Saturday, September 15, 2018

Book Reviews: Bad Blood

Bad Blood
by John Carreyrou
This is a real life thriller written by a Wall Street Journal investigative reporter who was one of the first people in the media to puncture the lies and bovine excrement put out by Elizabeth Holmes and Sunny Balwani about their startup company Theranos. Theranos wanted to become famous for revolutionizing blood testing and laboratory science. Theranos' claim to fame was proprietary finger prick technology devices that were supposed to be able to test for hundreds of different diseases from very tiny blood samples. The results could then be wirelessly and securely transmitted to a patient's doctors. The idea was that by using this process, everyone would save time and expensive lab space. Additionally people who didn't like going into doctor's offices or labs for venous blood draws would be more likely to use the finger prick devices. 

And most importantly by catching diseases or conditions far earlier than anyone else, Theranos would be saving lives across the world. As an investor wouldn't you like to get in on the ground floor of a company like that? Why sure you would! It would be akin to being in at the beginning of Facebook, Amazon, Netflix,  Instagram, Microsoft, or Apple-the startup company closest to Holmes' heart. Holmes consciously modeled herself after Apple co-founder Steve Jobs, copying Jobs' black turtlenecks , his self-important quotes and even his deep voice. Holmes tried to pitch her normal alto down to the male tenor or even baritone range. This sounded utterly ridiculous.

It was particularly noticeable on the occasions when Holmes couldn't keep up the fakery or relaxed and forgot to speak in the male range. I guess no one ever called Holmes on it because her peers and investors didn't care what she sounded like as long as she dangled the possibility of millions or even billions in front of them. And Holmes' subordinates or employees learned very quickly that annoying, irritating, or mocking Holmes wasn't very healthy. Holmes and especially her number two, and lover, Balwani ran Theranos via pure intimidation. More on that in a minute. Arguably they had to run the company via intimidation because very little of Theranos' product worked. When things didn't work Holmes didn't come up with new ideas or new products. No. She lied. She faked tests. She hid results from regulators.  She altered results.


Holmes used every bit of wiggle room and lawyer speak to lie and then claim she hadn't lied. She found the exact path to walk that would allow her to avoid the attention of regulators like the FDA, SEC, or CMS and others as long as possible. She used her board and investors, powerful connected men like General James Mattis, Henry Kissinger, Rupert Murdoch, George Schultz, David Boies, and others to run interference for her. Her lies and legal aggressiveness were so great that they drove at least one former employee to suicide. 

This book is very easy to read. Broadly it's divided into three sections. The first section describes the various experiences of Theranos employees, some very high ranking, others less so, who over time noticed that the internal picture of what was going on inside Theranos didn't match what the company was telling investors, media, regulators or politicians. Holmes was the epitome of the Queen who killed messengers who brought her bad news. She didn't like hearing the word "no". With most people her hearing went away until they told her "yes". She and Balwani ran a company in which paranoia was rampant and information was segmented.

Balwani fired people for sins as minor as bringing a flash drive to work. Once some of the senior or more skilled employees realized that neither Balwani nor Holmes had the background or skill in chemistry, biology, or physics to deliver on their promises the employees had moral decisions to make. Some quit; others tried to confront Holmes and were usually fired immediately. Balwani seemed to enjoy bullying and humiliating people. Firing people was just the cherry on his ice cream sundae.


The book's second section concerns the increasing unease of doctors, scientists, regulators and employees of other companies or institutions (Safeway, Wal-Green, the U.S. Military) who had to deal with Holmes. Many of these men and women knew something was wrong with Theranos but were often stymied by Holmes' aggressive legal stance and political reach as well as their bosses' buy-in.

Carreyrou gives an example of an Army Lieutenant Colonel who contradicts a unsubstantiated assertion that Holmes makes and finds himself in a close call with Marine General Mad Dog Mattis. The book's final section details the fall of Theranos. Holmes' hubris and greed made her go live earlier than she should have with devices that often provided results no better than random guessing. Combined with Holmes' higher public profile, this exposure finally gave some whistle blowers the courage to go public. 

This snowballed into increased interest by the appropriate legal and regulatory authorities. And then there was excellent investigative work by the author, who seized frayed threads of various lies and kept pulling despite threats to his job and livelihood. Today Holmes and Balwani face federal indictments for fraud. Theranos is no more.

It's important to point out as the author does repeatedly that by selling these fraudulent devices Holmes was putting people's lives at risk. Missing cancer is horrible but in some cases telling someone that they had cancer or Addison's could be just as deadly. A doctor might prescribe treatment based on Holmes' devices that could negatively impact a healthy person very very badly. "Fake it til you make it" might work for software companies. It doesn't work or rather shouldn't work for medical ones.

It appears that it wasn't just money that motivated Holmes as her family was extremely comfortable, if not quite filthy rich. It seems to have been pure ego as much as greed. There were a lot of people who wanted to see a female led start-up succeed and so shut their ears and eyes to any negative evidence.  You should read this book. It's very well written with a good narrative flow and attention to detail. It's not just about one scummy company. It's about the compromises that all of us make when we try to make money, work for other people, or get caught up in bubbles. 
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