My intent is to complete our re-read of Bad Blood, Secrets and Lies in a Silicon Valley Startup in three more weeks.  The book has 24 chapters and an epilogue, therefore there will be two more weeks on the book and then a wrap-up.  We will re-read The Tipping Point by Malcolm Gladwell next. This week we tackle three more chapters in which we learn money is thicker than blood (something I learned working in a department store during college), and that people with a moral basis for ethics always have a breaking point (something I have only had to tangentially face).

Chapter – 16 The Grandson

This chapter is the story of Tyler Shultz.  Tyler Schultz is the grandson of George Schultz described when Googled as an “American economist, elder statesman, and businessman.” George Schultz had severed in the cabinets of three Republican presidents and was an investor and on the board of Theranos. Tyler met Elizabeth at his grandfather’s house. Tyler was mesmerized by Elizabeth’s vision and after an internship joined the firm to save the world.  Tyler along with a colleague immediately started to see through the glamour when he saw the lack of sophistication of the Edison. It began to dawn on him that the quality results were misleading. When Tyler went to his grandfather with his suspicions and information that there was fudging on proficiency testing, we find that the elder Schultz believed Elizabeth and Sunny. Tyler was compromised and therefore had to quit.  Erika, the colleague who began work with Tyler in assay validation, also quit soon after. Each was NDA’ed and threatened into silence. I am amazed at how both the HR and legal professions have become complicit to hiding improprieties and potentially illegal acts. #Metoo makes it hard to think of the Theranos story as an outlier. The money is thicker than blood (and the mirror image) punchline of this chapter reminds me why it is generally important to keep workplace relationships at arm’s length to avoid the drama seen in this chapter.

Chapter 17 – Fame

Back to Richard and Joe Fuisz.  The scene opens with the Richard and Joe meeting with Therenos’ killer lawyers to negotiate their surrender.  By this point in the story, the Fuiszs are representing themselves to save cash (we are back to the old saying that deep pockets trump being right).  In a meeting with Bois, the lead lawyer for Theranos, they utterly capitulated by rescinding rights to their patent in favor of Theranos.

The publication of the settlement opens the floodgate of positive exposure for Elizabeth (hence the title of the chapter) and Theranos. The exposure that allows Elizabeth to repeat and build on all of the problematic and loose statements seen in earlier chapters. A posthumous observation is the while the settlement and the attention it garnered might seem to be wonderful, it, in reality, is the beginning of the end. As most good leaders know, doubling down on falsehoods often attracts the wrong kind of attention. For example, I once watched a senior program manager, repeat exaggerations he had during made a team meeting about a project to department meeting (which filled a large auditorium in downtown Cleveland).  The exaggerations were exposed much to the person’s embarrassment in the Q&A session — they left the company soon after.

Chapter 18 – The Hippocratic Oath

In chapter 18 Alan Beam, Theranos’s laboratory director, reenters the story in a major way.  As we get to chapter 18 several people either on his staff or directly in his hierarchy have quit because they were having ethical problems over the statements that Elizabeth was making in the press. Alan is extremely worried that his laboratory credentials are at risk and that he might be sued for malpractice given Elizabeth statements of capabilities for the Theranos blood tests.  Mr. Beam contacts a firm that represents corporate whistleblowers as he begins to consider how he can exit.

Near the end of the chapter, Alan has resigned and Theranos has forced him to delete (and prove he has deleted) any emails from his personal account related to the problems at Theranos. Theranos’s legal team forces the issue and hides everything under a confidentiality agreement.

As the chapter ends Beam connects with Fuisz partially to commiserate and partly share information — misery loves company,  Fuisz is still vindictive and has a connection with an influential blogger who begins an investigation. What the blogger uncovers is enough to start him looking for an investigative reporter at the Wall Street Journal.

All of the problems and all of the lies are starting to come home to roost at this point.

Remember to buy a copy 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).

Previous Entries:
Week 1 – Approach and Introduction –
Week 2 — A Purposeful Life and Gluebot –
Week 3 — Apple Envy, Goodbye East Paly and Childhood Neighbors –
Week 4 — A Reflection –
Week 5 — Sunny –
Week 6 – The miniLab –
Week 7 – Wellness Play –
Week 8 – Who is LTC Shoemaker –
Week 9 – Lightning a Fuisz and Ian Gibbons –
Week 10 – Chiat\Day, Going Live and Unicorn –