We are back with Chapter 8 of Bad Blood, Secrets and Lies in a Silicon Valley Startup by John Carreyrou (published by Alfred A. Knopf, 2018 – Buy a copy and read along!). Chapter 8, titled The miniLab, focuses on overpromising and continues to layer on toxicity to the Theranos story.

The chapter begins with the reiteration of Theranos signing the Walgreens and Safeway accounts as retail partners. These are big deals to a start-up like Theranos.  The downside is that both signed based on a set of over-promises. As many of us in the software development world know, over-promising is not as rare as we would like and occurs for many reasons.  One of the most prevalent reasons is a form of extreme optimism in which engineers believe any problem is solvable. Agile attempts to mute this problem by delivering functionality on a short-term cadence. In Theranos’ case there is no mechanism to check overoptimism; therefore, Holmes and Sunny will feel like they can overpromise because they do not recognize that there are problems that won’t magically go away>

The chapter uses the story of two new engineers that Holmes hires to deliver on the over-promise as a plot device to move the book along. To meet the contractual requirements, a new machine will have to built that includes not only the same tools as the Edison (the original Theranos device), but also three more laboratory instruments.  All of the instruments would need to fit in a small container to meet Holmes’s vision. Greg (lead on the miniLab) and Kent, the two new hires, have the capabilities to deliver on paper but are inexperienced. Because they were leading the charge on the “miniLab,” Kent and Greg became Holmes’s pets.

One of the early problems is, despite Greg’s strong suggestion, for Theranos to build a prototype in order to determine how to solve the problem in the least complex way before shrinking the instruments to fit into the footprint required. Elizabeth won’t budge pushing an all or nothing approach for both functionality and form factor (small size). Greg felt that that was putting the cart before the horse. Agile practices like prototyping and/or developing an MVP attempt to break the all or nothing approach. The lack of using a prototype to validate the approach began to sour Greg’s attitude toward Theranos.

Later in the chapter, Greg found that Elizabeth and Sunny were in a romantic relationship and that they were being careful with that knowledge (I am being nice). Greg felt that it was wrong for the CEO and the second in command to be sleeping together.  The author suggests that this put the whole idea of the company that Holmes had sold in a different light for Greg. The lying about the relationship leads Greg to ask what else Holmes is lying about. The agile principle of transparency was not practiced at Theranos; Greg’s perception of Theranos soured even more. Everything described by Carreyrou describes a toxic culture at Theranos. Toxic cultures kill change and drive change agents out of the company. This is a common problem that can set in quickly even at the best companies when organizations hide problems.

There are several other toxic issues highlighted in the chapter.  The first is nepotism. Elizabeth hires her unqualified younger brother who in turn hired his frat brothers, all equally unqualified but viewed as more trustworthy by Holmes than the increasingly disillusioned original staff. By this point in the Theranos adventure, trust between engineering and Holmes (and vice versa) was trashed. Trust is important but there needs a relationship between trust and capability.

Another cultural problem occurs when Holmes goes into full hero worship mode when Steve Jobs dies. Holmes emulated many of the practices in Jobs‘ biography.  The behaviors that made Jobs special did not fit Holmes’s nature or the context that Theranos existed within. There are no best practices, just good ideas that work in specific contexts.

A third issue occurs when Greg’s sister receives an offer from Theranos but refuses the offer.  Holmes and Sunny hold Greg responsible and begin to shun him for lack of loyalty because his sister did not take the offer.  In Theranos, loyalty is the only currency to keep Holmes off your back.

The litany of the incidents in Chapter 7 continues when Kent announces that he has patented a bicycle lighting product and is running a Kickstarter to fund his side gig.  Holmes perceives this as disloyalty and tries to wrestle the patent from Kent even though there is no competitive reason for the reaction. The incident drives Kent from the company which further sours Greg’s relationship with the company.

The chapter ends with Greg leaving Theranos.  The engineers that join Theranos to put together the miniLab are gone and the revolving door that is Theranos lurches forward.

Most if not all of the problems in Chapter 7 are communications problems of one fashion or another.  For example, over-promising is a form of communication problem which spirals into even more toxic problems when the need to cover the problem up kicks-in along with the need to fix the problem.  Hiding and siloing information create even more issues. Teams work best when communication when they have access to a free flow of information and the trust that shared information generates.

Previous Installments:

Week 1 – Approach and Introduction – https://bit.ly/2J1pY2t   

Week 2 — A Purposeful Life and Gluebot – https://bit.ly/2RZANGh

Week 3 — Apple Envy, Goodbye East Paly and Childhood Neighbors – https://bit.ly/2zbOTeO

Week 4 — A Reflection – https://bit.ly/2RA6AfT

Week 5 — Sunny – https://bit.ly/2AZ5tRq