[SystemSafety] Theranos and the Last Honest Man

[Les Chambers]

Hi all
I have found the last honest man on the planet Earth. 
Tyler Schultz, the biologist and truth teller who brought down Theranos, 
reducing a multibillion dollar company to zero and sending it’s founder and 
CEO Elizabeth Holmes to jail for 11.25 years.
Tyler‘s story is of interest to this list as it gives a unique insight into 
the mind of the whistleblower as he navigates the rocky road of doing the 
right thing.
Ryan Holiday interviews Tyler on his podcast, The Daily Stoic, Episode:
“Theranos Whistleblower Tyler Shultz on Doing the Right Thing and Overcoming 
Fear.”
It’s a rattling good tale, highly recommended.
My summary and take-aways follow:

The Situation 
Elizabeth Holmes claimed that her company had invented a portable blood 
analyser that could perform 300 different blood tests using a tiny speck of 
blood from a finger pinprick. These claims were false, leading to charges that 
Holmes defrauded investors who lost hundreds of 
millions of dollars on a false promise.
As is common in this class of scenario the fraud was common knowledge inside 
the company. Some Theranos scientists took the easy path and politely 
resigned. Others clothed themselves in St Augustine’s duty of virtue - “Oh 
Lord make me virtuous, but not yet” - and looked the other way. Still more 
made noises and we’re promptly fired. Tyler Schultz, armed with an 
industrial strength moral compass, took them head on. Tyler’s personal 
situation was made even more interesting by 


The Complication
Tyler Schultz was the paternal grandson of Theranos boardmember George 
Schultz.
Remember George?
PhD in industrial economics (MIT)
Member of Dwight D Eisenhower‘s council of economic advisors
Dean of University of Chicago Graduate School of Business
Richard Nixon’s United States Secretary of Labour
Richard Nixon‘s United States Secretary of the Treasury
CEO of Bechtel Corporation
Ronald Reagan‘s United States Secretary of State
Informal policy advisor to George W Bush
Safe to say George knew a lot of people. He actively promoted the company 
attracting many big names to the Theranos board. It ultimately included:
	•	Henry Kissinger (former United States Secretary of State);
	•	Jim Mattis (retired Marine Corps four-star general);
	•	Richard Kovacevich (former CEO of Wells Fargo);
	•	William Perry (former United States Secretary of Defense); and
	•	William Foege (former director of the Centers for Disease 
Control and Prevention).
All men north of 80 years old who knew nothing of modern biological 
technology.

Tyler’s Problem
A weaponised nondisclosure agreement. The tool used to threaten noisy truth 
telling employees with prolonged legal action that would mean financial 
oblivion for the righteous and the good. 
The threat of career oblivion. The classic, “you’ll never work again as a 
scientist if you do this.”
The situation turned nasty. Holmes hired private detectives to follow him. 
Theranos lawyers threatened him. There were attempts to destroy his life. He 
had a falling out with his grandfather.

Tyler’s Solution
He tried to prove he was wrong to himself 
 and failed. The claims were 
blatantly and transparently false. This process of internal reflection gave 
him a very strong conviction that he was right. He tried to work internally 
within the company including briefing his own grandfather who refused to 
listen. He tried anonymous tips to New York State regulators using spoofed 
email accounts and burner phones but ultimately realised he would have to go 
public and risk his name to affect real change.

Tyler’s Enablers
He had less to lose than most.
He was 23 with the idealism of youth, no children and no mortgage.
As an American citizen he had no visa problems. Other non-US citizens at the 
company had work visas conditional on them working for Theranos. 
He had no share options.
He had no compelling desire for a career in science. His love of music meant 
he could just as easily pursue a career as a musician.
He admits to being arrogant and opinionated.
He was brought up to do the right thing by his parents.
His parents had the wherewithal to pay his legal bills. They had to sell their 
house. They discovered they had created a monster. The boy they had raised to 
do the right thing proceeded to take them at their word. To their eternal 
credit they backed him.

The Board’s Problem
How was Elizabeth Holmes able to snow her own board? These men were hardened 
players with long and successful careers in business, the military, politics 
and the diplomatic service?
Answer
Greed. George Schultz’s shareholding in Theranos amounted to hundreds of 
millions of dollars. Even at the age of 96 he wanted to go out as a 
billionaire. Evidence of the corrupting influence of money.
Ego. George Schultz was certain in his own judgement, he had been right so 
many times before he used that as sole evidence that he was right this time. 
Even when faced with scientific evidence from a Stanford educated scientist 
who happened to be his beloved grandson.
Love.  According to Tyler the entire board (all men of average age in the 80s) 
was in love with Elizabeth Holmes. The black turtleneck wearing Bamby. They 
vied for her attention. Henry Kissinger wrote her limericks  lovingly offering 
that Steve Jobs was an earlier version of her.
Ignorance. Beware of boards of directors stacked with “names” who are not 
qualified to perform due diligence on the company they are allegedly employed 
to guide.
Story. A global factor in all this was Elizabeth Holmes casting as hero in  a 
story everyone wanted to believe. Here is a genius 20 something, a Steve Jobs 
reincarnate on the path to a new Apple. Everyone knew what the hero wanted and 
they wanted her to have it.

Lessons I Learned
Make sure you are right. Telling the truth will attract attacks from all 
directions so you’d better have verifiable facts at hand. In extremis Tyler 
had a strategy to challenge his accusers to bring their machine into court and 
do 300 blood tests on the judge. If it ever did come to that the test would 
certainly have failed but even with this kind of certainty the case 
dragged on for months and cost a fortune.
Don’t be intimidated. Powerful people can be incredibly intimidating. Imagine 
standing up to George Schultz.  Yet he was a human being capable of concealing 
massive character flaws. If you cut them they’ll bleed. Truth telling is a 
socially levelling activity. Who cares if you’re interlocutor has advised 
presidents , if he’s lying he’s lying. We are all naked in the face of 
the truth.
Name the pathology. Name the personality flaw that is feeding the pathological 
behaviour. I once told a project manager, who had just attempted to crash a 
software project, that his strategy was so bad the malfeasance had been 
documented as bad practice in several books. It shook him up. 

Stoic Virtues 
Why then are the Stoics interested in Tyler Shultz? 
It’s because, at high personal cost, he actually practised the stoic virtues 
of courage, justice, temperance and wisdom. 

Engineering Virtues
Why then should people on this list be interested in Tyler Schultz.
Because if you pursue a career in functional safety for long enough and work 
for enough companies, at some point, there is a high probability that you will 
find yourself in a similar position. 
I have.
My first reaction was shock. How could the  senior management, who I 
previously respected, lie so easily? This is where stoic philosophy, 
originating  circa 300 BCE with the Phoenician merchant Zeno, can be a 
practical assistance to engineers right here right now. 
In his book, The Daily Stoic, Ryan Holliday gives the example of the Zen 
master who has a favourite cup. He had always viewed it as his broken cup 
because he knew that at some point he would inevitably break it. So when the 
day came there was no shock, just a passing thought, as he viewed it in pieces 
on the floor, “but of course”.
In the same vein one day, sitting in an engineering meeting viewing your 
“broken” senior management commiting blatant malfeasance, your thought should 
be “well here it is“. Followed by an execution of the strategy you have worked 
out well before hand. 
Daily journaling, a strong stoic discipline, can help you with this. Refer the 
meditations of Marcus Aurelius (the last of the five good Roman Emperors 160 
to 180 AD). Marcus journaled for his own purposes, to reflect on his day and 
meditate on his path to being a better person. 

Which brings me to my final point. The more I read of the ancient 
philosophers, especially the stoics, the more certain I am that philosophy 
should be at the heart of the engineering curriculum. Let us not continue to 
graduate technical monsters with no moral compass and no idea how to live a 
good life as an engineer.

Cheers
Les

Epilogue - What Happened to Tyler Schultz?
After being fired from Theranos Tyler worked at Stanford's Center for Magnetic 
Nanotechnology.
In 2017 he founded his own biotech company, Flux Biosciences which, according 
to LinkedIn, “utilises magnetic sensing to bring the power of medical grade 
diagnostics into patients’ homes.”
The word is he reconciled with his grandfather prior to his death in 2021.
--

Les Chambers

les at chambers.com.au