Crime stories are always best when they’re “based on a true story” and Bad Blood went one further by being a meticulously researched yet incredibly gripping account of Theranos’ rise and fall over the last decade. John Carreyrou portrays the major characters and events equally well, skilfully reconstructing events that took place years before he had even heard of Theranos, much less brought about their downfall with his 2015 Wall Street Journal front page story.
Theranos, for those who don’t pay much attention to unicorns, was once the worlds hottest biotech startup. It promised to revolutionise the world of blood tests, most notably by only requiring a prick of a finger, rather than the conventional method of using a needle.
This non-negotiable feature of the product was driven by Theranos’ founder Elizabeth Holmes’ fear of needles. Ms Holmes would have played the role of supervillain very well had this been a fictional tale. She appeared to believe her own delusions from start to finish, that she, at 19-year-old with two semesters of Chemical Engineering at Stanford under her belt, was going to revolutionise the world. Not the world of blood testing, the world. She once told her employees (at a Christmas party no less) that her blood testing machine “is the most important thing humanity has ever built” and encouraged any dissenters to leave right then. Every time the company was unable to meet a deadline, she used one of two tactics, securing an extension or outright fraud. She never appears to have considered accepting defeat and pivoting to a more realistic product.
Holmes believed herself to be the next Steve Jobs and even took to dressing like the Apple founder. Her messianic beliefs and self-confidence were indeed infectious and allowed her to gain the trust of so many otherwise intelligent and diligent men and women. What also shouldn’t be underplayed is the effect of Holmes’ background though, her family connections allowed her to snowball endorsements and use them to gain the trust of others. This is how she both acquired her early capital funding and eventually assembled an incredibly star-studded board of directors such as former Secretary of States George Shultz and Henry Kissinger and former US general (and future Defence Secretary) Jim Mattis.
One crucial factor in Theranos’ “success”, or rather failure, depending on how you look at it, was that most of the board had military or diplomatic backgrounds. This meant they were unwilling to challenge Holmes on the technical aspects of the product and exercised highly limited oversight. There is surely a lesson here for the eagerness to have “outside perspectives” on corporate boards, while this may indeed be desirable it can’t come at the cost of relevant expertise. Likewise, the dissenters in the various deals Holmes made, Walgreens, Safeway, the deal she almost closed with the US military, tended to be the specialists in their field.
Bad Blood also casts light on the truly worrying culture of Silicon Valley, Carreyrou’s work would have been impossible to write without the cooperation of the employees who quit after witnessing such barefaced fraud, but what of the hundreds who kept on working there? Theranos were either testing the blood on commercial machines bought from Siemens or were carrying out incredibly inaccurate tests on their own and promising patients and doctors the data was reliable. Holmes’ deputy, boyfriend and now co-defendant on fraud charges, Ramesh “Sunny” Balwani was a laughably unpleasant character. He would monitor CCTV footage to see when employees left, he would fire them publicly without even giving them a chance to retrieve their personal effects, he lectured the staff on the need for extreme loyalty. Exactly why employees put up with such working conditions is hard to explain. Holmes and Sunny were incredibly paranoid and prevented staff in different teams from communicating with each other while monitoring all their actions tightly, they would even search employees bags when they left in case they had printed copies of email exchanges. This level of paranoia, coupled with Holmes’ messianic charisma, seems to be what convinced so many A-list investors to part with their money (why have such security if you don’t have a billion dollar product?_ and to give Theranos a scarcely credible valuation of $9 billion dollars in 2013 (of course fraudulent revenue figures also played a role, as Holmes’ indictment makes clear).
The book is a thrilling read and the brilliant, brave former employees who faced up to expensive, intimidating legal threats are the only ones who really come out of it with any credit and were it not for them, it’s entirely possible far more patients could have made decisions based on fraudulent test results, as well as millions more in venture capital money being wasted (which would’ve been the real tragedy).
Length: 299 pages
Goodreads score: 4.45