Bad Blood: Elizabeth Holmes and Theranos, with author John Carreyrou

The Sydcast

Episode Summary

John Carreyrou literally wrote the book on Theranos – the bestseller “Bad Blood,” which built on his earlier writing at the WSJ that broke the story. With Elizabeth Holmes scheduled to be sentenced this week, I sat down with John to get the inside scoop on how he uncovered the Theranos fraud, his take on Holmes, what went wrong and why, and what her sentence is likely to be.

Sydney Finkelstein

Syd Finkelstein is the Steven Roth Professor of Management at the Tuck School of Business at Dartmouth College. He holds a Master’s degree from the London School of Economics and a Ph.D. from Columbia University. Professor Finkelstein has published 25 books and 90 articles, including the bestsellers Why Smart Executives Fail and Superbosses: How Exceptional Leaders Master the Flow of Talent, which LinkedIn Chairman Reid Hoffman calls the “leadership guide for the Networked Age.” He is also a Fellow of the Academy of Management, a consultant and speaker to leading companies around the world, and a top 25 on the Global Thinkers 50 list of top management gurus. Professor Finkelstein’s research and consulting work often relies on in-depth and personal interviews with hundreds of people, an experience that led him to create and host his own podcast, The Sydcast, to uncover and share the stories of all sorts of fascinating people in business, sports, entertainment, politics, academia, and everyday life.

John Carreyrou

John Carreyrou is the author of the New York Times bestselling book Bad Blood: Secrets and Lies in a Silicon Valley Startup. In his reporting for The Wall Street Journal, he was the first to break the scandal surrounding the failed biomedical startup Theranos and the disturbing lies of its wunderkind founder, Stanford dropout Elizabeth Holmes. A compelling speaker, Carreyrou discusses the ethical lapses, the credulous media coverage, and the lax oversight that allowed Theranos to achieve a “unicorn” valuation of $9 billion and shares with audiences the lessons that can be learned from its fall.

Bad Blood was also named the Financial Times and McKinsey Business Book of the Year. The HBO documentary based on the Theranos story, The Inventor, was directed by Academy Award winner Alex Gibney and premiered at Sundance. A graduate of Duke University, Carreyrou lives in Brooklyn, New York, with his wife and three children.

Insights from this episode:

• Details about John’s book
• Theranos scandal and how John discovered it
• The intimidation, threats, and stonewalling John experienced when covering the scandal
• Details about Elizabeth Holmes's trial
• Confidential informants being stalked during the trial
• What Elizabeth Holmes did wrong and how she was able to build credibility

Quotes from the show:

• “I had done a lot of reporting about health care medicine by then and enough to know that that’s not usually how things happen (Theranos scandal). Usually, people who make advances in medical fields are trained and then do decades of research before they add value” —John Carreyrou [9:14]
• “It wasn’t until late April/May of 2015 that I began approaching the company and letting them know that I was doing a story and could they answer these questions. At that point they tried to stonewall me, they gave me the silent treatment for about a month, but then I think it dawned on them that I wasn’t going away” —John Carreyrou [20:21]
• “They knew that those three employees (Adam Rosendorff, Tyler Shultz, and Erika Cheung) had left with objections and raising doubts, and their suspicions immediately gravitated toward them” —John Carreyrou [24:39]
• “That’s what you call affinity fraud. You surround yourself with people who have a lot of credibility and prestigious names, and you borrow their credibility. That is very much what took place. In this case, Elizabeth was able to do that” —John Carreyrou [40:23]
• “She was convicted of defrauding investors. To me, that isn’t the worst part of the scandal. What I consider to be the worst part is the fact she went live with a medical product that didn’t work. She had a machine called the Edison, it was very limited and its capabilities could only do a handful of blood tests, and it didn’t perform it accurately” —John Carreyrou [29:23]
• “To me, her biggest crime is that she knowingly commercialized a medical product that she knew was deficient, that she knew was flawed, that she knew didn’t work. She put patients in harm's way, she endangered the public health” —John Carreyrou [30:30]
• “[About cutting corners] Elizabeth Holmes is someone who was well aware of this history, of this lure. She knew that people like Larry Ellison and Steve Jobs had cut corners earlier in their careers and she felt entitled to do the same” —John Carreyrou [33:21]
• “The Theranos scandal is a reminder that fine, bring your new ideas and your money to the problems in healthcare but, you got to remember it’s not the same world as software and that the stakes are much higher. If you don’t bear that in mind then what happened to Elizabeth Holmes will happen to you” —John Carreyrou [37:07]

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This episode was produced and managed by Podcast Laundry.