Bad Blood: Secrets and Lies in a Silicon Valley Startup

by John Carreyrou

Both reported up to Elizabeth but weren’t encouraged to communicate with each other. Elizabeth liked to keep information compartmentalized so that only she had the full picture of the system’s development.

Ed pushed back against Elizabeth’s proposal. Even if he instituted shifts, a round-the-clock schedule would make his engineers burn out, he told her. “I don’t care. We can change people in and out,” she responded. “The company is all that matters.”

Ellison might be one of the richest people in the world, with a net worth of some $25 billion, but he wasn’t necessarily the ideal role model. In Oracle’s early years, he had famously exaggerated his database software’s capabilities and shipped versions of it crawling with bugs. That’s not something you could do with a medical device.

Before long, Ed noticed that Elizabeth was making new engineering hires, but she wasn’t having them report to him. They formed a separate group. A rival group. It dawned on him that she was pitting his engineering team and the new team against each other in some corporate version of survival of the fittest.

You couldn’t even exchange instant messages with a coworker. The chat ports were blocked. It was all in the name of protecting proprietary information and trade secrets, but the end result was hours of lost productivity.

“When you strike at the king, you must kill him.” Todd Surdey and Michael Esquivel had struck at the king, or rather the queen. But she’d survived.

Tony, who was under a lot of pressure from Elizabeth, finally had enough of hearing Aaron’s complaints and asked him to leave the company. “Go find a place where you can be a big fish in a small pond,” he told him.

Patent applications don’t become public until eighteen months after they’re filed, so neither Elizabeth nor her parents were initially aware of what Fuisz had done.

It was unusual for Walgreens to move this quickly. Opportunities the innovation team identified usually got waylaid in internal committees and slowed down by the retailer’s giant bureaucracy. Dr. J had managed to fast-track this one by going straight to Wade Miquelon, Walgreens’s chief financial officer, and getting him behind the project. Miquelon was due to fly in that evening and join them at the next day’s session.

Hunter was beginning to grow suspicious. With her black turtleneck, her deep voice, and the green kale shakes she sipped on all day, Elizabeth was going to great lengths to emulate Steve Jobs, but she didn’t seem to have a solid understanding of what distinguished different types of blood tests.

Van den Hooff listened with a pained look on his face. “We can’t not pursue this,” he said. “We can’t risk a scenario where CVS has a deal with them in six months and it ends up being real.”

Before long, Safeway too signed a deal with Theranos. Under the agreement, it loaned the startup $30 million and pledged to undertake a massive renovation of its stores to make room for sleek new clinics where customers would have their blood tested on the Theranos devices.

To Hunter’s amazement, he had even stopped asking Elizabeth and Sunny about the test results from the kickoff party. He was apparently willing to let Theranos get away with not producing them.

He focused on what he could control, continuing to ask tough questions on the weekly video calls until one day in early 2011 Lipinski told him that Elizabeth and Sunny no longer wanted him on the calls or in meetings between the companies. They felt that he was creating too much tension and that it interfered with getting work done, she said. Walgreens had no choice but to comply or Theranos would walk away, she added.

“Be polite, be professional, but have a plan to kill everybody you meet.”

Mattis was reluctant to give up. He wanted to know if they could suggest a way forward. As he’d put it to Elizabeth in an email a few months earlier, he was convinced her invention would be “a game-changer” for his men.

Elizabeth’s new corner office was designed to look like the Oval Office. Patrick ordered a custom-made desk that was as deep as the president’s at its center but had rounded edges. In front of it, he arranged two sofas and two armchairs around a table, replicating the White House layout. At Elizabeth’s insistence, the office’s big windows were made of bulletproof glass.

We posted it on the Journal’s website and the accompanying story quoted a laboratory expert who said its findings suggested the Edisons’ results were no better than guesswork.

“Theranos Had a Chance to Clear Its Name. Instead, It Tried to Pivot.”

Employees were prohibited from putting “Theranos” on their LinkedIn profiles. Instead, they were told to write that they worked for a “private biotechnology company.”

In December 2013, she forced through a resolution that assigned one hundred votes to every share she owned, giving her 99.7 percent of the voting rights.

If anything, it was Holmes who was the manipulator. One after another, she wrapped people around her finger and persuaded them to do her bidding. The first to fall under her spell was Channing Robertson, the Stanford engineering professor whose reputation helped give her credibility when she was just a teenager. Then there was Donald L. Lucas, the aging venture capitalist whose backing and connections enabled her to keep raising money. Dr. J and Wade Miquelon at Walgreens and Safeway CEO Steve Burd were next, followed by James Mattis, George Shultz, and Henry Kissinger (Mattis’s entanglement with Theranos proved no obstacle to his being confirmed as President Donald Trump’s secretary of defense). David Boies and Rupert Murdoch complete the list, though I’ve left out many others who were bewitched by Holmes’s mixture of charm, intelligence, and charisma.

Court filings from one of the investor lawsuits, meanwhile, revealed that former Secretary of Education Betsy DeVos had been among the company’s biggest investors. Ms. DeVos’s family lost $100 million—the same sum as the Cox family. Their losses were topped only by Rupert Murdoch, who lost $121 million (he got $4 million back under a legal settlement) and two Walton heirs, who had invested a combined $150 million. All told, investors in Theranos lost nearly $1 billion.