For many who have witnessed Silicon Valley’s tech boom up close, the story of Elizabeth Holmes and Theranos crystallized a lot of the reservations people have about Silicon Valley in general (and by extension, modern American capitalism as a whole). Theranos’s founder, Holmes, a former college dropout who was indicted this week for criminal fraud, was initially touted as the world’s youngest self-made female billionaire, with a net worth of $4.5 billion. That was before her company and its key technology were exposed as not working in the way that they’d promised or never having worked at all (the fraud indictment was for trying to cover that up). That someone could found a company at 19 and become a multi-billionaire without having developed much of anything beyond a good line of bullshit came to exemplify just how much a good sales pitch had come to matter more than having an actual product.
Elizabeth Holmes’ is more than just an epic grifter story. It felt like the apotheosis of several curious Silicon Valley phenomena. Like the phenomenon of massive startups with fabulously wealthy founder CEOs whose companies have never actually turn a profit (Uber, to name just one, has never turned a profit; Amazon claims it deliberately avoids them). Or the phenomenon of cult-like working environments, where employees are expected to work absurdly long hours and show absolute loyalty to the company, who in turn offer them zero job security and claim the right to fire them on the spot for any transgression, up to and including having a negative attitude. Elizabeth Holmes, for instance, once told employees “The miniLab is the most important thing humanity has ever produced. If you don’t believe this is the case, you should leave now.”
Which brings us to a few other Silicon Valley phenomena, like the idea that becoming a billionaire can be good for humanity, and that billionaire CEOs are some of our greatest humanitarians. She is the ultimate case study in why you should never trust anyone who constantly tells you not to be so cynical. Elizabeth Holmes both drank the Kool-Aid and served it, telling family from an early age that she wanted to become a billionaire, and eventually modeling herself after Steve Jobs — with the turtlenecks and fruitarian diet — and later fostered a work environment where inspirational quotes about serving humanity were plastered all over the walls at a company that had to thwart government regulations and lie to patients just to exist.
John Carreyrou, a Pulitzer Prize-winning journalist at the Wall Street Journal, helped bring Theranos down (though even now, there are still those who refuse to admit Theranos did anything wrong) with a series of investigative pieces starting in 2015. Now, he chronicles Theranos’ rise and fall in his new book, Bad Blood: Secrets and Lies in a Silicon Valley Startup. It’s a fascinating read, and not just for all the inside dirt on Theranos and Holmes and Holmes’ ex-boyfriend and co-conspirator, Sunny Balwani, a mercurial, Russ Hanneman-esque megalomaniac who drove around in Lamborghinis and a Porche with vanity plates mocking Marx (“DAZKPTL“).
Because Bad Blood isn’t just the story of Elizabeth Holmes and Theranos and Sunny, it’s the story of how John Carreyrou got the story of Elizabeth Holmes and Theranos, which is arguably just as interesting. You hear a lot about “fake news” and journalism’s supposed liberal bias, but rarely do you hear it driven home so vividly as in Bad Blood how hard (and much less lucrative than the alternative) it is to do critical journalism. And especially critical journalism about wealthy people. Holmes and Balwani throw up obstacle after obstacle, spewing out lawsuits with the help of their lawyer, David Boies, which constantly threaten to bankrupt or forever discredit Carreyrou, his publication, and his sources, potentially leaving them broke and unemployable, for the sin of trying to tell the truth. Balwani even allegedly led Theranos employees in a chant of “FUCK YOU, CARREYROU!” during company pow-wows.
To this day, one of Carreyrou’s sources, Tyler Schultz, grandson of Reagan secretary of state George Schultz, an early Theranos investor (other aging military “luminaries” were also early Theranos investors, like Henry Kissinger), estimates that his family is more than $400,000 in debt from legal fees as a result of Theranos’ attempts to discredit him. When it comes to adversarial journalism like Bad Blood, which we so desperately need, the obstacles are many and the incentives are few.
Thus, Bad Blood is about 15 cautionary tales in one. I spoke to Carreyrou by phone about it this week, and needless to say, there was a lot to talk about.