The rise and fall of Theranos

Investigative journalist John Carreyrou's new nonfiction thriller, 'Bad Blood,' tells story leading up to Palo Alto startup's fall from grace

Theranos, formerly based at 1701 Page Mill Road in Palo Alto, created devices that purportedly gave accurate results for a host of blood tests. Photo by Veronica Weber.

The day before he gave a keynote address to health care journalists in Phoenix, Arizona, on April 14, Wall Street Journal investigative reporter John Carreyrou learned he had been the target of a Space Invaders-style assassination by employees at Palo Alto blood-testing company Theranos, Inc.

The video game used company products to represent the black gun and the bullets; the biological agent for killing him was Zika virus, he said. (Theranos' management did not sanction the game, he later said. The creator messaged him that it was a way to learn the Python programming software and try to cheer up co-workers after morale at the company plummeted.)

Carreyrou — author of the new book "Bad Blood: Secrets and Lies in a Silicon Valley Startup," about the embattled company and its CEO and founder, Los Altos Hills resident Elizabeth Holmes — became the object of the company's wrath three years ago. Starting in October 2015, he exposed the startup's allegedly fraudulent practices in a series of articles. The book that followed, released by Alfred A. Knopf/Penguin Random House on May 21, tells step-by-step the chilling tale of how the Theranos scandal unfolded.

Last week, a federal grand jury indicted Holmes and the company's chief operating officer, Ramesh "Sunny" Balwani of Atherton, for an alleged multi-million-dollar scheme to defraud investors, doctors and patients. Both were charged with two counts of conspiracy to commit wire fraud and nine counts of wire fraud. If convicted, they each face up to 20 years in prison, $250,000 in fines and restitution for each count, according to a press release issued by the U.S. Attorney's Office on June 15.

"This conspiracy misled doctors and patients about the reliability of medical tests that endangered health and lives," FBI Special Agent in Charge John F. Bennett said in the press release.

Carreyrou's book has the elements of a fictional thriller: stalking by private investigators; ambushes; suicide by an employee; and lawsuits that left people financially ruined. The book entered the New York Times' best-sellers list for nonfiction at No. 10 on June 10, and a movie adaptation starring Jennifer Lawrence with a screenplay by "The Shape of Water" co-writer Vanessa Taylor is in the works.

The Theranos story started in 2003 like many in Silicon Valley: with a bright, young person championing an idea for a revolutionary product that purported to be able to change the world. Holmes, a 19-year-old Stanford University dropout, gained the attention of an influential Stanford engineering professor and made important contacts with high-powered venture capitalists excited by her idea.

She was lauded as a female Steve Jobs for her game-changing new medical device, which promised to do away with the dreaded hypodermic needle and venous blood draws. The Theranos miniLab and its predecessor devices could analyze a few drops of blood from a pricked finger for tell-tale markers of disease and ill health.

Holmes attracted some of the Bay Area's — and the nation's — most powerful and influential players: former secretaries of state George Shultz and Henry Kissinger; James Mattis, before he became the Secretary of Defense; former Secretary of Defense William Perry; and Silicon Valley venture capitalists Tim Draper, Don Lucas and Oracle co-founder Larry Ellison.

The company's devices purportedly gave accurate results for a host of blood tests used for determining vitamin D and thyroid-stimulating hormone levels as well as detecting syphilis, hepatitis C and cancer. It could revolutionize blood analysis by putting the devices in homes, retail centers and war zones, she promised.

The idea was astounding except that the product often didn't work. Many results were dangerously inaccurate. For example, some of the potassium-level results were so high, the only way they could have been accurate was if the patients were dead, Carreyrou wrote.

In one incident, a test taken at one of Theranos' Walgreens retail labs miscalculated the thyroid-secreting hormone in a pregnant woman's blood. A wrong medication dosage could have jeopardized the woman's pregnancy, he said at the April conference.

Doctors in the Phoenix area told him of blood test after blood test from Theranos that proved to be wrong. In one case, faulty Theranos tests sent a woman to the emergency room. She subsequently had two MRIs, which showed nothing was wrong.

"The collateral damage from these false blood tests is hard to assess," he noted.

Some patients have sued Theranos for medical battery and fraud.

"One of them alleges the company's tests failed to diagnose his heart disease and led him to have a preventable heart attack. One thing is certain. Charges that people would've died from misdiagnoses or wrong medical treatment could have risen exponentially if Theranos had expanded its blood-testing services to Walgreens' 8,134 other U.S. stores, as it was on the cusp of doing when I started digging into the company in February 2015," Carreyrou said in April.

"After my Phoenix trip, it took me more than six more months to expose what was essentially a giant, unauthorized medical experiment. The resistance the company and its lawyers put up was like nothing I've ever experienced in 20-plus years of reporting," he said.

But Holmes could not be persuaded to slow down the company's rollout. Nor would she change the number of many drops of blood used for the test and dilutions of the samples, even when employees told her that meaningful and accurate results weren't possible with such small quantities of blood.

Holmes and Balwani ignored their engineers and created a false narrative, Carreyrou wrote. Theranos modified off-the-shelf analyzing equipment the company purchased and used standard vein blood draws for many of its tests the very thing its new product was supposed to eliminate, the book alleges.

"Bad Blood" lays out an alleged deceit that had no bounds. During a demonstration for the large Swiss pharmaceutical company Novartis, the company beamed over a fake, prerecorded result that appeared to be providing data in real time, according to the book.

Likewise, Theranos kept investors, government regulators and business partners at a safe distance away from its laboratory. The stairs leading to the downstairs lab were hidden behind a locked door, employees told Carreyrou.

Theranos ruthlessly protected its deception. Tyler Shultz, George Shultz's grandson, resigned from his job at Theranos after receiving a scathing email from Balwani because he had voiced his concerns to Holmes. On his way out, Shultz got no farther than the parking lot when his phone rang. His mother, hysterical, said Holmes had called his grandfather and threatened that if he didn't stop his "vendetta" he would "lose," the book quotes Tyler Shultz as saying.

Theranos lawyers later confronted him at the elder Shultz's home. He and other employees were shadowed by private detectives hired by Theranos, and the company's hired guns tracked down doctors in their offices to extract retractions to statements they gave to Carreyrou, the book states. Holmes tried to stop The Wall Street Journal from publishing the story by trying to get owner Rupert Murdoch who was also a Theranos investor to quash it, the book alleges. He demurred.

In the end, Carreyrou's exposes were published, and federal regulators did investigate Theranos. Walgreens shut down the retail labs and sued the company, as did numerous investors in class-action lawsuits. Theranos voided or corrected nearly 1 million blood tests results in California and Arizona. In March, the Securities and Exchange Commission announced a civil lawsuit accusing Holmes and Balwani of an "elaborate" years-long, $700 million investor fraud. Holmes settled and agreed to step down from authority, return 18.9 million shares to the company, pay a $500,000 fine, relinquish her voting control of the company and be barred from serving as an officer of a publicly traded company for 10 years. As of June 20, the lawsuit against Balwani was still pending.

But "Bad Blood" is not just an indictment of Theranos and Holmes; it is also an impeachment of Silicon Valley culture. "Vaporware," a software or hardware product that is publicly announced but never actually manufactured, is a defining feature of the Valley, Carreyrou says in the book's epilogue. Companies announce to great fanfare an over-promised new product that takes years to materialize, if it ever does.

Theranos, in the heart of Silicon Valley's tech industry, was positioned to take advantage of that culture. Holmes controlled 99.7 percent of the Theranos board's votes. Board member George Shultz is quoted as saying in a deposition: "We never took any votes at Theranos. It was pointless; Elizabeth was going to decide whatever she decided."

The transgressions of most tech companies may have done little harm to consumers, but Theranos upped the stakes, Carreyrou said. Theranos' faulty results could have caused irreparable harm, either by failing to detect a life-threatening illness or causing a physician to prescribe the wrong medicine.

"Holmes and her company had overpromised and then cut corners when they couldn't deliver. It was one thing to do that with software or a smartphone app, but doing it with a medical product that people relied on to make important health decisions was unconscionable," Carreyrou wrote.

Holmes never made herself available to Carreyrou for any interviews, despite his many requests. At the journalism conference in April, he was asked: If he could ask Elizabeth Holmes one question, what would it be?

"How do you rationalize gambling with people's lives?" he said.

"Bad Blood: Secrets and Lies in a Silicon Valley Startup" is available at Kepler's Books in Menlo Park and Book's Inc. in Mountain View and Palo Alto.

Were you a patient who had blood tests through Theranos or at the Walgreens lab? We'd like to hear from you. Please contact Staff Writer Sue Dremann at

Watch Weekly journalists discuss "Bad Blood" on an episode of "Behind the Headlines" here.


Follow the Palo Alto Weekly/Palo Alto Online on Twitter @PaloAltoWeekly and Facebook for breaking news, local events, photos, videos and more.

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22 people like this
Posted by Blood on Their(anous) Hands
a resident of Ventura
on Jun 22, 2018 at 7:35 am

Blood on Their(anous) Hands is a registered user.

Rather ironic that Theranos HQ on Page Mill used to be a Wall Street Journal printing plant!

23 people like this
Posted by moi
a resident of Another Palo Alto neighborhood
on Jun 22, 2018 at 10:49 am

>> Editor —

Thank you for referring us to our wonderful local booksellers for copies of the book itself.
Much appreciated. We need to cherish Kepler’s and Books Inc. and patronize them whenever possible (which is almost always).

1 person likes this
Posted by Lily
a resident of Midtown
on Jun 22, 2018 at 2:00 pm

Also, Bells bookstore downtown, always worth a visit, privately owned, a longtime Palo Alto treasure.

Like this comment
Posted by Mark Weiss
a resident of Downtown North
on Jun 22, 2018 at 2:14 pm

Mark Weiss is a registered user.

More irony to con fuse this author with one man Shakespeare’s show Len carriou
Web Link

8 people like this
Posted by Curmudgeon
a resident of Downtown North
on Jun 22, 2018 at 3:53 pm

"How do you rationalize gambling with people's lives?"


5 people like this
Posted by Solon
a resident of Old Palo Alto
on Jun 22, 2018 at 4:08 pm

[Portion removed.]

Also, what is the duty of the board members? E and O insurance?

Do the thugs who trailed, threatened and covered up have liability?

I was an early user, relied on numerous tests. Was fooled.

Sorry, but further commenting on this topic has been closed.

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