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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 The

• 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.
    • woah 11y ago
      Your whole description of raising money, gauging customer interest, etc. is not really applicable here. Interest did not need to be gauged, they were claiming to have a technology that was fundamentally better than the existing tech. This is not a case of "do people want to use my new todo app?". The use of competitor equipment in this case was a tacit admission of their failure to deliver. The business proposition was "we have blood tests that are superior in every way", not "we want to open blood testing centers in Walmart". How much VC funding do you think they would have gotten on a pitch of opening retail blood testing centers with conventional equipment? It sounds like a boring, low margin business that no VC would want a part of.
      • pj_mukh 11y ago
        Most smart "hard tech companies" play with go to market strategies. If they don't, they should. Theranos was actually doing that right. If they were unsure of their tech (or worse were trying to swindle the market), why bother going to market with $400M in the bank? This points to sincere market experimentation. Whether it is appropriate for a biotech company to do so (with actual health information on the line) is another matter. At best, the FDA should have space for this kind of beta testing (clearly marked, always cross-checked etc.).
    • TheOtherHobbes 11y ago
• ebbv 11y ago
  I think outrage (of which anger is a component) is a natural reaction to someone scamming their way into a position of massive funding that many people are working tirelessly to try to reach. Saying that people shouldn't be outraged because they will probably fail and be punished is kind of silly. Do we say don't be mad at a murderer just because they are going to go to jail? Punishment or even resolution of a problem doesn't mitigate the emotional reaction to that problem for most people.
  • mbesto 11y ago
    To take this further, Theranos raised an estimated $400m. There a lot of people (including myself) who could have used that money (it's fungible) to create something that actually existed. Even at a paltry $2M per company (a typical seed round these days), it could have meant another 20 companies could have been created, or at least be given a fighting chance.
    • jdmichal 11y ago
      Just a note that your math was off by a factor of 10; it would be 200 companies at $2mm each.
      • mbesto 11y ago
        Good catch.
  • pj_mukh 11y ago
    Murderers have a victim party that lay charges. Have the investors or beta users laid charges? I actually don't know. Like I said AFAIK, Theranos hasn't taken money away from any more deserving startup. Though, I agree $400M is A LOT of money gone to a supposed undeserved startup. Maybe that's the source of the rage.
    • st3v3r 11y ago
      Money is finite. Money given to Theranos means the funds have less money to invest elsewhere. So yes, they did take money away from more deserving startups.
• CPLX 11y ago
  > Why are we so angry? What, pray tell, is the appropriate reaction to watching someone fraudulently incinerate 600 million dollars intended to be invested in taking care of people and improving health?
  • pj_mukh 11y ago
    I'm pretty sure that $600M was intended to be returning a 100x return and nothing else. My point remains, at this point if Theranos fails (and TRULY loses $600M) then it'll be because of the media shitstorm. If they naturally died because the company was full of shit (which it would eventually), then we'd have more reason to be angry at the waste of money.
    • CPLX 11y ago
      > If Theranos fails (and TRULY loses $600M) then it'll be because of the media shitstorm lolz So the reason the house of cards collapsed is because the WSJ said "Hey guys that thing might be a house of cards over there"?
      • pj_mukh 11y ago
        Sorry, that's not right. What I meant was at this point, we just won't know. Or are we assuming that the FDA would've never caught on and shut them down if it wasn't for WSJ? That they would've let fraudulent testing go on unabated. I don't know really know what WSJ did that wouldn't have otherwise come up in regular FDA proceedings other than telling a bunch of millionaires they were stupid with their money. P.S: To my point there are two articles on the HN frontpage about Theranos just today. This now seems like click-bait hoarding. The original WSJ piece was obviously warranted (if for anything then as a warning to SV biotech investors).
• maxxxxx 11y ago
  She most likely took public money in the form of pension funds and probably your municipality. The VCs won't lose their own money.