Bad Blood: Secrets and Lies in a Silicon Valley Startup
I was a technology banker in the heady days of Dotcom 1.0. I attended the H&Q Technology Conference at the tony Sun Valley ski resort in 1999. I was a lowly Associate, and our bank (Chase) had just closed on its shiny new purchase of the technology investment bank H&Q, a sure sign of a market top! What I noticed there was hubris; young people walking around with a superior attitude that replaced experience. I indeed recognize that a little bit of chutzpah is necessary to challenge incumbents, but this was next level. It truly was an alternate universe. Fast forward 20 years to 2009 when Theranos began, and its founder was a Stanford dropout/wunderkind Elizabeth Holmes. The main difference of overpromising, in this case, was Theranos was operating in a highly regulated business. Despite being a libertarian, I accept the fundamental premise that medical devices are highly regulated because people's lives depend upon accuracy. Further, consumers are not in a position to educate themselves sufficiently to make an informed decision absent government regulation. So when this company is making decisions that negatively impact their customers, even potentially hurt them, a red (Blood?) line has been crossed. She not only hurt patients (inexcusable), but also hurt employees, whistleblowers, and sophisticated investors having raised (and lost) over $1bn! It is a cautionary tale and one every startup investor should read! Her fate hasn't yet been determined, but the movie is already in the making!