Entrepreneurs

6 of the most fascinating revelations from new book on Theranos debacle and Elizabeth Holmes

Elizabeth Holmes
David Orrell | CNBC
Elizabeth Holmes

It's been three years since The Wall Street Journal's John Carreyrou first started exposing the fraud at blood-testing startup Theranos. Now, Carreyrou has delivered his long-awaited book about the onetime Silicon Valley darling's meteoric rise to a $9 billion valuation and the precipitous fall that came after it was revealed that the blood-testing devices Theranos was pushing as revolutionary were nowhere near capable of backing up the significant hype.

Titled "Bad Blood: Secrets and Lies in a Silicon Valley Startup," the non-fiction book hit bookshelves Monday. Carreyrou's exhaustive reporting on Theranos and its founder and CEO, Elizabeth Holmes, included interviews with over 150 people, including more than 60 former Theranos employees.

Despite having raised more than $700 million from investors, the company is now on the verge of bankruptcy, even with Holmes herself having settled "massive fraud" charges after reaching a settlement with U.S. regulators in March. Holmes' settlement with the SEC included a $500,000 fine and it bars her from leading a public company for the next decade.

Here are six of the most fascinating stories and quotes from "Bad Blood":

1. Founder and CEO Elizabeth Holmes was obsessed with Steve Jobs and Apple

The book's third chapter is called "Apple Envy" and it delves into Holmes' reported obsession with the tech giant and its iconic co-founder, Steve Jobs. "To anyone who spent time with Elizabeth, it was clear that she worshipped Jobs and Apple," Carreyrou writes.

According to the book, Holmes hired several former Apple employees, in part for their connection to the giant company, and she was fond of saying that Theranos' blood-testing device would be "the iPod of health care."

Apple chief executive Steve Jobs unveils a new mobile phone that can also be used as a digital music player and a camera, a long-anticipated device dubbed an 'iPhone.' at the Macworld Conference 09 January, 2007 in San Francisco, California.
Tony Avelar | AFP | Getty Images
Apple chief executive Steve Jobs unveils a new mobile phone that can also be used as a digital music player and a camera, a long-anticipated device dubbed an 'iPhone.' at the Macworld Conference 09 January, 2007 in San Francisco, California.

The book also notes that Holmes seemingly went out of her way to cultivate a similar "aura" to Jobs and took to wearing a black turtleneck most days, copying Jobs' own style, in order to "dress the part."

After Jobs died in 2011, Holmes even seemed to begin borrowing management styles from Walter Isaacson's best-selling biography of the former Apple CEO. Carreyrou writes that Theranos employees "were all reading the book too and could pinpoint which chapter she was on based on which period of Jobs' career she was impersonating."

2. Theranos employees describe a paranoid atmosphere

Carreyrou reports that some Theranos employees suspected Theranos' IT team of spying on them and reporting back to Holmes with their computer activity. Even worse, Carreyrou writes that Holmes' "administrative assistants would friend employees on Facebook and tell her what they were posting there."

3. Holmes described Theranos' miniLab device as "the most important thing humanity has ever built"

That's the show-stopping description Holmes assigned to the miniLab at her company's 2011 Christmas party. The portable device, which she claimed could diagnose a wide range of diseases with just a few small drops of blood, was not introduced to the public until 2016, after the company had already been forced to void two years of results from its previous blood-testing device, the Edison, due to inaccuracy.

4. Holmes demanded loyalty and could turn on people "in a flash"

Carreyrou writes that Holmes "demanded absolute loyalty from her employees and if she sensed that she no longer had it from someone, she could turn on them in a flash."

One former employee told Carreyrou that he assisted Holmes in some colleagues' terminations, which would sometimes include putting together "a dossier on the person she could use for leverage." In one instance, Holmes used the fact that "inappropriate sexual material" was found on a terminated employee's work laptop as a public justification of his firing after the fact.

Sunny Balwani, Theranos' former president and Holmes' boyfriend, made similar demands for complete loyalty. Carreyrou reports that, following a rash of resignations at the company, Balwani gathered employees for an all-hands meeting at which he told them "anyone not prepared to show complete devotion and unmitigated loyalty to the company should 'get the f--- out'."

5. The author alleges that Theranos had him followed

Carreyrou writes that he suspected Theranos of placing himself and Tyler Shultz, a former employee turned whistleblower, "under continuous surveillance for a year."

Shultz — whose grandfather, former U.S. Secretary of State George Shultz, served on Theranos' board — was apparently unbothered, telling Carreyrou, "'Next time maybe I'll take a selfie with you and send it [to Holmes] to save her the trouble of hiring [private investigators]."

6. Holmes tried to get Rupert Murdoch to kill The Wall Street Journal story about Theranos

In 2015, Murdoch led an investment round by pumping $125 million into Theranos, making him the company's biggest investor. (Other big-name Theranos investors who have now lost at least $600 million total include current U.S. Secretary of Education Betsy DeVos, Mexican billionaire Carlos Slim and members of the Walton family of Walmart heirs.)

Eventually, when Holmes learned that Carreyrou was investigating Theranos, she turned to Murdoch, whose media empire includes the journalist's employer, The Wall Street Journal. Carreyrou writes that Holmes tried to get Murdoch to kill the story, telling the billionaire "the information I had gathered was false and would do great damage to Theranos if it was published. Murdoch demurred, saying he trusted the paper's editors to handle the matter fairly."

In its review of "Bad Blood," The New York Times called this "a good moment in American journalism."

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