Theranos: Bad Blood, The Drop-Out and The Inventor
By
Leonard Zwelling
You are going to hear a lot about Theranos in the next months.
Theranos was the go-go start-up from Silicon Valley begun by a Stanford drop-out, Elizabeth Holmes (who attended St. John’s here in Houston). Her idea was a simple and good one. She was pledging to create a blood testing system that could do multiple determinations of blood constituents from a single finger stick. She was going to do this with a portable machine (called Edison) that could be brought into a patient’s home. It was going to decrease the cost of testing, the pain associated with it, and the need to go to a lab to get blood drawn. Who could argue with that?
The story, as it has wound out, is one of deception, greed and embarrassment as Ms. Holmes had many prestigious members of her corporate board including Henry Kissinger, George Schultz, James Mattis, Betsy DeVos and David Boies. Of course, none of these people knew a thing about medicine or laboratory testing, but they knew a great idea when they heard it and followed a very skillful liar in Pied Piper Holmes and her live-in honey and partner in crime, Sunny Balwani. It is likely that Holmes and Balwani will be going to jail in the next year or so, once they are tried for fraud and other crimes. You see, they could not get the technology to work despite having sold Walgreen’s and Safeway among others on its use.
The reason this story has taken a higher profile now is that The Drop-out is a great podcast from ABC News about the story available now for download. John Carreyrou’s book, Bad Blood, has been published to rave reviews and an HBO documentary by Alex Gibney is set to start running on Monday, March 18. It’s called The Inventor. And that’s not all. Jennifer Lawrence is slotted to play Holmes in the movie being made right now from the Carreyrou book.
Why do I love the Theranos story so much?
First, it is always fascinating to me when otherwise apparently smart people are taken in by shysters. I say this as a purported smart person who was himself taken in by a schemester not too long ago. We want to see what we want to see. We suspend disbelief all too readily. These former cabinet members all did just that and lost a lot of money in the process as the capitalization of Theranos slipped from a high of $9 billion at one point to nothing now. Elizabeth Holmes was the youngest female billionaire on the planet at one point. Now she is likely to go to jail.
Another really smart person from Houston I know asked me recently how this could have happened. I giggled. Look at Enron. There was a bunch of smart guys pulling the wool over everyone’s eyes. And what about the last president of MD Anderson with his silly Moonshot Program to cure cancer in five years. That was 8 years ago. He and his wife like Holmes and Balwani fooled everyone. Or almost everyone. As Carreyrou’s book makes clear, there were many who saw through the Theranos lies and got the heck out.
There are always folks who think that they are smarter than everyone else. There are always other folks who fall victim to the ruse and often lose money in their rush not to be left behind. I should know. I had a small experience like this myself. It was a painful but valuable lesson about Hollywood, but it can be applied broadly to life in general once money is involved. As we have come to learn in the area of college admissions, there are people willing to cheat.
The Theranos story is unique only in its magnitude and the fame of its victims. It’s analogous to the Bernie Madoff tale. We all want to believe in something. As Harry Dean Stanton once said, “We all have to believe in something. I believe I’ll have another beer.”
If it seems too good to be true, it usually is.
