One of the great corporate frauds of the 21st century, the Theranos blood-test scam, is brought to light in the award-winning bestseller Bad Blood: Secrets and Lies in a Silicon Valley Startup, published in 2018 and updated in 2020. Author John Carreyrou, a Pulitzer Prize-winning reporter and bureau chief at The Wall Street Journal, brings his years of experience to the case against tech startup Theranos and its spellbinding CEO, Elizabeth Holmes. The Vintage Books Edition (2020) is the basis for this guide.

Descended from a famous family, Elizabeth Holmes entered Stanford University surrounded by high expectations. As a first-year student of chemical engineering, Elizabeth worked out the basic theory of a blood-assay skin patch that would subject a few drops of blood to test for diseases, a technology that might revolutionize healthcare. In 2003, Elizabeth dropped out of her sophomore year and formed a company to produce a desktop machine that would assay tiny blood samples with dozens of tests and report them quickly to doctors.

Elizabeth captivated everyone she met, eventually rounding up millions in venture capital and hiring engineers and lab technicians to develop her device, which she dubbed the Edison. Her new company, Theranos—a mashup of “therapy” and “diagnosis”—was headquartered in Palo Alto, California at the center of Silicon Valley's startup culture. However, from the beginning, problems cropped up with the machines. Undaunted, Elizabeth forged ahead and contacted pharmaceutical companies, the Walgreens drugstore chain, and Safeway supermarkets, proposing that each install clinics within their stores that featured Theranos blood-test devices. Patients would give a few drops of blood from a finger prick instead of a vial of blood from a vein. Both companies signed on.

Problems persisted with the blood readers, but Elizabeth responded impatiently, berating or firing those employees who warned of trouble. She also started a relationship with a shadowy dot-com millionaire, Sunny Balwani, whom she installed as her second-in-command. The Edison machines at regional test centers proved balky, and Theranos quietly adopted a policy of shipping blood samples back to its lab for testing on conventional assay machines. Elizabeth announced plans for a new device, the miniLab, touting it as capable of performing up to 200 assays per blood draw. She continued to recruit new investors, and in 2014 her company was valued at $9 billion.

Theranos’ board of directors included such luminaries as Henry Kissinger, Sam Nunn, and former Secretary of State George Shultz. Shultz’s grandson, Tyler, a recent Stanford graduate with a degree in biology, took a job at Theranos. Inspired by Elizabeth’s vision, Tyler expected great things but quickly discovered incompetence and cover-ups at the company’s labs. Worse, he learned that the blood assays generated dangerously inaccurate results that could lead to life-threatening complications for patients. Tyler tried to warn Elizabeth, but she was deaf to him, and he resigned. Immediately he found himself threatened with lawsuits unless he returned all work documents and named others who were disgruntled. He also discovered that he was being followed. Several other ex-employees found themselves in similar straits. One Theranos scientist, faced with covering up fraudulent lab practices, committed suicide.

Reporter Carreyrou received a tip that things at Theranos weren’t as rosy as the company had led the media to believe. Carreyrou investigated the matter, contacting Tyler and others from Theranos. Accompanied by a doctor, he also tried out blood readers at an Arizona Walgreens; they each got inaccurate results. Renowned attorney David Boies, Theranos’ litigator, learned of Carreyrou’s investigation and threatened him and the Journal with a lawsuit if they published their findings, but they held firm. The exposé was published and caused a sensation. Government agencies launched thorough inspections of the company; they validated the Journal's findings and banned the company from further blood testing. Investors and patients filed lawsuits; Walgreens and Safeway quit their collaborations with Theranos and took the firm to court. Elizabeth and Sunny were charged with criminal fraud, and their high-flying company collapsed. Nearly a billion dollars of investor money was lost.