Inspirefest 2019: Theranos whistleblower Erika Cheung tells her story

16 May 20191.33k Views

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Erika Cheung at Inspirefest 2019. Image: Conor McCabe Photography

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Whistleblower Erika Cheung told Inspirefest about her role in revealing the truth behind Theranos, a hyped miracle health start-up that at its peak was worth $10bn but in the end was worth nothing.

At the height of its pomp, medtech start-up Theranos was fêted by the media and investors. Its founder, Elizabeth Holmes, graced the covers of prestigious business magazines and was trumpeted as the next Steve Jobs.

The story behind Theranos is, however, a salutary tale. Hyped as a breakthrough for blood testing, requiring between a hundredth and a thousandth of the amount of blood needed to perform testing, the company raised more than $700m and was worth $10bn in 2014.

This all came asunder in October 2015 when an investigative reporter from the Wall Street Journal, John Carreyrou, questioned the validity of Theranos’ technology.

Carreyrou was working with a number of whistleblowers, including Erika Cheung, who had departed the company when she came to the opinion that Theranos’ technology was bogus.

The subsequent investigation catapulted Theranos into the limelight for all the wrong reasons and the company faced a string of legal challenges from medical authorities and investors who felt they were duped.

Holmes’ personal worth dropped from $4.5bn to nothing, and by 2018 the company ceased operations.

At Inspirefest, Cheung gave an insight into her role as one of the key whistleblowers in the scandal that stopped the company from processing thousands of patients’ samples with faulty technology. The story has been covered in the book Bad Blood: Secrets and Lies in a Silicon Valley Startup by Carreyrou, 60 Minutes, ABC News and the recent HBO documentary The Inventor: Out for Blood in Silicon Valley.

Today she is based in Hong Kong, where she is focused on growing the entrepreneurial ecosystem in Asia and is a founding team member of Betatron, a start-up accelerator. She has also launched a new non-profit called Ethics in Entrepreneurship, which provides resources and best practices to prepare entrepreneurs and tech workers to better face the ethical challenges that may arise in their companies.

Five years ago, fresh out of college, Cheung had been working as a medical researcher with Theranos for several months when she first raised concerns.

Exposing the wild west of blood diagnostics

“The technology didn’t work,” she told Inspirefest. “The devices were nothing more than wishful thinking.”

Cheung had begun noticing anomalies whereby she would run a test on the thyroid status of a patient and get three different sets of results.

Not only that, but Theranos was experimenting on patients without their knowledge or consent, making them believe their tests were going before a well-vetted doctor.

She approached the company’s COO, Ramesh ‘Sunny’ Balwani. “I said, ‘I think we need to pay attention and stop processing samples.’ His response was, ‘What makes you think you are qualified? You need to do what I’m paying you for.’ I quit the next day.”

Cheung said she wanted to give Holmes and Balwani the benefit of the doubt, “but it was clear they just didn’t care. It didn’t matter how much evidence and red flags, they were going to process regardless. At this point I was heartbroken.”

Cheung recalled how she was approached by Carreyou, who had also been tipped off by a number of other whistleblowers.

What happened next was harrowing. “They [Theranos] went on a witch hunt and came after a whole bunch of prior employees.”

It wasn’t just the threat of being sued that alarmed Cheung, it was the fact that she discovered she was being physically followed. The matter came to a head one evening when colleagues noticed a man in a car outside where she worked and, when confronted, he handed her a legal letter that had the address of the apartment where she was staying.

While terrified, rather than being intimidated Cheung was galvanised into action and sent a critical email to the CMS (Centres for Medicare and Medicaid Services), spurring the investigation that unravelled the entire Theranos affair.

“So now Sunny and Elizabeth have faced numerous charges, from lawsuits to the CMS to investor lawsuits. And the biggest outstanding is criminal charges posted by the FBI.”

“Through this experience I was filled with an immense amount of fear, anxiety and self-doubt. The one anchor that made it easier was why I joined Theranos in the first place,” she said, referring to her principle of alleviating patient suffering. “This guiding mission was also the one able to pull me out of the chaos and madness.”

The entire experience and her work at Betatron in Hong Kong has spurred her on to start Ethics in Entrepreneurship.

“I noted that we are very good about teaching start-ups and tech workers how to scale and iterate, but never about the shadow side, and really they don’t have a lot of good resources when they face ethical dilemmas in these environments that are fast-paced, challenging and all about survival.

“This was a leading question that prompted my founding team to start Ethics in Entrepreneurship.”

Inspirefest is Silicon Republic’s international event celebrating the point where science, technology and the arts collide. 

John Kennedy is an award-winning technology journalist who served as editor of Siliconrepublic.com for 17 years.

editorial@siliconrepublic.com