The Real Story Behind ‘The Dropout’

Amanda Seyfried plays Elizabeth Holmes, who defrauded investors with her now-infamous company Theranos.
The Dropout
By  · Published on February 18th, 2022

Real Stories is an ongoing column about the true stories behind movies and TV shows. It’s that simple. This installment focuses on the true story of Elizabeth Holmes and Theranos, the subjects of the Hulu series The Dropout.

The Dropout, a limited series from Hulu starring Amanda Seyfried, depicts the wild rise and fall of former Silicon Valley executive Elizabeth Holmes. In the early 2000s, Holmes founded Theranos, a biotech company. She quickly became a billionaire and tech star. Then, in 2016, allegations of fraud began to surface. Holmes’ net worth was wiped out. Last month, a grand jury found her guilty of a number of felonies.

The series takes its inspiration from the 2019 long-form podcast of the same name by Rebecca Jarvis. Here is a look at the true story behind The Dropout, which centers around one thing: blood.

Who is Elizabeth Holmes?

Elizabeth Holmes was born in 1984 to a privileged family in Washington DC. Her father worked as an executive at Enron and her mother as a policy advisor and staffer in the federal government. While in high school, Holmes developed an interest in computer science and eventually made her way to Stanford. There, she studied chemical engineering, developed her first patent, and began to lay the groundwork for her business before eventually dropping out.

After leaving Stanford, Holmes founded a company called Real-Time Cures, later renamed Theranos, with her tuition money. The company’s genesis: Holmes’ fear of needles. Theranos’ chief goal was to run blood tests with only a few drops of blood. With the information taken from blood tests, patients could be diagnosed quickly, at home, and for a fraction of the cost. As Holmes told Wired in 2014:

“We wanted to make actionable health information accessible to people everywhere at the time it matters most. That means two things: being able to detect conditions in time to do something about them and providing access to information that can empower people to improve their lives.”

The air of secrecy, however, did not stop Holmes from developing her personal brand. Some in Silicon Valley began to liken Holmes to Apple founder Steve Jobs — a personal hero of hers — and she quickly bought outfits to fit the comparison. According to Elle, Ana Arriola, the company’s chief design architect, helped Holmes purchase black turtle necks from the same designer that made Jobs’. They quickly became her signature look. According to Vanity Fair:

“[Holmes] designed her Theranos office with Le Corbusier black leather chairs, a Jobs favorite. She also adhered to a strange diet of only green juices (cucumber, parsley, kale, spinach, romaine lettuce, and celery), to be drunk only at specific times of the day. Like Jobs, too, her company was her life.”

As the company continued its work, Holmes began building a list of high-profile board members and investors, including two former US Secretaries of State, two ex-Secretaries of Defense, a former CEO of Wells Fargo, the media mogul Rupert Murdoch, and Walgreens.

Partnering with Walgreens

In 2013, the San Francisco Business Times ran an article headlined “Secretive Theranos emerging (partly) from shadows.” The news was big. After years of work, the company announced a partnership with Walgreens to roll out their blood testing services, beginning with a location in Palo Alto. The promise? Hundreds of diseases could be detected with just a bit of blood. Some speculated that this would change the game for patients, doctors, and the medical community itself.

With the rollout, Elizabeth Holmes’ profile and net worth continued to rise. The media loved to profile her. She partnered with clinics that agreed to use the technology. Everything seemed to be going great.

But as the product slowly began to enter the world, some took notice of its imperfections. According to Vanity Fair, when Google Ventures considered investing in Theranos, the company did not respond to their inquires. Bilton writes:

“Eventually, Google Ventures sent a venture capitalist to a Theranos Walgreens Wellness Center to take the revolutionary pinprick blood test. As the VC sat in a chair and had several large vials of blood drawn from his arm, far more than a pinprick, it became apparent that something was amiss with Theranos’ promise.”

The Downfall of Theranos Begins

Internally, employees continued to question the legitimacy of Theranos’ product. Whenever they did, they were confronted by the company’s president and chief operating officer, Sunny Balwani (played in The Dropout by Naveen Andrews). Eventually, Balwani and Holmes began dating.

According to Vanity Fair, Balwani was a key figure in enforcing the company’s culture of secrecy. He prevented scientists and engineers from talking to one another about their work. Job applicants were not told the details of positions until they were hired. And Balwani’s lack of medical credentials led some to question his involvement in the company.

The FDA and The Journal

In the summer of 2015, everything began to fall apart. Officials from the FDA showed up at Theranos’ headquarters unannounced and began to investigate some of its laboratories. According to Vanity Fair:

“[Their investigation] found that Theranos appeared to ignore erratic results from its own quality-control checks during a six-month period last year and supplied 81 patients with questionable test results.”

At the same time, John Carreyrou (played in The Dropout by Ebon Moss-Bachrach), a Pulitzer Prize-winning journalist at the Wall Street Journal, began investigating the company. Lawyers for the company tried to intimidate him and sent threatening letters to those who talked with the reporter, including Rochelle Gibbons.

What Carreyrou found made its way to the front page in October of that year. He revealed that Theranos had misled consumers about its product, both in terms of accuracy and methodology. In an interview with The Ringer, Coarreyrou summed up his view of the company as thus:

“This particular company and the culture it created were unique, and I’d like to think that it’s not that widespread. The elements of it — the secrecy, paranoia, fear, and intimidation — are not as extreme in most other companies in the Valley.”

The Aftermath

In January 2016, the Centers for Medicare & Medicaid Services, a government agency within the US Department of Health & Human Services, launched an investigation of its own into Theranos and identified a series of problems with the company’s laboratories. When the problems were not resolved two months later, the agency banned Elizabeth Holmes from operating or owning such labs for two years.

The dominos began to fall. Walgreens withdrew from its partnership with Theranos. The FDA took action. And numerous lawsuits were filed against the company.

Then, in March 2018, the SEC sued Holmes and Balwani. The public, and the company’s investors, began to get a full look behind the curtain. In 2014, for example, the company had told investors the US Department of Defense was using their product in combat zones. This deal, the company claimed, would yield $100 million in revenue that year. But in fact, the DoD never used the product in combat zones. Theranos generated just $100,000 in profit in 2014.

The Trial of Elizabeth Holmes

In January 2022, Elizabeth Holmes was found guilty of fraud. She now faces up to 20 years in prison for each of the charges. In the final episode of the podcast The Dropout, Jarvis ends with these words:

“On January 3, 2022, Elizabeth walked out of the San Jose courthouse much like she did on day one of this trial and every day in between: hand-in-hand with members of her family. She was expressionless, focused, and silent.”

During the trial, Holmes also accused Balwani of sexual and emotional abuse. According to the New York Times:

“Ms. Holmes said Mr. Balwani, who is around 20 years older, controlled every aspect of her life, including her schedule, self-presentation and time spent with her family. She also accused him of forcing her to have sex with him. Mr. Balwani has denied the allegations.”

Balwani’s own trial for his role at Theranos is set to begin next month.

The Dropout premieres on Hulu on March 3, 2022. In the meantime, you can see the true story of Elizabeth Holmes and Theranos unfold in the HBO documentary The Inventor: Out for Blood in Silicon Valley

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Will DiGravio is a Brooklyn-based critic, researcher, and video essayist, who has been a contributor at Film School Rejects since 2018. Follow and/or unfollow him on Twitter @willdigravio.