systems designed to ensure that clinical lab results are accurate. Normally, labs must be certified under the Clinical Laboratory Improvement Amendments (CLIA)—a process overseen by the federal Centers for Medicare and Medicaid Services (CMS)—and the machines they use must be approved by the Food and Drug Administration. But Theranos argued that its technology fell into an obscure category called “laboratory-developed tests” that neither agency closely regulated. The company did obtain CLIA certification for its Palo Alto lab, but it didn’t show inspectors its proprietary equipment, only the room full of commercial analyzers. Until Tyler Shultz blew the whistle, no one outside the company knew that its entire far-flung testing business was being operated under the cover of that single certificate.
That’s just one of the shockers Carreyrou unearthed. A full accounting of the governance failures and regulatory loopholes that cleared the way for the Theranos hoax will take years, but Bad Blood makes an excellent start.
Inevitably, readers won’t share Carreyrou’s circumspection. Why did she do it? My own sense is that Holmes is a kind of female Tom Ripley: a fantasist so accomplished that she convinced even herself that all the corner-cutting was for a righteous cause. But just as critically, she accumulated power in a way that allowed her to keep outsiders from seeing the whole picture and to swat away anyone who challenged her. When Avie Tevanian, an early board member who’d been Steve Jobs’s right-hand man at Apple, went to Lucas with his qualms about Holmes’s management in 2007, he was told to resign.
Over time, most skeptics or critics were forced out of Theranos. There’s a precept in high-reliability “Lean Six Sigma” manufacturing that even the lowliest assembly line worker, if they spot a defect, is empowered to pull the “Stop” cord and shut down the whole line. Theranos took the opposite approach. Asking questions was the quickest way to get fired.