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Shumita Basu, Narrating: This is “In Conversation” from Apple News. I'm Shumita Basu. If it’s your first time finding us, welcome to the show.
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Basu, Narrating: Elizabeth Holmes was only 19 years old when she founded the biotech startup Theranos. And she knew that she had a compelling pitch: Just one drop of blood is all it takes to perform hundreds of diagnostic tests.
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Elizabeth Holmes: We see a world in which every person has access to actionable health information at the time it matters. A world in which no one ever has to say, "If only I'd known sooner."
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Basu, Narrating: But the technology she was bragging about didn't work. And it meant real people were getting wrong diagnoses.
Rebecca Jarvis: There was a woman who thought that she was miscarrying because of a Theranos test. There was a woman who thought she might have HIV because of a Theranos test. There was a man who thought he had prostate cancer because of a Theranos test.
Basu, Narrating: That's Rebecca Jarvis. She's the chief business, economics and technology correspondent for “ABC News.” She also hosts “ABC Audio's” podcast about Theranos, called “The Dropout.” Her podcast is the basis for a new Hulu series with the same name. Elizabeth Holmes stood in the spotlight. She was the one who was on the magazine covers, the one who charmed investors and politicians and Silicon Valley. But there's another person at the center of this story who's worth knowing: Ramesh aka "Sunny" Balwani.
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Sunny Balwani: We have reinvented how to do lab testing from few drops of blood. This is a big change from what we have seen for thousands of years.
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Basu, Narrating: Balwani and Holmes dated in secret for over a decade. He eventually became COO of Theranos.
Jarvis: If you were to Google right now "Sunny Balwani," there is very little that you will find, very few pictures that you will find of the actual Sunny Balwani outside of the deposition video. There's just so little on him.
Basu, Narrating: Earlier this year, Holmes was convicted of three counts of wire fraud and one count of conspiracy to commit wire fraud. She faces up to 80 years in prison. And now, Sunny Balwani is being tried for the same crimes. With his trial underway, I wanted to sit down with Rebecca Jarvis and ask her to tell us everything there is to know about Elizabeth Holmes' closest confidante during the Theranos years.
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Jarvis: Sunny Balwani was originally someone who grew up in Pakistan, who came to the United States, who went to college here and created his own company and was very successful in that company. And I've talked to friends of his, who knew him earlier on in his life, who knew him in those college years, who described him as a very happy and playful individual, somebody who really wanted bigger things for himself, wanted to grow and make a bigger business, a name for himself in the United States. And he and Elizabeth met when she was about 19 years old. She was studying abroad in China, learning Mandarin. And he, 20 years her senior around that time, went to the same program as she. The two of them studied together. He talks about her in his deposition as "The Elizabeth Holmes," as in the person in the program who was sort of the star, the shining star of this program, which was meant for college students. And basically, if you think about it, they were both kind of outsiders in this program. She had gotten into the program very young. He had gotten into the program much older than the majority of people. We don't have any accounts of anyone else who was his age who was a participant in the program. So they both sort of came to this world as outsiders. And by the accounts that they both share in their depositions, these are people who, you know, formed a deep friendship.
Basu: When did their relationship become romantic?
Jarvis: It's hard to say exactly the moment at which their relationship became romantic, but it appears that Sunny Balwani clearly took on an important role in Elizabeth Holmes' life during her time at Stanford. He was something of a mentor to her. He was something of a protector. Elizabeth Holmes, on the stand, talked about the idea that he said he would be there for her, that she didn't have to be afraid after this incident at Stanford where she was allegedly raped. So this experience that she went through, it sounds like, by her account, it's one of the things that brought the two of them closer together. And then, as time went on, she had dropped out of school, she had founded the company. Again, by all accounts, Sunny was really acting as a very significant force in her life.
Basu: So tell us, at what point exactly did Sunny Balwani move from this sort of informal role to a formal one at Theranos, becoming COO?
Jarvis: The formality came around 2009. This is when he gave this big multimillion-dollar check to Theranos to keep the company afloat. It was the sort of tail-end of the Great Recession. It was really hard to come by any kind of financing. He had it because he'd sold his company. And he gives the company a lifeline, and then he's also brought in as the COO, and also in that role has oversight of one of the most important functions of Theranos, which is the lab.
Basu: Mm-hmm. And I understand that he was known sort of as the enforcer in the workplace. I understand you have spoken with former Theranos workers on your podcast. How do people describe Sunny Balwani as a manager? What was his style?
Jarvis: Yeah, it's been described and to me as a Machiavellian style, better that they fear you than that they love you. He was an enforcer, and that's why we call one of our episodes that, because when he came on board, there was a lot of fear. And it became a system where, at least on the face of things, if Elizabeth wanted something done, she could go to him and he could do it.
Basu: A large number of text messages between Holmes and Balwani were made public by the government, during Elizabeth Holmes' trial. “CNBC” obtained even more messages. What did we learn about their relationship from those messages? And I wonder if there's anything that stands out to you in particular that you think gives some insight into who Balwani is?
Jarvis: The text messages, because there are so many of them, can really be read in very different ways. And the defense and the prosecution read them very differently. For example, the prosecution really leaned into this idea that these text messages showed the love that existed between Sunny and Elizabeth, that the word love showed up hundreds and hundreds of times among these thousands of text messages. Whereas the defense used the text messages more to paint Sunny Balwani as this domineering, controlling person who had very strong opinions about Elizabeth and expressed very strong opinions about everything she did, everything she said, and how she conducted herself. At the trial for Elizabeth Holmes, we saw all of the documentation, the notes that she had written to herself, which she said at trial were things that Sunny Balwani told her to do. Like don't take a meeting for more than five minutes, don't speak in that, quote unquote, girly voice. Very, very specific feedback for her to curry favor with powerful people, for her to exude a sense of power. Again, these are her accounts of what he was telling her to do, how he was telling her to behave. There were also, of course, the things that came up at Elizabeth's trial about the alleged assault that she experienced at his hands: that he was incredibly controlling, that he sexually abused her. And these are things that he has unequivocally denied. But they are representations of him that came up at her trial.
Basu: Now all told, their relationship lasted for over a decade. Is that right?
Jarvis: Yep. Mm-hmm.
Basu: So, when did it start to turn sour?
Jarvis: Yeah, it's kind of one of the biggest pieces that her defense attempted to argue at trial. This idea that… So, late in the Theranos story, the FDA got involved and regulators got involved and they started looking closely at Theranos. And in their reviews of Theranos, they came to realize that all was not well. And Theranos got a very bad review and was basically told that they're putting people's lives in immediate jeopardy and that they needed to clean up their act in a couple of days or else, basically, they would be out of business because they weren't complying. They would be non-compliant. That was a major turning point for the business. But it's also a time when Sunny Balwani basically started getting pushed out of the company. He ultimately left the company, and Elizabeth put a handful of new people on her board and brought new people into the company. And the defense would have you believe that, basically, Elizabeth Holmes was in the dark the entire time, until she gets this terrible review by regulators. And upon getting this terrible review, she makes immediate changes and says, you know, if hundreds of thousands of tests need to be invalidated, then that's what we will do because it's, quote unquote, "the right thing to do." And suddenly, it becomes apparent to her that Sunny isn't cutting it. That is the defense's argument. And that is, ultimately, the timeline of when Elizabeth and Sunny breakup. And Elizabeth and Sunny were sharing a home together. She and her brother moved out while Sunny was away on a trip to Thailand. And that was the end.
Basu: You know, you have spent years now reporting on this story. Knowing everything that you know about Holmes and Balwani, does that ring true to you, that Balwani was the one who was ultimately pulling the strings at the company?
Jarvis: I find that, personally, very difficult to believe because of the accounts that we've seen, because of her own accounts, on some level, on the stand. She did take the stand. She testified for seven days. Her defense was not a defense that purely said, "Sunny Balwani pulled the strings, and if I had just not listened to him." Her defense was basically, "Every person in this mix. The investors didn't do enough due diligence. They were smart. I was young, inexperienced. I didn't know what I didn't know. And they should have known to ask questions. And I didn't realize that I was sending them down the wrong path. Sunny Balwani was in charge of the lab and should have, through his experience, known better. That the lab director should have known better." It was really a defense that pointed the finger in every direction, other than herself.
Basu: You know, I think what people really struggle with is, you know, here's Elizabeth Holmes, on trial for lying to investors, making these serious allegations, accusations of abuse against Balwani, who's nearly 20 years older than her. What are we supposed to take away from her very emotional testimony?
Jarvis: Well, the way attorneys look at this question is not to question the legitimacy or illegitimacy of those claims, which again, Sunny Balwani has denied. The question that attorneys put forward - and it also appears to be how the jurors looked at all of this, from our interviews with them - is that these allegations, while serious, are not the heart of the questions that we need to answer to define and determine whether Elizabeth Holmes is guilty or not guilty. These allegations might, could have made her a more sympathetic person in the eyes of the jury. But from my conversations, from our interviews with the jury, it does not appear that they played a significant role. And they might play a more significant role at sentencing. Which by the way, Elizabeth Holmes will be sentenced at the end of September of this year, 2022. That will happen after Sunny's trial.
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Basu, Narrating: We're now a few weeks into Sunny Balwani's trial. As we mentioned earlier, he's charged with the exact same crimes as Holmes and has pleaded not guilty. Now originally, Holmes and Balwani were supposed to be tried at the same time.
Jarvis: They were co-conspirators. And as a result, the government's original case was that they did this together.
But after Holmes revealed she planned to testify that Balwani mentally and physically abused her, a judge granted Balwani's request to separate the trials. Balwani has denied the abuse allegations. Rebecca says the fact that Holmes' case was tried first could have an impact on Balwani's trial.
Jarvis: The government knows what worked or what they think worked at trial. It's, by and large, the same witness list. They know which witnesses really stood out to jurors versus the ones that might not have.
Basu, Narrating: I asked Rebecca what she expects to hear, as Balwani's trial continues.
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Jarvis: I mean, I think a lot of it is going to be very similar to the trial of Elizabeth Holmes, in terms of the case that the government puts together, which is a couple dozen witnesses, beginning with Erica Cheung, who has already taken the stand at this point, who broke down in tears on the stand in her testimony about Sunny Balwani. She worked in the lab. She was young. She was fresh out of school. She looked up to Elizabeth Holmes. And was one of the people who became a whistleblower and put her entire life at risk to tell the truth. So we have heard from her. General James Mattis made an appearance at Elizabeth's trial. He was a board member for a time of Theranos. It's very likely that he will be at this trial as well. He was a witness that, from talking to jurors, we know was very respected and perceived with a lot of import to their decision-making, to how they came to their conclusions. The jurors in this trial, they were stuck for a while. They spent a number of days before they came to a verdict in Elizabeth's trial. And they put together this star system where they looked at everybody and their credibility based on a number of stars. And four or five stars was the top, one star was the lowest. No one got one star, one person got two - that was Elizabeth Holmes - and the rest of the players got three or four stars. So it really was a question of credibility and what the government now has to work on is they can look at that and say, "Okay, this is what worked and this is what didn't work at trial."
Basu: And learn from that.
Jarvis: Mm-hmm. Yep. But I will tell you, being at Elizabeth's trial, Sunny Balwani's lawyers were there an awful lot as well. And so they're also saying, "Okay, how can we put our best foot forward for our client?"
Basu: Do you think we might see Balwani himself take the stand the way that Elizabeth Holmes did?
Jarvis: Yeah. It's possible. She's an outlier for taking the stand. It is very, very rare that, at a criminal trial, you see that. And again, it may play to this more sympathetic witness, more sympathetic defendant. It became more necessary, and the defense wrote about this at the outset of her trial, that if they were going to make these allegations against Sunny Balwani that she really would have to take the stand in order to corroborate the claims. With Sunny, it doesn't appear that we're going down that path.
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Basu: You know, we're just swimming in TV right now about scammers and fraudsters and people who are trying to fake it till they make it. There's, you know, the Anna Delvey series on Netflix, which has really taken off. There's a show about WeWork. A lot of also sort of tech world stories that are coming out. What do you think is the obsession with these types of stories, first of all? But also, I'm curious to hear from you where you think a person like Sunny Balwani fits into the schemer narrative?
Jarvis: I think, first of all, you have Silicon Valley. The technology that Silicon Valley has produced is completely ubiquitous. It is a part of our everyday lives, and you cannot really escape it. So the reality is, it's incredibly powerful. And yet, for most people, how Silicon Valley operates is still much like a black box. And there are still questions about how the whole thing actually goes down behind the scenes. The second thing that I think is going on is that there's this desire to sort of reverse engineer this type of situation. And there's this feeling that: If I understand the tricks, then I can make sure I'm never standing across from the trickster and getting duped.
Basu: Or even feeling like you can watch it and say, "Oh, well, I wouldn't have fallen for that."
Jarvis: Right, exactly. And so many people will say that I didn't… You know, a lot of Silicon Valley, by the way, a lot of the venture capital community did not bet on Elizabeth Holmes. And people will tell me very proudly now that they got a pitch deck from Theranos and completely passed, and it was a giant red flag. And I believe them, but they certainly were not speaking out when she was being celebrated far and wide, and Sunny as well. It's an interesting thing. There's a lot of people who, from Silicon Valley, who will say she really was an outlier. She is not one of us. She didn't do things the way that we do things. And she certainly didn't get the venture capital money from the biotech community. At the same time, it was hard to not see her as being of Silicon Valley when she's being celebrated in all the highest echelons of Silicon Valley. And no one is saying any of the things that now people will very freely say about her. No one said those things when she was on the cover of "Fortune" and "Forbes."
Basu: Yeah. That is such an interesting observation because I think so many people saw her as an example of what happens in Silicon Valley. And it's interesting to hear you point out how she really was an outlier in a lot of ways once you speak to people there. But to get back to the idea of Sunny Balwani, in a lot of these schemer stories, we're learning more about a romantic partner playing some kind of defining role. So, how do you see Sunny Balwani in this story, in the story of Theranos?
Jarvis: He's still somebody who, in some ways, in the way that Elizabeth is an enigma, I see him as a bit of an enigma. I thought it was very interesting; I was interviewing Naveen Andrews, who plays Sunny Balwani in “The Dropout,” and he describes Sunny Balwani as Lady Macbeth. And that, I thought, was a very interesting characterization of Sunny Balwani.
Basu: Yeah. What did he see as that analogy?
Jarvis: For him, it was: There's this person who is strategic and has a background and understands people, but also understands, in some ways like Lady Macbeth had Macbeth and Macbeth had to be the front person, but she was behind the scenes having the visions. Now that's the interpretation of Naveen Andrews. I think it, this trial, I'm very, very interested to see where this trial is different from Elizabeth's trial. And that, I think, will be incredibly telling. It's not going to happen, in my opinion, when the government's witnesses are on the stand. It's going to happen in the defense. And when you think about it, the defense for Elizabeth Holmes was Elizabeth Holmes. So, what is the defense for Sunny Balwani? Do they put a lot of people on the stand? If he goes on the stand, it will be fascinating because we've heard so much less from him than we ever heard from Elizabeth over the years.
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Basu: Rebecca Jarvis, thank you so much for talking with us about this.
Jarvis: I'm so glad you're interested, Shumita. Thank you.
Basu, Narrating: You can listen to Rebecca Jarvis' podcast for “ABC Audio,” called "The Dropout," on Apple Podcasts.
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