In yet another jaw-dropping interview that seemed to be broadcast from an alternate universe, venture capitalist Tim Draper tenaciously defended the failed blood testing company Theranos and its disgraced founder and CEO, Elizabeth Holmes.
In the interview, which aired on CNBC, Draper called the limping start-up “one of those extraordinary companies” and said he was glad to have backed Holmes, who he knows personally.
He went so far as to call Holmes a “great icon,” to which CNBC “Closing Bell” co-host Kelly Evans responded bluntly: “Icon of what?” Draper didn’t respond to the question, though.
His defense seems surreal in the wake of “massive fraud” charges from the Securities and Exchange Commission back in the March. The SEC alleged that Theranos, Holmes, and former President Ramesh “Sunny” Balwani raised $700 million in investments by orchestrating an “elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.”
Theranos and Holmes settled with the SEC without denying wrongdoing. Holmes will pay a $500,000 fine and will be barred from serving as a director or officer for a public company for 10 years. Balwani will face the SEC in court. The company meanwhile is nearing bankruptcy and down to a workforce of two dozen or less. Theranos counted about 800 employees back in 2015.
While Theranos and Holmes’ downfall was directly due to faulty technology, poor blood testing, regulatory issues, and alleged fraud, Draper had a different take on the situation. Instead, he fully blamed the reporter John Carreyrou, who first reported on the company’s hidden failings.
“Why is [Theranos] worthless? It’s worthless because this writer was like a badger going after her, like a hyena going after her, and then it became a bigger and bigger thing,” he said. “She got bullied into submission,” Draper explained, adding that if it weren’t for Carreyrou and other opponents, Theranos “could have been one of these big, huge winners.”
Amid his mind-boggling defense, the investor did admit that Theranos was now in the “loser column” of his investments list, which includes Tesla and Bitcoin. But Draper argued that Holmes’ blood testing technology would live on and get picked up by other entrepreneurs. “It’s going to happen,” he said. “We’re eventually going to change healthcare as we know it and she will have had a huge hand in making that happen.”