Theranos Whistleblower Shares His Story

Tyler Shultz is a whistleblower who exposed fraud at the health technology company Theranos. In a moderated conversation with Business Law Professor Rachael Spooner, he talked about his decision to work at Theranos, how he discovered the company’s fraud, and his struggle in the whistleblowing process.

Theranos was founded in 2003 by Elizabeth Holmes and subsequently shut down in 2018. Holmes claimed the company developed a blood-test machine that needed significantly smaller amounts of blood samples, operated faster, generated more-accurate results, and cost less than alternatives. In 2015, the Wall Street Journal exposed the fraudulence in Holmes’s claims with details provided by Shultz, who interned at Theranos while a student at Stanford prior to working there fulltime from 2013 to 2014.

“During my time as an intern, I saw very few red flags…I had good mentors there. I enjoyed the research I was doing…I thought I was going to work there for the rest of my career,” Shultz said.

He saw a Theranos device for the first time shortly after becoming a full-time employee at the company. He was assigned to test a Theranos machine, and realized it was not the game-changer Holmes claimed it to be but essentially a pipette on a robotic arm. 

The device was able to do only one part of the blood-testing process and had no advantage in efficiency or accuracy over any other existing machines, Shultz said. It also relied heavily on third-party devices to do the preparation for each test. Moreover, the Theranos device was almost always experiencing some technical issues.

“We did not get very good results…and [we] heard Elizabeth go on stage somewhere and talk about how they eliminated every possible way for human error,” Shultz said. “It was very disorienting. It was really hard for me to reconcile the differences between what Elizabeth was saying and what I was seeing in real life.”

Shultz talked about the culture of secrecy at Theranos. He learned stories of employees getting immediately fired after raising concerns about the legitimacy of the test results. Different research teams were encouraged not to exchange information. In fact, he said, there was a list of basic scientific vocabulary that a researcher was told not to use when describing a project. 

Additionally, none of the Theranos employees were allowed to say they worked at Theranos—they could only say they were working for a biotech company.

“There was an incident where Elizabeth, or Theranos, sued a group of former employees, and when that happened, they actually sent out a company-wide email about the lawsuit so that we knew that we could get sued,” Shultz said. “There was a very toxic culture.”

Holmes started intentionally avoiding Shultz as he made more and more reports to the company’s executives about inconsistency between his test results and the numbers on the validation reports published by the company.

The hardest part of his whistleblowing process, Shultz said, was the rejection from his family. Shultz’s grandfather (former Secretary of State George Shultz), a Theranos investor and board member, sided with Holmes in believing that Shultz’s evidence was false. His parents repeatedly told Shultz to quietly leave the company without making any trouble because they were too afraid of Holmes’s power and connections.

Although Shultz remained anonymous when providing tips to the Wall Street Journal, he said that the company and his family knew that he was the whistleblower. His family insisted that he make a compromise to avoid further conflict with Theranos.

“I remember [my parents] said, ‘Whatever it is they want you to sign, just sign it. You’ve done enough. This is not your responsibility. Just sign it, and move on with your life,’” Shultz said.

In a lawsuit against Theranos, he described his time as emotionally and financially difficult. He couldn’t talk to his family or friends, and he was followed by private investigators. His lawyer’s briefcase was stolen from a car, and Theranos’s team also attempted to restrain Shultz from earning any income, he said.

“It was a scary time,” Shultz said. “I remember a few times I slept with a knife right next to my bed. I would hear some rustling outside my window at night.”

Shultz said that things got better after he revealed his role in the case to the public. He received a surprising amount of support from the biotech community in the form of job offers from other companies as well as Ph.D. program offers. Free from Theranos’s secrecy agreement, he was finally able to tell his girlfriend where he had been working. In time, his family relationships also returned to some normalcy.

Looking back, Shultz believes that Holmes was driven not by profit or by a desire to revolutionize—she simply wanted to become the next Steve Jobs. Shultz said he is taking lessons from his experience at Theranos as he starts his own biotech firm.

“I think the biggest thing [for my company] will be building a community where you are allowed to disagree with people,” Shultz said. “I think at any company that should be true, especially in the scientific community.”

Adapted from an article by Matthew Ma in The Heights, December 1, 2019.