Bad Blood: A Story of Ethical Maleficence
Founded in 2003, Theranos became the darling of Silicon Valley as the hot new biotech startup that promised to revolutionize the medical industry. With just a drop of blood, Theranos founder Elizabeth Holmes promised her new technology could run hundreds of tests for diseases and key health markers. This promise led to a partnership with Walgreens to use Theranos testing capabilities in all their stores. By some, Holmes was called the female version of Steve Jobs, a visionary and maverick that would change the world. The partnership with Walgreens led to investors betting billions on this startup, making Holmes the youngest self-made female billionaire. And then, in 2015, it all came crashing down. A Wall Street Journal reporter, John Carreyrou, broke the story after extensive research and interviews with former employees. He found that many of the tests that Theranos claimed to be doing with their new technology was actually done with third party testing equipment. Furthermore, the new technology that Theranos claimed to revolutionize lab testing was frequently inaccurate, with may false positives and false negatives of test results. His reporting led to multiple investigations of the company in 2015-2016, from the FDA, the Centers of Medicare and Medicaid Services, and the Security Exchange Commission. This led to Theranos shutting down their lab and eventual bankruptcy of the company in 2018.
Bad Blood: Secrets and Lies in a Silicon Valley Startup is Carreyrou’s book length story of Theranos and his efforts to uncover the truth of this company. Carreyrou’s story paints Holmes and Theranos as a textbook case of ethical misconduct, exhibiting extreme dishonesty in selling their technology – beyond the normal marketing hype. While technology hype is not uncommon in Silicon Valley, biotech requires higher levels of validity and precision due to its direct impact on health. Unfortunately, Theranos failed to deliver that precision and validity. Through faked demonstrations, practiced lies, extreme secrecy, and smooth talking, Holmes convinced hundreds of investors to hand over $700 million dollars.
Carreyrou’s meticulously researched account of Holmes and Theranos paints a devastating picture of the deception and fraud. As I plowed through the book in two days, I was captured by the audacity of Holmes in her lies. But just as important, I saw how she appealed to her employees to cover for her sins. She demanded loyalty over independent thinking. She required secrecy over knowledge sharing. She expected faith in her vision over reason about the facts. While employees were often wowed by her promise of better, cheaper health care technology, she cut down any variations from her vision, frequently firing employees over the smallest slights. Although Carreyrou never uses the term, his book captures the soul of a narcissist.
I recommend the book, from its well researched fact oriented approach, to its engaging and plot driven approach to the story. Although the outcome may already be known, the path to its discovery was fascinating and insightful. This book would be great in a business ethics course or just general reading of anyone interested in business, technology, or investing. Learning how to spot dishonesty such as Holmes could save many people from the heartache she left in her wake.
