Bad Blood: Secrets and Lies in a Silicon Valley Startup

Nonfiction | Book | Adult | Published in 2018

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Summary

Chapter Summaries & Analyses

Author’s Note-Chapter 6

Chapters 7-10

Chapters 11-16

Chapter 17-Afterword

Key Figures

Themes

Index of Terms

Important Quotes

Essay Topics

Tools

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Discussion Questions

Themes

The Glory Versus the Reality

Growing up, Elizabeth Holmes was told that she was part of a grand family legacy of great achievers, starting with ancestor Charles Fleishmann of the Fleischmann Yeast fortune. As a child, Elizabeth dreamed of being a billionaire married to a US president.

Brilliant, intensely driven, able to talk nearly anyone into giving her what she wanted, Elizabeth quit her studies at Stanford to pursue her dream of changing the world of medicine with her new blood tester. The work was hard and prone to failure, but, under the high-stress competitive pressure of Silicon Valley’s startup culture, Elizabeth decided that her idea for a fast, portable blood-test service had to work, and, therefore, that it did work. As far as she was concerned, her own beliefs trumped reality.

No one could penetrate Elizabeth’s arbitrary belief system, and few could withstand the power of her charming salesmanship. Though in fact her machines didn’t work, she would tell anyone who would listen that her blood readers functioned beautifully and were about to revolutionize healthcare. She believed that people involved in the project who disagreed with her or presented evidence of problems were saboteurs working for her competitors, and they had to be marginalized or attacked.

In a speech to workers, Elizabeth declared that she was, in effect, building a religion, and any who doubted her should leave. When finally the truth came out and Theranos was banned from blood testing, Elizabeth persisted in trying to sell her still-nonfunctional blood-reading machines to doctors and patients. Eventually the FDA and CMS agencies shut down Theranos, lawsuits took the company’s funds, Elizabeth was indicted for fraud, and her dream of putting a dent in the universe, as her idol Steve Jobs had done, came to a tragic end.

The Folie à Deux

“It’s a folie à deux" (144), said Dr. Ian Gibbons to a Theranos coworker, referring to the irrational idea shared by Elizabeth and her associate, Sunny Balwani, that their blood readers would work properly and revolutionize the world.

Sunny, a dot-com millionaire who became her lover, signed on to her vision, perhaps out of a need for a new adventure. Swept up by Elizabeth’s enthusiasm, Sunny supported her uncritically. He became her office enforcer, badgering and threatening workers into compliance. Anyone who crossed him suffered his wrath. Between them, they devised an administrative system that forced all in-house communication to cross Elizabeth’s desk. Lack of easy chatter between departments only made it harder to resolve the technical problems that would one day scuttle Theranos.

Some believe it was Sunny who, Svengali-like, drove Elizabeth to extremes, but it’s more likely that he was someone she found to be in sync with her beliefs, a close aide who would bolster her efforts. Though Elizabeth could turn cold and threatening in a heartbeat, it was Sunny, with his growling threats, who proved especially useful in keeping employees in line.

It didn’t help that a family friend of Elizabeth, medical inventor Dr. Richard Fuisz, deliberately patented a device she would need for her blood readers simply to punish her for not consulting him when she started her new company. The paranoia that inflamed her and Sunny’s delusional leadership worsened markedly, until nothing stood in the way of Theranos’ runaway rush toward disaster.

Ironically, had Elizabeth taken account technical problems instead of denying them—working to fix them rather than brushing them off—it’s possible Theranos’ portable blood-test system might have launched successfully years before time ran out. Instead, a dream that began in a Stanford dorm room suffered from endless delays and coverups until, 14 years later, reality caught up with it.

The Emperor’s New Clothes

As a saleswoman, Elizabeth had it all: intelligence, a revolutionary idea, good looks, piercing blue eyes, a deep voice, a terrific delivery, and charming optimism. Virtually everyone who met her fell under her spell. This included some of the greatest names in technology, business, politics, and the military: George Shultz, Henry Kissinger, Sam Nunn, Hillary Clinton, General Jim Mattis, David Boies, Stanford chemist Channing Robertson, and the corporate leaders of Walgreens and Safeway.

So enchanted were these otherwise sober and competent people that they rebuffed anyone who raised suspicions about Elizabeth or her company. Effectively, she could convert people not only into believers but staunch representatives and defenders of her cause. Insiders who discovered that the entire enterprise was fraudulent, a kind of “vaporware” that would never produce results, found that they couldn’t convince anyone among Elizabeth’s army of true believers that “the emperor had no clothes.”

Like the child in the fairy tale who innocently revealed the king’s nakedness, it took a single person finally to call out the Theranos project and declare that there was nothing real about its promise. Unlike the fairy tale, however, the person doing the pointing, journalist Carreyrou, had to stand up to threats of ruin, as did his informants, who risked their careers and bank accounts to stand up to Elizabeth’s lies. Only then did it become possible for her supporters to step back far enough to accept the reality they had been denying.

In retrospect, it should have been clear that something was wrong. Repeatedly, Elizabeth refused to make her blood-test machines available for close inspection, and the promised test-result samples were always delayed. Normally, this would have set off alarm bells, but Elizabeth’s relentless and charming reassurances always put her followers’ minds at ease.

It’s been said that the best con artists believe their own stories. Perhaps Elizabeth was simply a con artist, or maybe she was one of those rare people who could hold two opposing realities simultaneously in her mind. Either way, Elizabeth, with full knowledge of the truth she so vigorously denied, got everyone to join her in believing the impossible. Bedazzled, her supporters were lulled into abandoning their diligence. As a result, a billion dollars went up in smoke, many medical patients faced dangerous risks, and many dreams were shattered.