We asked John Carreyrou ’94, two-time Pulitzer Prize winner and author of Bad Blood: Secrets and Lies in a Silicon Valley Start-Up (Knopf), about his reporting career and what we can learn from the rise and fall of Elizabeth Holmes’ blood-testing company, Theranos.
Has corruption always been an interest for you?
Is this type of reporting the natural extension of “follow the money” to you? As much as All the President’s Men and the Watergate reporting was inspiring, I’ve actually never, in my career until now, reported on politics or government or have been based in Washington, D.C., except for an internship I did after Duke. I mostly reported on business. And so, my investigative journalism has been about business. Of late, I’ve been focusing on Silicon Valley, obviously with Theranos. It strikes me that the same watchdog journalism that we’ve had for decades in this country, about government, and Washington, and the presidency, we should increasingly have about Silicon Valley, because it’s become such a huge part of our economy. Some of the companies out there are the biggest and most valuable in the world. We use their products a bunch of times a day.
In the past ten years, this ecosystem has risen where the companies, the startups, are able to get enormous funding without going public. Once upon a time, the companies had to go to the public markets and raise money. They were then subject to disclosure rules: They had to put out quarterly reports and annual reports and answer analysts’ questions and be exposed to reporting or scrutiny by Wall Street and by business journalists. Silicon Valley, in its latest sort of iteration, has avoided that by these startups not going public. One thing that plays a really big role in your book is the presence of nondisclosure agreements [NDAs] for employees who get disenchanted with Theranos and leave but then can’t say anything. How has that made your job trickier as a journalist? It was a very difficult obstacle to surmount in the Theranos reporting. And, yes, I think NDAs are everywhere now. They’re not just used in Silicon Valley. I think companies—and especially ones in Silicon Valley or on Wall Street—try to use NDAs to muzzle would-be whistleblowers. That’s a terrible development that I hope doesn’t continue. I don’t know if this can express itself through new regulations. But I think the Justice Department and the FCC should send a strong signal that that sort of behavior isn’t allowed, that just because you signed an NDA, that’s not a prohibition against pointing out wrongdoing and lawbreaking. And I hope, also, that the Theranos precedent serves to weaken that trend and go against it.
Will Silicon Valley change its behavior after the Theranos debacle?
It remains to be seen whether any real lessons will be drawn from this because a lot of sophisticated investors you see in Silicon Valley are saying, “Actually, Theranos wasn’t really part of the mainstream Silicon Valley. None of us funded it.” And it’s true that she scrupulously avoided VCs, and especially VCs with experience in med tech and biotech. And a lot of people who are respected in Silicon Valley are washing their hands of Theranos, saying, “This was a complete outlier. It happened on the fringes of our ecosystem.” That makes me think that, perhaps, people aren’t taking it seriously enough as a cautionary tale. I do think that it’s the overall environment and the culture of Silicon Valley that made someone like Elizabeth Holmes possible. You know, these catchphrases that are absolutely a part of Silicon Valley culture, like, “Move fast and break things and apologize later.” “Go to market as fast possible,” whether or not you have a buggy product, because you want to capture the market share. “De-bug the product later.” “Fake it till you make it.” “Vaporware.”
These are all things that are not just part of Silicon Valley DNA; the Valley prides itself on operating this way. And if there’s any lesson about Theranos, it’s that you can’t apply that playbook to certain industries, certainly not health care and medicine. And I question whether they should be applying it to this new realm that’s all the rage, in the Valley, of self-driving cars. I’m appalled by what happened in Arizona a few months ago, when that woman got run over by an Uber-operated car that absolutely should not have been on the road. Uber is basically using Arizona as a guinea pig in its experimentation. I think that behavior, that attitude, has gone way too far. [If] people in Silicon Valley don’t draw this lesson from Theranos, then I think potentially we’re facing more such scandals in the future.
Another one of those phrases, “Make something work, no matter what,” was Holmes’ go-to. The line between self-belief and fraud can be razor-thin, isn’t it?
Right. I will totally recognize and admit that to be a successful entrepreneur you have to be a believer in your vision, because you have to be super optimistic and have faith in yourself, and you’ve got to constantly be selling people on your vision. It’s true that there’s a fine line between that. So often, being super optimistic can veer into hyping and exaggerating. And then, before you know it, potentially you crossed the line into lying. I don’t what the solution is, other than to appeal to people’s basic morality and ethics. I think most people know when they’re pushing up against a bright red line. And usually, they’ll pull back from it. In this case, she did not. She just brazenly crossed it.
Do you think this story is more of an outlier, driven by Holmes’ sort of extreme personality? Or is it something that’s more inevitable, given the Silicon Valley “fake it until you make it” culture?
On that spectrum, I see it closer to the latter because I think, in many ways, the only thing that made this a scandal is that Silicon Valley playbook and culture were applied to health care. If they had not been applied to this industry where the stakes are so much higher, I question whether Holmes wouldn’t still be operating and be celebrated to this day. I think a lot of what she did is, like I said, completely embedded in behavioral patterns in Silicon Valley.
RECOMMENDATIONS from Nathaniel Philbrick A.M. '80
During In the Hurricane's Eye: The Genius of George Washington and the Victory at Yorktown (Viking), Philbrick covers how America’s first president navigated his way to glory during the Revolutionary War. Below, the National Book Award-winner summarizes the four books you should read about George Washington—after, of course, devouring his:
Parson Weems may have invented the story of the young George Washington chopping down his father’s cherry tree, but Philip Levy gets at the more interesting and much more complicated truth in Where the Cherry Tree Grew: The Story of Ferry Farm, George Washington’s Boyhood Home. A wide-ranging examination of Washington’s coming of age in a little red farmhouse on the banks of the Rappahannock River, just across from Fredericksburg.
Kevin J. Hayes, George Washington: A Life in Books. John Adams once claimed that Washington was “too illiterate, unlearned, unread for his station and reputation.” But as Hayes amply demonstrates, what Washington lacked in formal education he more than compensated for through a lifelong program of self-improvement. Yes, he was a man of action, but he was also a compulsive reader, who enjoyed novels like Tom Jones and Tristram Shandy when he wasn’t reading about military tactics, politics, and the latest farming techniques. Who knew America’s “indispensable man” was also a bookworm?
Joseph Manca, George Washington’s Eye: Landscape, Architecture, and Design at Mount Vernon. When it comes to the Founding Fathers, Thomas Jefferson is usually touted as the architectural genius. As Manca proves in this lushly illustrated book, Washington also had a passionate interest in architecture and design. Required reading if you are contemplating a trip to Mount Vernon.
Peter R. Henriques, Realistic Visionary: A Portrait of George Washington. In a single, relatively slim volume, Henriques provides a remarkably insightful examination of Washington’s multifaceted personality. His account of Washington on his deathbed is a tour de force. “Washington’s stoicism, strengthened by a belief in a benign and irresistible Providence,” Henriques writes, “empowered him with a calmness and courage in the face of danger that was awe-inspiring to his contemporaries.” Proving that character is indeed destiny, Washington died while taking his own pulse.
By Duke alumni & faculty
Tiber: Eternal River of Rome (ForeEdge Press) Bruce Ware Allen ’80
Understanding the Mexican Economy: A Social, Cultural, and Political Overview (Emerald Publishing) Roy Boyd Ph.D. ’81, Maria Eugenia Ibarrarán, and Roberto Vélez-Grajales
HELP! The Beatles, Duke Ellington, and the Magic of Collaboration (W.W. Norton and Company) Thomas Brothers, professor of music
The Cash Ceiling: Why Only the Rich Run for Office—and What We Can Do About It (Princeton University Press) Nicholas Carnes, Creed C. Black associate professor of public policy and political science
The Snow Leopard Project: And Other Adventures in Warzone Conservation (Hachette Book Group) Alex Dehgan ’91, Chanler Innovator in Residence at Duke Innovation & Entrepreneurship
Places I Stopped on the Way Home: A Memoir of Chaos and Grace (Icon Books) Meg Fee M.P.P. ’19
The Bloated Belly Whisperer (St. Martin’s Press) Tamara Duker Freuman ’97
Unlearning Eugenics: Sexuality, Reproduction, and Disability in Post-Nazi Europe (University of Wisconsin Press) Dagmar Herzog ’83
The Hubley Case (Moonshine Cove Publishing) Justin Lee ’06
Womanish: A Grown Black Woman Speaks on Love and Life (Ig Publshing) Kim McLarin ’86
This Is the Way the World Ends (Thomas Dunne Books) Jeff Nesbit ’79