Getting your blood tested is not a fast or pleasant experience. There are needles. A lot of common tests require a good deal of blood, meaning that you often have to give several vials. Because there are needles and lots of blood required, you generally have to go somewhere to let trained people draw your blood. And then they send it to a lab, where more trained professionals analyze it using sophisticated and expensive equipment. Sometime later you get your results, which can include important indicators of your health generally and can also tell you things like how you’re responding to medications. This whole process—go to a place, needles, lab, weeks pass, results—has been mostly the same for decades. The tests themselves have gotten better but the process hasn’t. Technology, though, has improved at such a rapid pace in the last 15 years. Wouldn’t it be great if there was a way to simplify the process? What if there was a blood-testing machine that people could have in their homes? They could put a pinprick’s worth of blood into it, it could analyze the blood and instantly share the results with their doctors. Think of how many lives real-time tracking could save…

Luckily we live in the age of disruption. And so, circa 2006, a prodigy Stanford student made it her mission to revolutionize blood testing. She enlisted professors and engineers and top chemists. She got backing from high-ranking government officials, and she received hundreds of millions of dollars from Silicon Valley venture capitalists to develop an in-home blood testing machine and to revolutionize the way healthcare outcomes are tracked. Hundreds of top minds in many fields poured a decade into the machine’s development. Forbes and the Wall Street Journal and grocery and healthcare conglomerates nationwide lined up to pay for and use this revolutionary new system.

And thanks to all this money and support and brilliance being thrown at an important problem, a decade on, we now have . . . nothing. No machine. No meaningful advances in the field. The company is shuttered. The founder-prodigy is under criminal investigation. And all of that time and those resources poured into a real problem where real improvements are possible and desperately needed yielded nothing at all.

In Bad Blood: Secrets and Lies in a Silicon Valley Startup, John Carreyrou has laid out the stranger-than-fiction story of Theranos in painstaking detail. Here’s the short version: Holmes got a bunch of people onboard with revolutionizing blood testing and got a bunch of venture capital money. She ran the place with an iron fist, firing people constantly and enforcing draconian security procedures. She talked a big game about her technology but had little of it to speak of—most of the early demonstrations by Theranos used faked results, and later on they mostly used other companies’ machines to do blood tests. They evaded regulators and lied to potential partners and clients and kept the charade going for more than a decade using non-disclosure agreements and fancy lawyers like David Boies to silence former employees and other detractors. Eventually someone tipped Carreyrou off to their shell game and he spent years unmasking the fraud through a lot of great investigative reporting and a lot of luck. Now Theranos is no more.

On the one hand, this is a story of a tyrannical boss with an apparent messiah complex torturing her employees and sacrificing any meaningful progress in the world at the altar of her personal ambitions. But it’s also a story about how you gain legitimacy (and funding) for a project in the 21st century. The book reads as an indictment of our culture’s current ideas about innovation. A democratically-controlled workplace with Theranos’s employees and resources could have truly revolutionized blood testing and saved countless lives. But the pressure to innovate and disrupt, and the need for a single visionary leader (whose abuses could be explained away as signs of genius), were necessary to get the money to do this work and, simultaneously, all but guaranteed that the work wouldn’t get done.

Illustrations by Matt Lubchansky

Elizabeth Holmes mesmerized many people she met. With her passion for disruption, her memorably deep voice, her piercing eyes, and her boundless confidence, Holmes was able to sell a seemingly endless line of luminaries on her vision. Holmes was a preternaturally determined individual. When she was about 9, she stated, with the utmost seriousness, that she intended to become a billionaire. The high-level personalities who became involved with Theranos did not do so because they understood the science behind her idea—there was no science to understand—but because of the force of Elizabeth Holmes’ personality.

Considering that the company was an almost total fraud, the number of highly-credentialed supporters Holmes attracted is almost stunning. Henry Kissinger was on the board, along with former Secretary of State George Schultz and former Secretary of Defense Bill Perry. Superstar lawyer David Boies was on the team, as was James Mattis, who concluded that Holmes herself “has probably one of the most mature and well-honed sense of ethics—personal ethics, managerial ethics, business ethics, medical ethics that I’ve ever heard articulated.” Barack Obama appointed Holmes an ambassador for global entrepreneurship, she made multiple White House appearances, and Joe Biden did a photo op at the Theranos lab.

It should have been obvious that Theranos could not actually revolutionize the blood-testing industry. There were more red flags than a Soviet street parade. The company never made it clear exactly how it planned to surmount the considerable chemical and engineering problems involved, and potential investors who pressed for proof that its new testing machines actually worked were given the runaround. When Holmes herself actually tried to explain the new method, Carreyrou points out that she sounded like a high school chemistry student. Here is how she explained the technology to the New Yorker: “A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel.” A chemistry, then a result! Voilà!

Theranos began with promise. Holmes hired top chemical engineers, many of whom did believe that the company could make blood testing significantly more efficient, even if they were skeptical of the outlandish promises Holmes made to the media and investors. (She and her partner Sunny Balwani insisted that their analyzer could process over 1,000 different blood testing codes, even though it had never in fact processed more than 12.) The diligent and competent employees, however, soon found that their workplace ran on Orwellian principles: all communication was obsessively monitored, departments could not talk to one another without going through Holmes, and employees who crossed Holmes or Balwani —by, for example, disagreeing with them—were routinely fired on the spot and frog-marched out of the building.

Holmes began running the operation more like a cult than a business, even saying that she was “building a religion.” Carreyrou reports that she was “dead serious” when she told assembled employees that the Theranos miniLab was “the most important thing humanity has ever built” and if “you don’t believe this is the case, you should leave now.” Advised to dress the part, Holmes started sporting the signature Steve Jobs black turtleneck. She began explicitly imitating Jobs, whom she referred to as “Steve” as if they were close friends. Employees could tell which chapter of Walter Isaacson’s bestselling Jobs biography she was on by which phase of Jobs’ career she was imitating.

As 700 million dollars flowed in, and Holmes was declared Silicon Valley’s first female billionaire based on the estimated value of the company, she became progressively more paranoid and megalomaniacal. She installed bulletproof windows in her office and had a 20-person security team. She worked out of a space designed to look like the Oval Office. Employees were fired constantly over minor issues, and anyone who raised impertinent questions learned quickly that no dissent would be tolerated. Carreyrou writes that Indian workers on H1-B visas effectively became “indentured servants” because of the control the company exercised over their immigration status. One employee emailed Holmes: “You have created a work environment where people hide things from you out of fear. You cannot run a company through fear and intimidation… it will work only for a period of time before it collapses.” Holmes did not change course.

The duplicity at Theranos boggles the mind. When Holmes publicly demonstrated the blood-testing machine, she had it spit out completely fake results. People were told that their samples were tested by the machine when they were actually being tested on standard equipment. The Theranos lab itself contained a secret downstairs that inspectors were kept from viewing. Holmes said that the machines were being deployed by the United States military on the battlefield. They weren’t.

There were tragic human consequences to Holmes’ fraud. A chemist named Ian Gibbons, who prided himself on his integrity and the quality of his work, committed suicide after becoming entangled in Theranos’ deceptions. A number of patients were given terrifying false test results from the Theranos machines, indicating that they had rare life-threatening illnesses. Holmes and Sunny Balwani were seemingly indifferent to the harm inflicted by their lies.

(Actually, as badly as Holmes comes across in Carreyrou’s reporting, her partner Balwani appears far worse. Sunny was far more tyrannical and abusive, conducting most of the summary firings and issuing some of the most menacing threats. Sunny also knew so little about the underlying chemistry that employees had fun trying to sneak a fictitious scientific term into a presentation, which Sunny dutifully repeated to the quiet amusement of his subordinates.)

The obvious, but interesting, question raised by the rise and fall of Theranos is: How could this happen? How could so many “brilliant” minds be duped? Holmes was the toast of Silicon Valley, profiled sympathetically in Forbes, Fortune, and the Wall Street Journal. Rupert Murdoch invested. So did Carlos Slim. Top venture capitalist and Netscape founder Marc Andreessen was a prominent defender of Theranos, even as the whole enterprise began to unravel. A 20-year-old dropout with almost no scientific training in the relevant fields managed to convince dozens of Geniuses that she had solved chemical engineering problems that no expert in the field could surmount, without ever having to explain how she had solved them.

The first explanation is that this was simply a really good story. It fit perfectly with the Silicon Valley Narrative, which at this point is as much of an archetype as the Horatio Alger tale. A college dropout from a prestigious university proves all the experts wrong, disrupting and revolutionizing a field. Holmes’ gender even provided a unique twist on the tale. These rich people wanted it to be true, because it would confirm their view of the world: Innovation doesn’t come from, say, well-funded public universities or the hard work of large teams of lowly employees. It comes from individual entrepreneurs who go their own way and single-handedly upend industries without help from anyone else. And never mind the constant criticisms of male domination in tech (and the attendant misogyny and constant demeaning of women), Holmes proved that Silicon Valley rewarded merit and not maleness. Her success helped the Valley reassure itself about its goodness. 

There was also an element of insecurity: Once somebody is declared a Genius, those tempted to say that the Emperor has no clothes always wonder whether they’re perhaps just missing something. Perhaps the Genius knows best. These things snowball. Once Forbes declares you the next big thing, Fortune will sign on too.

Holmes also knew that the aesthetic of success plays a big role in creating legitimacy. If you’ll look the part, people will treat you accordingly. Fake it till you make it. Holmes’ imitation of Apple extended beyond sweaters. She hired Chiat\Day, the advertising firm that had produced Apple’s famous “1984” ad, to brand Theranos. While the inside of a Theranos machine was clunky and largely useless, Holmes paid obsessive attention to the exterior design. She “wanted a software touchscreen similar to the iPhone’s and a sleek outer case for the machine. The case, she decreed, should have two colors separated by a diagonal cut, like the original iMac.”

All of this worked. Safeway and Walgreens both tried to get Theranos testing machines for all of their stores, and even though neither had seen much evidence of the machines’ viability, the potential upside was so big that they stifled their doubts. Carreyrou writes:

“Safeway was still hesitant to walk away from the partnership. What if Theranos technology did turn out to be game-changing? It might spend the next decade regretting passing up on it. The fear of missing out was a powerful deterrent.”

The reluctance of people to admit they’ve been duped also worked to Holmes’ advantage. George Schultz’s grandson, Tyler, worked at Theranos and saw instantly that there was something deeply awry. He attempted to warn his grandfather, who preferred to destroy his relationship with his grandson rather than contemplate the possibility he had made a serious error in judgment. In one of the more bizarre incidents of Carreyrou’s book, Schultz invited Tyler over to discuss the matter, and hid a team of attorneys in the house, who were waiting to spring out and cajole Tyler into signing an agreement to keep his mouth shut.

Theranos deployed the full coercive power of the law in order to keep its crimes quiet. Employee non-disclosure clauses were enforced to the letter. Anyone who threatened to blow the whistle was immediately warned that they faced serious legal consequences. David Boies’ law firm, Boies Schiller Flexner, pressured doctors who had doubts about Theranos into staying away from the press, and a team of lawyers confronted Carreyrou with (phony) intimations of potential impending libel suits. Getting ex-employees to talk on the record, even those alarmed by the company’s actions, proved challenging for Carreyrou. (Carreyrou’s attempts to track down the sources and piece together the story comprise a particularly gripping part of Bad Blood.)

There are obviously lessons here. Bad Blood sometimes reads like a how-to manual for running a fraudulent company, especially circa 2010. Want to ensure employee silence? Terrify them with constant monitoring and the ever-present risk of immediate termination. Make them sign all kinds of draconian agreements that, even if not actually legally binding, are as scary sounding as possible. Silo, silo, silo: Anyone who can see the whole picture will know about the fraud, but you can keep going for a long time if the engineers think the chemists are doing the real operative work, and the chemists think the engineers are, etc. Better not let them talk to each other. Oh, and of course demand absolute loyalty at all times.

Misconduct can go unnoticed because the law is an effective instrument of maintaining employee silence, or because the truth would wound so many egos that nobody has an interest in confronting it. These factors demonstrate how completely irrational market pricing can be; personality can be just as important as the product in determining what investors make of a company. So don’t worry so much about the science and technology—work on that personality. Get a schtick, steal someone else’s, whatever you can do. Wear black turtlenecks, or maybe hoodies or crocs.

These negative lessons can also tell us something about what is important in running a successful organization. The machines never got built because the engineers didn’t know anything about the fluid dynamics or chemistry problems, the designers didn’t know about the engineering problems, etc. So if you wanted to run Theranos successfully, you would do everything possible to get your different sets of employees together. You want your engineers and chemists to have healthy working relationships. Hell, you want them to be friends. Undying loyalty to you is what you demand when you are a fraud. Curious, joyful, and cooperative engagement with a problem is what you need for solutions.

The same goes for how employers should treat their workers. When disagreement is punished, people stop disagreeing. And then when the boss is wrong, which they inevitably will be even when they aren’t a non-expert in their early 20s, there will be no correction. Hierarchy is often counterproductive, and the stricter it is the worse the effects can be. There are even very simple lessons one can draw about current and common policy proposals: The board members of Theranos would have been served very well by having employee representation on the board, as Elizabeth Warren has proposed requiring.

But Bad Blood also shows us a completely dysfunctional corporate culture. Silicon Valley is a place where anything that promises to “disrupt” and “change the world” can rake in hundreds of millions of dollars, even if the purveyor is no less a flim-flam artist than a 1900s seller of patent medicines. Those celebrated as brilliant are easily tricked, and are certainly no wiser than the rest of us.

The most fortunate among us sometimes find ourselves in a uniquely capitalist quandary: We are faced with the choice between doing a job that is good for the world but pays less, or a job that is terrible for the world but pays more. You can scratch by at a nonprofit trying to get babies out of ICE cages, or you can go be a management consultant and help Saudi Arabia figure out whom to imprison for speaking out. And, for most people, doing good doesn’t last forever. Making relatively little money is exhausting in a world that demands much and judges harshly. Silicon Valley notoriously offers a solution. You can “make the world a better place” and get obscenely rich doing it. That promise is normally a bill of goods cynically sold to earnest souls, people who really want to believe that their lines of code adjusting the formatting on the ads served by some attention-harvesting social media company really are giving people meaning or connection or whatever.

Theranos, though, gives us a small glimpse into a possible alternative reality. Theranos really could have done significant good in the world. The people who came to work for Theranos thought that’s what they would be doing. And Theranos did amass a small fortune to do that. The money was there to improve blood testing and people were willing to do the work—they could have saved lives and lived comfortably for their trouble. But the money wasn’t really there to improve blood testing. The money was there to find a unicorn disrupter who could cement Silicon Valley’s narrative of itself and relieve some of the burden on its conscience. If Theranos had been reasonably and productively managed it could have saved lives, but it never could have raised its money. Holmes had to be both pandering and toxic. She had to be a charismatic non-expert in a black turtleneck. Not because of some fact about the world, but because the only way to get money for this project was to appeal to people with exponentially more ego than expertise or sense.

The money exists. The expertise exists. Everyone would be thrilled to do the work. There is even money to be made, value created, by improving existing systems and possibly even being a little disruptive. But the people and systems for allocating those resources are compromised, maybe beyond repair. And those compromised people and systems demand that inspiring young people be Elizabeth Holmes. Without greed, power-hunger, and workplace tyranny, people can actually get things done. But a culture of hype, always searching for the next Genius, will only give us Elizabeth Holmes and her miracle machine.

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