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A Marriage Gone Bad: Walgreens Struggles to Shake Off Theranos

144 points by dbcooper 10y ago

zwieback 10y ago
I wonder, is this good or bad for other startups in the diagnostics space?
- the_mitsuhiko 10y ago
  I don't see how there is anything good coming out of this for startups. Theranos burned the field for many more companies. //EDIT: which is very sad to see because in many ways it seemed like the CEO was behind it with a lot passion and no ill intentions.
  - existencebox 10y ago
    I'm surprised by your latter statement, especially in light of your former statement. Being blinded by passion, and having "no ill intentions", even if we liberally grant that much, is not the same as being properly considerate of the risks and responsibilities of as critical a technology as healthcare diagnostics. I assign a CEO direct responsibility for being aware of the efficacy of their product, and being honest about this, or at the VERY LEAST taking a proactive, candid, and reconciliatory response when the former is found to be untrue, and none of these preconditions seems to have been met from the news I've read. We live in a society where CEOs are lionized for success, but often seem to escape responsibility for failure. Frankly, I don't care either way if we consider them to be the true guiding hand or not, I just want us to be consistent one way or the other.
    - auggierose 10y ago
      > I just want us to be consistent one way or the other That does not really make sense, a priori prescribing how we want things to be. Assume a model of the world where the CEO always did something special to make their companies succeed, and where the failure of companies is always not due to the CEO, but due to the mediocrity of the other employees. That model makes about as much sense as each of the two other models you are proposing.
      - jonnathanson 10y ago
        Respectfully, I don't think that's what he's saying. If we want to look at this formally, we see he is stating three things: 1. That we seem to apply inconsistent standards of responsibility to CEOs. Are they ultimately responsible for the outcomes of the companies they lead, for good or for bad? In current practice, we seem to selectively apply praise and eschew blame. He wants to point this out. 2. He personally believes the CEO is ultimately responsible; however... 3. At the end of the day, he just wants society to apply a consistent standard, one way or the other: either the CEO is the ultimate point of accountability for all things, or she's not. He almost "doesn't care" which one we choose, so long as we choose one. Now, you're free to criticize the dichotomy he raises in those points. Maybe you find it overly reductive or absolutist. If so, fair. (Personally speaking, I believe the buck should stop at the CEO, insofar as she is the chief executive of the company, tasked with understanding and directing all of its actions. If she took deliberate part in any alleged deceptions, that's certainly worse than if she negligently allowed the deceptions to take place. But in either case, she bears some responsibility. Not the same degree of blame, but the same mantle of responsibility. It's her company, and whether she deliberately misguided it or was simply asleep at the wheel, those are both derelictions of the CEO's responsibilities. Sure, the BOD outranks the CEO, but the CEO has a much closer relationship with the day-to-day operations of the company.)
      - existencebox 10y ago
        There are a few reasons I take the stance I do. (as a slight edit, sister post Jonnathanson summarized my broader point far better than I could have, whereas my below is more a "more on why the current system isn't great") 1. We are currently living in a world without the constraint I propose, in which CEO comp is often a pro-factum given and attribution of blame almost unheard of. I do not pretend that the system I propose will _always be correct_, but I do believe it would motivate better behavior, as tighter accountability often does in other systems even if it doesn't necessarily "make sense". 2. Given the innate ambiguity of most of these situations, who gets to make that call anyway? (fault of failure). Is it even possible to make? My bet would be in many situations, difficult at best; but there is a massive power discrepancy currently at play, where executives have significantly more control over message/direction/response than those they can saddle with blame, so I suggest structuring systems in ways that help offset that imbalance. Does this put more duress on CEOs to take responsibility for their employees? Yes, and despite what I conceded above re: "making sense" not being necessary, I truly do think that sort of responsibility does "make sense" especially in a world where as CEO you take a massive percent share of those employees value. To coopt an old turn of phrase, "No free lunches."
    - the_mitsuhiko 10y ago
      I think what's happening to the company is what should have happened from my understanding of the situation. At the time time I can sympathise with the CEO because she has been working on that since she was 19 years old and it would appear that she is behind this with a passion. That by no means implies that she is not responsible for this. In my mind it's just a sad development from that perspective. Something I would not have wished on anyone.
      - jjm 10y ago
        Working on end result properly is not the same as "wishing" or "dreaming". My commentary is this, The quantification of the relationship between her leadership role and the direct effectiveness of the product is quite different than many other successful founder/CEOs. It is that which blinded her from either pivoting or acknowledging the reality of low effectiveness. A circumstance which to others would be justification to shutdown. Unless this was all well understood and then that would enter into discussions of willful negligence. A characteristic that has consequences as people's livelihood were expected to be affected. The spectacle is negatively impact ing startup partnerships. The result is either more due diligence with all parties, which either translates to more funding and a longer IPO journey, or cutting off these less mature startups at the knees early from funding until "results" are evident. Another question is will this situation coupled with general lack luster equity market enthusiasm be incorrect fodder for "bubble" talk (barring this a straw on camel back scenario - doubt it).
  - nkrisc 10y ago
    Intentions are as valuable as ideas. Outcomes and execution are ultimately what matters.
- joezydeco 10y ago
  Perhaps it's just a lesson to have your science locked down and proven before you make all kinds of promises to investors. And if your science is broken, don't snow people over with a board of directors that Fortune-50 companies can't even muster.
  - a3n 10y ago
    Except sometimes you need those investors' money to get to where your science is locked down and proven.
    - tclmeelmo 10y ago
      Experienced investors aren't going to invest much if the science isn't on a good foundation. Even if they would, that's a pretty expensive way to fund research: it's cheaper to fund it by grants or through revenue.
      - a3n 10y ago
        And were these experienced investors? :)
        tclmeelmo 10y ago
        I am under the impression that they were experienced in IT but inexperienced in biomedical investments.
    - hga 10y ago
      As I understand it, that's how it works with the VCs who specialize in biomedicine. They'll provide limited funding to scientists with a credible theory to see if it pans out, with further funding to ideally follow. Theranos got way too far without having to prove their science.
    - xenihn 10y ago
      Makes you wonder how much investor funding that would have otherwise gone to startups with an actual viable product was sucked up by Theranos.
- Geekette 10y ago
  There's been a lot of speculation about this being bad for other health related startups, etc. But I don't think so. To be a valid comparison, your startup would have to be perceived to have a confluence of factors shielding it from accountability: A combination of long tenure (Theranos is 13 years old) + huge amount of funding (this co. has $750M+) + a very politically influential board appear to be shielding Theranos from typical consequences of non-verified innovation (contrary to standard scientific process) and resistance to directly address specific allegations of misconduct (in tech process, company operations, among personnel etc).
- tclmeelmo 10y ago
  I would predict that it depends on where the money is coming from. For VC firms that are experienced in the biomedical space, Theranos changes nothing because they were already suspicious of Theranos. For firms that are inexperienced in the biomedical space, they have hopefully learned that growth cannot compensate for flaws in science or technology. If they continue to invest in biomedical, they will be much more careful in their DD; or perhaps they lose their appetite for biomedical and leave entirely. I don't think things have changed for biomedical startups that are based on good science and technology and have an experienced team. What would be wonderful is if the media learned a lesson from this mess. As I see it, they were a passenger in the Theranos hype machine.
  - yoohoocthulhu 10y ago
    I'd say that Theranos is so much of an outlier that it's failure won't really have a huge effect. They weren't patenting nor licensing any exciting technology. They had no groundbreaking presentations of their technology. They had no experts in the field working at the company or on the board.... I mean, it's amazing they raised money to begin with
    - deleted 10y ago
      [deleted]
  - jonnathanson 10y ago
    "For firms that are inexperienced in the biomedical space, they have hopefully learned that growth cannot compensate for flaws in science or technology. If they continue to invest in biomedical, they will be much more careful in their DD; or perhaps they lose their appetite for biomedical and leave entirely." Exactly, which will result in essentially a return to the status quo. The investors who understand the complexities and models of the various biomedical industries will continue to invest as they always have. The carpetbaggers will fold up their tents and move on. The result is less likely to be systemic taint or damage to biotech startups as a whole -- though this may happen in the short term -- and more likely to be a reduction in fly-by-night or sketchy biotech startups for lack of funding. "I don't think things have changed for biomedical startups that are based on good science and technology and have an experienced team." Yes. To paraphrase Buffett, the tide will go out, and we'll see who's been swimming naked -- but the people who've been wearing swimsuits will be just fine. "What would be wonderful is if the media learned a lesson from this mess. As I see it, they were a passenger in the Theranos hype machine." The media hype surrounding Theranos was truly spectacular to behold. One day, nobody's ever heard of this company that's been stealthily chugging along for nearly a decade and raising heroic amounts of capital. The next day, Holmes is on the cover of every business magazine, in full Steve Jobs attire and disposition. (I'm pretty sure one or two breathless headlines actually called her "The next Steve Jobs.") Soon she's headlining the lecture circuit and racking up more puff pieces and cover stories. It's as if nobody took a critical eye to any of this hype, other than the WSJ. No doubt a confluence of factors was at play here: A desire to fill the "Great Tech Visionary" vibe left vacant by Steve Jobs's death. A desire to find the next great female role model. A desire to cover "hard tech," and not just the Nth food-delivery app of the week. And then there's just good old-fashioned me-tooism, which routinely plagues the business press: "Everyone else is covering this, so it must be a Thing, and now that it's a Thing, we have to cover it!"
- yoohoocthulhu 10y ago
  The diagnostics space is kind of screwed at the moment anyway by court rulings that have severely limited the patentability of diagnostics tests
Aelinsaar 10y ago
I keep waiting for Theranos to loudly and messily implode, in a shower of subpoenas and people fleeing the country.
1024core 10y ago
A part of me feels sad for Theranos. I wanted them and Elizabeth to succeed; more the latter, actually. If she had succeeded (I still hold out hope), she would have been a terrific role model for young women everywhere.
- JamilD 10y ago
  A role model for young women with parents coming from old money, with both Beltway and VC connections? It'll be great to have another role model in tech for young women, but incidents like this do more harm than good…
  - ryandrake 10y ago
    This is a good point. Today's current tech role models, both male and female, are sending the unfortunate message: "Be born rich, have daddy pay for you to go to Stanford or Harvard, party a lot and make friends with rich future investors there, and you too can become a successful tech founder!"
    - JamilD 10y ago
      And don't forget to drop out after a year of college! You've made all the connections, so what else is there to learn? There are some exceptions to this pattern though, like Jan Koum and Andy Grove. We desperately need more of them in today's tech environment.
      - ryandrake 10y ago
        Maybe it's just me seeing the past through rose-colored glasses, but it seems that the "Work hard and know technology" founders were more common in the 70s, 80s, and 90s, in contrast to today's "Party hard and know rich people" founders.
        coev 10y ago
        In the late 90s there were a lot of hucksters trying to get in on the new Internet trend, there were lots of bad companies then too.
doctorcroc 10y ago
Unfortunate that Theranos didn't live up to expectations. Bill Gurley writes that the expose on Theranos may have been the seminal moment causing reality to kick in for this tech cycle: http://abovethecrowd.com/2016/04/21/on-the-road-to-recap/ http://abovethecrowd.com/2016/04/21/on-the-road-to-recap/ So in a way, it can be seen as a good and necessary thing that expectations are brought back to match reality.
pcurve 10y ago
Test accuracy aside, isn't finger prick blood draw painful? I've had blood drawn both ways, and finger prick is very unpleasant. I'll pick arm blood draw any day.
- LanceH 10y ago
  Time, skill required and volume are all in favor of the finger prick method. And some people absolutely freak out about needles but would be ok with a finger prick.
  - chimeracoder 10y ago
    > Time, skill required and volume are all in favor of the finger prick method. And some people absolutely freak out about needles but would be ok with a finger prick. Except the pain factor. Finger pricks are actually more painful, particularly when you have to draw more than a single drop of blood. Your fingers have more nerve endings than your upper arm. Also, you tend to use your fingers more than you apply pressure to your upper arm (e.g., typing, using your phone, playing the guitar - all of those require applying pressure to your fingertips, which will hurt). Even diabetics oftentimes prefer to use the arm pricks, and they need to draw a lot less blood than more elaborate tests need. (Not all diabetics, but enough that there are literally blood glucose monitors that advertise this as a specific feature).
    - LanceH 10y ago
      Not disagreeing with you, just saying the finger prick has a lot going for it. In particular the lower skill barrier to do it may make it cheaper or more convenient. It certainly opens the possibility of self administration up a lot more than a needle. Bit of a moot point until it comes along, though.
      - zadig 10y ago
        The problem with self-administration though is misinterpretation. Not to mention that the logic of cheapness/convenience -> more data -> better health doesn't always hold. The more features you screen for the higher the chance of false positives, and most people don't know how to put correct readings into medical context.
mc32 10y ago
One would think Walgreens would have done some due diligence when partnering with anyone. Wouldn't they put someone providing healthcare diagnostics services through rigorous testing to see if they could deliver on promises? I'm hoping they don't take providers' word when they partner with providers. Or is Walgreens just trying to get from under the weight of theranos's bad publicity at this point?
- tclmeelmo 10y ago
  This article (by way of the WSJ) claims that Walgreens skipped their standard DD in partnering with Theranos, and that the deal overall was atypically structured.
  - mc32 10y ago
    Something seems a bit fishy. An uncorroborated source says WG skipped the due diligence part but in any event had they tried Theranos would have rebuffed their inquiries (because "secrecy") Could they not just compare and contrast results against known technologies, why rely on theranos's data at all?
    - JonFish85 10y ago
      Probably because they felt they didn't have the luxury of time on this one. They were probably worried that Rite Aid / CVS / other competitor would beat them to the punch, and figured that it was worth the risk to move quickly, at the time.
    - pessimizer 10y ago
      Affinity fraud.
  - DannyBee 10y ago
    Yeah, It's not uncommon for execs who want some hip deal to happen to push super hard to shorten or eliminate diligence.
- bedhead 10y ago
a3n 10y ago
I have to wonder why the board of directors didn't, you know, direct. In an ideal world this would damage their reputation as directors with future companies. But not today.
- bronson 10y ago
  Have you seen who's on their board? https://en.wikipedia.org/wiki/Theranos#Governance https://en.wikipedia.org/wiki/Theranos#Governance It's almost as if they intentionally stacked it with senators, govenrnment, and military guys. This is not a typical board, especially for a medical company.
  - fapjacks 10y ago
    I read an incredibly thoughtful and insightful comment the other day arguing persuasively that the whole enterprise of Theranos was created with the singular mission of glomming onto government for fat contracts, and that's why the board looks the way it does. That they were riding the illusion of a working product hoping to become entrenched.
- URSpider94 10y ago
  This is what happens when you recruit your board based on who they know, instead of what they know. There are very few people on her board who could giver her valid advice about how to run a medical device company, they are all bureaucrats and politicians.
  - duncan_bayne 10y ago
    Is that intentional humour?
mcnamaratw 10y ago
So the not-too-subtle suggestion in the article is that maybe Walgreens might not be struggling too hard to shake off Theranos, because W owns a piece of the unicorn. Which isn't worth much if it ends up in the meat freezer. (I have no idea whether that suggestion is accurate.)
lingben 10y ago
thoroughly disappointed in the Shriver interview, didn't ask any hard questions, didn't redirect after her answers, didn't really seem like she was at all fully informed about Theranos now if John Carreyrou had been conducting the interview, that would be another thing but I get the feeling that he would never be granted an interview simply because he is much more qualified in terms of competency in Theranos and its history and science relative to Shriver that they would see him as a threat Shriver on the other hand probably came across as a 'safe' interview to the company, which it was real journalism is so hard to find these days, sigh "Journalism is printing what someone else does not want printed: everything else is public relations." George Orwell
- beachstartup 10y ago
  my high expectations for journalism dropped significantly sometime right after i started my company, because i then realized how much money it took to even be mentioned in any press, good or bad.
  - JonFish85 10y ago
    Isn't that advertising, rather than journalism?
    - beachstartup 10y ago
      yeah, exactly.
- shas3 10y ago
  It makes one suspicious, to the say the least, to see someone from a politically well-connected family like Shriver interview someone similarly well-connected like Holmes. The odds are high that they know each other and have reasons to scratch each others' backs.
  - JamilD 10y ago
    It's truly a shame that cronyism is becoming a larger part of the technology industry. Let's hope Theranos acts as a warning to VCs, and not as an indication of things to come…
raverbashing 10y ago
I believe all prick exams need some level of squeezing ( did one a couple of weeks ago, giving a couple of samples from the same prick) it didn't hurt too much though
- softawre 10y ago
  [offtopic] - And this is why I love HN. Maturity. Imagine this thread on reddit.
  - oldmanjay 10y ago
    this story just isn't very interesting for the meme-and-reference-humor-loving HN crowd. I assure you, they are around, working hard to destroy what relevance we strive to maintain.
    - semi-extrinsic 10y ago
      I believe GP was rather pointing out the large and (dare I say) untapped potential for double entendres in the posts above.
      - nickpsecurity 10y ago
        Exactly. I do memes, cultural references, academic references, and everything else here to liven up dry discussions. Yet, I had no intention of twisting those specific lines into something else because the thread would just get retarded. Like it does elsewhere. We're here and reading but just like HN quality level to stay where it is. :)
- dang 10y ago
  We detached this subthread from https://news.ycombinator.com/item?id=11549820 https://news.ycombinator.com/item?id=11549820 and marked it off-topic.
stanfordkid 10y ago
I've been calling this for ages since I saw Elizabeth Holmes speak at the Entrepreneurial Thought Leaders seminar at Stanford 5 or 6 years ago. Huge vision, entitled dismissal of incumbents, and a story that is just a little bit too perfect. Following your dreams is cool, but only when they aren't delusions.
- Aelinsaar 10y ago
  Especially when your delusions are being so very highly funded.
- bane 10y ago
  The first time I saw her interviewed, 2-3 years ago, I knew it also. The incredibly unclear, defensive and meandering answers to incredibly simple questions, the strange confrontational body posture, the paper-thin hints at more business partnerships and customers than they could actually talk about...once I started learning about the makeup of the board and some bio friends of mine explained the non-homogeneous chemistry of blood, I confirmed it in my mind. I still don't know of a convincing explanation for all of it, but it reminds me of some first and second-hand experiences I've heard about other, much smaller startups, in deep deep states of denial while the company is literally falling down around the CEOs head.
  - csours 10y ago
    The reality distortion field is not always a good place to be.
smaili 10y ago
tldr: Walgreens appears to have taken a cautious approach toward terminating the relationship, perhaps preferring to wait until federal regulators impose penalties or the criminal investigation yields formal charges, either of which would strengthen Walgreens’s hand. Essentially, Walgreens is playing the wait-and-see game before making their decision.
hunvreus 10y ago
I can't help but notice that Ms Holmes is now wearing a hair loose and a shirt. Having only ever seen her with hair tied and black turtle necks, I'm wondering if this is an attempt at softening her image in the midst of a deluge of bad publicity. Not an ad hominem or personal attack, purely curiosity.
- scottkduncan 10y ago
  I hope similar attention is paid to men's wardrobe choices next time a corporate scandal article involving a male CEO is posted to HN.
  - speeder 10y ago
    We don't need a scandal for that. If you look there are plenty of articles about Steve Jobs clothing, and about Mark Zuckerberg hoodies.
    - scottkduncan 10y ago
      Very true, I guess the distinction I'm trying to draw though is between having articles talk about men's clothing vs. having comments on an article about a company with a female CEO quickly go to her physical appearance when the subject at hand is the company's performance. When Facebook makes missteps, I don't think discussion on them quickly jumps to Mark's hoodies.
      - fahey21 10y ago
        It might if Mark showed up after a wave of bad press in a tailored suit.
  - beachstartup 10y ago
    http://www.businessinsider.com/tech-uniform-2014-5 http://www.businessinsider.com/tech-uniform-2014-5 what men wear at work is a frequent and unending topic of discussion, but you probably don't notice, because it doesn't fit your worldview. ... and if this hn thread were about that link, you'd probably be the person complaining that it focuses too much on men, and not enough on women. unfortunately, i don't have a quantum time machine, so we'll never really know.
wehadfun 10y ago
Why so much negative press about a diagnostic company? Most people would struggle to name 1 of these save for having to get a drug test or something. It just seems odd. Like some sort of vendeta to crush this company.
- danso 10y ago
  How many diagnostic companies have tried to make the same claims as Theranos without having a profitable business? Theranos punched far above its weight when it came to fundraising and garnering media hype. The downside of such an approach is that if you goof up, you are that much of a spectacle. Or to paraphrase Jesus, those to whom much is given, much is expected.
- kjs3 10y ago
  I dunno...diagnostic companies can determine whether or not you get a job, get insurance, are exonerated of a crime, determine what diseases you might be subject to. Seems like thing you might give a fuck about. And this is a company that claims it can manage that and a lot more, and has failed. Dunno...it gives me pause...
blizkreeg 10y ago
How has she escaped being fired yet?
- jeswin 10y ago
  Probably because that would accomplish nothing. From the initial refusal to publish details for review, and then the repeated delays, I'm guessing the "Edison Machine" is just snake oil. Theranos probably has no product.
- dbcooper 10y ago
  She owns > 50% of the company.
seesomesense 10y ago
Walgreen has significant equity in Theranos and is reluctant to force it into crash and burn mode.

144 points by dbcooper 10y ago

zwieback 10y ago

I wonder, is this good or bad for other startups in the diagnostics space?

the_mitsuhiko 10y ago
I don't see how there is anything good coming out of this for startups. Theranos burned the field for many more companies. //EDIT: which is very sad to see because in many ways it seemed like the CEO was behind it with a lot passion and no ill intentions.
- existencebox 10y ago
  I'm surprised by your latter statement, especially in light of your former statement. Being blinded by passion, and having "no ill intentions", even if we liberally grant that much, is not the same as being properly considerate of the risks and responsibilities of as critical a technology as healthcare diagnostics. I assign a CEO direct responsibility for being aware of the efficacy of their product, and being honest about this, or at the VERY LEAST taking a proactive, candid, and reconciliatory response when the former is found to be untrue, and none of these preconditions seems to have been met from the news I've read. We live in a society where CEOs are lionized for success, but often seem to escape responsibility for failure. Frankly, I don't care either way if we consider them to be the true guiding hand or not, I just want us to be consistent one way or the other.
  - auggierose 10y ago
    > I just want us to be consistent one way or the other That does not really make sense, a priori prescribing how we want things to be. Assume a model of the world where the CEO always did something special to make their companies succeed, and where the failure of companies is always not due to the CEO, but due to the mediocrity of the other employees. That model makes about as much sense as each of the two other models you are proposing.
    - jonnathanson 10y ago
      Respectfully, I don't think that's what he's saying. If we want to look at this formally, we see he is stating three things: 1. That we seem to apply inconsistent standards of responsibility to CEOs. Are they ultimately responsible for the outcomes of the companies they lead, for good or for bad? In current practice, we seem to selectively apply praise and eschew blame. He wants to point this out. 2. He personally believes the CEO is ultimately responsible; however... 3. At the end of the day, he just wants society to apply a consistent standard, one way or the other: either the CEO is the ultimate point of accountability for all things, or she's not. He almost "doesn't care" which one we choose, so long as we choose one. Now, you're free to criticize the dichotomy he raises in those points. Maybe you find it overly reductive or absolutist. If so, fair. (Personally speaking, I believe the buck should stop at the CEO, insofar as she is the chief executive of the company, tasked with understanding and directing all of its actions. If she took deliberate part in any alleged deceptions, that's certainly worse than if she negligently allowed the deceptions to take place. But in either case, she bears some responsibility. Not the same degree of blame, but the same mantle of responsibility. It's her company, and whether she deliberately misguided it or was simply asleep at the wheel, those are both derelictions of the CEO's responsibilities. Sure, the BOD outranks the CEO, but the CEO has a much closer relationship with the day-to-day operations of the company.)
    - existencebox 10y ago
      There are a few reasons I take the stance I do. (as a slight edit, sister post Jonnathanson summarized my broader point far better than I could have, whereas my below is more a "more on why the current system isn't great") 1. We are currently living in a world without the constraint I propose, in which CEO comp is often a pro-factum given and attribution of blame almost unheard of. I do not pretend that the system I propose will _always be correct_, but I do believe it would motivate better behavior, as tighter accountability often does in other systems even if it doesn't necessarily "make sense". 2. Given the innate ambiguity of most of these situations, who gets to make that call anyway? (fault of failure). Is it even possible to make? My bet would be in many situations, difficult at best; but there is a massive power discrepancy currently at play, where executives have significantly more control over message/direction/response than those they can saddle with blame, so I suggest structuring systems in ways that help offset that imbalance. Does this put more duress on CEOs to take responsibility for their employees? Yes, and despite what I conceded above re: "making sense" not being necessary, I truly do think that sort of responsibility does "make sense" especially in a world where as CEO you take a massive percent share of those employees value. To coopt an old turn of phrase, "No free lunches."
  - the_mitsuhiko 10y ago
    I think what's happening to the company is what should have happened from my understanding of the situation. At the time time I can sympathise with the CEO because she has been working on that since she was 19 years old and it would appear that she is behind this with a passion. That by no means implies that she is not responsible for this. In my mind it's just a sad development from that perspective. Something I would not have wished on anyone.
    - jjm 10y ago
      Working on end result properly is not the same as "wishing" or "dreaming". My commentary is this, The quantification of the relationship between her leadership role and the direct effectiveness of the product is quite different than many other successful founder/CEOs. It is that which blinded her from either pivoting or acknowledging the reality of low effectiveness. A circumstance which to others would be justification to shutdown. Unless this was all well understood and then that would enter into discussions of willful negligence. A characteristic that has consequences as people's livelihood were expected to be affected. The spectacle is negatively impact ing startup partnerships. The result is either more due diligence with all parties, which either translates to more funding and a longer IPO journey, or cutting off these less mature startups at the knees early from funding until "results" are evident. Another question is will this situation coupled with general lack luster equity market enthusiasm be incorrect fodder for "bubble" talk (barring this a straw on camel back scenario - doubt it).
- nkrisc 10y ago
  Intentions are as valuable as ideas. Outcomes and execution are ultimately what matters.
joezydeco 10y ago
Perhaps it's just a lesson to have your science locked down and proven before you make all kinds of promises to investors. And if your science is broken, don't snow people over with a board of directors that Fortune-50 companies can't even muster.
- a3n 10y ago
  Except sometimes you need those investors' money to get to where your science is locked down and proven.
  - tclmeelmo 10y ago
    Experienced investors aren't going to invest much if the science isn't on a good foundation. Even if they would, that's a pretty expensive way to fund research: it's cheaper to fund it by grants or through revenue.
    - a3n 10y ago
      And were these experienced investors? :)
      - tclmeelmo 10y ago
        I am under the impression that they were experienced in IT but inexperienced in biomedical investments.
  - hga 10y ago
    As I understand it, that's how it works with the VCs who specialize in biomedicine. They'll provide limited funding to scientists with a credible theory to see if it pans out, with further funding to ideally follow. Theranos got way too far without having to prove their science.
  - xenihn 10y ago
    Makes you wonder how much investor funding that would have otherwise gone to startups with an actual viable product was sucked up by Theranos.
Geekette 10y ago
There's been a lot of speculation about this being bad for other health related startups, etc. But I don't think so. To be a valid comparison, your startup would have to be perceived to have a confluence of factors shielding it from accountability: A combination of long tenure (Theranos is 13 years old) + huge amount of funding (this co. has $750M+) + a very politically influential board appear to be shielding Theranos from typical consequences of non-verified innovation (contrary to standard scientific process) and resistance to directly address specific allegations of misconduct (in tech process, company operations, among personnel etc).
tclmeelmo 10y ago
I would predict that it depends on where the money is coming from. For VC firms that are experienced in the biomedical space, Theranos changes nothing because they were already suspicious of Theranos. For firms that are inexperienced in the biomedical space, they have hopefully learned that growth cannot compensate for flaws in science or technology. If they continue to invest in biomedical, they will be much more careful in their DD; or perhaps they lose their appetite for biomedical and leave entirely. I don't think things have changed for biomedical startups that are based on good science and technology and have an experienced team. What would be wonderful is if the media learned a lesson from this mess. As I see it, they were a passenger in the Theranos hype machine.
- yoohoocthulhu 10y ago
  I'd say that Theranos is so much of an outlier that it's failure won't really have a huge effect. They weren't patenting nor licensing any exciting technology. They had no groundbreaking presentations of their technology. They had no experts in the field working at the company or on the board.... I mean, it's amazing they raised money to begin with
  - deleted 10y ago
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- jonnathanson 10y ago
  "For firms that are inexperienced in the biomedical space, they have hopefully learned that growth cannot compensate for flaws in science or technology. If they continue to invest in biomedical, they will be much more careful in their DD; or perhaps they lose their appetite for biomedical and leave entirely." Exactly, which will result in essentially a return to the status quo. The investors who understand the complexities and models of the various biomedical industries will continue to invest as they always have. The carpetbaggers will fold up their tents and move on. The result is less likely to be systemic taint or damage to biotech startups as a whole -- though this may happen in the short term -- and more likely to be a reduction in fly-by-night or sketchy biotech startups for lack of funding. "I don't think things have changed for biomedical startups that are based on good science and technology and have an experienced team." Yes. To paraphrase Buffett, the tide will go out, and we'll see who's been swimming naked -- but the people who've been wearing swimsuits will be just fine. "What would be wonderful is if the media learned a lesson from this mess. As I see it, they were a passenger in the Theranos hype machine." The media hype surrounding Theranos was truly spectacular to behold. One day, nobody's ever heard of this company that's been stealthily chugging along for nearly a decade and raising heroic amounts of capital. The next day, Holmes is on the cover of every business magazine, in full Steve Jobs attire and disposition. (I'm pretty sure one or two breathless headlines actually called her "The next Steve Jobs.") Soon she's headlining the lecture circuit and racking up more puff pieces and cover stories. It's as if nobody took a critical eye to any of this hype, other than the WSJ. No doubt a confluence of factors was at play here: A desire to fill the "Great Tech Visionary" vibe left vacant by Steve Jobs's death. A desire to find the next great female role model. A desire to cover "hard tech," and not just the Nth food-delivery app of the week. And then there's just good old-fashioned me-tooism, which routinely plagues the business press: "Everyone else is covering this, so it must be a Thing, and now that it's a Thing, we have to cover it!"
yoohoocthulhu 10y ago
The diagnostics space is kind of screwed at the moment anyway by court rulings that have severely limited the patentability of diagnostics tests

Aelinsaar 10y ago

I keep waiting for Theranos to loudly and messily implode, in a shower of subpoenas and people fleeing the country.

1024core 10y ago

A part of me feels sad for Theranos. I wanted them and Elizabeth to succeed; more the latter, actually. If she had succeeded (I still hold out hope), she would have been a terrific role model for young women everywhere.

JamilD 10y ago
A role model for young women with parents coming from old money, with both Beltway and VC connections? It'll be great to have another role model in tech for young women, but incidents like this do more harm than good…
- ryandrake 10y ago
  This is a good point. Today's current tech role models, both male and female, are sending the unfortunate message: "Be born rich, have daddy pay for you to go to Stanford or Harvard, party a lot and make friends with rich future investors there, and you too can become a successful tech founder!"
  - JamilD 10y ago
    And don't forget to drop out after a year of college! You've made all the connections, so what else is there to learn? There are some exceptions to this pattern though, like Jan Koum and Andy Grove. We desperately need more of them in today's tech environment.
    - ryandrake 10y ago
      Maybe it's just me seeing the past through rose-colored glasses, but it seems that the "Work hard and know technology" founders were more common in the 70s, 80s, and 90s, in contrast to today's "Party hard and know rich people" founders.
      - coev 10y ago
        In the late 90s there were a lot of hucksters trying to get in on the new Internet trend, there were lots of bad companies then too.

doctorcroc 10y ago

Unfortunate that Theranos didn't live up to expectations. Bill Gurley writes that the expose on Theranos may have been the seminal moment causing reality to kick in for this tech cycle: http://abovethecrowd.com/2016/04/21/on-the-road-to-recap/ http://abovethecrowd.com/2016/04/21/on-the-road-to-recap/ So in a way, it can be seen as a good and necessary thing that expectations are brought back to match reality.

pcurve 10y ago

Test accuracy aside, isn't finger prick blood draw painful? I've had blood drawn both ways, and finger prick is very unpleasant. I'll pick arm blood draw any day.

LanceH 10y ago
Time, skill required and volume are all in favor of the finger prick method. And some people absolutely freak out about needles but would be ok with a finger prick.
- chimeracoder 10y ago
  > Time, skill required and volume are all in favor of the finger prick method. And some people absolutely freak out about needles but would be ok with a finger prick. Except the pain factor. Finger pricks are actually more painful, particularly when you have to draw more than a single drop of blood. Your fingers have more nerve endings than your upper arm. Also, you tend to use your fingers more than you apply pressure to your upper arm (e.g., typing, using your phone, playing the guitar - all of those require applying pressure to your fingertips, which will hurt). Even diabetics oftentimes prefer to use the arm pricks, and they need to draw a lot less blood than more elaborate tests need. (Not all diabetics, but enough that there are literally blood glucose monitors that advertise this as a specific feature).
  - LanceH 10y ago
    Not disagreeing with you, just saying the finger prick has a lot going for it. In particular the lower skill barrier to do it may make it cheaper or more convenient. It certainly opens the possibility of self administration up a lot more than a needle. Bit of a moot point until it comes along, though.
    - zadig 10y ago
      The problem with self-administration though is misinterpretation. Not to mention that the logic of cheapness/convenience -> more data -> better health doesn't always hold. The more features you screen for the higher the chance of false positives, and most people don't know how to put correct readings into medical context.

mc32 10y ago

One would think Walgreens would have done some due diligence when partnering with anyone. Wouldn't they put someone providing healthcare diagnostics services through rigorous testing to see if they could deliver on promises? I'm hoping they don't take providers' word when they partner with providers. Or is Walgreens just trying to get from under the weight of theranos's bad publicity at this point?

tclmeelmo 10y ago
This article (by way of the WSJ) claims that Walgreens skipped their standard DD in partnering with Theranos, and that the deal overall was atypically structured.
- mc32 10y ago
  Something seems a bit fishy. An uncorroborated source says WG skipped the due diligence part but in any event had they tried Theranos would have rebuffed their inquiries (because "secrecy") Could they not just compare and contrast results against known technologies, why rely on theranos's data at all?
  - JonFish85 10y ago
    Probably because they felt they didn't have the luxury of time on this one. They were probably worried that Rite Aid / CVS / other competitor would beat them to the punch, and figured that it was worth the risk to move quickly, at the time.
  - pessimizer 10y ago
    Affinity fraud.
- DannyBee 10y ago
  Yeah, It's not uncommon for execs who want some hip deal to happen to push super hard to shorten or eliminate diligence.
bedhead 10y ago

a3n 10y ago

I have to wonder why the board of directors didn't, you know, direct. In an ideal world this would damage their reputation as directors with future companies. But not today.

bronson 10y ago
Have you seen who's on their board? https://en.wikipedia.org/wiki/Theranos#Governance https://en.wikipedia.org/wiki/Theranos#Governance It's almost as if they intentionally stacked it with senators, govenrnment, and military guys. This is not a typical board, especially for a medical company.
- fapjacks 10y ago
  I read an incredibly thoughtful and insightful comment the other day arguing persuasively that the whole enterprise of Theranos was created with the singular mission of glomming onto government for fat contracts, and that's why the board looks the way it does. That they were riding the illusion of a working product hoping to become entrenched.
URSpider94 10y ago
This is what happens when you recruit your board based on who they know, instead of what they know. There are very few people on her board who could giver her valid advice about how to run a medical device company, they are all bureaucrats and politicians.
- duncan_bayne 10y ago
  Is that intentional humour?

mcnamaratw 10y ago

So the not-too-subtle suggestion in the article is that maybe Walgreens might not be struggling too hard to shake off Theranos, because W owns a piece of the unicorn. Which isn't worth much if it ends up in the meat freezer. (I have no idea whether that suggestion is accurate.)

lingben 10y ago

thoroughly disappointed in the Shriver interview, didn't ask any hard questions, didn't redirect after her answers, didn't really seem like she was at all fully informed about Theranos now if John Carreyrou had been conducting the interview, that would be another thing but I get the feeling that he would never be granted an interview simply because he is much more qualified in terms of competency in Theranos and its history and science relative to Shriver that they would see him as a threat Shriver on the other hand probably came across as a 'safe' interview to the company, which it was real journalism is so hard to find these days, sigh "Journalism is printing what someone else does not want printed: everything else is public relations." George Orwell

beachstartup 10y ago
my high expectations for journalism dropped significantly sometime right after i started my company, because i then realized how much money it took to even be mentioned in any press, good or bad.
- JonFish85 10y ago
  Isn't that advertising, rather than journalism?
  - beachstartup 10y ago
    yeah, exactly.
shas3 10y ago
It makes one suspicious, to the say the least, to see someone from a politically well-connected family like Shriver interview someone similarly well-connected like Holmes. The odds are high that they know each other and have reasons to scratch each others' backs.
- JamilD 10y ago
  It's truly a shame that cronyism is becoming a larger part of the technology industry. Let's hope Theranos acts as a warning to VCs, and not as an indication of things to come…

raverbashing 10y ago

I believe all prick exams need some level of squeezing ( did one a couple of weeks ago, giving a couple of samples from the same prick) it didn't hurt too much though

softawre 10y ago
[offtopic] - And this is why I love HN. Maturity. Imagine this thread on reddit.
- oldmanjay 10y ago
  this story just isn't very interesting for the meme-and-reference-humor-loving HN crowd. I assure you, they are around, working hard to destroy what relevance we strive to maintain.
  - semi-extrinsic 10y ago
    I believe GP was rather pointing out the large and (dare I say) untapped potential for double entendres in the posts above.
    - nickpsecurity 10y ago
      Exactly. I do memes, cultural references, academic references, and everything else here to liven up dry discussions. Yet, I had no intention of twisting those specific lines into something else because the thread would just get retarded. Like it does elsewhere. We're here and reading but just like HN quality level to stay where it is. :)
dang 10y ago
We detached this subthread from https://news.ycombinator.com/item?id=11549820 https://news.ycombinator.com/item?id=11549820 and marked it off-topic.

stanfordkid 10y ago

I've been calling this for ages since I saw Elizabeth Holmes speak at the Entrepreneurial Thought Leaders seminar at Stanford 5 or 6 years ago. Huge vision, entitled dismissal of incumbents, and a story that is just a little bit too perfect. Following your dreams is cool, but only when they aren't delusions.

Aelinsaar 10y ago
Especially when your delusions are being so very highly funded.
bane 10y ago
The first time I saw her interviewed, 2-3 years ago, I knew it also. The incredibly unclear, defensive and meandering answers to incredibly simple questions, the strange confrontational body posture, the paper-thin hints at more business partnerships and customers than they could actually talk about...once I started learning about the makeup of the board and some bio friends of mine explained the non-homogeneous chemistry of blood, I confirmed it in my mind. I still don't know of a convincing explanation for all of it, but it reminds me of some first and second-hand experiences I've heard about other, much smaller startups, in deep deep states of denial while the company is literally falling down around the CEOs head.
- csours 10y ago
  The reality distortion field is not always a good place to be.

smaili 10y ago

tldr: Walgreens appears to have taken a cautious approach toward terminating the relationship, perhaps preferring to wait until federal regulators impose penalties or the criminal investigation yields formal charges, either of which would strengthen Walgreens’s hand. Essentially, Walgreens is playing the wait-and-see game before making their decision.

hunvreus 10y ago

I can't help but notice that Ms Holmes is now wearing a hair loose and a shirt. Having only ever seen her with hair tied and black turtle necks, I'm wondering if this is an attempt at softening her image in the midst of a deluge of bad publicity. Not an ad hominem or personal attack, purely curiosity.

scottkduncan 10y ago
I hope similar attention is paid to men's wardrobe choices next time a corporate scandal article involving a male CEO is posted to HN.
- speeder 10y ago
  We don't need a scandal for that. If you look there are plenty of articles about Steve Jobs clothing, and about Mark Zuckerberg hoodies.
  - scottkduncan 10y ago
    Very true, I guess the distinction I'm trying to draw though is between having articles talk about men's clothing vs. having comments on an article about a company with a female CEO quickly go to her physical appearance when the subject at hand is the company's performance. When Facebook makes missteps, I don't think discussion on them quickly jumps to Mark's hoodies.
    - fahey21 10y ago
      It might if Mark showed up after a wave of bad press in a tailored suit.
- beachstartup 10y ago
  http://www.businessinsider.com/tech-uniform-2014-5 http://www.businessinsider.com/tech-uniform-2014-5 what men wear at work is a frequent and unending topic of discussion, but you probably don't notice, because it doesn't fit your worldview. ... and if this hn thread were about that link, you'd probably be the person complaining that it focuses too much on men, and not enough on women. unfortunately, i don't have a quantum time machine, so we'll never really know.

wehadfun 10y ago

Why so much negative press about a diagnostic company? Most people would struggle to name 1 of these save for having to get a drug test or something. It just seems odd. Like some sort of vendeta to crush this company.

danso 10y ago
How many diagnostic companies have tried to make the same claims as Theranos without having a profitable business? Theranos punched far above its weight when it came to fundraising and garnering media hype. The downside of such an approach is that if you goof up, you are that much of a spectacle. Or to paraphrase Jesus, those to whom much is given, much is expected.
kjs3 10y ago
I dunno...diagnostic companies can determine whether or not you get a job, get insurance, are exonerated of a crime, determine what diseases you might be subject to. Seems like thing you might give a fuck about. And this is a company that claims it can manage that and a lot more, and has failed. Dunno...it gives me pause...

blizkreeg 10y ago

How has she escaped being fired yet?

jeswin 10y ago
Probably because that would accomplish nothing. From the initial refusal to publish details for review, and then the repeated delays, I'm guessing the "Edison Machine" is just snake oil. Theranos probably has no product.
dbcooper 10y ago
She owns > 50% of the company.

seesomesense 10y ago

Walgreen has significant equity in Theranos and is reluctant to force it into crash and burn mode.