Bad Blood Review: The Biggest Scam in Silicon Valley

Kevin Nguyen
Updated
Theranos said it would change the way blood testing worked—it raised over a billion dollars on that promise. But in his new book, John Carreyrou uncovers that Theranos’s greatest innovation was a technology as old as time: lying.

Titled after the 11th best song on 1989, John Carreyrou’s Bad Blood is a scrupulously reported book about Silicon Valley hubris. You might recall Carreyrou’s reporting last year in the Wall Street Journal, when he exposed the lie behind Theranos (rhymes with “Bailamos”), the multi-billion-dollar-valued tech startup that sought to simplify blood testing. Theranos—not to be confused with Thanatos, the god of death, or Thanos, the purple Marvel villain—raised money on a too-good-to-be-true promise of a pitch deck: a revolutionary household box that could administer a number of medical tests—all with a single prick. Turns out Theranos would involve a lot more than one prick.

The company’s CEO, Elizabeth Holmes, was a classic narcissist—an intelligent and ambitious entrepreneur who surrounded herself with mediocre yes men. She pitted engineering teams against each other, assuming competition would foster better productivity over collaboration. She was also paranoid and secretive. Holmes’s assistants would Facebook friend employees just to report on what they were posting. Her entire M.O. could be summed up by a motivational saying inscribed on a paperweight she kept on her desk: “What would you attempt to do if you knew you could not fail?”

The answer to that question: lie. Theranos created devices that simply did not work. So began a convoluted scheme of bait and switches (baits and switch?) with potential investors and clients to convince suckers that Theranos could deliver on the goods: broken machines and fake results. The technology might be new and shiny, but the scam was as old as time.

Bad Blood argues that Holmes was less an impressive con artist, but something more akin to a cult leader. People—employees and investors alike—were taken by Holmes’s “aura.” It’s no surprise that she deeply, deeply admired Steve Jobs. She dressed like him. Her Audi didn’t have a license plate, a nod to Jobs. After the Apple founder’s death, coworkers at Theranos noticed that Holmes was lifting management tactics from Walter Isaacson’s Jobs biography. (“They were all reading the book too and could pinpoint which chapter she was on based on which period of Job’s career she was impersonating.”) If she wasn’t being investigated for “massive fraud,” you’d imagine Holmes’s second startup would invent technology to let her wear Jobs’s skin.

Still, Holmes isn’t the only villain. Theranos' second-in-command was Sunny Balwani, her combative and self-aggrandizing boyfriend. In fact, even more than Holmes’s, Balwani’s behavior ranged from petty to straight-up vindictive. He harangued people about the number of hours they work, even summoning security footage to track employees’ comings and goings. At one point, after a flurry of resignations, he and Holmes called an all-hands meeting where Balwani said that “anyone not prepared to show complete devotion and unmitigated loyalty to the company should ‘get the fuck out’.” Then he distributed copies of noted trash book The Alchemist to everyone.

Throughout Bad Blood, a number of figures easily uncover pieces of Theranos’ sham. But in nearly every case, the skeptic is overruled by someone who is intoxicated by the company’s potential. That’s how Theranos raised $1.4 billion in capital. (High-profile suckers include: the Walmart heirs, Betsy DeVos, Rupert Murdoch.) They also scored lucrative deals with Safeway and Walgreens. “What if the Theranos technology did turn out to be game-changing?” Carreyrou writes, detailing investors’ approach to the company. “It might spend the next decade regretting passing up on it. The fear of missing out was a powerful deterrent.” That’s right, Theranos was buoyed not by common sense, but from corporate FOMO.

Carreyrou’s reporting in Bad Blood is exhaustive, having interviewed over 150 people—more than 60 of those being ex-Theranos employees with enough tea to fill an Olympic pool. Still, the book stumbles a bit in its third act, when Carreyrou introduces himself and how he broke the story. Since we’ve spent the last 200 pages in the story, hearing him piece it together after the fact is a bit humdrum. (Carreyrou might have two Pulitzers, but this isn’t exactly Spotlight.)

Still, these are small issues in a book that speaks volumes to tech at large. In the past two years, we’ve watched public opinion flip on Uber and Facebook, and the nerdy opulence of startups have become a frequent punchline, be it through the lampoon of HBO’s Silicon Valley or memes of thicc Mark Zuckerberg. In the same vein, Bad Blood is a satisfying read for anyone who wants a book full of salacious startupenfreude. (Who doesn’t like reading about a good old-fashioned scam?) But more vitally, the resonant moments of the book don’t just make out Theranos to be a fraud, but the promise of the tech industry itself. Overpromising everything to dazzle investors, abusing employees as the norm for “startup culture,” skirting laws and morality in the name of innovation—these are all features of Silicon Valley, not a bug.