Full review and highlights at https://books.max-nova.com/bad-blood

"Bad Blood" has been on my list for my 2018 "Year of Crime and Punishment" since it was announced last year. Wall Street Journal investigative journalist John Carreyrou shreds the legend of Silicon Valley darling Elizabeth Holmes but doesn't have access to quite enough of the picture to make this takedown a true slam dunk. It will probably be years before the full story comes to light, filling in the gaps in Carreyrou's reporting. How did Elizabeth think she could possibly get away with this? Why were so many otherwise reputable people (Shultz, Mattis, etc.) so taken with Holmes? And what the hell is the deal with the supposedly nefarious Sunny Balwani, who has almost no internet presence?

I particularly enjoyed this book because I'm currently living in Palo Alto, the epicenter of the Theranos saga. Although I've never seen Elizabeth Holmes (or her security detail!) in town or on campus, I often bike by Coupa Cafe, the Hoover Institution and other landmarks that Carreyrou references in the book. The story feels very alive and we're still reading about the Theranos fallout daily. Carryrou delves deep into Holmes's personal history to illustrate his vivid tale, and there's some truth to the criticism that this book is a bunch of Silicon Valley gossip.

But Carreyrou goes beyond gossip by making us take a hard look at the "fake it 'til you make it" mentality of the Bay Area. While Holmes may have been at the extreme end of the pathological ambition spectrum, her attitude and tactics were not unusual. In fact, a milder version of Holmes's approach is actually good. The whole idea of the "Lean Startup" philosophy is that you should try to get as much market validation with as little actual financial/engineering investment as you possibly can. One of the underlying assumptions is that solving product/market fit is far more difficult than getting the engineering right - and for many software companies, this is true. Holmes's problem was that the engineering turned out to be far more difficult than anticipated and that she leaned way too far out ahead of her team's technical capabilities. But when was the right time for her to admit the technical problems? I can easily imagine being in her situation and thinking, "just one more month... just one more..." But at some point, she crossed the line from "lean startup" to felonious fraud and Carreyrou forces us to contemplate where that blurry line lies.

The most surprising thing to me (besides Carreyrou's frequent mentions of how unusual Holmes's voice is... and it really is) is how long Holmes managed to get away with it. Her Jobs-esque "reality distortion field" somehow persuaded the Theranos board to flip from nearly firing her to give her complete control and convinced investors to pour hundreds of millions of dollars into her venture with apparently very little due diligence. Carreyrou himself says he was nearly blinded by Holmes's magnetism, but he never manages to convey quite exactly how she cast her spell (I suppose that's what makes it magic!). He does point out that the Theranos story was one that everyone wanted to believe, that:

"In Elizabeth Holmes, the Valley had its first female billionaire tech founder."

Holmes's name will surely go down in fraud history. Unfortunately, she has plenty of company, including Madoff, Ponzi, and Krueger. If you enjoy stories like this, I'd also recommend "The Dictator's Handbook" and "The Billionaire's Apprentice".

Bad Blood - Likewise Book Reviews

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