We're joined by New York Times tech reporter Erin Griffith. She's been on the scene in San Jose covering the fraud trial against Elizabeth Holmes—tech's trial of the century, or at least the decade, or maybe of a generation. We talk about the surprisingly plodding pace of such a high profile trial, what kind of a case the prosecution appears to be building and what will be the broader reckoning for the tech industry. If there will be one at all.
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Welcome, Hello everybody. Welcome to this week's episode
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of dead cat. This is Tom dote on doing intro
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duties of for you. I'm here with Eric newcomer
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Katie banner and our special guest Aaron Griffith reporter at
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the New York Times, who has been all over the theranos trial.
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She has been one of the The lucky reporters that has
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traveled down to the peninsula, to check out the proceedings of
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text trial of the century. And it was like we have a try of
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this Century every decade but yeah, yeah, that's right.
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Okay. So so yeah, this is a really
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short Century so far. So the bar is kind of low.
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Yeah, we can take the decade though, no, once the plants at
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that, although the Robert Durst trial attacks text.
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No, it's the startup fraud trial of a generation.
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That's what I said, great. That's my really, is that
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Printing. Is that if any more times
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official that somewhere? Nice.
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I mean, No One's Gonna dispute that.
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It was, we will Define Our Generation by what we remember
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of the, the more specific you are.
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The greater your hyperbole can be.
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Yeah. How so you going?
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How often are you going to try? So it's three days a week,
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Tuesday, Wednesday, Friday. Although this week, they added a
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Thursday and so I'm going Tuesday, Wednesday in our
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reporting fellow Aaron. Woo is going down on Fridays, so
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So, you know, a couple days a week and explain to me even just
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the experience of showing up because I like the from reading
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the stories, like the first day it seemed like a bit of a circus
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and there were people like this was the big moment.
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This was the reveal you know what is Elizabeth Holmes going
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to be wearing? That's the question on
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everyone's mind. No, but seriously don't like
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what? When you arrive at the
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courthouse here? Does it have a circus-like
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atmosphere? Yeah, it definitely did during
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the jury selection. To a limited degree.
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And then for sure, on the first week of the opening arguments, I
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mean that was when pressed from all around the country bunch of
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people from New York flew in, you know, that's when everyone
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who's not going to maybe go to the day-to-day of this three to
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four-month trial are going to. They're going to come for the
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first the first day the first week.
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And so that was definitely a circus Vibe.
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I mean, I showed up at like I don't remember like 5:00 in the
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morning. I think I got a hotel the night
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before. Just really didn't want to make
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that drive and And I was no. I mean, because San Jose is like
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setup for conference like, you know, just tons of conferences
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and those are not fully back yet.
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Like my hotel room was actually shockingly cheap.
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And anyway, so there's just already, there's already people
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there. Somebody had deputized
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themselves to like, make a list and put us on order.
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And I think I was, you know, maybe the somewhere between like
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number 7 and 13 or something, and then, in terms of what see
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you would get know in terms of the line, because before there's
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a pre line and then there's a line at like 7:00 or 7:30.
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Actually, like open up this gate where you can start sanding an
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official line. So everyone's kind of gathered
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or is this just a random person who cared about fairness, who's
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doing the Promenade? This was the oldest was a person
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who worked for a certain a TV network who had they had got,
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they want to make sure they were yeah.
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They had a lot of resources and their people were understandably
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at the top of the list and then yeah we wait in line for hours
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and hours and hours of courtroom doesn't actually open until
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like, I don't know, eight, I think.
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And then you go through security and while you're while you're
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waiting in line outside still, there's just like tons and tons
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of cameras. There was a guy with like a
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helmet with a GoPro on it. And, you know, everyone is kind
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of like waiting and waiting and waiting and then homes walks in
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and it's just like Madness, like people sprinting toward her and
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getting in her face and she's like, trying to, you know, she's
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got her whole Posse with her and trying to make her way in and
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then she has to, like, go through security and take off
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her shoes and like show her ID and do all that and Like taking
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pictures of her. So that part is like a little
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crazy. One of the days, there was a
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woman who was like, you're a good mom Elizabeth, great job.
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Like we're rooting for you and everyone's like, what?
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Because it's mostly media in the line and that woman got in
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trouble for potentially causing a mistrial because she's like,
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there might be jurors around and she's like, potentially, we
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can't have people know that. She's a good mom, right?
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Introducing, you know, right? No.
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No. I mean I mean This stuff I guess
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things get incredibly sensitive. Yeah.
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I mean people have been really, was axle of the jurors like just
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trying to stay away from them to not you know, like accidentally
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say something in front of them because like that would be a
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real nightmare to be the one who messes it up, you know, a good
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mom person was. No it was it was strange like
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pretty much every day. All the journalists are trying
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to figure out who everyone in the courtroom is because right,
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it's calmed down now, where it's not pet.
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It's not packed like I can show up at like 859 basically and
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still See in the courtroom. Are they letting you type on
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your laptop sister? Yes.
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Yeah although we have gotten in trouble for typing too loudly,
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like the judge has repeatedly chastised the Press gallery for
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like we're supposed to have silent keyboards which I don't
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even know what that is but but there's been times when he's
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like if your clam shell isn't silent you should get a new one.
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And and like you can just tell when there's somebody who's
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doing something really, you know, saying something exciting.
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You can hear the like kind of like low Roar a keyboard, a
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good, a good. Warning to the jury to start
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paying attention when the video is, yeah, tight with a clam
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chowder, especially, especially, because we're not getting any
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heads-up on who the Witnesses are the order of the witnesses.
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And so there's people who don't matter really at all to the
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news. Like, yesterday, there was a guy
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who from the New York fed who literally his job is to explain
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what a wire transfer is and confirm that there are nose has
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indeed done them so they can make the case that concern us
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commit wire fraud. So like there's that kind of
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Boring procedural stuff. And then there's you know like
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Rupert Murdoch or Henry Kissinger.
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And so we have no idea who's going to be next.
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And so every time those people testified already, the big at
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the highest-profile testimony so far has been James Madison.
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And I guess that was kind of actually a surprise that he
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apparently had some opening and his schedule and they're like,
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let's get them in and I kind of I mean I thought it was it was
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like pretty credible. You almost feel kind of bad for
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him in a way. Like there was some really cute
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moments where he was like when I joined their noses board like I
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didn't know why she wanted me because I have no Uncle
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background and he's like and so I got some books about how to be
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a board member and I read them and know he was nice.
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I mean, it was, it was funny. There were there were emails
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that they showed from him too Elizabeth and every single one
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he called her young Elizabeth. So you could tell that he had
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this like kind of Grandfather Levi with her young.
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Yeah, that's the prequel. Yeah, so, yeah, he was he was,
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he was one of the most interested that, right?
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I mean we've talked about that a bit on the show but like You
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know, one of the things that it seemed like Elizabeth Holmes was
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very targeted about when she was picking investors in people.
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For the board was like an older you know, man who is you know,
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not necessarily part of the medical world that seem to, you
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know, buy her story. Yeah.
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Without too many questions. And so what we'd like it's funny
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it seemed like she did her job pretty well.
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Getting someone like James Madness to refer to her as young
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Elizabeth every time. It's like, yes, I mean, I don't
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know how much of that was really intentional on her part or it's
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just, that's who she. That's Ooh, she was able to
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convince like I think she she tried to convince people who
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have the expertise and didn't get as far with them.
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And the ones that took the bait were basically George Schultz
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and then through the Hoover Institute at Stanford.
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And then he's the one who recruited all the other, like,
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Admirals generals, you know, high-profile kind of older
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powerful men. So, the Rupert Murdoch hasn't
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testified yet. No, no, I think he will.
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I hope he, I hope he will. He's one of their biggest
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investors. It was like more than 100
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million from Rupert Murdoch? Yeah.
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Yeah. He would come in to prove that
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there was harm or do. Well, he's technically the like
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victim in this case, right? Which is one problem, or one
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challenge. Because early, I've said on this
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podcast that I support him being defrauded side.
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I just like to be, we have said that that is strictly Eric's
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point of view, and we are not endorsing that no feelings in
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any way that reflects us or Publications.
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Yeah. So the investors are technically
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the victims. Here at the indictment initially
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included, patients, and doctors. But they were able to get that
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thrown off because they didn't lose money because they have
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their insurance paid for it. So it's technically about the,
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the only, the investors, not even somebody who result, the
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misled them or anything. They're not victims of wire
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fraud. In this case, they have
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testified though, they've already had one patient in one
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doctor testify and they're supposed to be more everything
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is so highly negotiated. And one of the things that they
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fought over is whether the patients can talk about their
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feelings Getting a wrong result. So they were not able to talk
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about this woman who basically had three miscarriages.
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She then got pregnant and theranos test told her that she
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had miscarried again and it turns out she was pregnant and
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it was a viable pregnancy. She had the baby.
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So she testified about that. Traumatizing experience, but she
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wasn't able to say that it was traumatizing.
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She just had to like lay out the facts and let the jury kind of
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fill it in. That was that was an interesting
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one, because most of the witnesses have not worn masks.
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Everyone else in the courtroom is wearing a mask.
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But during the testimony there like if you're vaccinated and
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unvaccinated, let's not wear masks and so they don't.
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But that woman had like this plastic almost kind of Bane
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looking mask over her face and it was very distracting and I
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found it like and you couldn't hear and it was like getting all
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steamed up and like I found it hard to actually even fully
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follow because of that. So there's like some weird kind
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of logistical things there too. But you could tell it was it was
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powerful because the defense didn't even ask her a single
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question they were just like okay Oh cool.
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Remind me here. I mean, the things that she is
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being charged with aren't necessarily related to the
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accuracy of the tests, right? I mean, right, it's about how
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she departed investors about invest ability to receive,
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right? Yeah.
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But it almost like, you know, I imagine if this was about
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building, like a character case against her and the Damage that
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the alleged fraud, cause you could definitely go to town
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bringing all the people who got an accurate test.
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But if it's not going to be as germane, to the point, like I
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feel like the Offense could pretty easily say like this is
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not relevant to the charges here and you could probably dismiss a
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lot of these Witnesses. I don't know.
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K to you. You cover this stuff a lot so
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you probably sorry that I'm coming in and I had a call even
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though I'm technically off today.
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Aaron did you go walk are all of the listeners through what it is
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exactly but Elizabeth Holmes is being charged with the city just
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Dove right in and we were talking about as a lying
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outside, the door of the courthouse, which is what yeah,
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listeners. And I made a really want to
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know. Talk about what Elizabeth was
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wearing. Aaron you wrote this great
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story, taking us inside the courtroom.
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You wrote it with Aaron. Whoo, and from your story, you
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wrote that homes. The disgraced founder is being
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tried on 12 counts of fraud, charge with misleading investors
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about her company's technology. Oh yeah, the case is different
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from perhaps the lawsuits and all the other kind of things
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that their nose has gone through and that she's being very
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specifically charged with wire fraud and conspiracy to commit
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wire fraud. So, it's all about what she
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told. Told investors that turns out to
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be a lie that they made an investment based on and lost
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their money. I'm so curious, why do you think
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this case has captured the public imagination to the extent
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that it has? I mean, when you're describing
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the scene there people lined up to watch what you very
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accurately described as it does mind-numbing lie dry testimony
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testimony that's filled with jargon about wire fraud.
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So what is it about this case? Do you think Made people want to
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line up to see. I mean, that's something I think
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about a lot. Like, I've had a lot of people
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send me messages asking about the logistics and how to get in
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and they always ask, like, like regular people.
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Yeah. Yeah.
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People in the tech industry or just in just general and
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business people who are kind of Legally legal tangential Point
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like paralegals and lawyer types and they they always ask like
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can I see? Can you see her or do you get a
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glimpse of her? It's like yeah, she walks over
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me in the hallway every day when I'm sitting on the floor.
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Floor charging my laptop. But I think there is a little
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fascination with her as a person because she did build herself up
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into such a cult of personality. And then to discover that a lot
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of it was lies or was was, you know, misleading or not.
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True is just so juicy. You know, it's like almost a
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tabloid story in a way that I think is like so hard for people
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to look away from. And that a story that I did last
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weekend was kind of Get to why people are so obsessed with True
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Crime and murder stories. And I think a piece of it is
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like, we're glad we're not the victim that it didn't happen to
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us. And so, and part of it is also,
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we want to get inside the mind of someone who could pull
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something like this off, because we never could and or even think
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to do such a thing. And then here's this person and
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look what they did. It's almost like, like, in a
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sick way, it's like almost impressive, you know, you're
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like, how do they do it and what motivated them and why?
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So, I think there's like a fascination with that.
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How much is a bad blood in the background?
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There are there was a fight over.
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Whether John Kerry Rue could come in the courtroom right and
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quickly here we should say. John Kerry roux is the Wall
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Street Journal reporter who broke the initial and a lot of
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the biggest stories about fairness and he wrote a book
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about it called Bad Blood which has been used as the basis for a
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bunch of TV documentaries. And he at this like concurrently
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is also doing a podcast documentary or like you know,
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podcast report about the trial. So he's like very much Figure in
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this whole story and the podcast is is pretty interesting.
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So yeah, he was there for jury selection and opening arguments,
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but he is listed by the defense on the witness list.
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And so he is the case and as is the case in most Charles
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Witnesses are not allowed to hear testimony.
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And so he would be banned from the courtroom.
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His lawyers have argued that they put him on that list as in
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bad faith to keep him out of the courtroom because of it was with
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her. Holmes, quote, animus toward him
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and he someone as they pointed out who had people chant.
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Fuck yes. Fuck you carry right?
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One of his lawyers. No animists whatsoever.
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Right? One of his lawyers brought that
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up as an example in the in the there was a mad separate
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magistrate hearing of resume about this matter yesterday and
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basically a magistrate judge ordered that a curry Roux.
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Can what can be granted, an exception on can come into the
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courtroom. Now he basically Called him an
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expert witness, which I initially thought was a really
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weird argument, but the judge can delete it out that he will
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not be testifying about things that he personally witnessed.
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He'll be testifying about things, other people told him
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and his own reporting. So I mean we'll see if he even
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gets called the right. Hard to believe the homes.
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He hasn't gotten a subpoena, I don't believe.
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Yeah, he has not gotten a subpoena and the homes Camp
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basically was saying like, we don't know if we're going to
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call, I can't promise. We don't know what we're going
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to do. We might not put on any defense
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whatsoever. And and so the judge was kind of
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like yeah sorry so bad blood definitely looms large it,
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particularly during jury selection, it was so hard for
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them to find jurors who had not heard of Elizabeth Holmes or
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ther knows a lot of them cited that, you know, they were aware
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of bad blood, they listen to a podcast or like, you know, saw
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interviews with Carrie Rue promoting the book, A lot of
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them knew about the documentary, you know, one person was like, I
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just I don't know much about her.
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I just know she loves black turtlenecks that disqualify the
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person, or are you allowed to know that?
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That person did not get selected, I don't know if that
00:16:04
was that played into it or not. I this election was actually
00:16:06
kind of done very quickly and a little bit behind closed doors.
00:16:09
So there's a media Coalition that is fighting to get the
00:16:12
juror questionnaires made public in that has like led to all
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these other weird delays. The judge told the jury that
00:16:18
they would be private turns out not to do that.
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The jury drama has been so fascinating, I don't have to
00:16:23
understand whatís. The food is on the verge of
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tears woman, I felt really bad for her basically My read is
00:16:32
that it seems like she was getting to the point where she
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realized that she might have to vote to convict and that it
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upset her so much and she couldn't like, she just couldn't
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stand the idea of like being responsible for somebody going
00:16:45
to jail and she even volunteered to stay on the jury as an
00:16:49
alternate. As long as she doesn't have to
00:16:51
vote, it was just to be a warm body.
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I don't know what that well, yeah, I mean there's there's
00:16:56
there were five alternatives to start were already down to
00:16:58
including her. And this 19 year old woman who
00:17:01
Turns out didn't have permission from her or she wouldn't be
00:17:03
getting paid to be off work for four months so they just missed
00:17:06
her anyway. The jury drama has been very
00:17:08
interesting. This is something that we talked
00:17:13
about earlier with the Ellen, Pao trial.
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We've seen this happen in all sorts of Criminal Justice
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matters, where the narrative around what happened is more
00:17:19
powerful than what it is. The investigation results find,
00:17:24
you know, that happened with Ferguson as well.
00:17:27
The Justice part put an entire huge report about why the police
00:17:30
officer in that case did not illegally harm.
00:17:34
Michael Brown but the narrative is going to live on that he was
00:17:37
unjustifiably shot. So Do you think that the, that
00:17:42
the outcome in the case will impact the narrative?
00:17:45
Say the jury acquits her? Will it matter in terms of the
00:17:48
bigger narrative around Elizabeth Holmes?
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And that's interesting because I think one thing that I've been
00:17:53
really surprised by in covering, this is how much every person
00:17:58
who has any inkling of knowledge about this believe she is guilty
00:18:02
and has already convicted her and so whenever I write
00:18:06
something that is, you know, balanced and says here's what
00:18:09
the defense said. Here's what the, you know,
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here's one way this could go. I just get bombarded by people
00:18:15
being like, you're so like, how dare you like, give her any
00:18:19
credibility whatsoever. She's a fraud.
00:18:22
She's guilty, she's going to jail beaubois and like I have to
00:18:24
keep explaining to people like these jurors have never heard of
00:18:27
her. They're getting a very
00:18:29
negotiated view of you know, highly negotiated and highly
00:18:32
limited view of one specific aspect of what she did.
00:18:36
Like you have to consider it through that lens.
00:18:38
And so I think that if If she is acquitted, there will be such
00:18:41
outrage like and cynicism in basically like Silicon Valley
00:18:46
and our justice system in like Business Leaders.
00:18:50
It kind of is the same sentences in that you see when people talk
00:18:53
about how Adam Newman, you know, who was not our lawyers.
00:18:57
And like me to say ever accused of criminal fraud, they're being
00:19:00
very proactive, it seems like Newman has people out and about
00:19:03
me, I believe the lawyers who have that much money would you
00:19:06
hire lawyers, are they I was saying is that he there's
00:19:12
cynicism because he remains a billionaire even though he
00:19:14
messed up so bad. And so I think that will just be
00:19:17
just add to that. He was really good at what he
00:19:20
did. He was very successful.
00:19:22
I had think that it was that he did anything about Elizabeth.
00:19:26
Oh no, she's in court right now. I feel like that is, you've
00:19:30
you're in trouble, not very good at navigating and are many, many
00:19:33
accident, merican lives. But Newman Newman is clearly
00:19:36
view is angry that the narrative About himself like he really got
00:19:41
so much money is money, doesn't matter to me.
00:19:43
But these people even if they're billionaires,
00:19:56
they don't like being tweeted at night.
00:19:57
It's the same thing as house arrest.
00:19:59
So Adam Newman is going to be forever, yoke to the guy who you
00:20:03
know, bilked SoftBank out of billions of dollars.
00:20:07
That's not cool as you pointed out in an another story.
00:20:10
And talking about Ozzy which is you know, there are no lawsuits
00:20:13
that we know of so far when it comes to, you know, the fate of
00:20:16
that media organization and Carlos Watson but now there's
00:20:19
lawsuit. So there's there's no federal
00:20:21
criminal charges criminals, right?
00:20:23
No criminal suits and I you know it would probably would surprise
00:20:26
me if their work has its kind of small potatoes compared to well
00:20:31
the kinds of things. Look at the look at the other
00:20:33
thing. The other cases, the Silicon
00:20:34
Valley cases the Aaron mentioned in that story.
00:20:36
And have you heard I mean, And I don't, I'm just going to say, I
00:20:41
don't know that the world had heard of some of these companies
00:20:46
before they were indicted. By federal prosecutors has, been
00:20:51
has been was head spin right scare.
00:20:52
How do you heard of had to spend one?
00:20:54
That was at some sort of fecal, matter started, but I'm going to
00:20:57
have testing startup. I don't think anybody had
00:20:59
thankfully heard of you buy them, until there were any sort
00:21:04
of allocation. We're, it's still the
00:21:07
prosecution right now, right? Yeah.
00:21:10
And it's, I mean, there's 200 and some 30, some people listed
00:21:14
on the witness list and we are moving very slowly through them.
00:21:18
Like the defense spent like four days, doing cross-examination of
00:21:23
Adam rosendorf, the lab director, this.
00:21:25
So he was almost an for a total of six days.
00:21:27
Like it's, it's slow going and I'm, I'm worried from the jury's
00:21:32
perspective. What do you think was the most
00:21:35
important testimony or what? If they heard so far?
00:21:37
I've been sort of trying to remember to To look over to see
00:21:41
how engaged they are during various testimonies and I feel
00:21:45
like they were super engaged during Erica.
00:21:47
Chung's testimony, she was just super like well-spoken.
00:21:51
I mean, she's had four years to like home this story, she was
00:21:53
the whistle one of the reasons. She was one of the
00:21:55
whistleblowers and she I think it was like also relatable.
00:21:59
It's like here's this woman right out of college gets her.
00:22:02
First job is so excited and bright-eyed and then like as
00:22:05
disillusioned and tries to raise flags.
00:22:08
And, you know, are red flags and You know is rejected and then
00:22:11
she gets stocked and by apis and like gets these cease-and-desist
00:22:15
letters and so that I thought was like pretty compelling they
00:22:19
the defense's strategy was just to like bore and complicate.
00:22:25
So they had her go through and just like read the entire org
00:22:29
chart of the entire lab right now.
00:22:31
Her seem like she's a very small insignificant person who didn't
00:22:35
know what their nose was actually doing and like just
00:22:38
long and kind of tedious and like Like like, you know, trying
00:22:41
to frustrate her a little bit to make her seem less Savory, it's
00:22:43
like and I don't know if that worked or not and, you know,
00:22:47
four days of like cross-exam of this lab director, who was also
00:22:52
carry revealed. One of his main sources in the
00:22:54
first Wall Street Journal article.
00:22:55
Like I don't know if they if they significantly like poked
00:22:59
holes in his story or if the jury is kind of like just
00:23:03
confused and doesn't know what to think.
00:23:05
That's a key. Question is just what homes new
00:23:08
versus. What some Abstract sense of the
00:23:11
company. Yeah, that's a big.
00:23:13
And it's a how much new and how much she was responsible for and
00:23:15
what, how much evidence is there Ben.
00:23:17
That's one thing that's that I've noticed is very repetitive
00:23:20
with every witness is that they're like, a particularly
00:23:23
with the Walgreens this week. They did, Walgreens and Safeway
00:23:26
execs who struck Partnerships with the company.
00:23:28
And it's like, what did she tell you what was that based on?
00:23:32
Did you invest based on what she told you?
00:23:34
And then it turned out to not be true.
00:23:35
Okay. Cool.
00:23:36
We got the check, it's like checking the boxes, you know,
00:23:38
and with the with a lot of The people who are raising red flags
00:23:41
from within a, ther knows it. There's always these questions
00:23:44
of like Elizabeth look, Elizabeth Holmes with CC, do not
00:23:47
email who was in charge of this, was it Elizabeth and like, so
00:23:50
they're constantly trying to tie that in like make it clear that
00:23:53
she was aware of this stuff because that was definitely one
00:23:56
of the defense's key things in their opening statements was
00:23:59
like, she's just this naive person who trusted everybody
00:24:02
else around her and they they misled her and she thought she
00:24:05
was doing it right? And sure she came up short but
00:24:08
failing, a business is not a crime.
00:24:10
You know, that was kind of their their message, which I mean, I
00:24:13
could, I could work, it could work.
00:24:15
And, and and, and basically, they're reasonable doubt is like
00:24:17
it's possible. She did not have all of the
00:24:20
answers or did not have all the data to be making definitive
00:24:24
claims. Like she was just old enough to
00:24:26
say, well I think we're doing this and if you can make that
00:24:28
point, then you could prove enough reasonable doubt that
00:24:31
it's like this was not willful. You know, fraud or willfully
00:24:34
misleading investors, I guess is what they're going to try to do.
00:24:37
Yeah. Aaron have you covered a trial
00:24:39
before? The only a trial of covered is
00:24:42
epic so I've never covered a criminal trial epic versus Apple
00:24:45
which was right antitrust lawsuit kind of.
00:24:49
I mean yeah, that was it that was way less fun than this now.
00:24:53
So what is it? What it in terms of reporting?
00:24:57
How was covering a trial different?
00:24:59
Is it fun? What's the terrible stuff?
00:25:01
What's boring, okay? So one thing that's really crazy
00:25:08
is, I don't know that I've been in many situations where there
00:25:12
have just been dozens, of, of my competitors writing the exact
00:25:17
same stories as me every day and so comparing like what they got
00:25:22
out of it. Versus what I got out of it has
00:25:24
been fascinating, there's so many times I read other stories
00:25:28
about the same thing that I wrote a story about and I'm like
00:25:31
I was sitting there in the courtroom and I literally don't
00:25:33
remember anyone saying this like I was talking with Adam Le
00:25:35
schinsky who's covering it for business.
00:25:37
Writer. And he was like, Oh, I thought
00:25:39
that about your story to. I didn't remember this one part
00:25:41
and I was sitting there and I like, how is that possible?
00:25:45
So, that's been kind of fascinating and then some
00:25:48
because you think it's hard for people to focus so, constantly
00:25:51
or you because you think people are inventing know.
00:25:55
I think it's part of it is just yeah I'm not I'm not paying, you
00:25:58
can't pay that close. It's very hard to pay that close
00:26:00
of attention the entire time while also taking notes while
00:26:02
also tweeting, while also competing for like well well
00:26:05
also goes rabbit, errs asking you what's Yes, the storytelling
00:26:08
you're telling her editor what's happening while?
00:26:10
Also trying to rewrite your story.
00:26:12
So, you know, it can be out at a reason like by print deadline.
00:26:15
So yeah. But you'll filing how weekly
00:26:18
daily, we're doing a weekly wrap up now and then like, when
00:26:22
there's a really big witness will do like an individual
00:26:25
story. I think the Wall Street Journal
00:26:27
is like they have. I think they like, maybe
00:26:29
pre-written stories on like, certain Witnesses because
00:26:31
there's some or they just like put it out and they've got 1
00:26:34
words already like on someone who's testified for 15 minutes
00:26:37
and Like, how'd you guys know but they're, you know, they're
00:26:40
really covering it extensively. Some people are like,
00:26:42
live-tweeting it and filing every day.
00:26:44
Other people are just kind of like picking off stories around
00:26:46
the sides. So is there anything really high
00:26:48
news value little courtroom value or like what was the
00:26:52
opposite of important to the jury?
00:26:54
But super important to the Press.
00:26:56
They spent a long time talking about, for example, stock option
00:26:59
backdating, which like is interesting to some of the
00:27:02
financial journalists who are like Aha and I cannot imagine
00:27:07
the jury got Anything out of that.
00:27:08
Just even seeing how the CEO of Safeway emailed with homes like
00:27:14
the metaphors? He used the, like the he's got
00:27:17
like, it almost was this like, increasingly sad relationship
00:27:21
where he's constantly sending her emails, like becoming
00:27:24
discouraged, increasingly disappointed and like you don't
00:27:27
get like continue. Like the, the partnership is
00:27:30
falling apart and you see it before your eyes and you're
00:27:32
like, oh, this poor guy. It's like you staked his
00:27:34
reputation on it. That's the those parts of it are
00:27:36
like, kind of fun for me. But I don't know if the jury is
00:27:39
like really cares and well it is like your your consumption of it
00:27:43
is not all together. Like all not all two different
00:27:46
than the jury's, right? I mean they're obviously not
00:27:48
able to pay attention to everything that's happening
00:27:51
today's testimony and you know they'll have the transcript and
00:27:54
things that maybe they will examine a during deliberations.
00:27:58
But I guess this is all incumbent on the lawyers to tell
00:28:02
a narrative that does stick in the things if they can manage to
00:28:05
get you and three other reporters to Simultaneously,
00:28:08
right? The same narrative.
00:28:09
They've basically done their job right.
00:28:11
There are still kind of like laying foundation.
00:28:14
So there's been so many times when they have like asked all
00:28:17
these questions and we don't know why they're asking and I
00:28:20
can't quite like figure out what they're getting at and they
00:28:22
never say and huh here's the Smoking Gun.
00:28:25
Like it's always just okay and now moving on like they dwelled
00:28:29
this week so much on this National Rollout idea.
00:28:32
And the only thing that I can imagine is that later that later
00:28:35
down the line when like Rupert Murdoch are whoever comes along
00:28:37
They're going to say, and did you invest?
00:28:39
Because she told you X about National Rollout and they're
00:28:42
going to say yes. And then it's the aha moment,
00:28:44
but, like they haven't had that many of those so far.
00:28:48
So it's been hard to cover. There's these documents that in
00:28:51
the opening arguments, they claimed that she basically, put
00:28:53
the logos of pharmaceutical companies on this like
00:28:56
validation report that they did not, in fact, approve of and
00:29:00
sent them around to investors. And so they're basically
00:29:02
accusing her of falsifying documents and they showed those
00:29:05
in court this week but they didn't.
00:29:07
Ever get to the falsification part they're just like and did
00:29:09
you invest based on this in the Walgreens guys?
00:29:11
Like yes. And so there's a lot of those
00:29:14
things where we're building but we haven't like landed any like
00:29:17
real punches yet and so I think everyone's still kind of waiting
00:29:21
for that because you haven't heard from the real victims, you
00:29:23
haven't heard from the investors, right?
00:29:26
We haven't heard from Walgreens was an investor and I see a
00:29:29
juicy piece of it this week that I loved was that they so
00:29:32
Walgreens invested. It's been written a million
00:29:35
times invested, 100 million dollars and then also in, Today,
00:29:38
40 million dollar convertible note, but I don't think anyone
00:29:41
fully understood that that hundred million dollars was
00:29:43
literally just an innovation fee for the privilege of partnering
00:29:47
with their nose. So they didn't get Equity or
00:29:52
they got the equity was through a 40 million dollar, convertible
00:29:55
note, hmm. But the hundred million dollars
00:29:58
it had, like certain Milestones that they had to hit in order to
00:30:00
pay it, but then there's also emails of homes, asking for them
00:30:03
to accelerate the payments even though they haven't hit any of
00:30:05
the Milestones, which was just like, was it good?
00:30:07
So, yeah, kind of wild but I was just like, Innovation fee.
00:30:11
What in the world? I feel like one of the things
00:30:14
that has come out of this trial and then the story that you
00:30:17
wrote looking at their nose and Ozzy, Why is this idea of the
00:30:20
massive amounts of schadenfreude around these failed companies?
00:30:24
Because to your point, retail investors can no longer get into
00:30:29
private companies because they don't go public for so long so
00:30:31
they don't see that growth. And we're living this age where
00:30:35
wealthy people are only getting wealthier.
00:30:37
People are getting more disgruntled.
00:30:38
On every front groups of people who supposedly have it all and
00:30:43
are the smartest best and brightest in the country.
00:30:45
Get bilked. For some reason seems very
00:30:47
satisfying, these days and I was You know, if you can talk about
00:30:51
that a little bit and do you think that that that that will
00:30:53
have any impact on a jury? That's a challenge that the
00:30:56
prosecution has is like making this jury care that like The
00:31:01
Waltons and Betsy DeVos and Rupert, Murdoch lost their money
00:31:06
investing. Yeah.
00:31:08
Yeah. And so that's why they're
00:31:10
bringing in all this other all the you know all the other stuff
00:31:12
around it with the patients and like the bad test and you know,
00:31:16
making you feel sorry for the employees and trying to you.
00:31:19
No make her out to be unethical but one piece of this that, like
00:31:24
everything that you said is exactly what I wrote and agree
00:31:27
with and like, yeah, we like people hate billionaires now.
00:31:29
It's like they're not like these benevolent like oh, you know,
00:31:33
Bill Gates, Warren Buffett, it's more like like there is a very
00:31:37
strong attitude that you see out there of like, fuck the rich but
00:31:40
I don't know how much of that is a piece of.
00:31:42
This will be a piece of his knee and I'm not really sure what you
00:31:45
guys think. That's what's interesting about
00:31:47
it to me because you know, As the lawyers here, you know, as
00:31:51
far as the prosecutors The Narrative that you create has,
00:31:55
you know, you're trying to prove your case, so that you win.
00:31:58
But also, you know, part of the things that can help you win are
00:32:01
the greater narratives, you know, if you are a member of the
00:32:04
jury you are doing Justice, not just by punishing this person
00:32:07
for a specific crime, but by setting an example and can be
00:32:10
seen more broadly as and other people.
00:32:12
If you're thinking of doing that, this will happen to you,
00:32:13
which is why I'm so curious about, you know, you're saying
00:32:17
this will fuel the cynicism Awesome.
00:32:19
Yeah, I'm Tech. It's like that's a lot to put on
00:32:22
the prosecution of say not only does Elizabeth Holmes need to be
00:32:25
charged for wire fraud but also she needs to be charged for
00:32:28
being duplicitous in a way that Silicon Valley represents
00:32:31
misleading promises about what this technology can do.
00:32:35
And I, you know, do you think that that's a case that they are
00:32:40
trying to build? And that has any sort of
00:32:41
salience with the jury because this is also taking place in
00:32:44
Silicon Valley, a lot of people do work for tech companies or
00:32:47
they certainly know people that work.
00:32:49
That companies there. And so do you want to try to
00:32:51
punish an entire industry or or the CT the sense of an industry
00:32:55
for the wrongdoings or alleged wrongdoings of one person?
00:32:58
I why? I'm so eager to see the jury
00:33:01
questionnaire. The juror questionnaires to see
00:33:03
what the background of these jurors are.
00:33:07
We've learned, we've heard from a few of them, but like in the
00:33:10
word are, but I think that will affect the case that they make
00:33:13
and to some degree because, yeah, if these are people who
00:33:16
work in the tech industry, and maybe have worked at a start-up
00:33:18
and can Relate to that feeling of scrambling or Blitz scaling
00:33:21
or whatever. You know, startups do to like,
00:33:25
you know, try to make it work then then maybe they might like
00:33:29
sympathize with her a little bit.
00:33:31
But I think odds are, if you work in the tech industry, you
00:33:33
probably heard of her and were dismissed.
00:33:36
But if you are someone who works in Silicon, Valley lives and
00:33:40
works in Silicon Valley and in the tech industry and its wealth
00:33:43
and power is looming large over you all the time and you kind of
00:33:45
like heat that then you know she could come to symbolize a
00:33:49
Privilege that like, is oppressing you all the time, and
00:33:52
that could also be a part of it. They haven't, really.
00:33:56
In fact, they've already argued a little bit about whether or
00:33:58
not she can use the defense of like, but in Silicon Valley,
00:34:01
everyone does it. And the judge basically said,
00:34:03
she's not allowed to argue that she was singled out, but they're
00:34:06
allowed to talk, broadly about the culture of Silicon Valley,
00:34:09
but they really haven't, like focused on that too much.
00:34:12
What I say I was going to add one thing that I've found.
00:34:17
So fascinating about, this is how ow and it's been going on.
00:34:20
Since the initial article happened in the Wall Street
00:34:23
Journal is just like how aggressively the VCS and Tech
00:34:27
leaders are distancing themselves from this and how
00:34:30
angry they are to hear that this is a case about forget them Marc
00:34:34
Andreessen seem to be blocking people back in the day when they
00:34:38
would attack her on Twitter and like there was definitely a
00:34:42
where we talking on this podcast.
00:34:45
I mean, there are lots of cases where Regulators their insurer
00:34:49
capitalist, there was a request argument for why this is not a
00:34:52
Silicon Valley case, you know what's the best?
00:34:55
Your UBC said, it's a diagnostic.
00:34:58
She didn't raise from any, the only real, like classic Silicon,
00:35:03
Valley venture firm that she raised from was Tim Draper.
00:35:05
And so they're like he doesn't count.
00:35:08
And and then it was super earn, it was harsh Helen, right?
00:35:13
And you could almost make a case.
00:35:14
And I think Carrie, His books and interviews has made the case
00:35:16
that it's like lookin Angel investment in an idea.
00:35:19
It's not really frightened me. Yeah.
00:35:21
You you invest in all kinds of things that don't pan, right?
00:35:24
It really got to be a lot hairier when it was, you know,
00:35:26
at the Betsy DeVos Rupert Murdoch level right, but that's
00:35:29
what she was making those like, actually false Revenue
00:35:32
projections, and she was saying, will make a billion dollars in
00:35:34
revenue. And when they literally had
00:35:35
zero, like, that kind of stuff is, that's when it gets into
00:35:40
fraud, but it's totally normal and that's why Silicon Valley
00:35:43
these season. It initially had that Civ like
00:35:45
knee-jerk response where they're like just give them time and
00:35:48
they'll figure it out. And then as more info came out
00:35:50
than it was clear that there was some, you know, major
00:35:53
misrepresentations happening that's when they all were like,
00:35:56
well, this isn't actually really Silicon Valley, even though it's
00:35:59
in Palo Alto connected to to Stanford, you know, like it's
00:36:04
like it was also well and she used to play vibrated by.
00:36:08
She was celebrated by the community.
00:36:09
I thought that was one of the strongest cases people have made
00:36:11
is that like whether or not she raised the money, she drank
00:36:14
their Kool-Aid. Did she replicated their fucking
00:36:17
fashion style? I'm just yeah.
00:36:20
Sadly. There would have been days.
00:36:23
When I thought about, like, I've looked in my closet grabbed a
00:36:26
black turtleneck and be like, I cannot wear this into the
00:36:28
courtroom, they'll think I'm mocking her own, not the court.
00:36:34
I've just been wanting to know this what are the what are the
00:36:36
lawyers like or what sort of the vibe on each side in terms of
00:36:42
stop their style homes? Lawyers are like Williams
00:36:46
Connolly which is like a very prestigious Law Firm they're
00:36:49
well known and they look slicked, they very nice suits.
00:36:53
Nice watches nice shoes, but it's what's what are the
00:36:57
prosecutors do? They seem like they went to, you
00:37:00
know, they're their own school or whatever the prosecutor.
00:37:03
He seemed very competent. They're they're very so the
00:37:06
judge has a really like soft and kind of like meticulous and
00:37:11
orderly Vibe. And so that's been for the most
00:37:14
part, the vibe in the courtroom. Like it's almost like quiet in
00:37:17
there except for on the cross examination of dr.
00:37:21
Rosendorf. When Lance Wade was just like,
00:37:23
really kind of like attacking and like that was there's only
00:37:25
been one witness so far where they have really like attacked,
00:37:28
do you think this is catching on with the broader public?
00:37:31
It's always hard to know as a What are your traffic numbers?
00:37:35
And I purposely never looked at that and whenever I do it upsets
00:37:39
me because you know, there's always like one story.
00:37:41
I cared a lot about that. No one reads and the really,
00:37:44
really the one I popped off that was just so of course, all we
00:37:48
care about is our tweets. That's really.
00:37:50
Yeah, so that all on the Twitter front, I have been surprised at
00:37:52
some of the day's. I've kind of like, live tweeted
00:37:54
it and I've been surprised with like people are really following
00:37:58
along and engaging and I'm like this is really getting in the
00:38:01
weeds here people. And they seem to like Be
00:38:04
fascinated by it. I mean there may be because the
00:38:06
access to it is so limited, you know, a lot of other trials that
00:38:10
have been happening in the pandemic era have had at least
00:38:12
like, like a hotline where you could listen in when they're not
00:38:15
doing that. So people have seemed really
00:38:18
interested in like kind of like what I was saying before for the
00:38:20
same reason that people are interested in true crime.
00:38:22
In general. Like one of the people who told
00:38:24
me who wrote to me that said they wanted to come to the
00:38:26
courtroom said that she was a fan of white collar crime which
00:38:31
side of it. Yeah.
00:38:33
I was like, generally has a crack.
00:38:36
You mean, like, you're like a fan of like stories about white
00:38:39
collar crime, but I think that's what she meant, but it was just,
00:38:42
it's still my meal. And there have been multiple
00:38:44
book clubs that red bad blood that have come to the trial.
00:38:49
Oh, that's extra credit. That's nice.
00:38:51
And some of them have, you know, said that they expected it to be
00:38:53
more exciting because it's not, you know, it's there's like the
00:38:56
thing that you do that you get misled about on like you know,
00:38:59
TV trials is that like there's so much boring, tedious
00:39:02
procedure Stuff and so much fighting over procedure.
00:39:06
And what can? And can't be said, what do you
00:39:08
do for lunch? It's will be.
00:39:12
The judge is the schedules always weird and we don't get
00:39:15
very long breaks and so I generally am like chugging a
00:39:20
Starbucks sandwich, it's so sad. That's like grammar that
00:39:23
horribly depressing interview that my guys.
00:39:26
It gave to Grub Street where he said he would voluntarily.
00:39:29
Eat seeing what? Yeah, just as like a practice,
00:39:33
what's wrong? Our brains that I know what Mike
00:39:35
Isaac likes like if I was in a trivial League, like I would get
00:39:38
that before. Like, some question of History,
00:39:40
like know what? Mike, Isaac Starbucks.
00:39:46
I think it was so bad, that that you couldn't help but like, have
00:39:49
it burned onto your brain. But yeah, I feel like I'm now
00:39:51
channeling that. So, we had this conversation
00:39:53
with Ben Smith for he kind of alluded to this idea that the
00:39:57
startup World, especially in start-up media.
00:40:01
It's it always feels like sort of Rod, adjacent your own.
00:40:06
I love that. He said that you're always
00:40:07
hustling. He didn't use those words.
00:40:09
I'm paraphrasing him right now. But do you think that the valley
00:40:13
acknowledges that in any way? Do you think that things like
00:40:17
the fairness trial and sort of more high-profile blow-ups,
00:40:21
cause the industry to look inward as a moment to be
00:40:25
introspective? Or do you think it's like a,
00:40:27
this is a one-off freak Show a few bad apples.
00:40:31
Look the other way, proceed kind of Thing.
00:40:34
Yeah, I wish that it was causing introspection but I think if
00:40:39
that was going to be the case it would have happened in 2016 when
00:40:44
all this stuff was collapsing and I think I wrote a story
00:40:47
about it at the time like it was not just their nose.
00:40:49
It was like the the mayonnaise mayonnaise company that was
00:40:52
buying its own mayonnaise from the stores.
00:40:54
It will enter Greek, they change their name and they are still
00:40:58
doing it. So anyway, Josh was that
00:41:01
retrospection would have happened.
00:41:03
Then, and there were many other, you know, examples of it.
00:41:05
And you guys interviewed Parker Conrad like they were, they were
00:41:08
cheating on tests and there's lots of places where Stars
00:41:13
Corners. You know, clicking along I'm
00:41:15
sorry I'm not going to whatever technicalities whatever it was
00:41:19
exactly. But they were they were anyway
00:41:23
yeah there that is kind of baked into the culture a little bit
00:41:26
and it is a part of like starting something from scratch
00:41:29
is that you have to convince investors of a vision of the
00:41:31
world that does not yet. Exist that you hope to make
00:41:35
exist. And if you come up short, are
00:41:38
you, are you a fraud? Or did you just like fail?
00:41:41
And that's like, kind of where that line is.
00:41:43
And so, I think most people are just like, oh, well, she
00:41:46
obviously crossed, like, very clear lines, and that would
00:41:49
never happen to me. So I don't think that there has
00:41:51
been a connection that is made. You think there's a big
00:41:55
difference between coming close to sort of line suggestive,
00:42:00
saying, we can be big and like the bright line.
00:42:03
I'm crossing to me, the bright line is very important and it's
00:42:06
a big difference not just sort of a difference in terms of
00:42:10
increment that's definitely something that the defense has
00:42:13
tried to. They tried to muddy that and
00:42:15
complicated a lot like there's a few very, very clear instances
00:42:19
where she said we have all their notes is being used and medevacs
00:42:22
and on the battlefield in Afghanistan and it obviously
00:42:25
wasn't but then there's many other instances where she said
00:42:29
were validated by Pfizer and like Pfizer did do a validation
00:42:33
test I did give them some money early on for some kind of
00:42:35
clinical thing in. Like, if you like, they're just
00:42:38
trying to like complicated enough.
00:42:39
So that it's like, well, some of what she said, seemed kind of
00:42:42
right ish? Close enough.
00:42:43
But Allah, maybe she didn't get all the details, right?
00:42:45
And so, they're like, a lot of the things that she that's being
00:42:49
that's coming out in the evidence.
00:42:50
Now is what you're talking about, which is like, just a
00:42:54
little bit fudging things, not egregious, bright Line crossing
00:42:57
like a clear, a clear lie, what we've seen the last, like, five
00:43:02
years is stuff, And Silicon Valley has gotten even crazier.
00:43:05
Diligence has gotten like even crazier because ideas and
00:43:12
investors are saying, you should just 10x your your Revenue
00:43:16
projections even though you're never going to hit that.
00:43:18
Like that's how you'll raise your next round of funding.
00:43:19
So like just say you're going to be 10 x even though that's like
00:43:22
so the council the counter argument to that is multiples
00:43:25
have gone up, right? If it was all just were
00:43:26
inflating future Revenue projections than the multiples
00:43:30
could stay the same but they are biting the bullet and No.
00:43:34
We're willing to pay 100 x Revenue not 10x.
00:43:37
So there is a reality to which the prices are just what the
00:43:41
standards for prices are check the price of reflection of how
00:43:44
much money is out there to be invested.
00:43:46
Right. Right.
00:43:47
Right. But they're not, they're not
00:43:50
lying. It's not like the multiples of
00:43:54
the future Revenue have stayed the same the multiples of future
00:43:57
Revenue. The multiples have gone up which
00:43:59
is a level which is an honesty about but not about your future.
00:44:03
Our Revenue that's a little bit the multiple that somebody will
00:44:06
pay on future Revenue as an investor.
00:44:08
I think you're conflating that with what the company itself
00:44:11
says, it will make in the future.
00:44:13
That's different, right? I'm just saying we don't have is
00:44:16
there strong evidence that future guidance is more inflated
00:44:21
than it has been in the past. Or is it just the case that
00:44:24
investors are willing to pay more for the same future
00:44:27
guidance? I think the, I think the the
00:44:29
point is, it's about diligence and the ability to just not Have
00:44:33
to be definitely gone to not have anything to, not have
00:44:36
anything, you said verified. So that a lot of creates the
00:44:39
environment where if you are inclined to stretch the truth, a
00:44:42
little bit or exaggerate or say you have this customer when in
00:44:45
fact, it's not fully locked in, like that's your chance to be
00:44:48
able to play my best. Marc Andreessen, one of the
00:44:51
biggest problems with America right now is that we're too slow
00:44:55
to do new things. There were two apprehensive and
00:44:57
so sure, maybe it's sad that like 5% some percentage of
00:45:01
companies are going to Be able to lie and get some money and
00:45:05
ultimately probably still fail but the idea that we're
00:45:08
deploying Capital faster for people doing interesting.
00:45:11
Things is good. That's better than just sitting
00:45:15
on our hands and not having that percentage that's faulty.
00:45:19
But maybe like in closing here about this and thinking about
00:45:23
reflection for Silicon Valley. I think it's interesting that
00:45:27
the bulk of their noses time, you know, when it was Raising
00:45:30
all this money and had all these outlandish projections happened
00:45:32
in, What 2015 2016 think about, how much more money is in
00:45:38
Silicon Valley. Now I was provision that
00:45:40
provision fund. Yeah, to me it would seem like
00:45:43
as more money comes into the system.
00:45:45
There needs to be a broader industry correction for there to
00:45:48
be real introspection, but at the end of the day, if your
00:45:51
Sequoia Andreessen Excel, whatever you didn't invest, like
00:45:55
you're like, our processes work like if you avoided that
00:45:58
company, That that is why you can't be indicted on your
00:46:03
process because you didn't make the investment.
00:46:05
I think that their nose is the most extreme version of what
00:46:09
we're talking about here and there are lots of less extreme
00:46:12
versions out there and so that's kind of like if you're a drug
00:46:14
dealer being like, well I'm not El Chapo.
00:46:16
You know, that's like the most extreme ones are the ones that
00:46:20
fail first. I think we might see a lot more
00:46:23
of this with specs. I mean that's where a lot of
00:46:26
these problems with like the Nicola thing.
00:46:29
The guy Rolling the truck down the hill to show that it drove
00:46:31
itself companies that are going public.
00:46:33
Lots to do. Yeah, the companies that are
00:46:37
going public a lot sooner with a lot less to show and are using
00:46:40
this backward way that avoids having to do certain disclosures
00:46:44
is, I think that is much much more likely to result in some
00:46:48
kind of terrible blow up than, like the private investing that.
00:46:52
We're talking about where Rupert Murdoch, rbc's, lose a lot of
00:46:55
money. All right?
00:46:55
Are we should? We should probably let you go?
00:46:57
I'm sure you've enjoyed not sitting in a Courtroom for for
00:47:00
several hours but you still had to have listened to my pleasure.
00:47:05
Yeah, thanks so much for joining us.
00:47:09
So what kind of salad, goodbye, goodbye.
00:47:18
Goodbye goodbye. Goodbye, goodbye.
00:47:21
Goodbye.