INSUBCONTINENT EXCLUSIVE:
In a world where thousands and thousands of startups are started in the Bay Area every year, becoming a name that everyone recognizes is no
small feat.Theranos reached that summit, and it all came crashing down.The story of the fraudulent rise and precipitous fall of the company
and its entrepreneur, Elizabeth Holmes, is also the singular story of the journalist who chronicled the company
John Carreyrou tenacious and intrepid reporting at the Wall Street Journal would ultimately expose one of the largest frauds ever
perpetrated in Silicon Valley.Bad Blood is the culmination of that investigative reporting
The swift decline of Theranos and its protective legal apparatus has done this story a lot of good: many of the anonymous sources that
underpinned Carreyrou WSJ coverage are now public and visible, allowing the author to weave together the various articles he published into
a holistic and complete story.And yet, what I found in the book was not all that thrilling or shocking, but rather astonishingly
pedestrian.Part of the challenge is Carreyrou laconic WSJ tone, with its &just the facts& attitude that is punctuated only occasionally by
brief interludes on the motivations and psychology of its characters
That style is appreciated by this subscriber of the paper daily, but the book-length treatment suffers a bit from a lack of charisma.The
real challenge though is that the raw story — for all of its fraud — lacks the sort of verve that makes business thrillers like
Barbarians at the Gate or Red Notice so engaging
The characters that Carreyrou has to work with just aren&t all that interesting
One could argue that perhaps the book is too early — with criminal charges filed and court trials coming, we may well learn much more
about the conspiracy and its participants
But I don&t think so, mostly because the fraud seems so simple in its premise.At the heart of this story is the use of heuristics by
investors and customers to make their largest decisions
Theranos is a story of the snowball effect blown up to an avalanche: a retired and successful venture capitalist seeds the company, leading
to other investors to see that name and invest, and onwards and upwards for more than a decade, eventually collecting a cast of characters
around the table that includes James Mattis, the current Secretary of Defense, and Henry Kissinger.Take Rupert Murdoch, the billionaire
owner of News Corporation (and by extension the Wall Street Journal), who invested $125 million into Theranos near the end of the company
He met Holmes at a dinner in Silicon Valley:During the dinner, Holmes came over to Murdoch table, introduced herself, and chatted him up
The strong first impression she made on him was bolstered by [Yuri] Milner, who sang her praises when Murdoch later asked him what he
thought of the young woman.….But unlike the big venture capital firms, he did no due diligence to speak of
The eighty-four-year-old mogul tended to just follow his gut, an approach that had served him well …He made one call before investing $125
million.To some readers, that might be a breathtaking sum, but it really is something of a pittance for Murdoch, whose reported net worth
today is roughly $17 billion
In the denouement of the Theranos story, Carreyrou notes that, &The media mogul sold his stock back to Theranos for one dollar so he could
claim a big tax write-off on his other earnings
With a fortune estimated at $12 billion, Murdoch could afford to lose more than $100 million on a bad investment.&For Murdoch, a bad
heuristic around the company cost him roughly 1% of his net wealth, and with the tax loss, may not have cost him much of anything at
all.That the challenge of the book: for all the fraud committed by Theranos and its founder, its financial losses were ultimately borne by
This is not the 2008 Financial Crisis, where millions of people are thrown out of their homes due to the chicanery of Wall Street fat
cats.If there is a lesson in all of this, it is that the right heuristics would have helped these investors to an extraordinarily degree
Take for example the rapid turnover of Theranos& workforce, which could have been checked on LinkedIn in minutes and would have signaled
something deeply wrong with the company culture and leadership
It doesn&t take many questions to discover the fraud here if they are the right questions.Beyond the investors and workers though, the harm
is even hard to track to patients
There are perhaps no more serious consequences around Theranos& fraud than for patients, who took tests on the company proprietary Edison
machines and received inaccurate and at times faked results
Yet, Carreyrou strangely hasn&t compiled a compelling set of patients for whom Theranos caused morbidity
If any industry comes out positively in this book, it is the doctors of patients who reorder tests and ask additional questions when results
didn&t make sense.Ultimately, Bad Blood is a complete book about an important story
I&m reminded a bit of the 2012 documentary The Act of Killing, in which the filmmakers travel to Indonesia to have the killers of the 1965
communist genocide recreate the murders they perpetrated
The director cut is long and at times remarkably tedious, and yet, that is in many ways precisely the point
As a viewer, you become inured to the murder, bereft of emotion while waiting for the ending credits to roll.Bad Blood is the same: its
direct, to the point, and relatively sparing in any deep thrills
The book gives us a pinprick in our belief that Silicon Valley vaunted investors and founders are immune to stupidity
If you didn&t already know that before, you certainly now have a one-word household name of a startup to reference.
