Biographies of great achievers can be a great source for inspiration. They can not only teach us resilience and strategy, but we can also see that every great individual who managed to achieve some ambitious goals had his faith tested several times along the way. Their vision combined with a burning desire and backed by discipline, hard work and people skills are the reasons why we now have great things that we take for granted, which can include: the incandescent light bulb, the antibiotics, the airplane, or the smartphone.
But what happens if, for a bright Stanford student with great resilience, sales skills and connections, being remembered as a great inventor like Thomas Edison, Louis Pasteur, The Wright brothers or Steve Jobs is more important than helping the world with a revolutionary discovery? This is the true and tragic story of Elizabeth Holmes and the company she so desperately wanted to become a success: Theranos.
I don’t read a lot of page turners. I often find myself unable to put a book down—but they’re not the kinds of books that would keep most people glued to their chairs. Still, I recently found myself reading a book so compelling that I couldn’t turn away.Bill Gates
Why is this thriller/biography/study case so important? Because we can be inspired by great achievements but we can also learn caution from the great failures. In short, this company promised to quickly give you a complete picture of your health using only a small amount of blood. Elizabeth Holmes founded it when she was just 19 years old, and both she and Theranos quickly became the darlings of Silicon Valley. She gave massively popular TED talks and appeared on the covers of Forbes and Fortune. By 2013, Theranos was valued at nearly $10 billion and even partnered with Walgreens to put their blood tests in stores around US. The problem? Their technology never worked. It never came close to working. But Holmes was so good at selling her vision that she wasn’t stopped until after real patients were using the company’s “tests” to make decisions about their health. She and her former business partner are now facing potential jail time on fraud charges, and Theranos officially shut down in August 2018.
There are a lot of interesting documentaries about this subject, like the one below, but they all have two things in common: they focus more on the second part of the company’s history and they do not get into much detail about the damage done by the company (like the struggles people working there had to endure and the troubles it caused to the people who wanted to either use or acquire this wonder device). The public didn’t really know about Theranos’ deception until Carreyrou broke the story as a reporter at theWall Street Journal. Because he was so integral to the company’s demise, Bad Blood offers a remarkable inside look.
The book presents the entire story of Theranos, from the moment it was conceived.
There’s a lot Silicon Valley can learn from the Theranos mess. To start, a company needs relevant experts on its board of directors. The Theranos board had some heavy hitters—including several former Cabinet secretaries and senators—but for most of the company’s existence, none of them had any expertise in diagnostics. If they had, they might have noticed the red flags a lot sooner.Bill Gates
Bad Blood tackles some serious ethical questions, but it is ultimately a thriller with a tragic ending. It’s a fun read full of bizarre details that will make you gasp out loud. The story almost feels too ridiculous to be real at points (no wonder Hollywood is already planning to turn it into a movie).
Another theme present in this story is the David vs Goliath fight between a company with vast resources, powerful investors and an army of well-renowned lawyers led by the famous David Boies, and a group of people (ex-Theranos-employees and a journalist) who wanted the truth to come up. Boies and his firm are described as protecting the startup using surveillance of witnesses and journalists, weaponized use of non-disclosure agreements and affidavits, intimidation tactics, and other heavy-handed practices. But the moral integrity and the fear of being associated with Theranos’ practices pushed the ex-employees into helping Carreyrou to get enough information so that the story could be made public (something Theranos and it’s lawyers tried desperately to stop).
Beyond the seriousness of this ordeal, there are some really ridiculous things described in the book:
- Elizabeth’s brother, who worked at the same company, used to copy and paste text into empty emails just for people to see that he is working. He also managed to hire in the company three of his friends and together they used to go out during work hours. To avoid suspicion, one of them kept an evidence of the time each one of them came in and out, so that they didn’t all disappear at the same time regularly.
- Observing that Elizabeth and Sunny (her fiancee who was also second in command and had an aggressive style of management and a very bad attitude towards employees) often went together to the bathroom, their colleagues were joking that they went to do drugs together.
- Because of his paranoia and erratic behavior, Sunny used to get into strong arguments with the Theranos’ employees and fire them afterwards. During one of these arguments, he shouted at an employee: “I have 40 million dollars and I don’t need to be here.” , to which the employee responded: “I don’t have a dollar in my account and I still don’t need to be here”. After another heated argument, one of the employees quit and left the facility refusing to sign any additional documents that would ensure he never spoke about what happened during his employment. Upon hearing that, Sunny called the cops and told them that an employee left with “the company’s secret data”. Asked how did he managed to get the data out, he replied: “it’s in his head”.
- Knowing that Elizabeth was reading the biography of Steve Jobs, the employees did that also. Judging by the way she acted, they knew the chapter she was on.
- Theranos claimed that tests done with their device were more accurate than those done in a traditional way. They arrived at this conclusion because it was believed that 93% of the errors in blood analysis were human errors, thus making the automated process used by Theranos way more reliable. However, during a trip to Switzerland, when the company was trying to get more clients, the device failed on all tests. Furthermore, one day earlier, Elizabeth pricked her fingers for two hours to see if the results are not correct, but consistent. They were neither.
- Some employees perceived the lack of attention span and knowledge of Sunny, and decided to use that against him. Responding with an email of more than 500 words would silence him because he was too lazy to read big emails. Also, he liked to repeat technical terms he heard, but he would usually pronounce them in a wrong way. After observing that, the employees started to use his version of the terms in future presentations, and burst out laughing after he left the room.
The author ends the book by stating that he believed Elizabeth did not initially set out to defraud investors and put patients in harm’s way when she dropped out of Stanford 15 years earlier. By all accounts she had a vision that she genuinely believed in and threw herself into realizing. But in her all-consuming quest to be the second coming of Steve Jobs amid the gold rush of the “unicorn” boom, there came a point where she stopped listening to the sound advice and began to cut corners. Her ambition was voracious and it brooked no interference. If there was collateral damage on her way to riches and fame, so be it.
Since Theranos had also bright employees who wanted to do their job but their work was undermined by the company’s leadership who created a toxic environment based on secrecy and non-communication between different departments of the company, we can conclude that this is a pure example of a terrible style of management that we should all avoid at all costs.