Bad Blood: Secrets and Lies in a Silicon Valley Startup is a must read that details the meteoric rise and crash and burn descent of a company called Theranos, and its principal, Elizabeth Holmes. The book was written by Wall Street Journal reporter John Carreyrou, who wrote a series of stories in the Journal that exposed the fraud, and brought Holmes and Theranos down. He gives us an up-close look at how Theranos skyrocketed to a market value of $10 billion through deception, but the story is so much more than your run of the mill business fraud case .
Theranos was a medical device company that promised an amazing array of medical diagnosis from a small sample of blood, using a Theranos machine. Elizabeth Holmes had modeled herself after Steve Jobs, to the point that she was wearing his style of clothing. Holmes got out there and sold the potential technology to anyone that would listen, drawing large capital infusions and attracting A-List people to her Board of Directors. The Board included Henry Kissinger, George Schultz, William Perry, Sam Nunn, and even General James Mattis. The problem was that the technology did not work, and Holmes knew it did not work. Despite that knowledge her and her CEO struck a major deal to deploy the technology in Walgreen stores. They would actually take the blood samples and analyze them with commercial blood analyzers made by other companies. She used that technique with investors, and in handling the volume of analysis required by the Walgreens contract.
How was she able to continue the fraud in the manner that she did? That is a fascinating question, and the answer does not reflect well on American business practices, or on the “elite” reaction to allegations of fraud. The people working for Theranos, especially the technical folks, understood that there were major issues with the technology. When they spoke up they were run out of the company. One of the employees was the grandson of George Schultz, who reported the suspicions he had about the technology to his grandfather. Instead of a receptive audience Tyler Schultz was given the cold shoulder by his grandfather, who accepted the word of Elizabeth Holmes that his grandson was in error, and just a disgruntled employee. This type of thing happened frequently before the sham was exposed, with Holmes exerting her influence, and deploying a strong personality to beat back the “doubters.” She also wielded super-lawyer David Boies, who represented the company, to launch legal assaults on those “doubters” that questioned the technology. The author himself was subjected to a pretty strong legal assault by Boies, causing the brass at the WSJ to want to proceed with caution. Boies is not a man to trifle with, and Holmes used him expertly to cast doubt on the doubters.
This effort manages to mix all of that into a great book that weaves the story together. It is almost unbelievable that it went on so long and ensnared so many people. In his review Bill Gates, who highly recommended the book, called some of the details shared by the author “insane.” In the end it all would have come crashing down at some point but Carreyrou, and those that helped him, deserve a lot of credit for digging into the story, fighting off the real heat that came down, and finally exposing the massive fraud that Theranos became. Elizabeth Holmes is a fascinating story. Without question she had a brilliance to her, and her ability to sell was truly extraordinary. But these talents ended up being used in a way that brought her, in the end, to a massive personal and professional disaster. She is now a defendant, charged with multiple crimes that could bring serious jail time. This book brings us that incredible story, and comes highly recommended.
A look at the pre-discovery publicity that Elizabeth Holmes received from just about every corner of the media world.