March Book Group Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou

MiliMili Shipmate
This month I have chosen a non-fiction book written by and based on John Carreyrou's Wall Street Journal articles about the medical device company/biotech startup Theranos, a company that claimed its devices could take and analyse multiple types of blood test from a single or a few drops of blood. It covers the rise and fall of Theranos and the lies Elizabeth Holmes and others in the company told influential investors, employees, pharmacies and the FDA. It covers how the company got away with the deception for so long by convincing highly influential leaders and investors in the United States and how the truth finally came to light.

It is quite a heavy read, but gives a fascinating, but disturbing insight into how unproved trust in Silicon Valley startups and fear of missing out on money making opportunities allowed a 19 year old college drop out to hoodwink so many with much more experience and education.

As usual questions will go up on the 20th of the month. There is also a documentary The Inventor: Out for Blood in Silicon Valley where John Carreyrou is interviewed and may be an interesting watch for those who can't find a copy of the book or find it heavy going. You are welcome to watch the documentary and join the discussion too as my discussion questions should be relevant to both.

Comments

  • CaissaCaissa Shipmate
    Thanks for facilitating this month, Mili.
  • MaryLouiseMaryLouise Shipmate, Host Emeritus
    edited March 3
    Managed to get a copy of Bad Blood so I'll be able to join in the discussion this month, looking forward to it. When I first read reports about Theranos, it made no sense to me that a major medical research breakthrough could go ahead without being vetted by the US Food & Drug Administration. There was a very good article in Vanity Fair, drawing on John Carreyrou's journalism, that looked at how this project was in fact run as a Silicon Valley venture capitalist tech company by unqualified people. Unbelievable story.
  • CaissaCaissa Shipmate
    Almost 100 pages in. Great read.
  • MiliMili Shipmate
    Glad you are enjoying it
  • CaissaCaissa Shipmate
    I have 50 pages to go. If you want the post 2018 story, Holmes' Wikipedia page provides a good synopsis.
  • CaissaCaissa Shipmate
    I finished on the 11th. How are others doing?
  • MiliMili Shipmate
    I will post questions tonight my time. Looking forward to everyone's responses even if it's just a small number this month. There's one more general question I might use a purgatory topic as I would like to know more shipmates' views on the topic of trust/distrust in modern medicine in society.
  • I have not joined the read, but have bookmarked the book to purchase. I found the whole scenario quite unbelievable and will look forward to the questions and responses, @Mili.
  • MiliMili Shipmate
    Here are the questions for this month. Feel free to add your own questions or expand the discussion.


    1. What about Elizabeth Holmes convinced so many influential and high powered people to invest in Theranos?

    2. If Theranos' devices had worked do you think their finger prick method would have been a popular alternative to regular blood tests? Would you have chosen the Theranos test over regular blood tests?

    3. How do we as a society balance the extremes of blind faith in science and medicine and avoiding modern healthcare for alternatives due to a belief it is all corrupt and just a money making exercise?

    4. How complicit were the employees at Theranos? Given the company's financial and legal power would you have chosen the whistle blower path?

    5. What were the strengths and weaknesses of Carreyou's investigation and the book as a whole?

    6. Did this book inspire you to read more non-fiction or investigative journalism?

    7. How responsible was Holmes for the fraud? Were you convinced by her arguments that she was manipulated by Ramesh "Sunny" Balwani?
  • CaissaCaissa Shipmate
    1. What about Elizabeth Holmes convinced so many influential and high powered people to invest in Theranos?
    She seemed sincere. I think many investors were seduced by the atmosphere of the time when tech companies were booming and busting. The technology sounded fantastic and people wanted to believe it was possible and it sounded like the logical next leap in blood testing


    2. If Theranos' devices had worked do you think their finger prick method would have been a popular alternative to regular blood tests? Would you have chosen the Theranos test over regular blood tests? Yes and yes.

    3. How do we as a society balance the extremes of blind faith in science and medicine and avoiding modern healthcare for alternatives due to a belief it is all corrupt and just a money making exercise? I am not quite sure whether I understand the question.

    4. How complicit were the employees at Theranos? Given the company's financial and legal power would you have chosen the whistle blower path?
    The employees of Theranos were abused by bullies. The whistleblowing path was very difficult given Theranos powerful friends and apparently deep pockets.

    5. What were the strengths and weaknesses of Carreyou's investigation and the book as a whole?
    Solidly researched book based on the information he had then and the sources available to him. Now we know the rest of the story with Elizabeth’s living quarters at the expense of the state. ;^)

    6. Did this book inspire you to read more non-fiction or investigative journalism?

    Not yet although I am glad I read it.

    7. How responsible was Holmes for the fraud? Were you convinced by her arguments that she was manipulated by Ramesh "Sunny" Balwani? The courts believe she and Sunny were responsible for the fraud so that is good enough for me. She constantly lied and misrepresented the truth to the possible detriment of people’s health. I am not convinced she was manipulated by Sunny.
  • CaissaCaissa Shipmate
    Is anybody else reading this book this month?
  • SarasaSarasa All Saints Host
    It sounds really interesting, but I've got so many other books on my to read pile that I'm afraid it's rather at the back of the list.
  • 1. What about Elizabeth Holmes convinced so many influential and high powered people to invest in Theranos? Holmes was energetic, passionate, and clearly had a kind of charisma that drew people into her dreams. People were attracted by the "magic" of the tiny tool that could do great things, especially in a tech world where things keep getting smaller, and people cannot necessarily tell the difference between the tininess that is possible in wearable tech (like a fitbit) vs. the reality of what is needed for biological testing.

    2. If Theranos' devices had worked do you think their finger prick method would have been a popular alternative to regular blood tests? Would you have chosen the Theranos test over regular blood tests? Yes, I do think the finger prick method would have been a very popular alternative to regular blood test. If finger prick testing were covered by our provincial health insurance in the same way that the traditional blood tests are, I would definitely choose it. Had it been an option when my 3-year-old son needed bloodwork, I might well have paid for it. He had to be held down by three staff people while the tech drew his blood. He had nothing good to say about the "blooders" for months afterward.

    3. How do we as a society balance the extremes of blind faith in science and medicine and avoiding modern healthcare for alternatives due to a belief it is all corrupt and just a money making exercise? Are you asking how we avoid the extremes of either starry-eyed magical thinking or cynical disparagement of the medical technology enterprise? If so, I certainly don't have a profound answer. I think the answer lies in rigorous peer review and scrupulous testing. At the same time (and this isn't about blood testing, necessarily) I wonder whether humanity's persistent denial of and fear of death leads us to spend money and energy in ways that could be better spent elsewhere.

    4. How complicit were the employees at Theranos? Given the company's financial and legal power would you have chosen the whistle blower path? This probably requires an "it depends" kind of answer. Some of the employees seem to have been deliberately in on the deception. Others were manipulated and abused into being complicit. Others seem to have been completely duped. I don't know that I would have had the courage to be a whistleblower. On the other hand, given my track record of looking under rocks and revealing what's there to the wider world, consequences be damned, I would certainly havewanted to be a whistleblower. I would have needed the support of my spouse and family, though. That road is unbelievably hard and painful. Who knows, I might have just quit and kept my head down.[/i]

    5. What were the strengths and weaknesses of Carreyou's investigation and the book as a whole? Carreyrou writes well. I have no background in journalism, so I can't evaluate his investigative work. However, it seems to have been thorough. I found it hard to read about the difficulties some of his sources experienced and how Carreyrou was unable to help or support them in tangible and non-tangible ways.

    6. Did this book inspire you to read more non-fiction or investigative journalism? It was a compelling read, and has reminded me that non-fiction and investigative journalism do not have to read like the history books of my youth. Those books tended to fall into the genre of "this happened, then that happened, then another thing happened" - wonderfully soporific.

    7. How responsible was Holmes for the fraud? Were you convinced by her arguments that she was manipulated by Ramesh "Sunny" Balwani? I believe that Holmes was responsible for the fraud. I don't know that I could put a % value on her responsibility... Is it possible for both Holmes and Balwani to each be 100% responsible? I don't believe she was manipulated by Balwani. Her early behaviour suggests that she was on her way to making billions at any cost before Balwani appeared on the scene. However, we are never independent operators. There would have, undoubtedly, been an interactive effect between Holmes and Balwani. This effect may well have led to both of them going further in the fraud than either would have done alone.
  • MiliMili Shipmate
    Thanks for all the responses so far.
    Caissa wrote: »
    3. How do we as a society balance the extremes of blind faith in science and medicine and avoiding modern healthcare for alternatives due to a belief it is all corrupt and just a money making exercise? I am not quite sure whether I understand the question.

    I guess I didn't word this question clearly. In my opinion, as someone with a couple of chronic illnesses that are well controlled by modern medicine, I tend to mostly trust scientists and medical experts. But incidents such as Theranos, the opoid crisis and various medical device scandals where inventors and pharmaceutical companies have lied for profit do make me more cautious. I try to balance finding the best medical treatment with my own research from reputable sources.

    However others have given up on modern medicine altogether leading to harm to themselves by not getting available treatments that would be beneficial or to society by refusing to vaccinate their children.

    I agree with questioning that ensuring proper, uncorruptable regulation is necessary. This can be a challenge as regulation costs money and can slow down treatments being available. Also wealthy companies and individuals can use their profits to corrupt regulators, influence doctors and hire expensive lawyers to shut up critics and whistle blowers.

    How do we as individuals and how do governments ensure we access good medical care while avoiding frauds or dangerous medicine or medical procedures?
  • CaissaCaissa Shipmate
    Thanks for the clarification. I think one of the key roles in a civil society for government is the regulation of healthcare. From a personal point of view, I think informed consent of a patient is important. That said, hope often leads people to succumb to frauds and dangerous medical practices.
  • MaryLouiseMaryLouise Shipmate, Host Emeritus
    edited March 29
    This case is fascinating and gave me a great deal to think about as regards the dangers of ignorance combined with hubris. I'm going to include replies to Mili's questions in a broader answer, if that's OK.

    Although much of the focus has been on Elizabeth Holmes, I was interested to look more closely at a couple of other figures connected to the scandal. The first was Ramesh 'Sunny' Balwani, the boyfriend who helped Holmes establish Theranos and someone she described as a controlling and abusive lover who 'misled and confused' her. Balwani was born in Pakistan, moved to India and then to the US and Silicon Valley where he worked in computer programming. He was one of the lucky Microsoft employees who made his money before the dot.com bubble burst, and that IT approach of gamble and risk shaped much of his managerial style at Theranos. Although he was president of the company, Balwani had no education or training in the biological sciences or medical device technology. It's also worth noting that many employees (including Holmes' younger brother) working in blood labs or device testing facilities had little or no training in blood pathology or quality-control procedures. That is shocking.

    I'm inclined to think though that the model and major influence on Elizabeth Holmes was her father Christian Holmes who was Vic-President of Enron and resigned when the fraud scandal broke. Christian Holmes sat on a board nominated mostly because of their investments and social connections, closeness to the Bush administration. He was never personally accused of wrong -doing since he was not involved with approving 'creative accountancy' practices or auditing procedures. He sold his investments before Enron went bankrupt and seemingly has no guilt about the role he played in propping up a vast scam. His wife, Noel, Elizabeth's mother was a congressional aide and through her parents, Elizabeth Holmes could get access to those in the defence ministry, Big Pharma, start-up billionaires. Entrepreneurial risk ran in the family, made wealthy by a great-grandfather's yeast business. The list of investors and directors included so many well-known public figures that nobody considered the absence of qualified medical scientists.

    Both Holmes and Balwani ignored warnings from professors and trained scientists because they wanted to believe the device could work, given time. It never did. When, early on, Holmes presented demos to Pfizer and GlaxoSmithKline, the results were falsified before being sent to those companies. She and Balwani must have known this was happening. When Holmes carried out tests for modified blood testing devices to be used by the military in Cameroon, Uganda and South Sudan, she claimed the devices could operate in very high temperatures. This was subsequently disproved.

    There's no doubt in my mind that both Holmes and Balwani knew from early on that Edison blood-testing devices simply didn't work. They followed the Silicon Valley mantra of 'fake it until you make it' and made extravagant claims about a still-developing buggy technology, much as inventors like Steve Jobs and other had done with Internet software. Their business model was a hi-tech start-up, not a medical technology supported by academic research departments.

    The difference IMO is ethical. A flawed software programme or new smarter-than-smart fitbitwill not kill you or lead to a critical misdiagnosis of what is wrong with a patient's health. Patients came forward during and after the trial to claim they had been diagnosed HIV+ when this was untrue (Erin Thompkins case), that they were not diabetic even though they had a history of worsening diabetes, that their blood tests were inconclusive -- because of flawed equipment.

    As investigative non-fiction, this was a compelling read. I would like to have had more indepth biography of Elizabeth Holmes and her family context but I'm not sure that was possible. Why did a Stanford drop-out come to think of herself as a scientific inventor-genius and ignore the obvious failures of her invention? What role was played by the rape at Stanford and the secretive possibly abusive relationship with Balwani? She had the kind of hubris associated with delusional complexes and some of that had to do with what might be called 'social capital', family wealth and connections that led to her mixing with those who consider themselves an elite: successful, born leaders and innovators not bound by the ethical rules of the society. Her time in prison might just give her time to plan another career in wellness or politics.

    There's need for more whistle-blowers (with better protections in place) and serious investigative journalists (more funding of trained, responsible and ethical journalism) but also more FDA oversight of inventions emerging from companies like Theranos. And better science education around illness, healthcare and medical procedures. If there was more public awareness about what blood tests involve and the complexities of screening for various pathologies, Theranos might have been made accountable earlier. It reminded me of the ignorance and anti-intellectualism shown around vaccinations during Covid. Scepticism is so often our best friend.





  • I really appreciated your reflections @MaryLouise. Thank you!
  • MaryLouiseMaryLouise Shipmate, Host Emeritus
    I really appreciated your reflections @MaryLouise. Thank you!

    Thanks @questioning. What also struck me, especially when I looked at the scandal around Enron was how opaque and murky financial fraud can be at this level of so much money and so few returns. Holmes and Balwani surrounded themselves with lawyers, Balwani was paranoid about secrecy and refusing to disclose any details of technology development, yet they didn't seem to grasp they could be prosecuted for misleading or lying to investors.

    Elizabeth Holmes relied on her father for inside connections and advice on accountancy practices. That Christian Holmes, as the Vice-President of Enron, had no clue how much money was being invested in power plant projects in the Philippines, Indonesia and India makes no sense since he was an investor. Enron's employees operated like cowboy pirates, no team work, no overviews or supervision. Enron put in a bid for $438.6-million to manage a water system services company in Buenos Aires, Argentina and when Enron execs arrived there, it was a shambles, abandoned and in decay. Multinational special project entities helped keep the accounting more opaque but the projects themselves were unviable. The collapse was fast and brutal but of course the senior management, including Christian Holmes, had made enough to bow out gracefully. Holmes Sr and his fellow directors could distance from the scandal and then invest in Theranos, having learned zilch about business ethics or consequences. White-collar monetary crime is so often seen as harmless, a 'victimless crime' or just bad luck.

    One of the most fascinating aspects of Bad Blood is that Carreyrou comes across as a serious financial journalist; he worked for many years on the Wall Street Journal and had a specialised understanding of crooked banking or auditing practices.
  • MiliMili Shipmate
    Thanks for your informative posts MaryLouise. I don't know much about the Enron scandal so it is really interesting to know how Elizabeth Holmes' father Christian was involved and reflect on whether the values she was taught as a child may have impacted her decisions as an adult.

    I am going to post my response to the book on Monday as the last day of the month is Easter Sunday. Meanwhile I am enjoying reading everyone's discussion.
  • MiliMili Shipmate
    Here are my responses to the remaining questions:

    1. What about Elizabeth Holmes convinced so many influential and high powered people to invest in Theranos?

    Partly Holmes had family connections to influential people. She had done well at school and begun her company at a time when many young people were working in tech and creating inventions that older people did not understand. Like Holmes I am blonde and have an (actual not fake) deep voice but never found those characteristics helped me influence people, if anything I have been picked on for my voice being different. So I think she must have been fairly attractive to men physically and had a lot of charisma and charm. Her upper class background probably also played a part.


    2. If Theranos' devices had worked do you think their finger prick method would have been a popular alternative to regular blood tests? Would you have chosen the Theranos test over regular blood tests?

    I have had finger prick blood tests for haemoglobin levels and personally prefer standard blood tests, but having read the stories about people with cancer or who for some other reason had hard to find veins I could see how the technology could have overtaken standard blood tests in popularity. It was still a needle though and those sort of tests hurt your finger so I was surprised that those with a fear of needles would prefer the method.

    4. How complicit were the employees at Theranos? Given the company's financial and legal power would you have chosen the whistle blower path?

    Some of the employees seemed aware of the fraud and chose to stay for the pay, but many were duped into joining what they thought was a successful company and eventually left when they realised what was going on. Some also seemed keen to make the technology work and were not involved in lying to investors or passing off faulty machines as completed.

    I would like to think I would take the whistle blower path, but it is always horrifying to read the destruction and legal cases brought upon people who whistle blow against big companies.

    5. What were the strengths and weaknesses of Carreyou's investigation and the book as a whole?


    The book was well researched and Carreyou was prepared to back his investigation against pressure from Theranos not to publish. Carreyou spoke to a large number of people to provide convincing evidence of the fraudulent practises occurring at Theranos. Sometimes I had trouble keeping track of all the people involved, but I'm not sure there is any other way the book could have solved that problem. As someone who only studied biology until Year 12 of high school I was able to follow the scientific explanations and find the book engaging.

    6. Did this book inspire you to read more non-fiction or investigative journalism?

    I already enjoy reading a mix of fiction and non-fiction and reading 'long-read' newspaper and journal articles.

    7. How responsible was Holmes for the fraud? Were you convinced by her arguments that she was manipulated by Ramesh "Sunny" Balwani?

    I found this hard to decide. Holmes was fully responsible for her part in the fraud, but it seemed so unlikely she would stay in a relationship so long with someone like Balwani. Could there have been personal manipulation given their age gap as it was difficult to see why she found him attractive? If it is true that he supported her after the alleged sexual assault it could be seen as manipulating Holmes into relying on him emotionally. It is questionable if either of them could have pulled off the Theranos scam for so long without the help of the other.
  • questioningquestioning Shipmate
    I saw this news article this morning. It wanted to be shared here. I don't understand how people can be so cavalier with others' lives.
  • MaryLouiseMaryLouise Shipmate, Host Emeritus
    I saw this news article this morning. It wanted to be shared here. I don't understand how people can be so cavalier with others' lives.

    That is shocking, I hope the bad science and sloppy ethics of that lab gets taken to court
  • CaissaCaissa Shipmate
    It was one of the top stories on our 0600 CBC radio news this morning.
  • MiliMili Shipmate
    Wow that's awful! There is related article on the website about dog dna tests. The same company gave chihuahua results for a great Dane and various dog breeds for the human journalist. They relied on the false information the journalist gave about what breed they thought the dogs and journalist were. They also got caught giving Canadian Indigenous results to three non-indigenous people and a dog in another investigation.
  • It's one of the things that makes me leery about DNA testing, how much oversight is there? If anyone has personal experience, I'd be happy to hear.

    When testing our two kids for sibling BMT workup, they had to take our daughter's result back through the cell process to get further info as their compatability was soo off the tissue typing of her brother. I asked the staff whether some families assumed there had been playing away when that happened. They told me that yes, that's why they get quite detailed testing and take the time to explain it to families. There is only a one in four chance of a sibling being compatible and we needed to rely on a donated cord blood transplant which came from overseas. Previously the child had had matches on both the marrow donor registry and the cord blood registry. I don't know if those matches had aged out, were no longer available or had been used by the time kid needed 2nd transplant.

    I often think there must be a very special place waiting for those who are eager to profit off the misery and need of others.
  • Mili wrote: »
    Wow that's awful! There is related article on the website about dog dna tests. The same company gave chihuahua results for a great Dane and various dog breeds for the human journalist. They relied on the false information the journalist gave about what breed they thought the dogs and journalist were. They also got caught giving Canadian Indigenous results to three non-indigenous people and a dog in another investigation.

    The next day, there was an article about one of the key employees of the paternity test company. He has already been convicted of running a fraudulent allergy testing company (separate from the paternity test company) and is in a US jail awaiting sentencing. He, quite literally, took the samples people mailed him, threw them in the garbage, and sent back completely made-up results.

    This is the sort of thing that gives alternative medicine a very bad reputation. As @Cheery Gardener said:
    I often think there must be a very special place waiting for those who are eager to profit off the misery and need of others.

    I can't imagine how such people live with themselves. I certainly couldn't.

    I, also, am highly suspicious of DNA testing companies. The potential for misuse or misinterpretation of the results (assuming the tests are actually done(!) and done correctly(!)) seem to me to be dangerously high.
  • MiliMili Shipmate
    I have done the Ancestry DNA test and it seems fairly accurate for pinpointing regions ancestors lived in the last three hundred years and most of the close DNA matches can be confirmed by matching trees or at least geographic locations.

    The only other genetic test I had was for thalassemia as my grandmother was diagnosed as a carrier based on a blood test and my mother had inconclusive results on the blood test. It turned out I had another mutation that means I have a small percentage of foetal haemoglobin (normally people have almost 0% shortly after birth) which was why the figures on the blood test were inconclusive. Now I wonder if other family members also have this mutation, rather than carrying the gene for thalassemia, though everyone insists my grandmother must have had the gene as she couldn't take iron and had anemia during pregnancy that wasn't caused by the usual lack of iron. There is also a fanciful family story that my great grandmother must have has ancestry from the Spanish Armada as she was from Ireland and that's how thalassemia got in the family. However there is little evidence Spanish sailors had children with Irish women and thalassemia is not common in Spain anyway. Plus my research found out my great grandfather's mother's family were all Irish as well and he was the one that came up with the Spanish Armada theory, perhaps due to stigma of inherited illnesses and yet he must have known his maternal grandparents were Irish. One of his grandmothers even spoke Gaelic, which he sadly was also ashamed of, but we just thought she was from the Scottish Highlands.

    I dug into this issue more generally and found out that in countries such as India this can be a serious issue, as most people only get the blood test and are sometimes told they don't carry thalassemia when they do or told not to risk marrying someone with the gene as the results are inconclusive. Given how convinced my family are of a blood test that is not always conclusive one way or the other, I can imagine that less educated people would question even less.
  • MiliMili Shipmate
    Also the internet is so dodgy too, or maybe I shouldn't use Google Chrome. I went from here to Youtube and immediately got an ad for iron tablets!
  • @Mili, I appreciate your insights about DNA testing as I've been contemplating it in the family history context. I did not know whether to shudder or laugh at the appearance of the iron tablets ad!
  • MiliMili Shipmate
    Getting time off for good behaviour seems reasonable, but I didn't realise she had an appeals case on the horizon. I guess we will see how that goes soon.
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