It’s 2008, and Elizabeth Holmes is about to be removed as CEO of Theranos, the blood-testing startup she founded. Don Lucas, chairman of Theranos’ board, has convened an emergency meeting with the other directors to discuss concerns about Holmes’ revenue projections, which seem highly unrealistic. Holmes is waiting outside Lucas’s office. When the four men call her in, it’s to tell her that she has proven too young and inexperienced for her title.
“But then something extraordinary happens,” John Carreyrou writes in Bad Blood: Secrets and Lies in a Silicon Valley Startup. “Over the course of the next two hours, Elizabeth convinced them to change their minds. She told them she recognized that there were issues with her management and promised to change. She would be more transparent and responsive going forward. It wouldn’t happen again.”
You might think Holmes the sympathetic character in this tableaux: a 20-something female entrepreneur surrounded by middle-aged men telling her she’s not qualified to run her own company. After all, Steve Jobs, Holmes’ idol, started Apple Computer when he was 21. Mark Zuckerberg launched Facebook in his dorm room. Holmes, who wrote her first patent application as a freshman at Stanford University, was the reason Theranos even existed. Surely, if given a second chance, she would run with it.
And run with it she did: Under Holmes’ leadership, Theranos would go on to become one of the most spectacular startup implosions in Silicon Valley history. As Carreyrou first outlined in a 2015 exposé (paywall) in the Wall Street Journal, Holmes presided over a company defined by mismanagement, secrecy, deception, and paranoia. By the time she found herself charming the board to let her stay on as CEO, Theranos was already a bomb waiting to go off.
“It was almost hypnotic”
Holmes’ connections in Silicon Valley, where she grew up, helped Theranos find its early footing—wealthy family friends were some of its first investors. But Holmes was also very convincing, and captivated many an executive and venture capitalist with her laudable ambitions, unshakeable confidence, and unnaturally deep voice. She modeled herself after Silicon Valley legends like Jobs and Oracle founder Larry Ellison, whose ranks she hoped to join one day. Many people Holmes met seemed to agree this was possible. “She had the presence of someone much older than she was,” Carreyrou writes. “The way she trained her big blue eyes on you without blinking made you feel like you were the center of the world. It was almost hypnotic.”
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Behind the scenes, Holmes was exacting and mercenary. She frequently purged employees who questioned her, and kept information compartmentalized across teams so only she had a complete picture of Theranos’ inner workings. (If this sounds benign enough, remember that the company was building a blood-testing device requiring input from from chemists, engineers, and designers, none of whom could even instant-message each other.) She had assistants track when employees came and left, and even become friends with employees on Facebook to tell Holmes what they were posting.
Holmes was also vengeful. After firing her first chief financial officer, Henry Mosley, for questioning the accuracy of information she was presenting to potential investors, Holmes found out via the IT department that he had once used his work computer to browse pornography. She said that discovery was the reason for Mosley’s termination, even though it took place after he was let go. Holmes used the claim to deny Mosley his stock options.
Mosley was one in a long line of people—due to the makeup of Silicon Valley, most of them men—to question the feasibility of Theranos’ technology, timeline, and financial footing. When the skepticism came from within, Holmes would shoot it down and ultimately fire whoever expressed it. When it came from investors or executives at any of Theranos’ real or potential partners, she would focus on anyone in the room that seemed to have her back, and could often convince them that the skeptics were the problem.
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