Bad Blood: Secrets and Lies in a Silicon Valley Startup

I missed this book when it launched, but Alex Gibney's excellent 2019 HBO doucmentry 'The Inventor: Out for blood in Silicon Valley' prompted my purchase.Carryrou's book covers three and a half years of investigation into Theranos, its founder Elizabeth Holmes and her meteoric rise and spectacular fall in the obsessive pursuit of a dream. Its a fascinating read and Carryrou uses his research to tell the story from the beginning. The story of his investigations as a Wall Street Journal reporter follows the cronological order of events and is documented towards the end of the book.Essentially, Elizabeth Holmes developed a start-up in Silicon Valley where she attempted to develop a device which could provide multiple blood test analyses for a range of conditions and diseases in a box not much larger that a large bread-bin. For the user only a small pinprick of blood was required to complete all these tests.This would be a game changer. Some day, every home could have one and for a small charge could carry out blood tests and have them analysed almost immediately, providing early warning of developing conditions. What's not to like? Nothing it seemed.What makes this book so fascinating, as well as the central characters and story, are the themes it explores such as:Greed and denialThe historty of Silicon Valley start-ups is one where investors always try and get in at the beginning of potentially novel ideas and make a killing. Think Google, Facebook and Uber. Two things drive this. The idea and the confidence/ expertise/drive of those taking it forward. In the case of Theranos Elizabeth Holmes force of personality outweighed any doubts about the concept or the execution. However at the time she started Theranos, she was 19 and a Stanford dropout with no experience in blood testing whatsoever, beyond a grand idea and good connections.Holmes exerted an almost Svengali like hold of the people in her orbit. This is partly to do with her physical appearance. Tall; striking blue unblinking eyes; dessed in black turtle necks (a la Steve Jobs) and speaking in a baritone voice. Supremely confident in both her idea and herself she managed to persuade and recruit a Board of former ex- Government Cabinet members; a 4 star General (Jim Mattis of Trump fame) and big name investors, who blinded by either the promise of the idea or the money to be made from it, were sufficiently incurous as to seek the detail of how this invention actually worked. People and organisations such as Walgreens were happy to put hundreds of millions of dollars investment into Theranos without demanding independent expert due diligence of the product.At the time of Theranos's demise it was valued as a private company at $9bn, with Holmes's share of that valuation at $4.5. Up to that point no investor in Theranos had seen the inner working of the product or questioned the fabulous claims made for it. Neither had any member of her company Board.Secrecy and liesHolmes and her senior executive partner were secretive to the point of paranoia over their idea. Two reasons for this. First they were genuinely concerned about their ideas being stolen, but as time went on and they could not get their invention to work the secrecy hid a raft of corner cutting, false promises and outright lies as to how the equipment was performing. Only those in Theranos working on the project could see how far from the truth the claimes Holmes made for the product and its readiness to market actually were. Some turned a blind eye while those with professional or ethical concerns were either fired or left, all under rigourous confidentiality clauses.This secrecy coupled with an agressive management style also stifiled the creative initiative of the Theranos team. Knowledge was power and developers were deliberately siloed to ensure they only worked on their own area so the ability to share thinking across the firm was severly limited.Weaponising the lawWhat I found perhaps most shocking of all is the way the agressive use of the threat of litigation is used to force compliance, especially against those who cannot financially afford to fight their corner. The lawyers who command the most fees are the legal pit bulls of the industry. Holmes spares no expense in protecting her secrets and covering her lies with the determined use of agressive legal firms and the threats of legal action to force whistleblowers to keep silent. This extends to Carryrou as well. Of the $900m raised by Holmes in her third funding round, $300m went on lawyers fees!Regulatory incuriousityThe FDA and other regulators seemed broadly incurious about the claims for this machine and remained so until things started to go badly wrong when what was essentially an idea at prototype stage went live to the public. The degree to which private companies can avoid such scrutiny is alarming. The debate is still ongoing as to whether Holmes deliberately misled or had sociopathic tendencies. The story is not over. She is now charged with alleged Federal and SEC crimes which carry up to 20 years in prison.I highly recommend this book, which I think will become a textbook on leadership, governance failure and greed.I also recommend Gibney's HBO documentary which brings to life the people and events in the book, not least Elizabeth Holmes herself. It also adds visual detail on the development of the blood testing device in the way Carryrou's book can not.Hope this is helpful.

This has to be one of the best written books I have read, the style of writing is clear and concise, not overly complex or long winded as often happens with such complex business story. The flow of the writing and story telling is also excellent, it’s an extremely comfortable and enjoyable read. Given how we’ll this book is written I possibly would have enjoyed it even if it had not covered such a interesting topic.This story is fascinating, having worked in the software and technology industry for many year, this book rings true, its always shocking to see how unwilling people are to ask the hard question and speak up, even when its clear something is clear wrong within a company.It’s a modern day emperor's new clothes, where even big name software and investment entrepreneur can’t see the woods for the trees.

At a time when trust in media is at an all time low in the US, this book reminds us why investigative journalism is still needed to help ordinary people cut through the bullsh*t and see things for what they actually are. This book, which is not only well written and gripping from chapter to chapter, does a brilliant job of showing rather than telling. It is a must-read for anyone who wants to avoid being bewitched by shiny things and big promises. What a great read. Now that I'm done, everything else seems to pale in comparison!

The core of this tragic story is quite straight forward, and has sadly been witnessed in many variants in financial markets over time. Yet there is such an ridiculousness about some events in this story that you wouldn’t be able to make it up as fiction.If you weren’t aware you’ll see how Silicon Valley provides the perfect breeding ground for a combination of hubris, absence of ethics and a gold-rush-blindness. It’s about a start-up company and its rock–star founder/CEO that has developed supposedly easier and faster blood tests, potentially revolutionizing the medical world. Well-known, high-profile investors lined up to back the company and helped to secure a market cap of $9 bln at its IPO. . If you are not familiar with the actual events, I will try not to spoil the story. But there was an issue with the entire proposition, a big one.. And it’s fascinating how the CEO, with her Steve Jobs-Syndrome, manged to pull rational and experienced people into her cult.So ultimately it’s another disturbing case about how regulators, investors, staff and sadly patients were all misled through bogus claims and plain fraud with quality standards. The latter part of the book deals with the subsequent threats, lawsuits after the author, a Wall Street Journal journalist that obviously portrays himself in clever light, exposed all this.As a professional investor it’s the type of book that will entertain you on a not-too lengthy flight. But it also serves as a reminder not to close your eyes to the pitfalls and red flags when investing in companies. A lack of oversight and serious governance issues lie at the heart of this drama; the well-respected board of the company included no-one with experience the medical field to properly assess what the company was actually trying to achieve..

This book was different from my usual choices and came recommended by my sister. It’s an interesting story, though as it’s a documentary style book with lots of people involved it is at times hard to follow. Characters are also introduced in a way that makes you think they’ve been in the book before when they haven’t, so I was flipping back a lot thinking “do I know this person? Have I missed something?”. If I hadn’t had a bookmark a lot of the time I didn’t know where I had left off because it was so detailed and therefore a bit confusing, but once I decided to plod on and give up trying to understand every aspect it was easier to get on with and overall it was an enjoyable read.