July 2018

Carreyrou, John. Bad Blood. New York: Alfred A. Knopf, 2018. ISBN 978-1-9848-3363-1.
The drawing of blood for laboratory tests is one of my least favourite parts of a routine visit to the doctor's office. Now, I have no fear of needles and hardly notice the stick, but frequently the doctor's assistant who draws the blood (whom I've nicknamed Vampira) has difficulty finding the vein to get a good flow and has to try several times. On one occasion she made an internal puncture which resulted in a huge, ugly bruise that looked like I'd slammed a car door on my arm. I wondered why they need so much blood, and why draw it into so many different containers? (Eventually, I researched this, having been intrigued by the issue during the O. J. Simpson trial; if you're curious, here is the information.) Then, after the blood is drawn, it has to be sent off to the laboratory, which sends back the results days later. If something pops up in the test results, you have to go back for a second visit with the doctor to discuss it.

Wouldn't it be great if they could just stick a fingertip and draw a drop or two of blood, as is done by diabetics to test blood sugar, then run all the tests on it? Further, imagine if, after taking the drop of blood, it could be put into a desktop machine right in the doctor's office which would, in a matter of minutes, produce test results you could discuss immediately with the doctor. And if such a technology existed and followed the history of decline in price with increase in volume which has characterised other high technology products since the 1970s, it might be possible to deploy the machines into the homes of patients being treated with medications so their effects could be monitored and relayed directly to their physicians in case an anomaly was detected. It wouldn't quite be a Star Trek medical tricorder, but it would be one step closer. With the cost of medical care rising steeply, automating diagnostic blood tests and bringing them to the mass market seemed an excellent candidate as the “next big thing” for Silicon Valley to revolutionise.

This was the vision that came to 19 year old Elizabeth Holmes after completing a summer internship at the Genome Institute of Singapore after her freshman year as a chemical engineering major at Stanford. Holmes had decided on a career in entrepreneurship from an early age and, after her first semester told her father, “No, Dad, I'm, not interested in getting a Ph.D. I want to make money.” And Stanford, in the heart of Silicon Valley, was surrounded by companies started by professors and graduates who had turned inventions into vast fortunes. With only one year of college behind her, she was sure she'd found her opportunity. She showed the patent application she'd drafted for an arm patch that would diagnose medical conditions to Channing Robertson, professor of chemical engineering at Stanford, and Shaunak Roy, the Ph.D. student in whose lab she had worked as an assistant during her freshman year. Robertson was enthusiastic, and when Holmes said she intended to leave Stanford and start a company to commercialise the idea, he encouraged her. When the company was incorporated in 2004, Roy, then a newly-minted Ph.D., became its first employee and Robertson joined the board.

From the outset, the company was funded by other people's money. Holmes persuaded a family friend, Tim Draper, a second-generation venture capitalist who had backed, among other companies, Hotmail, to invest US$ 1 million in first round funding. Draper was soon joined by Victor Palmieri, a corporate turnaround artist and friend of Holmes' father. The company was named Theranos, from “therapy” and “diagnosis”. Elizabeth, unlike this scribbler, had a lifelong aversion to needles, and the invention she described in the business plan pitched to investors was informed by this. A skin patch would draw tiny quantities of blood without pain by means of “micro-needles”, the blood would be analysed by micro-miniaturised sensors in the patch and, if needed, medication could be injected. A wireless data link would send results to the doctor.

This concept, and Elizabeth's enthusiasm and high-energy pitch allowed her to recruit additional investors, raising almost US$ 6 million in 2004. But there were some who failed to be persuaded: MedVentures Associates, a firm that specialised in medical technology, turned her down after discovering she had no answers for the technical questions raised in a meeting with the partners, who had in-depth experience with diagnostic technology. This would be a harbinger of the company's fund-raising in the future: in its entire history, not a single venture fund or investor with experience in medical or diagnostic technology would put money into the company.

Shaunak Roy, who, unlike Holmes, actually knew something about chemistry, quickly realised that Elizabeth's concept, while appealing to the uninformed, was science fiction, not science, and no amount of arm-waving about nanotechnology, microfluidics, or laboratories on a chip would suffice to build something which was far beyond the state of the art. This led to a “de-scoping” of the company's ambition—the first of many which would happen over succeeding years. Instead of Elizabeth's magical patch, a small quantity of blood would be drawn from a finger stick and placed into a cartridge around the size of a credit card. The disposable cartridge would then be placed into a desktop “reader” machine, which would, using the blood and reagents stored in the cartridge, perform a series of analyses and report the results. This was originally called Theranos 1.0, but after a series of painful redesigns, was dubbed the “Edison”. This was the prototype Theranos ultimately showed to potential customers and prospective investors.

This was a far cry from the original ambitious concept. The hundreds of laboratory tests doctors can order are divided into four major categories: immunoassays, general chemistry, hæmatology, and DNA amplification. In immunoassay tests, blood plasma is exposed to an antibody that detects the presence of a substance in the plasma. The antibody contains a marker which can be detected by its effect on light passed through the sample. Immunoassays are used in a number of common blood tests, such the 25(OH)D assay used to test for vitamin D deficiency, but cannot perform other frequently ordered tests such as blood sugar and red and white blood cell counts. Edison could only perform what is called “chemiluminescent immunoassays”, and thus could only perform a fraction of the tests regularly ordered. The rationale for installing an Edison in the doctor's office was dramatically reduced if it could only do some tests but still required a venous blood draw be sent off to the laboratory for the balance.

This didn't deter Elizabeth, who combined her formidable salesmanship with arm-waving about the capabilities of the company's products. She was working on a deal to sell four hundred Edisons to the Mexican government to cope with an outbreak of swine flu, which would generate immediate revenue. Money was much on the minds of Theranos' senior management. By the end of 2009, the company had burned through the US$ 47 million raised in its first three rounds of funding and, without a viable product or prospects for sales, would have difficulty keeping the lights on.

But the real bonanza loomed on the horizon in 2010. Drugstore giant Walgreens was interested in expanding their retail business into the “wellness market”: providing in-store health services to their mass market clientèle. Theranos pitched them on offering in-store blood testing. Doctors could send their patients to the local Walgreens to have their blood tested from a simple finger stick and eliminate the need to draw blood in the office or deal with laboratories. With more than 8,000 locations in the U.S., if each were to be equipped with one Edison, the revenue to Theranos (including the single-use testing cartridges) would put them on the map as another Silicon Valley disruptor that went from zero to hundreds of millions in revenue overnight. But here, as well, the Elizabeth effect was in evidence. Of the 192 tests she told Walgreens Theranos could perform, fewer than half were immunoassays the Edisons could run. The rest could be done only on conventional laboratory equipment, and certainly not on a while-you-wait basis.

Walgreens wasn't the only potential saviour on the horizon. Grocery godzilla Safeway, struggling with sales and earnings which seemed to have reached a peak, saw in-store blood testing with Theranos machines as a high-margin profit centre. They loaned Theranos US$ 30 million and began to plan for installation of blood testing clinics in their stores.

But there was a problem, and as the months wore on, this became increasingly apparent to people at both Walgreens and Safeway, although dismissed by those in senior management under the spell of Elizabeth's reality distortion field. Deadlines were missed. Simple requests, such as A/B comparison tests run on the Theranos hardware and at conventional labs were first refused, then postponed, then run but results not disclosed. The list of tests which could be run, how blood for them would be drawn, and how they would be processed seemed to dissolve into fog whenever specific requests were made for this information, which was essential for planning the in-store clinics.

There was, indeed, a problem, and it was pretty severe, especially for a start-up which had burned through US$ 50 million and sold nothing. The product didn't work. Not only could the Edison only run a fraction of the tests its prospective customers had been led by Theranos to believe it could, for those it did run the results were wildly unreliable. The small quantity of blood used in the test introduced random errors due to dilution of the sample; the small tubes in the cartridge were prone to clogging; and capillary blood collected from a finger stick was prone to errors due to “hemolysis”, the rupture of red blood cells, which is minimal in a venous blood draw but so prevalent in finger stick blood it could lead to some tests producing values which indicated the patient was dead.

Meanwhile, people who came to work at Theranos quickly became aware that it was not a normal company, even by the eccentric standards of Silicon Valley. There was an obsession with security, with doors opened by badge readers; logging of employee movement; information restricted to narrow silos prohibiting collaboration between, say, engineering and marketing which is the norm in technological start-ups; monitoring of employee Internet access, E-mail, and social media presence; a security detail of menacing-looking people in black suits and earpieces (which eventually reached a total of twenty); a propensity of people, even senior executives, to “vanish”, Stalin-era purge-like, overnight; and a climate of fear that anybody, employee or former employee, who spoke about the company or its products to an outsider, especially the media, would be pursued, harassed, and bankrupted by lawsuits. There aren't many start-ups whose senior scientists are summarily demoted and subsequently commit suicide. That happened at Theranos. The company held no memorial for him.

Throughout all of this, a curious presence in the company was Ramesh (“Sunny”) Balwani, a Pakistani-born software engineer who had made a fortune of more than US$ 40 million in the dot-com boom and cashed out before the bust. He joined Theranos in late 2009 as Elizabeth's second in command and rapidly became known as a hatchet man, domineering boss, and clueless when it came to the company's key technologies (on one occasion, an engineer mentioned a robotic arm's “end effector”, after which Sunny would frequently speak of its “endofactor”). Unbeknownst to employees and investors, Elizabeth and Sunny had been living together since 2005. Such an arrangement would be a major scandal in a public company, but even in a private firm, concealing such information from the board and investors is a serious breach of trust.

Let's talk about the board, shall we? Elizabeth was not only persuasive, but well-connected. She would parley one connection into another, and before long had recruited many prominent figures including:

  • George Schultz (former U.S. Secretary of State)
  • Henry Kissinger (former U.S. Secretary of State)
  • Bill Frist (former U.S. Senator and medical doctor)
  • James Mattis (General, U.S. Marine Corps)
  • Riley Bechtel (Chairman and former CEO, Bechtel Group)
  • Sam Nunn (former U.S. Senator)
  • Richard Kobacevich (former Wells Fargo chairman and CEO)

Later, super-lawyer David Boies would join the board, and lead its attacks against the company's detractors. It is notable that, as with its investors, not a single board member had experience in medical or diagnostic technology. Bill Frist was an M.D., but his speciality was heart and lung transplants, not laboratory tests.

By 2014, Elizabeth Holmes had come onto the media radar. Photogenic, articulate, and with a story of high-tech disruption of an industry much in the news, she began to be featured as the “female Steve Jobs”, which must have pleased her, since she affected black turtlenecks, kale shakes, and even a car with no license plates to emulate her role model. She appeared on the cover of Fortune in January 2014, made the Forbes list of 400 most wealthy shortly thereafter, was featured in puff pieces in business and general market media, and was named by Time as one of the hundred most influential people in the world. The year 2014 closed with another glowing profile in the New Yorker. This would be the beginning of the end, as it happened to be read by somebody who actually knew something about blood testing.

Adam Clapper, a pathologist in Missouri, spent his spare time writing Pathology Blawg, with a readership of practising pathologists. Clapper read what Elizabeth was claiming to do with a couple of drops of blood from a finger stick and it didn't pass the sniff test. He wrote a sceptical piece on his blog and, as it passed from hand to hand, he became a lightning rod for others dubious of Theranos' claims, including those with direct or indirect experience with the company. Earlier, he had helped a Wall Street Journal reporter comprehend the tangled web of medical laboratory billing, and he decided to pass on the tip to the author of this book.

Thus began the unravelling of one of the greatest scams and scandals in the history of high technology, Silicon Valley, and venture investing. At the peak, privately-held Theranos was valued at around US$ 9 billion, with Elizabeth Holmes holding around half of its common stock, and with one of those innovative capital structures of which Silicon Valley is so fond, 99.7% of the voting rights. Altogether, over its history, the company raised around US$ 900 million from investors (including US$ 125 million from Rupert Murdoch in the US$ 430 million final round of funding). Most of the investors' money was ultimately spent on legal fees as the whole fairy castle crumbled.

The story of the decline and fall is gripping, involving the grandson of a Secretary of State, gumshoes following whistleblowers and reporters, what amounts to legal terrorism by the ever-slimy David Boies, courageous people who stood their ground in the interest of scientific integrity against enormous personal and financial pressure, and the saga of one of the most cunning and naturally talented confidence women ever, equipped with only two semesters of freshman chemical engineering, who managed to raise and blow through almost a billion dollars of other people's money without checking off the first box on the conventional start-up check list: “Build the product”.

I have, in my career, met three world-class con men. Three times, I (just barely) managed to pick up the warning signs and beg my associates to walk away. Each time I was ignored. After reading this book, I am absolutely sure that had Elizabeth Holmes pitched me on Theranos (about which I never heard before the fraud began to be exposed), I would have been taken in. Walker's law is “Absent evidence to the contrary, assume everything is a scam”. A corollary is “No matter how cautious you are, there's always a confidence man (or woman) who can scam you if you don't do your homework.”

Here is Elizabeth Holmes at Stanford in 2013, when Theranos was riding high and she was doing her “female Steve Jobs” act.

Elizabeth Holmes at Stanford: 2013

This is a CNN piece, filmed after the Theranos scam had begun to collapse, in which you can still glimpse the Elizabeth Holmes reality distortion field at full intensity directed at CNN medical correspondent Sanjay Gupta. There are several curious things about this video. The machine that Gupta is shown is the “miniLab”, a prototype second-generation machine which never worked acceptably, not the Edison, which was actually used in the Walgreens and Safeway tests. Gupta's blood is drawn and tested, but the process used to perform the test is never shown. The result reported is a cholesterol test, but the Edison cannot perform such tests. In the plans for the Walgreens and Safeway roll-outs, such tests were performed on purchased Siemens analysers which had been secretly hacked by Theranos to work with blood diluted well below their regulatory-approved specifications (the dilution was required due to the small volume of blood from the finger stick). Since the miniLab never really worked, the odds are that Gupta's blood was tested on one of the Siemens machines, not a Theranos product at all.

CNN: Inside the Theranos Lab (2016)

In a June 2018 interview, author John Carreyrou recounts the story of Theranos and his part in revealing the truth.

John Carreyrou on investigating Theranos (2018)

If you are a connoisseur of the art of the con, here is a masterpiece. After the Wall Street Journal exposé had broken, after retracting tens of thousands of blood tests, and after Theranos had been banned from running a clinical laboratory by its regulators, Holmes got up before an audience of 2500 people at the meeting of the American Association of Clinical Chemistry and turned up the reality distortion field to eleven. Watch a master at work. She comes on the stage at the six minute mark.

Elizabeth Holmes at the American Association of Clinical Chemistry (2016)

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Neovictorian [pseud.] and Neal Van Wahr. Sanity. Seattle: Amazon Digital Services, [2017] 2018. ISBN 978-1-9808-2095-6.
Have you sometimes felt, since an early age, that you were an alien, somehow placed on Earth and observing the antics of humans as if they were a different species? Why do they believe such stupid things? Why do they do such dumb things? Any why do they keep doing them over and over again seemingly incapable of learning from the bad outcomes of all the previous attempts?

That is how Cal Adler felt since childhood and, like most people with such feelings, kept them quiet and bottled up while trying to get ahead in a game whose rules often seemed absurd. In his senior year in high school, he encounters a substitute guidance counsellor who tells him, without any preliminary conversation, precisely how he feels. He's assured he is not alone, and that over time he will meet others. He is given an enigmatic contact in case of emergency. He is advised, as any alien in a strange land, to blend in while observing and developing his own talents. And that's the last he sees of the counsellor.

Cal's subsequent life is punctuated by singular events: a terrorist incident in which he spontaneously rises to the occasion, encountering extraordinary people, and being initiated into skills he never imagined he'd possess. He begins to put together a picture of a shadowy…something…of which he may or may not be a part, whose goals are unclear, but whose people are extraordinary.

Meanwhile, a pop religion called ReHumanism, founded by a science fiction writer, is gaining adherents among prominent figures in business, entertainment, and technology. Its “scriptures” advocate escape from the tragic cycle of progress and collapse which has characterised the human experience by turning away from the artificial environment in which we have immersed ourselves and rediscovering our inherent human nature which may, to many in the modern world, seem alien. Is there a connection between ReHumanism (which seems like a flaky scam to Cal) and the mysterious people he is encountering?

All of these threads begin to come together when Cal, working as a private investigator in Reno, Nevada, is retained by the daughter of a recently-deceased billionaire industrialist to find her mother, who has disappeared during a tourist visit to Alaska. The mother is revealed have become a convert to and supporter of ReHumanism. Are they involved? And how did the daughter find Cal, who, after previous events, has achieved a level of low observability stealth aircraft designers can only dream of?

An adventure begins in which nothing is as it seems and all of Cal's formidable talents are tested to their limits.

This is an engaging and provocative mystery/thriller which will resonate with those who identify with the kind of heroic, independent, and inner-directed characters that populate the fiction of Robert A. Heinlein and other writers of the golden age of science fiction. It speaks directly to those sworn to chart their own course through life regardless of what others may think or say. I'm not sure the shadowy organisation we glimpse here actually exists, but I wish it did…and I wish they'd contacted me. There are many tips of the hat here to works and authors of fiction with similar themes, and I'm sure many more I missed.

This is an example of the efflorescence of independent science fiction which the obsolescence of the traditional gatekeeper publishers has engendered. With the advent of low-cost, high-margin self-publishing and customer reviews and ratings to evaluate quality, an entire new cohort of authors whose work would never before have seen the light of day is now enriching the genre and the lives of their enthusiastic readers. The work is not free of typographical and grammatical errors, but I've read books from major science fiction publishers with more. The Kindle edition is free to Kindle Unlimited subscribers.

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Verne, Jules. Une Fantaisie du Docteur Ox. Seattle: CreateSpace, [1874] 2017. ISBN 978-1-5470-6408-3.
After reading and reviewing Jules Verne's Hector Servadac last year, I stumbled upon a phenomenal bargain: a Kindle edition of the complete works of Jules Verne—160 titles, with 5400 illustrations—for US$ 2.51 at this writing, published by Arvensa. This is not a cheap public domain knock-off, but a thoroughly professional publication with very few errors. For less than the price of a paperback book, you get just about everything Jules Verne ever wrote in Kindle format which, if you download the free Kindle French dictionary, allows you to quickly look up the obscure terms and jargon of which Verne is so fond without flipping through the Little Bob. That's how I read this work, although I have cited a print edition in the header for those who prefer such.

The strange story of Doctor Ox would be considered a novella in modern publishing terms, coming in at 19,240 words. It is divided into 17 chapters and is written in much the same style as the author's Voyages extraordinaires, with his customary huge vocabulary, fondness for lengthy enumerations, and witty parody of the national character of foreigners.

Here, the foreigners in question are the Flemish, speakers of dialects of the Dutch language who live in the northern part of Belgium. The Flemish are known for being phlegmatic, and nowhere is this more in evidence than the small city of Quiquendone. Its 2,393 residents and their ancestors have lived there since the city was founded in 1197, and very little has happened to disturb their placid lives; they like it that way. Its major industries are the manufacture of whipped cream and barley sugar. Its inhabitants are taciturn and, when they speak, do so slowly. For centuries, what little government they require has been provided by generations of the van Tricasse family, son succeeding father as burgomaster. There is little for the burgomaster to do, and one of the few items on his agenda, inherited from his father twenty years ago, is whether the city should dispense with the services of its sole policeman, who hasn't had anything to do for decades.

Burgomaster van Tricasse exemplifies the moderation in all things of the residents of his city. I cannot resist quoting this quintessentially Jules Verne description in full.

Le bourgmestre était un personnage de cinquante ans, ni gras ni maigre, ni petit ni grand, ni vieux ni jeune, ni coloré ni pâle, ni gai ni triste, ni content ni ennuyé, ni énergique ni mou, ni fier ni humble, ni bon ni méchant, ni généreux ni avare, ni brave ni poltron, ni trop ni trop peu, — ne quid nimis, — un homme modéré en tout ; mais à la lenteur invariable de ses mouvements, à sa mâchoire inférieure un peu pendante, à sa paupière supérieure immuablement relevée, à son front uni comme une plaque de cuivre jaune et sans une ride, à ses muscles peu salliants, un physionomiste eût sans peine reconnu que le bourgomestre van Tricasse était le flegme personnifié.

Imagine how startled this paragon of moderation and peace must have been when the city's policeman—he whose job has been at risk for decades—pounds on the door and, when admitted, reports that the city's doctor and lawyer, visiting the house of scientist Doctor Ox, had gotten into an argument. They had been talking politics! Such a thing had not happened in Quiquendone in over a century. Words were exchanged that might lead to a duel!

Who is this Doctor Ox? A recent arrival in Quiquendone, he is a celebrated scientist, considered a leader in the field of physiology. He stands out against the other inhabitants of the city. Of no well-defined nationality, he is a genuine eccentric, self-confident, ambitious, and known even to smile in public. He and his laboratory assistant Gédéon Ygène work on their experiments and never speak of them to others.

Shortly after arriving in Quiquendone, Dr Ox approached the burgomaster and city council with a proposal: to illuminate the city and its buildings, not with the new-fangled electric lights which other cities were adopting, but with a new invention of his own, oxy-hydric gas. Using powerful electric batteries he invented, water would be decomposed into hydrogen and oxygen gas, stored separately, then delivered in parallel pipes to individual taps where they would be combined and burned, producing a light much brighter and pure than electric lights, not to mention conventional gaslights burning natural or manufactured gas. In storage and distribution, hydrogen and oxygen would be strictly segregated, as any mixing prior to the point of use ran the risk of an explosion. Dr Ox offered to pay all of the expenses of building the gas production plant, storage facilities, and installation of the underground pipes and light fixtures in public buildings and private residences. After a demonstration of oxy-hydric lighting, city fathers gave the go-ahead for the installation, presuming Dr Ox was willing to assume all the costs in order to demonstrate his invention to other potential customers.

Over succeeding days and weeks, things before unimagined, indeed, unimaginable begin to occur. On a visit to Dr Ox, the burgomaster himself and his best friend city council president Niklausse find themselves in—dare it be said—a political argument. At the opera house, where musicians and singers usually so moderate the tempo that works are performed over multiple days, one act per night, a performance of Meyerbeer's Les Hugenots becomes frenetic and incites the audience to what can only be described as a riot. A ball at the house of the banker becomes a whirlwind of sound and motion. And yet, each time, after people go home, they return to normal and find it difficult to believe what they did the night before.

Over time, the phenomenon, at first only seen in large public gatherings, begins to spread into individual homes and private lives. You would think the placid Flemish had been transformed into the hotter tempered denizens of countries to the south. Twenty newspapers spring up, each advocating its own radical agenda. Even plants start growing to enormous size, and cats and dogs, previously as reserved as their masters, begin to bare fangs and claws. Finally, a mass movement rises to avenge the honour of Quiquendone for an injury committed in the year 1185 by a cow from the neighbouring town of Virgamen.

What was happening? Whence the madness? What would be the result when the citizens of Quiquendone, armed with everything they could lay their hands on, marched upon their neighbours?

This is a classic “puzzle story”, seasoned with a mad scientist of whom the author allows us occasional candid glimpses as the story unfolds. You'll probably solve the puzzle yourself long before the big reveal at the end. Jules Verne, always anticipating the future, foresaw this: the penultimate chapter is titled (my translation), “Where the intelligent reader sees that he guessed correctly, despite every precaution by the author”. The enjoyment here is not so much the puzzle but rather Verne's language and delicious description of characters and events, which are up to the standard of his better-known works.

This is “minor Verne”, written originally for a public reading and then published in a newspaper in Amiens, his adopted home. Many believed that in Quiquendone he was satirising Amiens and his placid neighbours.

Doctor Ox would reappear in the work of Jules Verne in his 1882 play Voyage à travers l'impossible (Journey Through the Impossible), a work which, after 97 performances in Paris, was believed lost until a single handwritten manuscript was found in 1978. Dr Ox reprises his role as mad scientist, joining other characters from Verne's novels on their own extraordinary voyages. After that work, Doctor Ox disappears from the world. But when I regard the frenzied serial madness loose today, from “bathroom equality”, tearing down Civil War monuments, masked “Antifa” blackshirts beating up people in the streets, the “refugee” racket, and Russians under every bed, I sometimes wonder if he's taken up residence in today's United States.

An English translation is available. Verne's reputation has often suffered due to poor English translations of his work; I have not read this edition and don't know how good it is. Warning: the description of this book at Amazon contains a huge spoiler for the central puzzle of the story.

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