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  • Writer's pictureAlan Shoebridge

Three lessons from Bad Blood: Secrets and Lies in a Silicon Valley Startup

A few times each year, I hear about a book that I know I am really going to like just from hearing a description of the subject matter. I rush out to get a copy – yes, I still prefer bookstores like Powell’s in Portland or Vroman’s in Pasadena – and basically read it cover to cover in a day or two. I’ve had a couple of those “must reads” this summer, but Bad Blood Secrets & Lies in a Silicon Valley Startup by John Carreyrou stands out for the professional relevance.

I hadn’t heard anything about Theranos until after news of the scandal broke, but when I did the rise and fall of the company, and its CEO, was fascinating to me. For those of you who aren’t familiar, here is the basic story as summed up by the author of Bad Blood:

“In 2014, Theranos founder and CEO Elizabeth Holmes was widely seen as the female Steve Jobs: a brilliant Stanford dropout whose startup ‘unicorn’ promised to revolutionize the medical industry with a machine that would make blood testing significantly faster and easier. Backed by investors such as Larry Ellison and Tim Draper, Theranos sold shares in a fundraising round that valued the company at more than $9 billion, putting Holmes's worth at an estimated $4.7 billion. There was just one problem: The technology didn't work.”

The book is excellent, engaging and a fast read. I highly recommend it. Here are three lessons that I think can benefit all of us:

1. Don’t ignore organizational culture warning signs

At Thernaos, anyone who questioned problems or raised doubts about the product was quickly silenced or marginalized. Regular firings were doled out publicly and employees were treated with little respect. In hindsight, clearly the corporate culture was broken and not open to transparency or honesty. Many employees stuck around far too long while ignoring the warning signs right in front of them.

2. Respect the ‘if it’s too good to be true, it probably is’ mantra

There is a reason that phrase has stood the test of time. It’s just common sense. Getting sophisticated diagnostic results from a drop of blood is something that appeals to everyone who has ever had to take a standard blood test. Sophisticated investors, highly-educated employees and corporate partners all wanted to believe in the mythical product so badly that they ignored clear evidence that the product did not work. The power of hope overcame logic.

3. The promise of technology is great, but it must be grounded in reality

There is a tremendous amount of excitement right now about the potential improvements that technology can bring to patient care. However, with all of the energy around this – and the possibility of making a tremendous amount of money – a high level of rigor is needed. Without careful introspection and caution there is a real risk that the Theranos story could be repeated again. Carreyrou spoke to that in an interview about the book:

“I think the Theranos story is a cautionary tale about how not to go about it, and how not to model yourself too much after the computer industry,” he said. “I’d like to think this was an outlier, that this was a lot of bad things that were extreme that aren’t going to be common going forward in Silicon Valley.”

“But in other ways, it was also representative of a certain hubris and arrogance, because she and her boyfriend Sunny [ex-Theranos president Sunny Balwani] didn’t even make the effort to understand what was going on in this field of blood diagnostics, and what other companies were working on,” Carreyrou added. “At the same time they were committing fraud, they also had convinced themselves that their malfunctioning prototype was the greatest thing that humanity had ever worked on.”

The last part of that sentence also struck me as a warning sign. The level of hubris and arrogance that the company’s CEO regularly displayed would have been more than enough to scare me off from working at Theranos.

Two other great summer reads:

  • The Comeback: Greg LeMond, the True King of American Cycling. If you love cycling, just go out and buy this book right now. For everyone else, I think you will still enjoy the lessons in this story of LeMond’s comeback from near death to winning the Tour de France. In addition, his almost sole voice of skepticism (in the US) against massive pressure when Lance Armstrong was running his con, is another great proof of lesson #2 above.

  • Coach Wooden and Me: Our 50-Year Friendship On and Off the Court. John Wooden’s life lessons are inspiring, and the relationship between Kareem Abdul Jabbar and his mentor/coach are tremendously touching.

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