~ Bad Blood: Secrets and Lies in a Silicon Valley Startup. By John Carreyrou.
Elizabeth Holmes was just 19 when she started her company in 2003. She had a squad of major-league cheerleaders — senior professors at Stanford, angel investors, CEOs of companies — who were bedazzled by her brilliance and charisma and her apparently sincere desire to improve the world. Her company, Theranos, promised to revolutionize the blood testing industry, performing hundreds of blood tests on a few drops of blood from a finger, sparing patients the dreaded needle stick, and reporting the results from a machine small enough to be kept in a home in just a few minutes.
Sound too good to be true? Some professors and pharmaceutical companies thought so, and were dubious of Theranos’ claims. But many others leaped on the bandwagon; some who actually believed Holmes was The Next Big Thing, and some who were just petrified of missing out on this wave.
John Carreyrou was a Wall Street Journal writer who first started investigating Holmes’ company, tipped off by ex-Theranos employees that their product was a far cry from its touted capabilities. In Bad Blood, he traces the story of Holmes and Theranos from its founding to the bitter end.
Holmes was inarguably driven and ambitious. She came up with her entrepreneurial idea after her sophomore year at Stanford and promptly dropped out to start Theranos. She was well connected, with friends whose parents were millionaires and investors, and could find talent via the Stanford network. But she brought in many of her investors by simply captivating them with her charisma, determination, and lofty goals. Sick patients would no longer have to provide multiple vials of blood for every test, she said. Small children would no longer scream in fright at blood tests. People with needle phobia (like herself) would no longer avoid getting tested.
Unfortunately, these goals were physically and chemically impractical from the start. It was simply impossible to get reliable results from tiny volumes of blood for a single test, let alone the hundreds of tests that Holmes promised. The heavy dilution required to produce enough material for this range of tests made them completely non-reproducible, with repeats of the same tests giving widely varying results.
Carreyrou’s descriptions of the internal operations of Theranos are hellish. Holmes was fixated on loyalty, refused to hear dissent, and her pronouncements became increasingly unrealistic. Her boyfriend, Sunny Balwani, was paranoid and security-mad. Employees were routinely fired for not being as single-minded as Holmes and Balwani, or resigned because they were unhappy about the lies and failed projects.
None of this stopped Holmes. By 2013 Theranos was rolling in investor money, had contracts with Walgreens and Safeway to install the Theranos machines in their stores, the Cleveland Clinic and major healthcare companies were partnering with Theranos, and Holmes herself was on the cover of Fortune, Forbes and was being touted as a wunderkind. They hired top lawyers to threaten ex-employees who were talking to journalists, and expensive ad agencies to craft Theranos PR.
Holmes’ fascination with Steve Jobs and Apple was well-known. It’s unclear if she developed this fixation herself, or just began to believe the people who told her she was the next Jobs. Or, as a young woman in Silicon Valley, did she mimic him so as to be taken more seriously? Regardless, she started dressing in black turtlenecks, and was always intense and focused, like him. She hired a private chef to make her green smoothies, and drove a car without license plates, as did he. The only problem was that Jobs had actual ground-breaking products, and Theranos did not.
Until the book reaches 2013, it is a thoroughly fascinating description of a company with no real product, but massive amounts of investor money. The amounts are so huge that they barely make sense …. 6 million becomes 10 million, then the next investment is 100 million …. and given that the investors are all extraordinarily rich, the reader might well have a pleasant sense of schadenfreude about them losing their money.
Theranos moved beyond the developer/tester phase, though, and that’s when things got darker. They deployed these machines — incomplete and unreliable, but with a snazzy black-and-white cover — into labs around the Phoenix area. Real people were having their blood sugar, potassium, hormone and antibody levels tested, with real healthcare consequences.
There were both false positives and false negatives. Patients with normal blood tests suddenly received abnormally high or low results, and rushed to the ER for further tests (which were, of course, normal), at both financial and emotional cost. Doctors started to catch on and send their patients to other labs for retests. Luckily there is no report of a patient having a serious medical emergency due to Theranos’ incorrect tests, but it is very obvious that this could easily have happened.
The writing in this book is not as good as Ronan Farrow’s Catch and Kill, but the story is just as remarkable. With both books, you find yourself going back and forth to Wikipedia for more of the story, or to find out what happened to one or the other person. Oddly, even though Farrow’s book was about Harvey Weinstein and sexual abuse while Bad Blood is about a Silicon Valley biomedical company, they have several connecting threads. Both Weinstein and Theranos had the same powerful law firm of David Boies threaten lawsuits upon anyone who might go public with accusations. Both of them hired detectives to investigate the journalists and witnesses.
The Wall Street Journal deserves kudos for its reporting, and for being willing to publish articles that contradicted its own previous glowing stories about Holmes and Theranos. (Farrow was less lucky at NBC and had to move to the New Yorker to get his story published).
This documentary novel is a powerful statement about the importance of investigative journalism. Theranos has shut down, and Holmes and Balwani go on trial the summer of 2020.
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