Bad Blood: Secrets and Lies in a Silicon Valley Startup

Bad Blood is a masterpiece of investigative journalism detailing the secrets & lies of "Theranos" - a biotech company promising to change the future of blood testing.

Besides it being the biggest scandal in recent Silicon Valley history, what makes this book so compelling, is the main antagonist - Elizabeth Holmes herself. She is described throughout the book as having charisma, so much so that she was able to pull off her stunts undetected, despite many alarms & red flags that should have been apparent. These stunts included: going live with a faulty products despite knowing it's faulty, reporting on inaccurate blood test results, deliberately hid error messages by displaying a "loading" message instead of an "error" message, deliberately misled FDA inspectors, outright lied to the public time and time again, mislead investors through over-projection of financial growth, unreasonably fired people left and right when they disagreed etc.

The book brings to light many topics & exemplifies the role of irrational belief, authority bias, using trade secrets as an excuse to deceive, the fragility of the law (with all its loopholes) that we currently have in place to protect ethics and morality, the fake-it-until-you-make-it culture of Silicon Valley - all of which may have chaperoned Holmes' stunt for as long as it did.

2/3 of the books exposes the various tactics Holmes & her accomplices used to cheat and lie their way through to becoming the most highly valued company in 2015 at $9 billion. The final 1/3 of the book is from the perspective of the journalist John Carreyrou himself, the moment he received "the tip" that led to this powerful piece of investigative journalism and his troublesome journey to get it published, despite all the legal threats Theranos top lawyers threw his way.

The many accounts of Elizabeth Holme's leadership was just so deplorable in many ways that this book could be called "How NOT to be a CEO" and it would still be a fitting title. Her deplorable treatments (and Sunny's treatments) of their employees and those who helped her get as far as she did highlighted her character - ironically, for a person wanting to transform the world through healthcare, her moral compass was zero - nada - nil.

Below are some of the topics I found interesting & what I learned from the book:

Irrational belief makes you vulnerable to deception

For one, it highlights the fascinating role of irrational belief & how it can make you overlook logic and intuition. Throughout the books, we are introduced to numerous characters, most of whom are former Theranos employees & those whose path crossed Theranos one way or another. While Theranos's questionable practices alarmed and raised suspicions in some, others were completely blindsided. There is no question that Theranos's mission to transform the world for the better through its blood testing "analyzer" is a noble novel idea, however, it is as if this deep desire to believe in such a revolutionary device to transform healthcare was what allowed Elizabeth's scams to go undetected.

For Elizabeth, her deep belief in Theranos coupled with her impatience and her unwillingness to consider viewpoints other than her own, led to her downfall. Her insistence on Theranos, being the smallest device one could possibly imagined was what made it so hard for her engineering teams to successfully developed the product. Had she given some leeway, Theranos may have been what she had wanted it to be. But one can only wonder.

Authority bias makes you blind

"Authority Bias" teaches us times and times again - how, when we assign too much power or authority to a figure, we tend to comply, accept and obey all that they say at face value, oftentimes with alarming consequences. Holmes uses her charisma to attract important people - offering them the prestigious appeal of becoming Theranos's board member etc. The presence of esteemed people that made up Theranos' board members is one of the reasons why the various investors had no reasons to believe anything could go wrong.

It wasn't long until Theranos investor portfolio were made of the top of the top people, ranging from political figures, lawyers, executives etc. And with all the backing from these influential figures, Theranos quickly became one of the most powerful companies in the world and was only attracting more and more investors.

With Theranos's downfall, the investors lost nearly $1 billion.

Trade secrets as an excuse

Wanting to protect "trade secrets" (or intellectual property) or wanting to conceal unethical and illegal practices from coming to light?

Where do we draw the line?

Elizabeth Holmes & (especially) Sunny Balwani (one of the board members, as well as her boyfriend at the time) led through fear and intimidation. They went to great lengths such as "routinely monitored employees' emails and internet browser history, prohibited the use of Google Chrome on the theory that Google could use the web browser to spy on Theranos’s R&D, employees who worked at the office complex in Newark were discouraged from using the gym there because it might lead them to mingle with workers from other companies that leased space at the site" etc. Their insistence on the employees to sign non-disclosure agreements (NDA) with their every move, made employees too scared to speak up. It also helped that Theranos hired lawyers who were always threatening to "bankrupt you and your family" if you chose to whistleblow.

NDA in the name of trade secrets coupled with their leadership through fear and intimidation was what enabled Theranos to evade federal law for as long as it did.

The startup culture & Steve Jobs emulation

Elizabeth Holmes obsessively looked up to Steve Jobs and emulated him in every possible way such adopting a black turtlenecks (Jobs' signature style), drove with no license plate (Jobs leased a new Mercedes every 6 months to avoid a license plate , referred to her products as the Apple of healthcare etc).

Theraos's positioning in Silicon Valley as another tech company tempted it to emulate the fake-it-till-you-make-it culture which is notoriously normalised in Silicon Valley.

“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.”

However, Theranos is not just another "tech" company, It is first and foremost a healthcare company that analyses people's blood; where a false analysis is a matter of life and death. Elizabeth's unfathomable actions despite serious grave consequences serve as an important lesson for the Silicon Valley's culture.

All in all, a compelling read that keeps you wanting to find out what's next!