5 Lessons From Bad Blood: A Billion Dollar Fraud

After finally finishing the 12-part podcast series on the infamous Elizabeth Holmes and her company Theranos, I have to say, the scale at which this deception ran was mind-boggling. Journalist John Carreyrou who broke the story originally and wrote the seminal book on the matter, produced Bad Blood: The Final Chapter, while Elizabeth was on trial for 11 counts of wire fraud in the US late in 2021.  

For a company started by a 19 year old so-called genius in 2003, raising nearly a billion dollars along the way and gaining worldwide attention for technology that would change everything, it was a fascinating story to hear unravel. There’s every element of a Hollywood blockbuster over the nearly two decades of Elizabeth’s journey with Theranos, and it was no surprise to see that Disney+ have released a big budget mini-series based on Elizabeth’s life this year (The Drop Out).

If you haven’t heard of this whole saga, it’s about a once paper billionaire's promise to perform hundreds of tests off a drop of blood, using a non-invasive and portable machine. An innovation, that if pulled off, would change healthcare globally. 

Unfortunately, it never worked.

But Elizabeth put on a great show to wealthy investors, high profile advisers and even got her equipment rolled out in a major US store. She played the role of her life for the best part of her 20s and 30s, but eventually the music stopped.

I’d highly recommend reading John’s book Bad Blood, and tuning into Bad Blood: The Final Chapter, which inspired these lessons I detail below.

Lesson #1 - Blind loyalty is a dangerous thing 

Many people in Elizabeth’s life were blindly loyal to her and remained wilfully ignorant to her actions along the two decade journey she took them on. Throughout history, many people have gotten into strife along their journey by letting loyalty blind them from the truth. But I think true loyalty means paying attention and asking the hard questions. 

If you are truly loyal to an organisation or person, and want them to succeed, you need to get comfortable with being uncomfortable.

If they’re worth your loyalty, they’ll work to address your concerns and make amends for their mistakes.

Lesson #2 - You can’t always fake it till you make it

As the old adage says, sometimes things are really too good to be true. The world desperately wanted to believe in Theranos’ revolutionary technology, as it would have profound impacts for our health care system, including matters, like the treatment of wounded soldiers on deployment, and the speed in which we can treat individuals in third world countries with reduced access to healthcare services and equipment.

Silicon Valley encourages people to fake it till you make it. Heck, they actively encourage it by throwing billions of dollars towards startups with nothing more than an idea.

Some of the biggest US listed tech companies, are yet to make a profit, and are arguably still trying to “make it”. Sometimes this works, but other times it ends up with people creating fictional technology and giving patients incorrect diagnoses.

Lesson #3 - Beware of investor affinity risks

A high-profile board and investor base doesn’t mean anything if they don’t ask the right questions.

Make sure you’re not investing in something, just because “that’s what all the smart people are doing”. 

The industry loves to play on your emotions (especially greed) by telling you this is a once in a lifetime investment opportunity that you’d be stupid to ignore. But keep your wits about you, do your own research and never put in more than you’re prepared to lose (especially with biotech companies).

Lesson #4 - Claims shouldn’t be taken on face value, no matter who delivers them

Just because an expert economist (who just so happens to have won a Nobel prize) goes on TV and tells the world the market is going to crash this year, doesn’t mean it’s going to happen. Similarly, a university drop out going onto create ground breaking biotechnology products, might make a great story, but won’t always be true. 

Investigate the claims people make, what they’re basing them on and what do they stand to gain by making them. 

There’s a lot of truth to the saying follow the money, and I’d like to broaden that by saying follow the incentives. Even wealthy and powerful individuals have been shown to make false claims, statements and assumptions, so it’s always worth taking these things with a grain of salt.

Lesson #5 - It doesn’t have to start with fraud to end with fraud

There’s been some debate as to whether Elizabeth intentionally set out to defraud the public and her investors of nearly a billion dollars. Given that she started this company with no fanfare in 2003, I believe it’s possible that she originally went into business with bright ideals and hopes of changing the world. But that’s not how everything unfolded. An individual or company doesn’t have to start with fraudulent intentions to end with fraudulent results.