As I read Bad Blood by John Carreyrou, I kept thinking: didn’t anyone learn from the first dot com boom?
Bad Blood is the story of Elizabeth Holmes and her now former company, Theranos. Her idea was to start a company – after only one year of college – that could perform a range of tests on just a drop of blood. Not the whole vial, or vials, that sometimes need to be taken. The problem, of course, was that it didn’t work; it never came close to working. Nonetheless she managed to hire more than 800 employees and at one point the company had a paper value of over $9 billion. How?
Good question. Her board had big names – Rupert Murdoch, George Schultz – but no one who knew anything about biochemistry. VC funds who normally invest in health care technology wouldn’t go near it, but other VC firms were more interested, maybe partially because of the names on the board?
Also because, as far as I can tell, Elizabeth Holmes was a really, really good salesperson. She used her own fear of needles as inspiration to investors and potential customers – likening getting blood taken to torture. And she apparently had a way of making people around her believe – really believe – that she and her company could do it.
But the tales of working at Theranos, the culture of fear, the spying on employees, the close watch over information and how it was shared was what really got me. People like Rupert Murdoch and George Schultz do know how to run large organizations and manage people and there was no indication that there was any board oversight of Elizabeth Holmes at all. Even George Schultz’ grandson, who worked at the company and tried to raise flags with his grandfather, was ignored because Mr Schultz trusted Ms Holmes so much.
Bad Blood is a thriller of bad corporate management and charisma trumping all. It should be a staple of MBA courses in the future.