7 ms·

Theranos devices ran “null protocol” to skip actual demo for investors

115 points by intunderflow 5y ago

azinman2 5y ago
How does she have money for her defense lawyers? All her money was given back, no?
- chris11 5y ago
  Her former lawyers for a civil case did claim she couldn't pay them. Though I wouldn't be surprised if she has insurance policies that cover some of her legal fees. And her husband is rich.
- TrumpRapedWomen 5y ago
  She married a very rich idiot.
tamaharbor 5y ago
Merits aside, I predict Holmes is too rich and pretty to be convicted of anything.
- cyanydeez 5y ago
  not in this climate and not with who she conned. cant imagine whose gonna be sympathetic here unless the jury is all karens
- rl1987 5y ago
  That doesn't apply if you defraud the rich people. Ask Bernie Madoff.
hikerclimber1 5y ago
I feel like she is a crook.
vmurthy 5y ago
I have read Bad Blood [0] about 3 years ago and the title describes only one part of the fraud going on in Theranos. Some more red flags (probably par for the course in Silicon Valley) - Abusive bosses and people fired for questioning even the basic things - Balwani ( her boyfriend/partner ) being a dick and having an unusual sway over the company - A culture of fear ( compare to living in a cult) etc etc. The clincher is that unlike most products which hopefully aren't life threatening if they don't work, this culture led to covering up defects with devices that directly affect the course of treatment and probably are life threatening if they are inaccurate. This to me is the ultimate fraud in a startup. [0] https://www.amazon.in/Bad-Blood-Secrets-Silicon-Startup-ebook/dp/B07BW911F7/ https://www.amazon.in/Bad-Blood-Secrets-Silicon-Startup-eboo...
jollybean 5y ago
If Theranos ultimately produced equipment that did what the demo demonstrated, would this demo then be fraud, or not? That's a legit question. Where is the hard demarcation between 'fraud' and 'controlled demo'? Because the ability to follow through with something is fairly intangible. Tesla could have gone bankrupt at several points. Would that have made some of Musk's unfulfilled claims (and actual unfulfilled orders) a form of fraud? I think Theranos is effectively a fraud, but I think it's also based on a kind of self-delusion derived from what is otherwise kind of common activity. It would be ideal to have maybe a bit of regulatory concern over this for medical devices, i.e. if you can't make anything up in a demo, anything hidden amounts to a material lack of disclosure of something serious.
- webmaven 5y ago
  > Tesla could have gone bankrupt at several points. Would that have made some of Musk's unfulfilled claims (and actual unfulfilled orders) a form of fraud? I think there is a pretty clear difference between non-performance due to bankruptcy (which is essentially "we haven't been able to make the tech work profitably and have run out of money") and bankruptcy due to non-performance ("we've run out of money because we haven't been able to make the tech work").
  - jollybean 5y ago
    Not sure if I agree. Tesla would have run out of money essentially trying to make the 'tech work' i.e. a truly viable electric car for the masses i.e. right price point, range, quality etc..
cblconfederate 5y ago
Is it common for tech employees to see fraud going on in front of their eyes for more than ten years and not say something, or at least stop enabling the company ?
- deleted 5y ago
  [deleted]
- reportgunner 5y ago
  Why specifically tech employees ? Are other industries free of fraud ?
  - cblconfederate 5y ago
    Because they are the hottest at this point
RyJones 5y ago
yes? they're a terrible company run by terrible people.
- buitreVirtual 5y ago
  were
  - fernandotakai 5y ago
    and thank god for that. can you imagine theranos doing covid tests?
    - deleted 5y ago
      [deleted]
    - mhh__ 5y ago
      I won't name names in case I'm wrong but there are apparently some cowboy companies doing exactly this in the UK. Huge numbers of contracts were outsourced with no review to anyone available (read: nepotism) with a phone number.
1cvmask 5y ago
The Germans would call this schadenfreude to the founder of Fox News perhaps: Meanwhile, investors were given binders that made hyperbolic claims about Theranos’ diagnostic technology. One binder sent to media tycoon Rupert Murdoch, who invested $125 million, said, “Theranos offers tests with the highest level of accuracy.” The company’s technology, it also said, “generates significantly higher integrity data than currently possible.” https://en.wikipedia.org/wiki/Schadenfreude https://en.wikipedia.org/wiki/Schadenfreude
LeifCarrotson 5y ago
Ads for new phones typically read "Screen images simulated". No one should blame Theranos for using carefully configured images in their marketing brochures - if the graphic designer used actual photos at all instead of CAD renders and simulated screenshots, you'd expect them to clear a fault or get a passing test before hitting the shutter. If there were some machines visible from the front lobby, if they were live and just running "demo mode" that's basically the same as putting a sticker with a passing test over the display. I give Apple a ton of credit for running with real demos, as shown by the fact that they fail, like the FaceID snafu: https://www.theverge.com/circuitbreaker/2017/9/12/16296912/apple-iphone-x-face-id-demo-fail https://www.theverge.com/circuitbreaker/2017/9/12/16296912/a... Or Steve Jobs' wifi disconnection: https://www.cnet.com/videos/steve-jobs-demo-fail/ https://www.cnet.com/videos/steve-jobs-demo-fail/ A lot of Apple demos include simulated marketing screen sequences too, but if they had 'lip synced' these parts I don't think anyone would have noticed. Clearly, they didn't, or else those two failures would not have happened. Regardless, I don't think Theranos running a "null protocol" or "demo mode" is particularly surprising. You can't blame them for wanting to avoid something like the machine blurting out "You Are HIV Positive" during a demo. I do think there's a difference between a marketing demo where you expect to be lied to and a "this is a standard production machine running an actual test" lie. The question is which side of that divide the Theranos investor demos fell on.
- pdabbadabba 5y ago
  I'd have a lot more sympathy for this argument if the Theranos machines were actually capable of doing the tests that they were pretending to run. I think there's a world of difference between a) simulating a technology that a company really can provide just to ensure that things run smoothly for the test and b) pretending to offer a technology that, in fact, the company couldn't provide at all.
- Zigurd 5y ago
  It depends on what you are demonstrating. I recently worked on a very legit medical device. It has a demo mode that shows off the product UI. It is 100% clear that there is no real sample and no real reagents in the machine. Note the article said the demo mode "would not analyze the sample." The article goes on to say that real blood samples were used in these demos. Not the same thing at all.
version_five 5y ago
I don't see any massive red flags in the stuff reported. I'm convinced based on what I know that Theranos engaged in deliberate fraud. But fraud is more than the sum of promotional practices that can be taken retrospectively or without context as sign of wrongdoing. Having scripted demos that hide error messages is not really sketchy. It could be part of a fraud, or it could not, but it's not really telling. I say this because we often see popular ethical judgements where it's made out that there is a clear line between good and bad and that because the key players were unethical, they just did a bunch of bad things. I don't see it that way. There are lots of individual small judgements, most of which could be completely benign, but that add up to a fraud in the bigger picture. It probably makes sense as part of a body of evidence in a trial, but it's not really as sensational as the tabloids would like it to be. Incidentally, I think that Theranos and Enron are basically the same story (at least Bad Blood and The Smartest Guys in the Room are the same book). And the root cause in both is not direct lack of scruples, but believing that ideas are what's important and execution doesn't matter. The lesson to me, is that a good way to get into trouble you cant get out of (and both of these stories resulted in real people taking their lives) is to think that details don't matter and a good idea is all you need.
- spaetzleesser 5y ago
  You may do scripted demos or avoiding problematic errors. But usually you will have some kind of path to get where you want to be. From what I have read Theranos had nothing. They had no idea how they could make their machines work. There was no new technology or new insight. They just lied blatantly. That’s on a different level from the usual cheating people do at demos.
  - adolph 5y ago
    Theranos has better than nothing. They have patents! https://patents.justia.com/assignee/theranos-inc https://patents.justia.com/assignee/theranos-inc
- tialaramex 5y ago
  So, fraud is a set of crimes which require intent. Specifically, they require intent to either gain from dishonesty or to cause another to lose through your dishonesty. Thus, dishonesty means you're skating on thin ice because a prosecutor only needs to show intent to gain (or for another to lose) and you're done. Much better to be honest and eliminate this whole thrust altogether. Intent to gain without dishonesty isn't a crime and would be generally seen as admirable.
temptemptemp111 5y ago
So just as accurate as corona tests.
deleted 5y ago
[deleted]
vernie 5y ago
Shark eyes.

115 points by intunderflow 5y ago

azinman2 5y ago

How does she have money for her defense lawyers? All her money was given back, no?

chris11 5y ago
Her former lawyers for a civil case did claim she couldn't pay them. Though I wouldn't be surprised if she has insurance policies that cover some of her legal fees. And her husband is rich.
TrumpRapedWomen 5y ago
She married a very rich idiot.

tamaharbor 5y ago

Merits aside, I predict Holmes is too rich and pretty to be convicted of anything.

cyanydeez 5y ago
not in this climate and not with who she conned. cant imagine whose gonna be sympathetic here unless the jury is all karens
rl1987 5y ago
That doesn't apply if you defraud the rich people. Ask Bernie Madoff.

hikerclimber1 5y ago

I feel like she is a crook.

vmurthy 5y ago

I have read Bad Blood [0] about 3 years ago and the title describes only one part of the fraud going on in Theranos. Some more red flags (probably par for the course in Silicon Valley) - Abusive bosses and people fired for questioning even the basic things - Balwani ( her boyfriend/partner ) being a dick and having an unusual sway over the company - A culture of fear ( compare to living in a cult) etc etc. The clincher is that unlike most products which hopefully aren't life threatening if they don't work, this culture led to covering up defects with devices that directly affect the course of treatment and probably are life threatening if they are inaccurate. This to me is the ultimate fraud in a startup. [0] https://www.amazon.in/Bad-Blood-Secrets-Silicon-Startup-ebook/dp/B07BW911F7/ https://www.amazon.in/Bad-Blood-Secrets-Silicon-Startup-eboo...

jollybean 5y ago

If Theranos ultimately produced equipment that did what the demo demonstrated, would this demo then be fraud, or not? That's a legit question. Where is the hard demarcation between 'fraud' and 'controlled demo'? Because the ability to follow through with something is fairly intangible. Tesla could have gone bankrupt at several points. Would that have made some of Musk's unfulfilled claims (and actual unfulfilled orders) a form of fraud? I think Theranos is effectively a fraud, but I think it's also based on a kind of self-delusion derived from what is otherwise kind of common activity. It would be ideal to have maybe a bit of regulatory concern over this for medical devices, i.e. if you can't make anything up in a demo, anything hidden amounts to a material lack of disclosure of something serious.

webmaven 5y ago
> Tesla could have gone bankrupt at several points. Would that have made some of Musk's unfulfilled claims (and actual unfulfilled orders) a form of fraud? I think there is a pretty clear difference between non-performance due to bankruptcy (which is essentially "we haven't been able to make the tech work profitably and have run out of money") and bankruptcy due to non-performance ("we've run out of money because we haven't been able to make the tech work").
- jollybean 5y ago
  Not sure if I agree. Tesla would have run out of money essentially trying to make the 'tech work' i.e. a truly viable electric car for the masses i.e. right price point, range, quality etc..

cblconfederate 5y ago

Is it common for tech employees to see fraud going on in front of their eyes for more than ten years and not say something, or at least stop enabling the company ?

deleted 5y ago
[deleted]
reportgunner 5y ago
Why specifically tech employees ? Are other industries free of fraud ?
- cblconfederate 5y ago
  Because they are the hottest at this point

RyJones 5y ago

yes? they're a terrible company run by terrible people.

buitreVirtual 5y ago
were
- fernandotakai 5y ago
  and thank god for that. can you imagine theranos doing covid tests?
  - deleted 5y ago
    [deleted]
  - mhh__ 5y ago
    I won't name names in case I'm wrong but there are apparently some cowboy companies doing exactly this in the UK. Huge numbers of contracts were outsourced with no review to anyone available (read: nepotism) with a phone number.

1cvmask 5y ago

The Germans would call this schadenfreude to the founder of Fox News perhaps: Meanwhile, investors were given binders that made hyperbolic claims about Theranos’ diagnostic technology. One binder sent to media tycoon Rupert Murdoch, who invested $125 million, said, “Theranos offers tests with the highest level of accuracy.” The company’s technology, it also said, “generates significantly higher integrity data than currently possible.” https://en.wikipedia.org/wiki/Schadenfreude https://en.wikipedia.org/wiki/Schadenfreude

LeifCarrotson 5y ago

Ads for new phones typically read "Screen images simulated". No one should blame Theranos for using carefully configured images in their marketing brochures - if the graphic designer used actual photos at all instead of CAD renders and simulated screenshots, you'd expect them to clear a fault or get a passing test before hitting the shutter. If there were some machines visible from the front lobby, if they were live and just running "demo mode" that's basically the same as putting a sticker with a passing test over the display. I give Apple a ton of credit for running with real demos, as shown by the fact that they fail, like the FaceID snafu: https://www.theverge.com/circuitbreaker/2017/9/12/16296912/apple-iphone-x-face-id-demo-fail https://www.theverge.com/circuitbreaker/2017/9/12/16296912/a... Or Steve Jobs' wifi disconnection: https://www.cnet.com/videos/steve-jobs-demo-fail/ https://www.cnet.com/videos/steve-jobs-demo-fail/ A lot of Apple demos include simulated marketing screen sequences too, but if they had 'lip synced' these parts I don't think anyone would have noticed. Clearly, they didn't, or else those two failures would not have happened. Regardless, I don't think Theranos running a "null protocol" or "demo mode" is particularly surprising. You can't blame them for wanting to avoid something like the machine blurting out "You Are HIV Positive" during a demo. I do think there's a difference between a marketing demo where you expect to be lied to and a "this is a standard production machine running an actual test" lie. The question is which side of that divide the Theranos investor demos fell on.

pdabbadabba 5y ago
I'd have a lot more sympathy for this argument if the Theranos machines were actually capable of doing the tests that they were pretending to run. I think there's a world of difference between a) simulating a technology that a company really can provide just to ensure that things run smoothly for the test and b) pretending to offer a technology that, in fact, the company couldn't provide at all.
Zigurd 5y ago
It depends on what you are demonstrating. I recently worked on a very legit medical device. It has a demo mode that shows off the product UI. It is 100% clear that there is no real sample and no real reagents in the machine. Note the article said the demo mode "would not analyze the sample." The article goes on to say that real blood samples were used in these demos. Not the same thing at all.

version_five 5y ago

I don't see any massive red flags in the stuff reported. I'm convinced based on what I know that Theranos engaged in deliberate fraud. But fraud is more than the sum of promotional practices that can be taken retrospectively or without context as sign of wrongdoing. Having scripted demos that hide error messages is not really sketchy. It could be part of a fraud, or it could not, but it's not really telling. I say this because we often see popular ethical judgements where it's made out that there is a clear line between good and bad and that because the key players were unethical, they just did a bunch of bad things. I don't see it that way. There are lots of individual small judgements, most of which could be completely benign, but that add up to a fraud in the bigger picture. It probably makes sense as part of a body of evidence in a trial, but it's not really as sensational as the tabloids would like it to be. Incidentally, I think that Theranos and Enron are basically the same story (at least Bad Blood and The Smartest Guys in the Room are the same book). And the root cause in both is not direct lack of scruples, but believing that ideas are what's important and execution doesn't matter. The lesson to me, is that a good way to get into trouble you cant get out of (and both of these stories resulted in real people taking their lives) is to think that details don't matter and a good idea is all you need.

spaetzleesser 5y ago
You may do scripted demos or avoiding problematic errors. But usually you will have some kind of path to get where you want to be. From what I have read Theranos had nothing. They had no idea how they could make their machines work. There was no new technology or new insight. They just lied blatantly. That’s on a different level from the usual cheating people do at demos.
- adolph 5y ago
  Theranos has better than nothing. They have patents! https://patents.justia.com/assignee/theranos-inc https://patents.justia.com/assignee/theranos-inc
tialaramex 5y ago
So, fraud is a set of crimes which require intent. Specifically, they require intent to either gain from dishonesty or to cause another to lose through your dishonesty. Thus, dishonesty means you're skating on thin ice because a prosecutor only needs to show intent to gain (or for another to lose) and you're done. Much better to be honest and eliminate this whole thrust altogether. Intent to gain without dishonesty isn't a crime and would be generally seen as admirable.

temptemptemp111 5y ago

So just as accurate as corona tests.

deleted 5y ago

[deleted]

vernie 5y ago

Shark eyes.