Add Bad Blood to the top of your to-read list.
Bad Blood tells the terrible story of Theranos and its founder, Elizabeth Holmes. She took the Silicon Valley habit of vaporware and “fake it ’til you make it” to medical devices. The Theranos machines were unreliable, if they worked at all. Bad software will mess with a company’s data. Bad medical devices could kill people.
To be a bit sympathetic to Ms. Holmes, it wasn’t all about the money. I’m sure she enjoyed the public admiration and accolades. The book doesn’t have her talking about rolling in piles of cash. Ms. Holmes was passionate about her vision of a revolution in health care to save lives and improve health outcomes. She was motivating the Theranos employees to go along with the bad acts to achieve the revolution.
She believed the entrenched blood testing laboratories, Quest Diagnostics and LabCorp, were out to stop her and stop the revolution. Doubts about the viability of Theranos’s products were perceived by Holmes as sabotage by the entrenched blood testing companies.
At some point she embraced the limelight and began believing her vision was working. Facts just got in the way. Success at the company was more likely if you told Ms. Holmes what she wanted to hear.
The company failed at corporate governance. Ms. Holmes had nearly all of the voting rights. There was no check on her power. The powerless board was full of statesman, not professional investors, corporate managers or medical experts. A Board of Directors with Henry Kissinger, former Secretary of State George Shultz, William Perry (former Secretary of Defense), , Sam Nunn (former U.S. Senator), and James Mattis (General, USMC) is impressive. But they brought no expertise or guidance for a medical device start up.
