I recently read Bad Blood (brilliant title) by John Carreyrou on the flight from Boston to San Francisco; in fact, I couldn’t put it down, even when I should have been prepping for interviews. The book is a piece of investigative journalism that reads like a thriller, mostly because you desperately want to see the bad guys finally get taken down. Yet, like Walter White, they keep getting away with it. The book can’t report their downfall because, fascinatingly, the book itself catalyzed the fall of Elizabeth Holmes and ‘Sunny’ Balwani. In a gonzo twist the author becomes a player in the story he’s reporting, threatened by the same Theranos enforcers that silenced internal whistle blowers and repelled investigators. Determined investigative journalism was required to expose the big lie that federal regulators turned a blind eye to and, sometimes, were complicit with.
In this way and others Bad Blood reminds me of The Best and the Brightest. In both Holmes and Lyndon Johnson you had charismatic but vindictive leaders that purged dissenters and promoted sycophants. In both cases you had the big lie – that Theranos technology worked, that the Vietnam War was necessary and we were winning – that could not be questioned for risk of retaliation. All ‘data’ was then fabricated to align with this outcome. This information was not independently verifiable because it was a trade secret or a national security risk. Once this ‘data’ generated by motivated reasoning existed it became further unassailable proof of the rightness of the original claim. Dissenters were not just ostracized but prosecuted – for violating their NDAs at Theranos, for treason at the White House – and thus silenced.
Theranos also featured a powerful cast of government figures on its board of directors – James Mattis, Henry Kissinger, John Biden, and most of all George Schultz – that provide cover in the federal bureacracy and national media. Notably, they are all older men described as personally enthralled with the young, charismastic Holmes. From the Wall Street Journal:
“The brilliant young Stanford dropout behind the breakthrough invention was anointed ‘the next Steve Jobs or Bill Gates’ by no less than former secretary of state George Schultz”
Empire of Illusion comments that fame has become credential enough for one to be an authority on any issue. I can’t think of any other justification for having a Cold War-era Secretary of State weigh in on the merits of a medical device. We saw the same with Obama and Solyndra; because these figures are brilliant in one domain we assume they are expert in another. Medical VCs quickly honed in on Holmes’ inability and hostility to backing her claims and declined to invest. The legitimacy she couldn’t obtain from the experts she obtained from the famous and powerful, to whom we (the public) readily assigned the same expertise as the experts. There might be a short-selling strategy here: look for the company that famous people who have no idea what they’re talking about are boosting.
Holmes found a ready audience for this publicity blitz in a media that desperately wanted a female STEM success story.
“As much as she courted the attention, Elizabeth’s sudden fame wasn’t entirely her doing. Her emergence tapped into the public’s hunger to see a female entrepreneur break through in a technology world dominated by men. Women like Yahoo’s Marissa Mayer and Facebook’s Sheryl Sandberg had achieved a measure of renown in Silicon Valley, but they hadn’t created their own companies from scratch. In Elizabeth Holmes, the Valley had its first female billionaire tech founder.”
I suppose this is the other side of the coin whereby VC firms expect the next Mark Zuckerberg to look like Mark Zuckerberg. Parmenides: “The good and the true are not necessarily the same.”
One last idea I wanted to mention was how many harmful affects Non-Disclosure Agreements (NDAs) seem to have in our society today. The #MeToo movement brought to light countless monsters who protected themselves for years with NDAs and no doubt there are thousands more. NDAs Theranos to antagonize their employees and cover their lies for years. Trump’s NDAs may have safeguarded his election. So far as I can tell these contracts serve only those with secrets to hide who possess the legal power and wealth to enforce them.