7 ms·

Safeway, Theranos Split After $350M Deal Fizzles

105 points by bedhead 11y ago

swampthinker 11y ago
Could a kind person summarize the article for us that don't have a WSJ subscription?
- empressplay 11y ago
  Click the "web" link in the header at the top of this page and it will google search the article, click on it in google and you'll see the whole thing.
- lokeshk 11y ago
  Pro tip: Do a google search of the title, and the link that comes up in the result won't require you a WSJ subscription. PS: This is true for most of the news websites that require subscription.
sebbot 11y ago
to anyone that doesn't have a wsj subscription, use the link from the google results: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QqQIwAGoVChMI8_XZ1ayHyQIVQcFjCh20CAnN&url=http%3A%2F%2Fwww.wsj.com%2Farticles%2Fsafeway-theranos-split-after-350-million-deal-fizzles-1447205796&usg=AFQjCNH0VFmzVZNRQHli7qd2DDXu6umZBg&sig2=etQXPu4uSowWZeJZYjGUbA https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&c...
- ecopoesis 11y ago
  Or just click the web link stories have now under their title.
deleted 11y ago
[deleted]
goodJobWalrus 11y ago
Is having blood tests in grocery stores / pharmacies a newish thing in the US, or it existed for a long time? I lived in the US in 2004-2007, and had blood tests regularly, but it would have never occurred to me to go to a grocery store for one.
- rezistik 11y ago
  It's Theranos business plan I believe.
- empressplay 11y ago
  No, the idea of having fast-turnaround blood-tests is the central focus of Theranos, one which it looks more and more likely it's failing to (and will seemingly never) deliver.
- Pyxl101 11y ago
  No, that's not typical. Blood tests are not usually offered in pharmacies either, and are reserved for clinics and hospitals. Blood tests typically involve needles, privacy, etc. They're the wrong atmosphere for a casual grocery store or pharmacy. Theranos's vision was to make blood tests easier and more accessible by requiring only a finger prick instead of drawing from a vein and by giving results quickly instead of hours or days later from a lab. It sounds like Safeway got on board with that vision as a forward-looking opportunity. If a full panel blood test was as easy as a finger prick, then I could see blood testing going mainstream in the way that Theranos is hoping, and Safeway was hoping, but it all depends on the technology actually working as advertised.
- URSpider94 11y ago
  Having pharmacies everywhere is becoming A Thing, since many Americans are on monthly prescriptions and it provides another contact point to come into the store. Budget department stores like Target and Wal-Mart have had them for years, grocery stores are just next in line. Value-add services in pharmacies are A Thing. In many places, pharmacists can administer vaccinations, and a lot of stores are adding "minute clinics" where you can go for quick health advice, blood tests, etc. Again, offering these services brings patients into the store where they will likely buy something else, and staffing these locations with nurses, nurse practitioners, or even just pharmacists, undercuts the cost of a visit to a medical doctor.
7Figures2Commas 11y ago
> Theranos often drew the same employee’s blood twice, first with blood from a finger prick and then the traditional method of a needle in the arm, according to one former Safeway executive. > The former executive said he worried that Theranos’s finger-prick process was still a work in progress. “If the technology is fully developed, why would you need to do a venipuncture?” this person said, using the term for a traditional blood draw. > The concerns deepened when Theranos’s test results for several Safeway employees differed from the results the same employees got from other laboratories, according to the former executive. Another former Safeway executive confirmed those recollections. > Theranos also backed away from putting its blood analyzers in Safeway’s clinics so patients could get the results quickly, the current and former executives said. > Instead, Theranos said blood samples collected at Safeway would have to be shipped to a central lab for analysis, according to the former executives. Wow. The Theranos story just keeps getting worse.
- danieltillett 11y ago
  Yep. I think this unicorn has a broken leg.
  - auvi 11y ago
    If Theranos is still valued at $9 billion, then it is almost a decacorn. We have to see what happens to its nine unicorn (or cat, pun intended) lives.
  - AJ007 11y ago
    Where is the line between grossly exaggerating ones product and criminal fraud drawn? Personally I view things where you give someone a false health diagnosis to be among the most egregious deceptions possible, a step beyond running a Ponzi scheme and in line with other things where users are severely hurt or killed.
    - danieltillett 11y ago
      I will be very surprised if Elizabeth hasn’t crossed the line over to fraud at some point. She is pulling down some very well connected people - she had better like orange.
colmvp 11y ago
Some important points from that article: > Current and former Safeway executives said Theranos missed deadlines for the blood-testing rollout. They also said several Safeway executives questioned the accuracy of results Theranos gave to Safeway employees tested at a clinic in the supermarket chain’s headquarters in Pleasanton, Calif. > Theranos often drew the same employee’s blood twice, first with blood from a finger prick and then the traditional method of a needle in the arm, according to one former Safeway executive. > The former executive said he worried that Theranos’s finger-prick process was still a work in progress. “If the technology is fully developed, why would you need to do a venipuncture?” this person said, using the term for a traditional blood draw. > The concerns deepened when Theranos’s test results for several Safeway employees differed from the results the same employees got from other laboratories, according to the former executive. Another former Safeway executive confirmed those recollections. > One Safeway executive got a frighteningly high result from Theranos on a test to gauge his prostate-specific antigen, according to two former Safeway executives. They said the test suggested that the executive had prostate cancer. Retesting by another lab came back normal.
- danso 11y ago
  One of the most irritating things about Theranos's defenders is their argument about how Theranos should be given lesser scrutiny because of how important and noble its mission is...that's the exact opposite of how it should be, IMO. Using Facebook as the archetypical unjustifiably-rich-startup (not my opinion, just well-repeated), in which the goal is to lower friction between friend-network-contacts...even if FB's news feed algorithm was corrupt, users have multiple ways of assessing the quality of their experience -- including out-of-band assessments (um, hanging out with friends IRL) and being able to defriend/filter lists... The whole point of Theranos is to reduce the friction in personal health assessment...which is a great idea regardless of noble motives...but lowering friction essentially means being able to more frequently collect and analyze data about yourself. If the assessment process is bad, then using more of the product is fundamentally terrible for the person. But the bigger problem is that it isn't easy to compare health tests...if getting an old-fashioned blood draw test was trivial, then Theranos would have no purpose in the first place. So with Theranos, the easily imaginable bad-case scenario is literally that people die because of false positives and negatives, no matter the kind motives and ambitions of Holmes. But I have to admit...at least Theranos believes in their own product? Because if it were just snake oil, they probably would've worked out a way to not use their flawed procedures for the Safeway executives, who have much interest and motive (and money) to do comparative quality testing. (unless of course the Safeway execs conducted their own blind tests...which is obviously what they should do but obviously, not all big money executives have been that skeptical of Theranos)
danieltillett 11y ago
Read the informed comments on Derek Lowe's blog about Theranos [1]. This is the money shot quote from johnnyboy "@Pete: it is entirely justified to have doubts about the validity of blood results obtained from finger pricks. The blood you get from a prick will be a mixture of blood from small venules, small arterioles, capillaries and lymph vessels, mixed with whatever loose tissue and cells have been cut by the prick and carried over into the blood. No way you could ever get a reliable CBC from such a sample. Since the kind of general blood tests that this company is targeting are usually CBC + chem panel, even if you could get your chem results from the prick, you still need a normal blood draw for the CBC, so the competitive advantage that they are trying to push (quick sampling by patient at pharmacy, without need for phlebotomist) is lost. On top of that, the variability inherent in chem results from prick blood will be significant for several analytes, like CK and AST (present in muscle so could be raised from prick injury), glucose and lipids (different levels in venous or arterial blood or lymph), etc… They are focusing on their fancy technology without much consideration of the underlying biology, typical error of engineering types.” 1. http://blogs.sciencemag.org/pipeline/archives/2015/10/15/theranos-and-its-blood-test-machine http://blogs.sciencemag.org/pipeline/archives/2015/10/15/the...
- refurb 11y ago
  No doubt that a blood sample from a finger prick is different than from a vein. That said, diabetics just use finger pricks for their blood glucose tests. Is the result calibrated for a finger prick test or do we just assume it's close enough?
  - danieltillett 11y ago
    You don’t need the accuracy that you need for the other tests plus glucose is in really high concentrations relatively to the other compounds they want to measure. If you are out by 20% on the glucose concentration in diabetes it does not matter too much, but it does for everything else. It is not like the current machines are 100% accurate anyway even though the ISO threshold is +-20% [1]. 1. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3317395/ http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3317395/
bedhead 11y ago
The anecdotal evidence is absolutely overwhelming at this point: Theranos simply doesn't work. Books will be written about this company...
- deleted 11y ago
  [deleted]
- Jerry2 11y ago
  Harvard Business Review's post mortem case study should be interesting as well.
- nemo44x 11y ago
  I agree. It will likely be seen as a massive scam. Ideas are cheap. Technology is hard.
  - tlmde 11y ago
    Yes, I've been working in MEMS for 15 years.
- w1ntermute 11y ago
  More importantly, who's going to play her on the big screen?
  - akhilcacharya 11y ago
    My money's on JLaw. I expect a Theranos movie written by Aaron Sorkin by 2020.
    - w1ntermute 11y ago
      What's it going to be called? Unicorn Blood?
      - akhilcacharya 11y ago
        Clever. I'd watch it opening day.
marcusgarvey 11y ago
>Safeway Inc. spent about $350 million to build clinics in more than 800 of its supermarkets to offer blood tests by startup Theranos Inc. >The $350 million price tag was equivalent to more than half of Safeway’s net income of $596.5 million in 2012. Safeway had revenue of $44.21 billion. Safeway also invested more than $10 million in Theranos, one former Safeway executive said. >Two of the former Safeway executives said they told Mr. Burd, Safeway’s chief executive, about the varying employee test results. >The former executives said Mr. Burd told them he had been reassured by Ms. Holmes. Mr. Burd continued to support the partnership with Theranos, according to the former Safeway executives. If he hadn't retired already, he should be fired for incompetence.
- danieltillett 11y ago
  It certainly will be interesting how he justifies this in front of the shareholder plaintiff lawyers.
  - anon8418 11y ago
    But but but Rumsfeld and Kissinger told me it was a sure thing!
    - jessaustin 11y ago
      Yeah those guys are famous for their foresight.
- kumarm 11y ago
  Mr. Burd declined to comment, citing a nondisclosure agreement. He retired in May 2013.
- sk5t 11y ago
  Well, Holmes _did_ reassure Burd. We cannot rule out the possibility that she is an exceptionally deft reassurer. In seriousness, Safeway gets durable capital improvements to their stores for their $350mm, still useful without Project T-Rex.
sama 11y ago
It's now been two weeks since Theranos said they were going to release clinical data.
- danieltillett 11y ago
  Sam I think we can safely say at this stage that there is no favorable clinical data.
- deleted 11y ago
  [deleted]
Pyxl101 11y ago
What options are there for founders to liquidate shares in the process of fundraising but before going public? Are founders typically able to liquidate some amount of shares in funding rounds in order to take home cash, or do investors disallow that entirely until a company is sold or goes public? Theranos is 12 years old at this point, and raised $400 million at a $4.5 billion valuation. Would a founder of a company in those circumstances have been able to liquidate - let's say - 1% of their ownership along the way, or in the last fundraising round, for cash? Or is that out of the question and founders are expected to retain their ownership aside from investment dilution until sale? I suppose the answer depends on the terms the company is able to work out with their investors. But perhaps someone can comment on what terms are common in such situations.
- alaskamiller 11y ago
  Biggest example is Snapchat, they got and keep asking for millions of dollars money when fundraising. Last year's big drama was Secret app's founder taking $6MM when they raised $25MM then proceeded to buy fancy cars. The product growth stalled and the company shut down in less than a year. Happened with Buffer.
  - Pyxl101 11y ago
    Thanks for the tip to Buffer. They've published a blog post explaining their reasons that I've started reading: https://open.buffer.com/raising-3-5m-funding-valuation-term-sheet/ https://open.buffer.com/raising-3-5m-funding-valuation-term-... > So you might be wondering, why raise funding if everything is going so well and we’re in full control? Here are some of the reasons: > 1. We’re removing pressure to sell, so we can go all in and keep building Buffer for the next 5-10 years. 2. Setting up a precedent for multiple regular liquidity events for investors and team members. 3. It’s a way to get partners on board who are excited about the unique way we’re running the company. 4. We want to add a little extra cushion to the bank to help us with any speed bumps that might arise [more details on each point in the article] Their reasons make sense to me.
  - Asparagirl 11y ago
    Happened with Basecamp (formerly 37 Signals), too -- they're bootstrapped but they took a small investment from Jeff Bezos so that they could cash out a little bit and enjoy themselves.
seesomesense 11y ago
This is what happens when the CEO of a startup is a liar. It is a shame, but it is unsurprising.
geomark 11y ago
Have the people who funded Theranos been calling the critics haters? That seems to be common with some VCs. Like calling HN "Hater News" because of harsh criticism of questionable claims of innovation.
- w1ntermute 11y ago
  https://twitter.com/pmarca/status/651634611357790208 https://twitter.com/pmarca/status/651634611357790208 If it comes out that Andreessen backed Theranos, I suspect there'll be a lot of schadenfreude in the Valley.
  - geomark 11y ago
    We all understand that the VC narrative is about potentials. Sometimes we don't buy into the potential, may even have legit reasons to believe it is bogus. But if we don't support the narrative we are haters. Seems beneath someone in that position to resort to name-calling.

105 points by bedhead 11y ago

swampthinker 11y ago

Could a kind person summarize the article for us that don't have a WSJ subscription?

empressplay 11y ago
Click the "web" link in the header at the top of this page and it will google search the article, click on it in google and you'll see the whole thing.
lokeshk 11y ago
Pro tip: Do a google search of the title, and the link that comes up in the result won't require you a WSJ subscription. PS: This is true for most of the news websites that require subscription.

sebbot 11y ago

to anyone that doesn't have a wsj subscription, use the link from the google results: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QqQIwAGoVChMI8_XZ1ayHyQIVQcFjCh20CAnN&url=http%3A%2F%2Fwww.wsj.com%2Farticles%2Fsafeway-theranos-split-after-350-million-deal-fizzles-1447205796&usg=AFQjCNH0VFmzVZNRQHli7qd2DDXu6umZBg&sig2=etQXPu4uSowWZeJZYjGUbA https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&c...

ecopoesis 11y ago
Or just click the web link stories have now under their title.

deleted 11y ago

[deleted]

goodJobWalrus 11y ago

Is having blood tests in grocery stores / pharmacies a newish thing in the US, or it existed for a long time? I lived in the US in 2004-2007, and had blood tests regularly, but it would have never occurred to me to go to a grocery store for one.

rezistik 11y ago
It's Theranos business plan I believe.
empressplay 11y ago
No, the idea of having fast-turnaround blood-tests is the central focus of Theranos, one which it looks more and more likely it's failing to (and will seemingly never) deliver.
Pyxl101 11y ago
No, that's not typical. Blood tests are not usually offered in pharmacies either, and are reserved for clinics and hospitals. Blood tests typically involve needles, privacy, etc. They're the wrong atmosphere for a casual grocery store or pharmacy. Theranos's vision was to make blood tests easier and more accessible by requiring only a finger prick instead of drawing from a vein and by giving results quickly instead of hours or days later from a lab. It sounds like Safeway got on board with that vision as a forward-looking opportunity. If a full panel blood test was as easy as a finger prick, then I could see blood testing going mainstream in the way that Theranos is hoping, and Safeway was hoping, but it all depends on the technology actually working as advertised.
URSpider94 11y ago
Having pharmacies everywhere is becoming A Thing, since many Americans are on monthly prescriptions and it provides another contact point to come into the store. Budget department stores like Target and Wal-Mart have had them for years, grocery stores are just next in line. Value-add services in pharmacies are A Thing. In many places, pharmacists can administer vaccinations, and a lot of stores are adding "minute clinics" where you can go for quick health advice, blood tests, etc. Again, offering these services brings patients into the store where they will likely buy something else, and staffing these locations with nurses, nurse practitioners, or even just pharmacists, undercuts the cost of a visit to a medical doctor.

7Figures2Commas 11y ago

> Theranos often drew the same employee’s blood twice, first with blood from a finger prick and then the traditional method of a needle in the arm, according to one former Safeway executive. > The former executive said he worried that Theranos’s finger-prick process was still a work in progress. “If the technology is fully developed, why would you need to do a venipuncture?” this person said, using the term for a traditional blood draw. > The concerns deepened when Theranos’s test results for several Safeway employees differed from the results the same employees got from other laboratories, according to the former executive. Another former Safeway executive confirmed those recollections. > Theranos also backed away from putting its blood analyzers in Safeway’s clinics so patients could get the results quickly, the current and former executives said. > Instead, Theranos said blood samples collected at Safeway would have to be shipped to a central lab for analysis, according to the former executives. Wow. The Theranos story just keeps getting worse.

danieltillett 11y ago
Yep. I think this unicorn has a broken leg.
- auvi 11y ago
  If Theranos is still valued at $9 billion, then it is almost a decacorn. We have to see what happens to its nine unicorn (or cat, pun intended) lives.
- AJ007 11y ago
  Where is the line between grossly exaggerating ones product and criminal fraud drawn? Personally I view things where you give someone a false health diagnosis to be among the most egregious deceptions possible, a step beyond running a Ponzi scheme and in line with other things where users are severely hurt or killed.
  - danieltillett 11y ago
    I will be very surprised if Elizabeth hasn’t crossed the line over to fraud at some point. She is pulling down some very well connected people - she had better like orange.

colmvp 11y ago

Some important points from that article: > Current and former Safeway executives said Theranos missed deadlines for the blood-testing rollout. They also said several Safeway executives questioned the accuracy of results Theranos gave to Safeway employees tested at a clinic in the supermarket chain’s headquarters in Pleasanton, Calif. > Theranos often drew the same employee’s blood twice, first with blood from a finger prick and then the traditional method of a needle in the arm, according to one former Safeway executive. > The former executive said he worried that Theranos’s finger-prick process was still a work in progress. “If the technology is fully developed, why would you need to do a venipuncture?” this person said, using the term for a traditional blood draw. > The concerns deepened when Theranos’s test results for several Safeway employees differed from the results the same employees got from other laboratories, according to the former executive. Another former Safeway executive confirmed those recollections. > One Safeway executive got a frighteningly high result from Theranos on a test to gauge his prostate-specific antigen, according to two former Safeway executives. They said the test suggested that the executive had prostate cancer. Retesting by another lab came back normal.

danso 11y ago
One of the most irritating things about Theranos's defenders is their argument about how Theranos should be given lesser scrutiny because of how important and noble its mission is...that's the exact opposite of how it should be, IMO. Using Facebook as the archetypical unjustifiably-rich-startup (not my opinion, just well-repeated), in which the goal is to lower friction between friend-network-contacts...even if FB's news feed algorithm was corrupt, users have multiple ways of assessing the quality of their experience -- including out-of-band assessments (um, hanging out with friends IRL) and being able to defriend/filter lists... The whole point of Theranos is to reduce the friction in personal health assessment...which is a great idea regardless of noble motives...but lowering friction essentially means being able to more frequently collect and analyze data about yourself. If the assessment process is bad, then using more of the product is fundamentally terrible for the person. But the bigger problem is that it isn't easy to compare health tests...if getting an old-fashioned blood draw test was trivial, then Theranos would have no purpose in the first place. So with Theranos, the easily imaginable bad-case scenario is literally that people die because of false positives and negatives, no matter the kind motives and ambitions of Holmes. But I have to admit...at least Theranos believes in their own product? Because if it were just snake oil, they probably would've worked out a way to not use their flawed procedures for the Safeway executives, who have much interest and motive (and money) to do comparative quality testing. (unless of course the Safeway execs conducted their own blind tests...which is obviously what they should do but obviously, not all big money executives have been that skeptical of Theranos)

danieltillett 11y ago

Read the informed comments on Derek Lowe's blog about Theranos [1]. This is the money shot quote from johnnyboy "@Pete: it is entirely justified to have doubts about the validity of blood results obtained from finger pricks. The blood you get from a prick will be a mixture of blood from small venules, small arterioles, capillaries and lymph vessels, mixed with whatever loose tissue and cells have been cut by the prick and carried over into the blood. No way you could ever get a reliable CBC from such a sample. Since the kind of general blood tests that this company is targeting are usually CBC + chem panel, even if you could get your chem results from the prick, you still need a normal blood draw for the CBC, so the competitive advantage that they are trying to push (quick sampling by patient at pharmacy, without need for phlebotomist) is lost. On top of that, the variability inherent in chem results from prick blood will be significant for several analytes, like CK and AST (present in muscle so could be raised from prick injury), glucose and lipids (different levels in venous or arterial blood or lymph), etc… They are focusing on their fancy technology without much consideration of the underlying biology, typical error of engineering types.” 1. http://blogs.sciencemag.org/pipeline/archives/2015/10/15/theranos-and-its-blood-test-machine http://blogs.sciencemag.org/pipeline/archives/2015/10/15/the...

refurb 11y ago
No doubt that a blood sample from a finger prick is different than from a vein. That said, diabetics just use finger pricks for their blood glucose tests. Is the result calibrated for a finger prick test or do we just assume it's close enough?
- danieltillett 11y ago
  You don’t need the accuracy that you need for the other tests plus glucose is in really high concentrations relatively to the other compounds they want to measure. If you are out by 20% on the glucose concentration in diabetes it does not matter too much, but it does for everything else. It is not like the current machines are 100% accurate anyway even though the ISO threshold is +-20% [1]. 1. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3317395/ http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3317395/

bedhead 11y ago

The anecdotal evidence is absolutely overwhelming at this point: Theranos simply doesn't work. Books will be written about this company...

deleted 11y ago
[deleted]
Jerry2 11y ago
Harvard Business Review's post mortem case study should be interesting as well.
nemo44x 11y ago
I agree. It will likely be seen as a massive scam. Ideas are cheap. Technology is hard.
- tlmde 11y ago
  Yes, I've been working in MEMS for 15 years.
w1ntermute 11y ago
More importantly, who's going to play her on the big screen?
- akhilcacharya 11y ago
  My money's on JLaw. I expect a Theranos movie written by Aaron Sorkin by 2020.
  - w1ntermute 11y ago
    What's it going to be called? Unicorn Blood?
    - akhilcacharya 11y ago
      Clever. I'd watch it opening day.

marcusgarvey 11y ago

>Safeway Inc. spent about $350 million to build clinics in more than 800 of its supermarkets to offer blood tests by startup Theranos Inc. >The $350 million price tag was equivalent to more than half of Safeway’s net income of $596.5 million in 2012. Safeway had revenue of $44.21 billion. Safeway also invested more than $10 million in Theranos, one former Safeway executive said. >Two of the former Safeway executives said they told Mr. Burd, Safeway’s chief executive, about the varying employee test results. >The former executives said Mr. Burd told them he had been reassured by Ms. Holmes. Mr. Burd continued to support the partnership with Theranos, according to the former Safeway executives. If he hadn't retired already, he should be fired for incompetence.

danieltillett 11y ago
It certainly will be interesting how he justifies this in front of the shareholder plaintiff lawyers.
- anon8418 11y ago
  But but but Rumsfeld and Kissinger told me it was a sure thing!
  - jessaustin 11y ago
    Yeah those guys are famous for their foresight.
kumarm 11y ago
Mr. Burd declined to comment, citing a nondisclosure agreement. He retired in May 2013.
sk5t 11y ago
Well, Holmes _did_ reassure Burd. We cannot rule out the possibility that she is an exceptionally deft reassurer. In seriousness, Safeway gets durable capital improvements to their stores for their $350mm, still useful without Project T-Rex.

sama 11y ago

It's now been two weeks since Theranos said they were going to release clinical data.

danieltillett 11y ago
Sam I think we can safely say at this stage that there is no favorable clinical data.
deleted 11y ago
[deleted]

Pyxl101 11y ago

What options are there for founders to liquidate shares in the process of fundraising but before going public? Are founders typically able to liquidate some amount of shares in funding rounds in order to take home cash, or do investors disallow that entirely until a company is sold or goes public? Theranos is 12 years old at this point, and raised $400 million at a $4.5 billion valuation. Would a founder of a company in those circumstances have been able to liquidate - let's say - 1% of their ownership along the way, or in the last fundraising round, for cash? Or is that out of the question and founders are expected to retain their ownership aside from investment dilution until sale? I suppose the answer depends on the terms the company is able to work out with their investors. But perhaps someone can comment on what terms are common in such situations.

alaskamiller 11y ago
Biggest example is Snapchat, they got and keep asking for millions of dollars money when fundraising. Last year's big drama was Secret app's founder taking $6MM when they raised $25MM then proceeded to buy fancy cars. The product growth stalled and the company shut down in less than a year. Happened with Buffer.
- Pyxl101 11y ago
  Thanks for the tip to Buffer. They've published a blog post explaining their reasons that I've started reading: https://open.buffer.com/raising-3-5m-funding-valuation-term-sheet/ https://open.buffer.com/raising-3-5m-funding-valuation-term-... > So you might be wondering, why raise funding if everything is going so well and we’re in full control? Here are some of the reasons: > 1. We’re removing pressure to sell, so we can go all in and keep building Buffer for the next 5-10 years. 2. Setting up a precedent for multiple regular liquidity events for investors and team members. 3. It’s a way to get partners on board who are excited about the unique way we’re running the company. 4. We want to add a little extra cushion to the bank to help us with any speed bumps that might arise [more details on each point in the article] Their reasons make sense to me.
- Asparagirl 11y ago
  Happened with Basecamp (formerly 37 Signals), too -- they're bootstrapped but they took a small investment from Jeff Bezos so that they could cash out a little bit and enjoy themselves.

seesomesense 11y ago

This is what happens when the CEO of a startup is a liar. It is a shame, but it is unsurprising.

geomark 11y ago

Have the people who funded Theranos been calling the critics haters? That seems to be common with some VCs. Like calling HN "Hater News" because of harsh criticism of questionable claims of innovation.

w1ntermute 11y ago
https://twitter.com/pmarca/status/651634611357790208 https://twitter.com/pmarca/status/651634611357790208 If it comes out that Andreessen backed Theranos, I suspect there'll be a lot of schadenfreude in the Valley.
- geomark 11y ago
  We all understand that the VC narrative is about potentials. Sometimes we don't buy into the potential, may even have legit reasons to believe it is bogus. But if we don't support the narrative we are haters. Seems beneath someone in that position to resort to name-calling.