Blood testing company Theranos rose to mighty heights thanks to a charismatic CEO. But it was a scam unravelled by journalist. Theranos closed this week. Nicola Kean reviews the extraordinary book by that journalist.
Elizabeth Holmes wasn’t just running a company, she was saving the world. One miraculous finger-prick blood test at a time.
Persuasive, passionate, and clad in a Steve Jobs-esque turtleneck, she parted establishment figures like Henry Kissenger and Jim Mattis from their money and leveraged their credibility. Her company, Theranos, was at one point valued at $9 billion, and was a darling of Silicon Valley.
Except it was all a long, and dangerous, con. Theranos claimed its machines could perform a number of blood tests with just a prick of a finger, a medically dubious proposition in the first place – but one even more unlikely given the readiness of the technology. That didn’t stop Holmes and her associates, despite warnings from staff, from bulldozing and NDA-ing their way into lucrative deals with the likes of the U.S. supermarket giant Safeway and drug store Walgreens.
That’s the story John Carreyrou tells in the first half of his book ”Bad Blood: Secrets and Lies in a Silicon Valley Startup.” The second half is devoted to how he unravelled it all.
The scam was so audacious, you wouldn’t quite believe it if it were fiction. Numerous staffers tried to warn Holmes that the tech wasn’t ready and the results were dangerously flawed – they were ignored, fired, or bullied into leaving the company after signing extensive non-disclosure agreements. Others blew the whistle but weren’t believed.
Afraid to miss out on the Next Big Thing, executives, investors and even board members turned a blind eye to troubling signs – contracts always in the works, evidence promised but never provided.
Regulators and politicians were deliberately shown a dummy lab. Rumours were spread that Theranos machines were being deployed on the frontline in Afghanistan, a blatant lie. Theranos director and former U.S cabinet member George Shultz chose to believe Holmes over his own grandson, who was so troubled by what he saw working at the company he quit and eventually became a key source for Carreyrou.
The machines didn’t even work on a basic level – many of the unfortunate people subjected to Theranos’ products had to do old fashioned tests, and often the blood work was done in commercial machines it had purchased. When tests were done with Theranos technology the proportion of false results was alarming, and many patients ended up in emergency rooms unnecessarily.
Why did she do it?
Carreyrou avoids the easy portrayal of Holmes as a femme fatale, using her wiles to trick middle aged and elderly men into parting with their cash. It’s much more complex, and confusing, than that.
Holmes has repeatedly declined interview requests – she and her former boyfriend/Theranos president Sunny Balwani are now facing serious fraud charges – so where the book struggles is explaining her motivation. Did she over promise and then cut corners in order to deliver? Or did she know exactly what she was doing and not care that lives were at risk? We won’t know unless she decides to talk one day, and even then we may not have an answer. But while the ultimate responsibility for the Theranos disaster lies with Holmes, those who enabled her also deserve a share of the blame.
New Zealand in particular it seems alarmingly easy to win good reviews from an overstretched local press.
The checks and balances failed. The board, stacked with prestige names, knew little about medical tech and appeared to take Holmes at her word. Regulators were overstretched and seemingly easy to deceive. The Silicon Valley press pumped up Theranos and Holmes without looking too hard under the hood.
It took a front page Wall Street Journal story, published in the face of heavy legal threats, to bring it all crashing down. It could happen again – and in New Zealand in particular it seems alarmingly easy to win good reviews from an overstretched local press.
It’s hard to come away from the book without the impression that the way Silicon Valley operates is deeply flawed at best, broken at worst. The little breadcrumbs of clues that Theranos was a total sham were laid out in a fairly clear path.
The NHS phlebotomist who took my blood sample a few weeks ago shook her head when I explained Holmes’ idea that multiple tests could be done with a finger prick worth of blood. “Not possible,” she said. It wouldn’t have taken much push-back from investors or clients, like Walgreens or Safeway, for the mask to slip. And yet, the prospect of making money or beating a competitor to a potentially groundbreaking technology was too great.
* Nicola Kean is a New Zealand journalist working in London. She was a producer of The Nation and the Parliamentary Press Gallery when working in New Zealand.