Bad Blood: Secrets and Lies in a Silicon Valley Startup

When I was working in product development for a technology company in the 1980's and 1990's, we had a term for new products that sounded great, but weren't ready for the public to use as vaporware, and this is what Elizabeth Holmes was selling with her company, Theranos and its so-called blood testing technology.
John Carreyrou paints a story of fraud and deceit perpetrated by a beautiful and intelligent psychopath who had the ability to mesmerize a whole cast of older, wealthy men who she got to both invest millions into her company and to sit on the Theranos board and enable her to carry on her deception far beyond the point where it should have failed.
The first half of this book needs a good edit. Like a lot of investigative reporters, Carreyrou seems to have a problem with editing out extraneous information from his story. As a result, the reader is inundated with too many characters and too much detail. However, once the story starts focusing on the story being printed in the Wall Street Journal, and the over-the-top reaction of Holmes and her company, he book reads like a thriller and it keeps you turning the pages to the very end. ( )

This story is fascinating. Yes, how was she able to rationalize lying and endangering so many -- investors, Walgreens, and especially the general public? It was good this book went into her family of origin. Holmes' father expected her to do something that would change the world. Did Elizabeth feel pressure to be some sort of genius influencer? She had this idea that couldn't work. She was told that it couldn't work by experts. Did some experts give her false hope? Did she intend to run this fraud forever, or did she have some hope that it would eventually work?

All this money, once again WASTED on a single 'vaporware' company, when it could have gone to support at least 1000 start-ups that actually have viable new technologies and products! What's wrong with American innovation in the 21st century? Apple didn't need this kind of money when it first started? Real innovations don't require this kind of money. These are just modern versions of Ponzi schemes - that's all they are. How stupid are these investors? Please stop all this nonsense and start investing in many more real companies and products (such as alternative energy technologies).
WHY? Probably because in these situations, someone is making millions off the pie-in-the-sky company whether it materializes into a reputable lab or not. That's the point. Money. Today people can still make a lot of money 10x quicker with vaporware as opposed to sticking in for the long haul. Talk to the people making a killing and ask them ;)

American Medicine is either profitable to shareholders, investors and founders or it is scrapped. When a new drug or technology appears, Wall Street is watching. This has NOTHING to do with patient's health or quality of life. This is the way of Big Pharma. Simple biology: A drop of blood may or may not contain all substances and pathogens within the blood-provider's body. That is the why of the blood draw - it takes that much blood to assure a complete picture of what is actually present in that sticky red stuff we run on. Some tests need more than the usual 5 - 7 cc's of blood to be accurate. Some need as much as 100 cc's to provide the image of blood chemistry. We can determine sugar levels (diabetes testing) from a drop of blood because that drop isn't tested for sugar; it's tested for a specific acid that sugar creates in the blood by making the drop into an electrolyte for a simple one-use battery (the test strip). Nobody likes to see their life-juice sucked into a vacutainer, but if accurate results are needed, that's how it has to be done. That blood, by the way, isn't just tested for one thing; a single sample can be used for as many as four tests as well as finding bacterial presence and microscopic examination of who's properly at home in the blood and who shouldn't be there.

Investors get hung-up on eye wash "due-diligence" process or their special "signals" which have nothing to do with the effectively reducing measurable risk, mutual relationship or being honest about expectations, rights and responsibilities on all sides of the proverbial table.... there are some risks you simply can't mitigate or foresee (popularity), only reduce risks by limited, representative trials and experimenting. Basically, it's non-business value hazing to see if founders are willing to overcome hoops.

On the other side of the fence, investing well is difficult because it's a hard-to-scale, lifestyle business model... keeping founders honest, motivated, team together and help just enough without stepping on too many toes... there is never enough people bandwidth with sound business judgement, experience and motivation to monitor every dollar spent. Investing in startups is basically throwing money most of the time until WhatsApp M&A's to recoup the IRR for the fund. Even worse is going IPO (which rarely happens any more) or crowdfunding, because not only does that signal inability to raise capital from moderately rich people (which may hurt valuation), it adds tons of complexity and requirements to satisfy even less savvy investors.

Walgreen, what were you thinking of just signed contract without doing any due-diligence to have the product live?? We have to think twice from now on at these pharmaceutical stores with what they offers to the public. They acted against the advice of their own consultant that they hired to do due diligence on Theranos, greed gets even the big companies who couldn't resist.

Finally, valuation is very malleable ... it's however much a buyer can be convinced to pay for it. Games like transactions and changes merely to polish balance and income statements are rife to optimize for M&A activities.

We forget the last batch of scams in about ten years. It used to take twenty years to generate a new generation of suckers. Yes, a sucker is born every minute, but it takes a while for the suckers to earn enough money to be scammed for more than 10 cents. This highlights knowing science before investing. If a black turtle neck fools investors, they deserve it. Land of the free, home of the brave. Sell a few grams of cocaine and you get 20 years. Do a 9 billion dollar scam and walk away free?

Many mysteries. How did this 19-year-old con-artist extraordinaire fool people like Kissinger, Shultz, the K brothers, etc.? And Federal inspectors? Even Walk Street? For more than a decade? More than 1 million fake blood tests voided at the last minute? Truly incredible! One can only deduce from Theranos, Enron, Madoff, Lehman Brothers, and TRUMP that Americans just love snake-oil salespersons, and tricky lawyers. A simple test by an assistant professor in a university lab would have exposed this scam.

Kudos aplenty to this down-to-earth journalist!

Bottom line: She should go to jail! Fraud is fraud - business must be discourage from bilking investors and taking risks at the cost of investors and the public! Remember nothing she had worked! She wanted to be Steve Jobs but ended up being Madoff. A pathological liar and quite cold blooded schemer who quite easily tricked powerful but already semi-senile old farts like George Schultz and Henry Kissinger. And all those Fortune magazines and Washington Posts who took their opinion at face value and spread the fake news. Most part is just comical: when the launch deadline was approaching and they didn't have a remotely working product Theranos engineers bought 6 refrigerator-sized mammoth blood analyzers at 100 grand each and tried to rig them to adapt to Theranos finger-stick samples. And even THAT didn't work. She never had the technology or even the path to get there! Nearly $1 billion with nothing to ever show, ended up with nothing to show! I’ve never been a Steve Jobs fan, but it’s interesting that her idol had a masterful, intuitive sense of what was possible from both a software and hardware standpoint. Despite initial objections from his engineers, he knew that single-button devices, touch screens, keyboards on the screen, swiping, etc., were all possible. He knew what could be done, and just how far he could push his people to accomplish it, because he himself had enough experience and sense to know what was in the art of the possible. Holmes, on the other hand, was an amateur who didn't cut her teeth designing devices. She tried to follow in the steps of Jobs by putting up a reality-distortion field, and thinking she could will things to come true. She simply lacked Jobs' innate sense of what could be done from a technical and engineering standpoint. If only she had been able to link up with a medical engineer who was a genius like Steve Wozniak...

Fraud 100% all the way.

NB: That Balvani character should be criminally indicted as well. ( )

A dense read--investigative journalism, after all--but absolutely fascinating. If you're thinking that CEO's of multinational corporations are smarter than the rest of us, this book is a reality check. The interesting thing is that in every organization that Elizabeth Holmes defrauded (including the United States Army), there was one person who smelled a rat. And couldn't get anybody to listen. ( )

So many people recommended this book to me and it did not disappoint! I had heard and read articles about Theranos, but to learn the details behind the fraud and the schemes that were concocted was intriguing. John Carreyrou told the story behind the headlines masterfully. The horrifying way the employees were bullied, the audacity of the executives with the support of their lawyers, the incredible naiveté of the investors (really guys???) and the courage of the whistleblowers made for a very fast-paced read. Highly recommend. ( )

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 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. ( )