Bad Blood: Secrets and Lies in a Silicon Valley Startup by John Carreyrou

Author:John Carreyrou [Carreyrou, John]
Language: eng
Format: epub, pdf
Publisher: Pan Macmillan
Published: 2018-05-30T16:00:00+00:00

MIKE BARSANTI WAS vacationing in Lake Tahoe when he received a call on his cell phone from Donald A. Lucas, the son of legendary venture capitalist Donald L. Lucas. Mike and Don had gone to college together in the early 1980s at Santa Clara University and had remained friendly ever since. Mike was the retired chief financial officer of a Bay Area seafood and poultry business that his family had operated for more than six decades before selling it the previous year.

Don was calling to pitch Mike on an investment: Theranos. That came as a surprise to Mike. He had last heard of the startup seven years earlier when he and Don had attended a twenty-minute presentation Elizabeth gave on Sand Hill Road showcasing her little blood-testing machine. Mike remembered Elizabeth very well: she’d come off as a dowdy young scientist back then, wearing Coke-bottle glasses and no makeup, speaking nervously to an audience of men two to three times her age. At the time, Don ran RWI Ventures, a firm he’d founded in the mid-1990s after spending ten years learning the ropes of the venture capital business working for his father. Mike had been an investor in RWI. His curiosity piqued by the awkward but obviously smart young woman, he’d asked Don why the firm wasn’t taking a flyer on her like his father had. Don had replied that after careful consideration he’d decided against it. Elizabeth was all over the place, she wasn’t focused, his father couldn’t control her even though he chaired her board, and Don didn’t like or trust her, Mike recalled his friend telling him.

“Don, what’s changed?” Mike now asked.

Don explained excitedly that Theranos had come a long way since then. The company was about to announce the launch of its innovative finger-stick tests in one of the country’s largest retail chains. And that wasn’t all, he said. The Theranos devices were also being used by the U.S. military.

“Did you know they’re in the back of Humvees in Iraq?” he asked Mike.

Mike wasn’t sure he’d heard right. “What?” he blurted out.

“Yeah, I saw them stacked up at Theranos’s headquarters after they came back.”

If all this was true, these were impressive developments, Mike thought.

Don had launched a new firm in 2009 called the Lucas Venture Group. In recognition of her longstanding relationship with his aging father, who was addled by the onset of Alzheimer’s disease, Elizabeth was giving him the chance to invest in the company at a discount to the price other investors were going to be offered in a big forthcoming fund-raising round. Intent on seizing what he saw as a great opportunity, the Lucas Venture Group was raising money for two new funds, Don told Mike. One of them was a traditional venture fund that would invest in several companies, including Theranos. The second would be exclusively devoted to Theranos. Did Mike want in? If so, time was short. The transaction had to close by the end of September.

A few weeks later, on

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