I didn’t feel badly for all the rich guys like Rupert Murdoch and Robert Kraft who lost millions – pocket change to them – as I watched the HBO documentary, “The Inventor: Out for Blood in Silicon Valley,” that premieres at 9 p.m. Monday.
As a journalist, I felt for Fortune magazine’s Roger Parloff and the New Yorker’s Ken Auletta. They also initially bought the compelling story of Steve Jobs wannabe Elizabeth Holmes.
Holmes misled some of the most wealthy and powerful people in America to invest in a biomedical startup company, Theranos, that went from being worth $9 billion to going bankrupt overnight after her con was uncovered.
And what a story she told.
Who wouldn’t want to be able to have a small amount of blood drawn by a prick in the finger rather than a needle in the arm to discover what potentially ails them?
Anyone who has their cholesterol or sugar levels tested monthly or annually would applaud the idea that Holmes was selling in Theranos.
Oscar-winning filmmaker Alex Gibney tells the story of Holmes’ deception in a fascinating and compelling way that it should get viewers invested in it early and remind them if something looks too good to be true it just may be too good to be true.
She is compared early to inventor Thomas Edison, whose “greatest invention may have been himself” and subscribed to the inventor’s creed passed down to Silicon Valley: “Fake it until you make it.”
Gibney tells Holmes’ story with the help of two whistleblowers who worked for Theranos.
One of them, Tyler Shultz, is the grandson of George Shultz, who served under three different Republican presidents and for a long time believed in Holmes more than his blood relative. Tyler Shultz became a source of a Wall Street Journal story by reporter John Carreyrou that brought down Holmes’ con.
The other whistleblower in this cautionary tale, Erika Cheung, also spoke to Carreyrou. After initially drinking the “Kool-Aid a little too quickly,” Cheung realized that the technology – described by one journalist as "comically vague" – in a process sorted out in a mystery box didn’t work.
At a press conference last month in Pasadena, Calif., Gibney said he was surprised by the level of naiveté among investors and board members. He found it jaw-dropping that none of the people investing millions in Theranos looked at an audited financial statement.
“The power of the story and I think Elizabeth was a very compelling storyteller was so immense that everybody just went along,” Gibney said.
He added he thought Holmes was able to get away with it because she had credibility from the board and the powerful people – mostly older men – who endorsed her.
“I mean, in a way that was the secret of Elizabeth,” said Gibney. “She surrounded herself with creditability, and the creditability kept multiplying.”
The Theranos board consisted of famous people and famed lawyer David Boies was her lawyer, which bestowed credibility on Holmes and led to the magazine cover stories by Parloff and Auletta.
“It’s like a snowball rolling downhill,” said Gibney. “A snowball of creditability, but nobody ever stops along the way to ask any of the questions like should these people have been so credible?”
Gibney agreed with a critic’s suggestion that “the desire to see this this young, attractive woman succeed in a big way” in a field dominated by men “might have blinded people to the fraud” and led the journalists to write about her incredible idea.
“I think we all wanted to believe that so that’s a story that she very compellingly sold and they wanted to write,” said Gibney. “Who wouldn’t want to write that story? That’s what made it so attractive I think.”
Shultz and Cheung experienced Holmes’ charm firsthand.
“She would also make you feel like you were critical to achieving this incredible vision that she had sold you on, and she was just, you know, extremely charismatic,” said Shultz. “She knew exactly what to say at the right times ... It was like a reality distortion field she kind of walked around with.”
“It’s also the vision,” added Cheung. “I think everyone can have the sense of the pain you go through when you get your blood drawn, and to make that less painful by just getting a finger stick, that’s compelling. The idea that you have price transparency; that you can go to the doctor and walk out and know how much you’re going to be charged and how much you need to pay by the end of the visit, that’s compelling. So it was the first time that we had seen someone really take strong leadership in the healthcare space for an industry that so many people are unsatisfied with. So I think the combination of just, not only her as a figure, but also the vision in the industry that she was going into.”
Gibney noted that Holmes was very good at repeating her compelling story.
“There’s a moment in the film where you see her on various different shows, and it splits into a number of different screens, because she kept telling that same story over and over again,” said Gibney. "It’s a very compelling, emotional story. So being able to tell that story is important. That’s what Edison was good at. By the way, that’s what Steve Jobs was good at. He was a really good storyteller. Those product presentations were storytelling masterpieces. Now, the problem was that, unlike Jobs and Thomas Edison, her product didn’t work, but the story was great.”
Shultz added people wanted to believe.
“I would also add that she kind of, like, checked a lot of boxes,” he said. “Like, she dropped out of college. She dressed like Steve Jobs. She had, like, a fleet of security detail everywhere she went. So when you did have an opportunity to speak with her you felt like you were talking to someone who was very special.”
And what lesson did Gibney think people should take from this documentary?
“I think there’s always a productive lesson you can take from being defrauded, which is trust but verify,” said Gibney. “But I think that, to some extent, these frauds work, in part, because we’re all invested in dreams. We all want to overachieve. We all like people who overpromise and overachieve. So the grandeur of these visions is compelling to us, which is why I think we’re all invested in them, but we’re also interested in when people take us in, and then lie to us, and then fail, and then I think we’re happy that they fall.”