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“Bad Blood” by Wall Street Journal Investigative Reporter John Carreyrou pulls back the veil on a startup that once deceivingly charmed investors into a multi-billion dollar valuation: Theranos.
The blood testing company’s story is inextricably intertwined with that of its iconic founder CEO Elizabeth Holmes.
Mr. Carreyrou’s book goes all the way back to the beginning with Ms. Holmes, describing how the little girl who – on the rare occasion she actually lost a game of Monopoly would fly through the house’s screen door in a rage – became the charismatic founder of a company built on the promise that it could revolutionize health care by simultaneously conducting several medical tests from a finger prick of blood.
Ms. Holmes, a Stanford dropout, worshipped the late Apple founder Steve Jobs and sought to become the first female tech entrepreneur to join the likes of Jobs, Microsoft’s Bill Gates and Facebook’s Mark Zuckerburg.
“With her black turtleneck, her deep voice, and the green kale shakes she sipped on all day, Elizabeth was going to great lengths to emulate Steve Jobs, but she didn’t seem to have a solid understanding of what distinguished different types of blood tests,” Mr. Carreyrou writes.
Mr. Carryou introduces the flaws of the Theranos technology first, forcing the reader to experience the excitement employees and fans of Ms. Holmes’ public persona felt early on, all with the knowledge that inevitably it will painfully come crashing down.
One of the technology flaws involved the practicalities of using such a small sample of blood. Using a few drops from a fingertip meant the sample had to be diluted before the tests were performed, a practice known to make results less reliable.
Another problem was the reliability of the test results themselves. Faulty results could result in “two nightmare scenarios” in which a patient with a false positive undergoes an unnecessary and costly procedure, or a patient with a false negative goes untreated for a serious or even deadly condition.
“Holmes and her company had over promised and then cut corners when they couldn’t deliver,” Mr. Carryou writes. “It was one thing to do that with software or a smartphone app, but doing it with a medical product that people relied on to make important health decisions was unconscionable.”
The shortcomings of Theranos’ technology should have been addressed through reasonable skepticism of the company’s investors. But Ms. Holmes’ ability to charm the wealthy and powerful proved invaluable to her and Theranos time and again.
Ms. Holmes managed to persuade billionaires, CEOs and even medical experts that not only was Theranos on the road to changing the world, but that she was the right person to navigate that journey.
After meeting Ms. Holmes, a peer of an otherwise level-headed and principled Walgreens executive – who held a medical degree – described him as “a groupie who’d flown across the country to attend a concert played by his favorite band.”
President Barack Obama named Ms. Holmes a U.S. Ambassador for global entrepreneurship and the Harvard Medical School invited her to join its board of fellows. She also hosted Vice President Joe Biden at Theranos headquarters, where he called the company the “laboratory of the future.”
Before going on to join the Trump administration as Secretary of Defense, General James Mattis repeatedly pushed for the Army to use Theranos blood testing devices at bases abroad.
As Ms. Holmes persuaded respected investors to buy stock and join the Theranos board, she conjured an illusion of legitimacy around the company. With two former Secretaries of State, high ranking military officials and serious venture capitalists at her side, it was all the easier to collect more.
Ms. Holmes’ projection of confidence and stability was belied by the reality of a revolving door of Theranos employees whose experiences follow a similar pattern: enthusiasm for the company’s mission driven by the promise of the blood testing devices and Holmes’ charm, wariness after discovering a paranoid and punitive company culture, disenchantment after learning of the devices’ flaws and the real people hurt by them, and finally relief upon cutting ties with Theranos entirely.
Firings, often carried out personally by Mr. Balwani, were such a regular ritual that one employee would make a game of it with peers by making them guess who was just escorted out of the building before revealing the name card he held in his hands.
Mr. Carreyou leaves it to the reader to conclude to what degree Ms. Holmes steered Theranos’ destructive path herself or was helped along by her influences. Those influences included her Pakistan-born boyfriend Ramesh “Sunny” Balwani who got rich off the dot-com bubble and convinced himself competence, not luck, made him wealthy; superstar lawyer David Boies, who accepted Theranos stock as payment for his services; and billionaire venture capitalist Larry Ellison, who “famously exaggerated his database software’s capabilities and shipped versions of it crawling with bugs.”
Remarking on Mr. Ellison’s aggressively overpromising his software’s capabilities, Mr. Carreyrou writes “That’s something you could not do with a medical device.”
That is exactly what Theranos did.