Rupert Murdoch led the most recent $430m funding round with $125m. He followed his gut: he’d invested $150k in Uber for it to become $50m.
The investment packket forecasted (profit revenue) of ($330m, $1b) in 2015 and ($505m, $2b) in 2016. Furthermore, Theranos had lined up Cox Enterprises, The Waltons, New England Patriots owner, Carlos Slim, controller of Fiat Chrysler.
Elizabeth brought up Carreyrou’s story to Murdoch, but Murdoch declined to intervene - saying he trusted the paper’s editors to handle the matter fairly.
Boies sent a 3rd letter reiterating his threat to sue the paper. He dismissed the thesis as too dramatic to let go, even if inaccurate. He however acknowledged for the first time that Theranos ran some tests on non-Theranos devices.
Boies offered a demonstration, but it would take weeks to organize, so the paper passed. Elizabeth was a few more days to talk to Carreyrou - she didn’t.
Thur, Oct 15, 2015. WSJ front page: A Prized Startup’s Struggles. NPR Marketplace, who had fawned over Holmes, interviewed Carreyrou and made the story the focus of the daily email. Forbes and New Yorker also picked up the piece. In SV, some VCs like Marc Andreessen defended Elizabeth. Other were less charitable. Why had Elizabeth always been so secretive? Why doesn’t the board have a blood science expert? Why hadn’t a single VC firm with expertise in healthcare invested?
The FDA had recently conducted a surprise inspection of Theranos in Newark and Palo Alto. The FDA declared the nanotainer an uncleared medical devices and forbade its use.
Elizabeth on CNBC: This is what happens when you work to change things. First they think you’re crazy, then they fight you, and then all of a sudden you change the world.
At WSJ D.Live conference:
- The nanotainer withdrawal was voluntary
- The Edisons were old tech that Theranos hadn’t used in years.
- Theranos had never used commercial lab equipment for finger-stick tests.
- Theranos never diluted finger-stick samples before running them on commercial machines.
Shultz, Kissinger, Nunn and the old boys all left to join a board of counselors. David Boies was made a director. He still considered a defamation suit likely.
Other WSJ publications over the subsequent 3 weeks:
- Walgreens halts nationwide expansion of Theranos wellness centers
- Theranos had tried to sell more shares at a higher valuation days before the first story
- Theranos’s lab was running without a real director
- Safeway had walked away from previously undisclosed partnership over concerns about testing