Disgusting. Outrageous. Criminal. Bad Blood is the result of the high-caliber reporting by John Carreyrou of The Wall Street Journal. Carreyrou is an investigative reporter with the paper who has an extensive background in healthcare fraud investigations.

Bad Blood tells the story of the unwinding of Theranos, the Sillicon Valley start-up founded by Stanford drop-out Elizabeth Holmes. Extraordinarily charismatic, Holmes set out with an ambitious goal to upend the clinical laboratory industry by developing a technology that would allow for a wide range of blood tests to be conducted with a few drops of blood from a finger prick. The concept was fantastical, and the execution was criminal.

Theranos, Holmes’ company, was powered by lies and deceit. Holmes, and later with the help of her boyfriend and corporate president, kept a tight grip on everything in the company. Firewalls were erected between teams, IT conducted a digital surveillance regime that would make the Chinese government envious, and employees were summarily fired. Employees operated under intense legal pressure, through the forms of non-disclosure agreements, affidavits, and ongoing compliance measures. As Carreyrou points out in the final pages, this whole atmosphere wasn’t constructed to protect intellectual property, it was created to protect the lie.

Despite its unicorn valuation, star-studded board of directors, and public-facing CEO, Theranos was not able to conduct a single successful blood test. During the period of time when Theranos was providing lab services to consumers, the majority of laboratory analysis was being conducted on commercially available machines. As the fraud unwound, every blood test result that was conducted on their proprietary machines were invalidated.

Carreyrou picked up the story on a tip, and tells the story of Theranos through the lens of dozens of characters. These characters all had a similar theme, they were people who’s ethical and moral compasses compelled them to resign from the a toxic culture.

While the first 75% of the book covers the history of Theranos with these characters checking in and out, the last 25% gives a fascinating insight into the work of Carreyrou. It shares, in detail, how he conducted his research, the sources, and the blowback that he got from the company. The outrageous lengths that Theranos went to intimidate and threaten sources in his story, before publication, is beyond the pale. Sources where threatened by a high-powered lawn firm and some were placed under surveillance. Carreyrou’s story passed editorial muster and, despite Holmes’ most craven attempts to kill it, made it to print and brought the whole fraud crashing down.

What’s most disturbing in this entire story, is that despite the lack of any success of the Theranos products, Holmes rushed them into a production environment and placed the lives of patients at risk. The people who used Theranos’ products were beta testers without informed consent. The Food and Drug Administration, and the Centers for Medicare and Medicaid Services, the federal regulators over medical devices and laboratories, said that Theranos put in jeopardy patient health and safety.

All along the way, Holmes defrauded investors, vilified and sued detractors, and put the lives of thousands of Americans in grave jeopardy. She did it to fulfill her own desire to be important and be remembered. Her entire empire was brought down by the bravery of a few individuals who refused to be bullied into silence and the sterling journalism of Carreyrou. Theranos is no more, Holmes has settled with the Security and Exchange Commission, and she is now under criminal indictment for fraud, along with her ex-boyfriend.

Capitalism provides the greatest opportunity for growth, even more profoundly when a market-based economy exists within a functioning democracy. In that environment, there will always be bad actors who try to game the system. We can be sure, that thanks in part to the integrity of journalism, their frauds will be exposed and they will be punished severely for their criminal enterprise. Holmes has been exposed, now it’s time for a federal jury to mete out justice.

Rating: ★ ★ ★ ★ ★

ISBN: 9781524731656