For months, legal observers have been speculating whether Elizabeth Holmes would take the stand in her own criminal trial. Friday afternoon, Holmes put those questions to rest and was sworn in.
In her testimony, it was abundantly clear that, without her family’s wealth and status, Theranos would have been little more than a college student’s flight of fancy.
Holmes traced the beginnings of Theranos for the jury. As a college freshman at Stanford studying engineering, she had wanted to miniaturize the blood testing process—initially, her dream was to cram everything into a pill or patch, she told the court. Patients would either swallow the pill or slap on the patch, et voilà, get results beamed to a separate device. Sounds exactly like the sort of thing a college first-year would dream up.
Except Holmes wasn’t just another college first-year. She was the daughter of Christian Holmes IV, a former Enron vice president descended from the family that founded Fleischmann’s Yeast, and Noel Daoust, a congressional aide. Though not Bill Gates wealthy, they certainly weren’t impoverished, and they had plenty of connections.
So when Holmes came home after her first year of college and had an idea for a patent, there was enough money for her to forego a summer job and hire an attorney from prominent law firm McDermott Will & Emery to draft the 30-page filing.
Then, after returning to Stanford for her sophomore year, she told the jury that she spent “almost all” of her time on research—basically, she blew off classes that were costing her parents nearly $40,000 per year. By March 2004, she managed to convince them to part with the remainder of the money they had set aside for her college—probably on the order of $100,000—so she could found a company, which she initially named Real-Time Cures.
For someone with dreams as big as Holmes’, $100,000 wasn’t enough, so she also got her parents to invest some of their retirement money.
“I started working all the time,” Holmes told the court about the summer of 2004. She also started “talking to my family, talking to my friends.”
That’s code for well-connected people her parents knew. One was venture capitalist Timothy Draper, founder of Draper Fisher Jurvetson and a former neighbor of the Holmeses when the family lived in California. Another was well-known venture capitalist Don Lucas. “I was introduced to him by someone who had gone to college with my dad,” she told the court.
Under questioning by her attorneys, Holmes said that Lucas was interested in investing and “began a very comprehensive diligence process.” He hired a law firm to review her patents and look over her contracts and financials. The jury saw a 2006 email in which Holmes sent Lucas a series of financial documents. The venture capitalist would go on to invest in Theranos’ series B round and introduce her to Oracle co-founder Larry Ellison, who would make an investment in the series C round.
By 2006, those connections were starting to pay dividends. Holmes’ company, by now renamed Theranos, had landed contracts with GlaxoSmithKline and Pfizer. She gave demos to Eli Lilly and Company and Novartis.
Holmes was particularly pleased with the Novartis demo. “We nailed this one,” she emailed her colleagues at the time. “You all did an incredible job in making this happen—this is the Theranos way. We are on a roll.”
That same demo, though, appears to have been a sham. In court, Holmes said that the tests were run on site and data was transferred back to California. But in John Carreyrou’s book Bad Blood, his reporting said that the device failed and that Theranos sent a fabricated result from California to Switzerland, where the pharmaceutical company is headquartered.
Holmes is on the stand again today, and her testimony is expected to continue through tomorrow.