2018, Books, Non-Fiction

Bad Blood (2018) by John Carreyou

This is a real page turner about how a startup deceived and defrauded investors, conned business partners and the public, and hounded former employees into not discussing the company’s problems. For someone like me, who pays little attention to Silicon Valley, it was an eye-opening read, as well as being impossible to put down.

Carreyou excels at creating a sense of momentum where the reader feels like something new is going to pop up in the next chapter or section. Though much of what Theranos’ management did is repetitive, Carreyou makes you desperate to know what they would get up to next, even if you could probably guess if you walked away from it. The other important thing is that he does an exceptional job of explaining what they were doing and why it was wrong. Sometimes when you read these accounts of malfeasance, the extent or breadth of the wrongdoing is not properly conveyed or explained but that’s not a problem here. He’s an excellent investigative journalist.

For me, the book raises two really important concerns about Silicon Valley in particular and corporate culture and investment practices in general.
The first is how easy it is to con investors, apparently. There were a bunch of ostensibly smart people on Theranos’ board but most of them never knew or cared that there was anything unethical or illegal going on. They were so awed by Holmes as to be worthless in terms of their role. Similar credulity came from the investors and business partners. I thought due diligence was something that venture capitalists and investment firms undertook but going by this book that appears to be a crock. To give one of the most egregious of the many examples of supposedly smart people and corporations behaving like idiots in the book: Walgreens hired a firm to do due diligence on Theranos and then wouldn’t let the company do the job it was hired for simply because some members of Walgreens staff were just too damn enthusiastic. This kind of behaviour leaves me wondering how often due diligence is thrown out the window due to faith or sheer enthusiasm. (Some of these investment firms presumably are using your money to invest.)

The other really alarming aspect of the book is how awful the law firms who represented Theranos behaved to the former employees. Though I’m not sure it would be possible to prove that the lawyers at these firms knew Theranos was lying through their teeth, I suspect at least one of the partners must have had some idea but bullied and intimidated former employees anyway. The problem is there will never be any consequences for these law firms, who are not performing any valuable service; the only thing they are doing is delaying public knowledge of corporate fraud. It’s appalling that whatever safeguards against this unethical behaviour exist in the US are not enough to prevent corporations from using lawyers as weapons to hide illegality and unethical conduct. (I really hope that this is less true in my country; I suspect it is but I don’t know for sure.)

So these aspects of the book were very eye-opening for me. So in addition to the enjoying the crazy story of a con woman and the rich people she conned, I also feel like I learned something about the corporate world.


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