Bad Blood: Secrets and Lies in a Silicon Valley Startup

Kindle Highlights

“Bloody Amazing,”

“THIS CEO IS OUT FOR BLOOD.”

“He stole property in his mind.”

“When you strike at the king, you must kill him.”

multimillion-dollar Qualcomm Tricorder XPRIZE competition.

SEIR (the letters stood for Susceptible, Exposed, Infected, and Resolved)

During the roundtable discussion, Biden called what he had just seen “the laboratory of the future.”

Fuisz presumed that Gibbons was a legitimate scientist and that, like most scientists, he was an honest person.

It was as if Boeing built one plane and, without doing a single flight test, told airline passengers, “Hop aboard.”

You cannot run a company through fear and intimidation . . . it will only work for a period of time before it collapses.

Holmes would be hosting a fund-raiser for Hillary Clinton’s presidential campaign at Theranos’s headquarters in Palo Alto.

Elizabeth scheduled the meetings on Wednesdays after learning that Apple’s creative meetings with the agency had always been that day of the week.

Like her idol Steve Jobs, she emitted a reality distortion field that forced people to momentarily suspend disbelief. The spell was broken, however,

Pathology Blawg didn’t exactly have a big readership, but Joe Fuisz came across the post in a Google search and brought it to his father’s attention.

She’d contracted out the case’s design to Yves Béhar, the Swissborn industrial designer whose reputation in the Valley was second only to Apple’s Jony Ive.

President Obama appointed her a U.S. ambassador for global entrepreneurship, and Harvard Medical School invited her to join its prestigious board of fellows.

By positioning Theranos as a tech company in the heart of the Valley, Holmes channeled this fake-it-until-you-make-it culture, and she went to extreme lengths to hide the fakery.

Hyping your product to get funding while concealing your true progress and hoping that reality will eventually catch up to the hype continues to be tolerated in the tech industry.

The number of test results Theranos voided or corrected in California and Arizona eventually reached nearly 1 million. The harm done to patients from all those faulty tests is hard to determine.

Under a settlement with Arizona’s attorney general, Theranos subsequently agreed to pay $4.65 million into a state fund that reimbursed the 76,217 Arizonans who ordered blood tests from the company.

Ten patients have filed lawsuits alleging consumer fraud and medical battery. One of them alleges that Theranos’s blood tests failed to detect his heart disease, leading him to suffer a preventable heart attack.

Audi A8 sedan. Their code name for her was “Eagle One.” (Sunny was “Eagle Two.”) The Audi had no license plates—another nod to Steve Jobs, who used to lease a new Mercedes every six months to avoid having plates.

good luck and please do read those books, watch The Office, and believe in the people who disagree with you . . . Lying is a disgusting habit, and it flows through the conversations here like it’s our own currency.

‘Riveting . . . A blistering critique of Silicon Valley, a kind of nonfiction corollary to Dave Eggers’s The Circle . . . Compelling . . . [Carreyrou’s] unmasking of Theranos is a tale of David and Goliath.’ Financial Times

One of them was former Netscape cofounder Marc Andreessen, whose wife had just profiled Holmes in a cover story for the New York Times’s style magazine headlined “Five Visionary Tech Entrepreneurs Who Are Changing the World.”

He pointed out how chummy Holmes had gotten with the Obama administration. He had seen her at the launch of the president’s precision medicine initiative earlier in the year, one of several White House appearances she’d made in recent months.

The brilliant young Stanford dropout behind the breakthrough invention was anointed “the next Steve Jobs or Bill Gates” by no less than former secretary of state George Shultz, the man many credited with winning the Cold War, in a quote at the end of the article.

One notable exception was Rupert Murdoch. The media mogul sold his stock back to Theranos for one dollar so he could claim a big tax write-off on his other earnings. With a fortune estimated at $12 billion, Murdoch could afford to lose more than $100 million on a bad investment.

Ian nodded. “It’s a folie à deux,” he said. Tony didn’t know any French, so he left to go look up the expression in the dictionary. The definition he found struck him as apt: “The presence of the same or similar delusional ideas in two persons closely associated with one another.”

Absolutely, I am more than pissed off at these people. I intend to seek my revenge and sue the fuck out of them when this is over, and you can guarantee I will not let Elizabeth Holmes have another fucking company as long as she lives. I will use my ability to file patents and fuck with her till she dies, absolutely.

One of the spots was a close-up of Elizabeth in her customary black turtleneck staring into the camera and talking about what she called people’s “basic human right” to access their own health information through blood tests. Her eyes looked so big and she spoke so slowly and deliberately that the video had a hypnotic quality to it.

Genome Institute of Singapore. Asia had been ravaged earlier in 2003 by the spread of a previously unknown illness called severe acute respiratory syndrome, or SARS, and Elizabeth had spent the summer testing patient specimens obtained with old low-tech methods like syringes and nasal swabs. The experience left her convinced there must be a better way.

Besides Theranos’s supposed scientific accomplishments, what helped win James and Grossman over was its board of directors. In addition to Shultz and Mattis, it now included former secretary of state Henry Kissinger, former secretary of defense William Perry, former Senate Armed Services Commitee chairman San Nunn, and former navy admiral Gary Roughead.

When she inquired about the basis for the claim about Theranos’s superior accuracy, Kate learned that it was extrapolated from a study that had concluded that 93 percent of lab mistakes were due to human error. Theranos argued that, since its testing process was fully automated inside its device, that was grounds enough to say that it was more accurate than other labs.

Justin had particular issues with Tim Kemp, the head of the software team. Tim was a yes-man who never leveled with Elizabeth about what was feasible and what wasn’t. For instance, he’d contradicted Justin and assured her they could write the Edison software’s user interface faster in Flash than in JavaScript. The very next morning, Justin had spotted a Learn Flash book on his desk.

Elizabeth had chosen Chiat\Day because it was the agency that represented Apple for many years, creating its iconic 1984 Macintosh ad and later its “Think Different” campaign in the late 1990s. She’d even tried to convince Lee Clow, the creative genius behind those ads, to come out of retirement to work for her. Clow had politely referred her back to the agency, where she had immediately connected with Patrick.

AFTER HOLMES’S APPEARANCE at the Journal conference, Theranos announced that it was making changes to its board of directors, which had been getting lampooned since the publication of my first story. George Shultz, Henry Kissinger, Sam Nunn, and the other aging ex-statesmen all left to join a new ceremonial body called a board of counselors. In their place, Theranos made a new director appointment that signaled an escalation of hostilities: David Boies.

Murdoch had first met Holmes in the fall of 2014 at one of Silicon Valley’s big galas, the annual Breakthrough Prize dinner. Held in Hangar 1 of NASA’s Ames Research Center in Mountain View, the award honors outstanding contributors to the fields of the life sciences, fundamental physics, and mathematics. It was created by the Russian technology investor Yuri Milner with Facebook founder Mark Zuckerberg, Google cofounder Sergey Brin, and Chinese tech tycoon Jack Ma.

As much as she courted the attention, Elizabeth’s sudden fame wasn’t entirely her doing. Her emergence tapped into the public’s hunger to see a female entrepreneur break through in a technology world dominated by men. Women like Yahoo’s Marissa Mayer and Facebook’s Sheryl Sandberg had achieved a measure of renown in Silicon Valley, but they hadn’t created their own companies from scratch. In Elizabeth Holmes, the Valley had its first female billionaire tech founder. Still,

Yagi, Mike, ref1, ref2, ref3 misleading advertising as concern of, ref1, ref2 Yahoo, ref1 Yale Corporation, ref1 Yam, Danise, ref1 Yamamoto, Gary, ref1, ref2 Yost, Judith, ref1 Young, Daniel, ref1, ref2, ref3, ref4, ref5, ref6, ref7, ref8, ref9 and ADVIA modifications, ref1, ref2, ref3 in meeting with author at WSJ offices, ref1 and proficiency-testing failures, ref1 promotions of, ref1 Tyler Shultz’s meetings with, ref1, ref2 Zika virus, ref1 Zuckerberg, Mark, ref1, ref2, ref3, ref4 Zuckerman Spaeder, ref1, ref2 ‘Riveting

A tale of heroic cupidity on a scale that made the very best and the very brightest look like the very, very foolish. We’re talking about Henry Kissinger, George P. Shultz, Jim Mattis, Sam Nunn, a clutch of Waltons, the super-lawyer David Boies and, for a while, Rupert Murdoch. Murdoch poured millions into this alleged scam and then, disappointingly for those who like one-dimensional nemeses, allowed one of his own newspapers, the Wall Street Journal, to blow the whistle. You will not be able to put this book down.’ Washington Post

A month or two after Jobs’s death, some of Greg’s colleagues in the engineering department began to notice that Elizabeth was borrowing behaviors and management techniques described in Walter Isaacson’s biography of the late Apple founder. They were all reading the book too and could pinpoint which chapter she was on based on which period of Jobs’s career she was impersonating. Elizabeth even gave the miniLab a Jobs-inspired code name: the 4S. It was a reference to the iPhone 4S, which Apple had coincidentally unveiled the day before Jobs passed away.

I’m fairly certain she didn’t initially set out to defraud investors and put patients in harm’s way when she dropped out of Stanford fifteen years ago. By all accounts, she had a vision that she genuinely believed in and threw herself into realizing. But in her all-consuming quest to be the second coming of Steve Jobs amid the gold rush of the “unicorn” boom, there came a point when she stopped listening to sound advice and began to cut corners. Her ambition was voracious and it brooked no interference. If there was collateral damage on her way to riches and fame, so be it.

The resignations infuriated Elizabeth and Sunny. The following day, they summoned the staff for an all-hands meeting in the cafeteria. Copies of The Alchemist, Paulo Coelho’s famous novel about an Andalusian shepherd boy who finds his destiny by going on a journey to Egypt, had been placed on every chair. Still visibly angry, Elizabeth told the gathered employees that she was building a religion. If there were any among them who didn’t believe, they should leave. Sunny put it more bluntly: anyone not prepared to show complete devotion and unmitigated loyalty to the company should “get the fuck out.”

DAVID BOIES’S LEGEND preceded him. He had risen to national prominence in the 1990s when the Justice Department hired him to handle its antitrust suit against Microsoft. On his way to a resounding courtroom victory, Boies had grilled Bill Gates for twenty hours in a videotaped deposition that proved devastating to the software giant’s defense. He had gone on to represent Al Gore before the Supreme Court during the contested 2000 presidential election, cementing his status as a legal celebrity. More recently, he’d successfully led the charge to overturn Proposition 8, California’s ban on gay marriage.

THE STORY WAS PUBLISHED on the Journal’s front page on Thursday, October 15, 2015. The headline, “A Prized Startup’s Struggles,” was understated but the article itself was devastating. In addition to revealing that Theranos ran all but a small fraction of its tests on conventional machines and laying bare its proficiency-testing shenanigans and its dilution of finger-stick samples, it raised serious questions about the accuracy of its own devices. It ended with a quote from Maureen Glunz saying that “trial and error on people” was “not OK,” bringing home what I felt was the most important point: the medical danger to which the company had exposed patients.

two weeks before Bruce Ivins killed himself in July 2008. The suicide had led to the disclosure that Ivins, an institute researcher, was the likely perpetrator of the 2001 anthrax attacks and to an avalanche of inspections from an alphabet soup of government agencies that had continued unabated for two years. Shoemaker had been the officer on the receiving end of every single one of them. With Colonel Edgar’s encouragement, he tried to defuse the situation by emailing CMS officials that he had never meant to imply that Theranos had already implemented the regulatory strategy he’d described, merely that it was considering it. He also expressed surprise that the agency had told Theranos he was the one who requested the inspection. The response he got brought another surprise: CMS had told Theranos no such thing; the company already

If anything, it was Holmes who was the manipulator. One after another, she wrapped people around her finger and persuaded them to do her bidding. The first to fall under her spell was Channing Robertson, the Stanford engineering professor whose reputation helped give her credibility when she was just a teenager. Then there was Donald L. Lucas, the aging venture capitalist whose backing and connections enabled her to keep raising money. Dr. J and Wade Miquelon at Walgreens and Safeway CEO Steve Burd were next, followed by James Mattis, George Shultz, and Henry Kissinger (Mattis’s entanglement with Theranos proved no obstacle to his being confirmed as President Donald Trump’s secretary of defense). David Boies and Rupert Murdoch complete the list, though I’ve left out many others who were bewitched by Holmes’s mixture of charm, intelligence, and charisma.

In a windowless war room set up on the second floor of the Page Mill Road building in Palo Alto, Holmes and her communications consultants discussed strategies for how to hit back against my reporting. One approach she favored was to portray me as a misogynist. To generate further sympathy, she suggested she reveal publicly that she had been sexually assaulted as a student at Stanford. Her advisers counseled against going that route, but she didn’t abandon it entirely. In an interview with Bloomberg Businessweek, she suggested she was the victim of sexism. “Until what happened in the last four weeks, I didn’t understand what it means to be a woman in this space,” she told the magazine. “Every article starting with, ‘A young woman.’ Right? Someone came up to me the other day, and they were like, ‘I have never read an article about Mark Zuckerberg that starts with ‘A young man.’”

As for Theranos itself, the company ran out of money in September 2018 and was dissolved. Fortress Investment Group, the private equity firm that provided it a loan in late 2017, took possession of its patents. Court filings from one of the investor lawsuits, meanwhile, revealed that Secretary of Education Betsy DeVos had been among the company’s biggest investors. Ms. DeVos’s family lost $100 million—the same sum as the Cox family. Their losses were topped only by Rupert Murdoch, who lost $121 million (he got $4 million back under a legal settlement), and two Walton heirs, who had invested a combined $150 million. Other victims of the alleged fraud include Mexico’s Carlos Slim ($30 million), the heir of a Greek shipping fortune ($25 million), the South African family that used to control diamond maker De Beers ($20 million), and many smaller investors who invested a total of about $70 million in the blood-testing company through venture funds. All told, investors in Theranos have lost nearly $1 billion.