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Theranos employees struggle to put scandal behind them

Posted: 7:05 AM, Mar 14, 2019
Updated: 2019-03-14 09:52:14-04

An endless job search compounded by fears of being blacklisted by certain businesses. Anxious gossip about who is and isn’t mentioned in the latest news reports. And probing questions from outsiders on how they could ever have worked at the disgraced company.

Welcome to life after Theranos.

At its peak in 2014, the blood-testing startup was a darling of Silicon Valley. Theranos reportedly had a $9 billion valuation, a retail partnership with Walgreens, and a board stacked with political heavyweights like Henry Kissinger and George Schultz. Hundreds of employees joined the company to help it fulfill the ambitious mission of creating a cheaper and more efficient alternative to traditional medical tests.

Then it all began to unravel. The Wall Street Journal published a report in 2015 questioning the company’s technology and testing methods. Theranos was sued by investors for fraud and had its blood-testing license revoked by the government. By 2018, its CEO Elizabeth Holmes had stepped down and its labs had closed. In September, Theranos announced plans to dissolve itself.

Today, some of those employees are still trying to move on from a company that is now a household name for all the wrong reasons. These efforts may be complicated by Hollywood’s interest in the story, including a new HBO documentary out this month, ensuring the Theranos scandal remains very much in the public eye.

While some former Theranos employees have landed at top-tier tech companies such as Facebook and Amazon, others have found themselves in a state of limbo, spending months or even years trying to secure new jobs with the stain of the company on their resume.

The people having the most trouble tend to be those who worked at the company for longer, or held higher level positions in certain departments, according to interviews with outside recruiters and seven former employees. Most of the former employees spoke with CNN Business on condition of anonymity due to concerns about ongoing legal proceedings or having their names publicly associated with the company.

One former Theranos employee recalled having lunch with a recruiter who had placed him at a previous job. The recruiter told him he was “the most qualified candidate,” before adding, “except for this.” Then the recruiter put a thumb over the word “Theranos” on the copy of his resume sitting on the table. Since then, the ex-employee has been rejected for multiple jobs and is still searching.

Others who have had interest from companies are still hesitant about their next moves. Janina Dong, a former recruiting manager at Theranos who left in 2017, has so far chosen to consult rather than take a full-time job. Part of the reason, she says, is “because I am second-guessing my own judgment” about where to work after failing to see Theranos for what it was.

“I think a lot of us were in denial”

Much of the attention to date has rightly focused on the ways in which Theranos and Holmes duped investors and patients whose health was put at stake. But some former employees say they too were left in the dark, both about the viability of the technology and the financial health of the company.

That case may be harder to make for those who worked there longer, rose up higher or stuck with the company well after the initial reports raised concerns about its technology. In the summer of 2016, months after the first Wall Street Journal report and more than a decade after the company’s founding, Theranos still employed between 700 and 900 people .

“There are people who got out of Theranos before everything went down. Those people managed to be fine,” said Erika Cheung, a former Theranos lab worker who tipped off the Centers for Medicare and Medicaid Services to look into the company. “And then there are people who stayed for a really long time.” Cheung worked at the company for less than a year and left before the investigative reports.

Explanations and justifications vary among staffers who were there for years.

“They really did keep people in their own little bubbles,” said the former employee who has been rejected for multiple jobs. “I think a lot of us were in denial,” said another former employee who continued working at the company after the Wall Street Journal story. “I know I was to a certain degree.”

This misplaced belief in Theranos has come at some personal and professional cost. One former employee said the stress of all the media scrutiny on the company led to burnout.

“I took off six months after the layoff to get over this,” she said. “I was exhausted, emotionally and physically.” The employee, who has since taken a new job, admits this time off was a luxury most may not have had.

Another former employee described working with a young startup only to part ways after being told that their Theranos pedigree might make it harder for the company to raise money. The former employee is now looking for “new career opportunities” outside their field of expertise after hitting a “road block” in the job search.

“Those doors right now are closed,” the former employee said. “It’s just unfortunate.”

“Obviously there’s skepticism,” said Sam Wholley, a partner at recruiting firm Riviera Partners, which works with tech companies like Uber and WeWork. At one point, Wholley said he was told by a company that even if a Theranos employee was “the best person in the world,” it still couldn’t hire him or her. The reason, as he summed up the company’s thinking: “My board would kill me.”

CNN Business reached out to a dozen tech and biotech firms about their stances on hiring former Theranos staff. Multiple companies, including Verily, the life sciences division of Alphabet, and Regeneron Pharmaceuticals, said they do not have any formal or informal policy prohibiting hiring someone with Theranos on their resume.

Still, employees remain mindful of the impression their work with Theranos may create. Patrick O’Neill, the former chief creative officer at Theranos from 2014 to 2017, said he has removed much of his promotional work for the company from his professional website. “Having it out for public consumption potentially could lead to a lot of criticism,” he said. “[Theranos] ended up hurting a lot of people.”

Last March, the Securities and Exchange Commission charged Theranos and Holmes with “massive fraud” involving more than $700 million raised from investors. The SEC accused Holmes and Theranos of “deceiving” investors and the media into thinking its portable blood analyzer “could conduct comprehensive blood tests from finger drops of blood, revolutionizing the blood testing industry,” when in fact it “could complete only a small number of tests.”

Holmes settled with the SEC, agreeing to pay a fine and give up her voting control over Theranos, but she and the company did not admit to any wrongdoing. Three months later, Holmes was indicted on federal wire fraud charges and stepped down from Theranos. She could face a maximum sentence of 20 years in prison. The company remains the subject of an ongoing criminal investigation by the Department of Justice .

A lawyer for Elizabeth Holmes declined to comment for this story. Holmes pleaded not guilty to the charges of wire fraud and conspiracy to commit wire fraud. Theranos’ lawyer did not respond to multiple requests for comment.

The long wait for public opinion to change

Many people who worked there now hope the public conversation around the company simply passes them by.

The former employee who was given the sobering talk by the recruiter remembers reading Bad Blood , the definitive tell-all book on Theranos by Wall Street Journal reporter John Carreyrou, on his Kindle app when it first came out last May.

“The first thing I did was look for my name,” he said. “And happily, I was not in the book.”

Since then, there has been a 60 Minutes segment on Theranos, a podcast on ABC and the upcoming Alex Gibney documentary on the company airing this month on HBO, called “The Inventor: Out For Blood.” Actress Jennifer Lawrence is also expected to star as Holmes in a movie based on Bad Blood. (CNN and HBO share parent company WarnerMedia.)

“I have friends who call me on a weekly basis, and say, ‘You should be happy you weren’t in this podcast,'” said the former employee who parted ways with a startup after Theranos.

The former employee said there is a sense of “dread” about each new splashy media event around Theranos. “You don’t really want to remind yourself of all this. Most of it is pretty depressing.”

It also may have the effect of prolonging what Wholley, the recruiter, referred to as the “cooling off period” before public perception around a company like Theranos and the people who worked there starts to shift — if it ever does.

“I would expect it to be years — a couple of years,” Wholley said. But as he points out, “If you were a senior manager at Enron … and you’ve had six jobs since then, someone is going to look at your resume and think of that.”