A Bloody Fraud

Review: 'Bad Blood: Secrets and Lies in a Silicon Valley Startup,' by John Carreyrou

Elizabeth Holmes / Getty Images
June 17, 2018

In 2015, CBS This Morning anchor Norah O'Donnell interviewed young Theranos CEO Elizabeth Holmes for a glowing segment about her biotech startup taking Silicon Valley by storm.

Amidst gushing questions about being a billionaire at 31 and what it was like to change the world with technology claiming to perform hundreds of blood tests from one drop, O'Donnell did ask a good one.

"It sounds genius. What about those who say, that's not enough blood to do all the tests that need to be done, especially if someone's very sick and you're trying to figure out what it is?" O'Donnell asked.

Holmes, without blinking and speaking in her hypnotically deep voice, responded with a ridiculous non-answer that gets to the heart of all that went wrong in the ethical and financial disaster that was Theranos.

"Every time you create something new, there should be questions, and to me, that's a sign that you've actually done something that's transformative," Holmes said.


Simultaneously self-glorifying and vague, triumphant and defensive, Holmes was in the middle of tricking another journalist into thinking she was Steve Jobs when she was really Bernie Madoff. Theranos was once valued at $9 billion and saw that number go to zero as its revolutionary blood-testing machinery was revealed to be fairy dust.

That happened because Wall Street Journal reporter John Carreyrou took a tip and uncovered what the Securities and Exchange Commission would call a "massive fraud" perpetrated by Theranos. The company's horrifying rise and precipitous fall are laid out in his outstanding book, Bad Blood: Secrets and Lies in a Silicon Valley Startup.

"Theranos is putting people in harm's way."

Those words, spoken by the health tech's laboratory director, sums up the cruel irony at the heart of Theranos and its CEO. It purported to save lives, but it really put countless people at risk.

Holmes is the fascinating and terrible star of Bad Blood, and although she's somewhat unknowable on a personal level—she unsurprisingly did not agree to be interviewed for the book—we still get the story of a budding sociopath.

Holmes dropped out of Stanford and founded Theranos at age 19. She sold venture capitalists, big-name investors, and major companies on her vision of a small machine that could run hundreds of complex blood tests from a single drop from your finger.

She envisioned placing her machines in drugstores and people's homes, creating a cheaper and less painful way to perform blood tests. Wonderful. Groundbreaking.

And impractical, for many reasons, chief among them the complexity of the tests requiring a greater blood sample than one drop. Another reason was the Theranos machinery was simply amateur. One of the fascinating subplots at work in Bad Blood is how many smart, successful people had strong reason to question Holmes and had their concerns simply explained away by her.

While reading Bad Blood, I softly whistled and muttered "wow" to myself more times than I could count. Carreyrou's book works as both a heroic story of great journalism and a creepy, paranoid thriller about a narcissist—Holmes called her technology "the most important thing humanity has ever built"—who saw herself as so similar to Jobs, she even aped his attire of black turtlenecks. Yuck.

In assured, well-sourced prose, Carreyrou outlines how Holmes and her No. 2, chief henchman and much older boyfriend Ramesh "Sunny" Balwani, ran Theranos like a criminal organization. They lied to investors. They fooled lab inspectors. They falsified test results. They made outrageous financial projections. They snooped on employees' computers. They had employees followed. They fired people who asked too many questions. They scammed Walgreens and Safeway. They charmed such figures as George Shultz, Henry Kissinger, and James Mattis. They created a fake lab to fool Vice President Joe Biden. They bullied a scientist who ultimately committed suicide.

In the chilling prologue, Holmes fired her CFO after he confronted her upon finding out Theranos used phony lab results to mask their blood testing machine's deficiencies in front of a European pharmaceutical company.

Most galling of all, they put their lemon machines out to market on unsuspecting patients.

The story, of course, isn't just about Holmes, but about the whistle-blowers within her company who braved an army of Theranos lawyers and intimidation tactics. Some were probably silent for too long, but they had their reasons to fear for their livelihood and even their safety. One of them was George Shultz's grandson Tyler, who became disillusioned when he discovered the "Edison"—the insufferably pretentious name for the Theranos miniature blood analyzer—didn't work.

In the final third of the story, Carreyrou discusses how he ultimately broke the story and withstood Holmes's brazen attempts, such as appealing directly to major investor Rupert Murdoch, to quash its publication. The posturing and self-aggrandizement employed by Theranos attorneys—one lawyer compared the company's trade secrets to the recipe for Coca-Cola—make for a humorous read.

Carreyrou hasn't held back what he thinks of his subjects—he called Holmes a "pathological liar" in a recent interview and said the Theranos board's oversight of her scientific claims was "one of the most epic failures in corporate governance in the annals of American capitalism." Wisely, he does little opining in the book itself and lets his remarkable storytelling do the work for him.

I didn't bring up O'Donnell at the beginning of the review to pick on her, but rather to put a face on the many journalists hoodwinked by Holmes. O'Donnell produced an informative 60 Minutes segment on "The Theranos Deception," and she made a painful admission.

"Almost every media outlet, including us here at CBS, bought into the Theranos myth," she said during the report.

It's a reminder that what's too good to be true often is.

Seeing Holmes brought low in Bad Blood is a welcome end to this enormously satisfying but infuriating book. Your blood will boil, but at least you'll know not to send it to Theranos.

Published under: Book reviews