Control and image are important to Elizabeth Holmes. They were important to the PR effort around Theranos when she was portrayed as the second coming of Steve Jobs. They were important when she delegated reprimands to maintain her friendly image. And they are important now — as a jury is about to decide whether she’s guilty of wire fraud and conspiracy to commit wire fraud.
Since September, she’s walked to the courthouse holding hands with someone — usually her mother. I have watched Holmes sit bolt upright at the defense table as her lawyers slowly wilt. She’s dressed in business attire — sheath dresses with structured blazers or skirt suits. Sensible kitten heels. A coterie of expensive blondes and men in fancy loafers have filled her side of the courtroom, especially as she has testified. (Occasionally, there is even a brunette.) Holmes is presenting an image of herself as a former CEO, surrounded by friends and family.
Holmes testified for seven days, and then the defense rested its case. (Closing arguments will take place next week.) She was one of only three witnesses her lawyers called to rebut the prosecution’s case — and by far the most significant.
The trial showcased her employees
The government called 29 witnesses in an attempt to show Holmes knowingly deceived investors and patients. The prosecution’s case showcased her employees, many of whom had quit because they were uncomfortable with what Theranos was doing.
Perhaps because the defense kept him on the stand so long, when I think of the archetypal Theranos employee, I think of Adam Rosendorff, the former lab director. He started at Theranos excited about what it was trying to accomplish and left miserable. Rosendorff hated Theranos VP Daniel Young — when he said Young’s name, his voice dripped with scorn. He was openly contemptuous of former Theranos president Sunny Balwani.
Rosendorff didn’t sound like he hated Elizabeth Holmes.
During his testimony, he was shown an email wherein Holmes’ brother, Christian, scolded Rosendorff for refusing to defend a bad test result. Then, as we all in the courtroom watched, Rosendorff was shown Christian had forwarded the email to his sister. In reply to Christian, Holmes wrote, “You handled this excellently.” When Rosendorff read this in court, apparently seeing it for the first time, his face fell. The email hurt.
Something similar happened with Tyler Shultz, another Theranos whistleblower. When Shultz took his concerns about Theranos’ methods to Holmes, Balwani’s response was nasty. In the email, Balwani complained about Shultz’s “arrogant and patronizing tone and reckless comments” before proceeding to insult his understanding of statistics.
But Balwani wasn’t acting alone. He’d drafted the email before he sent it and shared it with Holmes, who made edits.
Her manners have been impeccable
Holmes clearly wanted to be liked, so at Theranos, she let others handle rebukes. This is not unusual. Jimmy Page ran Led Zeppelin, make no mistake — but he didn’t do the yelling to keep people in line. He had Peter Grant, Zeppelin’s manager, do that. (Kurt Cobain sometimes deployed Courtney Love in a similar fashion.) A lot of hierarchical organizations are run this way, including corporations and monarchies, allowing the leader to maintain a pristine image.
Holmes has sought to carry such an image — six years after the first Wall Street Journal article exposed the reality at Theranos — into the courtroom. Throughout her time on the stand, Holmes focused primarily on whatever lawyer was talking to her. She listened attentively. When she fumbled with an exhibit or was confused, she apologized, smiling. In the small interactions I had with her outside the courtroom — there is only one women’s room — her manners have been impeccable.
Central to the trial is the question of how much Holmes knew. For her to be guilty of fraud, she had to have the intent to deceive. Intent is difficult to prove. Holmes’ defense argued in its opening statements the picture is more complicated than what the prosecution has put forward. The defense has suggested that most of the blame should fall on the shoulders of Theranos’ lab directors and on Balwani. That Holmes didn’t know about the problems in-depth. She thought she was telling the truth.
To emphasize this, the defense had Holmes testify to how what the investors heard was almost true — so maybe the investors had just misunderstood. “I wanted to convey the impact the company could make for people and for healthcare,” Holmes said. “I talked about what we created and what it could do, what was possible.”
Theranos worked with pharma companies, even if drugmakers such as Pfizer and Schering-Plough didn’t independently validate Theranos’ tech, as investors said Holmes claimed. Holmes said she put the drug companies’ logos on documents she gave to investors and business partners to represent the partnership — not to fool anyone. She couldn’t, however, explain away other changes she made to those documents that presented Theranos in a better light.
Theranos did one study with a US Army burn unit. It had started paperwork for other military studies — but didn’t deploy in Iraq, Afghanistan, or on military helicopters. But investors said Holmes told them that the company’s devices were used in Afghanistan and on medevacs. “I don’t think I said that,” Holmes said during her cross-examination.
Holmes claimed she didn’t tell Theranos investors about the company’s modifications to commercially available machines because she wanted to protect trade secrets. But she could have told Walgreens, because it was a business partner that had a confidentiality agreement in place, the prosecution pointed out, citing a document her own lawyers had created about trade secrets at Theranos. Certainly Holmes could have chosen to correct the glowing Fortune article that said Theranos only used its own devices. She did not. Instead, Theranos’ investor relations team sent it to her investors.
Holmes is testifying because it is the only way she can assert control over the trial
Two claims stuck out as being in the realm of pure fantasy: the number of tests Theranos could perform on its own equipment and its financial projections. To counter those, the defense showed evidence that Theranos was working on a device that might have been capable of running all the tests Theranos wanted to run at some point in the future. It also tried to pin the financial projections squarely on Balwani alone.
The court heard remarkably consistent testimony from multiple investors. The jury heard audio recordings of Holmes lying confidently. Jurors also saw video evidence — most recently a Mad Money segment — of Holmes’ dishonesty.
To make sure those recordings weren’t the only way the jury heard her voice, Holmes testified in her own defense. I have seen speculation that she did this because she is a master persuader. I don’t think that’s quite right — not least because Holmes wasn’t persuasive when she was unrehearsed. Holmes testified because it was the only way she could assert control over the trial, just as she made a point of controlling prospective investors’ demos of Theranos tech.
In her direct testimony, I saw only a glimmer of the charmer I’d been promised. The first day she was on the stand, I thought we’d get a tour de force. She was smiling, confident, relaxed. The early days of Theranos were happy memories for her.
The net effect was of watching someone realize in real time exactly how strong the case against her was
When she was asked about the testimony she’d heard in the trial, she seemed to get increasingly nervous — and her strategy of blaming others for Theranos’ problems didn’t feel especially compelling. The net effect was of watching someone realize in real time exactly how strong the case against her was and how weak her explanation sounded.
Frequently, when she was cross-examined, Holmes told the court she didn’t recall a conversation, text, or email. Sometimes this sounded flimsy — but sometimes it sounded like a natural response to being asked questions about events and conversations that took place more than five years ago.
On the final day of her direct testimony, Holmes pivoted from distancing herself from Theranos’ operations. She said that she’d been raped at Stanford, and it was part of why she’d dropped out. Her face turned pink; she almost sobbed. This was the beginning of Holmes trying to change the narrative that the prosecution had presented.
The Stanford incident wasn’t part of Theranos’ official founding lore. She wasn’t just starting a company — she couldn’t stand to be at Stanford anymore. “I decided I was going to build a life by building this company,” she said. Building a new company also meant building a new identity: a founder.
“You are the company,” Balwani texted Holmes in 2012
That made a few other things click into place. Emailing Rupert Murdoch, the owner of the Wall Street Journal, to try to kill John Carreyrou’s story wasn’t too extreme. But hiring private investigators and Fusion GPS to harass Carreyrou and his sources was unusual. Once she admitted the company was about building a new identity, it made more sense. (“You are the company,” Balwani texted Holmes in 2012.) It wasn’t just that Carreyrou was exposing Theranos — he was ripping away part of her very self.
In one exchange, prosecutors made this connection explicit. According to a set of notes Holmes said she took while Balwani raged at her, he said, “I don’t enjoy being in a company that’s not going to win... fucking mediocre quality of this piece of shit company.” Prosecutor Robert Leach asked Holmes if that was Balwani telling her about the problems with the company. Holmes replied, “He’s telling me about problems with me.”
Her performance on the stand when she talked about Balwani was compelling. Certainly the jurors were rapt. Holmes also had some contemporaneous documents to support her allegations: a handwritten memo by Balwani, her notes as he talked, and some text messages, including one where Balwani said, “I have molded you,” and chastised her for speaking in her “giddy” voice. She also testified that Balwani didn’t tell her to lie to investors, business partners, or the press. Instead, she said, “He impacted everything about who I was, and I don’t fully understand that.”
The prosecution responded by presenting texts where Balwani deferred to her or where Holmes overruled him. In a message from April 2015, Balwani wrote to Holmes, “I am worried about overexposure without solid substance.” Holmes replied, “That media is why we are getting Americare,” an insurance company. (Presumably, there was some kind of deal, but more details weren’t offered in court.) She went on to suggest using the media to “drown out and refute the crap.”
It is hard to say what happened in Balwani and Holmes’ private relationship, not least because it was secret
In July 2015, Balwani again objected to Holmes’ PR strategy, something he’d deferred to her on: “I do dislike the direction u have taken with all this PR and all legal work.” He even offered to leave the company.
And after seeing Holmes speak at a Wall Street Journal conference, Balwani wrote, “Worried about your ‘all fingersticks on our technology’ comment.”
It is hard to say what happened in Balwani and Holmes’ private relationship, not least because it was secret. But the texts where Balwani protested Holmes’ strategies show that he didn’t call all the shots at Theranos. In some of the documents we saw, when Balwani laid into someone, it was because Holmes had encouraged it. In the business relationship, she appeared to be the dominant partner.
The evidence also pointed to Holmes’ need for control. Press strategies are about control — Holmes even dictated Fortune journalist Roger Parloff’s word choice. The defense has noted multiple times that Holmes never sold a share of her Theranos stock; she also lost everything she’d invested. The defense pointed to this as proof she believed in Theranos’ tech. Well, maybe. But she was also making a salary of $400,000 a year in 2015. What would she need to sell her stock for?
Founding a company, being its CEO, and owning the majority of its stock (with super-voting rights, no less) put her in total control. She could have, as she admitted on cross-examination, fired the entire board of directors if she wanted. Her testimony about abuse was aimed at obscuring that.
Domestic abuse can warp a person’s self-image. But this isn’t a domestic abuse trial, and we have only tiny glimpses of what went on in Holmes’ and Balwani’s relationship. The jury may also be instructed to disregard it. Once the defense had rested, prosecutors told Judge Edward Davila to expect a filing to strike Holmes’ abuse testimony from the record. (The gist: without an expert witness to put that testimony in context, it is irrelevant.)
Even if they are told not to consider it, the jury still heard those allegations. But the image Holmes presented of herself in that testimony — thoroughly under Balwani’s control, down to the last details of what she ate and who she saw — ran counter to the image she projected, down to her posture: immaculate self-control, a leader. That image is a lot closer to the person we saw calling the shots in their texts and sending subordinates emails at 1AM.
The question is whether the jury will notice that, too.