11 ms·
Theranos Didn't Just Harm Investors
- madengr 8y agoJust finished Bad Blood. Hopefully they both get felony prison time, and there is precedence for it. I don't see how it's any different than a pharmacist diluting drugs. After diluting blood samples, they purposely doctored the statistics to reduce the deviation.
- tedmiston 8y agoDo you know of any good summaries for it? It's on my someday list but a CliffsNotes version would be awesome.
- kqr2 8y agoYou could also wait for the movie which will star Jennifer Lawrence: https://www.imdb.com/title/tt5795144 https://www.imdb.com/title/tt5795144 https://deadline.com/2018/05/vanessa-taylor-theranos-scandal-bad-blood-adam-mckay-jennifer-lawrence-elizabeth-holmes-1202390697/ https://deadline.com/2018/05/vanessa-taylor-theranos-scandal...
- perfmode 8y agogreat. elizabeth holmes is being immortalized by jennifer lawrence. i’m really in two minds about the practice of making films about people of the likes of Holmes.
- Waterluvian 8y agoThey just eat up the attention and validation of importance. Yum yum yum yum yum.
- metabagel 8y agoI wonder if Jennifer Lawrence can get her voice as ridiculously deep as Elizabeth Holmes.
- JackCh 8y agoI'm sure they could pitch down her voice in post. Or maybe give her a tank of sulfur hexafluoride...
- just_one_time_ 8y agoThe book says the voice was fake. The employee "caught" her using her real voice in private, apparently she was told early on to lower her voice to appear more confident.
- madengr 8y agoSorry, no. There are plenty of excepts though. It's a fast read, and you'll not want to put it down.
- KSS42 8y agoJean-Louis Gassée has a good write up. He tried using the technology and got very odd results. His use of the test in 2015: https://mondaynote.com/theranos-trouble-a-first-person-account-1690b827539f https://mondaynote.com/theranos-trouble-a-first-person-accou... Follow up from May 2018: https://mondaynote.com/theranos-could-have-been-stopped-9670793e3431 https://mondaynote.com/theranos-could-have-been-stopped-9670...
- Jonovono 8y agoI liked this interview with the author: https://www.youtube.com/watch?v=ta1DqI4xDRw https://www.youtube.com/watch?v=ta1DqI4xDRw
- mifreewil 8y agoYoutube John Carreyrou, he's done many 30min+ interviews in the last month that summarizes the story well.
- dyoo1979 8y agoThe Commonwealth Club of California had a pretty good session from the reporter: https://www.commonwealthclub.org/events/2018-06-07/theranos-fraud-and-deception-silicon-valley https://www.commonwealthclub.org/events/2018-06-07/theranos-...
- wp381640 8y agoYou shouldn't skip it - it's an excellent book that I believe in the long term will become a Silicon Valley staple similar to what Barbarian at the Gate is for Wall Street It's also a breezy read - I tore through it in a couple of sittings.
- chapium 8y agoIts pretty common for labs to dilute lab samples. I’m not sure this is the same thing.
- madengr 8y agoYeah, but they diluted them knowing the deviations were wild, then purposely tossed outliers to rein it in. It's statistical fraud 101. The premise is that you can't get enough blood (or quality of blood, as in the potassium test) from finger pricks to do the tests they claimed; period. They knew that soon after the start, and perpetrated the fraud for years.
- JackCh 8y agoThe third-party lab machines Theranos was secretly using will often dilute samples during their general operation. This is a known factor engineered into their design and accounted for in their certification/regulation. Theranos was secretly diluting blood samples even more, well beyond what the machines they were using were originally meant for. What they were doing was legally, ethically, and scientifically completely distinct. Prison time is definitely deserved.
- chapium 8y agoI guess im not fullybinformed on their actions, but of course the 3rd party machines automate the dilution process and in some cases dilution is done manually. Obviously working with the equipment outside of spec is wrong.
- pkaye 8y agoBecause Theranos used very small samples of blood, when they got diluted, the error margins on the measurements increased a lot because it was hard to get the ratio of blood to dilution fluid consistent when samples are small.
- fmstein 8y agoI disagree with this sentiment. After reading Bad Blood as well, I must say that nobody at the company deserves much punishment. It's Theranos's investors and Theranos's business partners that are mostly at fault. They didn't do their due diligence and simply assumed (hoped) that the technology worked. They were too concerned about missing out on the "big one", which clouded their judgement. No patients were harmed. The only losers in this are the investors that invested in Theranos. Given that they blindly trusted the pitch, without verifying that the technology worked, that makes them very bad and unskilled investors. Unskilled investors losing a lot of money is, in fact, a very good thing for the Silicon Valley ecosystem. It's how bad influencers are flushed out of the system.
- alonmower 8y agoPatients received incorrect blood test results and it's impossible to argue Theranos didn't know that this was a risk of what they were doing. In Bad Blood there were anecdotes of people being sent straight to the hospital because of worrying results. Beyond the psychological harm in the reported false positive cases why are you confident that no patients were harmed in even worse ways (i.e. false negatives, not catching a condition early)?
- deleted 8y ago[deleted]
- drspacemonkey 8y agoThere was at least one case of a false negative resulting in a preventable heart attack.
- asdsa5325 8y agoLying to investors is a crime. There is a large difference between making a stupid investment and being lied to about a stupid investment. Did you make an account just to make this dumb comment?
- favorited 8y ago
- icantdrive55 8y agoWhat I found troubling is she is only being fined $500,000. That's just too little. I was really hoping the fine would sting. Oh yea, and she can't be a CEO for ten years. Can be anything else though? White privilege? And she had some good lawyers?
- toss1 8y agoThe patients are indeed potentially hurt more than anybody in this fraud, and it makes it much more egregious than the more ordinary silicon-valley <fake it till you make it> fraud (& I've been angry about since before it was popular to hate on Theranos). However, in ending with "the venture capitalists are just fine", the article also completely misses another class of people who are also hurt by these types of fraud -- all the other more worthy honest startups that went unfunded or under-funded when Theranos sucked $700 million out of the investment ecosystem. All of the other bogus companies mentioned ( Hampton Creek; Zenefits; Lending Club; Skully; ScoreBig; Rothenberg Ventures; Faraday Future; Hyperloop One...), and many others not only suck the life out of the system, they destroy the ability of other honest startups to make it. The VCs legitimately risk failure; it's the nature of VC. But they aren't supposed to be risking fraud, which is perhaps why they don't catch it as much as they should in Due Diligence. Seems they need to do better Due Diligence, checking not only whether everything matches their expectations, but also whether it actually is what it is represented to be.
- avip 8y agoThere's another overlooked class of people in the hype/fraud cycle: normal people like you and me, via our pension funds.
- sokoloff 8y agoI believe that is a risk that's priced into venture investing already. Not to defend the fraudsters here, but a certain amount of high-risk investments are going to end up failing because of fraud and investors knowingly bear those risks (and/or pay a money manager to smoke out and avoid those risks).
- toss1 8y agoTrue, some aspect of the fraud is likely priced in by investors at the individual investment level. But, do they price in the damage to the overall startup ecosystem, which makes a more difficult landscape for everyone to succeed, them included? E.g., an overall broader perception of fraud, smoke, and mirrors will make it harder for them to raise their next funds, and general skepticism of the startup environment, reduces the liklihood of success of all the ventures. This environment is either a virtuous circle that'll lift all boats (to mix metaphors), or the opposite...
- tptacek 8y agoLevine spends a good chunk of this engaging with Felix Salmon's Slate article about how many startups could be charged with wire fraud. But I think Salmon overstates his case and oversimplifies wire fraud and I'm a little surprised Levine, a lawyer, doesn't catch him on this. Salmon says wire fraud is among the easiest crimes to prove: everything is done by wire now, so "you show the lie, you show the wire, boom". But it's actually not enough to show a "lie" and then a "wire". Check out a federal court's model jury instructions for wire fraud. The burden on the prosecutor is higher than showing simple dishonesty; they have to prove "intent to defraud", which means that the accused had to have lied deliberately in order to cheat victims. There are, even in the jury instructions themselves, multiple mitigating factors for "intent to defraud". And, aside from that, there's a legal difference between that and wildly extrapolating from realistic revenue forecasts to irrationally high outcomes you merely hope could happen if everything breaks your way. I think you can make the case that Balwani and Holmes got indicted because their dishonesty was unusually brazen and directly connected to the business they were in. They lied about what they were doing in the (then) present tense. They didn't make simply make unrealistic forecasts or put the rosiest possible color on how their engineering work was going; they fabricated entire medical procedures.
- cepth 8y agoNot only did they endanger patient lives by using unready and flawed technology, they were brazen enough to lie about it in writing (in pitch decks) and on national TV (CBS This Morning and others). By putting blatantly false claims, like “Theranos Edison devices are deployed in the backs of Humvees in Afghanistan” and “Theranos technology has been validated by Johns Hopkins”, in writing, they have made it quite easy for prosecutors to meet any mens rea bar. That said, it’s true that historically prosecutors have used wire fraud charges as an open ended tool. In “The Chickenshit Club”, the author describes in detail how various white collar crime task forces employed US Postal Service inspectors to help build wire fraud cases. It may not be as easy as Felix Salmon is saying, but the idea that any fraud that involves a wire constitutes “wire fraud” is not that far off from federal prosecutors’ historical playbook.
- closeparen 8y ago
- matchagaucho 8y agoAre there any questions as to the validity of Theranos' IP portfolio? Or was the tech all junk science too? The list of assigned patents looks impressive. Perhaps something that could be developed further by an acquirer? http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2FPTO%2Fsearch-bool.html&r=0&f=S&l=50&TERM1=Theranos&FIELD1=&co1=AND&TERM2=&FIELD2=&d=PTXT http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=H...
- Hermitian909 8y agoThe book "Bad Blood" covers this a bit. From what I gather the only thing they ever managed was a bit miniaturization of several existing standalone products and a way to integrate those products into a single package. When Elizabeth Holmes presented the tech at an AACC conference (https://www.youtube.com/watch?v=n6JRG733ReQ&t=3882s https://www.youtube.com/watch?v=n6JRG733ReQ&t=3882s) experts in the field were pretty underwhelmed.
- cepth 8y agoThe loan that Theranos took out from Fortress last year is secured by the company’s assets and IP (https://techcrunch.com/2017/12/23/theranos-gets-100-million-in-debt-financing-to-carry-it-through-2018-with-some-caveats/ https://techcrunch.com/2017/12/23/theranos-gets-100-million-...). Fortress is no slouch, but I wonder if their acquisition by SoftBank has changed their model to more of a VC risk taking appetite instead of traditional Wall Street firms. Further, the late Ian Gibbons was the “real” inventor on many of these patents. At the end of his life, he despaired to find out that because Elizabeth Holmes insisted on being listed as an inventor on all of Theranos patents, that was potential grounds for cancelling the patents altogether should someone challenge the patents in court.
- purplezooey 8y agoSo the question remains, though, is her baritone voice an act, or is it her real one?
- jogundas 8y agoDoes https://www.youtube.com/watch?v=pIXAmjUFSso https://www.youtube.com/watch?v=pIXAmjUFSso not count as conclusive evidence on this matter?
- Maro 8y agoWhy? In this one she has the deep voice, no?
- jogundas 8y agoNo, only part of the interview. At some point she forgets she has to do it. And then when asked what one has to do to become successful, she remembers it again.
- js2 8y agoHer voice sounds much more natural in this interview: https://www.youtube.com/watch?v=pIXAmjUFSso https://www.youtube.com/watch?v=pIXAmjUFSso
- Ftuuky 8y agoI'm a man with a very very deep voice and some hoarseness as well. So many people ask me if it's all an act but it's not. When adolescence came in was like POW you have a baritone voice now.
- rdlecler1 8y agoInteresting background on wirefraud. It seems like any company that says, “we will” in their crunchbase profile could be liable.
- ericnyamu123 8y agowow.check out this cool forum http://mawazo.byethost7.com/index.php http://mawazo.byethost7.com/index.php
- gfgffdf 8y agowow.check out this cool forum http://mawazo.byethost7.com/index.php http://mawazo.byethost7.com/index.php