Imagine that you’re young, brilliant, charismatic, and you have a compelling vision for a bold new idea that could revolutionize health care: scores of laboratory tests, from routine chemistries to tests for life-threatening infectious diseases, that could be run on just a few drops of blood from a single finger prick.
You even have a great backstory: You have needle phobia and would personally benefit from such an approach and an uncle who died from a cancer that could have been cured if it were just detected early enough by a blood test.
Imagine you are a descendant of the founder of the Fleischmann’s Yeast company and of the man who established Cincinnati General Hospital and the University of Cincinnati’s medical school. Your family is connected, with ready access to venture capitalists, and you go to a school in Palo Alto, California, which has a recent history of other brilliant, young people who left to start revolutionary tech companies before securing their degrees. One of these ABDs (“All But Degrees”) from another college started a company from his garage nearby – a company by the name of Apple. He’s your role model.
What would you do? Finish four years of undergraduate work, followed by two to five years of postgraduate studies, and then a residency and fellowship, like those poor saps who eventually become doctors? Or do you ditch college after two semesters and start to make a difference in patients’ lives sooner?
If you’re Elizabeth Holmes, the founder and CEO of Theranos, you choose the latter path. John Carreyrou’s book Bad Blood: Secrets and Lies in a Silicon Valley Startup takes us through the meteoric rise – and ultimate fall – of Ms. Holmes and her infamous company. It is part cautionary tale and part sociologic study of how many smart, sophisticated, wealthy, and even famous people let themselves be duped into writing glowing articles in major newspapers and magazines and investing hundreds of millions of dollars in technology that never really worked.
It’s a narrative about the power of a good story, and of an engaging personality.
Ms. Holmes used her family’s connections to great advantage, assembling a powerhouse board of directors that included, among others, the famous nonagenarians (and former U.S. cabinet secretaries) Henry Kissinger and George Shultz. Mr. Carreyrou intimates that these older gentlemen had a grandfatherly soft spot for Ms. Holmes, which may have clouded their business judgment. A bespoke board and connections beget investment dollars, which led to employee hires and development of a prototype machine. Theranos quickly became one of the unicorn Silicon Valley tech startups, with a valuation measured in billions of dollars.
The technology for analyzing the blood was not much different from available technology – just more compact and claiming to require less blood for the requisite testing.
Much less blood. In fact, it was such a small amount of blood that it had to be diluted substantially to reach the volume needed for the machine to work. As any scientist will recognize, the more you dilute a substance, the greater the variability in your ability to measure it accurately.
When the machine produced results that, predictably, varied wildly, Ms. Holmes’ lackeys just threw out the outliers. Their documented results were clustered more tightly, bolstering the machine’s reported accuracy. And, when Ms. Holmes feared that the machine wouldn’t perform during product demonstrations for potential investors (including pharmaceutical companies), she had her programmers alter the machine to display results that looked accurate but had nothing to do with the blood sample being analyzed.
To put it simply, she and her minions lied. Anyone in the company who questioned these methods was fired and forced to sign a nondisclosure agreement on his or her way out the door.
She even convinced Pfizer to validate her faulty prototype machines in patients in Tennessee who were participating in a cancer clinical trial. Some Theranos employees, who eventually quit, were appalled at the ethical line that had been crossed. As a clinical trialist and as someone with a moral compass, it is hard not to judge this decision with equal opprobrium.
Undeterred, the people at Theranos developed partnerships with the drugstore chain Walgreens and the supermarket chain Safeway and started testing blood in wellness clinics within those stores – both with finger pricks and with traditional phlebotomy samples. Those tests were run on the machine being developed at Theranos headquarters and on traditional Siemens machines that the company had also purchased – and which Theranos used to receive CLIA certification for its lab. Erroneous results from the machine still in development were fed back to physicians and their patients – even to Mr. Carreyrou himself, who had his blood drawn (via a venous stick) at a Theranos Wellness Center in a Walgreens. He also had his blood drawn, the same day, at a traditional LabCorp site.
The results? Theranos reported four lab values as being abnormal, all of which were normal through LabCorp. Theranos also reported as normal the author’s cholesterol levels, which were abnormal through LabCorp. The downstream implications for the tens of thousands of people who received their laboratory results similarly are obvious: follow-up tests, prescribed medications, and added worry.
Mr. Carreyrou, a reporter for The Wall Street Journal, flexes his investigative journalist muscles jauntily throughout this well-researched and well-referenced book. He interviews and chronicles the experiences of many who participated in the Theranos debacle, which at times bogs down the flow of the book.
The story gains speed at the end, though, as Mr. Carreyrou and the Journal alert Ms. Holmes that they are about to print the story that will unravel Theranos’ veil of competence. Theranos responds by throwing up legal obstacles and hiring private detectives and company representatives to try to bully sources – and the Journal – into recanting their statements. Nevertheless, Mr. Carreyrou’s articles are published in the fall of 2015 and Theranos faces a tsunami of consequent lawsuits, investigation by government agencies, and in March of 2018, charges from the U.S. Securities and Exchange Commission for conducting “an elaborate, years-long fraud.” Within the past couple of weeks, Theranos announced it is finally folding.
Bad Blood is a cautionary tale about the dangers of hubris, of creating a culture of fear and retribution, and of deceit in meeting the expectations of investors. It also is a reminder of why the press, who have come under frequent attack for being purveyors of so-called “fake news,” is so necessary as an independent safeguard against people who lie and cheat for their own gains.
And maybe it’s a reminder of why it wasn’t such a bad idea for us poor medical saps to complete all of that school and all of that training; so we could differentiate right from wrong and always keep our focus on what benefits patients.