Bad Blood, John Carreyrou. New York: Vintage, 2020.

Summary: The account of Elizabeth Holmes, the blood testing company Theranos, and the ambition that led to lies upon lies deceiving famous investors, pharmaceutical companies, and business publications until an investigative reporter on a tip discovered the house of cards on which it was all built.

Elizabeth Holmes knew from childhood what she wanted to be. Rich. A billionaire. She broke off one romantic relationship because it hindered her in the single-minded pursuit of a dream.

The dream. To create a device that could perform an array of blood tests from a few drops of blood obtained from a finger stick. Anyone who has regular blood draws understands what a revolutionary idea this is. She dropped out of Stanford after only a year to pursue the dream fueled by repeated rounds of investor fund-raising. She drew luminaries around her–Jim Mattis, Attorney David Boies, George Schulz, Henry Kissinger, Hilary and Chelsea Clinton, Rupert Murdoch. All the time, she managed to conceal a fundamental problem. The devices didn’t work. They gave wildly inaccurate readings on the few tests they could run, and served as collection devices for conventional labs on the tests they couldn’t run.

The problem. Accurate blood tests require a volume of blood drawn from a vein. Finger sticks draw from capillaries and are susceptible to hemolysis, the rupture of red blood cells spilling their contents into the sample, rendering readings inaccurate. The typical lab panels doctors run require various processes. That’s part of why so much blood is needed. All the tech people at Theranos never figured out how to get around that problem.

Holmes could not let go of the idea, or pivot because of the fundamental problems with the machines her company developed. And so began the lies. Wildly optimistic prospectuses for investors. Falsified lab-certification results. She convinced the military, Safeway Stores, Walgreens, and even the prestigious Cleveland Clinic to invest in her machines at points. Business publications like Forbes, Fortune, and Inc. bought Holmes carefully crafted myth, further attracting investor interest. She even suppressed problems when they went “live.” Over 100,000 people were tested on the machines. Meanwhile, she and her second in command (and romantic interest–also problematic) enforced a culture of secrecy and intimidation and confidentiality agreements within the company.

How did this all happen? John Carreyrou was a Wall Street Journal investigative reporter who was contacted by a pharmacy blogger suggesting that all was not as it seemed. Eventually troubled former employees risking lawsuits came forward with key evidence of what went on in Theranos labs to fool inspectors. Careful investigative work while intimidated by high-powered lawyers from David Boies firm led to the story that revealed that the empress had no clothes, a story of massive fraud and deceit from 2003 to 2018.

When legal investigations opened things up, Carreyrou was able to write the whole narrative of this company. But how did it happen? No small part of this was due to the force of Elizabeth Holmes character–so sincere in her dream as she spoke, so riveting with her large blue eyes, and unnaturally deep voice. So like her idol, Steve Jobs, in her black turtlenecks. The same powers of persuasion were exerted over investors and employees. Sadly, the latter also saw the lies, the coverups, and the Machiavellian use of power that only increased when Sunny Bulwani, romantic interest and second in command showed up. There was an utter lack of corporate governance. Despite the impressive names of Mattis, Boies, Schulz, and Kissinger, they basically gave Elizabeth free reign to do what she wanted, no questions asked. When Tyler Schulz left and tried to plead with his grandfather, his grandfather refused to listen, leading to an alienated relationship.

The story also reveals the critical importance of investigative reporting backed up by editorial oversight and legal support. Where due diligence on the part of investors, corporate governance, and government regulators failed, a reporter given the time and resources and support to tell the story ferreted out the lies that made up the house of cards that is Theranos. What the book also reveals is another aspect of great reporting in the tradition of Ida M. Tarbell who exposed the monopolistic practices of Standard Oil–that unraveling such a story makes for a great read as we wonder whether Holmes will “fake it until she makes it” and will she gets away with her lies. It is a tale both riveting and sad, one every MBA and start-up entrepreneur ought read.