Bad Blood: Secrets and Lies in a Silicon Valley Startup

 

Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou

Bad Blood is an excellent example of how to write a true story and make it sound as exciting as a thrilling page-turning novel.  Few true accounts have the bite that author Carreyrou has with this narrative.  If you’ve read enough true accounts of companies, organizations, or people who go bad, you know how easy it is for the author to get tied up with so many “facts” and minutia, that the finished product can significantly lose its edge.  I’m reminded of a book titled “The Smartest Guys in the Room” about the Enron scandal. Although that book was a best-seller, there were times when I felt as I was reading an expanded version of the company’s 10k report.  It simply wasn’t very interesting a lot of the time.  Fortunately, this isn’t the case with Bad Blood.

This is the story of the failed start-up company known as Theranos and its CEO Elizabeth Holmes.  Elizabeth Holmes was young, brilliant, attractive, and incredibly ambitious.  She dropped out of college at the young age of nineteen, not because she couldn’t handle it nor didn’t like it, but because she was too impatient.  She was ready to take over the world and didn’t want to waste time waiting to get a college degree.  The company she founded, Theranos, had a very attractive idea that would revolutionize healthcare.  The premise?  When patients needed extensive blood work, they would no longer need to subject themselves to long needles that would drain a substantial amount of blood to fill up multiple test tubes to perform tests.  Holmes set out to create a device that would simply prick a patient’s finger, take a miniscule amount of blood, hook it up to a relatively small box, and within a short amount of time, this little box could perform the extensive tests and give the patient their results in a fraction of the amount of time.

Well, to sum it up, the idea may have been revolutionary, but it simply couldn’t work.  Holmes was so persuasive, though, that she convinced many of the wealthy that it could, and managed to raise millions and millions of dollars to try to make her dream a reality.  When you end up spending the millions and millions of dollars on your idea that never comes to fruition, what do you do?   Author Carreyrou argues that Holmes hemmed, hawed, lied, deceived and stole to masquerade this unpleasant fact.  I got the impression that she wasn’t really that bad of a person (initially anyway), yet got so sucked in by her ambition and greed, that she simply couldn’t accept failure as being an option.  This kind of behavior, sadly, isn’t that uncommon. We read stories all the time of successful entrepreneurs who plow ahead after continuous failures.  Those who make the headlines are the rare few that actually succeeded against insurmountable obstacles.  What we don’t read about are the failures; which probably outweigh the successes by a ratio about 100 to 1.  Who wants to read about failures?   Unless, of course, you have a story as compelling as this one.

The author is a journalist for the Wall Street Journal, and is actually a part of the story.  He pens a piece for his paper that exposes much of the fraud, yet we don’t read about his first-hand recollections until probably 2/3 of the way through the story.  Each chapter that he writes is captivating in that he focuses on so many of the key players.  Not only do we read about Holmes and her lover/business partner Sunny Balwani, but we read about disgruntled employees, employees who are terminated, employees who are threatened by high pressure lawyers, doctors, patients, lab technicians, investors, and acquaintances.  All of them are crucial when reading about this train wreck.

For me, the highlights are what goes on within the walls of the company. Holmes and Balwani run the startup as authoritarian dictators, and you get the impression that working for this company would be a nightmare.  I couldn’t understand why so many of the employees stayed as long as they did.  Example: Not only were the different departments not allowed to speak to one and other, but when outside people were brought in for meetings, they weren’t even allowed to use the restroom without being “escorted” to do their business. They didn’t trust outsiders roaming the hallways.  Another example: We read about an engineer who worked for the company who designs a lighting system for his bicycle on his free time.  When Holmes finds out about this, she’s exasperated.  Why? Because her employees should not have any “free time”.  She expects them to spend every waking minute of their lives at the office trying to make her impossible dream a reality.  This book, I think, could also serve as a case study for companies in teaching management how NOT to treat their employees.

When employees quit, they’re threatened by Holmes and Balwani not to say ANYTHING about the company.  They then spy on ex-employees, and if the individual makes a passing comment, say, to a friend over dinner, the ex-employee next finds a team of threatening lawyers at their front doorstep with a 25 page lawsuit.   In fact, the author himself was threatened many times by these intimidating malcontents. Fortunately, he’s been in the business long enough to know about these scare tactics, and isn’t in the least bit afraid to write about what he knows.

So another story about a high-profile company that failed, and all of the dirty deeds done to cover it up.  What makes this story a bit scary is that the author alleges that such unethical activities happen all of the time when startups are trying to blunder their way to the top.  What makes this company unique, however, is that it’s dealing with the health of people.  So it’s ok if you design a piece of software “full of bugs” and somehow deceive the public, but it’s a definite no-no when your errors can cause a faltered result on a patient’s blood test.  I say “scary” because it really does cause one to be wary of any kind of “new” technology being implemented.   Who are we to trust?

As I write this review Homes and Balwani have yet to go to trial.  Of course, Holmes maintains her innocence.  I don’t see how anyone could believe her based on what this story uncovers.  It will be interesting to see the eventual outcome.   A really sad story.  Sure, it’s great to be young, ambitious, and chase big dreams, but when those dreams don’t come true, one needs to admit failure and not try to consistently cover it up.  So many people still can’t seem to find the courage to admit that they just might be wrong about some things.