Bad Blood: Secrets and Lies in a Silicon Valley Startup

In a true sense I have little to add to the weight of commentary about Bad Blood, the Wall Street Journal reporter John Carreyrou’s story about alleged fraud at blood-testing startup Theranos. There is a true crime-style podcast, a documentary and a forthcoming movie with Jennifer Lawrence. They collectively raise many uncomfortable questions about Silicon Valley culture, the misuse of commercial confidentiality contracts, the role of media hype and much else.

Bad Blood: Secrets and Lies in a Silicon Valley Startup
John Carreyrou, 2018

It’s striking that Carreyrou the reporter is, by necessity, a key character in his own book. Were it not for his first quietly damning article in 2015 citing sources who questioned the efficacy of the Theranos prototype, the company and its charismatic founder Elizabeth Holmes would probably be around today. Before Thernaos’s collapse amid regulatory investigations three years later the company’s employees played a Space Invaders game shooting at Carreyrou’s face and chanted “F*ck you, Carreyrou!” at all-staff meetings. So to dwell on the process up to and after that first WSJ article is not mere navel-gazing.

Theranos and its lawyers, led by celebrated attorney David Boies, fought the Journal tooth and nail. According to Carreyrou the firm threatened his sources, notably the young researcher Tyler Shultz whose famous grandfather George sat on Theranos’s board. (Boies has his say here) Holmes asked Rupert Murdoch, in the uncomfortable position of owning both the Journal and a $125 million chunk of Theranos stock, to kill the story.

It took close to a year for Carreyrou to publish after receiving his first tip. Carreyrou describes how he got there and what was missing, until he got it. I’ll close by summarising what it took for Carreyrou to reveal the fraud:

• Direct sources without an axe to grind. Some otherwise-credible people Carreyrou spoke to, such as the Fuisz family, had been involved in unrelated litigation with Holmes, “making them useless as sources.” Shultz, who later waived his anonymity, was a trustworthy journalistic source because he entered Theranos fresh and had raised concerns internally before turning whistleblower
• Contemporaneous documents. “Documentary evidence was the gold standard for these types of stories” and often Carreyrou was told by ex-Theranos employees, to his disappointment, that they didn’t have emails or other documentary proof of what they were claiming. Theranos, not unusually for Silicon Valley firm, vigilantly policed what departing staff took out the building
• Institutional backing. The Journal gave Carreyrou the time and money to continue his investigation and faced down threats. Aside from Holmes’s lobbying of Murdoch, which he was unaware of at the time, Carreyrou reports a couple of unnerving experiences that reflect the challenges of managing multiple silos. In summer 2015, while Carreyrou’s investigation was heating up, the Op-Ed side of the Journal gave Holmes column inches to promote Theranos’s technology. Carreyrou lobbied, and his editor agreed, that they needed to publish before the paper’s ‘WSJDLive’ conference where Holmes was scheduled (and did) make a live appearance.