Bad Blood: Secrets and Lies in a Silicon Valley Startup
S ilicon Valley is the land of dreams for tech geeks. This is not surprising at all considering that everything on planet earth and slightly beyond have been impacted one way or other by the disruptions that the Valley has pioneered. To name a few Xerox, HP , Apple, Tesla, Facebook, Uber; the list is long and will keep growing. To every success, story wisdom says there are a dozen failures that we do not get to read. We will call the failures as disasters for the only reason that if it were to be a success, it would have had universal impact. The disasters are of two types; failure of a business model or blatant fraud. John Carreyrou tells the inside story of Theranos a unicorn startup that took several investors, big wigs and of course customer corporates on a roller coaster ride at the end of which all the actors step out with a dizzy head and an unsure step.
Theranos has all the frills of a Silicon startup. Elizabeth Holmes a 19 year-old Stanford drop out has a magnetic personality and the vision to change the world. Being a great fan of Steve Jobs, she even wore turtleneck tee shirts. What does not quite fit into the plot is a relationship with ‘Sunny’ RameshBalwani, a man of Indian origin who is not only twice her age, but has the ‘I know all and I am the best’ attitude. It suddenly looks like a Bollywood script.
She was an instant hit with Forbes and she had a full house and more coming at TED talks. In 2014 Theranos was valued at USD 9 Billion. The investors included stalwarts such as George Shultz, Henry Kissinger, and Rupert Murdoch etc. Her obsession with Apple led her to hire stalwarts from Apple (they did not stay long though).
The tragedy was that she sold a vision that couldn’t be made into a credible ‘product’. The Theranos machine fell short of expectations. The health industry is very unlike other consumer technology. A bug in an I- phone may lead to call dropping; this however is not a matter of life and death. Theranos collaborated with Walgreens to have a Theranos blood tester at a boutique clinic in each store. There were cases where erroneous readings for a cancer survivor and a diabetic patient were so alarming that it appeared fatal. Retesting with another diagnostic clinic revealed the error of the Theranos readings. In many cases a sample of blood would be shown as analysed in Theranos machine, however would be shifted to a widely used analyser to generate reports.
Elizabeth Holmes consistently communicated false information about the Theranos blood-testing machine. She bullied her staff to keep silent on the abysmal performance of Theranos machine in the lab by threatening lawsuits. It required a gutsy whistle blower to inform the FDA, which led to federal investigations that resulted in a final closure. A series of exposures by John Carreyrou in Wall Street Journal shocked the Valley that finally saw the the truth about the Emperor’s new clothes.
John Carreyrou, an investigative reported from Wall Street Journal did a commendable job to weave a story about how Elizabeth Holmes, blinded by her passion, drove towards her vision in an unethical manner. This quote by the CEO Elizabeth Holmes from the Book sumarizes the story well.
“A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel.”
I read thrillers at times to get a kick on the fast pace. This book beats a thriller by a mile and makes James Bond look like a beginner.
Vishwanath Thanalapatti, PMP
Vishwanath is a banking professional with global experience. His focus in recent years has been in corporate banking and analytics related to corporate banking. His vast experience includes capital markets and risk management. He reads extensively on subjects as diverse as philosophy, blockchain technologies, humour etc. He keeps mentally and physically fit by practicing yoga and running.