Carreyrou Captivates Lab Institute With Inside Look at Theranos Fall

The tale could be headed to movie theaters around the nation soon. It is a gripping story of a Steve Jobs-wannabe—a young Stanford dropout with a vision and more than $400 million in funding from Silicon Valley’s biggest venture capitalists and notable wealthy backers from every corner of the nation. Her company reached a $9 billion valuation and her face graced the cover of Forbes. She became the talk not just of Silicon Valley, but of the laboratory industry with her vision of a full menu of rapid tests able to be performed from a single drop of blood.

And then the bubble burst. John Carreyrou, a Pulitzer prize-winning journalist at the Wall Street Journal, exposed the unicorn company, Theranos, for the fraud it was. The company’s hyped technology didn’t work. Millions of patient tests had to be voided.

Just two weeks after the publications of Carreyrou’s book, Bad Blood: Secrets and Lies in a Silicon Valley Startup, Theranos’ CEO and Silicon Valley darling Elizabeth Holmes was indicted by the U.S. Department of Justice on nine counts of wire fraud and two counts of conspiracy to commit wire fraud.

Carreyrou regaled attendees at G2 Intelligence’s 36th annual Lab Institute (Oct. 24-26; Washington, D.C.) with a riveting insider’s look at the meteoric rise and shocking collapse of Theranos.

How could Holmes rise so quickly to stardom? Carreyrou says that it was possible because of the Silicon Valley culture of “faking it until you make it.” Holmes felt entitled to do the same as her idol Steve Jobs, her investor Larry Ellison, and countless others. It is a culture where hype and overpromise win funding and it is okay to go to market with a buggy product, as long as you get to market quickly.

However, Carreyrou warns, the takeaway is that the Silicon Valley playbook is “ill-suited” to health care.

“Iterating and debugging once you are already commercial may be okay in the world of computer hardware and software, but that way doesn’t transfer well to medicine,” Carreyrou told G2 Intelligence in an interview. “Increasingly medical technology and the traditional Silicon Valley are going to converge. It is inevitable that convergence will accelerate and the people involved in that convergence need to adjust their behavior for anything that touches medicine, where ultimately the product affects people’s lives.

At the conference, Carreyrou was presented with the 2018 Kellison Distinguished Service Award. (Pictured above is Carreyrou signing copies of Bad Blood: Secrets and Lies in a Silicon Valley Startup at the Lab Institute conference).