13 ms·

Theranos Is Subject of Criminal Probe by U.S

390 points by fmihaila 11y ago

minimaxir 11y ago
Why is the SEC involved in a failure-to-quality-control issue? Were investors materially misled?
- chollida1 11y ago
  Yes, word on the street is that they are being investigated by the SEC for misleading their investors. This very sparse report leads with the same text and twitter is full of news sources "reporting" the same thing. I have a feeling that it's going to be a bad time for Theranos employee's and investors over the next few months. It's going to be much worse for a few of their executives.
- kchoudhu 11y ago
  With lots of mutual funds investing in these pseudo-public technology companies, actual investors are at risk. Thankfully, the SEC has our backs.
seehafer 11y ago
When I first read this headline I was thinking "Uh oh, Theranos must have very badly handled its interactions with FDA". But this is apparently the SEC investigating the company. Does anyone know how often the SEC investigates a private company with a product that's still essentially in beta testing?
- jonknee 11y ago
  > Does anyone know how often the SEC investigates a private company with a product that's still essentially in beta testing? Apparently at some point before a company takes $400m in investment on a fraudulent basis.
- sseveran 11y ago
  They will see if there is something like a material misrepresentation.
- pmorici 11y ago
  The cynical point of view is that some wealthy investors feel like they were mislead and that is the only reason the SEC gives a hoot.
  - smitherfield 11y ago
    Respectfully, that's a nonsense point of view. The investors want to get as much of their investment back as possible, or, if they've given up on that, they at least don't want to be seen as having invested in criminals.
    - pmorici 11y ago
      If they have concluded that their was some kind of fraud involved then having the government investigate and expose the facts is a lot easier and cheaper for them. They will then be free to use those facts to recover money.
      - smitherfield 11y ago
        They're the owners of the company; they're already entitled to their share of whatever's left. Institutional investors are a lot more worried about the (additional) reputational damage, from having invested with criminals, than they are about recovering fractions of fractions of fractions of pennies on the dollar by raiding Elizabeth Holmes' personal bank account.
  - xadhominemx 11y ago
    Nah, no way. If anything the SEC spends too much time chasing down small time crooks scamming grandpa.
    - pmorici 11y ago
      That's the point they only go after people scamming grandma unless some influential person pushes them to do otherwise.
- HillRat 11y ago
  Well, if it can be shown that they lied or omitted material information in the course of soliciting equity investments, that's a Rule 10b-5 violation, the SEC's big club. The fact that Theranos is a private company is immaterial, as is the possibility that none of its investors may have complained.
  - GCA10 11y ago
    Theranos has at least two mainstream venture funds among its investors. These funds have limited partners, most of which are fairly famous institutions (including big-name universities). These LPs hate to see their money squandered -- and they may feel a legal obligation to raise a ruckus.
- mikeyouse 11y ago
  The criminal probe is separate from the SEC actions -- The SEC can only refer criminal cases to the DOJ, they have no criminal enforcement arm themselves.[1] In addition to the criminal probe, the Securities and Exchange Commission is examining whether Theranos made deceptive statements to investors when it solicited funding, according to people familiar with the matter. So in addition to the criminal probe instigated by the DOJ, the SEC is investigating for securities issues. [1] - https://www.sec.gov/about/offices/oia/oia_enforce/overviewenfor.pdf https://www.sec.gov/about/offices/oia/oia_enforce/overviewen...
- Animats 11y ago
  The SEC is getting more aggressive about regulating large pseudo-public companies that haven't had a formal IPO, but which have many "qualified" investors.[1] Mutual funds now invest in these companies, which means ordinary investors are at risk. The SEC chair on "unicorns": "It is axiomatic that all private and public securities transactions, no matter the sophistication of the parties, must be free from fraud. Exchange Act Section 10(b) and Rule 10b-5 apply to all companies and we must be vigorous in ferreting out and punishing wrongdoers wherever they operate. In the unicorn context, there is a worry that the tail may wag the horn, so to speak, on valuation disclosures. The concern is whether the prestige associated with reaching a sky high valuation fast drives companies to try to appear more valuable than they actually are." That last sentence sounds a lot like Theranos. [1] https://www.sec.gov/news/speech/chair-white-silicon-valley-initiative-3-31-16.html https://www.sec.gov/news/speech/chair-white-silicon-valley-i...
  - trhway 11y ago
    "tough on Unicorns" :) The plight of Theranos has just become much worse as they will probably be made an example of.
    - ben_jones 11y ago
      My money is still on the CEO and board of investors bailing out on golden parachutes to whatever their next horrendous executive appointment will be.
      - rconti 11y ago
        Maybe for the board, but not the CEO -- she's not a hired gun, she was the founder.
  - Apocryphon 11y ago
    Good that the feds are doing their due diligence.
Fede_V 11y ago
Man, the shoe fell really, really quickly. Also - huge congratulations to the reporting team of the WSJ, that did an incredible job of unconvering this story back when Theranos was still considered a golden goose. John Carreyrou in particular did some exceptional reporting.
- cft 11y ago
  Uncovering? They pissed off (justly) somebody very important, probably in the military, and they used WSJ to orchestrate this.
  - FireBeyond 11y ago
    No, the other way around. They were all set to get it in at a high level into the military, when some pesky medical lower ranking officer said, hey, doesn't this need FDA approval? Theranos tried to squelch that, but to no avail.
    - ben_jones 11y ago
      Is it possible both of you are right?
      - vonklaus 11y ago
        > Is it possible both of [them] are right? Absolutely. However, they give 0 attribution to their baseless assertions. I follow Theranos enough where neither of these statements are so obviously common knowledge that they don't need to reference something at least in passing. Mostly, I am curious how this ended up happening.
        FireBeyond 11y ago
        Attribution: http://www.fiercemedicaldevices.com/story/theranos-asked-military-general-help-tamping-down-misinformation-dod/2015-12-02 http://www.fiercemedicaldevices.com/story/theranos-asked-mil... "But things didn't shake out that way. A military regulatory expert contacted the FDA with concerns about Theranos' technology without telling the company first, stalling the project and prompting Holmes to reach out to Mattis for help. "I would very much appreciate your help in getting this information corrected with the regulatory agencies," Holmes wrote in an email to Mattis, saying that since the "misinformation came from within DOD, it would be "invaluable" to have the information "formally corrected by the right people in the DOD."
bby 11y ago
I don't say this often, but fuck Theranos.
jackcn 11y ago
Like I've mentioned before, Theranos needs to shut down. The technology doesn't work (and likely it never will since blood constituents are not evenly distributed at small volumes) and its investors and executives are complicit in fraud. While half-completed/non-working solutions are fine in software world and with consumer electronics, a misreading or missed reading of blood parts can easily cost the health or life of a person. I'll be glad to see the SEC/FDA put an end to this.
- wrong_variable 11y ago
  healthcare is a very hard problem. While we in the tech community may find it morbidly entertaining to watch Theranos burn to the ground. Someone out there needs to attack healthcare. The not dying motivation is fairly important.
  - ddorian43 11y ago
    It's better to make photo-sharing apps and sell iphones. While healthcare is very hard, also needs alot of money. My idea would be: create photo-sharing app/telegram/iphones etc to make alot of cash and THEN try real-science-shit (like Elon Musk / ~Paypal Mafia).
  - 467568985476 11y ago
    The attacking part is great. It's the "fail fast" part that they messed up on. If the machines worked, would we be having this conversation about a company accused of lying to regulators and defrauding investors? Maybe it's a problem of Theranos setting investor expectations poorly, maybe the regulators are looking to make an example of someone for playing fast and loose in the traditionally tightly regulated healthcare industry, maybe both. Hopefully it's growing pains for a burgeoning biotech market and not actually fraud from the top.
  - toomuchtodo 11y ago
    > Someone out there needs to attack healthcare. All the attacking that needs to be done is political/social, not technical. Want to attack healthcare? Strip middlemen out so that the money flows to providers and researchers (Single payer + pouring additional money into the NIH/NSF, with the results being public domain). All of these YC startups I see "hacking" healthcare (Dr Chrono, HealthSherpa, etc) are just bandaids on a patient bleeding out from the jugular. EDIT: Before you chime in to state that single payer can't be done, 58 countries [1] enable it just fine. Governments can be even more accountable than the current breed of private health insurance providers (I cannot replace the board at my insurance carrier, nor can I FOIA them). If you want to "hack" healthcare and fix the problem, get involved in government and get single payer done. [1] https://en.wikipedia.org/wiki/Universal_health_coverage_by_country https://en.wikipedia.org/wiki/Universal_health_coverage_by_c...
homero 11y ago
Pump and dump couldn't dump!
dcgudeman 11y ago
The news release issued when the Walgreens deal was announced said consumers “will be able to access less invasive and more affordable clinician-directed lab testing, from a blood sample as small as a few drops, or 1/1,000 the size of a typical blood draw.” As part of the deal, Walgreens has invested at least $50 million into Theranos, according to people familiar with the matter. It really blows my mind that Theranos was able to get this far with what sounds like technology that simply didn't work. Did any investors simply try the test(s) before investing vast sums of money?
- lawnchair_larry 11y ago
  Have you ever seen how directors and executives make deals? Meanwhile, I'm sure dozens of engineers were shouting that this doesn't work, but couldn't get the message through the thick layer of middle management. It is not the least bit surprising to me.
thrownaway2424 11y ago
One thing I'd love to know, and that might come out in court eventually, is which early investors exited in the huge dumb-money round in 2014. What did they know and when did they know it, and all that.
- leroy_masochist 11y ago
  IANAL, but I'm pretty sure that in this kind of situation, unless said investors have a seat on the board of directors -- and none at Theranos did -- they're almost certainly not in trouble with the SEC. Theranos is a private company so the SEC rules around MNPI are not relevant here. However, if (IF) any of the earlier investors told later investors things about Theranos that they had reason to doubt in an effort to up the valuation of the next round, then I suppose that might be lawsuit fodder. How you would prove that? Dunno.
- alva 11y ago
  Out of interest, does any one know what liabilities such investors might have? If the outside investors had knowledge of the problems we are now seeing and sold off without disclosing the issues, are they somewhat accountable?
  - adventured 11y ago
    That almost entirely binds to what responsibility they had in regards to the company. If they weren't legally insiders, then even if they had more knowledge than the broader public does (which in this case may be irrelevant depending on a few things), they won't be carrying liability. To be clear, selling doesn't make them liable for fraud committed by Theranos, if they had no role in managing the company. Even if a lawsuit were brought, you're going to have one helluva hurdle in getting any liability to stick to said investor/s without proving direct involvement. Doing anything about insider trading in a private corporation, has historically been a challenging area for the SEC. They have often previously been more hands off, but they've gotten more aggressive about it lately: "On December 12, 2011, the SEC announced an enforcement proceeding that serves as a useful reminder that the federal laws against insider trading and misrepresentation apply as forcefully to private companies purchasing stock from employees and other shareholders as they do in the public company setting." http://www.lexology.com/library/detail.aspx?g=e24dc4ab-2a77-43d9-8a78-9ea46eca1aca http://www.lexology.com/library/detail.aspx?g=e24dc4ab-2a77-...
caminante 11y ago
non-paywall link: http://on.wsj.com/1VyFPIt http://on.wsj.com/1VyFPIt
- sparky_ 11y ago
  Much appreciated
  - chockZ 11y ago
    WSJ also allows for visitors from organic search to read the articles without the paywall. Simply Google search the exact WSJ article title with "quotations" around the title and click on the WSJ link from Google.
blakeross 11y ago
Here's a television parody I wrote about Theranos that ends right where this story begins... http://pricks.com http://pricks.com
- serf 11y ago
  that's a more noble use of that domain than anyone could have predicted.
- mrdmnd 11y ago
  I just read a 32 page script and now I want you to write major television shows. Is that your actual job? This is really good.
  - blakeross 11y ago
    Thank you! Currently it's a hobby; my background is in tech. This is the second script I've written. The first was a fake premiere for S3 of Silicon Valley (http://bit.ly/1LOZZpT http://bit.ly/1LOZZpT).
    - mrdmnd 11y ago
      Well, I know what I'm doing tonight. Cheers! This is great.
    - ryanwaggoner 11y ago
      Just wanted to say that I found this so funny when I read it a few months ago (if I remember correctly). You perfectly captured the characters and I could see them saying those exact words. I'm curious what it takes to break into the world of writing for existing TV shows. Can you sell scripts written on spec for shows like this?
      - blakeross 11y ago
        I appreciate it. You can't sell a script for a show to the show itself. In fact, the staff isn't even allowed to read it for legal reasons (if they happen to conceive a similar idea, they're worried you'll sue them later). However, an agent could shop your script to other shows to demonstrate that you're able to integrate well into a world you didn't create. It's rather strange: If you want to write for Breaking Bad, you should write a script for The Wire.
dcgudeman 11y ago
Investigators are also examining whether Theranos misled government officials, which can be a crime under federal law, some of the people said. Such subpoenas don’t necessarily mean prosecutors are actively seeking an indictment. People familiar with the matter said the investigation is at an early stage. In addition to the criminal probe, the Securities and Exchange Commission is examining whether Theranos made deceptive statements to investors when it solicited funding, according to people familiar with the matter. Theranos was valued at $9 billion in a funding round in 2014 and the majority stake of Elizabeth Holmes, the startup’s founder and chief executive, at more than half that. Has there been any other examples of such high profile entrepreneurs ending up at the wrong end of a criminal investigation?
- adventured 11y ago
  Sure. Adelphia Cable was a large company - the fifth largest cable company in the US - founded by John Rigas, and he was indicted when it imploded: "Federal prosecutors proved that the Rigases used complicated cash-management systems to spread money around to various family-owned entities and as a cover for stealing $100 million for themselves." https://en.wikipedia.org/wiki/Adelphia_Communications_Corporation https://en.wikipedia.org/wiki/Adelphia_Communications_Corpor... A few other examples from that time are not as clean when it comes to the direct "entrepreneur" part. Kenneth Lay is sometimes considered the founder of Enron, but he didn't build or found most of the pieces of it. Bernie Ebbers of Worldcom was a bit closer to being a traditional entrepreneur story: "Ebbers began his business career operating a chain of motels in Mississippi. He joined with several other people in 1983 as investors in the newly formed Long Distance Discount Services, Inc. (LDDS). Two years later he was named chief executive of the corporation. The company acquired over 60 other independent telecommunications firms, changing its name to WorldCom in 1995." https://en.wikipedia.org/wiki/Bernard_Ebbers https://en.wikipedia.org/wiki/Bernard_Ebbers Crazy Eddie is a famous story, but quite a lot smaller than Theranos (well, in regards to b.s. market valuation): "At its maximum, Crazy Eddie had 43 stores in the chain, and earned more than $300 million in sales" [that $300m in sales would adjust quite a lot higher in today's dollar] https://en.wikipedia.org/wiki/Crazy_Eddie https://en.wikipedia.org/wiki/Crazy_Eddie Bernie Madoff is maybe the most famous example (he ran his own firm for 48 years!): "Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008" https://en.wikipedia.org/wiki/Bernard_Madoff https://en.wikipedia.org/wiki/Bernard_Madoff Allen Stanford was sort of out of the same mold: https://en.wikipedia.org/wiki/Allen_Stanford https://en.wikipedia.org/wiki/Allen_Stanford
dcgudeman 11y ago
Investigators are also examining whether Theranos misled government officials, which can be a crime under federal law, some of the people said. Such subpoenas don’t necessarily mean prosecutors are actively seeking an indictment. People familiar with the matter said the investigation is at an early stage. In addition to the criminal probe, the Securities and Exchange Commission is examining whether Theranos made deceptive statements to investors when it solicited funding, according to people familiar with the matter. Theranos was valued at $9 billion in a funding round in 2014 and the majority stake of Elizabeth Holmes, the startup’s founder and chief executive, at more than half that. Has there been any other examples of such high profile entrepreneurs ending up at the wrong end of a criminal investigation?
dcgudeman 11y ago
The news release issued when the Walgreens deal was announced said consumers “will be able to access less invasive and more affordable clinician-directed lab testing, from a blood sample as small as a few drops, or 1/1,000 the size of a typical blood draw.” As part of the deal, Walgreens has invested at least $50 million into Theranos, according to people familiar with the matter. It really blows my mind that Theranos was able to get this far with what sounds like technology that simply didn't work. Did any investors simply try the test(s) before investing vast sums of money?
- throwaway_xx9 11y ago
  The Walgreen's angle is much bigger. From what I've read online, they invested $50 million and built out all those in-store clinics based on Theranos. Add in the retail space and construction costs, and you're looking at real money.
smitherfield 11y ago
Theranos' tragic flaw was not even so much that they were hyped to the moon and back, but that they believed their own hype.
forgetsusername 11y ago
Always fun to go back in time and look at what people were saying about Elizabeth Holmes and Theranos, like 2 years ago: https://news.ycombinator.com/item?id=7951019 https://news.ycombinator.com/item?id=7951019 or https://news.ycombinator.com/item?id=8181339 https://news.ycombinator.com/item?id=8181339 I find it insightful to see who was "right" and who was "wrong". There were a surprising number of people from the medical field expressing doubts about the technology.
- Mz 11y ago
  Perhaps should have been titled "30 year old vaporware sector billionaire"
- trhway 11y ago
  i remember that one https://news.ycombinator.com/item?id=8182026 https://news.ycombinator.com/item?id=8182026 That day I just basically learned about Theranos existence from the posted article, and that comments post explained to me what it is about :)
- drjesusphd 11y ago
  > There were a surprising number of people from the medical field expressing doubts about the technology. And were dismissed because their industry was being "disrupted".
return0 11y ago
What happens if the investors were not mislead? Is this probe a move by the big investors to cover their ass in the case that Theranos is found to have defrauded customers?
Animats 11y ago
Theranos isn't even at the leading edge of blood testing. There are now hand-held FDA-approved immediate blood testing devices.[1][2][3] Most of these require smaller amounts of blood than a remote lab, although more than a drop. Theranos is still in the send-it-to-the-lab-and-wait era. Even if Theranos' technology eventually works, it may be obsolete before it ships. [1] https://www.abbottpointofcare.com/products-services/istat-handheld https://www.abbottpointofcare.com/products-services/istat-ha... [2] http://www.epocal.com/system.html http://www.epocal.com/system.html [3] http://www.pixcell-medical.com/products/in-the-pipeline http://www.pixcell-medical.com/products/in-the-pipeline
- nextos 11y ago
  The healthcare industry is quite inefficient at allocating money to things that are needed and have a decent chance of working. For example, in the field of oncology there's very little money put into cheap accurate early screening. And an almost obsessive pour of money into trying to understand mid-to-late stage cancers. Even James Watson has criticized this. It's a sad situation, because we now know early pre-clinical tumours leave a trace of circulating DNA in blood. And it seems like a darn important and doable inference problem to distinguish cancer from control patients.
  - mattzito 11y ago
    > For example, in the field of oncology there's very little money put into cheap accurate early screening. And an almost obsessive pour of money into trying to understand mid-to-late stage cancers. Even James Watson has criticized this. I'm in no way an expert, but isn't part of that related to increasing evidence that early detection of a tumor isn't necessarily a benefit? I recall reading many tumors stop or grow so slowly that treating them has more of a downside than an upside. This is one of the reasons why early breast cancer screenings aren't a benefit.
    - bonniemuffin 11y ago
      You're definitely right that merely detecting tumors earlier doesn't always help, because many of them are relatively slow-growing and fairly harmless. But this actually makes a very specific kind of early detection research even more important: research to help us predict which early-stage tumors will progress to becoming deadly, and which ones won't. Currently we're pretty bad at making this prediction for many kinds of cancer, but if we could detect them all early AND distinguish the really bad ones from the mellower ones, we'd know exactly who to treat aggressively.
smaili 11y ago
This eerily reminds me of Enron.
- jonknee 11y ago
  Enron was much more of a real company. It collapsed due to poor investments and cooking the books, but Enron really did own a lot of assets. It would be more akin to Enron if Theranos' tech actually worked, but they were reporting much more profit than they were really getting.
- saryant 11y ago
  Well, her father did work there. (Though, in his defense, not in a business unit related to their fraud)
- driverdan 11y ago
  Other than (potential) fraud, they have very little in common.
aceperry 11y ago
The Theranos story is unfortunate due to the likelihood of fraud because the healthcare industry is in desperate need of disruption. Even if just from the periphery, which is how I would characterize Theranos' role, I think that could enable a change in how health care is done and delivered in the US.
maverick_iceman 11y ago
I wonder why WSJ went so aggressively against Theranos. (Not that I'm complaining.) Does anyone know the backstory there?
- adevine 11y ago
  Basically, it looks like one reporter starting pulling at the thread, and the whole sweater fell apart. I wouldn't really say they went after Theranos aggressively until they realized there was a much bigger story.
  - kchoudhu 11y ago
    *whole turtle neck. See: https://www.bing.com/images/search?q=elizabeth+holmes&FORM=HDRSC2 https://www.bing.com/images/search?q=elizabeth+holmes&FORM=H...
- biot 11y ago
  Because it's good journalism?
cft 11y ago
I think the working assumption of the investors was that she would be sacrificed, but Theranos would continue. But because of this, it may not happen.
supernova87a 11y ago
I think the reason we (maybe secretly) take so much satisfaction / schadenfreude at this story is that someone who was so hyped and the darling of Silicon Valley got so much funding and attention. While others who toil away on good ideas, without nearly so many connections and silver spoons, struggle to even get 1 minute of air time with the kind of funders and backers that she got. That, plus seeing the cluelessness and herd mentality of the people who are supposedly the experts at judging tech potential in this area.
- Mz 11y ago
  Or maybe some folks feel relieved to have their mental models for actual reality validated. Folks who thought it smelled like vaporware at best, or BS at worst, may not be engaging in schadenfreude so much as "Ha! I knew it! I'm not crazy!" It is possible to have not ugly reasons for finding satisfaction in seeing how this is turning out.
  - jjoonathan 11y ago
    Thanks, I miscategorized my own feelings of validation as schadenfreude and was feeling bad about it. Now I don't have to.
  - wpietri 11y ago
    Good point. For me it's not exactly schadenfreude. I'm ok with hype that turns out to be justified. And I'm mostly resigned to people who go wrong through an excess of enthusiasm and naivete. But when unjustified hype shades into negligence or fraud, I take a rich pleasure in seeing people get their comeuppance. It's not schadenfreude precisely, but more about seeing justice done, about seeing karma fulfilled.
    - mikekchar 11y ago
      I don't speak German, but I don't know if it ceases being schadenfreude just because you feel that the bad thing that happens is justified. Indeed, the Wikipedia page on the word freely mixes those kinds of examples in their page. I'm not trying to be confrontational here, but recently I've been having a fairly negative reaction to the happy feelings that occur when justice is served. Sometimes I think this fuels a search for justice, where punishment is almost a desired goal from the beginning. The OP also discussed the feeling of satisfaction that their world view is justified when someone gets punished. Without trying to ascribe any intent to the OP, I get very bad vibes out of relentless searches for justice where the punishment of those caught fuels a reinforcement that a certain world view is correct. Of course this is completely blowing these feelings up out of proportion, but from small seeds grow tall trees. I have lately wondered if justice is really something we should not try to pursue.
hackaflocka 11y ago
Is there any evidence of Elizabeth Holmes' scientific research abilities? Besides the 100 or so patents that she's on (none of which she's on alone)? E.g., is there anything in her high-school yearbook about her winning science contests, etc.?
hackaflocka 11y ago
This is more evidence of Silicon Valley's anti-woman culture. /sarcasm
- erikpukinskis 11y ago
  Is your sarcasm meant to imply that Silicon Valley's purported anti-woman culture is overstated?
shas3 11y ago
For all the EPA fights that plague larger older companies (and many new ones, too), industrial safety and adherence to regulations is very deeply ingrained in their cultures. Heads roll pretty quickly for violations at lower levels. Even higher level executives are often quite responsible about staying within the bounds of laws and regulations (though they are less so in doing layoffs and such). This obviously leads to slower innovation and more red-tape, but I have come to believe that slower innovation is an acceptable price to pay for the rest of the stuff being legit. If you are challenging the old order in old industries, and have to move fast and break (the right) things, do it like Tesla and Space X, not Theranos.
bane 11y ago
This is great, it couldn't have happened to nicer people. However, I'm willing to bet no charges will come out of it.
PakG1 11y ago
Funny, just saw this in the paper yesterday. I wonder how it differs from Theranos. http://szdaily.sznews.com/html/2016-04/18/content_3505489.htm http://szdaily.sznews.com/html/2016-04/18/content_3505489.ht...
- iam-TJ 11y ago
  If verified, the LinkedIn history [0] at least shows some expertise and progressive advancement in medical device design and manufacturer, which I don't think Theranos' CEO has. [0] https://www.linkedin.com/in/wendian-shi-21757833 https://www.linkedin.com/in/wendian-shi-21757833
programmer1234 11y ago
I am glad this is happening. Theranos lent credibility to the idea that Silicon Valley technology investors were and are in a position to improve society through funding legitimate scientific research, in contrast to say, Snapchat. Theranos lied, which might not have been a problem had it not been praised so much, and the board hadn't been stacked with major power brokers who are supposed to have integrity. The best we can do is figure out who was responsible and put them on a cross before the reputation of the whole venture community suffers from this scandal.
TheRealPomax 11y ago
note that this article requires a subscription to wsj.
ben_jones 11y ago
How long until hacker news champions the next Theranos?
anigbrowl 11y ago
Never trust anyone whose schtick is that they're too busy to have a private life.
- hackaflocka 11y ago
  Agreed. Did Holmes say that?
  - anigbrowl 11y ago
    It was a minor takeaway in some gushing article about 18 months ago though I don't recall where right now and don't feel like diving through my ancient HN comments. I just remember it jumping out as a 'too good to be true' aspect of the story.
  - return0 11y ago
    There is a number of things from her past interviews (https://www.youtube.com/watch?v=iwKs-eoPM-Y https://www.youtube.com/watch?v=iwKs-eoPM-Y) that leave a lot of questions. For example she says that she sleeps for 4 hours , and that she 's a big fan of the 10000 hours rule, and a bunch of stuff for how she really is committed to what she does, but very little on why she believes she can pull it through. For comparison, another female health entrepreneur, Woljisky of 23andme usually gives much more down-to-earth and concrete motives for her company. And there is the turtleneck thing that, in retrospect, looks ridiculous.
    - anigbrowl 11y ago
      Hey now I like turtlenecks, even if she was going for a 'Steve Jobs, only pretty' image.
madaxe_again 11y ago
The punchline will be kissinger dying weeks before the law finally catches up with the p'tach.
deleted 11y ago
[deleted]
cant_kant 11y ago
"The Journal‘s reporting suggests that Theranos had been falsifying lab records to make it look like its own proprietary gear was as reliable as the industry standard. Documents from health care inspectors also seem to show that this kind of stuff was happening. If the DOJ concludes that Theranos was charging money for a test it knew was not accurate, that would violate health care laws, and could earn people prison time." http://www.wired.com/2016/04/theranos-investigated-fraud-weird-private-company/ http://www.wired.com/2016/04/theranos-investigated-fraud-wei...

390 points by fmihaila 11y ago

minimaxir 11y ago

Why is the SEC involved in a failure-to-quality-control issue? Were investors materially misled?

chollida1 11y ago
Yes, word on the street is that they are being investigated by the SEC for misleading their investors. This very sparse report leads with the same text and twitter is full of news sources "reporting" the same thing. I have a feeling that it's going to be a bad time for Theranos employee's and investors over the next few months. It's going to be much worse for a few of their executives.
kchoudhu 11y ago
With lots of mutual funds investing in these pseudo-public technology companies, actual investors are at risk. Thankfully, the SEC has our backs.

seehafer 11y ago

When I first read this headline I was thinking "Uh oh, Theranos must have very badly handled its interactions with FDA". But this is apparently the SEC investigating the company. Does anyone know how often the SEC investigates a private company with a product that's still essentially in beta testing?

jonknee 11y ago
> Does anyone know how often the SEC investigates a private company with a product that's still essentially in beta testing? Apparently at some point before a company takes $400m in investment on a fraudulent basis.
sseveran 11y ago
They will see if there is something like a material misrepresentation.
pmorici 11y ago
The cynical point of view is that some wealthy investors feel like they were mislead and that is the only reason the SEC gives a hoot.
- smitherfield 11y ago
  Respectfully, that's a nonsense point of view. The investors want to get as much of their investment back as possible, or, if they've given up on that, they at least don't want to be seen as having invested in criminals.
  - pmorici 11y ago
    If they have concluded that their was some kind of fraud involved then having the government investigate and expose the facts is a lot easier and cheaper for them. They will then be free to use those facts to recover money.
    - smitherfield 11y ago
      They're the owners of the company; they're already entitled to their share of whatever's left. Institutional investors are a lot more worried about the (additional) reputational damage, from having invested with criminals, than they are about recovering fractions of fractions of fractions of pennies on the dollar by raiding Elizabeth Holmes' personal bank account.
- xadhominemx 11y ago
  Nah, no way. If anything the SEC spends too much time chasing down small time crooks scamming grandpa.
  - pmorici 11y ago
    That's the point they only go after people scamming grandma unless some influential person pushes them to do otherwise.
HillRat 11y ago
Well, if it can be shown that they lied or omitted material information in the course of soliciting equity investments, that's a Rule 10b-5 violation, the SEC's big club. The fact that Theranos is a private company is immaterial, as is the possibility that none of its investors may have complained.
- GCA10 11y ago
  Theranos has at least two mainstream venture funds among its investors. These funds have limited partners, most of which are fairly famous institutions (including big-name universities). These LPs hate to see their money squandered -- and they may feel a legal obligation to raise a ruckus.
mikeyouse 11y ago
The criminal probe is separate from the SEC actions -- The SEC can only refer criminal cases to the DOJ, they have no criminal enforcement arm themselves.[1] In addition to the criminal probe, the Securities and Exchange Commission is examining whether Theranos made deceptive statements to investors when it solicited funding, according to people familiar with the matter. So in addition to the criminal probe instigated by the DOJ, the SEC is investigating for securities issues. [1] - https://www.sec.gov/about/offices/oia/oia_enforce/overviewenfor.pdf https://www.sec.gov/about/offices/oia/oia_enforce/overviewen...
Animats 11y ago
The SEC is getting more aggressive about regulating large pseudo-public companies that haven't had a formal IPO, but which have many "qualified" investors.[1] Mutual funds now invest in these companies, which means ordinary investors are at risk. The SEC chair on "unicorns": "It is axiomatic that all private and public securities transactions, no matter the sophistication of the parties, must be free from fraud. Exchange Act Section 10(b) and Rule 10b-5 apply to all companies and we must be vigorous in ferreting out and punishing wrongdoers wherever they operate. In the unicorn context, there is a worry that the tail may wag the horn, so to speak, on valuation disclosures. The concern is whether the prestige associated with reaching a sky high valuation fast drives companies to try to appear more valuable than they actually are." That last sentence sounds a lot like Theranos. [1] https://www.sec.gov/news/speech/chair-white-silicon-valley-initiative-3-31-16.html https://www.sec.gov/news/speech/chair-white-silicon-valley-i...
- trhway 11y ago
  "tough on Unicorns" :) The plight of Theranos has just become much worse as they will probably be made an example of.
  - ben_jones 11y ago
    My money is still on the CEO and board of investors bailing out on golden parachutes to whatever their next horrendous executive appointment will be.
    - rconti 11y ago
      Maybe for the board, but not the CEO -- she's not a hired gun, she was the founder.
- Apocryphon 11y ago
  Good that the feds are doing their due diligence.

Fede_V 11y ago

Man, the shoe fell really, really quickly. Also - huge congratulations to the reporting team of the WSJ, that did an incredible job of unconvering this story back when Theranos was still considered a golden goose. John Carreyrou in particular did some exceptional reporting.

cft 11y ago
Uncovering? They pissed off (justly) somebody very important, probably in the military, and they used WSJ to orchestrate this.
- FireBeyond 11y ago
  No, the other way around. They were all set to get it in at a high level into the military, when some pesky medical lower ranking officer said, hey, doesn't this need FDA approval? Theranos tried to squelch that, but to no avail.
  - ben_jones 11y ago
    Is it possible both of you are right?
    - vonklaus 11y ago
      > Is it possible both of [them] are right? Absolutely. However, they give 0 attribution to their baseless assertions. I follow Theranos enough where neither of these statements are so obviously common knowledge that they don't need to reference something at least in passing. Mostly, I am curious how this ended up happening.
      - FireBeyond 11y ago
        Attribution: http://www.fiercemedicaldevices.com/story/theranos-asked-military-general-help-tamping-down-misinformation-dod/2015-12-02 http://www.fiercemedicaldevices.com/story/theranos-asked-mil... "But things didn't shake out that way. A military regulatory expert contacted the FDA with concerns about Theranos' technology without telling the company first, stalling the project and prompting Holmes to reach out to Mattis for help. "I would very much appreciate your help in getting this information corrected with the regulatory agencies," Holmes wrote in an email to Mattis, saying that since the "misinformation came from within DOD, it would be "invaluable" to have the information "formally corrected by the right people in the DOD."

bby 11y ago

I don't say this often, but fuck Theranos.

jackcn 11y ago

Like I've mentioned before, Theranos needs to shut down. The technology doesn't work (and likely it never will since blood constituents are not evenly distributed at small volumes) and its investors and executives are complicit in fraud. While half-completed/non-working solutions are fine in software world and with consumer electronics, a misreading or missed reading of blood parts can easily cost the health or life of a person. I'll be glad to see the SEC/FDA put an end to this.

wrong_variable 11y ago
healthcare is a very hard problem. While we in the tech community may find it morbidly entertaining to watch Theranos burn to the ground. Someone out there needs to attack healthcare. The not dying motivation is fairly important.
- ddorian43 11y ago
  It's better to make photo-sharing apps and sell iphones. While healthcare is very hard, also needs alot of money. My idea would be: create photo-sharing app/telegram/iphones etc to make alot of cash and THEN try real-science-shit (like Elon Musk / ~Paypal Mafia).
- 467568985476 11y ago
  The attacking part is great. It's the "fail fast" part that they messed up on. If the machines worked, would we be having this conversation about a company accused of lying to regulators and defrauding investors? Maybe it's a problem of Theranos setting investor expectations poorly, maybe the regulators are looking to make an example of someone for playing fast and loose in the traditionally tightly regulated healthcare industry, maybe both. Hopefully it's growing pains for a burgeoning biotech market and not actually fraud from the top.
- toomuchtodo 11y ago
  > Someone out there needs to attack healthcare. All the attacking that needs to be done is political/social, not technical. Want to attack healthcare? Strip middlemen out so that the money flows to providers and researchers (Single payer + pouring additional money into the NIH/NSF, with the results being public domain). All of these YC startups I see "hacking" healthcare (Dr Chrono, HealthSherpa, etc) are just bandaids on a patient bleeding out from the jugular. EDIT: Before you chime in to state that single payer can't be done, 58 countries [1] enable it just fine. Governments can be even more accountable than the current breed of private health insurance providers (I cannot replace the board at my insurance carrier, nor can I FOIA them). If you want to "hack" healthcare and fix the problem, get involved in government and get single payer done. [1] https://en.wikipedia.org/wiki/Universal_health_coverage_by_country https://en.wikipedia.org/wiki/Universal_health_coverage_by_c...

homero 11y ago

Pump and dump couldn't dump!

dcgudeman 11y ago

The news release issued when the Walgreens deal was announced said consumers “will be able to access less invasive and more affordable clinician-directed lab testing, from a blood sample as small as a few drops, or 1/1,000 the size of a typical blood draw.” As part of the deal, Walgreens has invested at least $50 million into Theranos, according to people familiar with the matter. It really blows my mind that Theranos was able to get this far with what sounds like technology that simply didn't work. Did any investors simply try the test(s) before investing vast sums of money?

lawnchair_larry 11y ago
Have you ever seen how directors and executives make deals? Meanwhile, I'm sure dozens of engineers were shouting that this doesn't work, but couldn't get the message through the thick layer of middle management. It is not the least bit surprising to me.

thrownaway2424 11y ago

One thing I'd love to know, and that might come out in court eventually, is which early investors exited in the huge dumb-money round in 2014. What did they know and when did they know it, and all that.

leroy_masochist 11y ago
IANAL, but I'm pretty sure that in this kind of situation, unless said investors have a seat on the board of directors -- and none at Theranos did -- they're almost certainly not in trouble with the SEC. Theranos is a private company so the SEC rules around MNPI are not relevant here. However, if (IF) any of the earlier investors told later investors things about Theranos that they had reason to doubt in an effort to up the valuation of the next round, then I suppose that might be lawsuit fodder. How you would prove that? Dunno.
alva 11y ago
Out of interest, does any one know what liabilities such investors might have? If the outside investors had knowledge of the problems we are now seeing and sold off without disclosing the issues, are they somewhat accountable?
- adventured 11y ago
  That almost entirely binds to what responsibility they had in regards to the company. If they weren't legally insiders, then even if they had more knowledge than the broader public does (which in this case may be irrelevant depending on a few things), they won't be carrying liability. To be clear, selling doesn't make them liable for fraud committed by Theranos, if they had no role in managing the company. Even if a lawsuit were brought, you're going to have one helluva hurdle in getting any liability to stick to said investor/s without proving direct involvement. Doing anything about insider trading in a private corporation, has historically been a challenging area for the SEC. They have often previously been more hands off, but they've gotten more aggressive about it lately: "On December 12, 2011, the SEC announced an enforcement proceeding that serves as a useful reminder that the federal laws against insider trading and misrepresentation apply as forcefully to private companies purchasing stock from employees and other shareholders as they do in the public company setting." http://www.lexology.com/library/detail.aspx?g=e24dc4ab-2a77-43d9-8a78-9ea46eca1aca http://www.lexology.com/library/detail.aspx?g=e24dc4ab-2a77-...

caminante 11y ago

non-paywall link: http://on.wsj.com/1VyFPIt http://on.wsj.com/1VyFPIt

sparky_ 11y ago
Much appreciated
- chockZ 11y ago
  WSJ also allows for visitors from organic search to read the articles without the paywall. Simply Google search the exact WSJ article title with "quotations" around the title and click on the WSJ link from Google.

blakeross 11y ago

Here's a television parody I wrote about Theranos that ends right where this story begins... http://pricks.com http://pricks.com

serf 11y ago
that's a more noble use of that domain than anyone could have predicted.
mrdmnd 11y ago
I just read a 32 page script and now I want you to write major television shows. Is that your actual job? This is really good.
- blakeross 11y ago
  Thank you! Currently it's a hobby; my background is in tech. This is the second script I've written. The first was a fake premiere for S3 of Silicon Valley (http://bit.ly/1LOZZpT http://bit.ly/1LOZZpT).
  - mrdmnd 11y ago
    Well, I know what I'm doing tonight. Cheers! This is great.
  - ryanwaggoner 11y ago
    Just wanted to say that I found this so funny when I read it a few months ago (if I remember correctly). You perfectly captured the characters and I could see them saying those exact words. I'm curious what it takes to break into the world of writing for existing TV shows. Can you sell scripts written on spec for shows like this?
    - blakeross 11y ago
      I appreciate it. You can't sell a script for a show to the show itself. In fact, the staff isn't even allowed to read it for legal reasons (if they happen to conceive a similar idea, they're worried you'll sue them later). However, an agent could shop your script to other shows to demonstrate that you're able to integrate well into a world you didn't create. It's rather strange: If you want to write for Breaking Bad, you should write a script for The Wire.

dcgudeman 11y ago

Investigators are also examining whether Theranos misled government officials, which can be a crime under federal law, some of the people said. Such subpoenas don’t necessarily mean prosecutors are actively seeking an indictment. People familiar with the matter said the investigation is at an early stage. In addition to the criminal probe, the Securities and Exchange Commission is examining whether Theranos made deceptive statements to investors when it solicited funding, according to people familiar with the matter. Theranos was valued at $9 billion in a funding round in 2014 and the majority stake of Elizabeth Holmes, the startup’s founder and chief executive, at more than half that. Has there been any other examples of such high profile entrepreneurs ending up at the wrong end of a criminal investigation?

adventured 11y ago
Sure. Adelphia Cable was a large company - the fifth largest cable company in the US - founded by John Rigas, and he was indicted when it imploded: "Federal prosecutors proved that the Rigases used complicated cash-management systems to spread money around to various family-owned entities and as a cover for stealing $100 million for themselves." https://en.wikipedia.org/wiki/Adelphia_Communications_Corporation https://en.wikipedia.org/wiki/Adelphia_Communications_Corpor... A few other examples from that time are not as clean when it comes to the direct "entrepreneur" part. Kenneth Lay is sometimes considered the founder of Enron, but he didn't build or found most of the pieces of it. Bernie Ebbers of Worldcom was a bit closer to being a traditional entrepreneur story: "Ebbers began his business career operating a chain of motels in Mississippi. He joined with several other people in 1983 as investors in the newly formed Long Distance Discount Services, Inc. (LDDS). Two years later he was named chief executive of the corporation. The company acquired over 60 other independent telecommunications firms, changing its name to WorldCom in 1995." https://en.wikipedia.org/wiki/Bernard_Ebbers https://en.wikipedia.org/wiki/Bernard_Ebbers Crazy Eddie is a famous story, but quite a lot smaller than Theranos (well, in regards to b.s. market valuation): "At its maximum, Crazy Eddie had 43 stores in the chain, and earned more than $300 million in sales" [that $300m in sales would adjust quite a lot higher in today's dollar] https://en.wikipedia.org/wiki/Crazy_Eddie https://en.wikipedia.org/wiki/Crazy_Eddie Bernie Madoff is maybe the most famous example (he ran his own firm for 48 years!): "Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008" https://en.wikipedia.org/wiki/Bernard_Madoff https://en.wikipedia.org/wiki/Bernard_Madoff Allen Stanford was sort of out of the same mold: https://en.wikipedia.org/wiki/Allen_Stanford https://en.wikipedia.org/wiki/Allen_Stanford

dcgudeman 11y ago

throwaway_xx9 11y ago
The Walgreen's angle is much bigger. From what I've read online, they invested $50 million and built out all those in-store clinics based on Theranos. Add in the retail space and construction costs, and you're looking at real money.

smitherfield 11y ago

Theranos' tragic flaw was not even so much that they were hyped to the moon and back, but that they believed their own hype.

forgetsusername 11y ago

Always fun to go back in time and look at what people were saying about Elizabeth Holmes and Theranos, like 2 years ago: https://news.ycombinator.com/item?id=7951019 https://news.ycombinator.com/item?id=7951019 or https://news.ycombinator.com/item?id=8181339 https://news.ycombinator.com/item?id=8181339 I find it insightful to see who was "right" and who was "wrong". There were a surprising number of people from the medical field expressing doubts about the technology.

Mz 11y ago
Perhaps should have been titled "30 year old vaporware sector billionaire"
trhway 11y ago
i remember that one https://news.ycombinator.com/item?id=8182026 https://news.ycombinator.com/item?id=8182026 That day I just basically learned about Theranos existence from the posted article, and that comments post explained to me what it is about :)
drjesusphd 11y ago
> There were a surprising number of people from the medical field expressing doubts about the technology. And were dismissed because their industry was being "disrupted".

return0 11y ago

What happens if the investors were not mislead? Is this probe a move by the big investors to cover their ass in the case that Theranos is found to have defrauded customers?

Animats 11y ago

Theranos isn't even at the leading edge of blood testing. There are now hand-held FDA-approved immediate blood testing devices.[1][2][3] Most of these require smaller amounts of blood than a remote lab, although more than a drop. Theranos is still in the send-it-to-the-lab-and-wait era. Even if Theranos' technology eventually works, it may be obsolete before it ships. [1] https://www.abbottpointofcare.com/products-services/istat-handheld https://www.abbottpointofcare.com/products-services/istat-ha... [2] http://www.epocal.com/system.html http://www.epocal.com/system.html [3] http://www.pixcell-medical.com/products/in-the-pipeline http://www.pixcell-medical.com/products/in-the-pipeline

nextos 11y ago
The healthcare industry is quite inefficient at allocating money to things that are needed and have a decent chance of working. For example, in the field of oncology there's very little money put into cheap accurate early screening. And an almost obsessive pour of money into trying to understand mid-to-late stage cancers. Even James Watson has criticized this. It's a sad situation, because we now know early pre-clinical tumours leave a trace of circulating DNA in blood. And it seems like a darn important and doable inference problem to distinguish cancer from control patients.
- mattzito 11y ago
  > For example, in the field of oncology there's very little money put into cheap accurate early screening. And an almost obsessive pour of money into trying to understand mid-to-late stage cancers. Even James Watson has criticized this. I'm in no way an expert, but isn't part of that related to increasing evidence that early detection of a tumor isn't necessarily a benefit? I recall reading many tumors stop or grow so slowly that treating them has more of a downside than an upside. This is one of the reasons why early breast cancer screenings aren't a benefit.
  - bonniemuffin 11y ago
    You're definitely right that merely detecting tumors earlier doesn't always help, because many of them are relatively slow-growing and fairly harmless. But this actually makes a very specific kind of early detection research even more important: research to help us predict which early-stage tumors will progress to becoming deadly, and which ones won't. Currently we're pretty bad at making this prediction for many kinds of cancer, but if we could detect them all early AND distinguish the really bad ones from the mellower ones, we'd know exactly who to treat aggressively.

smaili 11y ago

This eerily reminds me of Enron.

jonknee 11y ago
Enron was much more of a real company. It collapsed due to poor investments and cooking the books, but Enron really did own a lot of assets. It would be more akin to Enron if Theranos' tech actually worked, but they were reporting much more profit than they were really getting.
saryant 11y ago
Well, her father did work there. (Though, in his defense, not in a business unit related to their fraud)
driverdan 11y ago
Other than (potential) fraud, they have very little in common.

aceperry 11y ago

The Theranos story is unfortunate due to the likelihood of fraud because the healthcare industry is in desperate need of disruption. Even if just from the periphery, which is how I would characterize Theranos' role, I think that could enable a change in how health care is done and delivered in the US.

maverick_iceman 11y ago

I wonder why WSJ went so aggressively against Theranos. (Not that I'm complaining.) Does anyone know the backstory there?

adevine 11y ago
Basically, it looks like one reporter starting pulling at the thread, and the whole sweater fell apart. I wouldn't really say they went after Theranos aggressively until they realized there was a much bigger story.
- kchoudhu 11y ago
  *whole turtle neck. See: https://www.bing.com/images/search?q=elizabeth+holmes&FORM=HDRSC2 https://www.bing.com/images/search?q=elizabeth+holmes&FORM=H...
biot 11y ago
Because it's good journalism?

cft 11y ago

I think the working assumption of the investors was that she would be sacrificed, but Theranos would continue. But because of this, it may not happen.

supernova87a 11y ago

I think the reason we (maybe secretly) take so much satisfaction / schadenfreude at this story is that someone who was so hyped and the darling of Silicon Valley got so much funding and attention. While others who toil away on good ideas, without nearly so many connections and silver spoons, struggle to even get 1 minute of air time with the kind of funders and backers that she got. That, plus seeing the cluelessness and herd mentality of the people who are supposedly the experts at judging tech potential in this area.

Mz 11y ago
Or maybe some folks feel relieved to have their mental models for actual reality validated. Folks who thought it smelled like vaporware at best, or BS at worst, may not be engaging in schadenfreude so much as "Ha! I knew it! I'm not crazy!" It is possible to have not ugly reasons for finding satisfaction in seeing how this is turning out.
- jjoonathan 11y ago
  Thanks, I miscategorized my own feelings of validation as schadenfreude and was feeling bad about it. Now I don't have to.
- wpietri 11y ago
  Good point. For me it's not exactly schadenfreude. I'm ok with hype that turns out to be justified. And I'm mostly resigned to people who go wrong through an excess of enthusiasm and naivete. But when unjustified hype shades into negligence or fraud, I take a rich pleasure in seeing people get their comeuppance. It's not schadenfreude precisely, but more about seeing justice done, about seeing karma fulfilled.
  - mikekchar 11y ago
    I don't speak German, but I don't know if it ceases being schadenfreude just because you feel that the bad thing that happens is justified. Indeed, the Wikipedia page on the word freely mixes those kinds of examples in their page. I'm not trying to be confrontational here, but recently I've been having a fairly negative reaction to the happy feelings that occur when justice is served. Sometimes I think this fuels a search for justice, where punishment is almost a desired goal from the beginning. The OP also discussed the feeling of satisfaction that their world view is justified when someone gets punished. Without trying to ascribe any intent to the OP, I get very bad vibes out of relentless searches for justice where the punishment of those caught fuels a reinforcement that a certain world view is correct. Of course this is completely blowing these feelings up out of proportion, but from small seeds grow tall trees. I have lately wondered if justice is really something we should not try to pursue.

hackaflocka 11y ago

Is there any evidence of Elizabeth Holmes' scientific research abilities? Besides the 100 or so patents that she's on (none of which she's on alone)? E.g., is there anything in her high-school yearbook about her winning science contests, etc.?

hackaflocka 11y ago

This is more evidence of Silicon Valley's anti-woman culture. /sarcasm

erikpukinskis 11y ago
Is your sarcasm meant to imply that Silicon Valley's purported anti-woman culture is overstated?

shas3 11y ago

For all the EPA fights that plague larger older companies (and many new ones, too), industrial safety and adherence to regulations is very deeply ingrained in their cultures. Heads roll pretty quickly for violations at lower levels. Even higher level executives are often quite responsible about staying within the bounds of laws and regulations (though they are less so in doing layoffs and such). This obviously leads to slower innovation and more red-tape, but I have come to believe that slower innovation is an acceptable price to pay for the rest of the stuff being legit. If you are challenging the old order in old industries, and have to move fast and break (the right) things, do it like Tesla and Space X, not Theranos.

bane 11y ago

This is great, it couldn't have happened to nicer people. However, I'm willing to bet no charges will come out of it.

PakG1 11y ago

Funny, just saw this in the paper yesterday. I wonder how it differs from Theranos. http://szdaily.sznews.com/html/2016-04/18/content_3505489.htm http://szdaily.sznews.com/html/2016-04/18/content_3505489.ht...

iam-TJ 11y ago
If verified, the LinkedIn history [0] at least shows some expertise and progressive advancement in medical device design and manufacturer, which I don't think Theranos' CEO has. [0] https://www.linkedin.com/in/wendian-shi-21757833 https://www.linkedin.com/in/wendian-shi-21757833

programmer1234 11y ago

I am glad this is happening. Theranos lent credibility to the idea that Silicon Valley technology investors were and are in a position to improve society through funding legitimate scientific research, in contrast to say, Snapchat. Theranos lied, which might not have been a problem had it not been praised so much, and the board hadn't been stacked with major power brokers who are supposed to have integrity. The best we can do is figure out who was responsible and put them on a cross before the reputation of the whole venture community suffers from this scandal.

TheRealPomax 11y ago

note that this article requires a subscription to wsj.

ben_jones 11y ago

How long until hacker news champions the next Theranos?

anigbrowl 11y ago

Never trust anyone whose schtick is that they're too busy to have a private life.

hackaflocka 11y ago
Agreed. Did Holmes say that?
- anigbrowl 11y ago
  It was a minor takeaway in some gushing article about 18 months ago though I don't recall where right now and don't feel like diving through my ancient HN comments. I just remember it jumping out as a 'too good to be true' aspect of the story.
- return0 11y ago
  There is a number of things from her past interviews (https://www.youtube.com/watch?v=iwKs-eoPM-Y https://www.youtube.com/watch?v=iwKs-eoPM-Y) that leave a lot of questions. For example she says that she sleeps for 4 hours , and that she 's a big fan of the 10000 hours rule, and a bunch of stuff for how she really is committed to what she does, but very little on why she believes she can pull it through. For comparison, another female health entrepreneur, Woljisky of 23andme usually gives much more down-to-earth and concrete motives for her company. And there is the turtleneck thing that, in retrospect, looks ridiculous.
  - anigbrowl 11y ago
    Hey now I like turtlenecks, even if she was going for a 'Steve Jobs, only pretty' image.

madaxe_again 11y ago

The punchline will be kissinger dying weeks before the law finally catches up with the p'tach.

deleted 11y ago

[deleted]

cant_kant 11y ago

"The Journal‘s reporting suggests that Theranos had been falsifying lab records to make it look like its own proprietary gear was as reliable as the industry standard. Documents from health care inspectors also seem to show that this kind of stuff was happening. If the DOJ concludes that Theranos was charging money for a test it knew was not accurate, that would violate health care laws, and could earn people prison time." http://www.wired.com/2016/04/theranos-investigated-fraud-weird-private-company/ http://www.wired.com/2016/04/theranos-investigated-fraud-wei...