Spotify, the music streaming service that in November 2013 raised
$250 million at a price per share that valued the whole company at $4
billion.
These companies’ valuations would keep rising over the next few
years, but for now they had been leapfrogged by Theranos. And the
gap was about to get bigger.
The Journal article caught the attention of Christopher James and
Brian Grossman, two seasoned investment professionals who ran a
hedge fund based in San Francisco called Partner Fund Management.
With about $4 billion in assets, Partner Fund had a successful track
record, having notched up average annual returns of nearly 10 percent
since James had founded it in 2004. Part of that success could be
credited to its large health-care portfolio, which was overseen by
Grossman.
After they reached out to her, Elizabeth invited James and
Grossman over for a meeting on December 15, 2013. When they
arrived at Theranos’s headquarters, a sprawling beige structure built
into the side of a hill a stone’s throw from the Stanford campus, the
first thing they both noticed was the heavy security. There were
multiple guards at the entrance and they had to sign nondisclosure
agreements just to be allowed into the building. Once inside, guards
escorted them everywhere, even to the bathroom. Parts of the building
couldn’t be accessed without special key cards and were off-limits to
them.
Elizabeth and Sunny had always been security conscious, but their
level of paranoia had reached a new peak with the launch in Walgreens
stores. They had convinced themselves that Quest and LabCorp
viewed Theranos as a mortal threat to their cozy oligopoly and that
they would try to quash their new competitor by any means available.
There was also the matter of the promise John Fuisz had made in his
deposition to “fuck with” Elizabeth until she died. She took that threat
very seriously. Following his retirement from the military earlier that
year, James Mattis had joined the Theranos board and, on his
recommendation, Elizabeth had hired Jim Rivera, the head of his
Pentagon security detail. Rivera was a grizzled pro who had protected