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WSJ’s John Carreyrou says Theranos is a ‘cautionary tale’ for the health-tech industry

The too-good-to-be-true company’s CEO, Elizabeth Holmes, was obsessed with Apple co-founder Steve Jobs.

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Theranos CEO Elizabeth Holmes on the cover of Forbes magazine Forbes

In October 2015, Wall Street Journal investigative reporter John Carreyrou published his first article about health-tech startup Theranos, which had raised hundreds of millions of dollars toward developing a revolutionary new form of blood testing. Two and a half years later, the company is on the verge of shutting down and CEO Elizabeth Holmes has been charged with fraud by the SEC.

How did everything go so wrong?

In Carreyrou’s new book, “Bad Blood: Secrets and Lies in a Silicon Valley Startup,” he explains how Holmes sought to become the first female billionaire tech founder — by any means necessary. She was “obsessed” with Apple co-founder Steve Jobs and at one point called her company “the iPod of health care.”

“She was taken in by the razzle-dazzle of the computer industry and the internet industry,” Carreyrou said on the latest episode of Recode Decode, hosted by Kara Swisher. “And also, she was taken with the money. The valuations that some of these companies reach — Mark Zuckerberg was coming up around the same time that she was, and I think she was very aware of his rise. And I think she wanted to replicate it.”

But when Theranos released its blood-testing machines in Walgreens stores in 2013 — a feat that helped it raise $650 million from investors like Rupert Murdoch, Carlos Slim and the Walton family — it crossed a line. The machines did not work as advertised, and were diluting patients’ blood in a way that could produce inaccurate results.

“She had to have been aware that going live with blood tests that she hadn’t validated, that were not really reproducible according to the company’s own data, she had to know that they were putting patients in harm’s way,” Carreyrou said. “And that’s just beyond the pale and hard to get your mind around.”

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On the new podcast, Carreyrou also talked about the implications of Holmes’s rise and fall for Silicon Valley at large. There are many legitimate companies in the region working on the convergence of health care and technology, but it’s dangerous to force these companies into the same box as a computer firm like Apple.

“I think the Theranos story is a cautionary tale about how not to go about it, and how not to model yourself too much after the computer industry,” he said. “I’d like to think this was an outlier, that this was a lot of bad things that were extreme that aren’t going to be common going forward in Silicon Valley.”

“But in other ways, it was also representative of a certain hubris and arrogance, because she and her boyfriend Sunny [ex-Theranos president Sunny Balwani] didn’t even make the effort to understand what was going on in this field of blood diagnostics, and what other companies were working on,” Carreyrou added. “At the same time they were committing fraud, they also had convinced themselves that their malfunctioning prototype was the greatest thing that humanity had ever worked on.”

Carreyrou expects to write another “Silicon Valley saga” in the future, but first he has to figure out if he’s going to be in the movie adaptation of “Bad Blood,” which is already in the works. Adam McKay will direct, “The Shape of Water” co-writer Vanessa Taylor will pen the screenplay and Jennifer Lawrence is attached to star as Elizabeth Holmes — but who should play Carreyrou?

“I think the guy who plays Thor would be the right choice,” he said. “The diameter of our biceps is, uh, similar.”

If you like this show, you should also sample our other podcasts:

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