Free Minds & Free Markets

Theranos, Elizabeth Holmes, and the Cult of Silicon Valley

In Bad Blood, Wall Street Journal reporter John Carreyrou explains why Silicon Valley's mystique makes suckers out of billionaires.

Elizabeth Holmes was everything Silicon Valley investors and the media could hope for: a brilliant, young female entrepreneur who dropped out of Stanford at 19 to start a company called Theranos.

Established in 2003, Theranos promised to save people from pain and disease through early detection and lead the way into an era of cheaper, more consumer-driven health care. Holmes' big idea was to replace traditional venous blood draws in a doctor's office, hospital, or lab with simple finger pricks. One day, she said, patients would be able to do the tests at home and upload the results for their doctors.

Holmes stacked her board of directors with heavyweights such as former and future cabinet members George Schultz, Henry Kissinger, and Gen. James Mattis. She held fundraisers for Hillary Clinton and cadged hundreds of millions of dollars from investors such as the Walmart heirs, Rupert Murdoch, and Betsy DeVos. For a time, her company was worth more than Spotify or Uber.

Today, Theranos is on the verge of liquidation and its backers have seen their investments wiped out. Holmes may face charges.

The man who looked closer at Theranos is John Carreyrou, a veteran investigative journalist at The Wall Street Journal. His dogged reporting revealed the tactics of flattery and intimidation that fooled Holmes' investors and the press, allowing her to keep up the deception for as long as she did. When Carreyrou's stories on Theranos started appearing in 2015, Holmes went on the offensive, depicting herself as a Silicon Valley disrupter who had become the target of a smear campaign orchestrated by established interests.

Reason's Nick Gillespie sat down with Carreyrou to talk about his new book on Theranos, Bad Blood: Secrecy and Lies in a Silicon Valley Startup, which has made the New York Times bestseller list and will soon be made into a movie starring Jennifer Lawrence as Elizabeth Holmes. Bad Blood raises tough questions about regulators' failure to stop Theranos, the infatuation of the public and the press with the mystique of Silicon Valley, and the shadowlands where innovation, capitalism, and deception meet.

Produced by Justin Monticello and Todd Krainin. Camera by Jim Epstein.

Music credits:

Raro Bueno by Chuzausen is licensed under a Attribution-NonCommercial-ShareAlike 3.0 International License.

On Matters of Consequence (Act I) by Lloyd Rodgers is licensed under a Public Domain Mark 1.0 License.

On Things Invisible to the Eye (Act II) by Lloyd Rodgers is licensed under a Public Domain Mark 1.0 License.

Photo credits:

Elizabeth Holmes at WSJDLive 2015: Mike Blake/REUTERS/Newscom

Elizabeth Holmes at TIME 100 Gala 2015: Everett Collection/Newscom

Elizabeth Holmes at TIME 100 Gala 2015: Robin Platzer/Twin Images/LFI/Photoshot/Newscom

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Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • SQRLSY One||

    And the FDA couldn't protect us all from this fraud? But they can sure protect us from lung flutes!

    So be SURE to NOT do anything like THIS!

  • MoreFreedom||

    "And the FDA couldn't protect us all from this fraud"

    As a Reason reader, I'd expect that you know the FDA (like other government regulatory agencies) exists to benefit and protect politicians and their rich crony friends in the industry, not to protect the public.

    Nothing produces prosperity, or protects people from shady businesses, like the free market.

  • Incomprehensible Bitching||

    Why would you want to give a blood test to a thermos anyway?


  • SQRLSY One||

    The thermos will keep your blood boiling hot!

  • ||

    Why would you want to give a blood test to a thermos anyway?

    Because he's going to wipe out half the Marvel Universe anyway, and this way allows Tony Stark to live?

  • Rich||

    Theranos is on the verge of liquidation and its backers have seen their investments wiped out. Holmes has been unmasked as a fraud and may face criminal charges.

    Wow, just think how bad off Theranos and Holmes would be if they had *not* gotten away with it!

  • DrZ||

    "Elizabeth Holmes was everything Silicon Valley investors and the media could hope for: a brilliant, young female entrepreneur who dropped out of Stanford at 19 to start a company..."

    Think of how much more money she could have dupped investors for if she were a brilliant, young black person of undetermed sexual orientation. It would have been the perfect politically correct mix that would have made investors want to give even more.

  • Horatio||

    Talented fraudsters will, unfortunately, always find marks even among intelligent people.

    Talented fraudsters bolstered by the bigotry of low expectations can cause orders of magnitude more damage.

  • Rich||

    Talented fraudsters bolstered by the bigotry of low expectations

    and by the audacity of hope?

  • NoVaNick||

    I don't think anyone had low expectations-the fact that she had the right pedigree (Stanford and Silicon Valley) and is young and attractive made Theranos too hard to resist. Also, its fairly easy to dupe anyone if you sound sciency enough.

  • SQRLSY One||

    "Also, its fairly easy to dupe anyone if you sound sciency enough."

    She would have gone far in Scientology!!!

  • PS||

    By the look in her eyes, I would say she went there and back and bought the e-meter.

  • Tommy_Grand||

    There is zero chance ZERO chance she cheated her way into Stanford. The real tragedy is such a audacious talented ah-maz-ing genius resorted to lies & falsehood, succumbed to the pressure, etc etc. etc

  • DJK||

    Why is she an amazing genius? She was 19 years old, dropped out of undergrad, and we expected her to just have solutions to complicated problems? Many people have spent academic and industrial careers developing microfluidic blood processing systems. This is not rocket science. It's a well-developed and well-understood field. The technological limitations are extremely well-known, as are the future technological developments that would be required to surmount them. This was not someone inventing a brand-new field. It was someone trying to go down a path having a very well-known endpoint.

  • Tommy_Grand||

    all womyn are amazing, you horrible person. if not for your paternalistic, phallocentric, logo-centric male domination of science -- which oppresses womyn and prevents these beautiful flowers from blooming in technical fields -- we'd long ago have cured every disease and protected mother Gaia. next you'll be telling me it's ok for NASA rocket scientists to wear Hawaiian shirts w/ hula dancers...


  • Unicorn Abattoir||

    I'm sure she'll be on the late-night infomercial circuit soon enough, selling you things that "they" don't want you to know about.

  • ||

    Also, its fairly easy to dupe anyone if you sound sciency enough.

    This can't be stated enough. I've worked for and with no less than three companies that sought and failed to do what Theranos said they could do and at least a couple who made similar types of claims and had similar celebrity investors. It should be clear from the degree of fraud and irreproducibility in academia that this is an issue with how science at least as much as it is with how business is conducted.

  • ||

    But celebrities cement the idea sciencey sounds legit!

    See Brady and plastic straw bans.

  • PS||

    ...or Nathan Fillian and "Solar freakin' roads!!!"

  • a tandem||

    I don't think Obama's message of lower expectations was so much intentional bigotry but rather just a worldview that sadly relied on the bigotry of his supporters

  • MoreFreedom||

    Note how she handed out board seats to the politically connected, and raised money for Hillary. That's buying political protection, until her fraud was exposed and even the politicians couldn't support her. It was also buying legitimacy and funding.

  • JeremyR||

    I think this also illustrates what's wrong with corporate America. Why on Earth should a company ever have a board of directors full of people like George Schultz, Henry Kissinger, and Gen. James Mattis? Much less a medical company?

    Instead of picking people who are competent at business, all too often it's the politically connected that are on boards of directors

  • Diane Reynolds (Paul.)||

    I kind of disagree, it's everything that's right with corporate America. When you see a board of directors for a medical company that looks like hers, that your first sign something is very wrong.

  • Eric L||

    Yes, on several investing online discussion boards I frequent, the make up of the Theranos BOD was viewed with suspicion and a red flag that the story was to go to be true.

  • Red Rocks White Privilege||

    Apparently it was Schultz's kid, who worked at Theranos, that was one of the whistle-blowers.

  • Bubba Jones||

    And it caused a major rift between them.

  • ||

    My initial thought was is was the idea that mind blowing that she managed to get those people? Makes you wonder if they can think at all or spot bull shit. Weird.

  • DJK||

    The field of microfluidic blood analysis is extremely well-developed. Its current limitations are extremely well-known. Any VC who invested in this company simply failed to do their due diligence.

  • a tandem||

    The board had like 40 members. The BEST corporate boards do have a few people of high reputation worldwide it isn't just "'corporate America" phenomena you assert.

    And for good reason. People with reputations to lose are generally careful. And Schultz, and Kissinger for example run very successful businesses. They also have valuable experience on a variety of boards, from academic institutions, to charities, and foundations as well as different types of business structures.

  • Diane Reynolds (Paul.)||

    I don't know if all the credit goes to this Wall Street Journal reporter because I know I was reading some independent bloggers that were reporting some very troubling details about theranos very early on in the process. Also for me, I'll always remember her TED talk as the TED Talk That put me off TED talks.

    The media also gets some blame for this. They were so anxious to prop up a young female entrepreneur in Silicon Valley, they were willing to look past all kinds of irregularities with this company.

  • Red Rocks White Privilege||

    Also for me, I'll always remember her TED talk as the TED Talk That put me off TED talks.

    Her vocal fry was particularly bizarre; the only women I've known with voices that deep were butch lesbians.

  • Marty Feldman's Eyes||

    And Princess Vespa. She's a bass!

  • IceTrey||

    Her voice was fake too.

  • Red Rocks White Privilege||


  • ||

    The media also gets some blame for this. They were so anxious to prop up a young female entrepreneur in Silicon Valley, they were willing to look past all kinds of irregularities with this company.

    Remember the 20th Century Motor Car Corporation? Neither do I.

  • ||

    Bloggers never get credit. Remember, it was bloggers who started questioning drugs in baseball. All it takes is an inquisitive mind to look at the stats and data and start the process of 'um, something ain't right.'

    Of course, the media - in its obsession with being pals with athletes and protecting access - ignored the issue (I find it hard to believe some of those insiders didn't have an inkling something was amiss. They may have heard things but they sure as hell didn't dig. Then they pulled a 'we didn't know?' Bull fucking shit. That means you're shitty at your jobs) and worse, you had guys like Wilbon mocking bloggers as being 'in their parent's basement' deriding the concern in his usual sanctimonious style.

    It took a couple of investigative journalists OUTSIDE the sport to expose the story.

    The sports media didn't come out looking good at all as they pretended to be hoodwinked.

    Sports writers are the worst. Especially the woke ones.

  • Unicorn Abattoir||

    This is right from a press release on Theranos' website, the day Holmes reached a deal with the SEC:

    Theranos' independent directors said in a statement, "The Company is pleased to be bringing this matter to a close and looks forward to advancing its technology."

    Con men to the end, or just fools?

  • Longtobefree||

    A good actor NEVER breaks character

  • ||

    Enron. Worldcom.

    To the end. Rinse and repeat.

  • Red Rocks White Privilege||

    the shadowlands where innovation, capitalism, and deception meet.

    Here's a case from the pot industry that sounds pretty similar, although the company is still operating.

  • Bubba Jones||

    Hot chick who dresses like Steve jobs steals money for old white people.

    Film at 11.

  • Diane Reynolds (Paul.)||

    "Hot chick"

    Lets not get ahead of ourselves...

  • Red Rocks White Privilege||

    To be fair, in the tech world any woman who's at least semi-attractive is looked at like Elle MacPherson.

  • ||

    To be fair, in the tech world any woman who's at least semi-attractive is looked at like Elle MacPherson.

    Or... in the regular world any woman above about a 5 automatically gets 1-2 points more attractive/less crazy if she can do math in her head.

  • DJK||

    I don't know that she's hot. She's cute at the very least. I imagine being worth a few billion (prior to the company's collapse) made her a bit more attractive.

  • ||

    When I see those eyes (The Guess Who ta-na-na-na-na), I don't think 'hot'.

  • The Last American Hero||

    Interesting how she looks about 20# heavier in video vs. on the magazine covers.

  • Incomprehensible Bitching||

    You don't trust crazy eyes. Never trust crazy eyes. You don't want to see those eyes when the cra cra starts.

  • Conchfritters||

    ^^ that's what I'm talking about

  • Hoofddorp Haarlemmermeer||

    For sure. If you see crazy eyes on the CEO, run from that company. I've spent a lot of my career working with and for startups, mostly on the east coast and damn it's amazing how that has correlated to poorly-run or thought-out companies. Yes there are certainly other points to check, but making sure your executive staff is sane is something many VCs seem to forget.

  • gphx||

    Nice job Nick.

    In a few years you can just change the names to Elon Musk and Tesla.

  • ||

    The fact Musk is a darling and gracing so many covers of magazines immediately makes me suspicious.

    If the media is selling it, that means a flare is up. Your skeptical spidey-senses should be on alert.

  • ||

    That includes honorary degrees, awards, prizes and the like.

    Mostly corroded by a cynical industrial recognition complex.

  • Conchfritters||

    It's got the second highest market cap of any American auto manufacturer behind GM, and yet I think I've only seen 5 of them on the road in my life.

  • The Last American Hero||

    You live in a different part of the country than I, since I can find 5 parked at the grocery store by my house at any given moment.

  • Gozer the Gozarian||

    So you live in California?

  • Jimothy||

    Yep, I kept thinking about Musk while I watched this video. However, I'm not sure I'd call him a fraud. He's got a product, it works, he just can't produce enough of it reliably and profitably.

    I think Tesla is grossly overvalued, the media hype the company and its cars, and Musk is a cult of personality. I'll even say the company has a very good chance of going bankrupt as early as this year. But did Musk set out to defraud investors and dupe the press and audiences? I don't think so. But I did foresee Holmes's fraud, so maybe I'm wrong about this.

  • DJK||

    Tesla is an extremely frustrating company. They're clearly never going to make money sans some huge unforeseen development. I'd love to have a short position on them. But the moron investors who continue to bail them out could keep them limping along for years.

  • Longtobefree||

    "You can't cheat an honest man"

  • ||

    I'll watch later but did her idea have merit and she was just too incompetent or egotistical to see it through?

  • dchang0||

    No merit. It was too good to be true long ago, when everyone believed her.

  • AZ Gunowner||

    Note here that she is not going to jail, just paying a fine.

    Guess what that makes the SEC, just another criminal gang getting their cut.

  • ||

    I'll comment as I watch.

    So, people were smitten by big blue eyes that don't blink?

    Didn't people learn early to be wary of people who don't blink?

    She looked to copy Steve Jobs is a bit creepy. It's okay to admire someone to that degree? Staw-ker!

    Plus that voice. I'd be too distracted.

    /hits play.

  • ||

    As per my question about how people could be so cavalier. Wal-Green did no due diligence driven by fear of missing out.

    Meanwhile, I go through the ringer just for a $10 000 LOC extension on a profitable business.

    She gets Way-Greens because her blue eyes.


    No one knows what it's like....Behind blue eyes.

  • Rockabilly||

    A pretty face
    can launch
    a thousand ships

  • ||

    She did it with intelligence and charm. Wrap men up. Was something else at play?

    Hey, I'm just asking. Not for a friend. For me. I'm sad and lonely.

  • ||

    She was a pathological liar and the media still ate her up.

    Reminds me of a time when the media licked Mao, Pol Pot, Hitler, Lenin and Stalin balls. Duranty anyone?

    You know the saying, those deceived want to be deceived.

    Not very good journalism if you ask me because skepticism should be the cornerstone of any journalist's reporting, no?

  • ||

    Excellent question about whether it was a market failure or success and I agree with the journalist in that it's mind-boggling Walgreens dove into this blindly. Not only were they willing participants but so were all the other capitalists who didn't ask questions going on Walgreens' lead.

  • IceTrey||

    Maybe the investors wanted a tax write off.

  • IceTrey||

    I still don't know if it was a scam from day one or did it turn into one when the tech didn't pan out.

  • NotAnotherSkippy||

    I've never seen a journal article or even a semi-decent layperson write-up, e.g. popular science/mechanics. Underpants Gnomes science set off my spidey sense years ago.

  • Sevo||

    Fortune did an article on her it seems five years back or so. To the credit of the author, and after some puffery, he made it quite clear that there seemed to be a sum of 5 from what appeared to be 2 and 2.

  • a tandem||

    She got a pass because silicon valley and the press is desperate for women leaders. It is why of all the candidates, Hillary was the one Trump could beat. If Hillary had not been married to Bill and wasn't owed by Bill and the DNC for attacking the women Bill Clinton abused, Hillary would have been a third rate lawyer, probably chasing ambulances Chicago.

    Holmes is another Ghostbusters II phenomena. An affirmative action business "leader." She was heralded in EVERY left wing publication as some kind of messiah when she was just a scam artist enabled by virtue signaling

  • Sevo||

    "...probably chasing ambulances Chicago...."

    Or Little Rock.

  • Red Rocks White Privilege||

    She got a pass because silicon valley and the press is desperate for women leaders

    That's ultimately what it boils down to, more the press than the valley. The latter's culture is wired to parrot the mass media conventional wisdom because the industry is packed with nerds that are still trying to fit in with the cool kids. So they're going along with this "women in tech" puffery on the surface, even if in reality it's still men running the show. And as long as today's shitlib progressivism is the status quo, it will remain that way.

  • John C. Randolph||

    George Schultz, Henry Kissinger, and Gen. James Mattis.

    Politicians, not technology executives.

    This was a con game, which she could have done anywhere in the country.


  • Hoofddorp Haarlemmermeer||

    Give it a few years and she'll be back with a new con. She's a pathological liar so she won't be able to stop.

  • ||

    She's a pathological liar so she won't be able to stop.

    In her defense, kinda the opposite of Bill Burr's gold-digging whores sketch, if I opened my mouth and people threw millions of dollars at it, I'd probably have a hard time keeping it shut too.

  • Brian||

    I always thought heir business plan sucked.

    Ok, so everyone buys their own individual diagnostic blood-o-meter, collects their own results, and ships the results to a doctor.

    Compare that to a rapid laboratory that can efficiently receive, process, and send results in 24-48 hours, getting quicker and quicker over time.

    Just how cheap and commodified does this self administered blood diagnostic-o-meter have to be before that's the most efficient solution to this problem?

    It sounds like the Theranos technology has to be almost perfect across multiple dimensions before it even approaches the best solution, and that's probably only for some people, who need frequent blood tests that go beyond glucose readings.

    But, hey: big important people. Pony up!

  • swampwiz||

    I had no idea that the Queen Thief had such a low voice. Has she been taking testosterone?

  • Number 2||

    How exactly is Holmes' conduct different from Bernie Madoff's? Each swindled people out of millions of dollars by lying to them unabashedly. Why is she freely walking the streets while Madoff will die in prison?

  • jm15xy||

    Madoff is the stereotypical leftist villain, I mean, you couldn't have painted a better portrait of a blood sucking capitalist swindling his way to wealth. On the other hand, Holmes was a stereotypical feminist hero.

  • markm23||

    1) It's easy to explain Madoff's scam to a jury. He accepted money to invest, didn't invest it, and covered by using part of the money to pay previous investors - and there are laws specifically against conducting business that way. OTOH, it's probably impossible to prove Theranos was a scam to people who cannot understand the science, and it's a very complex science.

    2) Most entrepreneurs start with unjustified confidence in an idea, and hope that other peoples' money will make it actually work. If it doesn't work, honest ones dissolve the business rather than suckering new investors. Holmes apparently started the same way, but kept on selling stock as things continued to fail in the lab, sliding from overoptimism to fraud. Madoff apparently started similarly - making investments and promising high returns - gradually turning this into a pyramid scheme as his investment successes continued to fall short of his promises. The difference is that Madoff got away with it for decades; even if no one can pinpoint where he slid from overoptimism to outright fraud, it's clear that it was outright fraud without even a pretense of investing the money for a long time. Holmes was exposed before she clearly reached the point where it was outright fraud rather than self-delusion.

  • Deconstructed Potato||

    and will soon be made into a movie starring Jennifer Lawrence as Elizabeth Holmes

    So it's either going to be a piece on how she's an identity politics hero callously crushed by a patriarchal conspiracy, or J-Law just signed up for her usual "trojan horse" duties, managing to fight the good fight, but wrapped up in prog-friendly exterior.

  • Gozer the Gozarian||

    This is what would have panned out of Hillary was elected president. I can see Holmes running for office like some narcissistic entitled bitch who thinks she deserves the presidency. I'd check her for an "I'm with Her" sticker somewhere....

  • Jayburd||

    "reality distortion field" says the guy wearing a black tee shirt and a black leather jacket somewhere in the room. A rare insight into The Jacket's power.


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