Bad Blood: Secrets and Lies in a Silicon Valley Startup

Scion of a noted family surrounded by great expectations, Elizabeth Holmes started the company that would become Theranos from her dorm room at Stanford in 2002. Her skills as a founder—decisiveness, optimism, intelligence, piercing blue eyes, and deep voice—attracted several high-powered people to the company’s staff and board of directors. For a time, her promise of a revolution in healthcare, via blood readers that could run dozens of tests on a few drops of blood, seemed unstoppable, and by 2014 Theranos was worth $9 billion. Problems with the company’s machines kept cropping up, however, and employees who brought these issues to Elizabeth tended to get fired. To cover up these issues, Elizabeth became increasingly bold in lying to supporters and the media.

Her misdeeds, and those of her company, finally became known, and federal agencies banned Theranos from the blood-test business. Backers and patients sued, and federal fraud charges were brought against Elizabeth and her aide, Sunny Balwani. Elizabeth had to give up her voting rights and stock; by 2018, her estimated worth had fallen from $4.5 billion to zero. At the time of Bad Blood’s 2020 update, the wire fraud trial was still pending. 

An internet-millionaire Pakistani in his mid-40s who met Elizabeth at Stanford’s Mandarin language program, Sunny become both her advisor and boyfriend. In 2008, he was made executive vice chairman and got involved in all aspects of Theranos, ordering employees around in a high-handed manner and threatening or firing them if they refused to comply with demands that they lie about data coming from Theranos blood testers. When the company collapsed, Sunny was brought up on fraud charges alongside Elizabeth. 

Lieutenant Colonel David Shoemaker, a microbiology PhD in charge of monitoring all medical equipment considered for use by US forces, visited Theranos to hear about a plan to put that company's blood readers into forward bases in Afghanistan. Suspicious of Theranos’ efforts to circumvent FDA regulation, Shoemaker contacted federal officials who visited Theranos for an inspection. A furious Elizabeth Holmes wrote to General James Mattis, who approved the Afghanistan blood-test project, asserting that Shoemaker was defaming her company and interfering with Mattis’ orders. Mattis demanded an explanation from Shoemaker, who managed to convince Mattis that there were irregularities that needed resolution. They decided on a plan to move forward, but inaction by Theranos caused delays, and both men retired before any resolution could be reached. 

Four-star general Mattis, director of US Central Command and for two years secretary of defense in the Trump administration, is famous for his fierce devotion to his soldiers and a hard-bitten, take-charge approach to strategy and tactics. He once addressed his Iraqi troops with the following directive: “Be polite, be professional, but have a plan to kill everybody you meet” (128). Elizabeth met with and convinced Mattis to use her blood-test system on the battlefield in Afghanistan. When later she wrote to him, accusing Lt. Colonel David Shoemaker of stonewalling the Army vetting process, an angry Mattis demanded an explanation from Shoemaker, who clarified the situation and drew up a plan to expedite things. Theranos failed to move forward with the plan, and Mattis retired from the Marine Corps soon after, but he joined the Theranos board. 

Attorney Boies was a “master litigator” renowned for shepherding the US antitrust case against Microsoft, managing Al Gore’s appeal before the Supreme Court of the US presidential election in 2000, helping to overturn California’s ban on gay marriage. Boies was ruthless in ferreting out dissidents among Theranos employees, using spies and intimidation to get his way. Boies tried to scuttle Carreyrou’s exposé in The Wall Street Journal of problems at Theranos, but he failed, and, as the company collapsed under pressure from regulatory restrictions and major litigation, he left Theranos’ employ. 

Grandson of George Shultz, US President Reagan’s secretary of state, Tyler finished his undergraduate studies at Stanford and, inspired by Elizabeth Holmes’ speeches about her revolutionary vision of the future of medicine, began working at Theranos in 2013. Tyler discovered serious irregularities at the company and tried to alert Elizabeth but was rebuffed. He resigned, only to be hounded by attorneys who demanded that he turn over all information and documentation involving Theranos and its naysayers. Tyler refused and, instead, helped journalist Carreyrou with his investigation into Theranos. He also tried and failed to convince his grandfather of the problems at Theranos, and they became estranged.  

A well-respected chemical engineer and inventor, Ian held 50 US patents and was, arguably, the actual inventor of technologies claimed by Elizabeth Holmes. Richard Fuisz, another inventor who devised and patented a radio communication system to transmit data from machines like Elizabeth’s, hoped that Gibbons, who had grown despondent and discouraged by incompetence and fraud at Theranos, would testify for him in the lawsuit between Fuisz and Theranos. Caught between his job and his conscience, on the day before his deposition, Ian committed suicide. 

Pathologist Alan Beam was Theranos’ lab director beginning in 2013. He found intolerable irregularities in the company’s procedures but couldn’t convince Elizabeth and Sunny of the need to fix them. Fed up, he resigned but kept critical emails for documentation. Found out and forced to destroy the copies, Alan omits to mention that he also sent the documents to a whistleblower law firm, which later forwarded them to journalist Carreyrou, and the documents became evidence in The Wall Street Journal report on Theranos misdeeds.