TOA Podcast Studio: Theranos whistleblower Erika Cheung on ethics in tech
Erika Cheung never considered herself much of a troublemaker. Yet in 2014 she found herself embroiled in one of the largest scandals in Silicon Valley’s history when she blew the whistle on fraudulent practices at Theranos, her first employer out of college.
In 2014, Theranos founder and CEO Elizabeth Holmes was the darling of the health tech scene and her company was valued at $9 billion. But by the time Theranos went into liquidation in September 2018, its stock had been rendered essentially worthless.
At the 2019 Tech Open Air festival in Berlin, Erika — now co-founder of Hong Kong-based accelerator, Betatron — spoke as part of the TOA Podcast Studio. She discussed the culture of silence at Theranos, why she decided to break it, and how she’s now working with other startups to help prevent this from happening again.
The Theranos nightmare
When Erika joined Theranos, it seemed like a dream job. CEO Elizabeth Holmes was the subject of cover stories and rhapsodic media profiles by the likes of Forbes, Fortune, and WIRED. Journalists and investors alike uncritically endorsed her claim that Theranos would soon be able to run 30 tests from a single drop of blood, and all for less than 50 percent of the usual cost.
In a TEDMED talk that year, Holmes described the company’s mission as allowing any private individual easy access to potentially life-saving lab results for the early detection of everything from diabetes to heart disease.
“I was so committed to that vision. I really believed in what we were trying to build,” says Erika, who was employed as a medical researcher. “I thought I was going to spend the next ten years of my life working for that company.”
A mere seven months later, however, Erika found herself actively working against Theranos and the woman who had once inspired her.
“This was my very first job, so I was constantly asking questions like, ‘Is this right? Should we be manipulating outliers like this? Is it okay that we’re having these types of errors?'” she says. “At first I just thought things were just a bit wonky because we were still in research and development, but then I saw people actively doctoring the data. That was kind of the red flag.”
Theranos had claimed that the blood samples it collected through partnerships with supermarket chains, such as Walgreens and Safeway, would be analyzed by its 4S device, which Holmes had touted as being able to run those 30 tests from the tiny drop of blood.
In fact, the 4S was entirely defective. As a result, the company had instead been diluting the sample with saline in order to run it through standard commercial machines, which require a much higher blood volume to work. This brought the concentration of disease-relevant biomarkers far below the FDA-recommended level, which created serious doubts about the reliability of the tests.
When Erika raised her concerns to senior company employees, she was not met with reassurance, but with either tacit acceptance of the malpractice or outright denial that anything nefarious was going on.
“Some people kind of shrugged their shoulders and just explained that they needed to keep their job,” she says. “Others were so enamored with Elizabeth and her vision that they had blinders were up to the chaos surrounding them.”
In the end, there were about eight former employees who came forward and spoke out about the company, but Erika was one of only a few to take her concerns directly to federal regulators. Why did she speak up?
“Ethics has just been embedded in my personality and who I am. That kind of mobilized me,” she explains. “But some of the inner turmoil for me is that there are still hundreds of thousands of patients whose stories have largely gone untold. What happened to them? What was the consequence of the fact that we weren’t providing reliable tests?”
Building entrepreneurship’s ethical future
Today, Erika lives in Hong Kong, where she co-founded Betatron, a startup accelerator. She says the main thing she looks for in potential entrepreneurs is “honesty.” Earlier this year, she helped launch the non-profit venture “Ethics in Entrepreneurship,” which organizes workshops and consultation for startup founders, with the aim of preventing Theranos-type scandals from happening again.
“You’re always going to have these bad actors. You’re going to have people like Elizabeth Holmes,” she says. “But they are enabled by a whole bigger population of people of workers and supporters. What we’re trying to do is think about how tech founders can commit to an ethical culture as they grow from a two-person startup to a 300-person company.”
That means not only relying on the ethical integrity of individual founders, but on deliberately cultivating an environment in which employees at all levels of the workplace are not afraid to speak up when they see problems or injustices. And it means creating a broader understanding that doing so is for the benefit not only of themselves, but also for their organization, and for society as a whole.
Despite her experience, and despite her awareness that what happened at Theranos is not an isolated case, Erika is still optimistic about the transformative potential of technological innovation.
“Technology is still at this really interesting point for most people in that it has transformed their lives in a really beneficial way,” she says. “Hopefully, we’re getting to a point where people truly commit to building companies that are making a difference, companies that are improving the lives of communities, and more vulnerable populations that wouldn’t otherwise benefit. Hopefully we’re on that path.”
Stay tuned for each new episode of the TOA Podcast Studio series on the What’s NEXT podcast feed. Co-hosted by TOA and Samsung NEXT, these sessions brought together a dozen of today’s leading minds in technology to share the human stories behind their innovations. To hear more, subscribe to What’s NEXT on Apple Podcasts, Google Play, Spotify, or via RSS on your podcast app of choice.