3 Lessons from Bad Blood | John Carreyrou

The Thrilling Story of A Billion-Dollar Scam

Jack Yang
6 min readFeb 21, 2021
Bad Blood: Secrets and Lies in a Silicon Valley Startup


Bad Blood is a clear demonstration that real life can be even crazier than fiction writers’ wildest imagination. The non-fiction book details the rise and fall of Theranos, a multi-billion-dollar scam that promised to revolutionize health care and fooled almost everyone including big names like Henry Kissinger and George Schulz. This is one of the few books that I couldn’t stop myself from reading. The story is so breathtaking and thrilling that I was so shocked by what happened that I questioned if it is even real life. Carreyrou, the journalist that exposes the whole scam as well as the author of this book, did a fantastic job of making the story more like a thriller novel than a journal report. In addition to the brilliant story, the book also includes some insights from witnesses and Carreyrou himself. It is easy to get blown away by the plot and forget about the lessons that can be learned. In the following section, I will list some of the valuable takeaways from this epic failure.

Score: 4.75/5

Who Should Read It: anyone who wants a page-turner or is interested in a case study of failed business


1. Signs of a Potentially Troubling Company (Employees’ Side)

During my reading of the book, I’m often shocked by how amazingly bad Theranos runs as an enterprise. The company and its executives do almost the exact opposite of what I learned from leadership and organizational communication. There are a few especially noteworthy management themes that run throughout the rise and the fall of the company.

  • Lead Through Fear: Both Elizabeth and Sunny run the company by fear. Anyone who raises concerns or is simply not behaving the way they want is fired or degraded. When this happens, employees will become fearful and work like puppets of the executives, not being able to contribute truthful and meaningful work as well as point out potential problems.
  • Communication Blockage: A notable trick Elizabeth uses to manipulate the employees and investors is to block the flow of information, making her the sole channel of communication. For departments to update each other, everything has to be reported to Elizabeth to redirect the messages. This is not only highly inefficient but has the risk that the middle person can alter or withhold important information, as with the case of Elizabeth.
  • High Turnover Rate: This is another indication of a potentially bad company. On one hand, high employee turnover is usually very costly since a lot of resources have to go into recruiting and training. On the other hand, a high turnover rate could suggest there are some underlying issues within the organization. Theranos is an extreme case of high turnover rate, where it is not uncommon to see employees join and leave just within few days.
  • Deceitful Management: If the employers cannot be truthful, it is usually a red flag. Radical transparency and openness are the keys to a successful organization, without them, employees could work for the wrong cause, as the cause of Theranos. Even though Elizabeth knew clearly that the machines are not working properly, she continued to lie to partners and investors while trying to silence her employees.
  • Bad Culture: The above few points can also be summarized into a company’s culture. If something doesn’t feel right to you as an employee, it probably is. This is the intuition several Theranos employees had first joining the company, and their thoughts are eventually proved to be right. Theranos has a toxic, fearful, and dishonest culture that silent employees from voicing their opinions. It is like a ship that is steered in the wrong direction. The more momentum it gets, the more catastrophic the eventual failure becomes.

2. Signs of a Potentially Troubling Company (Investors’ Side)

In the previous section, we mention signs that employees can use to spot a troubling company. In this section, we will delve into signs to pay attention to as investors since many investors and partners lost millions with Theranos while there are some clear red flags that everyone overlooked.

  • Big Fish is Rare: If you invested in Amazon or Apple a decade ago, you should see an exponential increase in your returns. However, opportunities like these are extremely rare. More often than not, these companies are busts than bursts. Investors often look for the “next big thing” and want to believe the companies they are investing in will generate massive returns. Such is the case with Theranos investors. They wanted to believe that Theranos is going to produce revolutionary technology so much that they were willing to block out other information or think more critically about the company.
  • FOMO (Fear Of Missing Out) Is a Scary Thing: You may be surprised to find out that big pharmacy names like Walgreens partnered with Theranos. One of the key motivations is not how much they believe the technology, but is simply the fact that they see an opportunity to beat competitors like CVS. Elizabeth is so skillful at manipulating this psychology to her advantage that Walgreens executives didn’t even question the legitimacy of her technology.
  • Do Your Due Diligence: How is it possible that investors put billions of dollars into a medical company while no investor from medical background actually invested? How is it possible that a medical company could raise billions without a peer-review publication? These all seem absurd but it is the result of investors not doing their due diligence properly. It is important to do your own research on the company before investing and do not be swayed simply because other big names are investing.
  • Do Not Invest With Your Ideal: The partnership with Safeway and the appointment of George Schulz as the board of advisor are results of another fatal mistake. The Safeway CEO and Schulz both see Theranos as a way to fulfill their dreams of combining health care with technology. However, because they are invested in Theranos both financially and emotionally, it became difficult to see the red flags can present over and over again. Denying Theranos is like denying their dreams. In brief, it is important to invest with a clear mind and without sentimental value.

3. Do NOT Lead Through Your Ego

The fact that Elizabeth worships Steve Jobs is not a secret at all. From her imitation of Jobs to her rockstar-like lifestyle, Elizabeth drowned in the praises and her own personal fantasy that she became no longer grounded in reality. In order to fulfill her ego of becoming the “female Steve Jobs” or the person to revolutionize the health care industry, Elizabeth stopped listening to advice from others, over-promised to partners and investors, and entirely lived in a bubble of lies and ideals. Unfortunately, this is not uncommon among businesses. Initially, the founders start with a good intention in mind, but as the company grows, they begin to take their foot off ground and lead with their ego to become “the next big thing”. This is where confirmation bias, the tendency to only listen to what supports one’s existing belief, comes into play. They would listen to reports that things are going well and ignore suggestions for improvement or reports that contradict their beliefs. Therefore, as a leader, it is important to constantly sync with reality and embrace opposing messages. I believe the ending message in the book perfectly summarized this point.

By all account, she had a vision that she genuinely believed in and threw herself into realizing. But in her all rush of the “unicorn” boom, there came a point when she stopped listening to sound advice and began to cut corners. Her ambition was voracious and it brooked no interference. If there was collateral damage on her way to riches and fame, so be it. (John Carreyrou)

Thank you for reading my summary. If you enjoy it, feel free to check out my other book reviews at https://jackyangzzh.medium.com/