Bad Blood

(Axel Boer) #1

avail. When they showed up at Novartis’s Basel offices the next
morning, it got worse: all three Edison readers produced error
messages in front of a room full of Swiss executives. Susan was
mortified, but Elizabeth kept her composure and blamed a minor
technical glitch.

Based on the intel he was getting from Susan and from other
employees in Palo Alto, Todd became convinced that Theranos’s board
was being misled about the company’s finances and the state of its
technology. He took his concerns to Michael Esquivel, the general
counsel with whom he had established good rapport.

Michael, it turned out, was developing his own suspicions. During a
lunchtime run with a colleague from the new office to the Stanford
Dish and back, he mentioned not feeling too good about Theranos’s
pharmaceutical partnerships. He wouldn’t say more, but the colleague
could tell something was bothering him.

In March 2008, Todd and Michael approached Tom Brodeen, one of
Theranos’s board members, and told him the revenue projections
Elizabeth was touting to the board weren’t grounded in reality. They
were hugely exaggerated and impossible to reconcile with the
unfinished state of the product, they said.

Brodeen was a seasoned businessman in his mid-sixties who had
headed one of the big consulting firms as well as several technology
companies. He hadn’t been on the Theranos board long, having joined
at the request of Don Lucas in the fall of 2007. Given how new he was
as a director, he advised Todd and Michael to take their account
directly to Lucas, the board’s chairman.

Coming just months after Avie Tevanian had raised similar
concerns, Lucas took the matter seriously this time. In a way, he
couldn’t afford not to: Todd was the son-in-law of one of Theranos’s
investors, the venture capitalist B. J. Cassin. Cassin and Lucas were
longtime friends. They had both invested in Theranos at the same
time, during the startup’s Series B round in early 2006.

Lucas convened an emergency meeting of the board in his office on
Sand Hill Road. Elizabeth was asked to wait outside the door while the
other directors—Lucas, Brodeen, Channing Robertson, and Peter

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