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Bad Blood book review
One of my Christmas presents was “Bad Blood” by John Carreyrou. This was on my wish list, and my Dad not only got it for me—he sent me his own copy.
This book is about Theranos. If you missed the headlines about this a few years ago, this was a Silicon Valley startup at one point valued at over $10 billion that was trying to disrupt laboratory blood testing. The claim was they could use a single drop of blood to test for over 200 things.
This is, quite frankly, complete bullshit. Per my dad—who is in laboratory medicine—everyone in the field knew that this was impossible, and knew that the way that Theranos was conducting itself (not releasing any data, avoiding regulation) was highly unethical and way outside the norms of the industry. But that didn’t stop them from being about to raise over $900 million in investments over ten years, become a media sweetheart, and launch patient services in Walgreens.
The reality was—that technology does not exist, so to be able to meet the commitment to Walgreens, they (among other things) “jail-broke” a Siemens analyzer to use it with diluted finger stick samples rather than the recommended amount of venous draws. The laboratory was also incredibly poorly run, so even when they were using commercially available techniques, their results were hugely unreliable. They were faking regulatory filings. They hid one of their labs from an FDA inspector. They went after whistleblowers with PIs and lawyers (more than half that $900 million went to legal fees).
The founder/owner, Elisabeth Holmes, and a few of her compatriots are under criminal indictment, but the court case was delayed to next year because of COVID.
The lessons I drew from this were a couple:
1. The average person knows fuck-all about laboratory medicine. Since my dad is a laboratory scientist (he currently runs a major health system’s in-house laboratory), I through osmosis apparently have picked up quite a lot that most people don’t know, judging by what the book felt it had to explain. Also, as a chemistry major, I understand that when you are talking about blood tests, you are talking about separate techniques executed in different ways, and that for most of these, you need enough blood to see if it reacts to the reagents. I think the fact that there are techniques for amplifying trace amounts of DNA have led people to believe that it’s therefore possible to do all blood tests with tiny amounts of blood and that is very much not true. Like, testing if you have antibodies for a disease, testing if you have high cholesterol levels, and testing for genetic markers are all *totally different techniques*. The idea that you could do all of that on a few microliters of blood is absurd.
But it seems like, in a Silicon Valley context, since everything else can be miniaturized, why not this too? The story was something that people very much wanted to be true, so people ignored all the many, many, many red flags.
2. And let’s talk about the story. This is a demonstration of the manipulative power of the TED talk format, and how ultimately hollow it is. (Elisabeth Holmes of course had a TED talk.) Elisabeth Holmes dropped out of Stanford at 19 to found Theranos. People love that story. OMG—a young woman tech entrepreneur, what a genius. We’re just going to set aside that there’s no possible way that someone who took two semesters of chemical engineering and has no training in medicine or laboratory science at all could invent a holy grail of medical science. In fact, she never got any investment at all from venture capitalists that specialize in biotechnology, and she never had any board members with scientific—let alone medical—backgrounds.
There’s also the gap between what the technology was supposed to be able to do—perform faster, more accurate blood tests on less blood—and what the story selling it was. Cause the pitch was—this will prevent anyone from losing a loved one too soon. Literally Elisabeth Holmes’s pitch was tapping into people’s grief over losing loved ones. Even if her machines could do what she said they could, they weren’t going to cure death. But that’s the emotional hook that got people to throw their money at her.
(As an aside, the story that she used for her TED talk is about her grief at losing her uncle too soon. Her family members were disgusted by this, as she was never close to her uncle, so was just using his death from skin cancer to sell her fraud.)
3. There’s been a lot written recently about misinformation and why people fall for it, and I think it’s incredibly relevant here. Her main supporters were older men with illustrious careers in unrelated fields. She had the support of Henry Kissinger, General Mattis (four-star general who later became Secretary of Defense), former US Secretary of State George Schultz. These are all people who considered themselves good judges of character, who had had long, successful careers. So once Elisabeth Holmes convinced them she was the real deal, literally nothing could change their mind about that.
George Schultz is a particularly tragic story. He encouraged his grandson, Tyler Schultz, to get a job in the laboratory there. Tyler was immediately appalled by what he saw—they were faking regulatory requirements. When he brought up his concerns within the company, he was told he had no idea what he was talking about. He ultimately quit, and then told his story (including sharing internal emails and reports) to a WSJ reporter (the book’s author). This caused Theranos to sue him. His grandfather helped Theranos to ambush him. Even as the lawsuits cost Tyler’s parents $400,000 to defend, the grandfather stood by Elisabeth Holmes. Even when the WSJ articles came out followed by a cavalcade of regulatory findings and lawsuits, all showing that this whole thing was a fraud, Elisabeth Holmes was at the grandfather’s ninetieth birthday, but Tyler was not.
The really remarkable thing about this story to me—as someone with a professional interest in fraud, and as someone who has read quite a few books about frauds—is most of the time, the fraud is siloed within the company. At Enron, there was a corporate culture of being cut throat, and other than Andy Fastow and a few people close to him, most people at Enron had no idea what was happening (on the part of the C-suite and the board, largely because they didn’t ask).
At Theranos there wasn’t one whistleblower. There was a constant stream of them:
- They hired product designers from Apple. These people came on assuming, of course, that there was a product. When they found out the product was not even remotely ready, they brought up concerns to management, then quit.
- The marketing firm they hired brought up concerns about false advertising.
- Many lab technicians quit over ethical concerns. One was fired for reporting the violations committed by a colleague.
- The head of the laboratory quit.
- The chief scientist was fired, then un-fired and demoted after bringing up concerns.
- People they were hiring right out of college were constantly raising their hands that things were wrong, and were being fired or berated until they quit.
- Each of their major business partners, there was at least one person involved that was deeply concerned and thought they shouldn’t go ahead. Safeway hired a consultant to validate the efficacy of it, and when he started raising more and more questions, Theranos said they would walk if he continued to be included, so Safeway cut him out of the discussion.
- Board members raised concerns—and then were asked to step down from the board because they weren’t being team players. (Hint: raising concerns is literally the job of the board.)
- The CFO, when he found out that Theranos was faking the demonstrations of the tech shown to investors, demanded that they not do that as it was a serious legal violation. He was fired. They didn’t have a CFO after that.
And I haven’t even gone into the profoundly dysfunctional workplace that was Theranos, where the COO—a vicious bully with no scientific understanding—was Elisabeth Holmes’s 20-year-senior boyfriend, whom she lived with.
Basically, over and over and over, anyone with any knowledge of laboratory medicine or any visibility into what the company was actually doing could see immediately that there were major problems, and a lot of them chose to leave because of the ethical violations, especially once they started treating patients.
But over and over, powerful people ignored the warnings from the people with more information because they had decided that Elisabeth Holmes was the real deal and they didn’t want to give up on the dream.
My Dad has pointed out, Theranos is a real cautionary tale, especially now. There is currently a gold rush for laboratory technology—it has never been more central in the public consciousness. So the lessons of this are important. There will be a lot of snake oil salesman. Listen to what the scientists say, listen to the warnings from people on the ground, and don’t latch onto an idea as true just because you really want it to be.
This book is about Theranos. If you missed the headlines about this a few years ago, this was a Silicon Valley startup at one point valued at over $10 billion that was trying to disrupt laboratory blood testing. The claim was they could use a single drop of blood to test for over 200 things.
This is, quite frankly, complete bullshit. Per my dad—who is in laboratory medicine—everyone in the field knew that this was impossible, and knew that the way that Theranos was conducting itself (not releasing any data, avoiding regulation) was highly unethical and way outside the norms of the industry. But that didn’t stop them from being about to raise over $900 million in investments over ten years, become a media sweetheart, and launch patient services in Walgreens.
The reality was—that technology does not exist, so to be able to meet the commitment to Walgreens, they (among other things) “jail-broke” a Siemens analyzer to use it with diluted finger stick samples rather than the recommended amount of venous draws. The laboratory was also incredibly poorly run, so even when they were using commercially available techniques, their results were hugely unreliable. They were faking regulatory filings. They hid one of their labs from an FDA inspector. They went after whistleblowers with PIs and lawyers (more than half that $900 million went to legal fees).
The founder/owner, Elisabeth Holmes, and a few of her compatriots are under criminal indictment, but the court case was delayed to next year because of COVID.
The lessons I drew from this were a couple:
1. The average person knows fuck-all about laboratory medicine. Since my dad is a laboratory scientist (he currently runs a major health system’s in-house laboratory), I through osmosis apparently have picked up quite a lot that most people don’t know, judging by what the book felt it had to explain. Also, as a chemistry major, I understand that when you are talking about blood tests, you are talking about separate techniques executed in different ways, and that for most of these, you need enough blood to see if it reacts to the reagents. I think the fact that there are techniques for amplifying trace amounts of DNA have led people to believe that it’s therefore possible to do all blood tests with tiny amounts of blood and that is very much not true. Like, testing if you have antibodies for a disease, testing if you have high cholesterol levels, and testing for genetic markers are all *totally different techniques*. The idea that you could do all of that on a few microliters of blood is absurd.
But it seems like, in a Silicon Valley context, since everything else can be miniaturized, why not this too? The story was something that people very much wanted to be true, so people ignored all the many, many, many red flags.
2. And let’s talk about the story. This is a demonstration of the manipulative power of the TED talk format, and how ultimately hollow it is. (Elisabeth Holmes of course had a TED talk.) Elisabeth Holmes dropped out of Stanford at 19 to found Theranos. People love that story. OMG—a young woman tech entrepreneur, what a genius. We’re just going to set aside that there’s no possible way that someone who took two semesters of chemical engineering and has no training in medicine or laboratory science at all could invent a holy grail of medical science. In fact, she never got any investment at all from venture capitalists that specialize in biotechnology, and she never had any board members with scientific—let alone medical—backgrounds.
There’s also the gap between what the technology was supposed to be able to do—perform faster, more accurate blood tests on less blood—and what the story selling it was. Cause the pitch was—this will prevent anyone from losing a loved one too soon. Literally Elisabeth Holmes’s pitch was tapping into people’s grief over losing loved ones. Even if her machines could do what she said they could, they weren’t going to cure death. But that’s the emotional hook that got people to throw their money at her.
(As an aside, the story that she used for her TED talk is about her grief at losing her uncle too soon. Her family members were disgusted by this, as she was never close to her uncle, so was just using his death from skin cancer to sell her fraud.)
3. There’s been a lot written recently about misinformation and why people fall for it, and I think it’s incredibly relevant here. Her main supporters were older men with illustrious careers in unrelated fields. She had the support of Henry Kissinger, General Mattis (four-star general who later became Secretary of Defense), former US Secretary of State George Schultz. These are all people who considered themselves good judges of character, who had had long, successful careers. So once Elisabeth Holmes convinced them she was the real deal, literally nothing could change their mind about that.
George Schultz is a particularly tragic story. He encouraged his grandson, Tyler Schultz, to get a job in the laboratory there. Tyler was immediately appalled by what he saw—they were faking regulatory requirements. When he brought up his concerns within the company, he was told he had no idea what he was talking about. He ultimately quit, and then told his story (including sharing internal emails and reports) to a WSJ reporter (the book’s author). This caused Theranos to sue him. His grandfather helped Theranos to ambush him. Even as the lawsuits cost Tyler’s parents $400,000 to defend, the grandfather stood by Elisabeth Holmes. Even when the WSJ articles came out followed by a cavalcade of regulatory findings and lawsuits, all showing that this whole thing was a fraud, Elisabeth Holmes was at the grandfather’s ninetieth birthday, but Tyler was not.
The really remarkable thing about this story to me—as someone with a professional interest in fraud, and as someone who has read quite a few books about frauds—is most of the time, the fraud is siloed within the company. At Enron, there was a corporate culture of being cut throat, and other than Andy Fastow and a few people close to him, most people at Enron had no idea what was happening (on the part of the C-suite and the board, largely because they didn’t ask).
At Theranos there wasn’t one whistleblower. There was a constant stream of them:
- They hired product designers from Apple. These people came on assuming, of course, that there was a product. When they found out the product was not even remotely ready, they brought up concerns to management, then quit.
- The marketing firm they hired brought up concerns about false advertising.
- Many lab technicians quit over ethical concerns. One was fired for reporting the violations committed by a colleague.
- The head of the laboratory quit.
- The chief scientist was fired, then un-fired and demoted after bringing up concerns.
- People they were hiring right out of college were constantly raising their hands that things were wrong, and were being fired or berated until they quit.
- Each of their major business partners, there was at least one person involved that was deeply concerned and thought they shouldn’t go ahead. Safeway hired a consultant to validate the efficacy of it, and when he started raising more and more questions, Theranos said they would walk if he continued to be included, so Safeway cut him out of the discussion.
- Board members raised concerns—and then were asked to step down from the board because they weren’t being team players. (Hint: raising concerns is literally the job of the board.)
- The CFO, when he found out that Theranos was faking the demonstrations of the tech shown to investors, demanded that they not do that as it was a serious legal violation. He was fired. They didn’t have a CFO after that.
And I haven’t even gone into the profoundly dysfunctional workplace that was Theranos, where the COO—a vicious bully with no scientific understanding—was Elisabeth Holmes’s 20-year-senior boyfriend, whom she lived with.
Basically, over and over and over, anyone with any knowledge of laboratory medicine or any visibility into what the company was actually doing could see immediately that there were major problems, and a lot of them chose to leave because of the ethical violations, especially once they started treating patients.
But over and over, powerful people ignored the warnings from the people with more information because they had decided that Elisabeth Holmes was the real deal and they didn’t want to give up on the dream.
My Dad has pointed out, Theranos is a real cautionary tale, especially now. There is currently a gold rush for laboratory technology—it has never been more central in the public consciousness. So the lessons of this are important. There will be a lot of snake oil salesman. Listen to what the scientists say, listen to the warnings from people on the ground, and don’t latch onto an idea as true just because you really want it to be.