MBA1158 Must Read: Bad Blood by John Carreyrou

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Hey O welcome to the $100 MBA Show Business Strategies you need to know every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the Hundred Dollar mba, a complete business training and community online and Today's episode is a must read episode on our Must Read Episodes. I share with you a book that I've read that has influenced me as an entrepr. I share with you its takeaways, its insights and why you should read it too. Today's must read is Bad Blood by John Carreyrou. Bad Blood is the incredible true story about a startup called Theranos that had an evaluation of $9 billion. They built a technology where they can run hundreds of different types of medical tests with just one drop of blood. This was revolutionary. But there was only one problem. The technology didn't work and today Theranos is worth a whopping $0. The author, John Carreyrou is a Wall Street Journal investigative journalist and he's the one who cracked this story in the first place. Some major, major mistakes were made in the startup. Misleading investors and dragging people along with the hopes of something working. In the meantime, putting people's lives at risk. You can't make this stuff up. So why am I sharing this must read with you? Well, there's so many lessons you can learn from a hugely successful company. Crashing and burning. I saw flaws in the company and its top members that we all can identify with. I want to share with you what I learned and what are the mistakes you need to avoid at all costs in your business. Can't wait to share with you the insights from this page turner. Let's get into it. Let's get down to business. Bad Blood is such a good read, I literally couldn't put it down. I had to force myself to stop reading it so I can get some sleep. It's no wonder it's a national bestseller and it just was released in June of 2018. It hit the top of every single list and has over 1200 five star reviews on Amazon. Like I mentioned, this book lays out the story of Theranos, a startup that came out of the Silicon Valley that was founded in 2013 by Elizabeth Holmes, who was the founder and CEO. She was seen to be the next Steve Jobs and graced the COVID of magazines like Fortune and Forbes. Elizabeth Holmes attended Stanford, but dropped out to start Theranos. Funny enough, she has a huge fear of needles. So she wanted to create a technology to allow you to run hundreds of different blood tests with just a few drops of blood, a finger prick of blood instead of, you know, injecting a needle and drawing, you know, those syringes of blood. Now this is very ambitious, but the problem is, is that there's a difference between ambition and research and development and aiming high and actually putting people's lives at risk. What do I mean by that? Well, Theranos was backed by some major, major investors like Rupert Murdoch and the Waltons, the family behind Walmart. And she had some pretty old heavy brass from Silicon Valley on the board. So they all trusted her and believed that she can make this happen. Unfortunately, she wanted to please these investors and actually deliver on her promises in terms of a launch day. And she actually signed big contracts with companies like Walgreens. They're a chain of pharmacies in America and they installed these machines in stores and they were actually doing blood tests for actual customers. Unfortunately, the technology didn't work and the tests were all over the place. Now, the reason why this is so dangerous is because, hey, if a test comes back negative, you're like, okay, I'm all good, I'm all healthy. I don't have to worry about it. If the test is not accurate, there's a good chance you're not all good and you're neglecting something that you need to do. The opposite could just be as disastrous. You might get a blood test done and the result says your potassium levels are going crazy and you rush the ER and you take all these battery of tests and realize, oh, you're fine, this test was wrong. You may have done some procedures that you shouldn't have had or spent a whole bunch of money when you didn't have to eventually, 2015, the author of this book, John Carreyrou, broke the story in the Wall Street Journal. And he did so because many of the ex employees were disgruntled and really felt, hey, this company's hurting people. And their conscience really spoke up even though they signed some ironclad non disclosure agreements. Felt like, hey, if they get sued, if they get in trouble, it might just be worth it because people might die. Both Elizabeth Holmes, the founder, and her COO have been indicted by a federal grand jury on nine counts of wire fraud and two counts of a conspiracy to commit wire fraud. Elizabeth has been slapped with a half a million dollar fine. She can't be an executive of a public company for 10 years and she may see some serious jail time. Not a happy ending. But what can we learn from this story and what can you learn when you read this book? First of all, I have to say that the author is a great writer, but he's also very fair. He's very fair towards Elizabeth Holmes. He's not out to bash her and try to make her look bad. He's actually quite sympathetic. And I have to say, he's really balanced. He could have easily made her to look out like a monster. This helps you actually gain some learnings from the book without having the tainted idea that this person is just evil. So the first lesson is, if you're gonna bring on external investors in your company, that's totally fine. But understand that comes with some pressures. That comes with having to answer to people and their demands. Don't cave into their demands if they're not reasonable. You can't make those deadlines if you can't hit those targets. At the end of the day, you're going to be accountable, not them. You're the leader of the company. They're just investors. Everybody is looking out for themselves. That's something that is displayed very clearly in this book. That's the first lesson. Second lesson, there's a fine line between ambition and delusion. The best products out there start off as a great, amazing, ambitious idea. But then it starts to get closer and closer to practicality. I guarantee that Steve Jobs first understanding of the iPhone or conception was far advanced than version one. But he has to meet the technology and reality somewhere. And often that's far greater than enough to wow your customers and to have a successful business. Lesson number three, don't be arrogant and find mentors. Find people that have done it before you. Find people that can guide you along the way. And I say people, not one person you want to get different perspectives on how to achieve your goals. This is especially important if you're young in the game. If you're a young person and you're new in entrepreneurship, you could be 50 or 60 and be new at entrepreneurship. Understand we don't have all the answers. We need to seek help from others sometimes. Number four, Never, never, never, never lie to your customers. Don't even over promise and under deliver. It's always better to do the opposite to under promise and over deliver to give them these delightful surprises. You serve your customers because they're the ones who serve you. They're the ones who actually pay your bills and allow you to have this business and allow you to fulfill your dreams and live the lifestyle you want to. So respect them by being honest and transparent with them. With where you are, with your business, with your product, with your innovation, with your roadmap, whatever it is. I learned this the hard way myself with Webinar Ninja. I wanted to please my customers so much. I didn't want to tell them bad news at the start if we had a delay in development or something like that. I quickly learned that hey, it's better to communicate. Tell them the truth and tell them that there are delays. In fact, I forced myself to communicate by doing a monthly members webinar for all our members. And I update them on what's going on and what we're working on and what's going on in the next month and what's ahead and why we work on these things. And I'm very transparent that the fact that hey, we're a self funded company, these are the teammates we work with so they understand what they're a part of. And that gives me this sense of relief that hey, I'm giving them the truth, I'm giving them the right expectations. But at the same time they feel excited because they know they're a part of the actual progress of the company. 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Bad Blood is an incredible cautionary tale. I didn't want to give away too much about the story and all the juicy bits because it's worth the read. It's amazing, but I wanted to give you my takeaways from the business point of view, from the learning point of view, from the point of view of not failing and doing all the wrong things. Listen, business is hard. Building a business, building something that people want and are willing to give their hard earned dollar for, that's a hard thing to do. You have to make hard choices and tough sacrifices. We're bound to make mistakes along the way. I don't want you to be afraid to make mistakes or to fail, but some mistakes are so big it's hard to recover from. You got to stay clear from those. And that's what this book is all about. Check it out. Bad Blood by John Carreyrou. I'll put a link to the book in today's show notes over@100mba.net MBA 1158 thank you so much for listening to the 100 All NBA Show. If you have a book you think I should read, let me know. Email me over@omar NBA.net one of the things that struck me the most is the fall of Theranos was because of disgruntled employees, people that just had such a horrible experience at the company, they had to tell other people about it. Now that's an extreme example, but it got me thinking about our own companies, our own business. How are we treating our employees? How are we treating people that leave our company? How are we taking care of them during that transition when they leave? It's their impression of us. People talk, especially when they change jobs. So keep that in mind. One of the things that we like to do is that we like to stay in touch with the people that leave that resign and just check up and say, hey, I hope everything is going well. Let us know how everything is going. And if the resignation was mutual, we always let them know, hey, the door is always open if you want to come back. Most companies and organizations don't do that, and we know that because we worked for organizations in the past. So you can differentiate yourself by really caring about your employees, present and past. Thank you so much for listening to the show. I'll check you tomorrow. Take care. Foreign.

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