Blinded by ambition, aided by sycophant and sustained by greed
By Trevor Muchedzi
Bad Blood, the Financial Times and McKinsey 2018 book of the year, is a revealing account of the meteoric rise and spectacular fall of Theranos Inc, a multi-billion fraud biotech start up founded in 2003 by then 19 year old Elizabeth Holmes. The company was set to revolutionize the US$220 billion U.S. laboratory industry by developing a ingenious blood-testing device that could run hundreds of blood tests using one or two drops of blood. Theranos’ divine goal was to do away with the painful needles used to draw blood and help to proactively identify potential diseases early enough when they can still be cost effectively treated. But there was only one problem: Its technology didn’t work.
Entrepreneurs within Silicon Valley are well known for exaggerating the capabilities of their technological solutions as a way to win customers and secure venture capital funding at lofty valuation. Such white lies are less damaging when it’s a piece software or a device but when it comes to the people’s health, one has to straddle a fine line. You can’t play “try and error” with people’s lives.
In this book, John Carreyrou takes readers through the journey of how Ms. Homes, through sheer determination, a cunning tongue, outright lies and deceit managed to perpetuate a myth for 15 years and hoodwinked the finest minds in venture capital investing, regulators and business partners. Obsessed with Steve Jobs and Apple, Ms. Holmes believed Theranos’ blood-testing device would become the “iPhone of the healthcare industry”, a noble aspiration that would transform people’s healthcare needs. However, aided by blind followers and supported by a passive Board, she ruthlessly broke every rule, crossed every ethical and moral line and violated every social norm in her quest for success. She ruled by oppression and developed a culture of fear and Gestapo-like secrecy at Theranos. Employees were treated like wet wipes that could be disposed of at any given point in time and those who dared to differ with her were dismissed instantly but sycophants were hastily promoted.
The book also illustrate the damage, both emotionally and financially, that was inflicted on ordinary people as a result of Theranos’ lies. So many people were incorrectly diagnosed of diseases which they didn’t have, resulting in some undergoing expensive medical procedures they didn’t need. In addition, other people would also go through emotional stress for weeks or months only to realize that it was a false alarm. It reflects how far damaging Ms. Holmes’ quest for glory went.
Also feeding into Theranos illusion was FOMO – the Fear Of Missing Out. Many VC investors and business partners including retail pharmacy giants like Walgreens were so obsessed by the promise of the technology that they waived the basic need to do a thorough and detailed due diligence on Theranos’ device. They became so afraid to probe Ms. Holmes’ claims under the premise that it will irk her and she would retaliate by side-lining them from the deal. Over its lifespan, Theranos raised over US$700 million in funding and reached a peak valuation of US$9 billion. In the end, this psychological bias did cost these companies hundreds of millions of dollars.
On the bright side through, Bad Blood also narrates the role played by a number men and women who chose to do the right thing and risked their lives and careers to expose Theranos. Despite facing a barrage of lawsuits, threats and relentless surveillance, these former employees, doctors and patients went to great lengths to uncover the massive fraud that was putting the lives of millions of people in danger. If it weren’t for their heroic acts, it’s anyone’s guess how far the damage could have gone.
Bad blood is a reflection of how far greed can go in the world of capitalism. Although entrepreneurs can and should use whatever tool they have at their disposal to advance their ambitions, there is a red line one shouldn’t cross. Unfortunately Ms. Holmes wasn’t afraid to cross that line and even if there was collateral damage along the way, so be it.