When the whole world was fawning over Elizabeth Holmes and Theranos, Wall Street Journal reporter John Carreyrou was sitting on the subway in New York reading skeptically about the rocket ship taking off 3,000 miles across the country.
The investigative reporter said he noticed a couple of odd things about the Silicon Valley-based health tech company from a profile in The New Yorker and the claims Holmes was making about its blood testing device. “I just thought there was some weird things about what I read in that story, some things that struck me as odd,” he says.
For one, the way Holmes described the Theranos technology was incredibly vague. Moreover, there was the notion that Holmes—who dropped out of school at 19 and had little chemical engineering training—could really add value in the field of medicine and invent something extraordinary.
A few weeks later, by chance, Carreyrou received a call from Adam Clapper, a pathologist who wrote the industry blog, Pathology Blawg. Clapper had similar cynical feelings about Theranos and connected to Carreyrou to Richard Fuisz, an entrepreneur who knew Holmes as a child and had more background information on the company. After connecting with those two, he got in touch with first-hand sources, including Theranos’ outgoing lab director, about what was really happening at the company.
From there, it was off to the races. Carreyrou’s reporting in the WSJ and later, his book, “Bad Blood: Secrets and Lies of a Silicon Valley Startup,” uncovered Theranos and Holmes’ fraudulent behavior, essentially how the company’s blood testing technology wasn’t even close to doing what it promised. Holmes was misleading investors and customers, and putting the public in danger by having them use its shoddy products.
After Carreyrou’s reporting, Holmes left the company in disgrace, and got charged by the federal government on fraud. A few weeks ago, Theranos announced it was shuttering all operations. “Bad Blood” has been optioned into a movie, starring Jennifer Lawrence as Holmes. Chief Executive got a chance to speak with Carreyrou about a wide array of topics. Below are excerpts from this conversation.
You did a lot of reporting and writing on this story before “Bad Blood” came out. At what point did you think it would be a good book?
In the summer of 2015, the way the company counterattacked [my reporting] as I relate in the book, was in some ways really astonishing and I’d never experienced anything like it. And I’m getting threatened, my paper’s getting threatened, my sources are also being followed and threatened. The number two guy at the company is flying out to Arizona to threaten doctors who have spoken to me on the record. I mean it was completely surreal.
And the first thought that came to me is, “I’m like living a movie right now.” So it wasn’t long before that thought became, “This is a book. This story could carry a book.” And shortly thereafter I started hatching the plan in my mind that I needed to look into a book. And of course it all hinged on getting that first story published October of 2015, so I still had to concentrate on that. But the seeds were planted for a book that summer.
What really stuck out to me in the book is you really go through all the people who basically enabled Theranos and Elizabeth, including the media. I mean you don’t even spare your own paper. There are so many things here that really lead her to have this monumental rise. Why did so many people fail to see the reality here?
I think it’s a combination of several factors. One is this second bubble, as I like to call it, in Silicon Valley…which by the way hasn’t really deflated. It’s kind of a gold rush environment. The sums of money coursing through that ecosystem are enormous…since basically the rise of Facebook…there’s been this gold rush mentality out there and there’s been this mentality of trying to get on the next rocket ship. And I think that was a factor that influenced people like [well-known lawyer] David Boies, the way he took compensation, in Theranos shares instead of money, it influenced those elderly ex-statesmen, they were all given shares for being on the board.