Bad Blood is about Elizabeth Holmes and her startup Theranos. She was considered the female Steve Jobs in the making.But the company she and her Stanford alumni peer Shaunak Roy built was a house of cards, trapped in lies and trickery .The startup promised a tiny, ultra-portable, cheap and quick blood-testing device capable of screening for 200 conditions.
The idea was a wearable patch which would test patients’ blood over the course of a day using microneedles. It only aimed to do away not only with the needles but also provide real-time information on bloodwork to assist ongoing diagnoses. It was hailed as a “miracle machine.” However, there was just one problem: the machines was virtually impossible to build and what they built did not live up to the promise they had made. However, rather than owing it.
At one time in 2014, this company selling a device that didn’t work was valued at $9 billion and had agreements to supply the Edison to global distribution heavyweights Safeway and Walgreens; Theranos mislead regulators, investors and customers and risked the lives of millions of people and even prompted an employee suicide.
When they knew microneedles wouldn’t be able to draw enough blood. They had a credit-card-sized blood-testing machine which would draw a few drops of blood using a pinprick. This could be plugged to another machine to check for 240 common ailments from vitamin D deficiency to HIV.The machine was called Edison. But it soon ran into trouble.The idea of using a single pinprick was unworkable. That was a problem – after all, it was the Edison’s main selling point. But it proved impossible to screen for 240 ailments using such a tiny blood sample. Timothy Hamill, the vice chairman of the University of California’s San Francisco-based Department of Laboratory Medicine, went on the record to say that it was unlikely that you’d be able to run 240 separate tests on a single drop of blood even if you worked on a solution for a thousand years
The company tried special microchambers to move the blood around. But nothing worked for more than 80 common illnesses. The accuracy was questionable, the blood became diluted during the with low reliability of the results. The Edison was also temperature-sensitive and not workable in different climates. The pipettes became clogged up and became useless in a month . Cleaning required a physical employee to do it. The machine had problems determining sodium and potassium
levels. Red blood cells split apart when they’re extracted with a pinprick, making the results dubious at best.
But Holmes was seen as female Steve Jobs, Investors lined up and , and cash started pouring into the company. Holmes chose Apple’s ad to represent Theranos. People looked at her, as an icon in the making – the first self-made billionaire businesswoman who earned her fortune making a machine that saved lives!
Theranos hired Larry Ellison, the respected Oracle ex CEO. he applied his software model sending out buggy software and working on perfecting it later during beta-testing. Theranos was in such a rush to get its products to market.
Theranos started deceiving and fooling its investors as well as journalists and the Food and Drug Administration (FDA) about its devices. She said tests could be done in 30 mins . The vast majority of tests, for example, weren’t even carried out by the Edison! On a good day, the boxes were capable of running around 20 of the 240 most important tests.. Hematology and chemical tests were performed using the traditional method of extracting blood from a vein. The vial containing the customer’s blood was then express-couriered to a lab in Palo Alto where it was tested using machines produced by other manufacturers, notably Siemens. So what did Theranos do? They secretly used third-party machines to do the tests, knowing full well that the regulators would assume they were using their own Edison.
Theranos wasn’t just lying to its investors and customers. The company was also deceiving the entire medical establishment and press. By this point, team Theranos had become a past master at manipulating and cherry-picking data to polish its image. Theranos also liked to boast that the efficiency of its Edison had been verified in peer-reviewed journals.That turned out to be a bogus claim.The only “peer-reviewed” article published about the device appeared in an obscure pay-to-publish Italian journal called Hematology Reports. The article’s data set was drawn from a mere six patients.
So how did the company continue to attract investment given that their product was performing so poorly?Unsurprisingly, they lied some more. The demonstrations shown to angel investors were also fake.
The levels of deception practiced here bordered on the surreal. In the early stages of product development, Theranos even used mock machines incapable of performing real blood tests.
Blood could be seen percolating through the device before false readings popped up on the display.
The investors were kept in the dark. When VIPs visited Palo Alto, a pinprick of their blood was put in the Edison for show. Once they’d left the room, however, the blood sample was quickly dispatched to a lab and processed in a Siemens machine!
By now, you might be wondering how Theranos managed to pull off its scam in such a carefully regulated market. The answer is simple: it went to extraordinary lengths to dodge FDA regulation. The key to Theranos’ ploy was to pretend that the Edison wasn’t a medical device at all.Because the results were forwarded to Palo Alto for analysis, it claimed, the device was simply a tool for sending information. That meant it wasn’t subject to FDA regulation.
Theranos reluctantly changed its tack when Dr. Shoemaker, a lieutenant colonel in the US Army, insisted on having the boxes approved by the FDA before he would consider installing them in military field hospitals.The company promised that it’d conform to FDA standards but stalled just long enough for Shoemaker to retire. After that, the whole project was quietly dropped.
Discontent among employees was high, and the company had a huge staff turnover. Theranos protected its secrets by making workers sign confidentiality agreements, preventing the disgruntled from leaking compromising details to the press. Theranos had a trick up its sleeve,: it systematically hired Indian employees who were dependant on their work visas to remain in the United States. Recruiting staff from India was easy enough. Elizabeth’s boyfriend and second-in-command Sunny Balwani was Indian and had excellent connections in the country’s tech industry.
But these policies soon resulted in tragedy.Ian Gibbons, a British biochemist who’d been tirelessly working on Theranos’ immunoassays for years, committed suicide in 2013. Earlier, he’d been demoted for questioning the company’s honesty regarding the machines it was using for tests.As a result of his objections, he was replaced by a junior scientist with far fewer qualifications but one key asset: he didn’t rock the boat like Gibbons.
No one knows how many patients died as a result of Theranos’ reckless behavior. What we do know is that its Edison boxes were used one million times in Arizona alone before Walgreens pulled the plug on its collaboration with the company. Theranos was forced to repay the $4.65 billion it had received for carrying out blood tests in the state.
A lesson for entrepreneurs-not to get carried away too far on their idea.
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