My fourth book of 2020 was the nonfiction book Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou. I picked this up after watching HBO’s The Inventor on my flight back to the US after our Tokyo vacation.
I was so struck by the narrative Holmes creates around herself, and the bafflingly flimsy structure of the Silicon Valley startup model. Holmes, a bright woman from a well-connected and well-educated family, dreamed of being a rich and powerful businessperson. But her aspiration for business success outweighed her aspirations for nearly anything else, eschewing college to start a company in which she seemed less interested in the science and more interested in the market need for novel medical devices.
If you somehow missed the bizarre story of Theranos and its wide-eyed CEO and founder, Elizabeth Holmes, it’s essentially the story of a company over-promising and under-delivering so many times that the over-promising became flat-out lies, and the under-delivering became laboratory mismanagement, obfuscation, and fraud to such a scale that people could have died using the “technology” Theranos was creating.
The device in question: a blood-testing machine that used minuscule amounts of blood to conduct elaborate health tests, and which could allow its users to forego expensive, potentially physically taxing traditional blood draws. The Edison machine was the first prototype of the device, with the 2.0 version dubbed “miniLab” never fully coming into operation.
There was only one problem with the Edison machine. It was criminally inaccurate.
The results varied so greatly, the information it provided put patients at risk. It was so inaccurate, at one stage in its usage by test trials in Walgreens stores, Theranos wasn’t even running the blood through its own technology for every test…it was often using Siemens blood analyzers and acting as though they were using their own proprietary technology.
Holmes modeled herself after Steve Jobs and truly considered herself a revolutionary mind in the field of blood analysis, despite having no medical training or engineering skills to speak of. She hired amazing scientists and engineers to work for her, though, which you’d think would start to legitimize the company. However, she and her boyfriend Sunny, the president of the company, had a lot of opinions about the work, which made progress on the devices impossible. Work that they themselves could not do! I just can’t understand why you would hire NASA-level biochemists and then tell them that their math didn’t match an esoteric idea of what a good invention is. It’s the complete antithesis of imposter syndrome.
And it worked, for a while anyway. Holmes amassed millions of dollars from investors during her time as CEO, and even after the Carreyrou report hit the Wall Street Journal, many of those same investors stuck by the company.
The impossibility of what she was trying to create aside — and the specifics she wanted were exactly that, according to dozens of experts working for her over the course of the company’s life — the business itself was also run very poorly. High security and surveillance, verbal abuse, loyalty pledges, every conversation potentially litigious, and laboratory management below the bare minimum. The reports of former employees working for Theranos are heartbreaking and horrendous, with some employees even being tailed by private investigators.
The book devotes itself to these stories, the employees and investors duped by Holmes’ big promises and glossy marketing. From multiple perspectives, across a decade, the entire ordeal seems doomed from the start.
There was no way to create the technology she pitched without modifications.
There was no way to run multiple kinds of tests on such a small blood sample.
And if somehow these first two issues were overcome, there was absolutely no way to create anything meaningful without substantial dedication to research and development.
But because Holmes refused to listen to any of these people, and because they were forbidden to share information with each other (yes, really), the buried problems mounted privately as Theranos became more profitable publicly.
From the book, it’s obvious that Holmes at least partially believed in her own importance to the world through the creation of the Edison machine, and the miniLab. But she never put anything meaningful behind the practicality of it. She never compromised or deviated from an image she had in her mind when she was very young and very inexperienced in the industry, and she ignored all the regulations that would have guided the company to a more viable product.
It’s also obvious that things might have gone differently for the company if Sunny Balwani had never become involved with Holmes, as he escalated personnel situations far beyond what any reasonable professional would do in a functional workplace. He was a vindictive man who threatened anyone who dared question the god-status of the startup.
Carreyrou weaves together a fascinating story of innovation and fraud, ego and despair, and ultimately the hubris of the tech bubble of late capitalism. He also skillfully creates an unbelievably compelling character study of real people, and the ethics they either choose to abide by or ignore in the face of a complicated moral failing. It was a great read, and a close look at one of the most captivating “rise and fall” stories of the last ten years.
Rating: 5 out of 5 Bay area cocktails while speaking to a confidential informant.