Bad Blood is a straightforward read about the meteoric rise and spectacular fall of Theranos. I finished the book during the Easter break. It is one of a few books that I was not able to put down. The bizarre story told in the book kept me wondering whether I have been reading a fiction novel. Sometimes, I can even picture Elizabeth Holmes staring at me without blinking and trying to dupe me into believing her big lies. Scary.
When there are sweet dreams, there are horrifying nightmares too. The blood-testing company Theranos, founded in 2003 by a Stanford dropout Elizabeth Holmes, was certainly one of those in the Silicon Valley.
With millions of dollars raised from lots of high-profile VC investors, the glimmering unicorn came up with a revolutionary blood analyzer that could run hundreds of laboratory tests with just one tiny drop of your blood.
As the money was pulled in, the problem was pulled out: “the iPod of healthcare” never came close to working as promised and everything about Theranos seemed to be a whopping lie. Remarkably, Holmes still managed to fool her way to the top of Silicon Valley and made herself the youngest female billionaire in history.
Nothing seemed to stand in the way of her rise until a host of Theranos secrets and lies were exposed in a series of investigative stories in the Wall Street Journal. After a federal grand jury indicted Homes and former Theranos COO Ramesh Balwani on 11 counts of fraud and conspiracy in June 2018, her house of cards started to fall apart.
This is a shocking story about deceit, fraud, and greed. Yet, sadly, what sets this story different from a typical corporate fraud is that the widely inaccurate and erratic testing results put many vulnerable patients at risk for inappropriate medical treatments – there were terminal cancer patients who have given their blood for testing survival rates!
Holmes often told the heartfelt story about how her beloved uncle had passed away from cancer. It just sounds so ironic now that her device cannot do what it purported to do – build “a world in which no one would have to say goodbye too soon” (mentioned in Holmes’ 2014 TED Talk and other interviews). Before Holmes went down as a disgrace, she acted as a good storyteller, giving people hope.
Theranos seemed to have everything it would need to change the medical industry forever but ended up being one of the biggest frauds in history. So, how did it go so horribly wrong?
The first red flag is that she dropped out of school to create a health tech with no medical knowledge. Early on Holmes rode on the reputation of her investors. However, not everyone was buying into what she was selling – she struggled to convince investors that specialize in medicine, as a lack of knowledge.
She also hired her boyfriend Balwani as the second-in-charge, who came from a software background and had little knowledge of the inner workings of a medical company. Clearly, Holmes and her team did not understand that her unicorn was not a traditional tech venture. When it comes to medical ethics and human life, the “fake it until you make it” ethos of Silicon Valley do not work.
The Theranos board was made of seasoned professionals, but none of them had any experience in diagnostics. If they had, they might be able to notice these red flags a lot sooner. However, do not forget that Holmes was a master manipulator. With her incredible power of lobbying and persuasion, she had her board wrapped around her finger. That is another reason why Theranos was kept afloat for more than a decade with no real working technology.
Holmes used inflated accounting numbers and falsified test results to back up her claims in front of investors and clients, while constantly firing skeptics and doubters with legal threats. The cultural disease at Theranos is what Holmes should have aimed to cure first. Tough questions shall also be raised regarding the failure of regulators to stop Theranos – why it took so many years until the company collapsed in a sea of federal charges?
In mid-2014, Fortune magazine released a front-page story titled “This CEO is out for blood”. This rocketed Elizabeth Holmes to celebrity status and the flattering press coverage became part of Theranos’ strategy. From this point, she was constantly making media appearances.
Holmes was everything that the media was looking for. There is no better story than a young female entrepreneur breaking into the boys’ club of Silicon Valley, who dropped out of Stanford at 19 because she wanted to change the practice of the medicine. No, that is not what she was after in life. From a young age, Elizabeth Holmes knew exactly what she wanted – to become a billionaire. She was obsessed with fortune and then, fame.
The Theranos story reflects a current problem in our society that the appearance of success measured by mad money outweighs everything else. Holmes was willing to stop at nothing to make a fortune, not worrying about the severe jeopardy due to her fake promise to patient health. The investors only cared about the tech-driven wealth and cannot be bothered to question the validity of the blood-testing technology, which affects millions of people that have serious illnesses. While there are some real breakthroughs in the medical field missing in the sea of media, reporters and journalists cannot get enough of Holmes and her big lies. This is a sad story where innovation, capitalism, and ethics got lost.
Elizabeth Holmes idolized Steve Jobs that she only wore black turtlenecks. I hope, sooner or later, orange is going to be the new black for her. ▲