4 ms·

In all sincerity: does Theranos have anything left? This isn't 23andMe where a viable product got caught up in legal fights over reporting. As I understood it,

In all sincerity: does Theranos have anything left? This isn't 23andMe where a viable product got caught up in legal fights over reporting. As I understood it, the fraudulent component here was "everything at all worthwhile about the product". Are they just a shell at this point, trying to use the team and leftover money as a basis for a new project? Do they have some existing offering which isn't totally valueless? What's happening here?

thinkpad20 9y ago
The only thing that comes to mind is the sunk costs fallacy. Although it's hard to imagine Theranos ever becoming a success (and certainly, I won't be rooting for it), it might be harder for those who poured millions into the company to let go. That's my guess anyway.
- seanp2k2 9y ago
  Why stop operating when you can continue until bankruptcy and beyond? Serious question...if there's no reputation left to lose and everyone is still getting paid, what incentive do they have to stop?
  - awinder 9y ago
    If you're an investor, do you want to get some pennies back on the dollar, or do you want to get 0 pennies back on the dollar? If they liquidate they can take that cash and pay out something, at least to some class of investors.
    - abduhl 9y ago
      I would imagine writing the whole thing off as a loss is better from a tax perspective.
      - parthpatel1001 9y ago
        Please excuse my ignorance, but I don't understand this. Scenario 1: I have $100 in gains this year. I owe $30 in taxes. I am left with $70. (Say $100 is 30% bracket) Scenario 2: I have $100 in gains this year. I write off a $10 loss. (Say $90 is 25% bracket). I owe $22.5 in taxes. I am left with $67.5. Is it the case that writing off the loss is better, if you can be bumped so far down the brackets that (gains - loss)(1-lower_tax_rate) > (gains) (1 - higher_tax_rate)?
        lotyrin 9y ago
        No, it's continuous with no edge effects like this because only income within a bracket is taxed at that bracket.
      - awinder 9y ago
        I don't think it'd ever be better because you're always writing off the loss, the difference is the size of the loss. It's better to, e.g., get 10K back out of 100K investment and claim a 90K loss, versus getting back 0K with a 100K loss claimed. You're only getting back your taxes from that 10K difference in losses, versus getting the 10K back. The delta would always be there.
zitterbewegung 9y ago
I thought your comment was true 6 months ago and said something similar. I don't think anyone can answer your question until we see the HN post with the title: "Theranos closes" and we read about the postmortem if one will exist.
philipov 9y ago
They're a zombie, but having a large cash reserve in one spot is capital, and capital keeps a business running, hunting for brains. Maybe they should reinvent themselves as a hedge fund.
- rgbrenner 9y ago
  No one would put money into a hedge fund run by holmes. Would you trust her with your money? She stinks of fraud already. If she told me the fund was doing great, I would get suspicious that she was turning into the next bernie madoff.
  - unknown_apostle 9y ago
    You would think so, but: https://en.wikipedia.org/wiki/John_Meriwether https://en.wikipedia.org/wiki/John_Meriwether "A year after LTCM's collapse, in 1999, Meriwether founded JWM Partners LLC. (...) Meriwether opened his third hedge fund venture, named JM Advisors Management, also based in Greenwich, Connecticut, in 2010." Meriwether blows up and is not a fraud. But then there's this guy: https://www.wsj.com/articles/jon-corzine-considers-launching-hedge-fund-1429484718 https://www.wsj.com/articles/jon-corzine-considers-launching... Though in all fairness I don't know whether he pulled that one off.
    - jzebedee 9y ago
      I don't think equating LTCM with fraud is exactly right. They used an incredibly risky strategy and had their leverage blow up in a black swan event. A failure, but not fraud.
      - unknown_apostle 9y ago
        No you're right, it's fundamentally wrong to compare Meriwether with Corzine. But my kneejerk response was to the "entrust your money".
      - btilly 9y ago
        A black swan event caused by the phenomena that previously uncorrelated financial indicators temporarily become correlated under stress. A few months after they blew up, their portfolio was profitable again.
dragonwriter 9y ago
> In all sincerity: does Theranos have anything left? As I understand it, Holmes controls an outright majority of the voting rights, so the question is does Holmes have anything left to gain from Theranos operating.
mustacheemperor 9y ago
>Do they have some existing offering which isn't totally valueless There's a lot of patents, via Holmes. Someone in the last Theranos thread also pointed out that whatever hardware does exist may have licensing value for other developers. The owners may be planning to part it out.

thinkpad20 9y ago

The only thing that comes to mind is the sunk costs fallacy. Although it's hard to imagine Theranos ever becoming a success (and certainly, I won't be rooting for it), it might be harder for those who poured millions into the company to let go. That's my guess anyway.

seanp2k2 9y ago
Why stop operating when you can continue until bankruptcy and beyond? Serious question...if there's no reputation left to lose and everyone is still getting paid, what incentive do they have to stop?
- awinder 9y ago
  If you're an investor, do you want to get some pennies back on the dollar, or do you want to get 0 pennies back on the dollar? If they liquidate they can take that cash and pay out something, at least to some class of investors.
  - abduhl 9y ago
    I would imagine writing the whole thing off as a loss is better from a tax perspective.
    - parthpatel1001 9y ago
      Please excuse my ignorance, but I don't understand this. Scenario 1: I have $100 in gains this year. I owe $30 in taxes. I am left with $70. (Say $100 is 30% bracket) Scenario 2: I have $100 in gains this year. I write off a $10 loss. (Say $90 is 25% bracket). I owe $22.5 in taxes. I am left with $67.5. Is it the case that writing off the loss is better, if you can be bumped so far down the brackets that (gains - loss)(1-lower_tax_rate) > (gains) (1 - higher_tax_rate)?
      - lotyrin 9y ago
        No, it's continuous with no edge effects like this because only income within a bracket is taxed at that bracket.
    - awinder 9y ago
      I don't think it'd ever be better because you're always writing off the loss, the difference is the size of the loss. It's better to, e.g., get 10K back out of 100K investment and claim a 90K loss, versus getting back 0K with a 100K loss claimed. You're only getting back your taxes from that 10K difference in losses, versus getting the 10K back. The delta would always be there.

zitterbewegung 9y ago

I thought your comment was true 6 months ago and said something similar. I don't think anyone can answer your question until we see the HN post with the title: "Theranos closes" and we read about the postmortem if one will exist.

philipov 9y ago

They're a zombie, but having a large cash reserve in one spot is capital, and capital keeps a business running, hunting for brains. Maybe they should reinvent themselves as a hedge fund.

rgbrenner 9y ago
No one would put money into a hedge fund run by holmes. Would you trust her with your money? She stinks of fraud already. If she told me the fund was doing great, I would get suspicious that she was turning into the next bernie madoff.
- unknown_apostle 9y ago
  You would think so, but: https://en.wikipedia.org/wiki/John_Meriwether https://en.wikipedia.org/wiki/John_Meriwether "A year after LTCM's collapse, in 1999, Meriwether founded JWM Partners LLC. (...) Meriwether opened his third hedge fund venture, named JM Advisors Management, also based in Greenwich, Connecticut, in 2010." Meriwether blows up and is not a fraud. But then there's this guy: https://www.wsj.com/articles/jon-corzine-considers-launching-hedge-fund-1429484718 https://www.wsj.com/articles/jon-corzine-considers-launching... Though in all fairness I don't know whether he pulled that one off.
  - jzebedee 9y ago
    I don't think equating LTCM with fraud is exactly right. They used an incredibly risky strategy and had their leverage blow up in a black swan event. A failure, but not fraud.
    - unknown_apostle 9y ago
      No you're right, it's fundamentally wrong to compare Meriwether with Corzine. But my kneejerk response was to the "entrust your money".
    - btilly 9y ago
      A black swan event caused by the phenomena that previously uncorrelated financial indicators temporarily become correlated under stress. A few months after they blew up, their portfolio was profitable again.

dragonwriter 9y ago

> In all sincerity: does Theranos have anything left? As I understand it, Holmes controls an outright majority of the voting rights, so the question is does Holmes have anything left to gain from Theranos operating.

mustacheemperor 9y ago

>Do they have some existing offering which isn't totally valueless There's a lot of patents, via Holmes. Someone in the last Theranos thread also pointed out that whatever hardware does exist may have licensing value for other developers. The owners may be planning to part it out.