For June’s book club we read Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou. The book and investigation behind it are gripping tales of how the glorified “fake it ’till you make it” entrepreneurial culture can backfire on humanity in the hands of a sociopath. (Yes, I have strong feelings.) I had heard of Theranos, and certainly lived here in the Silicon Valley as the events of this book unfolded, but even hearing about the controversy through the media at the time, the depth and scope of the scam that was perpetrated by Elizabeth Holmes and her partner Sunny Balwani illustrated in the book is astonishing.
I won’t summarize the story since it was well reported in situ by the Wall Street Journal and the results of her 2020 trial and conviction for defrauding investors (mind you not for harming people with her faulty medical devices nor her harrassing employment practices) are all widely available. There is even a documentary on Netflix. I will instead summarize our book club commentary. We had a split among folks believing that she was a brilliant and misguided young woman, nobel in her fantasy, and naive in her approach, and those of us who believe she was essentially a con woman, willing and wanting to mislead others in order to become the next Steve Jobs, and there was nothing and no one she would allow to stand in her way.
Let’s be clear: some of the most interesting and innovative solutions of our time have come from entrepreneurs and MANY of the most respected ones overstated the value and/or readiness of their products at the time of launch (Larry Elison, Steve Jobs, etc.) I would argue this is quite typical and framed as “marketing” or “vision” when the company or product ultimately meets with success. The difference is that most of the entrepreneurs who make it are actually operating from a baseline of skill in the domain where they are innovating, and that the implications of software being less high quality or fully featured than the marketing is far less dire than when medical devices fail to accurately diagnose real issues. Elizabeth Holmes, as a college dropout, really had no basis for building a company around a technology domain in which she had no depth, and the flimsiness of her claims became obvious quickly to experts as soon as the media picked up the story. Most blood tests just cannot work on such tiny samples, so while lots of folks really do suffer from blood draws (e.g. cancer patients with collapsing veins), we have not yet solved the real challenges of testing accurately without larger samples.
As someone who has spent my career in semiconductor and systems engineering, I have always found overstated marketing moderately appaling. In hardware if you overstate what your chip or system can do, someone else can purchase it, benchmark it, and prove you are wrong. Legally compaies are required to publish the exact conditions of the experiment they ran to yield those results (and if they don’t they can be sued). So it is likely not surprising that I find a lot of software and services marketing to be fluffy at best, and morally repugnant at worst.
I think this background is why I found the claims of Elizabeth Holmes so horrifying. America relies on our enforcement agencies to protect us from con women and men like Holmes and Balwani. That entreprenurial mania could somehow allow politicians, investors, and enforecement agencies to ignore the facts is a real testimony to how the world glorifies these individuals at the expense of common people, their health, and wellness. We are obsessed with the stories of entreprenuers, and arguably many of the most valuable companies raising America’s GDP come from these lightening rod individuals, so maybe there is a basis for it. Still, nearly half of jobs in America come from small businesses, not the massive multinational corporations the 1 in 10,000 entrepreneurs eventually create. We should not ignore the collateral damage many entrepreneurs leave in their wakes while we glorify the companies some of them have been able to build. This book is a cautionary tale of what happens when we don’t do our due diligence and we let the story eclipse reality.