‘The Dropout’ Episode 4: Recap And Ending: How Did Elizabeth Holmes Convince Walgreens To Invest?


The 4th episode of the mini-series, “The Dropout,” takes us through the tactical decisions made by Elizabeth Holmes in order to procure funds for her startup, Theranos.

Earlier, we had seen that Ramesh “Sunny” Balwani had come on board, bringing with him funding of 20 million dollars. Now it is evident that Elizabeth Holmes wouldn’t have allowed Mr. Balwani to be a part of her startup, if the conditions hadn’t become so adverse for her. She was being removed from her position as CEO. Elizabeth had done a trial on cancer patients with a prototype that didn’t work. The board members, especially Don Lucas, thought that she was in need of guidance. But the Stanford dropout hadn’t come this far just to give up her position, even if it meant keeping the board members in darkness. Elizabeth Holmes knew that she had no option other than to involve Ramesh Balwani. She lied about the fact that she didn’t know Ramesh Balwani personally, and he was just an investor who was willing to invest 20 million dollars in Theranos provided she was retained as the CEO of the company.

Elizabeth proved beyond doubt that she was an expert schemer, but the question remained how long could the business survive when the core foundation, i.e., their prototype, was not even close to being functional. 

See More: ‘The Dropout’ Episode 1, 2, & 3: Recap And Ending: Was Elizabeth Holmes Wrong In Being Ambitious?

‘The Dropout’ Episode 4 – Recap

Theranos had a knack for spending its funds way too quickly. The 20 million dollars brought on board by Ramesh Balwani, who was now the COO of the company, was almost over by 2010. Elizabeth still couldn’t get any approval from FDI and was planning to target the retail sector. She had completely revamped the outlook and the inner functioning of Theranos since Mr. Balwani came on board. She was not as approachable as she had been once. Security was tightened, and strict rules were applied. Somewhere, the joy of working or creating something new was lost, and it gave way to a very monetarily driven, business-oriented structure that was ruthless and devoid of any sort of exuberance.

The Edison machine was still not working when Elizabeth pitched to Walgreens, for putting the device in their drugstores.

Major Spoilers Ahead

How Did Elizabeth Holmes Influence Dr. Jay Rosen Of Walgreens? 

Dr. Rosen, who liked being called Dr. Jay, was the medical director from Walgreens who met Elizabeth Holmes and Ramesh Balwani when they came to pitch. Obviously, Elizabeth Holmes did not have a working prototype, so she had to find some other way to impress Dr. Rosen. She knew that if she had him by her side, then he would act as her spokesperson, and eventually, other members would accept the deal. Elizabeth knew how to impress and influence people. There is a simple rule: if your subject matter is not up to the mark, then make the outer cover so attractive and captivating that the other person just keeps thinking about it. Humans have this habit of getting carried away with praise, and they develop a soft corner for the one who is making it. And that was the agenda of a shrewd Elizabeth Holmes. She tells Dr. Jay Rosen that back in 1992, he had the foresight to persuade doctors to transmit records electronically, which eventually became a breakthrough. Catching him off guard, soaking in his own glory, she tells him that she too wants to achieve the same feat through her Edison machine and do good for the world like he did.

She offers to open wellness centers, where the patients would come for their low-cost blood tests. Dr. Jay Rosen, after hearing all this, is totally on board. He is sure that a deal between Walgreens and Theranos would be beneficial for both companies. He meets Wade Miquelon, the Executive Vice President and Chief Financial Officer of Walgreens. Wade, at that time, wanted to close a deal with Express Scripts and needed to be convinced to sign a contract with Theranos, as he questioned their credibility.

The Dropout Episode 1 2 3 Recap Ending 2022 Series Amanda Seyfried
Credits: Hulu

How Did Elizabeth Holmes Convince Walgreens To Invest In Theranos/Project Beta? 

Walgreens was in a vulnerable position, considering there was an ongoing recession. Dr. Jay hooks Wade Miquelon by saying that Theranos might be talking to CVS too, the pharma giant who was also their competitor. Wade finally agrees, but he wants someone who knows about labs to look into the matter and assess things. Walgreens hired Kevin Hunter, an expert who was to look into the authenticity of the blood tests that Theranos was planning to do with their Edison Machine.

Obviously, Elizabeth was still years away from developing a working prototype, so she couldn’t afford to take Walgreen’s team into her labs. She fabricates a story about how she is uncomfortable showing her lab to Kevin Hunter because he previously worked for Quest Diagnostics. Elizabeth Holmes tells Dr. Jay that she had reasons to believe that Quest Diagnostics wanted to copy their technology.

Wade Miquelon also comes down to Palo Alto and agrees with Kevin that unless and until they get access to the lab, they wouldn’t go ahead with the deal. But Dr. Jay is blindfolded by the charisma and flattery of Elizabeth Holmes, so much so that he is just not ready to give up on the deal. 

Ramesh Balwani and Elizabeth Holmes thwart the Walgreens team, and try the same route of flattery and adulation with Wade. It doesn’t work on him, so they take a different route. Elizabeth Holmes tries to get an upper hand in the deal, by somehow showing that they were not the desperate ones, as they were also in talks with Steven Burd, the CEO of Safeway, a supermarket chain.

The next day, both Safeway and Walgreens came to the Theranos office. Elizabeth Holmes comes and tells Wade Miquelon that Theranos had decided to not go ahead with the deal. Wade, Dr. Jay, and their colleagues think that Safeway might have bagged the deal. But while waiting in the portico, when they talk to Steven Burd, they come to know that they didn’t get the deal. Just then, Elizabeth and her team come down from the office, talking purposely about a flight to Boston.

It was then that everybody realized that Theranos might be signing a deal with CVS pharmacy. She did this so that both Walgreens and Safeway could think that they were losing out on an opportunity and then come back with a lucrative offer. So, without checking the authenticity of the tests, Walgreens agreed to become a part of Project Beta.

The Conclusion

Dr. Jay always believed that to be in business, Walgreen had to adapt according to the changing times. He tells Wade that these new breeds of entrepreneurs don’t overthink and aren’t easily intimidated. They agreed that maybe Elizabeth Holmes was bluffing about the whole CVS pharmacy thing, but they couldn’t let the deal slip from their hands.

On the other hand, Ian Gibbons, the head chemist of Theranos, has a conflict of interest. He comes to know about Project Beta, and goes to meet Channing Robertson, an old friend who was also a board member. He tells him that they were not even close to making the Edison machine fully functioning and that they were risking the lives of innocent people. Channing tells Elizabeth Holmes about the meeting, who instantly fires Ian Gibbons, though later she has to take back her decision as the other scientists refused to work in the absence of their beloved chemist.

You feel bad for Ian Gibbons, because he only knew science and was alien to the politics of the world. Just like an artist who doesn’t know how to sell his art and, in turn, has to adhere to the whims and fancies of the business people who come on board to decide the fate of his creation. Often you find these pure-hearted people in helpless situations, and that’s when you realize how important it is to play the game, because there is no alternative to it. His lab, his equipment, the camaraderie that he had with other scientists, and obviously the joy of creating something, are snatched from him when he is given another place to sit in the office and is restricted from entering the lab. The astute businesswomen found a way to make the scientists work, who were protesting when Ian Gibbons was fired, and yet not let him meddle with the proceedings. Maybe that’s how business is done, and there is no place for people who uphold values and ethics in this brutal system.

The next episodes of “The Dropout” will focus on how Elizabeth Holmes digs her own grave, as sooner or later, the flaws in the Edison Machine will come to light.

See More: ‘The Dropout’ Episode 5: Recap & Ending, Explained – Was Elizabeth Holmes Behind Ian Gibbons’ Suicide?

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Sushrut Gopesh
Sushrut Gopesh
I came to Mumbai to bring characters to life. I like to dwell in the cinematic world and ponder over philosophical thoughts. I believe in the kind of cinema that not necessarily makes you laugh or cry but moves something inside you.

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