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The story of Theranos is the Silicon Valley equivalent of the Enron scandal replete with bold claims, high valuations, defrauding of investors and terrible corporate governance. Theranos promised to revolutionize healthcare by painlessly performing hundreds of tests on a single drop of blood.

In 2015, Theranos was a unicorn valued at $9 billion. By 2018, the company shut down and Elizabeth faced a ten-year ban from serving as an officer of a public company. Theranos serves as a cautionary tale of what can go wrong with a 'fake it till you make it' approach to building a company. Find out what happened behind the facade of promises in Bad Blood.

Top 20 insights

  1. At the age of ten, Elizabeth Holmes was determined to become a billionaire entrepreneur, an ambition her parents strongly encouraged. To achieve this, she dreamt of designing technology that changed the lives of people.
  2. Elizabeth dropped out of Stanford to start Theranos. The vision was to build a portable device that would painlessly perform hundreds of tests on a few drops of blood.
  3. Steve Jobs was a huge inspiration for Elizabeth who called Theranos "the iPod of healthcare." She began to imitate Jobs in her management style and even in wearing black turtlenecks every day to work. "Like her idol Steve Jobs, she emitted a reality distortion field that forced people to momentarily suspend disbelief."
  4. Avie Tevanian, a board member, grew suspicious about Theranos. Revenue projections never materialized, documents for deals with pharma giants were not shown and there were consistent product delays. When Avie raised this with the board, Theranos threatened him with lawsuits and forced him to quit.
  5. When the board again received similar complaints, Elizabeth was asked to step down. However, she managed to win the board back, a difficult feat even for seasoned CEO's. "When you strike at the king, you must kill him." In this case, the queen survived and the complainant was fired next week.
  6. Toxic Culture: Elizabeth indulged in nepotism by hiring her romantic partner Sunny Balwani as the Executive Vice Chairman, a vaguely defined role with sweeping powers. The Board was not informed about their relationship and the vast scope of Sunny's role. Elizabeth also hired her brother Christian and his friends, none of whom had any relevant background.
  7. Toxic Culture: Theranos blocked online communication and spied on employee conversations and social media posts. Sunny used a fear and intimidation-based approach harassing employees he disliked. Employees suspected of not being 'loyal enough' were fired on some pretense.
  8. Red Flag: Elizabeth managed to convince Pfizer to use Theranos devices in a patient trial. However, the collaboration soon came to an end as the devices had frequent mechanical failures, wireless transmission errors and poor temperature tolerance. There were issues with test results as well.
  9. Turning Point: Theranos landed mega-deals with Walgreens, a massive pharmacy store chain and Safeway, one of America's largest supermarket chains. Both companies bet big on this collaboration. However, the partnership was marked by Theranos missing deadline after deadline.
  10. Red Flag: Theranos promised its devices could perform 192 different tests while they could barely do a dozen. To meet the Walgreens deadline, Theranos hacked commercially available blood testing devices and used them for testing. The test results had dangerously high error rates.
  11. Turning point: Theranos's stellar board, the Walgreens and Safeway deals, a potential defense contract and highly inflated revenue projections raised investor expectations. A new fundraising round made Theranos a unicorn, valued at an astonishing $9 billion. Elizabeth, now worth $5 billion, became Silicon Valley royalty.
  12. John Carreyrou, Wall Street Journal journalist and the book's author, discovered that Theranos's performed its tests on hacked commercial machines. Doctors shared horror stories of faulty test results creating health scares and needless suffering for many patients. "The way Theranos is operating is like trying to build a bus while you're driving the bus. Someone is going to get killed."
  13. Theranos tried to scuttle John's investigation by sending legal notices and threatening emails to his sources and Wall Street Journal. Elizabeth convinced Rupert Murdoch, the owner of Wall Street Journal, to invest $125 million in Theranos. Using this, she tried to get him to kill John's story, but Murdoch refused.
  14. John wanted to publish quickly. But the paper's editor advised patience. He likened investigative journalism to la mattanza, a Sicilian ritual where fishermen with spears would stand in the water for hours. When the fish grew comfortable and carelessly swam close, they would swiftly go for the kill.
  15. Turning Point: The Wall Street Journal carried John's articles exposing how Theranos ran tests on hacked devices. Subsequent pieces revealed that Walgreens and Safeway had terminated their partnership with Theranos. Throughout all this, Elizabeth played the wronged visionary, claiming false allegations were the price she had to pay for being a pioneer.
  16. An investigation by Centers for Medicare & Medicaid Services (CMS) confirmed that Theranos used hacked devices and test results were highly unreliable. Theranos was forced to void over a million test results paying $4.65 million in reimbursements. What is unimaginable, however, is the damage that could have been caused had Theranos rolled out nationwide.
  17. Investors sued Theranos, Elizabeth and Sunny for deceit. Walgreens filed a lawsuit for violation of basic quality standards and legal requirements. The Securities Exchange Commission charged Theranos with fraud and barred Elizabeth from holding office in public companies for ten years. She was forced to give up voting control and most of her shares in Theranos.
  18. Red Flag: "Hyping your product to get funding while concealing your true progress and hoping that reality will eventually catch up to the hype continues to be tolerated in the tech industry." However, in healthcare the costs were far higher. Millions of lives were at risk as treatment decisions are made based on lab results.
  19. Culture Alert: Elizabeth knew exactly what she was doing and systematically manipulated people. Her ambition would not admit setbacks. She made disastrous decisions that cost Theranos, the investors and the general public dearly.
  20. The story of Theranos is a cautionary tale. Watch out for similar warning signs in your organization and the companies you work with. Your career or business might be at stake.


At the age of ten, Elizabeth Holmes was determined to become a billionaire entrepreneur, an ambition her parents strongly encouraged. To achieve this, she was convinced she had to create technology that changed the lives of people. Stanford became an obvious choice for a bright student with entrepreneurial dreams. With her track record of academic excellence, Elizabeth was admitted to Stanford as a President's Scholar. At Stanford, she took a special interest in Channing Robertson's courses in Chemical Engineering and controlled drug-delivery devices. She also started working at his lab under Shaunak Roy, a Ph.D student of Robertson's.

Starting up

Elizabeth spent the summer of 2003 interning at the Genomics Institute of Singapore. While using syringes and nasal swabs to test patients for the SARS epidemic, she was convinced there had to be a better way. On her return, she worked non-stop for five days to come up with a patent application for an arm patch that could detect medical conditions and administer suitable drug dosages. When Channing Robertson saw it, he was impressed with her drive and inventiveness in synthesizing different pieces of science and engineering. He encouraged her to drop out and start a new venture. Elizabeth incorporated her startup as Real-Time Cures, which she later changed to Theranos. Channing Robertson joined the board and Shaunak Roy became the first employee. Tim Draper, the famous venture capitalist, invested $1 million. To investors, she pitched the idea of a Therapatch, a sort of a band-aid that would draw blood painlessly, analyze it and deliver a suitable drug dosage. The readings would be instantly sent to the doctor. By 2004, Theranos had raised $6 million.

Theranos 1.0

Shaunak quickly realized that making such a patch was nearly impossible due to the engineering challenges it presented. They abandoned the idea for a cartridge and reader system. The blood sample would be drawn in a card-shaped cartridge and placed in a reader would analyze the blood and produce test results. Test results would be beamed to doctors who could prescribe modified dosages. This would sharply reduce the time needed to make changes to drug doses. Elizabeth dreamed of putting them in the houses of patients. However, engineering this pared-down version was still extremely difficult. After 18 months, Shaunak managed to make a prototype which was named Theranos 1.0.

Edmond Ku was hired to engineer the Theranos 1.0 prototype into commercializable product. Elizabeth insisted on using only a drop of patient blood to perform tests and wanted the cartridge to fit in the patient's palm. This emphasis on miniaturization caused serious technical challenges. Ed's problems were complicated by the fact that Theranos's culture of information secrecy discouraged the engineering team and the chemistry team from communicating. He was never sure if the errors were caused by faulty chemistry work or faulty device design.

As months went by, Elizabeth grew frustrated with the slow pace and wanted to run the engineering teams twenty hours and seven days a week. Ed felt this would overburden his already stressed team and refused to comply. Over the next few months, he saw new engineers being hired who did not report to him. A parallel engineering team was being formed to make both teams compete with each other.

Elizabeth successfully convinced Pfizer to use the Theranos system in one of their patient trials at Tennessee. Patients would have the Theranos 1.0 device in their homes and take blood tests daily. The results would be shared with Pfizer. The day before Elizabeth was to train the patients and doctors, the cartridges and readers were not working properly. Ed spent the night fixing them. When he came to know the study involved patients suffering from terminal cancer, he felt that the device was too unreliable to be used in a serious study.

The Edison

At Theranos, the competition between engineering teams increased. The other team headed by Tony Nugent decided to abandon the existing approach in favor of a robotic mechanical arm which mimicked the steps a chemist would perform. Instead of building it from scratch, Tony re-engineered a commercially available glue-dispensing robot. The new device was the size of a desktop computer, but could still be installed at patient homes. Elizabeth christened this the Edison and this became the new direction for Theranos. Immediately, she started giving demos with the new system. This made Tony uneasy as the system had hardly been tested. Ed Ku and his entire team were fired. Shaunak Roy grew disillusioned with the new direction which was a far cry from the initial vision. He decided to move on.

Toxic work culture

Steve Jobs was a huge inspiration for Elizabeth who called Theranos "the iPod of healthcare". In 2007, she recruited some Apple employees including Ana Arriola, who had worked on the iPhone's design. Elizabeth wanted the Edison to have Apple design elements including a touchscreen similar to the iPhone and an outer case resembling the iMac. Ana soon began to have problems with the suffocating culture at Theranos. Elizabeth's paranoia about information secrecy made Theranos block online communication across teams leading to huge productivity losses. Employees suspected that Theranos spied on their conversations and social media posts. Arrival and departure timings were strictly monitored. When board meetings were convened, employees were told to avoid eye contact with Board members. Elizabeth demanded unconditional loyalty from her employees and fired those she felt were not loyal enough. Within two years, over thirty people were fired not counting the twenty odd members of Ed Ku's engineering team.

Boardroom manoeuvres

When Ana heard about the Pfizer trials, she asked Elizabeth to pause the trials until the problems in the Theranos system were fixed. Elizabeth refused. Anna shared her concerns with Avie Tevanian, who was on the board of Theranos. Avie by then had begun harboring concerns of his own about Theranos. The optimistic revenue projections Elizabeth shared at board meetings never materialized. Every time he asked for details about pharmaceutical deals, he was told they were under legal review. There were consistent delays in making the devices production-ready. When Elizabeth wanted to set up a foundation for tax purposes and sought board approval for a special grant of stock, Avie felt this was not good corporate governance. Elizabeth would control the foundation, increasing her voting share. Upset with Avie's criticisms, Elizabeth wanted him to resign from the board.

This incident shocked Avie and he began to review the Theranos documents he had. He found glaring inconsistencies and constant staff turnover. When Avie took it up with Don, the board Chairman, Don told him to consider resigning. Shaunak Roy was planning to sell his founder's shares back to Elizabeth. Avie realized that the shares were being sold at an 82 percent discount compared to the last fundraising round. He decided to buy them. Soon, Theranos threatened Avie with a lawsuit. On second thought, Avie decided he did not want to own more of the company given what he knew about it. He wrote one last letter to Don urging him to tell the other board members about the issues with Theranos and resigned.

Todd Surdey, a Theranos sales executive, realized that the company's revenue projections were wildly optimistic. Each contract with a pharmaceutical company was contingent on Theranos proving that its blood analysis system worked. Worse, the devices often malfunctioned. During a demo for Novartis, all three Edison readers displayed error messages. He took his concerns to Don Lucas saying that the revenue projections were vastly exaggerated given the unreliable state of the Theranos product. This time Don took the complaint seriously. He convened an emergency meeting and Elizabeth was asked to wait outside. The board decided that Elizabeth was too inexperienced to head the company and decided to make her step down. When Elizabeth was called in to be informed, she agreed that there were shortcomings and promised to correct them. In the course of the next two hours, she managed to win back the confidence of the board, in a manner that even experienced CEOs would have found hard to pull off. One of the board members was reminded of the saying that "When you strike at the king, you must kill him". In this case, the queen survived. Todd was fired next week.

Nepotism at work

In 2009, Ramesh "Sunny" Balwani joined Theranos as Executive Vice Chairman, a vaguely defined role with sweeping powers. Sunny made his fortune when, the startup he worked with, was acquired by a competitor for $232 million. As the Chief Technology Officer, Sunny had made $40 million. When Elizabeth had met Sunny during her impressionable Stanford days, she saw in him a successful entrepreneur. Soon they had become romantically involved and Elizabeth moved into his house in 2005. Sunny had a habit of flaunting his wealth by driving Porsches and wearing expensive clothes.

While Elizabeth had informed the board of hiring him, she had hidden their relationship and underplayed the scope of his role. Sunny used a fear and intimidation-based approach to management. Employees found him arrogant, rude and condescending. Often he would remind people that he was doing a favor to them by working at Theranos when he did not need the money. Employees he disliked faced frequent harassment and yelling. Eventually, he would "disappear them", a phrase that employees coined for Sunny's frequent firings.

Elizabeth took nepotism one step further by hiring her brother Christian, an analyst with no background in medical diagnostics. Christian, in turn, recruited four of his former fraternity mates, who soon became known as the "Frat Pack". None of them had previous experience in medical devices. However, they won Elizabeth and Sunny's confidence by spending long hours in the office and willingly doing everything that was asked of them. Sunny saw these as indicators of hard work and "loyalty". Soon, they were called into meetings that other senior employees were not invited to.

Predicting epidemic outbreaks

The Pfizer collaboration came to an end as the company was unimpressed with the results from the validation study. Theranos devices had frequent mechanical failures, wireless transmission errors and poor temperature tolerance. Further, there were issues with test results as well.

The outbreak of Swine flu at Mexico was seen by Elizabeth and Sunny as the perfect opportunity to demonstrate Edison's usefulness. The Chief Scientific Officer at Theranos proposed creating mathematical models from blood-test results of recently infected patients to predict where the virus would spread next. Elizabeth used her Stanford batch connections in Mexico to ship two dozen Edison readers to Mexico City hospital. Sunny and another colleague flew down to Mexico to test patients for Swine Flu. The Edisons functioned unreliably and produced frequent error messages and wrong results. Sunny also traveled to Thailand, which had a massive Swine Flu outbreak, to set up Edisons for testing. There were rumors this was not done by the book. As the epidemic came under control, both the Mexico and Thailand projects slowly lost momentum. Theranos pivoted yet again, this time from predictive modeling to consumer testing i.e performing doctor prescribed blood tests for patients

Megadeals: Walgreens and Safeway

In 2010 Theranos started courting Walgreens, one of America's largest pharmacy store chains, promising to run blood tests within minutes from a few drops of patient blood. The Walgreens innovation team immediately saw huge potential in a partnership. Both companies agreed to run a pilot project where Theranos readers would be placed in 30 to 90 Walgreens stores within a year. Walgreens committed to purchase $50 million worth of Theranos Cartridges and loaned $25 million to Theranos. This was unusually fast deal-making for the conservative company.

Hunter, an expert in clinical laboratories, was hired by Walgreens to evaluate the partnership. Theranos claimed to have a commercially ready lab that could perform 192 different blood tests on their devices. In reality, the company had only a research lab and the Edison could do only a limited set of tests called immunoassays. When Hunter asked to see the lab and do a live test on Theranos devices, he was politely refused. To verify the reliability of Theranos technology, Hunter asked for a patient study where Theranos results would be compared to results from Stanford Hospital. This was again swiftly rejected by Elizabeth. Theranos claimed that its technology had been reviewed by Johns Hopkins University's medical school. When Hunter asked for the documents, he was shocked to see a generic 2-page letter with an explicit disclaimer saying the letter was not an endorsement of the technology by Johns Hopkins Medicine. Frustrated by Hunter's probing, Elizabeth and Sunny ensured Walgreens removed him from further meetings. Walgreens ignored the red flags raised by Hunter and continued with the partnership. A key reason for this was fear that its competitor CVS would court Theranos and they would lose out on groundbreaking innovation.

Theranos also made headway with Safeway, one of America's largest supermarket chains. Steve Burd, who led the company for seventeen years had a stellar reputation. Theranos gelled well with his passion for healthcare and promised a new revenue stream for Safeway. A deal was signed wherein Safeway would loan $30 million to Theranos and build new clinics inside its stores where customers could get their blood tested. Safeway would be exclusive Theranos partners in the Supermarket segment while Walgreens would have an exclusive partnership for drugstores.

The miniLab

With two massive deals on the table, Theranos had a new problem. Both companies were promised that Theranos devices could perform hundreds of blood tests. In reality, the Edison could only perform a limited group of tests. Theranos hired engineers to build a new device, the miniLab, which would be capable of doing multiple types of tests. To do this, the miniLab would need far more components than the Edison. While most components were commercially available, the engineering challenges came from Elizabeth's focus on miniaturization. As soon as a barely-working prototype was ready, Sunny began placing component orders for a hundred minilabs based on the prototype. A manufacturing facility was leased for production. The engineering teams were shocked at how a barely tested prototype was assumed to be a finished product. This could have dangerous consequences.

Safeway turns a blind eye

Safeway's wellness centers, which looked more like spas, were being built in eight hundred stores at a massive cost of 350 million dollars. However, there were significant delays from Theranos's end. Finally, a beta run was launched where Theranos handled blood testing at the Safeway employee health clinic. However, no devices were put there. Samples were couriered to Theranos's office for testing. Blood was drawn using both finger sticks and hypodermic needles, raising suspicions among Safeway medical staff. Results, which were supposed to be instantaneous, took over two weeks and many employees received erroneous results. Safeway turned a blind eye to these concerns.

At Theranos, the miniLabs were not ready to be used to test Safeway's blood samples. So they began to use commercial blood analyzers to handle tests. Even then problems cropped up. Manufacturer instructions were ignored and expired blood drawing tubes were used, compromising results. Safeway, unaware of these problems, began hiring staff for the wellness centers. The company had forecasted that the wellness centers would bring in $250 million in revenue for 2012. Delays meant that it did not materialize. The wellness centers were taking up precious real estate space that could be put to other uses.

A military foray

Theranos was attempting to get the military to use its technology. When Elizabeth met James Mattis, the head of US Central Command, she spoke of how Theranos's instant testing could save lives on the battlefield. Intrigued, he asked his staff to consider a field trial for Theranos devices. However, the military realized that it could not deploy Theranos devices as they had not been approved by the FDA. A compromise was worked out. Theranos's tests would not be used for wounded soldiers. Instead, the devices are used to confirm the results produced by regular testing methods. However, by the time General Mattis retired in 2013, Theranos had not even begun the study.

False claims

To prepare a marketing campaign for the launch of Theranos's testing services at Walgreens and Safeway stores, Elizabeth hired the advertising agency Chiat\Day. The agency was chosen because they had represented Apple for years. From the fall of 2012 to the spring of 2013, the agency worked on everything from creating a brand identity to making a new website for Theranos. They decided that the best visual for Theranos would be the 'nanotainer', a miniature vial Theranos designed to collect blood from fingertips. To complement the visual, the team came up with the slogan "One tiny drop changes everything".

Soon agency employees began to encounter problems with Theranos. There was the familiar obsession with secrecy. Materials provided by Theranos had to be kept in a locked room accessible only to people who signed confidentiality agreements. Elizabeth wanted the promotional material to carry bold claims. One such claim was that 800 tests could be run on a drop of blood. Another claim was that Theranos's tests were approved by FDA, which was not true. Chiat\Day executives grew concerned about these dubious claims as they were liable to legal penalties in case of misleading advertising. A day before the website launch in September 2013, Elizabeth called an emergency meeting and proceeded to systematically water down all previous claims to the extent where agency employees wondered if Theranos had any novel technology at all.

Building a religion

As Theranos was readying for launch, the problems with the miniLab continued. It would take years to turn this barely functioning prototype into a viable product. But Elizabeth wanted to meet the September 2013 deadline for launching at Walgreens no matter what. Since the miniLab was nowhere close to ready, they decided to revert to using the Edison. But the Edison could only perform a very limited range of tests. This led to the decision to cheat. Theranos employees hacked into a Siemens blood testing device to make it compatible with the finger-sticks Theranos used for drawing blood. The machines were being used in a way that neither the manufacturer nor the FDA approved of. Employees from the chemistry team tried to convince Elizabeth that the Edison had a very high error rate and was not ready for commercial use. Regular patients would rely on these results to make medical decisions. When Elizabeth seemed indifferent to their concerns, some even resigned. Furious with the resignations, Elizabeth called an all-employee meeting and said that she was building a religion. Those who did not believe should leave.

This CEO is out for blood

On the day of Theranos's commercial launch, a highly favorable interview of Elizabeth appeared in the front pages of the Wall Street Journal. Elizabeth had carefully engineered this piece by leveraging her connections. She used the Walgreens launch and the article to start a new fundraising campaign. At investor presentations, Elizabeth and Sunny claimed that their device could perform 300 different medical tests and that all their tests were submitted to the FDA for approval. Theranos had a stellar board that included the former Secretary of State George Schultz, retired general James Mattis, and Henry Kissinger. The sterling reputation of these men and their military background made Theranos's claims about the military using its devices seem credible. The Walgreens and Safeway deals along with a potential Department of Defense contract raised investor expectations. Sunny gave ambitious revenue projections - Theranos would make gross profits of $1.08 billion on revenues of $1.68 billion by 2015. These numbers were fabricated and multiple times higher than the company's internal projections. After a new round of fundraising, Theranos was valued at an astonishing $9 billion. It had become a unicorn, a startup worth over a billion dollars. Elizabeth, who owned over half the shares, was now worth nearly $5 billion.

In June 2014, Elizabeth featured on the cover of Fortune, with the headline "This CEO is out for blood." In the interview which made her a star, Elizabeth disclosed Theranos's valuation at $9 billion and claimed that 70 tests could be done from just one finger stick draw. Soon she featured in Forbes, USA Today, Fox Business and NPR. Elizabeth was named as one of the hundred most influential people in the world by Time magazine and joined the board of fellows at Harvard. Her security team grew to twenty people, her food was cooked by a personal chef and she traveled in a private jet. The people who handled publicity made Elizabeth the face of Theranos and raised her public profile.

The fairy tale unravels

In December 2014, The New Yorker published a piece on Elizabeth which attracted the attention of Adam Clapper, a pathologist who ran an industry blog named Pathology Blawg. Adam was skeptical about Theranos's claims to run so many tests on a drop of blood. He spoke to Alan Beam, a former laboratory director at Theranos, who confirmed his suspicions about the unreliable and haphazard blood testing practices that Theranos employed. Adam passed the tip to John Carreyrou, a journalist with the Wall Street Journal. This is how John, the author of this book, began to investigate Theranos.

The tip from Clapper reinforced John's previous suspicions about Theranos. There was no peer-reviewed data to back Theranos's claims. Further, cutting-edge medical advances took decades of formal training and research. Unlike in computer science, college dropouts pioneering groundbreaking medical technology was unheard of. John got in contact with Alan who confirmed that the Edisons were highly error-prone and repeatedly failed quality control. Out of the 240 tests Theranos offered, only 80 could be done on finger sticks. Of these hardly a dozen were analyzed on Theranos's devices. The rest were performed on hacked commercial analyzers. Results of these tests were unreliable. Theranos would dress up lab data. A syphilis test that gave accurate results only 65 percent of the time. Yet data was fudged to show an accuracy of 95 percent. Vitamin D tests, which were approved for use on patient samples, consistently failed quality control checks. As the former director of the lab, he was worried about being held liable for Theranos's malpractices. Alan was even more concerned that faulty test results could lead to wrong diagnoses which put patients at risk. Others John spoke to at Theranos confirmed Alan's claims. As one of them said "The way Theranos is operating is like trying to build a bus while you're driving the bus. Someone is going to get killed."

John began contacting doctors whose patients had their blood tested with Theranos. Dr. Nicole Sundene shared multiple instances where faulty test results from Theranos had caused health scares for her patients. A patient's lab reports indicated a stroke and she was immediately sent to the emergency room. It was only after multiple scans and tests that she was found to be completely normal and discharged. Other doctors John met shared horror stories of Theranos's faulty test results creating needless suffering for patients.

Scuttling the story

When Theranos came to know that John was investigating the company, John's sources received threatening legal notices asking them to refrain from divulging confidential information about Theranos. The Wall Street Journal also received an email demanding that the paper destroy confidential information about Theranos in its possession. The company also pressurized Dr. Sundene and other doctors to retract their statements.

Theranos continued its efforts to scuttle John's story. On July 28, an op-ed by Elizabeth Holmes appeared in the Wall Street Journal. Elizabeth courted Rupert Murdoch, the media mogul, to convince him to invest in Theranos. Murdoch, who owned Wall Street Journal, was impressed by Elizabeth's charisma and rosy revenue forecasts of 2 billion dollars in revenue by 2016. He invested 125 million dollars in Theranos, making it his single largest non-media investment. During a visit, Elizabeth raised the issue of John's story hoping he would ensure it would be killed. Murdoch chose not to intervene, despite his investment in Theranos.

La Mattanza

John was worried that the more the delay in publishing, the more time Theranos had to kill the story. However, his editor felt that a story with such an impact must be made watertight before being published. He illustrated this by giving the example of the Sicilian ritual la mattanza. Fishermen would wade into the sea with spears and stand absolutely still for hours. When the fish no longer noticed them and swam close, they would swiftly kill the unsuspecting prey. The same principle applied in investigative journalism. John's only concern was that the story had to be published before, the Wall Street Journal's annual tech conference in October where Elizabeth had been invited. After her appearance at the event, it would be difficult for the paper to publish an expose on Theranos.

The exposé

The first story was published on the Journal's front page on October 15, 2015. It revealed how Theranos ran only a small part of the tests on their devices. It also exposed Theranos's lack of accuracy and its issues with proficiency testing. This created a media furor with Forbes, New Yorker, NPR and other news outlets picking up the story. In Silicon Valley, skeptics felt their suspicions were reaffirmed while others were unsure what to believe. Theranos issued strong denials.

John's sources at the FDA revealed that the agency had conducted a surprise inspection of Theranos's labs. The key reason was the poor test data submitted to the FDA. The nanotainer, Theranos's blood collection device, was banned from further use and declared an "unapproved medical device". Elizabeth tried to cover this up as a voluntary decision. The next day, the Wall Street Journal ran a front-page story on the FDA inspection and nanotainer ban.

Much to everyone's surprise, Elizabeth appeared at the Journal's D. Live tech conference. In her interview with the paper's technology editor, Elizabeth insisted that the withdrawal was voluntary. She also lied that Theranos did not use any commercial lab equipment for finger tests. Over the next few weeks, John published four more articles exposing how Walgreens and Safeway had walked away from their partnership with Theranos. Throughout this entire period, Elizabeth played the wronged visionary, claiming that false allegations were the price she had to pay for being a pioneer.

Sources tipped off John that Centers for Medicare & Medicaid Services (CMS) had done an inspection of Theranos's lab recently and it had not gone well. The agency declared that Theranos posed "immediate jeopardy to patient health and safety". The contents of the report were devastating for Theranos. The federal agency said that Edisons were used in the lab for only 12 of the 250 tests Theranos performed. The rest were run on commercial analyzers. The test results were highly unreliable including a test that failed quality control 87 percent of the time. Unsafe laboratory practices were followed with blood stored at wrong temperatures and expired chemicals used. In a follow-up action, the CMS threatened to ban Holmes from the blood -testing industry for two years. This was a damning indictment of Theranos. John published this story along with the report on the Wall Street Journal website. A week later yet another story broke that Theranos had voided tens of thousands of blood-test results, saying they were unreliable. When Walgreens came to know about this, they terminated the partnership.

Amidst the mounting calamities, Elizabeth felt she had one last chance to reverse all this. She had been invited to the annual conference of the American Association of Clinical Chemistry. At the conference, she unveiled the miniLab and explained how the device could be deployed at the homes of patients to deliver much faster test results. Watching her presentation, John realized what made so many people blindly believe in Elizabeth. She was an amazing saleswoman. "Like her idol Steve Jobs, she emitted a reality distortion field that forced people to momentarily suspend disbelief." This changed, however, when the audience began asking sharp questions about the novelty of the technology and the lack of data in the presentation. A wave of critical articles followed.


This was the last straw for Theranos's investors. Partner Fund which had invested almost $100 million sued Theranos, Elizabeth and Sunny for deceit. Another set of investors filed a separate lawsuit alleging securities fraud. Most investors, however, settled for an extra grant of shares in exchange for promising not to sue. Rupert Murdoch sold his shares back to Theranos for one dollar to claim a tax write-off. The law firm Boies and Schiller stopped its work for Theranos. Walgreens filed a lawsuit alleging that Theranos breached the "most basic quality standards and legal requirements". The firm agreed to pay $ 4.65 million to reimburse 76,217 people who had taken blood tests. The number of tests Theranos voided reached 1 million. What cannot be measured, however, is the damage that could have been caused had Theranos gone ahead with its nationwide rollout.

Theranos settled the case with Partner Fund for $43 million. Costly litigations meant that Theranos began to run out of money. Repeated layoffs reduced the workforce from 800 in 2015 to around 130 employees. In March 2018, the Securities Exchange Commission charged Theranos with fraud. Elizabeth was barred from being a director or officer in public companies for ten years. She had to relinquish voting control at Theranos, return a large portion of her stock and pay $500,000 in penalties.


"Hyping your product to get funding while concealing your true progress and hoping that reality will eventually catch up to the hype continues to be tolerated in the tech industry". Elizabeth embodied this and went to extreme lengths to hide the problems at Theranos. However, unlike tech companies, Theranos was in healthcare and the costs were far higher than releasing buggy software. Patient lives were at risk as treatment decisions are decided based on lab results. Some believe that Elizabeth did all this under the toxic influence of Sunny. However, a closer look reveals that Elizabeth knew exactly what she was doing. Elizabeth systematically manipulated people to do what she wanted. From Channing Robertson to Don Lucas to George Schultz, everyone was under the influence of Elizabeth's reality-distortion field. While she did start out with the vision to change the world, her ambition would not admit any setbacks. This forced her to make disastrous decisions that cost Theranos, the investors and the general public dearly.