Tuesday, June 19, 2018

How Walgreens Got Taken: Read This Fantastic New Book About Theranos

Here’s your must-read summer book: Bad Blood: Secrets and Lies in a Silicon Valley Startup. It’s the thought provoking and gripping cautionary tale of Theranos, a business that raised $900 million to “disrupt” the lab testing business.

Alas, Elizabeth Holmes, the company’s founder and CEO, and her former chief commercial officer appear to have misrepresented and falsified almost everything about the company and its technology. Last week, they were both indicted by the Justice department.

Bad Blood is one of the best non-fiction business books I have ever read. Drug Channels readers may enjoy some schadenfreude about the hapless behavior of Walgreens’ previous management team. I’ve selected a few choice highlights below. But trust me: The whole book is a great read.

THE STORY

Bad Blood was written by John Carreyrou, the Wall Street Journal journalist who uncovered the Theranos scam. Carreyrou reconstructs the history of Theranos, explains how he broke the story, and details Theranos’ attempts to bully him and the Journal before everything finally collapsed.

Walgreens was a major investor in Theranos. It also placed Theranos’ faulty blood testing machines inside multiple Walgreens stores in California and Phoenix.

Be sure to read chapter 7, called “Dr. J.” The title refers to Jay Rosan, a physician who was part of the Walgreen’s innovation team.

As Carreyrou explains, Walgreens’ executives fell for the Theranos story without much rigorous due diligence. Walgreens executives also undermined the work of Kevin Hunter, an independent consultant who warned Walgreens about potential problems at Theranos.

Rosan is singled out as one of Theranos’ biggest internal cheerleaders. He appears to be a key figure in Walgreens lack of typical business safeguards and oversight. Other Walgreens execs mentioned in the book include Kermit Crawford, Renaat Van den Hooff, Trish Lipinski, and Colin Watts.

The book also places blame on Wade Miquelon, Walgreens’ former CFO. Miquelon negotiated the Theranos agreement and supported the company’s investment.

Fun fact: the book reports that after Miquelon’s second arrest for drunk driving, his “nickname in the hallways of Walgreens headquarters was Michelob.” LOL!

How much did Walgreen love the Theranos story? Apparently, one or more Walgreens executives sang a karaoke version of John Lennon’s Imagine, but with lyrics celebrating the Walgreens-Theranos alliance. If you have this video, please send it to me!

Here’s the amazing coda: Prior to last week’s indictment, Elizabeth Holmes was raising money for a new company. Based on Carreyrou’s book, I advise you to keep your hand on your wallet!

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