Does Theranos Mark the Peak of the Silicon Valley Bubble?

Silicon Valley has a term for startups that reach the $1 billion valuation mark: unicorns. The term is instructive. It suggests not only that hugely successful startups are rare, but also that there’s something unreal about them.

There’s no recent Valley startup that satisfies both dimensions better than Theranos. Founded by a 19-year-old Stanford dropout, Elizabeth Holmes, who went on to become the world’s youngest self-made female billionaire, it raised nearly a billion dollars from investors and was valued at $10 billion at its peak. It claimed to have developed technology that dramatically increased the affordability, convenience, and speed of blood testing. It partnered with Safeway and Walgreens, which together spent hundreds of millions of dollars building in-store clinics that were to offer Theranos tests. Tens of thousands of Americans had their blood tested by its proprietary technology.

The problem was that Theranos’ technology was never close to ready. In a series of devastating articles published in the Wall Street Journal starting in 2015, reporter John Carreyrou reminded us that unicorns are usually found only in fairy tales. Theranos, he reported, was analyzing many of the blood samples it received using off-the-shelf commercial blood analyzers. Samples analyzed with Theranos’ own technology often produced inaccurate results. Some patients were rushed to a hospital on the basis of erroneous readings, only to be sent home when their blood was properly analyzed by the hospital. Even worse, Theranos was using brutal intimidation tactics against its own employees to stop the truth from coming out.

This month, Carreyrou’s book about the Theranos saga, , was released. It reads like a page-turner in the finest tradition of Michael Crichton, complete with secondary and tertiary characters and finely detailed scene settings, with the tragic difference that