TL;DR: Bad Blood

Bad Blood

In the retrospect, a few red flags were raised during the Theranos’ ascendancy:

  1. The founder, Elizabeth Holmes, had little experience on medical devices when she dropped out Stanford as a 19-year-old sophomore. There MIGHT exists prodigy founder, but highly unlikely in the medical field due to many years of professional training.

  2. No biotech focused venture capital invested on Theranos. Its all-star board director were heavily specialized on the military and diplomatic expertise, nobody had worked on medical field1.

  3. Theranos is reluctant to publish any peer-reviewed journal to validate the accuracy of the test result. It also refused to discuss the menchanics of the miniature devices.

In the book, Bad Blood, the Wall Street Journal journalist, John Carreyrou discloses more details about the troubled company:

No matter how bad you think the Theranos story was, the reality was actually far worse.

The finger-pricking blood collection in Holme’s vision is not new. The blood testing industry has been working on this holy grail for years without material progress. Obviously the small sample size is more vulnerable to the margin of error, also the blood collected from capillaries carries unique biochemical traits. For example, the red blood cells are more likely break, then artificially elevate the potassium concentration.

The Dirty Secret

Theranos’ endeavor stayed in the course of miniature rather than seeking methodological breakthroughs. They built a toaster-sized prototype for chemiluminescent immunoassy, called Edison; but hit the wall when extending its functionalities. Thus they stacked multiple units as miniLab. The test results were neither accurate or precise as the fundamental methodology challenges are not solved.

But these drawback did not hinder Holmes to pitch the product to vendors, partners, and government agents. And the company tried all possible means to protect the secret. Holmes carefully compartmented the organization to several silos; only the senior management could see the big picture. The company also never hesitated to leverage the legal weapons to scare current and former employees. Theranos hired the most prestigious lawyer in the country, David Boies to outgun its opponents who later joined the board of directors. Part of the legal fees are paid by Theranos’s stock, — a really smart move for Theranos.

The Great Saleswoman

It is no doubt that Holmes is a great saleswoman with the Steve Job’s reality distortion field. She also dressed in black turtle neck, and intentionally speak in a lower tone, “fake it until make it”. She successfully lured the former Secretary of State, retired Admiral, General USMC to join the board, and established chains of endorsement to boost the creditability.

She also closed hundred-million dollar deal with Walgreen for the strategical partnership. It is interesting to see how the fear of missing out clouded the executives’ judgement and let Theranos slid without cross-examining the testing results.

I think Elizabeth Holmes will be a great leader in the software industry with her ruthless growth hack. Unfortunately, the medical industry demand a higher standard far beyond the minimum viable product(MVP). And her ruthless disregard of the human’s well being cast the doubt whether she has the sociopath tendency:

  • The Edition did not function correctly in a investment demo, they fabricated the testing result and beamed it back.

  • They hacked Siemens equipments to test diluted blood samples, which was not approved or supported by the manufacturer.

  • They couriered blood samples from Arizona to their labs in Newark, California to avoid FDA regulation. The contractors were not certificated with proper cold chain. In fact, Theranos’ practice in Arizona is so badly executed, the company voided two years of blood test result.


  1. Theranos introduced its medical advisory board on April, 2016.