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This is unmitigated bullshit. The firm was launched into its ludicrous fundraising path via her relationship with Tim Draper, the consummate Silicon Valley insi

by CPLX 11y ago

This is unmitigated bullshit. The firm was launched into its ludicrous fundraising path via her relationship with Tim Draper, the consummate Silicon Valley insider, and even the article points out that the fundraising was pretty much all SV. Just not the right Silicon Valley, you know. This should be in a textbook as the archetypal "No True Scotsman" argument.

leroy_masochist 11y ago
I thought the author actually did a pretty good job at parsing the difference between the biotech teams at established VC firms and the people who invested in Theranos, explaining in measurable and falsifiable terms how the former differ from the latter (academic background, require peer-reviewed studies before investing, etc).
- CPLX 11y ago
  Well yes, that's the fundamental trick of a No True Scotsman argument.[0] The headline reads "Don't Blame Silicon Valley" not "Don't Blame Top Tier Silicon Valley Experienced Life Science VC Teams" This is the article's thesis: "It is tempting to see Theranos as another example of Silicon Valley hype — a company based on a wisp of an unproven idea becomes a multibillion-dollar phenomenon with the backing of pump-and-dump venture capitalists. In fact, however, Silicon Valley’s most experienced investors in start-ups saw red flags at Theranos before anyone else. The Theranos saga shows just how well Silicon Valley does its homework" A corrected sentence could be something like "The Theranos saga, while showing how SV fundraising hype can incinerate billions of dollars, also has a small story involving a few specific guys who know life science who aren't as easily fooled." But they didn't write that. [0] https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman Person A: You can't blame Silicon Valley for this Person B: But these people are all Silicon Valley players Person A: Ah yes, but they're not true Silcon Valley players
  - leroy_masochist 11y ago
    I'm familiar with what an NTS argument entails and I continue to disagree. I think the author's point could be restated as, "if you're going to say that what happened at Theranos discredits Silicon Valley, then let's define what we mean by 'Silicon Valley'". Specifically, the author is pointing out that "Silicon Valley", when used colloquially, might mean "Silicon Valley venture capital firms with a track record" or it might mean "any qualified investor calling themselves an 'angel' or a 'VC' who buys private company stock". The difference between the former and the latter is not purely rhetorical, as in the definition of the NTS fallacy; it is, as I mentioned in my previous comment, measurable and falsifiable. And the author is basically saying that people in the former group should not be stigmatized by the failings of certain people in the latter group.
    - CPLX 11y ago
      Tim Draper is a Silicon Valley VC with a track record. He was apparently an accessory to his daughter's best friend ripping off billions of dollars in investor money based entirely on hype and insiderism, descending into a scandal currently under federal investigation. In Silicon Valley. Page Mill Road to be specific. Getting op-eds placed in the NYT isn't going to take the stink off this one. Though I am sympathetic to the instinct to try.
      - Alex3917 11y ago
        > Tim Draper is a Silicon Valley VC with a track record. Him investing in Theranos only at best shows that he thought that it had been appropriately de-risked enough to justify a tiny pre-seed investment, not that it was later de-risked enough to justify the seed, A, B, etc.
    - mcguire 11y ago
      So you are saying that Silicon Valley is "the start-up ecosystem built around the 15 or 20 venture capital firms in the tech sector and a similar number in life sciences that account for almost all of the successful companies." That might come as a surprise to most of the people who think they work there.
argonaut 11y ago
DFJ invested $500k at the seed stage, and did not take a board seat (which is customary for seed). That is nothing in the venture world, from both a financial and a commitment perspective; their lack of control/involvement reflects that (http://www.bloomberg.com/news/articles/2015-10-19/early-theranos-investor-remains-supportive-even-without-answers-ifydlf03 http://www.bloomberg.com/news/articles/2015-10-19/early-ther...). In fact, VC firms often make those kinds of investments solely as footholds for potential future investment. To illustrate again that that is a relatively low amount of money from a committment perspective, most VCs have an explicit policy of not investing in companies that compete with portfolio companies, except for companies they funded for seed (e.g. seed is enough of a crapshoot that they won't always hold themselves to not investing in competitors). If not now, as recently as 1-4 years ago, you could seriously have gotten three times that kind of seed funding by just being a team of two ex-FB/Google/etc employees with a semi-plausible idea and prototype.
on_ 11y ago
Maybe you are right, but what are we blaming silicon valley for? Being wrong on a venture investment? I don't really understand any of this. A well funded company was unsuccessful in a spectacular fashion, and the people who thought it would be and are to "blame" lost money. Sounds like the system working. Clinkle also lost a ton of money for a lot of pretty smart people. I blame silicon valley because it was their fault they made a bad investment (as much as SV can be a collective group). I mean, I bet like 1/10 companies they fund fail. Some comitted fraud, some had shitty biz plans, some failed for no reason.
- batbomb 11y ago
  Fetishization of dropout geniuses. Origin myths. "Disruption". "Making the world a better place". Growth hacking. Do things that don't scale.
  - mcguire 11y ago
    Failure (and perhaps inability) to follow the well known and well grounded regulatory system in the industry.
    - batbomb 11y ago
      That probably falls under "move fast and break things"
      - JustSomeNobody 11y ago
        Things == Theranos Regulations are in place for a reason.
        afarrell 11y ago
        Many but not all regulations are in place for a reason that remains good.
        11y ago
tassddsfdsfm 11y ago
That's not what "No True Scotsman" means, nor is NTS much of a "fallacy" in any case. The article isn't introducing an obfuscating qualification after being caught out with some inconvenient fact - there isn't even an interlocutor! It's merely delineating those people it thinks ought to be brought to mind when one hears of Silicon Valley. Right or wrong, it has nothing to do with NTS whatsoever. If anything, you're guilty of rhetorical underhandedness in bringing in a highly dubious "fallacy" into the conversation in order to boost your case.
exelius 11y ago
Yeah, I kind of feel bad for Elizabeth Holmes. She was built up into this superstar by the media, when she was really just an ambitious kid who developed some cool tech. Now she's likely looking at a prison sentence for fraud, because they're not going to pin this on her VC backers or their powerful friends... I get the feeling that she kind of got wrapped up in something that spiraled out of control. She developed a promising new technology that ended up not working out for the use case they intended; but by that point it was too late to pivot because there were too many deals in place already. She's obviously brilliant, it's just a shame that her youth and naiveté were taken advantage of by greedy biotech VC assholes.
- blackguardx 11y ago
  I'm not that familiar with her story. What did she develop? Did she get funding based on the prototypes she made? I always assumed the money came first and then engineers and scientists developed the tech. She provided the vision.
  - exelius 11y ago
    From what I understand, she developed the initial prototypes as an undergrad at Stanford and one of her professors helped hook her up with a bunch of VCs with powerful friends. Could just be part of the mythos as well; it can be hard to tell with startups like this.
- snowwrestler 11y ago
  People don't just get "built up into this superstar by the media." To the extent Theranos and Holmes became media superstars, they at least participated fully in that process. More likely is that they had an aggressive PR function that actively sought positive media coverage, and succeeded. Just like some PR operation in Silicon Valley undoubtedly did the legwork to get this op-ed posted by the NY Times.
- woah 11y ago
  What technology did she develop? It sounds like none of it worked.
wklauss 11y ago
> Just not the right Silicon Valley, you know. My guess is that if Theranos had been a success, we would be reading about it as en example of how Silicon Valley is capable of transforming many industries. If it's part pof the club when it goes up, it should be part of the club when it goes down.
- mcguire 11y ago
  But...going up is the definition of the club.
- crdoconnor 11y ago
  Like this puff piece? "Five Visionary Tech Entrepreneurs Who Are Changing the World" http://www.nytimes.com/interactive/2015/10/12/t-magazine/elizabeth-holmes-tech-visionaries-brian-chesky.html http://www.nytimes.com/interactive/2015/10/12/t-magazine/eli... "Since dropping out of Stanford’s School of Engineering during her sophomore year in 2004, she has spent nearly every waking moment working on bio-engineering breakthroughs in diagnostic testing and persuading lawmakers"
- downandout 11y ago
  Of course. The press gets the benefit of hindsight. Still, this article makes several good points. If Elzabeth Holmes hadn't grown up next door to Tim Draper, Theranos probably wouldn't exist, Elizabeth Holmes would probably be a Stanford graduate instead of a dropout, and she and her company would almost certainly not be under criminal investigation. It's obviously not Tim Draper's fault that this went so badly, but at the same time he should (and apparently doesn't) well understand that others will use his investment as a proxy for due diligence. Having that kind of clout is a responsibility unto itself. He should either hold all investments to the same due diligence standard, or make his involvement confidential in cases where he is investing for reasons other than those for which he normally invests.
  - geofft 11y ago
    The question, then, is how many successful startups got their foot in the door because they knew an influential investor socially, even though they couldn't convince investors of their science? Investing in startups is risky because you can't know all the details. There are plenty of cases where an investor doesn't know for themselves if a technology works, but believes in the founders anyway. In some cases, even the founders don't know yet, but their pitch is more confident than they really are. This is fine because, at least some of the time, the technology does indeed end up working. If Theranos had gone well, we would be celebrating how Silicon Valley looks for disruptors and is willing to invest in risky, unproven technologies by smart kids who know better than to waste their life getting a Ph.D., no? It's inconsistent to be willing to both praise and criticize VCs for taking risks on technologies they don't understand. If Tim Draper shouldn't have done that for Theranos, other VCs shouldn't be doing it for anyone else. And if it's good for VCs to do it in general, it was good for Tim Draper to take this risk.
marketforlemmas 11y ago
Totally agree; this is basically a text-book example of the "No True Scotsman" argument.
hornbaker 11y ago
Holmes was a family friend of the Drapers, and his investment was a token amount. I doubt whether he did ANY due dili on that one, and find it hard to hold that against him.
- david927 11y ago
  Do VCs actually perform TDD? Like at UBeam? Or Color? This is a bigger problem than one company. This is that funding has been divested from basic technical due diligence. It's one thing to fund a company trying to make a new form of aircraft and another to fund one that makes a pill that will allow you to fly.
- CPLX 11y ago
  You think it's OK for a partner at a VC firm with a fiduciary duty to its LP's and investors to use the firm to give half a million dollars to his daughter's friend without any due diligence?
pj_mukh 11y ago
Why are we so angry? Did she take public money? Did she perhaps steal away investment money from another more "deserving" health-care startup (likely?)? If Theranos is full of shit, they'll be dead in a year or two, even the dumbest of VC's start asking probing questions at later rounds, DEFINITELY before IPO. At this point it'll be the PR shitstorm that'll kill Theranos before any attempt to develop actually functioning tech.
- potatolicious 11y ago
  I think some of the anger is entirely natural and expected - it's not just that Theranos failed, or that their ideas were bad to begin with, it's that they behaved unethically, in poor faith, and illegally to boot. First of all, their fraud endangered people. People rely on blood diagnostics to save their lives and maintain their health - their fraud is not as simple as failing to clean your home or failing to bring you dinner. Much of the anger I think isn't even from the perspective of Silicon Valley, it's simply being angry at a company that put many people at risk via deep, systemic, and willful fraud. On a tribal level, their behavior also reflects on us, because we're all part of this Silicon Valley pool. When a member of your "tribe" behaves poorly IMO it's entirely natural to feel anger at them. On a higher and more pragmatic level, Theranos' behavior to some degree threatens the health of the industry, by inviting more heavy-handed regulation, and bringing more intense scrutiny from both outside and inside (one can argue both these things are justified, though). We've generally operated so far under the idea that everyone (for the most part) is behaving in good faith, that startup failures are honest failures, and don't involve unprecedented, deep, systemic fraud. There is also anger at investors in general, stemming from a general feeling that they aren't doing enough to police bad behavior from their founders. Startup failures are to be expected - they are core to the SV model - but in general whenever SV companies behave egregiously badly their investors are entirely mute. This is doubly infuriating when, like in Theranos' case, the bad behavior has serious consequences.
  - pj_mukh 11y ago
    Has a misdiagnosis and resulting fall-out actually been tracked down? Most of the Theranos projects I remember were beta projects (with Walgreens and such). Fairly common to raise money on a vision, launch an unfinished product (she used the competitors devices to deliver results?) to gauge customer interest, esp in targetted markets, then go gung-ho on Engineering to deliver. Maybe this doesn't work in Bio-tech? I wouldn't know. I agree this will bring a whole lot of unwanted attention to a new industry, but would argue that this was because of the litany of borderline clickbait articles that have followed the WSJ expose. Now if Theranos dies, we'll never know if they were actually full of shit, or if they were actually close to solving the problem but died because they couldn't weather the PR shitstorm.
jackcosgrove 11y ago
This article is just CYA by the True Scotsmen of Silicon Valley.
phodo 11y ago
https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman
whack 11y ago
That's a disingenuous attack on Silicon Valley. At a technical level, Silicon Valley is merely a geographical location. Anyone can move there. Anyone can invest money in anyone they want to. If some guy from NYC moved to SV tomorrow, and invested in a company that makes the world a worse place, how is it fair to blame the 'Silicon Valley" for that? When the author says "Don't blame Silicon Valley," he's not referring to the geographical location. He's referring to the culture and ecosystem. That's an important distinction to make. If you feel that the SV culture and ecosystem are indeed to blame for Theranos, you need to show that Theranos has strong ties to players who are a central part of the SV culture and ecosystem. This is surely a nebulous and subjective term, but that doesn't make it any less important. It makes no sense to blame SV culture for something, if the only players involved are fringe players in the ecosystem.
- forgotpwtomain 11y ago
  What the OP is referring to is exactly the kind of argument you are making* - since you can always scope the culture and ecosystem to exclude the kind of people that should be blamed for X. [0] https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman
  - whack 11y ago
    Again, you haven't addressed any of the things I said at all. If you have a couple of people whom you know to be at-fault, and you want to indict the broader SV culture/eco-system to be at-fault, you need to show that those people are emblematic of the SV culture/eco-system. The NYT author has taken a reasonable stab at refuting that assertion. I'd love to see you make a similarly credible assertion, before expecting anyone to take you seriously. Yes, such an argument is subjective in nature, but so are many important things in life which can't simply be ignored because they are subjective. Your assertion that SV culture is at fault, just because person X did something wrong and person X lives in SV, is absurd. By that same argument, if some NYC billionaire were to move to SV today, and bankrolls some company founded by another NYC guy who just moved to SV and proceeds to engage in unethical behavior, it would be a damning indictment of SV culture. Such an argument is patently absurd and violates all common sense.
malz 11y ago
Not only does the author try to avoid blame in this case, he tries to take credit for everything else: "15 or 20 venture capital firms ... account for almost all of the successful companies."

by CPLX 11y ago

leroy_masochist 11y ago

I thought the author actually did a pretty good job at parsing the difference between the biotech teams at established VC firms and the people who invested in Theranos, explaining in measurable and falsifiable terms how the former differ from the latter (academic background, require peer-reviewed studies before investing, etc).

CPLX 11y ago
Well yes, that's the fundamental trick of a No True Scotsman argument.[0] The headline reads "Don't Blame Silicon Valley" not "Don't Blame Top Tier Silicon Valley Experienced Life Science VC Teams" This is the article's thesis: "It is tempting to see Theranos as another example of Silicon Valley hype — a company based on a wisp of an unproven idea becomes a multibillion-dollar phenomenon with the backing of pump-and-dump venture capitalists. In fact, however, Silicon Valley’s most experienced investors in start-ups saw red flags at Theranos before anyone else. The Theranos saga shows just how well Silicon Valley does its homework" A corrected sentence could be something like "The Theranos saga, while showing how SV fundraising hype can incinerate billions of dollars, also has a small story involving a few specific guys who know life science who aren't as easily fooled." But they didn't write that. [0] https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman Person A: You can't blame Silicon Valley for this Person B: But these people are all Silicon Valley players Person A: Ah yes, but they're not true Silcon Valley players
- leroy_masochist 11y ago
  I'm familiar with what an NTS argument entails and I continue to disagree. I think the author's point could be restated as, "if you're going to say that what happened at Theranos discredits Silicon Valley, then let's define what we mean by 'Silicon Valley'". Specifically, the author is pointing out that "Silicon Valley", when used colloquially, might mean "Silicon Valley venture capital firms with a track record" or it might mean "any qualified investor calling themselves an 'angel' or a 'VC' who buys private company stock". The difference between the former and the latter is not purely rhetorical, as in the definition of the NTS fallacy; it is, as I mentioned in my previous comment, measurable and falsifiable. And the author is basically saying that people in the former group should not be stigmatized by the failings of certain people in the latter group.
  - CPLX 11y ago
    Tim Draper is a Silicon Valley VC with a track record. He was apparently an accessory to his daughter's best friend ripping off billions of dollars in investor money based entirely on hype and insiderism, descending into a scandal currently under federal investigation. In Silicon Valley. Page Mill Road to be specific. Getting op-eds placed in the NYT isn't going to take the stink off this one. Though I am sympathetic to the instinct to try.
    - Alex3917 11y ago
      > Tim Draper is a Silicon Valley VC with a track record. Him investing in Theranos only at best shows that he thought that it had been appropriately de-risked enough to justify a tiny pre-seed investment, not that it was later de-risked enough to justify the seed, A, B, etc.
  - mcguire 11y ago
    So you are saying that Silicon Valley is "the start-up ecosystem built around the 15 or 20 venture capital firms in the tech sector and a similar number in life sciences that account for almost all of the successful companies." That might come as a surprise to most of the people who think they work there.

argonaut 11y ago

DFJ invested $500k at the seed stage, and did not take a board seat (which is customary for seed). That is nothing in the venture world, from both a financial and a commitment perspective; their lack of control/involvement reflects that (http://www.bloomberg.com/news/articles/2015-10-19/early-theranos-investor-remains-supportive-even-without-answers-ifydlf03 http://www.bloomberg.com/news/articles/2015-10-19/early-ther...). In fact, VC firms often make those kinds of investments solely as footholds for potential future investment. To illustrate again that that is a relatively low amount of money from a committment perspective, most VCs have an explicit policy of not investing in companies that compete with portfolio companies, except for companies they funded for seed (e.g. seed is enough of a crapshoot that they won't always hold themselves to not investing in competitors). If not now, as recently as 1-4 years ago, you could seriously have gotten three times that kind of seed funding by just being a team of two ex-FB/Google/etc employees with a semi-plausible idea and prototype.

on_ 11y ago

Maybe you are right, but what are we blaming silicon valley for? Being wrong on a venture investment? I don't really understand any of this. A well funded company was unsuccessful in a spectacular fashion, and the people who thought it would be and are to "blame" lost money. Sounds like the system working. Clinkle also lost a ton of money for a lot of pretty smart people. I blame silicon valley because it was their fault they made a bad investment (as much as SV can be a collective group). I mean, I bet like 1/10 companies they fund fail. Some comitted fraud, some had shitty biz plans, some failed for no reason.

batbomb 11y ago
Fetishization of dropout geniuses. Origin myths. "Disruption". "Making the world a better place". Growth hacking. Do things that don't scale.
- mcguire 11y ago
  Failure (and perhaps inability) to follow the well known and well grounded regulatory system in the industry.
  - batbomb 11y ago
    That probably falls under "move fast and break things"
    - JustSomeNobody 11y ago
      Things == Theranos Regulations are in place for a reason.
      - afarrell 11y ago
        Many but not all regulations are in place for a reason that remains good.
        11y ago

tassddsfdsfm 11y ago

That's not what "No True Scotsman" means, nor is NTS much of a "fallacy" in any case. The article isn't introducing an obfuscating qualification after being caught out with some inconvenient fact - there isn't even an interlocutor! It's merely delineating those people it thinks ought to be brought to mind when one hears of Silicon Valley. Right or wrong, it has nothing to do with NTS whatsoever. If anything, you're guilty of rhetorical underhandedness in bringing in a highly dubious "fallacy" into the conversation in order to boost your case.

exelius 11y ago

Yeah, I kind of feel bad for Elizabeth Holmes. She was built up into this superstar by the media, when she was really just an ambitious kid who developed some cool tech. Now she's likely looking at a prison sentence for fraud, because they're not going to pin this on her VC backers or their powerful friends... I get the feeling that she kind of got wrapped up in something that spiraled out of control. She developed a promising new technology that ended up not working out for the use case they intended; but by that point it was too late to pivot because there were too many deals in place already. She's obviously brilliant, it's just a shame that her youth and naiveté were taken advantage of by greedy biotech VC assholes.

blackguardx 11y ago
I'm not that familiar with her story. What did she develop? Did she get funding based on the prototypes she made? I always assumed the money came first and then engineers and scientists developed the tech. She provided the vision.
- exelius 11y ago
  From what I understand, she developed the initial prototypes as an undergrad at Stanford and one of her professors helped hook her up with a bunch of VCs with powerful friends. Could just be part of the mythos as well; it can be hard to tell with startups like this.
snowwrestler 11y ago
People don't just get "built up into this superstar by the media." To the extent Theranos and Holmes became media superstars, they at least participated fully in that process. More likely is that they had an aggressive PR function that actively sought positive media coverage, and succeeded. Just like some PR operation in Silicon Valley undoubtedly did the legwork to get this op-ed posted by the NY Times.
woah 11y ago
What technology did she develop? It sounds like none of it worked.

wklauss 11y ago

> Just not the right Silicon Valley, you know. My guess is that if Theranos had been a success, we would be reading about it as en example of how Silicon Valley is capable of transforming many industries. If it's part pof the club when it goes up, it should be part of the club when it goes down.

mcguire 11y ago
But...going up is the definition of the club.
crdoconnor 11y ago
Like this puff piece? "Five Visionary Tech Entrepreneurs Who Are Changing the World" http://www.nytimes.com/interactive/2015/10/12/t-magazine/elizabeth-holmes-tech-visionaries-brian-chesky.html http://www.nytimes.com/interactive/2015/10/12/t-magazine/eli... "Since dropping out of Stanford’s School of Engineering during her sophomore year in 2004, she has spent nearly every waking moment working on bio-engineering breakthroughs in diagnostic testing and persuading lawmakers"
downandout 11y ago
Of course. The press gets the benefit of hindsight. Still, this article makes several good points. If Elzabeth Holmes hadn't grown up next door to Tim Draper, Theranos probably wouldn't exist, Elizabeth Holmes would probably be a Stanford graduate instead of a dropout, and she and her company would almost certainly not be under criminal investigation. It's obviously not Tim Draper's fault that this went so badly, but at the same time he should (and apparently doesn't) well understand that others will use his investment as a proxy for due diligence. Having that kind of clout is a responsibility unto itself. He should either hold all investments to the same due diligence standard, or make his involvement confidential in cases where he is investing for reasons other than those for which he normally invests.
- geofft 11y ago
  The question, then, is how many successful startups got their foot in the door because they knew an influential investor socially, even though they couldn't convince investors of their science? Investing in startups is risky because you can't know all the details. There are plenty of cases where an investor doesn't know for themselves if a technology works, but believes in the founders anyway. In some cases, even the founders don't know yet, but their pitch is more confident than they really are. This is fine because, at least some of the time, the technology does indeed end up working. If Theranos had gone well, we would be celebrating how Silicon Valley looks for disruptors and is willing to invest in risky, unproven technologies by smart kids who know better than to waste their life getting a Ph.D., no? It's inconsistent to be willing to both praise and criticize VCs for taking risks on technologies they don't understand. If Tim Draper shouldn't have done that for Theranos, other VCs shouldn't be doing it for anyone else. And if it's good for VCs to do it in general, it was good for Tim Draper to take this risk.

marketforlemmas 11y ago

Totally agree; this is basically a text-book example of the "No True Scotsman" argument.

hornbaker 11y ago

Holmes was a family friend of the Drapers, and his investment was a token amount. I doubt whether he did ANY due dili on that one, and find it hard to hold that against him.

david927 11y ago
Do VCs actually perform TDD? Like at UBeam? Or Color? This is a bigger problem than one company. This is that funding has been divested from basic technical due diligence. It's one thing to fund a company trying to make a new form of aircraft and another to fund one that makes a pill that will allow you to fly.
CPLX 11y ago
You think it's OK for a partner at a VC firm with a fiduciary duty to its LP's and investors to use the firm to give half a million dollars to his daughter's friend without any due diligence?

pj_mukh 11y ago

Why are we so angry? Did she take public money? Did she perhaps steal away investment money from another more "deserving" health-care startup (likely?)? If Theranos is full of shit, they'll be dead in a year or two, even the dumbest of VC's start asking probing questions at later rounds, DEFINITELY before IPO. At this point it'll be the PR shitstorm that'll kill Theranos before any attempt to develop actually functioning tech.

potatolicious 11y ago
I think some of the anger is entirely natural and expected - it's not just that Theranos failed, or that their ideas were bad to begin with, it's that they behaved unethically, in poor faith, and illegally to boot. First of all, their fraud endangered people. People rely on blood diagnostics to save their lives and maintain their health - their fraud is not as simple as failing to clean your home or failing to bring you dinner. Much of the anger I think isn't even from the perspective of Silicon Valley, it's simply being angry at a company that put many people at risk via deep, systemic, and willful fraud. On a tribal level, their behavior also reflects on us, because we're all part of this Silicon Valley pool. When a member of your "tribe" behaves poorly IMO it's entirely natural to feel anger at them. On a higher and more pragmatic level, Theranos' behavior to some degree threatens the health of the industry, by inviting more heavy-handed regulation, and bringing more intense scrutiny from both outside and inside (one can argue both these things are justified, though). We've generally operated so far under the idea that everyone (for the most part) is behaving in good faith, that startup failures are honest failures, and don't involve unprecedented, deep, systemic fraud. There is also anger at investors in general, stemming from a general feeling that they aren't doing enough to police bad behavior from their founders. Startup failures are to be expected - they are core to the SV model - but in general whenever SV companies behave egregiously badly their investors are entirely mute. This is doubly infuriating when, like in Theranos' case, the bad behavior has serious consequences.
- pj_mukh 11y ago
  Has a misdiagnosis and resulting fall-out actually been tracked down? Most of the Theranos projects I remember were beta projects (with Walgreens and such). Fairly common to raise money on a vision, launch an unfinished product (she used the competitors devices to deliver results?) to gauge customer interest, esp in targetted markets, then go gung-ho on Engineering to deliver. Maybe this doesn't work in Bio-tech? I wouldn't know. I agree this will bring a whole lot of unwanted attention to a new industry, but would argue that this was because of the litany of borderline clickbait articles that have followed the WSJ expose. Now if Theranos dies, we'll never know if they were actually full of shit, or if they were actually close to solving the problem but died because they couldn't weather the PR shitstorm.

jackcosgrove 11y ago

This article is just CYA by the True Scotsmen of Silicon Valley.

phodo 11y ago

https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman

whack 11y ago

That's a disingenuous attack on Silicon Valley. At a technical level, Silicon Valley is merely a geographical location. Anyone can move there. Anyone can invest money in anyone they want to. If some guy from NYC moved to SV tomorrow, and invested in a company that makes the world a worse place, how is it fair to blame the 'Silicon Valley" for that? When the author says "Don't blame Silicon Valley," he's not referring to the geographical location. He's referring to the culture and ecosystem. That's an important distinction to make. If you feel that the SV culture and ecosystem are indeed to blame for Theranos, you need to show that Theranos has strong ties to players who are a central part of the SV culture and ecosystem. This is surely a nebulous and subjective term, but that doesn't make it any less important. It makes no sense to blame SV culture for something, if the only players involved are fringe players in the ecosystem.

forgotpwtomain 11y ago
What the OP is referring to is exactly the kind of argument you are making* - since you can always scope the culture and ecosystem to exclude the kind of people that should be blamed for X. [0] https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman
- whack 11y ago
  Again, you haven't addressed any of the things I said at all. If you have a couple of people whom you know to be at-fault, and you want to indict the broader SV culture/eco-system to be at-fault, you need to show that those people are emblematic of the SV culture/eco-system. The NYT author has taken a reasonable stab at refuting that assertion. I'd love to see you make a similarly credible assertion, before expecting anyone to take you seriously. Yes, such an argument is subjective in nature, but so are many important things in life which can't simply be ignored because they are subjective. Your assertion that SV culture is at fault, just because person X did something wrong and person X lives in SV, is absurd. By that same argument, if some NYC billionaire were to move to SV today, and bankrolls some company founded by another NYC guy who just moved to SV and proceeds to engage in unethical behavior, it would be a damning indictment of SV culture. Such an argument is patently absurd and violates all common sense.

malz 11y ago

Not only does the author try to avoid blame in this case, he tries to take credit for everything else: "15 or 20 venture capital firms ... account for almost all of the successful companies."