Bad Blood

Bad Blood Plot Summary

Introduction

Elizabeth Holmes seemed destined to revolutionize healthcare. At just 19, the Stanford dropout founded Theranos, a company promising to perform hundreds of blood tests from a single drop of blood. With her striking appearance—deep blue eyes, blonde hair, and signature black turtleneck—Holmes crafted an image as Silicon Valley's first female tech superstar. By 2014, she had raised nearly $900 million from investors, secured a partnership with Walgreens, and achieved a company valuation of $9 billion, making her the world's youngest self-made female billionaire. Her board of directors included former Secretaries of State and Defense, lending credibility to her revolutionary claims. Yet beneath the carefully constructed facade lay one of the most spectacular frauds in business history. Holmes had built an empire on technology that simply did not work, endangering patients and deceiving investors. Her journey from wunderkind to convicted felon offers profound insights into the dangers of unchecked ambition, the Silicon Valley culture that enabled her deception, and the human cost when healthcare innovations are pursued without scientific integrity. It serves as a cautionary tale about how charisma and narrative can temporarily triumph over substance, and how the pressure to succeed can corrupt even the most idealistic visions.

Chapter 1: Early Life and Stanford Beginnings

Elizabeth Anne Holmes was born in Washington, D.C. in 1984 to a family with a distinguished pedigree. Her father, Christian Holmes IV, worked in government agencies before moving to Enron, while her mother, Noel, worked as a Congressional committee staffer. The family lineage included entrepreneurs and physicians—her great-great-grandfather had founded Cincinnati General Hospital—creating a legacy of achievement that weighed on young Elizabeth. From childhood, she demonstrated unusual intensity and ambition. When relatives asked what she wanted to be when she grew up, she unhesitatingly replied: "I want to be a billionaire." During her high school years in Houston, Elizabeth displayed remarkable focus and determination. She taught herself Mandarin Chinese and launched her first business selling computer software to Chinese universities. Friends and family noted her intense work ethic—she often studied late into the night and slept very little, a pattern that would continue throughout her life. Those who knew her described a young woman with unwavering confidence and a singular ability to articulate ambitious visions for her future. Elizabeth set her sights on Stanford University, the gateway to Silicon Valley. Arriving as a President's Scholar in 2002, she chose to study chemical engineering and quickly distinguished herself. Professor Channing Robertson, a respected figure in the department, became her mentor after she impressed him with her determination and intellect. She worked in his research laboratory and took his seminar on advanced drug delivery devices, absorbing knowledge about the intersection of engineering and medicine that would later inform her business concept. The pivotal moment in Elizabeth's early journey came during the summer after her freshman year. While interning at the Genome Institute in Singapore during the SARS outbreak, she became convinced there must be a better way to conduct disease testing. Upon returning to Stanford, she drafted a patent application for a wearable patch that could administer medication and monitor patients' blood for infections. She showed the patent to Professor Robertson, who later recalled being astonished by her creativity and vision. "I told her, 'You're doing the work of a seasoned Ph.D.,'" he would later testify. In 2003, at just 19 years old, Elizabeth made the decision that would define her life: she dropped out of Stanford to pursue her entrepreneurial vision full-time. Using her tuition money as seed funding, she founded Real-Time Cures, which she quickly renamed Theranos—a combination of "therapy" and "diagnosis." With unwavering confidence, she told Professor Robertson that she would change the face of healthcare forever. Robertson was so impressed that he became the first member of her board of directors, lending crucial academic credibility to the teenage entrepreneur's audacious vision.

Chapter 2: Building Theranos: The Revolutionary Vision

Elizabeth Holmes launched Theranos with a transformative mission: to revolutionize the blood testing industry by creating technology that could run hundreds of tests from just a few drops of blood pricked from a finger. Traditional venous blood draws were painful, expensive, and required specialized technicians; Holmes envisioned a world where anyone could walk into a pharmacy, provide a tiny blood sample, and receive comprehensive health information at a fraction of the traditional cost. This vision resonated powerfully in Silicon Valley, where disrupting established industries was celebrated and healthcare seemed ripe for technological transformation. The early days of Theranos were marked by Elizabeth's extraordinary ability to inspire and persuade. Operating from a small office in Palo Alto, she convinced initial investors—including family connections and venture capitalist Tim Draper—to provide seed funding. Her pitch combined personal passion with technological promise: she often spoke of her own fear of needles and her uncle's death from cancer that might have been prevented with earlier detection. These emotional hooks, combined with her articulate descriptions of microfluidics and nanotechnology, proved irresistible to early backers who saw in her the next Steve Jobs. By 2006, Theranos had developed its first prototype blood-testing device, which Elizabeth claimed could perform multiple tests from tiny blood samples and wirelessly transmit results to doctors. The company initially focused on partnering with pharmaceutical companies to monitor patients during drug trials, but Elizabeth's ambitions were far greater. She envisioned Theranos devices in every home, allowing people to detect diseases before symptoms appeared and share real-time health data with their physicians. This expansive vision helped attract more investment, though the technology remained largely unproven. As Theranos grew, Elizabeth cultivated an image as a visionary founder. She adopted a uniform of black turtlenecks, spoke in an unusually deep voice that former employees believed was affected, and surrounded herself with security guards. She enforced extreme secrecy within the company, compartmentalizing information between departments and requiring employees to sign expansive non-disclosure agreements. This secrecy was justified as protecting valuable intellectual property, but it also prevented outside scrutiny of the technology's actual capabilities. By 2010, Theranos had pivoted to a new device called the Edison, named after the famous inventor. Rather than the microfluidic system Elizabeth had initially described to investors, the Edison was essentially a modified commercial blood analyzer with significant limitations. It could perform only a small number of tests, and even those results were often unreliable. Nevertheless, Elizabeth continued to pitch Theranos as having revolutionary technology that could perform hundreds of tests from a drop of blood, a claim that bore little resemblance to reality but captivated investors and potential partners alike. In 2013, Theranos achieved a major breakthrough by signing a partnership with Walgreens to offer blood testing in retail pharmacies. The deal, potentially worth hundreds of millions of dollars, gave Theranos tremendous legitimacy and access to patients. However, the company was nowhere near ready for commercial deployment. As the Walgreens launch approached, Elizabeth and her second-in-command (and secret boyfriend) Ramesh "Sunny" Balwani made a fateful decision: they would use conventional laboratory equipment for most tests while continuing to claim they were using their proprietary technology. This deception marked the point where ambitious vision crossed into outright fraud.

Chapter 3: Cultivating Power and Celebrity Status

Elizabeth Holmes possessed an extraordinary ability to charm and influence powerful people. Her first major ally was Don Lucas, the legendary venture capitalist who had backed Oracle and other tech giants. Lucas became chairman of Theranos's board and treated Elizabeth like a granddaughter. Through Lucas, she connected with Oracle founder Larry Ellison, who became an investor and mentor. These relationships gave Theranos immediate credibility in Silicon Valley's competitive landscape. In 2011, Elizabeth began cultivating an even more impressive circle of influence. She befriended George Shultz, the former Secretary of State under Reagan, who was then a distinguished fellow at Stanford's Hoover Institution. Impressed by her vision and charisma, Shultz joined the Theranos board and introduced Elizabeth to his powerful network. Soon, the company's board included an astonishing roster of American statesmen: former Secretaries of State Henry Kissinger and George Shultz, former Secretary of Defense William Perry, former Senate Armed Services Committee chairman Sam Nunn, and former Marine Corps general James Mattis (later Secretary of Defense under President Trump). The composition of this board was striking not just for its star power but for its notable lack of expertise in medicine, laboratory science, or diagnostics. These distinguished men, most in their 80s and 90s, were captivated by Elizabeth's vision and charisma. Henry Kissinger described her as having "a sort of ethereal quality—she is like a member of a monastic order." The presence of these luminaries created a powerful halo effect around Theranos, discouraging skepticism from investors, partners, and the media. After all, how could such accomplished individuals be fooled? Elizabeth's ascent to celebrity status accelerated in 2014 when Fortune magazine put her on its cover, revealing Theranos's $9 billion valuation and Elizabeth's 50% ownership stake, making her—on paper—the youngest self-made female billionaire in history. This was followed by profiles in Forbes, The New Yorker, and Inc. She graced the covers of T: The New York Times Style Magazine and Glamour, which named her "Woman of the Year." Time magazine included her in its list of the 100 most influential people in the world. President Obama appointed her a U.S. ambassador for global entrepreneurship. As her fame grew, Elizabeth embraced the trappings of success. She traveled in a private Gulfstream jet, was driven around in a black Audi with no license plates (a Jobs-like affectation), and employed a security detail of 20 people. Her office in Theranos's new headquarters was designed to resemble the Oval Office, complete with bulletproof windows. In Silicon Valley's male-dominated tech world, Elizabeth had become not just a unicorn founder but a cultural icon representing the potential for women to break through the industry's glass ceiling. Elizabeth's public appearances were carefully choreographed to enhance her mystique. She spoke at prestigious conferences like TED MED and the Clinton Global Initiative, delivering her message with unwavering confidence. In interviews, she deflected technical questions with practiced talking points about empowering patients and democratizing health information. When challenged about the science behind Theranos, she would cite the company's hundreds of patents as evidence of innovation, though many of these patents described aspirational technology rather than working systems. Her performance was so convincing that even skeptical journalists often left interviews believing in her vision.

Chapter 4: Scientific Deception and Internal Resistance

Behind Theranos's carefully crafted public image lay a troubling reality: the company's proprietary technology simply didn't work as claimed. The Edison devices were unreliable, producing wildly inconsistent results. The miniLab, a more advanced system under development, remained perpetually unfinished. Yet as commercial deadlines with Walgreens loomed, Elizabeth and Sunny Balwani made a fateful decision: they would launch with modified commercial blood analyzers while continuing to claim they were using their own revolutionary technology. The scientific deception took multiple forms. When demonstrating the technology to investors or partners, Theranos employees would collect blood samples from visitors, then secretly test them on commercial machines purchased from companies like Siemens rather than on Theranos's own devices. Software was written to mask error messages on Edison devices during demonstrations. For actual patient testing, the company diluted tiny finger-stick samples to run them on commercial machines, a practice that compromised accuracy. When proficiency testing—a regulatory requirement to ensure lab accuracy—showed poor results, the company used commercial analyzers for the regulatory samples while using their faulty Edison devices for actual patient testing. Scientists within Theranos repeatedly raised alarms about the technology's shortcomings. Anjali Laghari, a veteran chemist who had worked with the company for eight years, emailed Elizabeth data showing unacceptably high error rates just before the commercial launch. When her concerns were ignored, she resigned in protest. Her deputy, Tina Noyes, followed suit. Ian Gibbons, the company's first scientific hire and a respected biochemist, became so distraught over the company's direction that he attempted suicide the night before he was scheduled to testify in a patent case, dying days later. Tyler Shultz, grandson of board member George Shultz and a Stanford biology graduate who joined Theranos in 2013, discovered that the company was manipulating validation data to make its tests appear more accurate. When quality control tests failed, they were simply repeated until acceptable results were obtained, or data points were arbitrarily removed as "outliers." Tyler also found that Theranos was violating laboratory regulations in how it handled proficiency testing, which is designed to ensure test accuracy. When Tyler raised these concerns with Elizabeth in an email, he received a blistering response from Sunny Balwani, who belittled his understanding of statistics and laboratory science. "The only reason I have taken so much time away from work to address this personally is because you are Mr. Shultz's grandson," Sunny wrote, demanding an apology. Tyler resigned that day. When he tried to explain his concerns to his grandfather, the elder Shultz remained loyal to Elizabeth, creating a painful family rift that would last for years. Erika Cheung, another young scientist who had joined around the same time as Tyler, witnessed similar problems in the clinical laboratory. Quality control tests on the Edison devices frequently failed, yet Sunny pressured lab personnel to test patient samples on them anyway. When she refused to run a hepatitis C test on an Edison because she didn't trust the device, she was summoned to Sunny's office and berated. She too resigned, convinced that patient safety was being compromised. Both Tyler and Erika would later become key whistleblowers, though they faced intense legal intimidation for speaking out.

Chapter 5: The Culture of Fear and Secrecy

Theranos operated under a cloak of extreme secrecy that went far beyond normal corporate confidentiality. Employees were required to sign expansive non-disclosure agreements, and the company was physically divided into siloed departments that were forbidden from communicating with each other. Elizabeth insisted this was necessary to protect the company's revolutionary technology from competitors, but it also served to prevent anyone from seeing the complete picture of Theranos's operations and understanding the full extent of its technological failures. At the center of this paranoid culture stood Sunny Balwani, Elizabeth's romantic partner and the company's president and COO. Their relationship was kept secret from investors and the board, creating a significant conflict of interest at the top of the organization. Despite having no background in medicine or laboratory science, Sunny wielded enormous power at Theranos. He monitored employees' comings and goings, checked security logs to see when people badged in and out, and made evening rounds of the engineering department to ensure people were still at their desks. Employees described him as a tyrant who created a culture of fear with his intimidating behavior. Sunny was particularly harsh with the company's many Indian employees, many of whom were on H-1B visas and dependent on Theranos for their continued presence in the United States. This created a form of indentured servitude, with employees afraid to raise concerns for fear of losing their jobs and being forced to leave the country. Firings were so common that employees coined a phrase for them: to "disappear" someone. The company's security team would escort terminated employees out of the building immediately, often without allowing them to say goodbye to colleagues. Elizabeth and Sunny were obsessed with the idea that Quest Diagnostics and LabCorp, the two dominant players in the blood-testing industry, viewed Theranos as a mortal threat and would stop at nothing to undermine the company. This paranoia led to increasingly extreme security measures. After the commercial launch in Walgreens stores, Elizabeth hired Jim Rivera, a former military security officer who had protected General James Mattis in Iraq and Afghanistan. Rivera led a team of guards who wore black suits and earpieces, and carried concealed weapons. In November 2013, Elizabeth and Sunny called an all-hands meeting after the resignations of several key scientists. Elizabeth told the gathered employees that she was building a religion. If there were any among them who didn't believe, they should leave. Sunny put it more bluntly: anyone not prepared to show complete devotion and unmitigated loyalty to the company should "get the fuck out." This cultish atmosphere discouraged dissent and critical thinking, essential elements for scientific progress and ethical business practices. The culture of secrecy extended to how the company dealt with external criticism. When Lieutenant Colonel David Shoemaker, a military officer evaluating Theranos's technology for battlefield use, raised regulatory concerns, Elizabeth sent a blistering email to General Mattis accusing Shoemaker of communicating "blatantly false information" to regulators. When Tyler Shultz resigned and raised concerns, the company threatened him with legal action, even using his grandfather as an intermediary to deliver the message. This aggressive response to criticism created a chilling effect that temporarily silenced many who might have spoken out sooner.

Chapter 6: Whistleblowers and Media Exposure

Despite Theranos's culture of fear and intimidation, several brave employees eventually stepped forward to expose the truth. Tyler Shultz and Erika Cheung, both young scientists who had joined Theranos with idealistic visions of revolutionizing healthcare, became key whistleblowers after witnessing alarming practices in the company's laboratories. Their courage would ultimately help bring the Theranos fraud to light, though not without personal cost. After resigning from Theranos in April 2014, Tyler Shultz contacted New York state regulators about the company's improper handling of proficiency testing. This anonymous tip was one of the first official complaints against Theranos. Meanwhile, Tyler's relationship with his grandfather George Shultz became strained as the elder Shultz continued to support Elizabeth. In a painful confrontation at his grandfather's home, Tyler tried to present evidence of Theranos's deception, but the former Secretary of State remained loyal to Elizabeth, telling his grandson he believed he was "wrong." Erika Cheung, who had also resigned in early 2014, initially kept quiet about her experiences. However, as Theranos's public profile grew and Elizabeth was celebrated as a visionary, Cheung became increasingly troubled by the disconnect between the company's public claims and the reality she had witnessed. In 2015, she took the courageous step of contacting regulators at the Centers for Medicare and Medicaid Services (CMS), providing crucial information that led to a surprise inspection of Theranos's laboratory. These internal whistleblowers eventually connected with John Carreyrou, an investigative reporter at the Wall Street Journal. Carreyrou had received a tip from a pathologist skeptical of Theranos's claims and began digging into the company's practices. His investigation faced unprecedented obstruction. Theranos hired David Boies, one of America's most formidable lawyers, who deployed aggressive tactics to intimidate sources and the Wall Street Journal itself. Elizabeth personally called Rupert Murdoch, who owned the Journal and had invested $125 million in Theranos, asking him to kill the story. To his credit, Murdoch declined to interfere with the newspaper's reporting. On October 15, 2015, the Wall Street Journal published Carreyrou's first exposé, revealing that Theranos was using its proprietary technology for just a small fraction of its tests and that employees questioned the accuracy of its results. The company responded with vehement denials, claiming the article was factually inaccurate and motivated by established laboratory companies trying to crush innovation. Elizabeth made a defiant appearance at the Wall Street Journal's technology conference just days after the article was published, insisting that Theranos's technology worked and that the company was being unfairly attacked. The whistleblowers paid a heavy personal price for their integrity. Theranos hired private investigators to follow them and threatened ruinous litigation. Tyler Shultz's family spent over $400,000 on legal fees fighting Theranos's threats. Erika Cheung lived in fear of surveillance and legal repercussions. Yet their courage, combined with Carreyrou's tenacious reporting, ultimately protected countless patients from potentially harmful medical decisions based on faulty blood tests. Carreyrou continued his investigation, publishing a series of devastating articles that revealed the extent of Theranos's deception. His reporting triggered regulatory investigations that would soon confirm the whistleblowers' accounts. In 2018, he published "Bad Blood," a comprehensive account of the Theranos scandal that became a bestseller and was later adapted into a documentary and dramatized in a television series. The media exposure initiated by these brave individuals ultimately led to the company's downfall and Elizabeth's criminal prosecution.

Chapter 7: The Collapse of a $9 Billion Empire

The publication of John Carreyrou's Wall Street Journal investigation in October 2015 triggered a cascade of regulatory actions that quickly dismantled Theranos's house of cards. In January 2016, the Centers for Medicare and Medicaid Services (CMS) released a damning inspection report revealing that Theranos's lab practices posed "immediate jeopardy to patient health and safety." The report detailed how the company's proprietary Edison devices failed quality control tests nearly one-third of the time and how the company had failed to address these problems. The Food and Drug Administration, which had previously granted limited approval for one Theranos test, conducted surprise inspections and declared the company's nanotainer blood collection tubes an "uncleared medical device." This effectively shut down Theranos's finger-stick testing program, the cornerstone of its business model. By July 2016, CMS imposed the harshest penalty available, banning Holmes from owning or operating a laboratory for two years and revoking the company's laboratory license. Theranos's business partnerships collapsed in rapid succession. Walgreens terminated its relationship in June 2016 and sued to recover its $140 million investment. Safeway, which had spent over $350 million renovating stores to accommodate Theranos wellness centers before the partnership dissolved, also pursued legal action. The company was forced to void or correct tens of thousands of blood test results issued to patients, an unprecedented admission of failure in the laboratory industry. As the company's fortunes collapsed, investors who had poured hundreds of millions into Theranos began to realize they had been deceived. Partner Fund Management, a hedge fund that had invested $96 million in 2014, filed a lawsuit alleging that Elizabeth and Sunny had engaged in "a series of lies, material misstatements, and omissions" to secure their investment. Other lawsuits followed, including a class action filed on behalf of patients who had received inaccurate Theranos test results. The Securities and Exchange Commission charged Holmes and Balwani with "massive fraud" in March 2018. Holmes settled the SEC case without admitting wrongdoing, agreeing to pay a $500,000 penalty, return millions of shares to the company, relinquish her voting control of Theranos, and accept a ten-year ban from serving as an officer or director of a public company. Balwani chose to fight the charges in court. More seriously, the U.S. Department of Justice pursued criminal charges against both Holmes and Balwani for wire fraud and conspiracy, alleging they had deliberately misled investors and patients. The indictments carried potential sentences of up to 20 years in prison. The company's once-illustrious board members distanced themselves, and Holmes and Balwani's romantic relationship ended acrimoniously. By September 2018, Theranos announced it was dissolving, returning what little remained of its cash to creditors. The company that had once been valued at $9 billion and employed hundreds of people ended with a whimper, its revolutionary technology revealed as largely fictional. In January 2022, following a lengthy trial, Elizabeth Holmes was convicted on four counts of defrauding investors and later sentenced to more than 11 years in federal prison. Sunny Balwani was separately convicted on 12 counts of fraud and conspiracy and sentenced to nearly 13 years. The Theranos scandal prompted soul-searching throughout Silicon Valley about the "fake it till you make it" culture that had enabled Holmes's deception. Unlike software startups where failures primarily affect investors, Theranos had put actual patients at risk. Regulators strengthened oversight of laboratory-developed tests, and investors became more skeptical of healthcare startups making revolutionary claims without peer-reviewed evidence.

Summary

Elizabeth Holmes's meteoric rise and catastrophic fall represents one of the most spectacular deceptions in American business history. Her journey from Stanford dropout to billionaire CEO to convicted felon encapsulates both the promise and peril of Silicon Valley's innovation culture. Holmes exploited the tech industry's celebration of visionary founders and its tolerance for exaggeration, applying these norms to healthcare where scientific rigor and patient safety should have been paramount. Her ability to charm powerful figures—from former Secretaries of State to media moguls—created a protective shield that temporarily insulated her from scrutiny, while her ruthless response to internal dissent silenced those who might have exposed the fraud earlier. The Theranos saga offers profound lessons about the importance of governance, transparency, and ethical boundaries in entrepreneurship. Holmes's ability to raise nearly $1 billion while evading scientific scrutiny revealed dangerous blind spots in how investors evaluate healthcare startups. Her story reminds us that true innovation cannot be built on deception, no matter how compelling the vision or charismatic the founder. In our pursuit of technological breakthroughs that improve human lives, we must never sacrifice the fundamental principles of scientific integrity and ethical responsibility that protect those same lives from harm. For investors, entrepreneurs, and consumers alike, the ultimate legacy of Theranos may be a healthier skepticism toward revolutionary claims and a renewed appreciation for the patient, methodical work of genuine scientific progress.

About Author

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John Carreyrou

John Carreyrou is a Pulitzer Prize-winning reporter and a nonfiction author. His first book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, chronicles Silicon Valley's biggest fraud.

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