Bad Blood: Secrets and Lies in a Silicon Valley Startup

Elizabeth Holmes wanted to be the next Steve Jobs. She wanted to remembered as an entrepreneur who changed the world, with a glowing biography of her insight and toughness by someone like Walter Isaacson. But her company was an immense fraud that is still tumbling down around her, SEC fines filed and real charges pending. This is The Soul of a New Machine as done by Joel and Ethan Coen. Arrogant people, machines that fail constantly, and an intricate web of lies and threats that, finally, implodes spectacularly in the face of reality. Short of the Coen Brothers, Carreyrou is the best man for the job, the Wall Street Journal reporter who broke the story that killed Theranos and turned Holmes into a byword for a meteoric fall from grace. show more Bad Blood is thrilling. I stayed up past 2:00 AM reading it.

Holmes had ambition, I'll give her that. She dropped out of Stanford to chase a dream of a whole new spectrum of blood tests, which would use a few drops of blood milked from a finger to do instant full spectrum lab workup in the comfort of someone's home. No more needles, no more visits to the phlebotomist. Just a sleek, iPhone like-portal to a word of personalized on-demand medical monitoring.

The ambition was grand. There was just one minor problem. The test didn't work, and never did. Microfluidic capillaries jammed, software bugged out, readings swung wildly. As Ludwig Fleck said, "A fact is that which resists arbitrary thinking," and whatever Holmes and her investors thought, as long as the various models of analyzers returned inaccurate, Theranos was nothing but a dream.

That didn't stop Elizabeth Holmes. If she had any real talent, it was bending (mostly older, mostly male) investors to her vision. Theranos moved from one round of venture capital funding to another, becoming the highest valued unicorn in Silicon Valley, despite repeated failures of their basic products. The Theranos board included right-wing ghouls like Henry Kissinger, Rupert Murdoch, and George Schultz, along with General (now Sec. Def.) Mattis, and Darth Vader of the legal profession, David Boies. Holmes also buddied up to Democrats, including Vice President Biden and Candidate Hillary Clinton.

The real action of the book is the insanity inside Theranos. Senior executive Ramesh "Sunny" Balwani, also Holmes' much older boyfriend, must have studied Beria as a leader. Information was tightly controlled to prevent 'leaks'. Skeptics and bearers of bad news were fired. The victims of sudden and summary firings were slapped with massive NDAs and followed by private detectives. Meanwhile, Theranos bodged together a lab out of commercially available equipment, operated in total violation of best practices. The Theranos tests were a far cry from what was advertised, and were wildly inaccurate to boot. The harms were real. One Arizona woman, on receiving a Theranos test with Potassium levels that indicated an immanent stroke, spent Thanksgiving in the ER, paying thousands of dollars out of pocket for totally unnecessary brain scans. The emotional damage is just as real, if harder to quantify. The only thing that limited the negative consequences were the relative small number of roll-out sites in Phoenix.

As a handful of whistleblowers made contact with Carreyrou, and he began investigating. The whole house of cards that was Theranos began to collapse, months after Elizabeth Holmes made her mainstream PR debut and the company's valuation soared to over $9 billion. Reading the failures of management in detail is astounding. Regulatory strategy was to slide between the FDA and the smaller agency that manages lab tests, which is absurd. The basic research was driven by design wish lists: a final box no larger than this, a few drops of blood and no more, rather than an actual research agenda. It must have been terrifying to work for Theranos, realize it was all a fraud, and that you were powerless against Elizabeth Holmes' political and legal connections. Ian Gibbons, a key scientist, committed suicide rather than be deposed as a witness against the company.

In the end, the system worked, sort of. Theranos was shut down, Holmes and Balwani are disgraced and charged with numerous crimes. The company eagerly exploited a gray and under-regulated area to always surf ahead of their promises. They lied and bullied relentlessly. In retrospect, the final crash was never in doubt. But it is astounding that Holmes and Theranos got so far, with little more than intense charisma and a slick sales pitch.

I wonder how many other Silicon Valley unicorns are made of plaster. show less

The Theranos story is so fascinating. Carreyrou paces the book evenly, slowly building his case. I borrowed this from a clinical chemist who plays (per him) a bit role in the story, appearing in a couple sentences within the book. When I returned his copy, the two of us sat in his office just marveling at how things progressed so far. Within my own little clinical chemistry domain, CLIA looms like a Greek god -- all-powerful and all-knowing. Should we accidentally make a typo in our data, CLIA will send bolts of lightning to destroy us. The idea that a lab somehow became CLIA-certified with such significant variance in their data even before the straight-out fraud is almost unbelievable.

In addition, this seems like any doctor in their show more right mind would know what to make of Theranos. My best friend who works with silicon valley startups asked me about it several years ago, when I was still in residency, and I told her that the problem with capillary draws was hemolysis (blood cells splitting) and that you could never get some accurate results do that - and that's baked in to the blood draw, before you even get to the machinery. Any doctor worth their salt knows this.

So this is an almost fantastical story about how someone by force of personality alone paraded out technology that everyone knew was impossible, and somehow, without ever really inventing anything became a billionaire running laboratory testing in clinical labs on patients. It's pretty serious and scary stuff.

While reading it, I couldn't help but be amazed by the number of smart, well-educated people who were at least temporarily a party to this, often bullied by fancy lawyers and nondisclosure agreements. I think there's a lot here about how much the assumptions of civil society are really what keep us in check more so than institutions like CLIA or CAP. Once someone starts operating in bad faith, it's pretty scary how far they can get. On the other hand, Theranos was pretty much brought down by Carreyrou assisted by a pair of early-twenty-somethings who felt they had to speak out. So I think there's also a lot here about the importance of protecting whistle-blowers and the media. show less

Having worked at a variety of small pharma and biotech companies (including on that developed clinical diagnostic test kits), there was much in this book that resonated with me. This book should be required reading for anyone who begins work at a start-up. However, in addition to containing many lessons as to how you should NOT run a company and the red flags to look out for when you work at a dysfunctional organization, the book is a great read, even knowing how it ends. There are many fascinating and troubling tales within this book. John Carreyrou deserves much credit for his thorough research, his guts and perseverance, and his masterful storytelling.

This is an incredible story and a gripping book--most legal thriller writers would reject it as unbelievable.

If you had an idea for what you thought medicine would do, how would you go about it? For Elizabeth Holmes, the answer was surprising: drop out of college and found a company for a product that she didn't know how to make, didn't understand the underlying science for, or even know if it could be done. And rather than spend time researching and developing the product, you'd sell it anyway.

The scale of her fraud is breathtaking. She brazenly lied to investors, to scientists, to the government, to the media, and to all of Silicon Valley for over a decade. To protect her secret, she ran Theranos as a tyranny. The human cost of her show more actions to her employees alone is horrific, and we're lucky she harmed fewer patients.

The most intriguing aspect of the book is the way she was able to transform herself into a Silicon Valley myth. She got everyone to believe what they wanted to believe: that she was a visionary, and that they'd be stupid to pass up this amazing technology that she refused to demonstrate for them. Up till the final collapse, some very famous people stuck by her. It's not a pleasant portrait of her investors or the culture. show less

Best for:
Anyone who enjoys a true story about shady people who (for the most part) get what’s coming to them.

In a nutshell:
An experienced Elizabeth Holmes convinces a lot of people that she is on to the next big thing in biotechnology. She isn’t, and she gets VERY touchy when people point that out. Also, lots of powerful old white guys make some absurd financial decisions.

Worth quoting:
N/A

Why I chose it:
I listened to the podcast “The Drop Out,” which is just a few episodes long, but was definitely enough to get me interested.

Review:
Oh MY god did I love this book. I purchased the audio version and planned to listen to it during some long runs I have coming up. Instead, I could barely put it down, and listened to it every chance I show more got. It is a meticulously researched book, and Carreyrou explains complicated things (like how blood tests work) in ways that are not condescending or difficult to understand. The story develops slowly but never drags, as Carreyrou lays out the entire fiasco step by step.

What it comes down to is the Elisabeth Holmes was — is — a fraud. I think she started out with an idea (blood testing without the needles), and then became like a dog with a bone. She couldn’t and wouldn’t accept anyone disagreeing with her, because she was going to change the world. I don’t believe she was motivated by greed or money; I think she was fully motivated by her ego. She couldn’t dare admit that she was in over her head, or that her company Theranos wasn’t able to do what she promised; she just kept lying to others (and possibly herself) in the hopes that everything would work itself out.

The story is at times unbelievable. The number of attorneys involved. The cloak and dagger way the company treated its ‘trade secrets.’ The threatening letters. The lawsuits. The firings of anyone who questions anything. To think that people act this way — and think it is justified — is distressing to say the least. And frankly, I reserve about as much disgust for the attorneys who did Elisabeth Holmes’s bidding as I do for Holmes and her C-suite colleagues. The way the tormented people is offensive.

One area I think could have been developed a little bit more is the exploration of what the failures of the blood testing did to people’s lives. Carreyrou does share some stories of those who were harmed — such as a woman who ended up with $3,000 in unnecessary medical bills — but that can at times get lost in the story. And of course many of the whistle-blowers were motivated by the danger that faulty blood testing can cause, but it still wasn’t necessarily woven in as much as I would have liked. But that’s a very minor quibble, because it’s definitely discussed.

A little more than halfway through the book, the author become part of the story. It’s a slightly dramatic moment, but I think it is handled very well. The investigation of the Wall Street Journal article that predates the book is a huge reason why Theranos has been sued and why some of its leadership have been charged with crimes. It would be impossible for him to stay out of it, and the book would have suffered greatly without his perspective being shared in this way.

There were many moment when I got so angry at the things people were getting away with, but the last couple of chapters — I mean, there are some serious just deserts being served. It’s chef’s kiss come to life.

Keep it / Pass to a Friend / Donate it / Toss it: Keep it. And probably listen again soon. show less

I tore through this book. The story is fascinating, and I found it generally well written. It astounds me that so many generally smart people fell for this, although I think that says something about how much we all want to believe. It is also remarkable how much self-delusion it must have taken for Holmes to bald faced lie for so long (when it was obvious that if the devices don't work she would eventually be caught). The central idea of the Theranos product would be wonderful - but I think we're still a long way from having that sort of technology.

Straightforward reporting of the Theranos saga. On full display is the greed, ego, chutzpah and arrogance of founder Elizabeth Holmes, all leading to her inevitable (and satisfying) crash and burn. Apparently it was only dumb luck that nobody died from the inaccurate lab tests that incredibly this company was allowed to unleash on an unsuspecting public. The laxity of the regulatory process that allowed this to happen will make your blood boil, pun intended.