over dinner at a wine bar with two Walgreens colleagues who weren’t privy to the secret discussions with Theranos. After asking them to keep what he was about to tell them confidential, he revealed in a hushed tone that he’d found a company he was convinced would change the face of the pharmacy industry.
“Imagine detecting breast cancer before the mammogram,” he told his enraptured colleagues, pausing for effect.
* * *
—
A FEW MINUTES BEFORE eight a.m. on August 24, 2010, a group of rental cars pulled up in front of 3200 Hillview Avenue in Palo Alto. A stocky man with glasses and dimples on his wide nose stepped out of one of them. His name was Kevin Hunter and he headed a small lab consulting firm called Colaborate. He was part of a Walgreens delegation led by Dr. J that had flown to California for a two-day meeting with Theranos. The drugstore chain had hired him a few weeks before to help evaluate and set up a partnership it was negotiating with the startup.
Hunter had a special affinity for the business Walgreens was in: his father, grandfather, and great-grandfather had all been pharmacists. Growing up, he’d spent the summers helping his dad man the counter and stock the shelves of the pharmacies he ran on air bases in New York, Texas, and New Mexico. As familiar as he was with drugstores, though, Hunter’s real expertise was with clinical laboratories. After getting his MBA at the University of Florida, he had spent the first eight years of his career working for Quest Diagnostics, the giant provider of lab services. He had subsequently launched Colaborate, which advised clients ranging from hospitals to private equity firms about laboratory issues.
The first thing Hunter noticed as he shut the door of his rental car and walked toward the entrance of Theranos’s office was a shiny black Lamborghini parked right next to it. Looks like someone is trying to impress us, he thought.
Elizabeth and Sunny greeted him and the rest of the Walgreens team at the top of a flight of stairs and showed them to the glass conference room between their offices. They were joined there by Daniel Young, who had succeeded Seth Michelson as head of Theranos’s biomath team. On the Walgreens side, in addition to Hunter and Dr. J, three others had made the trip: a Belgian executive named Renaat Van den Hooff, a financial executive named Dan Doyle, and Jim Sundberg, who worked with Hunter at Colaborate.
Dr. J high-fived Sunny and Elizabeth, then sat down and kicked off the meeting with the same line he always used when he introduced himself: “Hi, I’m Dr. J and I used to play basketball.” Hunter had already heard him use it a dozen times in the few weeks they’d worked together and no longer thought it was funny, but for Dr. J it was a joke that never seemed to grow old. It elicited a few awkward chuckles.
“I’m so excited that we’re doing this!” Dr. J then exclaimed. He was referring to a pilot project the companies had agreed to. It would involve placing Theranos’s readers in thirty to ninety Walgreens stores no later than the middle of 2011. The stores’ customers would be able to get their blood tested with just a prick of the finger and receive their results in under an hour. A preliminary contract had already been signed, under which Walgreens had committed to prepurchase up to $50 million worth of Theranos cartridges and to loan the startup an additional $25 million. If all went well with the pilot, the companies would aim to expand their partnership nationwide.
It was unusual for Walgreens to move this quickly. Opportunities the innovation team identified usually got waylaid in internal committees and slowed down by the retailer’s giant bureaucracy. Dr. J had managed to fast-track this one by going straight to Wade Miquelon, Walgreens’s chief financial officer, and getting him behind the project. Miquelon was due to fly in that evening and join them at the next day’s session.
About half an hour into discussions centering on the pilot, Hunter asked where the bathroom was. Elizabeth and Sunny visibly stiffened. Security was paramount, they said, and anyone who left the conference room would have to be escorted. Sunny accompanied Hunter to the bathroom, waited for him outside the bathroom door, and then walked him back to the conference room. It seemed to Hunter unnecessary and strangely paranoid.
On his way back from the bathroom, he scanned