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Bad Blood by John Carreyrou: folie à deux?

Updated: Feb 2, 2023

From a valuation of $10 billion to zero, how did Elizabeth Holmes’ health tech company, Theranos, collapse into agonising disgrace so spectacularly?

Whether you normally read business books or not, I highly recommend you read this one; it’s an astonishing tale. The Theranos story unfolds with all the elements of a cracking saga: villains and heroes, intriguing plot twists, and heart-breaking conflict.

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Bad Blood: folie à deux?

At the very heart of the story is the unseeing folie à deux of Elizabeth Holmes and Ramesh ‘Sunny’ Balwani.

Acting on a tip-off, John Carreyrou, a journalist for the Wall Street Journal, embarked on what he describes as a ‘saga which consumed three and a half years of my life’ to uncover the murky truth behind Theranos. His meticulous research and astute cultivation of inside sources allowed him to lay bare the folly and hubris at the centre of this scandal. It’s absolutely fascinating.

What went so dramatically wrong?

It’s argued that to deliver innovation, a ‘fake it ‘til you make it’ approach is necessary to keep investment flowing until the concept or technology is proven and bug-free. Anyone who’s ever worked for a start-up will likely be familiar with the concept. But at what point does the promise of ‘jam tomorrow’ drift into outright fraud if the output is undeliverable?

We admire Elizabeth Holmes for her vision and tenacity, admirable traits in an entrepreneur. In contrast, we abhor her short-sightedness, her unwillingness to listen and her sheer pig-headedness. Any attempt to tell truth to power in Theranos was rejected outright and seen as a betrayal.

Bad Blood raises another interesting issue. How much of Theranos’ problems were caused by poor salesman(woman)ship? The sales mantra ‘the answer is yes, now what was the question’ has been commonplace in start-ups for generations, but we see just how dangerous a concept it is when applied in the health sector.

One of the core mysteries at the centre of the story is the relationship between Elizabeth Holmes and Ramesh Balwani. The numerous testimonies of ex-Theranos employees paint Balwani as an ignorant bully. He is clearly out of his depth but too arrogant to seek advice and insecure to face criticism of any kind. The mystery is why Elizabeth Holmes was in a long-term relationship with him and why she gave him carte blanche to behave as he did. One explanation offered was that their relationship was folie à deux: a shared delusional belief.

Whatever the reason Theranos collapsed spectacularly, investors lost an estimated $1 billion dollars, and Elizabeth Holmes and Ramesh Balwani are facing criminal charges.

Bad Blood is a fascinating, cautionary tale of wilful ignorance, blind recklessness, and overarching pride for which Elizabeth Holmes, Ramesh Balwani, their investors, and employees paid a heavy price.

Happy reading!

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