Theranos: John Carreyrou’s Bad Blood, Secrets and Lies in a Silicon Valley Startup

“Intersectionality” as an idea doesn’t appeal to me, but the coincidence of Morgan Freeman’s troubles, and the publication of John Carreyrou’s Bad Blood, had me thinking about the word for days.

As everyone knows, the 80-year-old Freeman is accused of leering and unwanted touching by eight women. What sets him apart from other accused men is that much of it occurred in view and some was actually captured on video while he knew the cameras were rolling. In a montage meant to provoke outrage, Freeman is seen flirting with broadcast journalists in ways they appear to enjoy, showing a man whose soulful eyes are brimming with seductive appreciation. He is also in thrall to these young women; anyone who misses that isn’t looking hard enough.

Carreyrou’s investigation into the failure of Theranos, an ambitious healthcare startup, and the news about Freeman suggest a common theme: as the CEO of Theranos, Elizabeth Holmes appears to have been the mistress of a Silicon Valley honey-trap, one enhanced by the aura of tech wizardry, the promise of astronomical earnings, and the chance for investors to make history. Her relationships with much older men were key.

Holmes was a 19-year-old Stanford dropout when she conceived the idea of a skin patch that could both draw blood and diagnose illnesses. When it became clear the patch “bordered on science fiction,” her next idea was to develop a blood testing machine with the capacity to run multiple analyses with just one drop. The machine had to be small and simple enough to be placed in patients’ homes, where it would send results to doctors who could diagnose illnesses or adjust drug dosages remotely. Of course, conducting blood tests from home and receiving treatment over the internet held the promise of revolutionizing healthcare. 

What follows in Carreyrou’s account is Holmes’ twelve-year odyssey to bring the machine into being, a period of time that saw her go from doe-eyed ingenue to vindictive diva, one that fired a head-spinning list of experts and had security details large enough to rival a sitting president’s. The question posed by Bad Blood is how were so many investors fooled?

It helped that Holmes started out with good family connections. Via father Chris Holmes’ contacts in the U.S. government and the corporate world, she was able to draw in a wide, impressive circle of investors. By the end of 2004, the year she started the company that became Theranos, she had raised six million. Throughout years of balancing the promise of brave new technology with stratospheric levels of “trade secret” security–a trick that created its own convincing patina–Holmes enjoyed several successful investment rounds. In early 2014, almost ten years later, private investors and hedge fund managers were staking amounts in the neighbourhood of $100 million.

Sunny Belwani: Holme’s much older (and secret) boyfriend eventually became her protector and enforcer at Theranos. His claim to vast technical knowledge made him a figure fun for many experts at the startup.

The problem was simple: Holmes’ idea was daring but impossible. The drop-sized samples didn’t allow for comprehensive assays, not without diluting blood to distorting volumes, and the wildcards of end-user error on the one hand, and the necessity for divergent test methods on the other, meant the machine could not be made, at least not in the compact way Holmes had conceived it. That she was able to fool people was down to her sustained optimism, which over the years, and what must have been mounting panic, turned to dishonesty and scorched-earth litigation. Employees who dared to point out problems or express discomfort at her dissembling were routinely escorted out of the building and forced to sign non-disclosure agreements under threat of ruin. With superstar lawyer David Boies on her side, Holmes wasn’t messing around.

Apart from learning how to hide her lack of progress, she also had a board of directors that included luminaries: former secretaries of state George Shultz and Henry Kissinger, former secretary of defense William Perry, senate arms services committee Sam Nunn and former navy admiral Gary Roughead. As Carreyrou notes, all were fellows at the Hoover Institution and had been “carefully cultivated” by Holmes after she initially won Shultz over. As accomplished as these men are, none had any meaningful experience with Silicon Valley, a deficit that told its own story once an autopsy of Theranos was underway.

What is reminiscent of Freeman’s troubles is that Holmes’ good looks and appearance of wide-eyed vulnerability likely extended Theranos’ disastrous run. The trend of octogenarians marrying young models, à la Anna Nicole Smith and J. Howard Marshall, suggests, just as those clips of Freeman suggest, Holmes’ elderly supporters were in thrall to her too, a phenomenon that is often summed up in that unkind proverb, “There’s no fool like an old fool.”

For example, Shultz supported her at the expense of alienating his own grandson. Tyler Shultz, a Stanford graduate, had worked at Theranos and was the first ex-employee to provide Carreyrou with documents proving the company’s ominous sleights of hand. It’s notable that Tyler became estranged from his grandfather over the latter’s obstinance about Theranos’ viability, creating a rift and leaving the young man vulnerable to litigation. That Holmes attended Shultz’s ninety-fifth birthday celebrations while Tyler did not is just one of several sad footnotes in the story.

That said, Bad Blood is a hoofer of a tale: thoroughly engaging and light and graceful on its feet. Following the science and the engineering, Carreyrou’s understanding of events is clear and is complemented by skilful portraiture. The anguish of those attempting to address the cognitive dissonances that defined the Theranos mandate is balanced by just enough light-handedness, especially when it comes to exploring the liability that was Sunny Balwani’s Svengali to Holmes’ not-so-innocent Trilby. That was another May-December relationship that was kept under wraps for many years, especially when, five years into Theranos’ run, Balwani stepped into the daily operations and became Holmes’ dim-witted enforcer.

Former Secretary of State, George Shultz

Carreyrou’s story isn’t focused on feminist themes, so my assessment of Holmes’ character is mine alone. However, it arises from an intersection of facts: Theranos’ failure and that annoying trend of believing women are perennial victims, especially of older, wealthier (and often white) men. In this case, Holmes successfully sold a fantasy to men who turned out to be credulous marks: she cultivated a persona, found her targets, and produced story after story while the money kept pouring in.

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