At Reparo we love a good book about business and investing, and two books that have been doing the rounds in the office are “Bad Blood: Secrets and Lies in a Silicon Valley Startup” and “Super Pumped: The Battle for Uber”. The books follow two high-profile Silicon Valley startups and profile two founders with win-at-all-costs mentalities.
Beyond being engaging reads that provide insight into the mentality and culture of some Silicon Valley startups, both these stories have lessons investors can learn from.
“Bad Blood: Secrets and Lies in a Silicon Valley Startup” tells the story of ill-fated health technology company Theranos. It was written by John Carreyrou, a Wall Street Journal journalist who originally published many of the book’s findings in a series of articles for the publication.
Theranos was a blood-testing start-up that claimed to have invented a way of testing blood for multiple diseases with nothing more than a drop of blood.
The startup was perhaps most interesting because it appeared to take inspiration not from pharmaceutical companies, but tech behemoths, particularly Apple. The founder, Elizabeth Holmes, was thought to have been obsessed with Steve Jobs and hired Apple engineers to design the product. She even named one of the devices “4S,” supposedly influenced by the iPhone.
While the technology Theranos claimed to have invented would certainly have been revolutionary, the major issue was that it wasn’t ready. Despite this inconvenience, the company kept signing deals, including with major supermarket chains Safeway and Walgreens. By 2014 Theranos was worth $9 billion.
However, this was also when things started to go seriously wrong. Concerns about the company’s ability to deliver on its promises wouldn’t go away, both from those inside and outside the startup. Top employees began to quit, some of the company’s biggest deals fell through, it was hit by several lawsuits, and it began to shut down labs and lay off staff.
While not mentioned in the book due to the timing of its publication, the company was dissolved in September 2018, shortly after the book’s release.
The book reads like a crime thriller and the Hollywoodesque plot of the story (it is being made into a film), as well as the over-the-top yet real characters, make it an interesting read. The book won critical acclaim on its release, featuring in the year-end lists of publications including The New York Times and the Financial Times.
As a lender, we found the apparent lack of due diligence done by investors — or really anyone — to have been jaw-dropping.
Powered by the huge claims of the company’s founder, and her apparent brilliance, pretty much everyone — investors, media, other companies — became caught up in chasing the next big thing, rather than looking deeper at the company and its ability to produce what it said it could produce.
“Super Pumped: The Battle for Uber” by Mike Isaac, tells the story of Uber’s dramatic rise to becoming one of the world’s best-known companies, as well as exploring the negative effects of its win-at-all-costs mentality. This culture ultimately led to a power struggle between investors and CEO Travis Kalanick that resulted in the divisive figure resigning from his post.
While anyone who has followed the story of Uber over the last few years will know much of what is covered — from Kalanick’s controversial behaviour to the reported poor treatment of drivers — the book tells the story in a way that keep things interesting. Interviews with those around the company offer insight into what was happening that most people wouldn’t have got from news stories at the time.
The story in the book has a lot in common with that of “Bad Blood”, despite the differing fates of the companies. They are both businesses that were led to incredible valuations by charismatic, driven individuals. While a huge benefit to the companies in their early stages, the mentality of both leaders ended up costing them in the longer term.
Reparo Provides Financing for Businesses Looking to Grow
While we don’t finance startups in Silicon Valley, we do provide much-needed capital to SMEs all across the UK. If you’re a broker looking for access to quick finance for a client, consider Reparo. We offer asset-backed loans of between £10,000 and £1 million to businesses which may have struggled to gain financing elsewhere, including recently formed businesses without a history of revenue.
Get in touch with our team on firstname.lastname@example.org or call 0161 451 5710 to discuss your options.