The rise and fall of Elizabeth Holmes, Silicon Valley’s startup queen

Bad Blood: Secrets and Lies in a Silicon Valley Startup. By John Carreyrou. Knopf; 352 pages; $27.95. Picador; £20.

A FEW years ago Elizabeth Holmes, boss of Theranos, dressed up as Queen Elizabeth I for the company’s Halloween party. At the time she reigned over Silicon Valley’s startup scene. In 2013-15 she raised around $700m to fund her firm, which had supposedly developed a way to test blood with a single pinprick. Ms Holmes (pictured) was hailed as the next Steve Jobs and the youngest female self-made billionaire in history. At its peak, Theranos claimed a private valuation of $9bn.

But the startup throne is precarious. “Bad Blood”, an enjoyable book by John Carreyrou, an investigative journalist, charts Ms Holmes’s rise and dramatic fall. It was Mr Carreyrou who first raised questions about Theranos, suggesting in the Wall Street Journal in 2015 that its testing technique yielded unreliable results. Earlier this year Ms Holmes settled civil charges brought by America’s financial regulator, the Securities and Exchange Commission (SEC), of defrauding investors. A criminal inquiry is believed to be in train.

What went wrong? Mr Carreyrou suggests Ms Holmes cared less for patients than about advancing her own interests and personal brand. According to the SEC, she and Sunny Balwani, her deputy (and, says Mr Carreyrou, secretly her boyfriend), misled investors and other corporations about the state of Theranos’s technology and sales. These falsehoods lured new partners. For example, Safeway, a grocery chain, and Walgreens, a pharmacy giant, respectively stumped up around $400m and $140m to collaborate with Theranos.

Ms Holmes is not the only one implicated in the debacle. It highlights the Valley’s propensity to glorify lone, inexperienced entrepreneurs who promise to reshape an industry—and enrich those who spot them early. Ms Holmes’s partners and investors desperately wanted to believe that a young woman could get to the top. Her face was plastered on magazine covers, even as she refused to reveal the details of her firm’s technology. Too little scrutiny was offered by the older men on her board, who eventually included Henry Kissinger and George Shultz (both former secretaries of state). Mr Carreyrou says the board had been set to sack Ms Holmes in 2008, but she wangled another chance.

In reality, Theranos’s tests were never as sound as the firm claimed. Instead of admitting that the technology was not ready to deploy, Theranos “hacked” a solution, using modified traditional devices from other manufacturers. Perhaps Ms Holmes was adhering to the Valley’s spirit of disruption by improvising a fix. That might work for software and internet firms. In the health-care business, the stakes are higher.

The book is especially engaging on Ms Holmes’s battle with the author himself. She tried to squelch Mr Carreyrou’s initial exposé, going so far as to recruit Rupert Murdoch, the Journal’s proprietor, as an investor. (He put $125m into Theranos in 2015, a stake that is now worthless.) Mr Carreyrou is weaker on Ms Holmes’s psychology. He never got close enough to her or her confidants to illuminate her motives.

One striking oversight is an examination of her company’s origins. Ms Holmes apparently wrote a patent application for a medical device after a year at Stanford University and a summer internship in Singapore. Mr Carreyrou recounts this creation myth without comment. Still, the story and its telling are not over yet. A Hollywood film starring Jennifer Lawrence as Ms Holmes is in the works.