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Bad Blood: Secrets and Lies in a Silicon Valley Startup Kindle Edition
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Editorial Reviews
Review
"Bad Blood is the real be-all end-all of Theranos information…. Bad Blood is wild, and more happens on one page than in many other entire books." —Margaret Lyons, The New York Times
"You will not want to put this riveting, masterfully reported book down. No matter how bad you think the Theranos story was, you'll learn that the reality was actually far worse."
—Bethany McLean, bestselling coauthor of The Smartest Guys in the Room and All the Devils Are Here
"Chilling... Carreyrou tells [this story] virtually to perfection… Reads like a West Coast version of All the President's Men."
—Roger Lowenstein, The New York Times Book Review
"The definitive account of Theranos’s downfall, detailing its motley crew of executives, legal knife fights, dramatic PR stunts, and skullduggery... Offers a lot for foreign-policy wonks... While Bad Blood is worth reading for its own merits—it’s a stunning feat of journalism that reads like a thriller—it also says a lot about Washington’s facile relationship with Silicon Valley. Most D.C. power brokers know next to nothing about science or technology but increasingly view Silicon Valley tech as a deus ex machina for some of the world’s most complicated challenges. Bad Blood offers a sobering warning of where that type of thinking can lead."
—Robbie Gramer, Foreign Policy
"A great and at times almost unbelievable story of scandalous fraud, surveillance, and legal intimidation at the highest levels of American corporate power. . . . The story of Theranos may be the biggest case of corporate fraud since Enron. But it’s also the story of how a lot of powerful men were fooled by a remarkably brazen liar."
—Yashar Ali, New York Magazine
"Even if you didn’t follow the story of charismatic Theranos founder Elizabeth Holmes (and the ensuing trainwreck) in the news, you will find yourself zipping through a book that proves once again that fact is stranger than fiction. A stunning look into a high-tech hoodwinking; like a high-speed car chase in a book."
—The New York Post's "28 Most Unforgettable Books of 2018"
"In Bad Blood, acclaimed investigative journalist John Carreyrou, who broke the story in 2015, presents comprehensive evidence of the fraud perpetrated by Theranos chief executive Elizabeth Holmes... He unveils many dark secrets of Theranos that have not previously been laid bare… The combination of these brave whistle-blowers, and a tenacious journalist who interviewed 150 people (including 60 former employees) makes for a veritable page-turner."
—Eric Topol, Nature
"Engrossing… Bad Blood boasts movie-scene detail… Theranos, Carreyrou writes, was a revolving door, as Holmes and Balwani fired anyone who voiced even tentative doubts… What’s frightening is how easy it is to imagine a different outcome, one in which the company’s blood-testing devices continued to proliferate. That the story played out as it did is a testament to the many individuals who spoke up, at great personal risk."
—Jennifer Couzin-Frankel, Science
"In exposing the fudged numbers, boardroom battles and sickening sums of money tossed Theranos’ way, Bad Blood succeeds in highlighting Silicon Valley’s paradoxical blind spot. Insular corporate culture and benevolent media coverage have allowed a monster to grow in the Valley—one that gambles not just with our smart phones or our democracy, but with people’s lives. Bad Blood reveals a crucial truth: outside observers must act as the eyes, the ears and, most importantly, the voice of Silicon Valley’s blind spot."
—B. David Zarley, Paste Magazine's "16 Best Nonfiction Books of 2018"
"Carreyrou blends lucid descriptions of Theranos’s technology and its failures with a vivid portrait of its toxic culture and its supporters’ delusional boosterism. The result is a bracing cautionary tale about visionary entrepreneurship gone very wrong."
—Publishers Weekly (Starred)
"Crime thriller authors have nothing on Carreyrou's exquisite sense of suspenseful pacing and multifaceted character development in this riveting, read-in-one-sitting tour de force.... Carreyrou's commitment to unraveling Holmes' crimes was literally of life-saving value."
—Booklist (Starred Review)
"Eye-opening... A vivid, cinematic portrayal of serpentine Silicon Valley corruption... A deep investigative report on the sensationalistic downfall of multibillion-dollar Silicon Valley biotech startup Theranos. Basing his findings on hundreds of interviews with people inside and outside the company, two-time Pulitzer Prize-winning Wall Street Journal reporter Carreyrou rigorously examines the seamy details behind the demise of Theranos and its creator, Elizabeth Holmes… [Carreyrou] brilliantly captures the interpersonal melodrama, hidden agendas, gross misrepresentations, nepotism, and a host of delusions and lies that further fractured the company’s reputation and halted its rise."
—Kirkus
"You will not want to put this riveting, masterfully reported book down. No matter how bad you think the Theranos story was, you'll learn that the reality was actually far worse."
—Bethany McLean, bestselling coauthor of The Smartest Guys in the Room and All the Devils Are Here
"Chilling... Carreyrou tells [this story] virtually to perfection… Reads like a West Coast version of All the President's Men."
—Roger Lowenstein, The New York Times Book Review
"The definitive account of Theranos’s downfall, detailing its motley crew of executives, legal knife fights, dramatic PR stunts, and skullduggery... Offers a lot for foreign-policy wonks... While Bad Blood is worth reading for its own merits—it’s a stunning feat of journalism that reads like a thriller—it also says a lot about Washington’s facile relationship with Silicon Valley. Most D.C. power brokers know next to nothing about science or technology but increasingly view Silicon Valley tech as a deus ex machina for some of the world’s most complicated challenges. Bad Blood offers a sobering warning of where that type of thinking can lead."
—Robbie Gramer, Foreign Policy
"A great and at times almost unbelievable story of scandalous fraud, surveillance, and legal intimidation at the highest levels of American corporate power. . . . The story of Theranos may be the biggest case of corporate fraud since Enron. But it’s also the story of how a lot of powerful men were fooled by a remarkably brazen liar."
—Yashar Ali, New York Magazine
"Even if you didn’t follow the story of charismatic Theranos founder Elizabeth Holmes (and the ensuing trainwreck) in the news, you will find yourself zipping through a book that proves once again that fact is stranger than fiction. A stunning look into a high-tech hoodwinking; like a high-speed car chase in a book."
—The New York Post's "28 Most Unforgettable Books of 2018"
"In Bad Blood, acclaimed investigative journalist John Carreyrou, who broke the story in 2015, presents comprehensive evidence of the fraud perpetrated by Theranos chief executive Elizabeth Holmes... He unveils many dark secrets of Theranos that have not previously been laid bare… The combination of these brave whistle-blowers, and a tenacious journalist who interviewed 150 people (including 60 former employees) makes for a veritable page-turner."
—Eric Topol, Nature
"Engrossing… Bad Blood boasts movie-scene detail… Theranos, Carreyrou writes, was a revolving door, as Holmes and Balwani fired anyone who voiced even tentative doubts… What’s frightening is how easy it is to imagine a different outcome, one in which the company’s blood-testing devices continued to proliferate. That the story played out as it did is a testament to the many individuals who spoke up, at great personal risk."
—Jennifer Couzin-Frankel, Science
"In exposing the fudged numbers, boardroom battles and sickening sums of money tossed Theranos’ way, Bad Blood succeeds in highlighting Silicon Valley’s paradoxical blind spot. Insular corporate culture and benevolent media coverage have allowed a monster to grow in the Valley—one that gambles not just with our smart phones or our democracy, but with people’s lives. Bad Blood reveals a crucial truth: outside observers must act as the eyes, the ears and, most importantly, the voice of Silicon Valley’s blind spot."
—B. David Zarley, Paste Magazine's "16 Best Nonfiction Books of 2018"
"Carreyrou blends lucid descriptions of Theranos’s technology and its failures with a vivid portrait of its toxic culture and its supporters’ delusional boosterism. The result is a bracing cautionary tale about visionary entrepreneurship gone very wrong."
—Publishers Weekly (Starred)
"Crime thriller authors have nothing on Carreyrou's exquisite sense of suspenseful pacing and multifaceted character development in this riveting, read-in-one-sitting tour de force.... Carreyrou's commitment to unraveling Holmes' crimes was literally of life-saving value."
—Booklist (Starred Review)
"Eye-opening... A vivid, cinematic portrayal of serpentine Silicon Valley corruption... A deep investigative report on the sensationalistic downfall of multibillion-dollar Silicon Valley biotech startup Theranos. Basing his findings on hundreds of interviews with people inside and outside the company, two-time Pulitzer Prize-winning Wall Street Journal reporter Carreyrou rigorously examines the seamy details behind the demise of Theranos and its creator, Elizabeth Holmes… [Carreyrou] brilliantly captures the interpersonal melodrama, hidden agendas, gross misrepresentations, nepotism, and a host of delusions and lies that further fractured the company’s reputation and halted its rise."
—Kirkus
About the Author
JOHN CARREYROU is a two-time Pulitzer-prize winning investigative reporter at The Wall Street Journal. For his extensive coverage of Theranos, Inc., Carreyrou was awarded the George Polk Award for Financial Reporting, the Gerald Loeb Award for Distinguished Business and Financial Journalism and the Barlett & Steele Award for Investigative Journalism in 2016. Carreyrou lives in Brooklyn with his wife and three children.
--This text refers to the audioCD edition.
Amazon.com Review
An Amazon Best Book of May 2018: In Bad Blood, the Wall Street Journal’s John Carreyrou takes us through the step-by-step history of Theranos, a Silicon Valley startup that became almost mythical, in no small part due to its young, charismatic founder Elizabeth Holmes. In fact, Theranos was mythical for a different reason, because the technological promise it was founded upon—that vital health information could be gleaned from a small drop of blood using handheld devices—was a lie. Carreyrou tracks the experiences of former employees to craft the fascinating story of a company run under a strict code of secrecy, a place where leadership was constantly throwing up smoke screens and making promises that it could not keep. Meanwhile, investors kept pouring in money, turning Elizabeth Holmes into a temporary billionaire. As companies like Walgreens and Safeway strike deals with Theranos, and as even the army tries to get in on the Theranos promise (there’s a brief cameo by James “Mad Dog” Mattis), the plot thickens and the proverbial noose grows tighter. Although I knew how the story ended, I found myself reading this book compulsively. – Chris Schluep
--This text refers to an alternate kindle_edition edition.
Excerpt. © Reprinted by permission. All rights reserved.
Prologue
November 17, 2006
Tim Kemp had good news for his team.
The former IBM executive was in charge of bioinformatics at Theranos, a startup with a cutting-edge blood-testing system. The company had just completed its first big live demonstration for a pharmaceutical company. Elizabeth Holmes, Theranos’s twenty-two-year-old founder, had flown to Switzerland and shown off the system’s capabilities to executives at Novartis, the European drug giant.
“Elizabeth called me this morning,” Kemp wrote in an email to his fifteen-person team. “She expressed her thanks and said that, ‘it was perfect!’ She specifically asked me to thank you and let you all know her appreciation. She additionally mentioned that Novartis was so impressed that they have asked for a proposal and have expressed interest in a financial arrangement for a project. We did what we came to do!”
This was a pivotal moment for Theranos. The three-year-old startup had progressed from an ambitious idea Holmes had dreamed up in her Stanford dorm room to an actual product a huge multinational corporation was interested in using.
Word of the demo’s success made its way upstairs to the second floor, where senior executives’ offices were located.
One of those executives was Henry Mosley, Theranos’s chief financial officer. Mosley had joined Theranos eight months earlier, in March 2006. A rumpled dresser with piercing green eyes and a laid-back personality, he was a veteran of Silicon Valley’s technology scene. After growing up in the Washington, D.C. area and getting his MBA at the University of Utah, he’d come out to California in the late 1970s and never left. His first job was at chipmaker Intel, one of the Valley’s pioneers. He’d later gone on to run the finance departments of four different tech companies, taking two of them public. Theranos was far from his first rodeo.
What had drawn Mosley to Theranos was the talent and experience gathered around Elizabeth. She might be young, but she was surrounded by an all-star cast. The chairman of her board was Donald L. Lucas, the venture capitalist who had groomed billionaire software entrepreneur Larry Ellison and helped him take Oracle Corporation public in the mid-1980s. Lucas and Ellison had both put some of their own money into Theranos.
Another board member with a sterling reputation was Channing Robertson, the associate dean of Stanford’s School of Engineering. Robertson was one of the stars of the Stanford faculty. His expert testimony about the addictive properties of cigarettes had forced the tobacco industry to enter into a landmark $6.5 billion settlement with the state of Minnesota in the late 1990s. Based on the few interactions Mosley had had with him, it was clear Robertson thought the world of Elizabeth.
Theranos also had a strong management team. Kemp had spent thirty years at IBM. Diane Parks, Theranos’s chief commercial officer, had twenty-five years of experience at pharmaceutical and biotechnology companies. John Howard, the senior vice president for products, had overseen Panasonic’s chip-making subsidiary. It wasn’t often that you found executives of that caliber at a small startup.
It wasn’t just the board and the executive team that had sold Mosley on Theranos, though. The market it was going after was huge. Pharmaceutical companies spent tens of billions of dollars on clinical trials to test new drugs each year. If Theranos could make itself indispensable to them and capture a fraction of that spending, it could make a killing.
Elizabeth had asked him to put together some financial projections she could show investors. The first set of numbers he’d come up with hadn’t been to her liking, so he’d revised them upward. He was a little uncomfortable with the revised numbers, but he figured they were in the realm of the plausible if the company executed perfectly. Besides, the venture capitalists startups courted for funding knew that startup founders overstated these forecasts. It was part of the game. VCs even had a term for it: the hockey-stick forecast. It showed revenue stagnating for a few years and then magically shooting up in a straight line.
The one thing Mosley wasn’t sure he completely understood was how the Theranos technology worked. When prospective investors came by, he took them to see Shaunak Roy, Theranos’s cofounder. Shaunak had a Ph.D. in chemical engineering. He and Elizabeth had worked together in Robertson’s research lab at Stanford.
Shaunak would prick his finger and milk a few drops of blood from it. Then he would transfer the blood to a white plastic cartridge the size of a credit card. The cartridge would slot into a rectangular box the size of a toaster. The box was called a reader. It extracted a data signal from the cartridge and beamed it wirelessly to a server that analyzed the data and beamed back a result. That was the gist of it.
When Shaunak demonstrated the system to investors, he pointed them to a computer screen that showed the blood flowing through the cartridge inside the reader. Mosley didn’t really grasp the physics or chemistries at play. But that wasn’t his role. He was the finance guy. As long as the system showed a result, he was happy. And it always did.
***
Elizabeth was back from Switzerland a few days later. She sauntered around with a smile on her face, more evidence that the trip had gone well, Mosley figured. Not that that was unusual. Elizabeth was often upbeat. She had an entrepreneur’s boundless optimism. She liked to use the term “extra-ordinary,” with “extra” written in italics and a hyphen for emphasis, to describe the Theranos mission in her emails to staff. It was a bit over the top, but she seemed sincere and Mosley knew that evangelizing was what successful startup founders did in Silicon Valley. You didn’t change the world by being cynical.
What was odd, though, was that the handful of colleagues who’d accompanied Elizabeth on the trip didn’t seem to share her enthusiasm. Some of them looked outright downcast.
Did someone’s puppy get run over? Mosley wondered half jokingly. He wandered downstairs, where most of the company’s sixty employees sat in clusters of cubicles, and looked for Shaunak. Surely Shaunak would know if there was any problem he hadn’t been told about.
At first, Shaunak professed not to know anything. But Mosley sensed he was holding back and kept pressing him. Shaunak gradually let down his guard and allowed that the Theranos 1.0, as Elizabeth had christened the blood-testing system, didn’t always work. It was kind of a crapshoot, actually, he said. Sometimes you could coax a result from it and sometimes you couldn’t.
This was news to Mosley. He thought the system was reliable. Didn’t it always seem to work when investors came to view it?
Well, there was a reason it always seemed to work, Shaunak said. The image on the computer screen showing the blood flowing through the cartridge and settling into the little wells was real. But you never knew whether you were going to get a result or not. So they’d recorded a result from one of the times it worked. It was that recorded result that was displayed at the end of each demo.
Mosley was stunned. He thought the results were extracted in real time from the blood inside the cartridge. That was certainly what the investors he brought by were led to believe. What Shaunak had just described sounded like a sham. It was OK to be optimistic and aspirational when you pitched investors, but there was a line not to cross. And this, in Mosley’s view, crossed it.
So, what exactly had happened with Novartis? Mosley couldn’t get a straight answer from anyone, but he now suspected some similar sleight of hand. And he was right. One of the two readers Elizabeth took to Switzerland had malfunctioned when they got there. The employees she brought with her had stayed up all night trying to get it to work. To mask the problem during the demo the next morning, Tim Kemp’s team in California had beamed over a fake result.
***
Mosley had a weekly meeting with Elizabeth scheduled for that afternoon. When he entered her office, he was immediately reminded of her charisma. She had the presence of someone much older than she was. The way she trained her big blue eyes on you without blinking made you feel like the center of the world. It was almost hypnotic. Her voice added to the mesmerizing effect: she spoke in an unusually deep baritone.
Mosley decided to let the meeting run its natural course before bringing up his concerns. Theranos had just closed its third round of funding. By any measure, it was a resounding success: the company had raised another $32 million from investors, on top of the $15 million raised in its first two funding rounds. The most impressive number was its new valuation: one hundred and sixty-five million dollars. There weren’t many three-year-old startups that could say they were worth that much.
One big reason for the rich valuation was the agreements Theranos told investors it had reached with pharmaceutical partners. A slide deck listed six deals with five companies that would generate revenues of $120 million to $300 million over the next eighteen months. It listed another fifteen deals under negotiation. If those came to fruition, revenues could eventually reach $1.5 billion, according to the PowerPoint presentation.
The pharmaceutical companies were going to use Theranos’s blood-testing system to monitor patients’ response to new drugs. The cartridges and readers would be placed in patients’ homes during clinical trials. Patients would prick their fingers several times a day and the readers would beam their blood-test results to the trial’s sponsor. If the results indicated a bad reaction to the drug, the drug’s maker would be able to lower the dosage immediately rather than wait until the end of the trial. This would reduce pharmaceutical companies’ research costs by as much as 30 percent. Or so the slide deck said.
Mosley’s unease with all these claims had grown since that morning’s discovery. For one thing, in his eight months at Theranos, he’d never laid eyes on the pharmaceutical contracts. Every time he inquired about them, he was told they were “under legal review.” More important, he’d agreed to those ambitious revenue forecasts because he thought the Theranos system worked reliably.
If Elizabeth shared any of these misgivings, she showed no signs of it. She was the picture of a relaxed and happy leader. The new valuation, in particular, was a source of great pride. New directors might join the board to reflect the growing roster of investors, she told him.
Mosley saw an opening to broach the trip to Switzerland and the office rumors that something had gone wrong. When he did, Elizabeth admitted that there had been a problem, but she shrugged it off. It would easily be fixed, she said.
Mosley was dubious given what he now knew. He brought up what Shaunak had told him about the investor demos. They should stop doing them if they weren’t completely real, he said. “We’ve been fooling investors. We can’t keep doing that.”
Elizabeth’s expression suddenly changed. Her cheerful demeanor of just moments ago vanished and gave way to a mask of hostility. It was like a switch had been flipped. She leveled a cold stare at her chief financial officer.
“Henry, you’re not a team player,” she said in an icy tone. “I think you should leave right now.”
There was no mistaking what had just happened. Elizabeth wasn’t merely asking him to get out of her office. She was telling him to leave the company—immediately. Mosley had just been fired. --This text refers to the audioCD edition.
November 17, 2006
Tim Kemp had good news for his team.
The former IBM executive was in charge of bioinformatics at Theranos, a startup with a cutting-edge blood-testing system. The company had just completed its first big live demonstration for a pharmaceutical company. Elizabeth Holmes, Theranos’s twenty-two-year-old founder, had flown to Switzerland and shown off the system’s capabilities to executives at Novartis, the European drug giant.
“Elizabeth called me this morning,” Kemp wrote in an email to his fifteen-person team. “She expressed her thanks and said that, ‘it was perfect!’ She specifically asked me to thank you and let you all know her appreciation. She additionally mentioned that Novartis was so impressed that they have asked for a proposal and have expressed interest in a financial arrangement for a project. We did what we came to do!”
This was a pivotal moment for Theranos. The three-year-old startup had progressed from an ambitious idea Holmes had dreamed up in her Stanford dorm room to an actual product a huge multinational corporation was interested in using.
Word of the demo’s success made its way upstairs to the second floor, where senior executives’ offices were located.
One of those executives was Henry Mosley, Theranos’s chief financial officer. Mosley had joined Theranos eight months earlier, in March 2006. A rumpled dresser with piercing green eyes and a laid-back personality, he was a veteran of Silicon Valley’s technology scene. After growing up in the Washington, D.C. area and getting his MBA at the University of Utah, he’d come out to California in the late 1970s and never left. His first job was at chipmaker Intel, one of the Valley’s pioneers. He’d later gone on to run the finance departments of four different tech companies, taking two of them public. Theranos was far from his first rodeo.
What had drawn Mosley to Theranos was the talent and experience gathered around Elizabeth. She might be young, but she was surrounded by an all-star cast. The chairman of her board was Donald L. Lucas, the venture capitalist who had groomed billionaire software entrepreneur Larry Ellison and helped him take Oracle Corporation public in the mid-1980s. Lucas and Ellison had both put some of their own money into Theranos.
Another board member with a sterling reputation was Channing Robertson, the associate dean of Stanford’s School of Engineering. Robertson was one of the stars of the Stanford faculty. His expert testimony about the addictive properties of cigarettes had forced the tobacco industry to enter into a landmark $6.5 billion settlement with the state of Minnesota in the late 1990s. Based on the few interactions Mosley had had with him, it was clear Robertson thought the world of Elizabeth.
Theranos also had a strong management team. Kemp had spent thirty years at IBM. Diane Parks, Theranos’s chief commercial officer, had twenty-five years of experience at pharmaceutical and biotechnology companies. John Howard, the senior vice president for products, had overseen Panasonic’s chip-making subsidiary. It wasn’t often that you found executives of that caliber at a small startup.
It wasn’t just the board and the executive team that had sold Mosley on Theranos, though. The market it was going after was huge. Pharmaceutical companies spent tens of billions of dollars on clinical trials to test new drugs each year. If Theranos could make itself indispensable to them and capture a fraction of that spending, it could make a killing.
Elizabeth had asked him to put together some financial projections she could show investors. The first set of numbers he’d come up with hadn’t been to her liking, so he’d revised them upward. He was a little uncomfortable with the revised numbers, but he figured they were in the realm of the plausible if the company executed perfectly. Besides, the venture capitalists startups courted for funding knew that startup founders overstated these forecasts. It was part of the game. VCs even had a term for it: the hockey-stick forecast. It showed revenue stagnating for a few years and then magically shooting up in a straight line.
The one thing Mosley wasn’t sure he completely understood was how the Theranos technology worked. When prospective investors came by, he took them to see Shaunak Roy, Theranos’s cofounder. Shaunak had a Ph.D. in chemical engineering. He and Elizabeth had worked together in Robertson’s research lab at Stanford.
Shaunak would prick his finger and milk a few drops of blood from it. Then he would transfer the blood to a white plastic cartridge the size of a credit card. The cartridge would slot into a rectangular box the size of a toaster. The box was called a reader. It extracted a data signal from the cartridge and beamed it wirelessly to a server that analyzed the data and beamed back a result. That was the gist of it.
When Shaunak demonstrated the system to investors, he pointed them to a computer screen that showed the blood flowing through the cartridge inside the reader. Mosley didn’t really grasp the physics or chemistries at play. But that wasn’t his role. He was the finance guy. As long as the system showed a result, he was happy. And it always did.
***
Elizabeth was back from Switzerland a few days later. She sauntered around with a smile on her face, more evidence that the trip had gone well, Mosley figured. Not that that was unusual. Elizabeth was often upbeat. She had an entrepreneur’s boundless optimism. She liked to use the term “extra-ordinary,” with “extra” written in italics and a hyphen for emphasis, to describe the Theranos mission in her emails to staff. It was a bit over the top, but she seemed sincere and Mosley knew that evangelizing was what successful startup founders did in Silicon Valley. You didn’t change the world by being cynical.
What was odd, though, was that the handful of colleagues who’d accompanied Elizabeth on the trip didn’t seem to share her enthusiasm. Some of them looked outright downcast.
Did someone’s puppy get run over? Mosley wondered half jokingly. He wandered downstairs, where most of the company’s sixty employees sat in clusters of cubicles, and looked for Shaunak. Surely Shaunak would know if there was any problem he hadn’t been told about.
At first, Shaunak professed not to know anything. But Mosley sensed he was holding back and kept pressing him. Shaunak gradually let down his guard and allowed that the Theranos 1.0, as Elizabeth had christened the blood-testing system, didn’t always work. It was kind of a crapshoot, actually, he said. Sometimes you could coax a result from it and sometimes you couldn’t.
This was news to Mosley. He thought the system was reliable. Didn’t it always seem to work when investors came to view it?
Well, there was a reason it always seemed to work, Shaunak said. The image on the computer screen showing the blood flowing through the cartridge and settling into the little wells was real. But you never knew whether you were going to get a result or not. So they’d recorded a result from one of the times it worked. It was that recorded result that was displayed at the end of each demo.
Mosley was stunned. He thought the results were extracted in real time from the blood inside the cartridge. That was certainly what the investors he brought by were led to believe. What Shaunak had just described sounded like a sham. It was OK to be optimistic and aspirational when you pitched investors, but there was a line not to cross. And this, in Mosley’s view, crossed it.
So, what exactly had happened with Novartis? Mosley couldn’t get a straight answer from anyone, but he now suspected some similar sleight of hand. And he was right. One of the two readers Elizabeth took to Switzerland had malfunctioned when they got there. The employees she brought with her had stayed up all night trying to get it to work. To mask the problem during the demo the next morning, Tim Kemp’s team in California had beamed over a fake result.
***
Mosley had a weekly meeting with Elizabeth scheduled for that afternoon. When he entered her office, he was immediately reminded of her charisma. She had the presence of someone much older than she was. The way she trained her big blue eyes on you without blinking made you feel like the center of the world. It was almost hypnotic. Her voice added to the mesmerizing effect: she spoke in an unusually deep baritone.
Mosley decided to let the meeting run its natural course before bringing up his concerns. Theranos had just closed its third round of funding. By any measure, it was a resounding success: the company had raised another $32 million from investors, on top of the $15 million raised in its first two funding rounds. The most impressive number was its new valuation: one hundred and sixty-five million dollars. There weren’t many three-year-old startups that could say they were worth that much.
One big reason for the rich valuation was the agreements Theranos told investors it had reached with pharmaceutical partners. A slide deck listed six deals with five companies that would generate revenues of $120 million to $300 million over the next eighteen months. It listed another fifteen deals under negotiation. If those came to fruition, revenues could eventually reach $1.5 billion, according to the PowerPoint presentation.
The pharmaceutical companies were going to use Theranos’s blood-testing system to monitor patients’ response to new drugs. The cartridges and readers would be placed in patients’ homes during clinical trials. Patients would prick their fingers several times a day and the readers would beam their blood-test results to the trial’s sponsor. If the results indicated a bad reaction to the drug, the drug’s maker would be able to lower the dosage immediately rather than wait until the end of the trial. This would reduce pharmaceutical companies’ research costs by as much as 30 percent. Or so the slide deck said.
Mosley’s unease with all these claims had grown since that morning’s discovery. For one thing, in his eight months at Theranos, he’d never laid eyes on the pharmaceutical contracts. Every time he inquired about them, he was told they were “under legal review.” More important, he’d agreed to those ambitious revenue forecasts because he thought the Theranos system worked reliably.
If Elizabeth shared any of these misgivings, she showed no signs of it. She was the picture of a relaxed and happy leader. The new valuation, in particular, was a source of great pride. New directors might join the board to reflect the growing roster of investors, she told him.
Mosley saw an opening to broach the trip to Switzerland and the office rumors that something had gone wrong. When he did, Elizabeth admitted that there had been a problem, but she shrugged it off. It would easily be fixed, she said.
Mosley was dubious given what he now knew. He brought up what Shaunak had told him about the investor demos. They should stop doing them if they weren’t completely real, he said. “We’ve been fooling investors. We can’t keep doing that.”
Elizabeth’s expression suddenly changed. Her cheerful demeanor of just moments ago vanished and gave way to a mask of hostility. It was like a switch had been flipped. She leveled a cold stare at her chief financial officer.
“Henry, you’re not a team player,” she said in an icy tone. “I think you should leave right now.”
There was no mistaking what had just happened. Elizabeth wasn’t merely asking him to get out of her office. She was telling him to leave the company—immediately. Mosley had just been fired. --This text refers to the audioCD edition.
Product details
- ASIN : B078VW3VM7
- Publisher : Vintage; 1st edition (May 21, 2018)
- Publication date : May 21, 2018
- Language : English
- File size : 13505 KB
- Text-to-Speech : Enabled
- Enhanced typesetting : Enabled
- X-Ray : Enabled
- Word Wise : Enabled
- Print length : 336 pages
- Lending : Not Enabled
- Best Sellers Rank: #6,103 in Kindle Store (See Top 100 in Kindle Store)
- Customer Reviews:
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Reviewed in the United States on May 21, 2018
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This is an impeccably researched and referenced account of the Theranos saga. As a long-time observer and sometime competitor of Theranos I watched this tale unfold whilst working at a couple of established IVD companies. Everyone I knew who had ever developed an assay or instrument knew this was smoke and mirrors, impossibly too good to be true. What I never suspected was just how personally dishonest EH had been, and for how long the complex deception was maintained. Whilst I've met a few egregious individuals working for big companies, there are enough checks and balances (QA/RA, Med/Sci Affairs, CLSs and other professionals etc) in place to stop harmful devices getting out the door.
The subject matter - developing devices and assays - is a complex dry topic, difficult to write engagingly about. But JC does a workmanlike job and I read this in one go after its midnight Kindle release. My only nit to pick is the poor editing: there are so many uses of '....named....' as in 'an engineer named John Smith' or 'a restaurant named Joe's Bar' that it got irritating. Find/replace 'named' with a comma would have worked fine in most cases. The text was also repetitive - eg '...an award named after Channing...' gets at least 2 mentions. But not enough to lose a star.
Kudos to the good people at Theranos who had the courage to get the story out and for JCs persistence into a headwind of legalistic intimidation. I've heard Theranos is now a case-study for MBA students: this book should be required reading for anyone thinking about 'disrupting' the medical devices industry. There are lives at stake.
The subject matter - developing devices and assays - is a complex dry topic, difficult to write engagingly about. But JC does a workmanlike job and I read this in one go after its midnight Kindle release. My only nit to pick is the poor editing: there are so many uses of '....named....' as in 'an engineer named John Smith' or 'a restaurant named Joe's Bar' that it got irritating. Find/replace 'named' with a comma would have worked fine in most cases. The text was also repetitive - eg '...an award named after Channing...' gets at least 2 mentions. But not enough to lose a star.
Kudos to the good people at Theranos who had the courage to get the story out and for JCs persistence into a headwind of legalistic intimidation. I've heard Theranos is now a case-study for MBA students: this book should be required reading for anyone thinking about 'disrupting' the medical devices industry. There are lives at stake.
764 people found this helpful
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5.0 out of 5 stars
Fascinating, horrifying, and richly detailed account of corporate ambition gone awry.
Reviewed in the United States on May 22, 2018Verified Purchase
I started this book and could not put it down. It's a horrifying true story of a driven entrepreneur whose only overriding goal was to become insanely rich. And she would do anything, any unimagineable thing, to get there.
Elizabeth Holmes leveraged her family's high profile connections to draw in early investors and supporters, who were not very inquisitive on details, nor very skeptical in nature. Drawing on the good name and reputation of these early supporters, she was able to build an impressive roster of other supporters with stellar reputations in tech and venture capital circles. From there, it was just a matter of stage managing the house of cards she was building.
Holmes crafted a Potemkin village that had fooled investors, customers, and visiting dignitaries. Her product demonstrations were outright theater, staged managed illusions worthy of David Copperfield. Theranos employees in on the ruse were assured it was just temporary, until the actual product could be perfected and the results repeatable. That day would never come. Those on the outside who also worked in this field had well founded and grave doubts about how Theranos could be touting a product that seemingly defied both logic and physics. Their suspicions, proven to be correct, was that it was too good to be true.
Without a trace of guilt or regret, she induced powerful tech workers to leave lucrative careers at other major tech firms, giving up millions in stock options, to come work for Theranos, surely knowing the whole thing would collapse one day. When skeptical board members asked to see data affirming the effectiveness of their product, Holmes would defer, saying those papers were in perpetual legal review. Some employees, when they were no longer useful to her, or deemed disloyal, were immediately and unceremoniously marched out.
This is a real life thriller, the story of someone who is a true diabolical movie villain. Holmes is portrayed vividly as a paranoid sociopath who could also be disarming, charmingly manipulative, utterly ruthless and devoid of conscience. This is a tale of corporate greed and lack of regulatory oversight gone all awry.
Elizabeth Holmes leveraged her family's high profile connections to draw in early investors and supporters, who were not very inquisitive on details, nor very skeptical in nature. Drawing on the good name and reputation of these early supporters, she was able to build an impressive roster of other supporters with stellar reputations in tech and venture capital circles. From there, it was just a matter of stage managing the house of cards she was building.
Holmes crafted a Potemkin village that had fooled investors, customers, and visiting dignitaries. Her product demonstrations were outright theater, staged managed illusions worthy of David Copperfield. Theranos employees in on the ruse were assured it was just temporary, until the actual product could be perfected and the results repeatable. That day would never come. Those on the outside who also worked in this field had well founded and grave doubts about how Theranos could be touting a product that seemingly defied both logic and physics. Their suspicions, proven to be correct, was that it was too good to be true.
Without a trace of guilt or regret, she induced powerful tech workers to leave lucrative careers at other major tech firms, giving up millions in stock options, to come work for Theranos, surely knowing the whole thing would collapse one day. When skeptical board members asked to see data affirming the effectiveness of their product, Holmes would defer, saying those papers were in perpetual legal review. Some employees, when they were no longer useful to her, or deemed disloyal, were immediately and unceremoniously marched out.
This is a real life thriller, the story of someone who is a true diabolical movie villain. Holmes is portrayed vividly as a paranoid sociopath who could also be disarming, charmingly manipulative, utterly ruthless and devoid of conscience. This is a tale of corporate greed and lack of regulatory oversight gone all awry.
450 people found this helpful
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Reviewed in the United States on May 27, 2018
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It takes a mighty strong person and an incredible investigative journalist to take down a multibillion company lead by a CEO and her partner who are doing nothing but telling lies, mistreating their employees, taking millions of dollars under false pretenses from Fortune 500 businesses and wealthy investors, betraying their esteemed board members, and worst and most harmful of all, putting the lives of their end customers in serious jeopardy because the technology that they claim to have engineered does not exist nor has it been FDA approved or tested. This is John Carreyrou’s BAD BLOOD: SECRETS AND LIES IN A SILICON VALLEY STARTUP. Carreyrou went to monumental lengths over the course of several years, with the help of named and unnamed sources who worked or were connected to Theranos, the company, which claimed to have created a blood-testing device that with ‘one drop of blood’ could obtain hundreds of test results thus saving lives. Not only were their little machines ineffective but they were doing no such thing. Meaning, they could not provide accurate test results because they were not even obtaining them. Rather, they were using commercial analyzers in their place. At the helm was Theranos founder and CEO Elizabeth Holmes, a Stanford drop-out who had a brilliant idea, but it was never brought to fruition. She simply leads people to believe it was with her charm. A lot of people.
It is staggering how many people she swayed. We’re not just talking about a co-worker or two but former heads of state, who later joined her board, people who amassed fortunes in the billions who were willing to loan Theranos money, major corporations including Walgreens and Safeway who wanted to get in on the ground floor, and many more. It is equally astonishing how so many smart, successful people were not taken aback by her freakish obsession with imitating Steve Jobs. Perhaps, they chalked this up to her eccentricity.
It took courage for people to come forward. They were threatened with lawsuits that could bankrupt them ten times over, by one of the leading and most intimidating litigators in the country. Carreyrou, a Pulitzer Prize winning investigative journalist, who has been with The Wall Street Journal for almost 10 years, had the support of his editor, newspaper, and its attorneys. He never thought for a minute to back down. The result – a series of articles in the paper that exposed Theranos and Holmes for the fraud they committed.
It is dumbfounding to read BAD BLOOD and to think that Holmes and her number two in command, Sunny Balwani, also her romantic partner, which was kept secret, got away with so much for so long, and even when finally confronted and their hands were forced, they still would not admit fault. Is Holmes a criminal? Is she delusional?
What I do know is that you will not be able to put this book down.
It is staggering how many people she swayed. We’re not just talking about a co-worker or two but former heads of state, who later joined her board, people who amassed fortunes in the billions who were willing to loan Theranos money, major corporations including Walgreens and Safeway who wanted to get in on the ground floor, and many more. It is equally astonishing how so many smart, successful people were not taken aback by her freakish obsession with imitating Steve Jobs. Perhaps, they chalked this up to her eccentricity.
It took courage for people to come forward. They were threatened with lawsuits that could bankrupt them ten times over, by one of the leading and most intimidating litigators in the country. Carreyrou, a Pulitzer Prize winning investigative journalist, who has been with The Wall Street Journal for almost 10 years, had the support of his editor, newspaper, and its attorneys. He never thought for a minute to back down. The result – a series of articles in the paper that exposed Theranos and Holmes for the fraud they committed.
It is dumbfounding to read BAD BLOOD and to think that Holmes and her number two in command, Sunny Balwani, also her romantic partner, which was kept secret, got away with so much for so long, and even when finally confronted and their hands were forced, they still would not admit fault. Is Holmes a criminal? Is she delusional?
What I do know is that you will not be able to put this book down.
300 people found this helpful
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Natalia Rice
5.0 out of 5 stars
The best read of the season; the author deserves an award.
Reviewed in the United Kingdom on July 2, 2018Verified Purchase
Drop everything you're doing and start reading it. It's an utterly engaging mix of genres - investigative journalism, psychology (at times psychiatry), organisational behaviour, business & science reporting, and a story of worst and best of the humankind. I've cancelled meetings and events, delayed going to bed just to keep reading this book - the story is almost surreal, and it's hard to believe it really happened, and yet it did.
I'd like to compliment the author. The depth of the investigation is extraordinary; but most importantly, the narration is done in this perfect documentary style when even the most chilling events are described with high precision but without falling into emotional judgement.
I also would like to say a big thank you to all the sources and contributors who made this book possible. You're very brave people; I applaud your courage and ethics.
I'd like to compliment the author. The depth of the investigation is extraordinary; but most importantly, the narration is done in this perfect documentary style when even the most chilling events are described with high precision but without falling into emotional judgement.
I also would like to say a big thank you to all the sources and contributors who made this book possible. You're very brave people; I applaud your courage and ethics.
96 people found this helpful
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David
5.0 out of 5 stars
If something sounds too good to be true it probably is.
Reviewed in the United Kingdom on April 3, 2019Verified Purchase
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 denial
The 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 lies
Holmes 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 law
What 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 incuriousity
The 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.
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 denial
The 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 lies
Holmes 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 law
What 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 incuriousity
The 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.
13 people found this helpful
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Gisele Navarro
5.0 out of 5 stars
I don't normally write reviews but I had with this book
Reviewed in the United Kingdom on August 19, 2018Verified Purchase
Patrick Lencioni mentioned this book in one of his latest newsletters so I bought it without reading the reviews. What followed was a week of late nights due to my inability to put my Kindle down.
I can't believe I completely missed the news about Theranos but that certainly made for an even better reading experience - so much drama, intrigue and bad blood was a recipe for one of my favourite books of the year.
I can't believe I completely missed the news about Theranos but that certainly made for an even better reading experience - so much drama, intrigue and bad blood was a recipe for one of my favourite books of the year.
14 people found this helpful
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M Mansour
5.0 out of 5 stars
Best business book of 2018 (so far)
Reviewed in the United Kingdom on August 24, 2018Verified Purchase
I read this book in straight 48 hours since boarding a long-haul flight. Mesmerising, excellently researched, gripping..just could not put it down. This is a moral story comprising the ugly greed laden face of Silicon Valley and its founders, the army of ruthless lawyers squashing people along the way (they tried to silence the author of this book), the cult-ish abandonment of common sense and judgement of who's who of Silicon Valley and Corporate America as they pursue the next big thing. Nevermind that actual people's health and well being were at serious risk and not just their dollars.
14 people found this helpful
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Doalch
5.0 out of 5 stars
Great read.
Reviewed in the United Kingdom on July 6, 2018Verified Purchase
Read this in three days, couldn't put it down. If this was a work of fiction it'd be hard to believe, yet it's fact. The emperor's new clothes on steroids being funded by some of the biggest players in the US and fueled by a complete web of lies, deceit and some seriously shady business practices.
Easily a five star, definitely a must read.
Can't wait to see the film.
Easily a five star, definitely a must read.
Can't wait to see the film.
8 people found this helpful
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