EShe compared herself to Steve Jobs, dreamed of following the paths of Californian glory, but will perhaps spend twenty years in prison: Elizabeth Holmes appears before the federal court of San José in California to face eleven counts of ‘charge. Born in 1984 to a family on the American East Coast, Holmes will go down in the annals of start-up history as the founder of Theranos, a company praised by the media, pushed by investors and valued at billions of dollars until what a fine day the wall street journal publishes a scathing investigation, lifting the veil on the dangerousness of the company, the incompetence of its leaders and the ineffectiveness of the products and analyzes offered.
Imagine that you were offered an automated blood analysis method requiring only a few drops collected via your finger and which would allow you to avoid the long lines of medical analysis laboratories – or even to detect certain pathologies early. You would probably say yes, wouldn’t you? Well, it was the very simple and technically impossible idea of Theranos, an idea that did not survive the work of John Carreyrou, American journalist, double Pulitzer Prize winner. He will have spent many months gathering the testimonies of former Theranos employees and other insiders until publishing in October 2015 an article lifting the veil on a cruel reality. Indeed, Theranos was content to use the devices of its competitors in order to satisfy its customers and absolutely did not meet the minimum requirements of the American health sector. From this survey appeared Bad Blood, published in France by Larousse editions. We met its author, who will see his work adapted for the big screen in 2022. Jennifer Lawrence will play Elizabeth Holmes.
Point : Before publishing an investigation noted in the columns of the wall street journalwhat was your view of Silicon Valley and its crazy-growth start-ups?
John Careyrou: Although I am based in New York and do not cover Silicon Valley specifically, I watched from afar what I considered to be a new bubble being built. I was skeptical of all the hype.
In your opinion, the so-called strategy of blitzscaling (growing extremely fast) and the lack of transparency are they the main threats to the credibility of start-ups?
Absolutely. The slogan “Move fast and disrupt” may have worked for Facebook (although it remains debatable), it is not acceptable in the health sector, because the lives of patients are at stake. There is a reason for which healthcare is the most regulated sector in the world. You must be careful and scrupulous when marketing a product that patients will rely on to make critical decisions.
During this bubble, which I call the second Silicon Valley bubble after the dot. and years. As a result, they are able to avoid the scrutiny of the press and analysts of listed companies. This lack of transparency creates fertile ground for bad behavior and outright scams.
Fake it until you make it : can you tell me more about what has become a mantra for some entrepreneurs, who launch products that start out dysfunctional?
It means that you exaggerate what you have achieved and hope that reality will eventually catch up with what you promised investors and the general public. Fake it until you make it has been part of Silicon Valley’s DNA since Silicon Valley became what it is today. Steve Jobs, Larry Ellison and even Bill Gates all adopted this principle until they succeeded in their careers. The main difference is that they did it in the IT sector. When Larry Ellison lied about the features and capabilities of Oracle products when the company was founded, the health of citizens was not threatened.
But how did Elizabeth Holmes deceive everyone for more than a decade?
Theranos managed to dupe US healthcare regulators. When federal inspectors came to inspect the Theranos laboratory in December 2013, they were not shown the room where illegal tests were carried out on pirated Edison and Siemens devices.
Elizabeth Holmes, the shooting star of Silicon Valley
In July 2004, during a meeting, several MedVenture Associates investors admitted their skepticism regarding Theranos products. How did Holmes manage to thrive despite this? Are most investors oblivious?
MedVenture was a venture capital firm with extensive experience in medical device start-ups. After that meeting, Holmes carefully avoided specialist medical technology investors. The people she raised money from over the next decade didn’t have the expertise to review her products. And they got caught up in Silicon Valley’s signature unicorn gold rush.
What was the role of the Theranos board of directors, made up of well-known personalities like Henry Kissinger? Was it only an organ of legitimation?
The board has failed miserably in its balancing act. That said, Holmes held 99.7% of the voting rights in the company. The board of directors was therefore powerless. Theranos story is a cautionary tale of giving too much power to young start-up founders.
Reading your book, it is obvious that Theranos was a place of extreme social violence, the scene of multiple layoffs. Do you agree on this?
Yes, the company culture was incredibly toxic. Theranos maintained a tight screed by having its former employees sign nondisclosure agreements and threatening to sue them for breaching those agreements if they told anyone.
Theranos looked like a cult, in which adoration and terror were daily…
I think the cult analogy is correct. Most employees who stayed at Theranos for a while came to distrust Holmes, although they didn’t necessarily dislike her. However, almost all the employees who worked there really hated Sunny Balwani.
How would you describe the relationship between Sunny, the company’s number two, and Elizabeth Holmes?
They shared everything: the same bed, the same company. They were only motivated by money and fame. Sunny had a catastrophic influence on Holmes, but he didn’t control it, he didn’t pull the strings. She always had the last word when they disagreed on something, which they often did. They did this scam together, as a team. Holmes knew exactly what she was doing.
Bad Blood. Theranos scandal, secrets and lies in the heart of Silicon Valleyby John Carreyrou (Larousse, 2019, 359 p., €20.95).