Bad Blood: Secrets and Lies in a Silicon Valley Startup

by John Carreyrou

Elizabeth didn’t actually drop out of Stanford until the following fall after returning from a summer internship at the Genome Institute of Singapore. Asia had been ravaged earlier in 2003 by the spread of a previously unknown illness called severe acute respiratory syndrome, or SARS, and Elizabeth had spent the summer testing patient specimens obtained with old low-tech methods like syringes and nasal swabs. The experience left her convinced there must be a better way.

Elizabeth incorporated the company as Real-Time Cures, which an unfortunate typo turned into “Real-Time Curses” on early employees’ paychecks. She later changed the name to Theranos, a combination of the words “therapy” and “diagnosis.”

JINX!!!

She was so fixated on the idea that she got upset when an employee ordered up fake blood drops made of foam and put the Theranos logo on them for a company display at a job fair. Elizabeth felt the foam drops were much too big to convey the tiny volumes she had in mind.

There was a rumor circulating around the office that he’d been caught embezzling funds.

There was also a cold, businesslike dynamic to their relationship. When they parted at the airport, Sunny didn’t say “Goodbye” or “Have a nice trip.” Instead, he barked, “Now go make some money!”

From that point on, she came to work in a black turtleneck and black slacks most days.

Who ever said a lady needed to dress provocatively to get stupid old men to fall all over them.

information was split into silos, hampering communication between employees and departments. 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.

Avie decided to exercise his rights and told Esquivel he wanted to acquire the pro-rata portion of Shaunak’s stock he was entitled to.

Why would you want to own more useless shit after seeing the light?

Unionized moving companies were all mob controlled, the person said. What Theranos was proposing to do risked devolving into violence.

In some instances, she asked him to build a dossier on the person that she could use for leverage.

Once or twice, Aaron Moore tried to put it to use by coaxing several colleagues into a game of indoor soccer.

One of the stops was at Bebo, a social networking startup that was acquired by AOL a few weeks later for $850 million.

Fuisz was referring to his patent filing in conversations with his wife as “the Theranos killer.”

Standing in front of a slide titled “Disrupting the Lab Industry” projected on a big screen, one of the Walgreens executives was singing along to “Imagine.”

Corporate Ra Ra at its finest.

While Elizabeth was fast to catch on to engineering concepts, Sunny was often out of his depth during engineering discussions. To hide it, he had a habit of repeating technical terms he heard others using.

PHB

Forwarding the email to her personal Yahoo account would have been easier, but she knew Sunny closely monitored employees’ email activity. So she hid the printout in her bag and smuggled it out.

Still visibly angry, Elizabeth told the gathered employees that she was building a religion. If there were any among them who didn’t believe, they should leave.

And no one thought about calling her out about her delusions here?

the unicorns were able to raise staggering amounts of money privately and thus avoid the close scrutiny that came with going public.

there was nothing like a magazine cover to grab people’s attention. Especially when that cover featured an attractive young woman wearing a black turtleneck, dark mascara around her piercing blue eyes, and bright red lipstick next to the catchy headline “THIS CEO IS OUT FOR BLOOD.”

Their code name for her was “Eagle One.” (Sunny was “Eagle Two.”) The Audi had no license plates—another nod to Steve Jobs,

Rochelle spoke on the record even though she had inherited from her husband Theranos stock options that were potentially worth millions of dollars. She didn’t care about the money, she said, and in any case, she didn’t believe the shares were really worth anything.

Ding ding ding!!! Finally someone who finally knew the value of crap is CRAP.

“We’re doing this for you,” George said. “Elizabeth says your career will be over if the article is published.”

After all, Theranos’s employees, its investors, and its retail partner, Walgreens, had all learned of the inspection’s findings and the threatened ban by reading the Wall Street Journal. If Holmes was sincere about making things right, why had she tried so hard to suppress their disclosure?

I now suspected Theranos had had both of us under continuous surveillance for a year. And, more than likely, Erika Cheung and Alan Beam too.

In spite of all these setbacks, Holmes felt she still had one card to play to turn public opinion around: wow the world with a display of her technology.

What technology? Using someone else's machine? Or the one about using OTC tests?

She wore a white blouse under a dark jacket. Gone was the black turtleneck, which had become an object of ridicule since the previous fall.

Other lab experts were quick to note that none of the miniLab’s various components were novel. All Theranos had done was make them smaller and pack them into one box, they said.

Most of the other investors opted against litigation, settling instead for a grant of extra shares in exchange for a promise not to sue.

Let me do some math here. First we add the zeros together. Then, we carry the zero over to the other zero. Eventually, we get a big giant ZERO.

Two years and three months later, she finally delivered on that pledge: in January 2018, Theranos published a paper about the miniLab in the peer-reviewed scientific journal Bioengineering and Translational Medicine.

Such overpromising became a defining feature of Silicon Valley. The harm done to consumers was minor, measured in frustration and deflated expectations.

By positioning Theranos as a tech company in the heart of the Valley, Holmes channeled this fake-it-until-you-make-it culture, and she went to extreme lengths to hide the fakery. Many companies in Silicon Valley make their employees sign nondisclosure agreements, but at Theranos the obsession with secrecy reached a whole different level. Employees were prohibited from putting “Theranos” on their LinkedIn profiles. Instead, they were told to write that they worked for a “private biotechnology company.” Some former employees received cease-and-desist letters from Theranos lawyers for posting descriptions of their jobs at the company that were deemed too detailed. Balwani routinely monitored employees’ emails and internet browser history. He also prohibited the use of Google Chrome on the theory that Google could use the web browser to spy on Theranos’s R&D. Employees who worked at the office complex in Newark were discouraged from using the gym there because it might lead them to mingle with workers from other companies that leased space at the site.

Hyping your product to get funding while concealing your true progress and hoping that reality will eventually catch up to the hype continues to be tolerated in the tech industry. But it’s crucial to bear in mind that Theranos wasn’t a tech company in the traditional sense. It was first and foremost a health-care company. Its product wasn’t software but a medical device that analyzed people’s blood.

Two years later, Holmes made sure that the board would never be more than a placeholder. 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. From that point on, the Theranos board couldn’t even reach a quorum without Holmes. When he was later questioned about board deliberations in a deposition, George Shultz said, “We never took any votes at Theranos. It was pointless. Elizabeth was going to decide whatever she decided.” This helps explain why the board never hired a law firm to conduct an independent investigation of what happened. At a publicly traded company, such an investigation would have been commissioned within days or weeks of the first media revelations. But at Theranos, nothing could be decided or done without Holmes’s assent.

Countries call this dictatorship.

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.

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 when she stopped listening to 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.

Not a spoiler. Its was a trainwreck always about to happen.

I am very lucky that this book landed at Knopf and in the deft hands of Andrew Miller. Andrew’s enthusiasm and his unshakable faith in me gave me the confidence I needed to bring it to fruition. I’m