As AI companies attract investment at enormous valuations, former Theranos whistleblower Tyler Shultz sees a familiar risk: investors may struggle to tell a real technical breakthrough from a persuasive pitch. He warns that AI’s complexity could give people who want to deceive investors more room to do so.
Why Theranos still matters to investors
Shultz joined Theranos in his first job after college and became a key whistleblower. The company’s blood-testing devices produced dangerously inaccurate results, and faulty results reached patients through Walgreens stores.
Theranos reached a peak valuation of around $10 billion even though its technology did not work as claimed. The company used its own machines for only a fraction of tests, outsourcing others to third-party equipment.
For Shultz, the lesson is about the power investors hand to founders when they commit money without enough scrutiny. He told SF Standard that the practice of having a short coffee meeting and then sending someone $100,000 should be over. He said Elizabeth Holmes took that model and scaled it to $100 million.
Theranos often raised money from individual investors, including the DeVos and Walton families, rather than venture firms. The company did not share scientific information or evidence that its machines worked with potential investors, citing trade-secret concerns. That approach also kept many top Silicon Valley venture capitalists away.
AI raises a new due diligence problem
The Theranos scandal was widely treated as a warning that investors should prioritize due diligence. Shultz worries that the fast-moving AI boom could cause them to forget that lesson.
He says checking AI claims can be especially difficult. Investors may have trouble separating something genuinely distinctive from a product that is essentially a “ChatGPT wrapper.” That uncertainty, he argues, creates an opening for misleading claims.
The challenge is not simply that a technology is unfamiliar. If outsiders cannot readily assess what a product does or how it differs from existing tools, they may have to rely more heavily on what a company says about itself. Shultz’s concern is that this gap can make it easier to persuade investors without proving the underlying claim.
His warning is a call to treat a compelling presentation as the start of scrutiny, not its conclusion. When a company asks for substantial funding, investors need evidence that supports its claims and a clear understanding of what they are backing.
Holmes remains part of the story
The renewed attention to Theranos comes as a documentary, “You Can See Everything,” follows Holmes in the final weeks before prison. Directed by Nathan Fielder and Lance Oppenheim, the film avoids casting her simply as either a master manipulator or a victim. It instead depicts her ability to draw sympathy even from people familiar with her crimes.
Shultz told The San Francisco Standard that Holmes wants people to keep talking about her. The article suggests that sympathy could matter to her future, while noting that the film gives limited attention to the harm Theranos caused patients and the targeted harassment Shultz faced as he raised concerns.
In the documentary, Holmes and her partner, hotel heir Billy Evans, are shown working on Haemanthus, a diagnostics company they call “Theranos 2.0.” It has reportedly raised about $20 million in funding. Shultz says he feels uneasy about what may come next, adding that she is preparing a second act, though he does not know where it will lead.
The case for asking harder questions
Theranos is no longer just a story about one failed company. For Shultz, it offers a practical reminder for an investment climate where technical claims can be difficult to evaluate and companies that have never turned a profit are raising capital at trillion-dollar valuations.
That reminder is straightforward: investors should understand what a product can actually do before trusting a founder’s account of its novelty. In AI, where the difference between a new capability and a wrapper around an existing tool may be hard to see, that work may be particularly important.