Among the many hot streaks in investigative journalism, it would be hard to top John Carreyrou’s ongoing run.
The Wall Street Journal’s deep-dive ace, who won his first Pulitzer in 2003, snagged his second in 2015 after he and a team exposed how Medicare got bilked for $60 billion in bogus charges. Carreyrou easily could have taken home a third award when he broke the scandal of Theranos, Inc., a high-flying Palo Alto tech firm that promised to revolutionize blood testing by getting fast results with just a few drops of blood.
Launched in 2003 by 19-year-old doe-eyed Stanford dropout, Elizabeth Holmes, who promoted herself as the next Steve Jobs and, a decade later, the world’s youngest female billionaire, Theranos made equipment that didn’t work, duped investors and endangered patients’ heath.
He didn’t win the Pulitzer, but Carreyrou’s shocking series claimed a 2016 George Polk award, one of journalism’s most prestigious honors, and a book he wrote about it is now being made into a movie starring Jennifer Lawrence.
The publication of “Bad Blood: Secrets and Lies in a Silicon Valley Startup,” which is out today, has turned the spotlight on the 45-year-old Park Slope father, who grew up in Paris as the son of acclaimed French journalist Gerard Carreyrou. His career-capping expose has been cited on “60 Minutes” and “CBS This Morning” and hailed in Vanity Fair, which called it a “blistering wave of reporting.”
Journalist John Carreyrou
We caught up with Carreyrou in Phoenix last month, where he was the guest speaker at the Association of Health Care Journalists annual conference, and held a room of hardened journalists spellbound as he described his pursuit of the story.
Among the interesting details: a key source in his Medicare probe provided the tip that got him looking into Holmes and her operation.
So that seemed a good place to start for his interview with The Hatch Institute’s editor Brad Hamilton: How exactly did the reporter come across this Adam Clapper, who wrote about lab testing on The Pathology Blawg and ultimately led Carreyrou to a Theranos insider, spurring the demise of a $10 billion company backed by Bob Kraft, Rupert Murdoch and software titan Larry Ellison?
John Carreyrou: On his blog he had posted quite a few items about abuses in the lab world, so I got in touch with the guy. [Clapper] was a pathologist in Columbia, Missouri. He took the time to explain to me the nuances and complexities of laboratory billing. That was the origin of our relationship. Eight months later, out of the blue, he gives me a call and says, “I think I’ve stumbled onto a big story.”
Brad Hamilton: Did you know anything about Theranos at the time?
JC: He asked me that, if I was aware of this Silicon Valley start-up and its prodigy founder Elizabeth Holmes, and it turned out that I had read Ken Auletta’s profile of her in the New Yorker that December. The story had given me pause. It was clear that Theranos hadn’t done any peer review [studies] and was jealously guarding its secret recipe, which I thought was weird. Because in medicine, any real innovation goes through scientific journals. But to be honest, I probably wouldn’t have done anything about it if he hadn’t called me a month later and asked if I’d read the piece.
BH: So what did you do?
JC: I posted a blog item, declaring myself a skeptic. And then people wrote in, saying Theranos was a scam and [Holmes] was a fraud. None of these people were primary sources but one of them mentioned he’d made contact with an ex-employee. So my source said, “Let me get back in touch with them and see if they’ll talk to you.'”
BH: Did that work?
JC: He told me one of these people was Richard Fuisz, a former childhood neighbor of the Holmes family who Elizabeth had sued for stolen patent information. In the course of litigating against her, Fuisz had found the former laboratory director at Theranos and had become convinced that this was a fraudulent operation. It took me a couple of days to get in touch with this ex lab director, who was being hounded and was terrified. After about an hour on the phone with him, I knew this was big.
BH: But the lab source wouldn’t go on the record.
CJ: He was worried, for good reason, that Theranos was going to come after him. I agreed to grant him confidentiality. In the book I call him Alan Beam.
BH: Then what?
CJ: Well, the Journal won’t allow us to go with a story based on one anonymous source, so I knew I had to get more. After our first phone call, I asked Beam if he could get me the names of current or former employees who could corroborate his information. He sent me seven names. I was quickly able to contact two of them. They were terrified, but it was clear they had major concerns about how that place was run. One of them she had quit because she wasn’t comfortable with the test results that Theranos was putting out.
BH: But neither of those sources was on the record?
CJ: No. So I kept talking to Alan Beam, and he gave me some more names, and some others I tracked down using LinkedIn and other databases.
BH: And one of those paid off?
CJ: Beam called me and said there’s this guy, a former employee, Tyler Shultz. He thought he’d left Theranos on really bad terms but he didn’t know for sure. I jotted down the name Tyler as a potential source. A couple of days later I noticed that Tyler checked out my profile on LinkedIn. So I InMailed him. But I didn’t hear anything back. Suddenly, a month later, Tyler called me in the Journal newsroom on a burner phone. He’d been agonizing about whether to call.
BH: Tyler is the grandson of George Shultz, the former secretary of state, who was a Theranos backer and board member. Was the family pressuring him?
JC: His parents had told him not to talk to me. But he just couldn’t help himself.
BH: What did he offer?
JC: After I granted him confidentiality, he told me he’d been at the company for eight months and he had some documents, and I asked him to email them to me, which he did using a fictional Yahoo email account. A couple of weeks after that, I flew to the Bay Area and met Tyler at a beer garden in Mountain View. And I got a more detailed account of his time at the company. But by that time Alan Beam had stopped cooperating.
JC: He was terrified. It was a setback. He was a very reluctant whistleblower. I had to do an unbelievable amount of handholding. I tried to turn him around. I couldn’t. I had dealt with confidential sources in the past, but Alan Beam was the most difficult to navigate. So I decided to give him some space. Sometimes you have to lay off confidential sources They are human beings. Later, he got back in touch with me. And he resumed being a source. The lesson was you have to be patient.
BH: What else did you take away from that experience?
JC: Generally, you have to try to empathize with your source. The source has to feel that you are on their side, and that you’re not going to burn them. One of the things I tell my sources is, “I’m in this for the long game. If I burn one source, it will get out there. And I’m not going to do that for just one story.” That gives sources confidence. Also, you have to get to know the source. If you put in those hours on the phone and in person, they’re going to feel that you are their friend and their ally. And by the way, it shouldn’t just be a trick.
BH: Do you ever share details of your personal life?
JC: Absolutely. They need to know that you’re a human being. That you have a family. Give them a glimpse of your life. I don’t hesitate to do that. You have to talk to them so much that there’s no way they don’t know you’re hanging out with your two boys in Prospect Park. Beam, he grew up in South Africa. I grew up in Paris. Both slight outsiders in America. You don’t want to be this faceless robot on the other end of the phone.
BH: Sounds like you try hard to put them at ease.
JC: It comes naturally. I’m not a data specialist, but one of my strengths as a reporter is getting sources to feel comfortable with me. They find me personable. And I do tell them about my agenda. I don’t sugarcoat.
BH: Do you ever give whistleblowers a pep talk, that telling all will serve the public good?
JC: With Alan Beam, he was tortured by the notion of people getting fraudulent blood test information. So the idea was to stop others from being affected.
BH: Was he afraid someone would out him as a source? Did you use any encryption technology?
JC: We texted via iPhone iMessage, which I knew was well encrypted. Tyler used a burner and a fake email address. I found LinkedIn to be a very useful tool. If you agree to do this seminar with them, they will give you a free premium account. That gives you the ability to InMail people.
BH: Were you worried about getting sued?
JC: I learned with Theranos that bringing in the lawyers early was incredibly beneficial. That’s something that I do now. Bring them under the tent, get them to feel like they are part of the process. But no matter how good your reporting is, you’re never going to be able prevent a subject from suing if they feel like suing. [Casino magnate] Sheldon Adelson sued the Journal because he was described as being foul-mouthed. At the Journal, it’s drilled into us that we do our own fact checking. I go back over every word, making sure that there’s a basis for using everything I put in the story. My editor, the way he did it, he would check off each word as he went.
BH: This is your first book, and it’s a gripping yarn. Did you pick up any storytelling tricks along the way?
JC: At a newspaper, the most important thing is the lead and it’s still a good rule to go by. The lead and the first couple of paragraphs that come after that. Drawing in the reader to making them want to read on. At the Journal, everything has to be attributed, and they’re not big on adjectives. So you can’t do a wind-up like the New Yorker does that lasts a page and a half. I was able to unleash my prose in a way that I wasn’t able to do at the Journal.
BH: Give us an example.
JC: The first three-quarters of the book are told in the third person. It was omniscient. That’s not to say it was fictionalized. It was totally reported out and based on long interviews but I took the point of view of each character. The result of that is that it’s much more readable. Chapter 13 is about this photo shoot with Elizabeth Holmes for a secret marketing campaign for Theranos. People described the scene to me, and the photographer showed me the photos. It was almost as if I was there.
BH: This was just after Holmes had coldly rebuffed the widow of Ian Gibbons, the company’s cancer-stricken chief scientist, who raised the alarm about Theranos’ flawed testing machines, then killed himself because he thought Holmes was about to fire him.
JC: And Elizabeth spent hours and hours going over those photos. She told Patrick, the photographer, she wanted them to convey empathy.
BH: You also refer to two executives at Walgreens, a key partner of Theranos, by the their nicknames: Michelob and Dr. Jay. The first drank too much. The second repeatedly told others he was Dr. Jay and he used to play basketball.
JC: Those nicknames tell you a lot about those people and why they were bad stewards for Walgreens. Dr. Jay has this clownish nickname that plays on a basketball legend, and he likes that joke. It’s silly. Yet he embraces the nickname. So that tells you he’s a tool. And Dr. Jay, with his DUIs, had a drinking problem.