This content details the experience of Tyler Shultz, a former Theranos employee and whistleblower, who exposed the company's fraudulent practices despite immense personal and familial pressure, ultimately contributing to its downfall.
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[music]
I know you'll all join me in welcoming Tyler to Santa Clara University.
[claps]
So I'm going to share a little bit of the background of the story for those of you
that may not know some of the details and then Tyler and I will start talking.
The story of the Theranos downfall has been well-documented over the last
several years most recently in John Carreyrou's best-selling book, Bad Blood.
But I want to give our audience a little overview of the story before we dive
into our conversation.
Towards the end of our time together
there'll be an opportunity for questions.
Tyler started as an intern at Theranos between his
Junior and Senior year of college at Stanford University.
Elizabeth Holmes, the
infamous founder and former CEO of Theranos was good family friends with
Tyler's family and Tyler's grandfather, George Shultz, who served on the board of
directors for the company. While interning at Theranos, Tyler actually
decided to change his major from engineering to biology because he was so
taken with the mission of the organization.
After graduating with a degree in biology,
he started working full-time at Theranos. But he quickly
figured out that something in the diagnostic numbers wasn't adding up.
Theranos was inaccurately telling other companies and
the public about what their machines could do.
Instead of immediately blowing the whistle
Tyler decided to bring up his concerns internally.
He talked to Elizabeth and others and senior leadership positions in the company.
Only to be met with hostility.
He also tried to explain to his grandfather
what was going on but his grandfather didn't believe him.
His parents urged him to quit but to say the reason for quitting was that he was
going to get his phd, so as not to make waves.
Ultimately after only months,
after only eight months of working at Theranos,
Tyler resigned.
He was 23 years old at the time.
Originally, Tyler didn't think about or consider talking with a reporter.
But as Carreyrou has explained in his book,
he sent Tyler a LinkedIn message and asked if he wanted to talk
to him about Theranos. Tyler decided to reach out to Carreyrou
via burner phone and he eventually became a
central anonymous source for Carreyrou's articles on Theranos.
In the two years that followed,
Tyler had to fight back various legal threats from Theranos.
He even had private investigators following him.
Theranos' legal team tried to get him to sign
several different affidavits, saying he was, he had been
talking to the Wall Street Journal and they employed a variety of bullying
tactics to convince him to do so.
They also tried to convince Tyler to name other whistleblowers.
Throughout this whole ordeal, Tyler remained steadfast to
his commitment to do the right thing while also having the added complexity
of his family's involvement in the company.
His grandfather didn't believe Tyler
when he came to him with concerns and he tried to broker a deal between
Tyler and Theranos. All the while Elizabeth Holmes continued to attend
Schultz family functions.
Eventually Carreyrou's reporting exposed Theranos
for what it was - an elaborate corporate fraud.
Tyler's family by then had spent
four hundred thousand dollars on legal fees to fight back Theranos' threats.
In March of 2018, Holmes and the company's former president, Sunny Balwani,
were charged with massive fraud by the SEC.
Holmes paid a fine, gave back stock and
is barred from being an officer or director of any public company for ten years.
Balwani did not settle with the SEC and in June of 2018 the US
District Attorney for Northern California announced an indictment of
Holmes and Balwani on wire fraud and conspiracy charges and I believe they are
actually in court, perhaps as we speak.
Theranos ceased operations on August 31st 2018
and the company was dissolved.
In recent days, reports suggest there may
be more criminal charges coming as part of a larger investigation into the
company as a whole.
After leaving Theraos, Tyler worked at
Stanford Center for Magnetic Nanotechnology. Currently he is the CEO
and co-founder of Flux Biosciences Incorporated, a startup that aims to
bring medical grade diagnostics into the home of consumers.
Why don't you just start by telling us why you quit your job at Theranos.
The first big red flag was the first time I saw the Theranos device,
and you could quickly see that it was not what
it had been claimed to be.
Like everything inside the device was something that I had already seen before
and almost any other laboratory that had been in up to that time and you
could quickly tell that it couldn't run, you know, hundreds of tests. It couldn't
even run two tests at the same time and
while I was there we only got up to running seven tests total and if you
wanted to run all those seven tests at the same time those would have had to
been on seven different devices so her claims of running you know 300 or
whatever tests from a single drop of blood seemed grossly exaggerated.
Working with the devices and I would see that the variations of the results that it
produces was very high and then in our daily lab meetings we would kind of go
over the experiments that we had done in the previous 24 hours and kind of pick
and choose about what experiments needed to be repeated so we would essentially
just delete sections of an experiment and repeat it with and replace it with new data.
And at first that seems kind of weird but then you eventually kind of
like fall into the habit of doing that and it's a really bad habit and then I
started hearing about the quality controls failing and this is with with
my colleagues who are running real patient samples so they would run the
quality controls for the day and they would fail and then some select cases
they would be pressured to run patient samples anyway even though we knew that
the test wasn't functioning properly
and then quality controls would fail
multiple days in a row which is a really bad sign because just statistically you
should know how often a quality control should fail and we were failing way more
often than that and we were coming up with ways on how to how to prevent
reporting quality control failures and then there was an incident where the
CLIA inspectors came to inspect the laboratory but they essentially locked
the door to the room that had all the Theranos devices in so they only saw
like the third-party Siemens, you know, FDA-cleared type equipment and
when we got that sample we split it and we ran it on the Theranos devices and
the Siemens equipment and the results were off by, sometimes more than 300%
and we decided to report the results from the Siemens equipment not
from the Theranos devices even though we were running patient samples on the Theranos devices.
As a validation, was really affecting quality controls and
ultimately patient samples and I felt like you know our
practices that of what I'm doing here are so bad that it's affecting patients' results.
So then I went and I had some questions and I went to Elizabeth and I
kind of brought a couple of these things up and she said like oh that doesn't
sound right and like I'll set you up with a meeting with the Statistics
vice-president so we can explain to you how statistics is done and I
and I said that I've heard her say and I've seen on our website that our coefficient
of variation is less than 10% but I never. I almost never saw that to
actually be the case and she said no I don't think we say that let's check the
website so he went around to her computer and looked at the website and
on the home page first page in big bold it says CV less than 10% and then in
smaller writing underneath it says Vitamin D and she says we've only made
that claim for Vitamin D, it's not meant to be indicative of our assay
performance as a whole though who knows if this actually works in the real world.
I said you know we claim that we are fast, cheaper, more accurate and I don't think
any of those things are true and he says I don't think we've ever claimed that
we're more accurate. I said "really? that's weird"
He said if you see any materials
that say we're more accurate let me know. So I went back to my desk
and you google Theranos and every article says "faster, cheaper, more accurate".
"Faster, cheaper, more accurate." "Faster, cheaper and more accurate."
So I go back to him with all these articles and I say like what's going on here if this
is incorrect we should actually go correct this information since we're
we're saying that we are bringing transparency to blood testing so if this
isn't correct we should proactively correct it and he said yeah I think
Elizabeth just tends to exaggerate in interview-type setting. Actually instead
ask that I write all my concerns in an email and I'm actually really thankful
that I did that because now it's all documented.
So I put, I wrote a really long email
with all these concerns in it and sent it to Elizabeth and essentially
Sunny replied who was the president slash boyfriend saying within an even
longer email and essentially just saying that I was arrogant, ignorant, patronizing,
reckless, no understanding of math science, or basic statistics and that if
I had any other last name that I would already been held accountable to the
strongest extent.
That's why I decided to quit.
I was naively hoping that I would
be listened to so I really wanted to bring these concerns to Elizabeth and
actually work through them. You know, she was on the cover of Forbes and Inc and to
me those interviews went like this - Elizabeth how great are you and she
would say I am really great and they would report elizabeth is really great
and that was pretty much the extent of the interview no one had asked her a
hard question or if they did she didn't answer it and it looked like John really
wanted to ask hard questions and so I did some research on John and I saw that
based on his past reporting that people had been arrested so like action had
happened after John's reporting which made me have a lot of confidence that it
would be worth it and I actually told my parents about John and they said that's
awesome but don't talk to him.
Identify yourself as a whistleblower because
If I remember correctly this is another thing that your parents said would be a bad idea.
Yeah, definitely.
But you did it anyway.
Yeah, so that happened more than a year after the
first time I contacted John, I think, and you know at that time when I outed
myself as a whistleblower, I think the writing was already on the Wall. So like
The Wall Street Journal had published a bunch of articles about Theranos already
The Huia came out with their report that said there was documented
times where, control, quality controls failed and then patient samples were run anyway.
Which is one of the things I had alleged
it had come out that they had
shell corporations buying third-party laboratory equipment so they could
essentially hide that they had these other laboratories.
David Boies, who was their general counsel said that
when the inspectors came to look at the labs
that they didn't ask to see the Theranos devices which is why they weren't shown that lab.
So basically all the things that I had said, I had felt like I
had been proven to be correct but Elizabeth was still having you know
weekly luncheons with my grandfather, he was still on their board of directors
David Boies who was really bullying me was still their general counsel and on
their board member, on their board of directors
and Elizabeth was still going to our family functions and I was still being
followed by private investigators and I just felt like I have so much power
right now because when Theranos first thought that I'd spoken to The Wall Street Journal,
they had my grandfather called me and I ended up going to his
house just to talk to my grandfather and I explicitly said I want to talk to my
grandfather without lawyers because it was a clear at that point that Theranos
wanted me to talk to their lawyers and I said I want to come talk to you not to
lawyers so I went to his house and I'd you know rehashed all of these old
conversations that I had with him where I said this thing is you know doesn't
exist. Essentially and we're giving patients
bad results we're not testing on the Theranos devices but he didn't believe me.
And then he just said that there was one
page confidentiality agreement and if I agreed to sign it that a world of trouble
would go away and I said okay I'll sign a one-page confidentiality
agreement and then he said actually there are two lawyers here right now can
I go get them and I said okay and so these lawyers come in and they don't
give me a one-page confidentiality agreement they give me a temporary
restraining order, a letter signed by David Boies, I don't remember exactly what was
in the letter but was basically like you're a terrible person signed David Boies.
So this was nothing like a one-page confidentiality agreement and
or just talk to your grandfather
Yea, or just to talk to my grandfather
this is nothing like what I expected and that
story hadn't come out yet and I thought that would make them look really bad and
I felt like I had proven to be right and I had this story and they were still
following me with private investigators they you know
Elizabeth was still going my family functions I just felt like they had no
respect for me and I just felt like I wanted to show that I was willing to
stand up for myself and that's why I outed myself. Ultimately you know, bullied,
intimidated, end up racking up legal fees but I think I'm different and that it
seems like most whistleblowers have a tough time getting their life back on
track afterwards and they have a tough time
getting a job in the same industry but that has not been the case for me like
right after I outed myself in the Wall Street Journal I was getting job offers
from different biotech companies I was getting job offers from
venture capital companies, you know people just emailing me say we'd love to have
you work with us.
Which is, which seems, which is the exact opposite of what I
was expecting everyone was telling me that once you're kind of pegged as a
whistleblower that you're not going to be able to get a job in that field and I
don't know exactly why my experience is different than than the normal experience.
Could have to do with your relative youth. I mean, the fact that
somebody that early in their career is that comfortable with their own thought process
and can overrule every outside piece of advice they're getting and
still sort of stay the course. That could be pretty compelling for a future employer.
For those months were somewhere around like $400,000. Actually, I guess
that, four hundred thousand dollars was more than just those four months but the meat of it was
those four or five months.
And during that time I wasn't really thinking about
I was only thinking about money as, as a resource like I didn't have an emotional
attachment to money, I really saw it as like runway like, how long can I fight
Theranos with this X amount of money. My legal fees for those months were
somewhere around like four hundred thousand dollars.
Sometimes I feel like
people paint a picture of me that's actually better than it is like when I
look back at that moment I don't even I like I don't even know if that was
necessarily like a good thing for me to say like yeah I'm willing to you know
put my parents out of a house to keep fighting this fight.
There are a lot of conflicting roles here.
I mean the family obligations, you had colleagues that you worked with
that you considered friends, supervisors. So lots of different roles
to kind of sort through in terms of whose interest to put first and and how
to and how to go about doing that so I I think given the situation you did, you've
done a very nice job of doing that.
There was a number of people just in that list
that were misled in this story you know talk about inspectors, investors,
different people in the company.
Why do you think that was possible?
Because trade secrets.
Trade secrets. Exactly.
Say a little more about that.
That's what Elizabeth answer to any tough question would be - "I can't tell you because trade secrets".
SEC you know, came out with their findings, I was actually over at his house just to
see my aunts and uncles who were in town and he kind of stopped the conversation
and said well the SEC came out with this report and I had no idea the extent to
which Theranos had been lying and I'm really proud of Tyler for
standing up for what he believes in.
I really idolized my grandfather, and my grandfather actually
has a track record of having a really strong moral compass and he would always
say like you can't love your job too much otherwise you'll do things you won't
ordinarily do in order to keep your job. So you should always be willing to quit
a job and my parents, you know are the best people. I think I got lucky they're
like my dad like one of my earliest memories ever actually is when I was in
kindergarten there was, I got classmate of mine who had just come from Japan
didn't speak any English, it's like my parents worked with me to learn how to
say like can I be your friend in Japanese so that I could like befriend
this this kid and that's like one of my earliest memories ever so that was those
were the parents that I had growing up with.
I don't really remember there being
a community values or like a certainly a mission statement that was formalized
but it was obvious that their value was "work really hard" and not necessarily
work smart just work a long time. She would say you know our goal is to never
have to say goodbye too soon and she would tell this story of her uncle who
passed away, you know, too young from I don't remember some some kind of cancer so
there was that and she was really inspiring as, she was a really inspiring
leader, like she made every person feel like they were super important to
achieving the vision of the company. I mean the workplace felt like you were on
a sinking ship the whole time for sure, at least. So for me I felt like there
were two different worlds there was a carpeted world and there there was the
tile world. So the carpeted world was where the
product managers were, was where the executives were, it was where you know
software engineers were and then there was a tiled world, where
all the labs were. So all the research, all the Theranos devices, all the CLIA labs -
all that was in the tiled world and they were just completely two separate
realities and it was really hard for me to reconcile the differences.
Like I would go talk to Elizabeth and we were talking about the vision of the company
and I would feel so motivated and she would tell me about how what I was doing
was so important to achieving that vision and I would go back feeling so
motivated and then I would start doing the lab work and I go wait wait what
this is what we're talking about how did that happen
she is she's very convincing and I can see how if you weren't working with the
devices every day how it would be hard to believe that she's lying to you.
The board didn't really have any power, like it was kind of like a fake board. So you
have to make sure that the board actually has powers and then the other
thing I think would be would be extremely important I don't know if
there's practical way to do this but just talk to the person who's pipetting
whoever's doing this kind of work talk to that person and ask them what they're
doing and how things are looking. One director came and asked me like you know
what is this experiment telling you that you're working on right now I would say
this experiment is telling me that this device does not work.
Maybe it's better to think about now you sort of have your own enterprise and some responsibility.
for some other colleagues, you know is somebody in that role, what do you think
the important things are that you take away from the experience you've had?
Yeah, I think the the most important thing is to trust the people that you hire and so
Elizabeth hired all these great scientists but then didn't listen to
anything they had to say so like I had some form of immunity because I had a
personal relationship with Elizabeth felt like I was in a position that no
one else was where maybe I would be listened to you so that's kind of why I
decided to speak up.
Hi my name is Seth Michaelson and I was the CSO at Theranos in 2010
I walked out because of the same things you saw. First of all, great job bro.
Wow.
My name is Father Paul Goda, I taught in the law school here
for 40 years and my question hinges on your connection with the legal system,
$400,000 at a relatively short time I don't understand that and I'm curious
about your reaction to the complexity of the legal system
and the cost because my question is what in the hell is going on?
I don't know, I mean
I was really disappointed in the legal system
like when when I was going through this it really felt like we settled disputes
over a game of one-on-one basketball and you can pay whoever you want to go play
for you. So like Theranos could like, you know, pay LeBron James to go play
one-on-one for them and then whoever they're suing has to pick, you know, in
most cases, like a high school basketball player to go play against LeBron James
and that's kind of how things are settled. Luckily I was in a position
where I, I could actually get someone who was really good to go play for me and
put up a fight but, yeah overall I was pretty disappointed and I just can't imagine,
like I had there's like a huge like privilege aspect to this story and the
only reason I could do what I did was because I could, I was willing to spend a
million dollars doing it. On the flip side of that, I had a colleague, Erica who
had the same concerns that I did, also spoke to John Carreyrou, also reached out
to state regulators which, I did not know about, and she comes from you know very
different background than I did she was in student debt still when she quit
Theranos, so she didn't have that and she you know we took the same steps but
then when the lawyer, the Theranos lawyers approached her, you know she
ended up you know moving to Hong Kong and like putting her head down and
ignoring them which turned out to be a really good idea, I should have done that.
[laughs]
You have to make sure that you distinguish what is vision and what is
where you are now and I've, Elizabeth, those somehow became one thing it's like
right now we can run 300 things from a drop of blood and that wasn't really
true but that was the vision. But I went through that when I was fundraising like
you know you come up with some revenue projections you put it on a slide and
then the investor goes, mmm, no we're looking for something bigger and then
later they'll kind of like tell you, by the way..
like investors assume that you're doubling your revenue,
that like you take what you actually think and you double it so,
in the investors' mind, they're halving it. So it's the stupid game that everyone's
playing and I just didn't want to play it so I just took the revenue slide out.
My name is Mara I'm an alum, and my local Safeway built one of those nice rooms
for blood testing and not until I read the book that I know why they had this
great room. As somebody who needs to test their blood on a regular basis for I'm
on blood thinners. A wrong diagnosis, I could either bleed out or I could get a
blood clot and have a stroke. So I wanted to personally thank you for what you did
because you could have very well saved my life.
Thank you.
[claps]
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