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Theranos’s Fate Rests with a Founder Who Answers Only to Herself
- semi-extrinsic 10y agoFrom TFA: "“For every Theranos, there’s a Facebook,” said Bryan Roberts, a partner at Venrock, a leading venture capital firm." Really? I thought unicorns were called unicorns because they're, well, rare? Also interesting that we're now at the point where Theranos == failure.
- daveguy 10y agoIf we're at the point where Theranos == failure, then "For every Facebook there are 10-100 Theranos" would be more accurate.
- smitherfield 10y agoYou can keep going on the orders of magnitude. There are only 3 "Facebooks:" Facebook (market cap $318bn), Google ($504bn) and Amazon ($292bn).
- cperciva 10y agoI'd include Apple on that list. Sure, the company was founded a long time ago; but for practical purposes you might as well consider that Apple 1.0 (the computer company) died and Apple 2.0 (the iGadget company) launched in 2001.
- aaronbrethorst 10y agoI'd place the date for Apple 1.0's death at December 20, 1996, but agree with you 100% on the iGadget part. http://www.cnet.com/news/apple-acquires-next-jobs/ http://www.cnet.com/news/apple-acquires-next-jobs/
- cperciva 10y agoRight, I was taking the release of the iPod as the date that Apple 2.0 launched; we can certainly say that Apple 1.0 died five years earlier and it existed as a zombie company for five years.
- Philadelphia 10y agoThe iMac was the first big hit under Jobs 2.0. Then iTunes. Then the iPod.
- aaronbrethorst 10y agoAbsolutely correct. iMac proved to Apple employees, their investors, and their faithful, oft-curbstomped users that Apple could still make something really friggin' cool. iPod changed the course of Apple's destiny. There's a reason that the company was renamed from Apple Computer, Inc to Apple, Inc., and the first step towards that transition was the iPod, not the iMac.
- meric 10y agoApple could be seen as the brand name NeXT decided to keep after acquiring Apple 1.0. I'd say there's two unicorns in there, one died from accelerated aging and had its corpse eaten. Remember even Ford and GM were unicorns once upon of time.
- Retric 10y agoApple was a profitable multi billion dollar company in 2000. https://www.apple.com/pr/library/2000/10/18Apple-Reports-Fourth-Quarter-Profit-of-170-Million.html https://www.apple.com/pr/library/2000/10/18Apple-Reports-Fou... 170 million in profits a quarter in Sept 2000 and a recent history of rapid growth is easily a 10+ billion dollar company. PS: There stock hit the lowest point in 1998 under jobs, but 1998-2000 was a solid run up before the market tanked. Don't forget they did a 2:1 split in Jun 21, 2000. But, in terms of fundamentals they were a huge profitable 10x unicorn and growing in 2000. And even at the bottom of there second dip in Jan 2, 2001 @14.88 they where at twice Jan 2, 1998's split adjusted 6.815.
- smitherfield 10y agoBut it didn't raise money from venture capitalists during that time, which is the context of the original quote.
- keymone 10y agofor every rare epic failure there is rare epic success <- that's how i read it? edit: typo
- Asparagirl 10y ago"I think the board has complete confidence in Elizabeth Holmes as a founder of the company, as a scientist and as an administrator,” he said. A scientist?! Since when?
- whyenot 10y agoShe dropped out of Stanford's chemical engineering program. Surely that should count for something!
- freyr 10y agoAll that says is she was admitted to Stanford as an undergrad, and lasted there till she was 19. That alone doesn't make someone a scientist.
- vehementi 10y agoCould anything she's done in the last 13 years qualify her as a scientist? What does it take to be one?
- joshmn 10y agoOnly "official" per MW, but, > a person who is studying or has expert knowledge of one or more of the natural or physical sciences. Would she be able to test out of all her BA requirements from Stanford with what she's learned?
- freyr 10y agoShe might test out of all the BS requirements.
- TrickedOut 10y agoShe might be able to liquidate some of her founder's stock, donate it to a university, and get an honorary PhD :-)
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- moonlighter 10y agoTakeaway for future founders incorporating: - Own a majority interest in your company. - Be the company's chairman/woman and CEO. - Issue dual-class shares ("supervoting shares") where class B shares carry many more votes than ordinary class A shares so the board can't pull a Steve Jobs on you.
- LoSboccacc 10y agoFounders that need money to execute or risk folding rarely get to set their conditions
- daemin 10y agoWhat surprised me was that the company was founded 12 years ago. I had assumed that since people were commenting on the founder as a "young, didn't complete college, no real experience, etc" that the company was founded very recently. Upon learning that, it seems to me that the company has grown more organically, more like a bootstrapped business of sorts.
- moonlighter 10y agoNot every founder needs VC money; think outside the YC bubble.
- a_bonobo 10y ago>Ms. Holmes, a 32-year-old Stanford University dropout, owns a majority interest in Theranos, a privately held company she founded in 2003. So she was 19 years old when she founded the company? What was the product back then?
- joshmn 10y ago> So she was 19 years old when she founded the company? What was the product back then? What the product is now. I don't know her personally, but from what I've gathered she's always had a very well-to-do network via her Father (?). Probably helped a bit.
- w1ntermute 10y agoThe product has actually changed quite a bit since Elizabeth founded Real-Time Cures, as it was called back then. The initial goal was to create a continuous, blood monitoring skin patch with a cellular connection.
- jerryhuang100 10y agoi would argue that even by removing EH from the CEO role of T would not save T as: 1) its core technology is basically non-existed, non-proven, non-peer-reviewed and was never fully covered by its 20 or 30 something non-core patents. it seems its core tech is all inside EH's head. 2) their company machinery is not healthy enough that "could be run by a monkey" (quoting warren buffett, no offense to any one). even some guy hired by EH for their biochem had to killed himself. 3) EH is the only hub node for the vast politicians on its board and its political network.
- moonlighter 10y ago"Non-peer-reviewed"? This is a private company with proprietary technology, not the New England Journal of Medicine. Proprietary and peer-reviewed are oxymoronic in this context.
- jerryhuang100 10y agoin medical/scientific realm, claims are peer-reviewed to be valid.
- crygin 10y agoHeh, this is, bluntly... untrue. In medicine, certain types of published studies are sometimes peer-reviewed, and sometimes people care about that, and that's about the extent of peer review as far as validity goes. Drug studies are not peer-reviewed in any meaningful way, and that's about as statistically strong a claim as exists in most of medicine. Medtech (implants, mechanisms, Theranos-like processes, etc) are certainly never "peer-reviewed".
- jerryhuang100 10y agodrug studies (or medtech) might not need to be peer-reviewed, but their underlining principles / entity / mechanism are peer-reviewed as scientific discovery. T is totally not the case. in fact its claim for using tiny amount of blood for medical diagnostics and its clinical results are disputed and questioned by comparing to its peers in peer-reviewed journals.
- joshmn 10y agoThe fact a board of politicians shows "complete confidence" of EH as a founder, scientist and administrator means one thing. And that one thing isn't good, unless you're on that board. I feel bad for anyone that got roped into this mess and tried to do right by it. That person(s) exist, and when this sideshow completes itself, they're looking at a sweet 60 Minutes segment that I'll gladly make some popcorn for.
- no_wave 10y agoThat guy existed - his name was Ian Gibbons and he killed himself in 2013 apparently.
- kumarski 10y agoHere's the really big kicker that hits me in the face as I look at the leadership team of Theranos. It's a descriptive statement about the company: Nobody on Theranos's board has a pharma, hematology, research, or diagnostics background related to the line of business of Theranos. This makes it that much more difficult to get the bottom of what they've innovated, if anything at all.
- joshmn 10y agoYeah, so, what were investors thinking? Like, I see it like this: She presents Theranos as LeBron James. If I want to win a championship as a player, I'd have a higher probability of getting one if LeBron is on my team. So I join him.[0] Where are all the awesome supporting cast members? [0] Yes I realize he's 2/6.
- LAMike 10y agoThis lady is no Lebron James. More like Darko Milicic.
- willvarfar 10y agoThey were all people with connections to the top of DoD. Presumably they were 100% aiming at a military contract?
- raverbashing 10y agoThis is the billion dollar question. Or at least was, before the company started going down the drain The only person that had some knowledge of biology on board was Holmes. Now, while the board usually doesn't deal with the technical minutia they should be definitely keeping an eye on possible regulatory needs and associated risks
- whyenot 10y agoShe took some science classes at Stanford. That's got to be worth a PhD from some second rate institution like a state school. It's not like you need a great deal of medical science in order to do a medical startup. As long as you have the right connections and a lab coat that fits, you're good to go.
- jmarbach 10y agoThe course content of the Chemical Engineering courses at Stanford are almost certainly identical to the Chemical Engineering courses at San Jose State. The course content for any Bachelors Degree in the sciences are determined by an international community of professors and professionals, such as the Association for Computing machinery and IEEE in the Computer Science field.
- on_ 10y ago> The course content of the Chemical Engineering courses at Stanford are almost certainly identical to the Chemical Engineering courses at San Jose State. Even if we accept that Stanford's teaching staff, resources, and student peer-groups are complete non-factors, it is extremely unlikely the content is the same. Both because schools differ on how they supplement that content (adding more & where they provide additional attention) and general quality of laboratories ect. So even if they use the exact same books depending on how granular you define "content", I think we can say San Jose (or many universities) are difficult to compare directly. While I wouldn't put it as rudely as parent, Stanford has a reputation for putting out high quality engineers, although that is irrelevent to the point, which is that you certainly can't say general content guidelines map to "certainly identical" experience...
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- Roritharr 10y agoTheranos most valuable service to me was that they've shown me what a small man I really am, considering that I enjoy reading about their failure much more than reading about someone else's successes.
- aaronbrethorst 10y agoIf they'd operated with even the slightest veneer of humility, and if the whole thing had not turned out to be such a house of cards, then you probably would not have such intense feelings of schadenfreude. I think it's pretty normal to feel some pleasure at the misery of others when those others have made themselves out to be such Paragons of Virtue, Captains of Industry, Movers and Shakers of 21st Century Health, and whatnot, and turn out to completely full of it. And, just to make sure it's clear that I'm not exaggerating, we're talking about a company whose founder literally received something called the Horatio Alger Award last year: She was the youngest person ever to be awarded the Horatio Alger Award in recognition of “remarkable achievements accomplished through honesty, hard work, self-reliance and perseverance over adversity.” http://www.nytimes.com/2015/10/30/business/the-narrative-frays-for-theranos-and-elizabeth-holmes.html http://www.nytimes.com/2015/10/30/business/the-narrative-fra...
- LordHumungous 10y agoShe wore black turtlenecks ffs. If that's not hubris then I don't know what is.
- raymondh 10y agoI almost downvoted this comment. What a person wears is a personal decision and irrelevant to this discussion.
- Aaronontheweb 10y agoWooooosh. It's a reference to comparing oneself to Steve Jobs. They make fun of it in Silicon Valley and elsewhere in tech culture.
- 1024core 10y agoHow is this any different than Google, Facebook, etc.?
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- TrickedOut 10y agoGoogle, Facebook have working products people are willing to use and largely based on open technologies, where the competitive advantage is speed to market, network effects, and good execution.
- LordHumungous 10y agoWhat's the endgame? Theranos spends the next five years burning a billion VC dollars and then goes bankrupt?
- J-dawg 10y agoI remember reading a similar article about Hampton Creek, the food startup. How do VC's end up investing in stuff like this? That's not meant to be a rhetorical question, I know nothing about investing. I'm genuinely interested in how very smart people end up giving millions of dollars to fund vapourware. What is the due diligence process? Don't VC's hire an independent expert in the field to audit the core technology? I guess confidentiality is an issue, but we have NDAs for that, right?
- aaronbrethorst 10y agoIt started off with Elizabeth Holmes being childhood friends with Tim Draper's daughter: Timothy Draper, the well-known venture capitalist, had been a neighbor when the Holmeses lived in California. The children played together. “I gave her her first million bucks to get the business going,” Mr. Draper says. http://www.nytimes.com/2015/12/20/business/theranos-founder-faces-a-test-of-technology-and-reputation.html http://www.nytimes.com/2015/12/20/business/theranos-founder-... And it doesn't hurt that her family is ridiculously well connected, or that Holmes is obviously an incredibly intelligent person...It just seems like the technology simply didn't pan out, and she was never able to say '¯\_(ツ)_/¯ sorry guys, no dice.'
- shoyer 10y agoSmart investors know their area of expertise and audit the core technology themselves. Noteably, nobody with a specialization in healthcare invested in Theranos.
- J-dawg 10y agoSurely this alone should have deterred the non-specialist investors?
- jacquesm 10y agoThe problem here is that if one investor is 'in' the rest will assume they did due diligence and will use this as social proof to invest as well, aka the herd mentality in investing. Quite a few VC's would never invest these kind of funds without a full process DD (legal, financial, technical, commercial), but once you're vetted by one of the top flight VCs and have received an investment from them a lesser party could easily make a whole pile of (wrong) assumptions, especially if there are links between the parties outside of the VC circuit. What should be done is definitely not always what is actually done. A simple reason for this is that if the DD fails the investor pays for the DD from their own management fees, but if the deal goes through the company invested in usually gets the invoice from all the DD parties (as per the terms sheet, this is a very common clause). This puts a weird incentive on VCs to let deals go through, they can't have too many DDs fail during the process or it can actually materially impact their ability to work. Imagine that if 2% (which is pretty much the going rate) of a small fund (say 50M) is what the VC company has to operate on for every year that it runs (so 1M) divided over all the partners and associates in the fund, renting a building in some prestigious place, travel and so on has to bear the additional load of several full process failed DDs (anywhere from 50K to 200K each) it can really hit hard if too many of them fail. So if there is a way to avoid doing DD because a larger party is already 'in' this is a quick way to validate and a very easy mistake to make. Of course - given that that is what I sell - I would very much prefer it if every round every investor would do their own due diligence but in practice you really don't see that. The most common format is that in every round there is some level of DD done (thoroughness roughly related to the size of the deal) and then all the parties involved decide to invest (or not...) based on DD done by one of them. In the Theranos case I suspect the 'big names' blinded investors, which is dumb on a very basic level. But it's their money and if they decide to throw it away on a BS project that is their right. The bit that really bothers me is how many good companies you could have funded instead of this one too-good-to-be-true unicorn.
- shoyer 10y agoOnly Theranos insiders know if their technology is actually worth anything. But supposing it is, I do think there is a narrow path to success with a new CEO and a cultural reboot (including publishing their work this time). That said, there are external factors (e.g., regulators, legitation) that could sink them regardless of the best efforts of a new management team. The need to clean house at the top to have any chance seems so obvious that I'm surprised the board hasn't resigned yet. I suppose they are giving Holmes the benefit of the doubt to come up with her own turn around plan first.
- sixQuarks 10y agoIt doesn't help that one of the founders committed suicide, I believe there was a rumor stating the reason was because their product didn't work.
- novalis78 10y agoPerfect setup for a conspiracy thriller: she appears on Bloomberg and mentions that Americas biggest problem is not health insurance but health care cost. The cronigarchie takes notice, swivels its massive canons and starts firing at her for the past six months. Epic. Even the NYTimes, who has been - ironically - somewhat at the forefront of investigating into medical billing fraud, still wonders if 'there is truth to her technology'. Let's see how this unfolds.