Book Summary: Bad Blood

Prologue

• Introduction: Theranos, a blood-testing startup, successfully completes its first major live demonstration for the pharmaceutical giant Novartis.
• Henry Mosley and Theranos: Henry Mosley, the Chief Financial Officer, joins Theranos because of the talented people involved and the huge potential market. He becomes increasingly uncomfortable with not fully understanding the technology and the aggressive revenue forecasts.
• Deception Revealed: Mosley discovers that the Theranos 1.0 blood-testing system is unreliable and that investor demos have been faked. He confronts Elizabeth Holmes, the founder and CEO, about the ethical implications.
• Mosley Fired: Holmes fires Mosley for not being a “team player” and questioning the company’s practices.

A Purposeful Life

• Early Ambition of Elizabeth Holmes: From a young age, Elizabeth Holmes aspired to be a billionaire and entrepreneur, inspired by her family's history and her father's emphasis on living a purposeful life.
• Family Background and Influences: Holmes's lineage includes the successful Fleischmann Yeast family and her mother's family with military and medical ties, which shaped her ambition and drive.
• Stanford University and the Genesis of Theranos: While studying chemical engineering at Stanford, Holmes conceives of a revolutionary arm patch for blood testing and drug delivery. She drops out to found Theranos and enlists the support of her professor Channing Robertson and Ph.D. student Shaunak Roy.
• Early Challenges and Funding: Early iterations of the patch technology prove impractical and Holmes pivots towards a portable blood-testing device. Despite facing rejections from some venture capitalists, Holmes secures funding from family connections and other investors, including Tim Draper.

The Gluebot

• Edmond Ku joins Theranos: Edmond Ku, an experienced engineer, joins Theranos to refine the prototype blood-testing system, but faces challenges due to Elizabeth Holmes’s insistence on using minimal blood volumes.
• Technical Issues and Turnover: The team struggles with miniaturization, fluid mechanics, and chemistry, resulting in high employee turnover and a tense work environment.
• Sunny Balwani’s Influence: Sunny Balwani, Holmes’s boyfriend and a successful entrepreneur, exerts influence behind the scenes and later joins Theranos as a senior executive.
• Shifting Priorities and the Edison: Theranos abandons its original microfluidic system in favor of a new prototype called the Edison, built around a repurposed glue-dispensing robot. This leads to the departure of Edmond Ku and Shaunak Roy.
• Ethical Concerns and Pilot Projects: Despite the Edison’s limitations and ethical concerns surrounding its use on terminal cancer patients, Holmes pushes forward with pilot projects for pharmaceutical companies.

Apple Envy

• Elizabeth Holmes’s Admiration for Apple: Holmes draws inspiration from Steve Jobs and Apple, recruiting several Apple employees, including Ana Arriola, a product designer who worked on the iPhone.
• Design and Culture Clashes: Arriola and other Apple recruits attempt to improve the design and functionality of the Edison, but clash with Theranos's culture of secrecy, paranoia, and employee surveillance.
• Ethical Concerns and Departures: Concerns about the reliability of the Theranos system and its use in a pilot study with cancer patients lead to the departure of Arriola and other Apple employees, highlighting ethical issues within the company.
• Avie Tevanian’s Doubts: Avie Tevanian, a former Apple executive and Theranos board member, raises concerns about the company’s financial projections and lack of transparency, leading to his resignation from the board.

Goodbye East Paly

• Move to Palo Alto: Theranos relocates to a more prestigious location in Palo Alto, signifying its growth and ambition, while also shedding light on the company's cultural issues and employee turnover.
• Matt Bissel’s Departure: Matt Bissel, the head of IT and a trusted confidant, leaves Theranos due to Elizabeth Holmes's demanding nature and ethical concerns, particularly regarding the treatment of fired employees.
• The "Gluebot" and Human Factors: Aaron Moore and Mike Bauerly, former Apple employees, conduct research on the Edison prototype and identify usability issues with finger-stick blood collection. Their concerns are dismissed by Holmes.
• Internal Conflicts and Departures: An internal prank and concerns about the company’s direction lead to the departure of Aaron Moore and Mike Bauerly, marking the end of the Apple contingent at Theranos.

The Childhood Neighbor

• Richard Fuisz and the Holmes Family: Richard Fuisz, an entrepreneur and medical inventor, feels slighted by the Holmes family, who are former neighbors and family friends, for not seeking his expertise in blood-testing technology.
• Fuisz's Vendetta and Opportunism: Fuisz, known for his vindictive nature and opportunistic business practices, patents a physician alert mechanism for at-home blood testing devices, targeting Theranos.
• Strained Relationships and Legal Action: Relations between the Holmes and Fuisz families deteriorate, leading to a lawsuit filed by Theranos accusing Fuisz and his sons of stealing trade secrets.

Sunny

• Chelsea Burkett Joins Theranos: Chelsea Burkett, a former friend of Elizabeth Holmes from Stanford, joins Theranos seeking a more purposeful job, but quickly becomes disillusioned with the company's culture and Sunny Balwani's management style.
• Sunny's Background and Wealth: Sunny Balwani, Holmes’s boyfriend, is a former software engineer who made a fortune during the dot-com boom. His aggressive and arrogant demeanor creates a culture of fear at Theranos.
• Technical Issues and Ethical Concerns: Chelsea encounters technical problems with the Edison during validation studies and becomes increasingly concerned about ethical issues surrounding the company’s projects in Mexico and Thailand.
• Chelsea's Departure: Chelsea resigns from Theranos due to her dislike of Sunny and ethical concerns about the company’s practices, highlighting the toxic work environment and the growing disconnect between Holmes’s vision and reality.

Dr. J

• Silicon Valley Boom and Walgreens’s Interest: Amidst a new technology boom in Silicon Valley, Walgreens, a drugstore chain seeking innovation, becomes interested in Theranos and its blood-testing technology.
• Dr. J's Enthusiasm and Project Beta: Dr. J, a Walgreens executive, becomes a staunch advocate for Theranos and helps fast-track a pilot project, code-named “Project Beta”, to place Theranos devices in Walgreens stores.
• Kevin Hunter’s Skepticism and Red Flags: Kevin Hunter, a lab consultant hired by Walgreens, raises concerns about Theranos's technology and lack of transparency, but his skepticism is dismissed by Dr. J and other Walgreens executives.
• Safeway Partnership and Project T-Rex: Safeway, another retail partner, invests heavily in Theranos and remodels its stores to accommodate wellness centers, despite delays and a lack of transparency from Theranos.

The miniLab

• The Need for a New Device: Theranos needs a new device, the “miniLab,” to perform a wider range of blood tests beyond the capabilities of the Edison and fulfill its promises to Walgreens and Safeway.
• Technical Challenges and Design Flaws: Engineers Kent Frankovich and Greg Baney face challenges in miniaturizing existing lab technology and express concerns about the miniLab’s design flaws and limitations.
• The Frat Pack and Nepotism: Elizabeth Holmes hires her brother Christian and his fraternity brothers, who have limited relevant experience, creating a culture of favoritism and loyalty within the company.
• Greg’s Disillusionment and Departure: Greg becomes disillusioned with Theranos due to ethical concerns, technical issues, and Sunny’s management style, leading to his resignation.

The Wellness Play

• Safeway’s Struggles and Project T-Rex: Safeway's financial performance suffers due to delays and rising costs associated with Project T-Rex, its partnership with Theranos.
• Employee Clinic and Discrepancies: Theranos takes over blood testing at Safeway’s employee clinic, but the results raise concerns about accuracy and inconsistencies.
• Theranos Lab and Regulatory Issues: The Theranos lab, despite obtaining CLIA certification, lacks experienced personnel and faces issues with quality control and equipment. Diana Dupuy, a lab technician, raises concerns about these issues and is eventually fired.
• Steve Burd’s Departure: Safeway CEO Steve Burd, a staunch supporter of Theranos, is forced to retire, leading to a loss of communication and trust between the companies.

“Who Is LTC Shoemaker?”

• Theranos and the Military: Elizabeth Holmes seeks to deploy Theranos devices in the Afghan war theater, but faces resistance from Lieutenant Colonel David Shoemaker, an army officer responsible for ensuring compliance with medical regulations.
• Regulatory Challenges and FDA Concerns: Shoemaker and an army lawyer raise concerns about Theranos’s regulatory strategy, which seeks to bypass the FDA, leading to an FDA inspection and further scrutiny.
• Elizabeth Holmes's Retaliation: Holmes retaliates against Shoemaker, leading to a confrontation with General James Mattis, who demands an explanation for the regulatory obstacles.
• Limited Experiment and Missed Opportunity: A compromise is reached for a limited experiment using leftover blood samples, but Theranos fails to follow through, missing an opportunity to validate its technology.

Lighting a Fuisz

• Theranos Sues Richard Fuisz: Theranos files a lawsuit against Richard Fuisz and his sons, alleging theft of trade secrets and hiring David Boies to represent the company.
• Boies's Tactics and Surveillance: Boies Schiller & Flexner, known for its aggressive tactics, employs private investigators to surveil the Fuiszes, raising concerns about paranoia and intimidation.
• John Fuisz’s Deposition and Threat: John Fuisz, Richard’s son and a former McDermott lawyer, is dismissed from the lawsuit but makes a threat against Elizabeth Holmes during his deposition, which is later used against him.
• Ian Gibbons as a Witness: Fuisz seeks to depose Ian Gibbons, a Theranos scientist, but Theranos delays the deposition, raising suspicions.

Ian Gibbons

• Ian Gibbons’s Background and Expertise: Ian Gibbons, a respected scientist with expertise in immunoassays, is hired by Theranos and becomes disillusioned with the company’s culture of secrecy and lack of scientific rigor.
• Conflicts and Demotion: Gibbons clashes with the engineering team and Elizabeth Holmes, leading to his demotion and marginalization within the company.
• Depression and Suicide: Gibbons becomes depressed due to his demotion and the pressure of the Fuisz lawsuit and eventually commits suicide. Theranos fails to acknowledge his death or honor his contributions to the company.

Chiat\Day

• Theranos Hires Chiat\Day: Theranos hires TBWA\Chiat\Day, the ad agency that represented Apple, to create a marketing campaign and brand identity for the company.
• The Nanotainer and Visual Identity: The Chiat\Day team focuses on the “nanotainer,” Theranos’s miniature blood vial, as a symbol of innovation and develops a visual identity centered around circles and the Flower of Life symbol.
• Concerns about Accuracy and Claims: Chiat\Day employees raise concerns about the accuracy of Theranos’s claims and its lack of transparency, but their doubts are dismissed by Elizabeth Holmes and Sunny Balwani.

Going Live

• Alan Beam Joins Theranos: Alan Beam, a pathologist, becomes Theranos’s laboratory director and witnesses firsthand the company's dysfunctional culture and technical problems with its blood-testing devices.
• The miniLab and Jurassic Park: Beam learns that the miniLab is not yet functional and that Theranos is using commercial analyzers to process patient samples, raising concerns about accuracy and regulatory compliance.
• Dilution and Hacking of Siemens Machines: To accommodate small finger-stick samples, Theranos dilutes blood samples and hacks Siemens machines, raising concerns about the validity of the results.
• Ethical Concerns and Launch Pressure: Beam expresses ethical concerns about the launch of Theranos’s blood tests in Walgreens stores, but his warnings are ignored.

Unicorn

• Theranos's Valuation and Funding: Theranos raises significant funding from investors, including Rupert Murdoch, achieving a $9 billion valuation and making Elizabeth Holmes a billionaire.
• Misleading Claims and Projections: Theranos misleads investors about the capabilities of its technology and its financial projections, while maintaining a culture of secrecy and paranoia.
• Partner Fund’s Investment: Partner Fund Management, a hedge fund, invests in Theranos based on misleading information and the company’s prestigious board of directors.

The Grandson

• Tyler Shultz Joins Theranos: Tyler Shultz, George Shultz’s grandson, joins Theranos after interning there, but becomes disillusioned with the company’s practices and lack of scientific rigor.
• Assay Validation and Data Manipulation: Shultz and Erika Cheung, another young employee, raise concerns about data manipulation and the accuracy of Theranos’s blood tests, but their concerns are dismissed.
• Proficiency Testing and Ethical Concerns: Shultz discovers that Theranos is cheating on proficiency testing and raises ethical concerns with his grandfather, George Shultz, but his warnings are ignored.

Fame

• Theranos Settles with the Fuiszes: Theranos and Richard Fuisz settle their lawsuit, with Fuisz withdrawing his patent and Theranos dropping its claims.
• John Fuisz’s Anger and Threats: John Fuisz remains angry and threatens to sue Theranos and David Boies, while Boies Schiller threatens to expose damaging information about him.
• Fortune Magazine Cover Story: Roger Parloff, a journalist for Fortune magazine, writes a cover story about Elizabeth Holmes and Theranos, portraying her as a visionary innovator and relying on the company’s board of directors as character witnesses.
• Holmes's Rise to Fame: The Fortune cover story and subsequent media coverage propel Holmes to fame and celebrity status, with numerous accolades and invitations to high-profile events.

The Hippocratic Oath

• Alan Beam’s Growing Disillusionment: Alan Beam, Theranos’s laboratory director, becomes increasingly concerned about the company’s practices and the accuracy of its blood-testing results.
• Ethical Concerns and Departures: Beam and other lab employees raise ethical concerns and resign, highlighting the growing crisis within Theranos.
• Beam’s Resignation and Email Deletion: Beam resigns and is forced by Theranos to delete emails he forwarded to his personal account, raising concerns about intimidation and retaliation.
• Richard Fuisz and Adam Clapper: Richard Fuisz contacts Adam Clapper, a pathologist and blogger who is skeptical of Theranos, and connects him with other individuals who have concerns about the company.

The Tip

• John Carreyrou Begins Investigating: John Carreyrou, an investigative reporter for the Wall Street Journal, receives a tip from Adam Clapper about Theranos and begins investigating the company.
• Confidential Sources and Corroboration: Carreyrou interviews several former Theranos employees, including Alan Beam, Erika Cheung, and Tyler Shultz, who provide information about the company's practices and raise concerns about patient safety.
• Questionable Test Results: Carreyrou investigates instances of questionable blood-test results and conducts his own experiment, confirming inconsistencies and inaccuracies in Theranos’s testing.

The Ambush

• Theranos Targets Tyler Shultz: Theranos lawyers ambush Tyler Shultz at his grandfather's house and threaten to sue him, attempting to identify the Wall Street Journal’s sources.
• Legal Threats and Surveillance: Theranos and Boies Schiller & Flexner employ aggressive tactics and surveillance against Shultz and his family, attempting to silence him.
• Tyler’s Refusal and Estrangement: Shultz refuses to cooperate with Theranos and becomes estranged from his grandfather, George Shultz, who remains loyal to Holmes.

Trade Secrets

• Theranos Delegation Meets with the Journal: A Theranos delegation, led by David Boies and Heather King, meets with John Carreyrou and Wall Street Journal editors, attempting to discredit his reporting and invoking trade secrets to avoid answering questions.
• Intimidation and Stonewalling: Theranos lawyers employ intimidation tactics and stonewalling to prevent the publication of Carreyrou’s investigation.

La Mattanza

• Theranos and the FDA: Theranos obtains FDA approval for a herpes test and seeks to expand its operations in Arizona, while continuing to operate in a regulatory gray zone and avoid close FDA scrutiny.
• Roger Parloff and the Ebola Test Demo: Roger Parloff, the Fortune journalist, attends a demonstration of Theranos’s Ebola test, unaware that the results are fabricated.
• Joe Biden’s Visit: Vice President Joe Biden visits Theranos’s Newark facility and praises the company's technology, unaware that he is being shown a fake lab.

Damage Control

• Rupert Murdoch’s Investment: Rupert Murdoch, the media mogul who controls the Wall Street Journal’s parent company, invests $125 million in Theranos.
• Theranos’s Retaliation Continues: Theranos continues its aggressive campaign against Carreyrou’s sources, attempting to silence and intimidate them.
• Threats of Legal Action: Theranos lawyers threaten to sue the Wall Street Journal and Carreyrou, attempting to prevent the publication of his investigation.
• Holmes’s Public Defense: Holmes attempts to discredit Carreyrou’s reporting and portrays herself as a victim of sexism and industry attacks.

The Empress Has No Clothes

• Erika Cheung’s Complaint to CMS: Erika Cheung files a complaint with the Centers for Medicare and Medicaid Services (CMS), triggering a surprise inspection of Theranos’s laboratory.
• CMS Inspection and Deficiencies: The CMS inspection reveals numerous deficiencies at the Theranos lab, posing “immediate jeopardy to patient health and safety” and leading to a threatened ban on Holmes and Theranos from the lab industry.
• Theranos’s Response and Continued Deception: Theranos downplays the seriousness of the inspection findings and attempts to keep the inspection report confidential.
• Leaked Documents and Public Scrutiny: Carreyrou obtains and publishes the CMS inspection report and a letter threatening to ban Holmes, exposing the extent of Theranos’s deception and leading to increased public scrutiny.
• Walgreens Terminates Partnership: Walgreens terminates its partnership with Theranos and shuts down all Theranos wellness centers in its stores.
• CMS Ban and Investigations: CMS bans Holmes and Theranos from the lab business, and federal authorities launch criminal and civil investigations into the company.

Epilogue

• The miniLab Paper and Continued Deception: Theranos publishes a paper about the miniLab, but the study uses venous blood draws and the results fall short of the company's original claims.
• Investor Lawsuits and Settlements: Partner Fund Management and other investors sue Theranos, alleging fraud and deception. Theranos settles the lawsuits.
• Downfall and Criminal Investigation: Theranos faces financial difficulties, layoffs, and a criminal investigation by the U.S. Attorney’s Office.
• SEC Charges and Settlement: The Securities and Exchange Commission charges Theranos, Holmes, and Balwani with fraud. Holmes settles the charges, relinquishing control of the company and facing a ban from serving as an officer or director in a public company for ten years.