Gaming

The downfall of Theranos, from the journalist who made it happen

Over the last few years, the failed biomedical startup Theranos has become synonymous with some of the worst aspects of Silicon Valley. Through a combination of hubris, mendacity, and paranoid secrecy, the company fooled investors and the press into thinking it had created a nearly magical medical tricorder, earning a “unicorn” valuation of $ 9 billion before the whole endeavor was revealed to be smoke and mirrors.

Much ink has been spilled documenting Theranos’ rise and then fall—but the most important work has arguably been that of Wall Street Journal reporter John Carreyrou. And Bad Blood: Secrets and Lies in a Silicon Valley Startup, his recent book on the subject, is as good a retelling of that tale as any we could hope for. So good, in fact, that I devoured it in a single sitting.

The man who made it happen

More than anyone else, Carreyrou deserves credit for pulling the wool from so many credulous eyes regarding Theranos and its founder, Elizabeth Holmes. Outlets like Fortune and Wired were writing hagiographic puff pieces about this precocious college dropout and her plan to save the world; Carreyrou was pointing out inconvenient facts, like the company’s inability to accurately conduct most of the hundreds of blood tests it claimed to have revolutionized. He credits pathologist Adam Clapper—who wrote the now-defunct Pathology Blawg—for tipping him off that something wasn’t entirely right.

Like many of us with even a cursory knowledge of diagnostic testing or medical device regulation, Carreyrou realized some of Theranos’ claims just didn’t sound legitimate. The complete absence of any peer-reviewed data was one hint. Or Holmes’ nonsensical description of her technology in a then-recent New Yorker article.

At the time, I was working in science policy and had become far more familiar with those topics than I’d ever planned. I remember my BS detector going off the charts every time I read about Theranos. That was just gut instinct though; unlike me, Carreyrou actually began digging. The resulting book is a highly accessible read that doesn’t require you to know your CLIA from your LDTs to enjoy or understand it.

Few people come out of Bad Blood looking good. Those who do are the Theranos’ whistleblowing employees, who had to put up with being stalked and sued by the secrecy-obsessed company. On the other side of the coin are those deserving our scorn. The Steve Jobs-obsessed Holmes, obviously. And her unpleasant-sounding co-conspirator and boyfriend Ramesh “Sunny” Balwani. But equally, all the credulous rich and powerful old men who bought into this house of cards.

What a bunch of morons

Men like General James Mattis, who described Holmes as having “one of the most mature and well-honed sense of ethics—personal ethics, managerial ethics, business ethics, [and] medical ethics that I’ve ever heard articulated.” (Holmes is now under indictment for wire fraud as well as having been charged with fraud by the SEC.)

Men like Safeway CEO Steve Burd and Walgreens’ Jay Rosen, each of whom tried to hitch their companies to Holmes’ wagon of lies. As Carreyrou describes at length, both CEOs studiously ignored any and all suggestions that they were being conned, costing their shareholders and employers plenty in the process.

Men like former US Cabinet member George Shultz, one of a number of grandee statesmen who comprised Theranos’ board of directors (none of whom had any notable background in science). Shultz was so wrapped around Holmes’ finger, we learn, that he sided with the precocious CEO when she threatened to sue his own grandson, who had desperately being trying to save Grandpa’s reputation by warning him it was all a scam.

In a particularly heartwarming section, we learn that Rupert Murdoch invested $ 125 million in the company for shares he eventually sold back for just one dollar. (Sadly, any therapeutic schadenfreude evaporates when Carreyrou reveals the press baron happily wrote off the loss.) I also rather enjoyed the ongoing description of Theranos’ battle with Richard Fuisz, a former neighbor and family friend of Holmes’ who has been called a patent troll. This is a case when you come away hoping both sides could have lost.

Bad Blood is available from booksellers now in physical and electronic versions, and if you’re not a reader but still want to know more about this story of technohubris, there’s soon to be a movie adaptation from the director of 2015’s The Big Short. It should serve as a cautionary example that sometimes those amazing-sounding scientific breakthroughs really are too good to be true. Particularly when the idea comes from a precocious wunderkind college dropout claiming to have solved some intractable problem that the entire scientific establishment thinks impossible. Because almost invariably, it turns out the establishment actually knows what its talking about.

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