9 ms·

Elizabeth Holmes is on trial for fraud, but don't forget about her VC enablers

135 points by xojoc 5y ago

andi999 5y ago
Looks like victim blaming. While this might be justified, the article doesnt give enough substance to do so. Also I disagree that Holmes is a scapegoat here (expect if you could make a case that she is not liable for her actions).
- sschueller 5y ago
  The VCs are definitely not victims here. Their own greed and incompetency to listen to experts put them in that position. The real victims are the people that received the results from such fraudulent tests and maybe even received improper treatments because of it.
  - andi999 5y ago
    "Their own greed and incompetency to listen to experts put them in that position" Maybe, but the article does not provide good evidence for that. In hindsight everything is obvious. One argument that it would have problems with regulations might also not be valid, since if you really manage to build something everybody wants to buy often regulation follows suite to allow for that.
    - sschueller 5y ago
      There were a lot of warning signs and even if the VC had invested already the could have killed it before it all collapsed in a giant media scandal. Same goes for SpaceX's point to point travel. It will never happen and there are many warning signs pointing to this fact. For example in their presentation they list a large list of cities, many of those are completely out of the question. So in essence a blatant lie. Sure SpaceX probably wont go under because they have some real projects but it is quite questionable for a company to make such claims knowing it will never meet them.
      - andi999 5y ago
        Yes. But let's say the investor thinks: sure the point to point is silly, but the real market is to compute with the Ariane programm, and space x will win; it is still justified to invest. Of course if the space x launches so far were in reality all cgi rendered, then that is fraud, but one shdnt say that this could have been obvious since there were warning signs. Maybe I am wrong but such announcements which clearly will never happen are just PR, like Ryanair announcing every couple of years that they either charge for toilets or remove the seats, both which will probably not happen in any near future but it gives them free press coverage. So what were the warning signs before investors invested?
        sschueller 5y ago
        To me that is way beyond some PR. Saying the rocket will be red and then it's blue, that might be PR, it doesn't affect the overall business and in the larger of things is irrelevant. Clamming you will be providing p2p travel to many destinations in the world is a whole other segment. These announcements go beyond PR, they are borderline fraud.
  - JackFr 5y ago
    They are literally the victims. Elizabeth Holmes made representations which she knew to be false to secure investments. That is explicitly fraud. That investors may have been foolish and greedy does not take away from the fact that Holmes acted to deceive them. If I leave the keys in the ignition of my sports car and it’s stolen, I’m a very foolish person, but certainly no less the victim of a car theft.
    - bserge 5y ago
      Any records of what she actually said to investors? Imo, it was likely just the usual pitch with vague promises and a lot of "believe/estimate/think/consider/approximately/likely/close to/in development". Just like any other startup before they strike it big or lose millions. Looks more like she "messed with the wrong mf'ers" as they say. Tbf, $1 billion is a lot of money.
    - dannyr 5y ago
      "If I leave the keys in the ignition of my sports car and it’s stolen, I’m a very foolish person, but certainly no less the victim of a car theft." Except that the investors gave the keys of their cars to Holmes. Holmes didn't grab their money without their permission.
      - sschueller 5y ago
        If you talk to your insurance, you are not the victim. They won't pay out a claim if you left your key in the car.
        relaunched 5y ago
        They'd say you didn't take reasonable care.
        projektfu 5y ago
        And then, in the US, if you have comprehensive coverage, they'd pay the claim.
  - AussieWog93 5y ago
    >Their own greed and incompetency to listen to experts put them in that position. You could say the same thing about any fraud victims, especially love scams[1]. [1]"Police statistics show more than 75 per cent of people caught up in online romance scams refuse to believe they're being ripped off." https://www.abc.net.au/radio/programs/am/online-love-fraud-victims-ignoring-police-warnings/5180608 https://www.abc.net.au/radio/programs/am/online-love-fraud-v...
    - em-bee 5y ago
      that's not the same thing. VCs are professional experienced investors and they failed doing their job. someone falling for a romance scam is simply inexperienced in that matter, and should not be expected to know better
      - AussieWog93 5y ago
        >someone falling for a romance scam is simply inexperienced in that matter, and should not be expected to know better People that fall for romance scams tend to be older and significantly more experienced (in terms of life and love) than people who don't. They also continue with the relationship even when friends, family and eventually law enforcement sit down with them and show them that it's a scam. I think many of these scams really highlight our innate desire to fool ourselves, especially when we are desperate and hopeful.
        em-bee 5y ago
        older and significantly more experienced (in terms of life and love) i doubt that older people are more experienced. being married for a decade or two does nothing to prepare you for an online relationship. older people likely never had an online relationship before and also weren't switching partners as often when they were young as people nowadays tend to. if they were they should have less trouble finding a new partner. they are falling for online relationships precisely because they don't know how to find a partner otherwise. but that isn't even the issue. i don't know if i could tell the difference between a genuine relationship and a well executed pretender. not meeting in person makes it really hard to verify the claims being made. what is puzzling is why someone would give up their life savings for someone they haven't even meet yet in person. some expensive gifts for a few thousand dollars, sure, but all i have? that's something i'd bring into a marriage and only use if it is really needed. but then, i am a skeptic by nature.
  - deleted 5y ago
    [deleted]
  - diogenes123 5y ago
    The men who got 'ripped off' are 'Epstein Island' crowd. I have heard stories about women ESCAPING their clutches - they are that voracious.
carlosdp 5y ago
For the 1000th time, a total of 0 (zero) VCs that most people would associate with "silicon valley" invested in Theranos, and the board was all made up of political and business figures like Kissinger.
- capableweb 5y ago
  The article doesn't seem to be about hating "Silicon Valley" type VCs, but more VCs in general so not sure where this comment comes from, or why you'd have to repeat a comeback so many times to an argument that doesn't even seem to be made in the first place.
  - rsynnott 5y ago
    When people talk about VCs here, they normally mean venture capital firms, who are relatively sophisticated, do due diligence, etc. The vast bulk of Theranos's investment came from, for want of a better term, elderly rich people operating in a personal capacity. I mean, you _could_ call Betsy DeVos or Rupert Murdoch VCs, but it's not how people typically understand the term.
    - dnautics 5y ago
      Doing due diligence and doing due diligence well are separate things. I have seen so many fictional or peri-impossible (impossible or "extremely implausible at current tech levels") tech get venture in silicon valley. For example, there was a company called blue turtle that claimed to want to build a bacterium that provided gaucher's disease enzyme as a probiotic supplement. I mean technically speaking it's not impossible, but there are so many things that 'dont exist yet and would need to be engineered' that I couldn't see it making it as a company.
      - colechristensen 5y ago
        To be fair, engineering bacteria to produce a single enzyme as an MVP is an afternoon activity for a single person. You can watch it done on youtube. (you do have to wait some weeks to get your gene sequences or plasmids or whatever manufactured then you have to culture etc. and it doesn’t always work…) But in general it’s not out of the ordinary to think you could do the engineering part in a day.
fergie 5y ago
Of course, and equally: don't absolve her of guilt because she is a privileged white woman.
achow 5y ago
https://archive.md/3NUps https://archive.md/3NUps
piker 5y ago
Stupid article. > Many diagnostic startup companies use this loophole to bypass the FDA’s rigorous clinical study and validation requirements which, on average, take three to seven years. Then: > Why didn’t any of the investors simply require Theranos to submit all their tests and the hardware platform to the FDA?
hatmatrix 5y ago
Walgreens did hire someone to do due diligence, and they ignored his warnings.
- diogenes123 5y ago
  It's Walgreens. What sort of people do you think manage that place?
draw_down 5y ago
Pathetic blame shifting
HKH2 5y ago
I haven't forgotten about her domestic abuse claims. Is she still pursuing that route?
- hellbannedguy 5y ago
  I wonder what percentage of women who get in trouble claim they were psychologically, or sexually abused? From my perspective, it's so common, it must be a in every defense attorney's bag of tricks? It's kinda brilliant because as a man you can't deny it for fear of being labeled a misogynist, or worse.
dig1 5y ago
How many of us heard this story: company founders smell something where money can be earned, start a company, hire a bunch of people and start spreading all the bells and whistles of the tech company have, but actually, it wasn't yet developed. I heard numerous times when founders/CEOs of companies I worked before announced that "we" have something, but we (engineering) didn't even hear for that. The problems start when those promises have to be met. I can't say I blame her for this, but I'm amazed how she managed to get funds without proper due diligence. For serious investments, VCs usually go through everything and have a good nose to smell bullsh*t. I guess (for this case) it was a good reference from influential individuals and politicians that probably (in this or that way) influenced VCs judgments.
- capableweb 5y ago
  I think context is very important as well. A CEO bragging about a Facebook->Instagram converter that doesn't actually works in real-life VS a blood testing machine that other treatments might depend on is for me two very different things.
- jasfi 5y ago
  It's advantageous to start marketing as soon as possible. However this should never turn into false promises and lies.
- matwood 5y ago
  If she had gotten to the next round of funding and developed anything she probably would have been fine. Overhanging the market is typically celebrated in startup culture marketing. Look how long WeWork went on or this company (https://www.aspiration.com https://www.aspiration.com) trying to go public right now. Both are playing fast and loose with their financials. At the end of the day, this feels like a bunch of rich people got suckered, couldn't dump it on the public market, and wanted to blame someone for their embarrassment.
  - 1986 5y ago
    Can you talk more or provide a link about what's going on with Aspiration? All I was able to find is that they're going the SPAC route, would like to understand more about any specific sketchiness.
baryphonic 5y ago
> Clinical labs are not regulated by the FDA, but fall under a far less arduous regulation known as Clinical Laboratory Improvement Amendments, or CLIA. I know a bit about the clinical laboratory environment through a close relation. In fact, that person was the first clue I had that Theranos was BS. (This was before the WSJ article or any of the whistle blowers had come forward.) Clinical laboratories are so resource constrained that FDA regulation would literally kill them. And many may not realize this, but 75%+ of any diagnosis is actually done by the lab. Care teams make hypotheses and labs reject them. I feel somewhat sympathetic to this article's thesis, that these "fraud" laws are meant more as a bailout for rich and powerful people as a way to pin blame on a scape goat. A regular person defrauded by a bank or some other professional would have no hope of bringing their abuser to a criminal trial. But demonizing then CLIA loophole as if it is some ghastly deviation only fixed by the Powerful and Mighty FDA seems short-sighted. Again, keep in mind that basically all lab scientists, all medical researchers who investigate lab procedures and all of the academics who study this and teach the next generation said Theranos was BS long before the government or press. No one listened to them.
- simonh 5y ago
  I suspect one reason why professionals in the industry were not listened to is that we are very used to hearing experienced voices in an industry in the process of being disrupted explain why the disruption can't happen and won't work, right up until it does both. The most famous example is the "PC guys are not going to just figure this out" quote regarding the iPhone. A lot of VCs will see people they regard as 'incumbents' being witheringly critical and think that's a good sign. Clearly there's a big difference between a businessman saying such things and professional scientists and clinicians.
  - thathndude 5y ago
    This seems to be the most plausible explanation. I can remember Steve Ballmer, an undeniably intelligent and capable professional, laughing away the idea of the iPhone doing even single digit percentage market share. I don’t think it was just competitive posturing. He genuinely was down talking what is arguably the most successful consumer product of the last 50 years.
roopawl 5y ago
Are we ever going to start talking about Stanford’s connection to this and related?
- diogenes123 5y ago
  You're getting warmer.
hikerclimber1 5y ago
According to an article she went to a Michelin star restaurant when her company was failing. They should fine her for all the money she has and make her bankrupt. That’s justice plus at least 5 years in jail.
hikerclimber1 5y ago
They should supenoa Elizabeth thernos credit cards and bank accounts to see just how much money she spent while her company was failing.
JCM9 5y ago
I remember at the time so many experts I knew in the field would say the Theranos claims were total BS and what she speaks of was tried and doesn’t work for X, Y, and Z reason. A science company board full of people without a science background was also a giant red flag. There were very much some she wasn’t fooling, but the broader media-sphere, PR engine, and high profile folks without a technical background bought the whole thing hook, like and sinker. In that way it was a textbook con. Avoid those that would sniff you out and focus on those that will be gullible to your play.
- diogenes123 5y ago
  Sounds the Iraq War and COVID-19. I wonder which sorts of organizations would orchestrate these...
  - easytiger 5y ago
    As it happens Holmes did some work on early SARS swab testing at a lab in Singapore when she was at university.
- colechristensen 5y ago
  This kind of back seat driving peer review isn’t helpful. “What she claims she can do is bs!” isn’t the story, because you’re really just disagreeing with marketing. The problem is it took far too long for anyone to actually check the real mechanics of what was being done to see if it was faked, someone with almost no access saying it’s fake is not an authority.
  - JCM9 5y ago
    The point of this whole Theranos thing is that medical product conversations need to be based on science, not marketing. It was the lack of transparency / access that is precisely what caused many scientists to question the claims. That’s generally not how science is done so it sets off the BS detectors. If you’ve made this breakthrough, show us. People got hurt here because of how that played out, and that’s messed up.
- 5y ago
easytiger 5y ago
Throwback to 2015 letter to the editor in fortune rebuffing the stories they published about Theranos https://fortune.com/2015/12/20/letter-to-the-editor-theranos-responds/ https://fortune.com/2015/12/20/letter-to-the-editor-theranos... https://archive.md/NE7NB https://archive.md/NE7NB Really quite something. Original story: https://archive.md/BpOhV https://archive.md/BpOhV And the even more original glowing and fawning cover story they did on Holmes in 2014: https://archive.md/XN6i6 https://archive.md/XN6i6 > Precisely how Theranos accomplishes all these amazing feats is a trade secret. Holmes will only say–and this is more than she has ever said before–that her company uses “the same fundamental chemical methods” as existing labs do. Its advances relate to “optimizing the chemistry” and “leveraging software” to permit those conventional methods to work with tiny sample volumes. Interesting how that reads in retrospect > Holmes counters that because, as noted, her tests employ “the same fundamental chemical methods” as existing tests, peer-review publication of validation studies is both unnecessary and inappropriate. Incredibly arrogant to the end fits well with her past behaviour > Theranos, which does not buy any analyzers from third parties, is therefore in a unique position. While it would need FDA approval to sell its own analyzers to other labs, it doesn’t do that. It uses its analyzers only in its own CMS-certified lab. All its tests are therefore LDTs, effectively exempt from FDA oversight.
xyzelement 5y ago
I have a vivid memory about the first time I found out about Theranos and Holmes. It was in the business school setting, and the point the professor was making was about how cool it is that a young woman is disturbing an old industry. Not the science, not the business, but the age and gender of the protagonist. It struck me as a bit weird intellectually - DEI is important but let's first establish that the thing being done is great, and then second take a look at who's doing it. It seemed like this short circuited in the speaker's mind because it was such a cool narrative. I wonder if that happened more broadly - it's a story that you easily wish were true!
- jack_riminton 5y ago
  This was definitely one of the main reasons. I remember at the time how gushing the media were. They were desperate for a female Jobs and she preyed upon that.
  - diogenes123 5y ago
    Media pushes an agenda. Why this one? The answer is there, but let's see if this crowd can solve the puzzle. What questions did Meyer Lansky ask when forming a partnership?
- trentnix 5y ago
  > I have a vivid memory about the first time I found out about Theranos and Holmes. It was in the business school setting, and the point the professor was making was about how cool it is that a young woman is disturbing an old industry. Not the science, not the business, but the age and gender of the protagonist. And now her defense is that she was used, abused, and manipulated by men. Occam's razor says she was a fraud then and is a fraud now.
diogenes123 5y ago
There's more to this than meets the eye. Hint: "spooky". A girl ripping-off the richest men in the country doesn't go to jail: she disappears. That these same men still back her should make you wonder, eh? Try ripping off Larry Ellison, and see what rogue LAPD sharpshooter he sends your way...
- meepmorp 5y ago
  What?
  - diogenes123 5y ago
    What happened to the CTO? Damn shame, eh.
trident5000 5y ago
What kind of psychopath has a baby right before a trial that may send her away to prison.
- trentnix 5y ago
  The kind that uses image and fraud in pursuit of their own ambitions. I'm guessing her child will be used to argue why she shouldn't go to prison. Convenient timing, isn't it?
alfiedotwtf 5y ago
Afraid to ask, but wouldn't the VCs be victims of her fraud rather than enablers?
diogenes123 5y ago
There are 2 tiers of people in Theranos: 1) those 'in the club' - Epstein-tier 2) those 'not in the club' - rich but still outsiders #1 had an agenda #2 got clobbered
Grustaf 5y ago
Is the article trying to say that the investors somehow wanted or at least tolerated that Holmes skirted the rules and scammed patients? That would seem incredibly short sighted. It's much more likely that she misled investors, and isn't that exactly what the lawsuit is about? > This dismal success rate is why venture capitalists historically have rarely invested in these companies. So why then did they collectively put $1.3 billion in Theranos? > Greed. Well in that sense, most venture capital investment stems from "greed", but surely that's the whole point, to leverage the "greed" of risk loving investors into funding new ventures?

135 points by xojoc 5y ago

Looks like victim blaming. While this might be justified, the article doesnt give enough substance to do so. Also I disagree that Holmes is a scapegoat here (expect if you could make a case that she is not liable for her actions).

sschueller 5y ago
The VCs are definitely not victims here. Their own greed and incompetency to listen to experts put them in that position. The real victims are the people that received the results from such fraudulent tests and maybe even received improper treatments because of it.
- andi999 5y ago
  "Their own greed and incompetency to listen to experts put them in that position" Maybe, but the article does not provide good evidence for that. In hindsight everything is obvious. One argument that it would have problems with regulations might also not be valid, since if you really manage to build something everybody wants to buy often regulation follows suite to allow for that.
  - sschueller 5y ago
    There were a lot of warning signs and even if the VC had invested already the could have killed it before it all collapsed in a giant media scandal. Same goes for SpaceX's point to point travel. It will never happen and there are many warning signs pointing to this fact. For example in their presentation they list a large list of cities, many of those are completely out of the question. So in essence a blatant lie. Sure SpaceX probably wont go under because they have some real projects but it is quite questionable for a company to make such claims knowing it will never meet them.
    - andi999 5y ago
      Yes. But let's say the investor thinks: sure the point to point is silly, but the real market is to compute with the Ariane programm, and space x will win; it is still justified to invest. Of course if the space x launches so far were in reality all cgi rendered, then that is fraud, but one shdnt say that this could have been obvious since there were warning signs. Maybe I am wrong but such announcements which clearly will never happen are just PR, like Ryanair announcing every couple of years that they either charge for toilets or remove the seats, both which will probably not happen in any near future but it gives them free press coverage. So what were the warning signs before investors invested?
      - sschueller 5y ago
        To me that is way beyond some PR. Saying the rocket will be red and then it's blue, that might be PR, it doesn't affect the overall business and in the larger of things is irrelevant. Clamming you will be providing p2p travel to many destinations in the world is a whole other segment. These announcements go beyond PR, they are borderline fraud.
- JackFr 5y ago
  They are literally the victims. Elizabeth Holmes made representations which she knew to be false to secure investments. That is explicitly fraud. That investors may have been foolish and greedy does not take away from the fact that Holmes acted to deceive them. If I leave the keys in the ignition of my sports car and it’s stolen, I’m a very foolish person, but certainly no less the victim of a car theft.
  - bserge 5y ago
    Any records of what she actually said to investors? Imo, it was likely just the usual pitch with vague promises and a lot of "believe/estimate/think/consider/approximately/likely/close to/in development". Just like any other startup before they strike it big or lose millions. Looks more like she "messed with the wrong mf'ers" as they say. Tbf, $1 billion is a lot of money.
  - dannyr 5y ago
    "If I leave the keys in the ignition of my sports car and it’s stolen, I’m a very foolish person, but certainly no less the victim of a car theft." Except that the investors gave the keys of their cars to Holmes. Holmes didn't grab their money without their permission.
    - sschueller 5y ago
      If you talk to your insurance, you are not the victim. They won't pay out a claim if you left your key in the car.
      - relaunched 5y ago
        They'd say you didn't take reasonable care.
        projektfu 5y ago
        And then, in the US, if you have comprehensive coverage, they'd pay the claim.
- AussieWog93 5y ago
  >Their own greed and incompetency to listen to experts put them in that position. You could say the same thing about any fraud victims, especially love scams[1]. [1]"Police statistics show more than 75 per cent of people caught up in online romance scams refuse to believe they're being ripped off." https://www.abc.net.au/radio/programs/am/online-love-fraud-victims-ignoring-police-warnings/5180608 https://www.abc.net.au/radio/programs/am/online-love-fraud-v...
  - em-bee 5y ago
    that's not the same thing. VCs are professional experienced investors and they failed doing their job. someone falling for a romance scam is simply inexperienced in that matter, and should not be expected to know better
    - AussieWog93 5y ago
      >someone falling for a romance scam is simply inexperienced in that matter, and should not be expected to know better People that fall for romance scams tend to be older and significantly more experienced (in terms of life and love) than people who don't. They also continue with the relationship even when friends, family and eventually law enforcement sit down with them and show them that it's a scam. I think many of these scams really highlight our innate desire to fool ourselves, especially when we are desperate and hopeful.
      - em-bee 5y ago
        older and significantly more experienced (in terms of life and love) i doubt that older people are more experienced. being married for a decade or two does nothing to prepare you for an online relationship. older people likely never had an online relationship before and also weren't switching partners as often when they were young as people nowadays tend to. if they were they should have less trouble finding a new partner. they are falling for online relationships precisely because they don't know how to find a partner otherwise. but that isn't even the issue. i don't know if i could tell the difference between a genuine relationship and a well executed pretender. not meeting in person makes it really hard to verify the claims being made. what is puzzling is why someone would give up their life savings for someone they haven't even meet yet in person. some expensive gifts for a few thousand dollars, sure, but all i have? that's something i'd bring into a marriage and only use if it is really needed. but then, i am a skeptic by nature.
- deleted 5y ago
  [deleted]
- diogenes123 5y ago
  The men who got 'ripped off' are 'Epstein Island' crowd. I have heard stories about women ESCAPING their clutches - they are that voracious.

carlosdp 5y ago

For the 1000th time, a total of 0 (zero) VCs that most people would associate with "silicon valley" invested in Theranos, and the board was all made up of political and business figures like Kissinger.

capableweb 5y ago
The article doesn't seem to be about hating "Silicon Valley" type VCs, but more VCs in general so not sure where this comment comes from, or why you'd have to repeat a comeback so many times to an argument that doesn't even seem to be made in the first place.
- rsynnott 5y ago
  When people talk about VCs here, they normally mean venture capital firms, who are relatively sophisticated, do due diligence, etc. The vast bulk of Theranos's investment came from, for want of a better term, elderly rich people operating in a personal capacity. I mean, you _could_ call Betsy DeVos or Rupert Murdoch VCs, but it's not how people typically understand the term.
  - dnautics 5y ago
    Doing due diligence and doing due diligence well are separate things. I have seen so many fictional or peri-impossible (impossible or "extremely implausible at current tech levels") tech get venture in silicon valley. For example, there was a company called blue turtle that claimed to want to build a bacterium that provided gaucher's disease enzyme as a probiotic supplement. I mean technically speaking it's not impossible, but there are so many things that 'dont exist yet and would need to be engineered' that I couldn't see it making it as a company.
    - colechristensen 5y ago
      To be fair, engineering bacteria to produce a single enzyme as an MVP is an afternoon activity for a single person. You can watch it done on youtube. (you do have to wait some weeks to get your gene sequences or plasmids or whatever manufactured then you have to culture etc. and it doesn’t always work…) But in general it’s not out of the ordinary to think you could do the engineering part in a day.

fergie 5y ago

Of course, and equally: don't absolve her of guilt because she is a privileged white woman.

achow 5y ago

https://archive.md/3NUps https://archive.md/3NUps

piker 5y ago

Stupid article. > Many diagnostic startup companies use this loophole to bypass the FDA’s rigorous clinical study and validation requirements which, on average, take three to seven years. Then: > Why didn’t any of the investors simply require Theranos to submit all their tests and the hardware platform to the FDA?

hatmatrix 5y ago

Walgreens did hire someone to do due diligence, and they ignored his warnings.

diogenes123 5y ago
It's Walgreens. What sort of people do you think manage that place?

draw_down 5y ago

Pathetic blame shifting

HKH2 5y ago

I haven't forgotten about her domestic abuse claims. Is she still pursuing that route?

hellbannedguy 5y ago
I wonder what percentage of women who get in trouble claim they were psychologically, or sexually abused? From my perspective, it's so common, it must be a in every defense attorney's bag of tricks? It's kinda brilliant because as a man you can't deny it for fear of being labeled a misogynist, or worse.

dig1 5y ago

How many of us heard this story: company founders smell something where money can be earned, start a company, hire a bunch of people and start spreading all the bells and whistles of the tech company have, but actually, it wasn't yet developed. I heard numerous times when founders/CEOs of companies I worked before announced that "we" have something, but we (engineering) didn't even hear for that. The problems start when those promises have to be met. I can't say I blame her for this, but I'm amazed how she managed to get funds without proper due diligence. For serious investments, VCs usually go through everything and have a good nose to smell bullsh*t. I guess (for this case) it was a good reference from influential individuals and politicians that probably (in this or that way) influenced VCs judgments.

capableweb 5y ago
I think context is very important as well. A CEO bragging about a Facebook->Instagram converter that doesn't actually works in real-life VS a blood testing machine that other treatments might depend on is for me two very different things.
jasfi 5y ago
It's advantageous to start marketing as soon as possible. However this should never turn into false promises and lies.
matwood 5y ago
If she had gotten to the next round of funding and developed anything she probably would have been fine. Overhanging the market is typically celebrated in startup culture marketing. Look how long WeWork went on or this company (https://www.aspiration.com https://www.aspiration.com) trying to go public right now. Both are playing fast and loose with their financials. At the end of the day, this feels like a bunch of rich people got suckered, couldn't dump it on the public market, and wanted to blame someone for their embarrassment.
- 1986 5y ago
  Can you talk more or provide a link about what's going on with Aspiration? All I was able to find is that they're going the SPAC route, would like to understand more about any specific sketchiness.

baryphonic 5y ago

> Clinical labs are not regulated by the FDA, but fall under a far less arduous regulation known as Clinical Laboratory Improvement Amendments, or CLIA. I know a bit about the clinical laboratory environment through a close relation. In fact, that person was the first clue I had that Theranos was BS. (This was before the WSJ article or any of the whistle blowers had come forward.) Clinical laboratories are so resource constrained that FDA regulation would literally kill them. And many may not realize this, but 75%+ of any diagnosis is actually done by the lab. Care teams make hypotheses and labs reject them. I feel somewhat sympathetic to this article's thesis, that these "fraud" laws are meant more as a bailout for rich and powerful people as a way to pin blame on a scape goat. A regular person defrauded by a bank or some other professional would have no hope of bringing their abuser to a criminal trial. But demonizing then CLIA loophole as if it is some ghastly deviation only fixed by the Powerful and Mighty FDA seems short-sighted. Again, keep in mind that basically all lab scientists, all medical researchers who investigate lab procedures and all of the academics who study this and teach the next generation said Theranos was BS long before the government or press. No one listened to them.

simonh 5y ago
I suspect one reason why professionals in the industry were not listened to is that we are very used to hearing experienced voices in an industry in the process of being disrupted explain why the disruption can't happen and won't work, right up until it does both. The most famous example is the "PC guys are not going to just figure this out" quote regarding the iPhone. A lot of VCs will see people they regard as 'incumbents' being witheringly critical and think that's a good sign. Clearly there's a big difference between a businessman saying such things and professional scientists and clinicians.
- thathndude 5y ago
  This seems to be the most plausible explanation. I can remember Steve Ballmer, an undeniably intelligent and capable professional, laughing away the idea of the iPhone doing even single digit percentage market share. I don’t think it was just competitive posturing. He genuinely was down talking what is arguably the most successful consumer product of the last 50 years.

roopawl 5y ago

Are we ever going to start talking about Stanford’s connection to this and related?

diogenes123 5y ago
You're getting warmer.

hikerclimber1 5y ago

According to an article she went to a Michelin star restaurant when her company was failing. They should fine her for all the money she has and make her bankrupt. That’s justice plus at least 5 years in jail.

hikerclimber1 5y ago

They should supenoa Elizabeth thernos credit cards and bank accounts to see just how much money she spent while her company was failing.

JCM9 5y ago

I remember at the time so many experts I knew in the field would say the Theranos claims were total BS and what she speaks of was tried and doesn’t work for X, Y, and Z reason. A science company board full of people without a science background was also a giant red flag. There were very much some she wasn’t fooling, but the broader media-sphere, PR engine, and high profile folks without a technical background bought the whole thing hook, like and sinker. In that way it was a textbook con. Avoid those that would sniff you out and focus on those that will be gullible to your play.

diogenes123 5y ago
Sounds the Iraq War and COVID-19. I wonder which sorts of organizations would orchestrate these...
- easytiger 5y ago
  As it happens Holmes did some work on early SARS swab testing at a lab in Singapore when she was at university.
colechristensen 5y ago
This kind of back seat driving peer review isn’t helpful. “What she claims she can do is bs!” isn’t the story, because you’re really just disagreeing with marketing. The problem is it took far too long for anyone to actually check the real mechanics of what was being done to see if it was faked, someone with almost no access saying it’s fake is not an authority.
- JCM9 5y ago
  The point of this whole Theranos thing is that medical product conversations need to be based on science, not marketing. It was the lack of transparency / access that is precisely what caused many scientists to question the claims. That’s generally not how science is done so it sets off the BS detectors. If you’ve made this breakthrough, show us. People got hurt here because of how that played out, and that’s messed up.
5y ago

easytiger 5y ago

Throwback to 2015 letter to the editor in fortune rebuffing the stories they published about Theranos https://fortune.com/2015/12/20/letter-to-the-editor-theranos-responds/ https://fortune.com/2015/12/20/letter-to-the-editor-theranos... https://archive.md/NE7NB https://archive.md/NE7NB Really quite something. Original story: https://archive.md/BpOhV https://archive.md/BpOhV And the even more original glowing and fawning cover story they did on Holmes in 2014: https://archive.md/XN6i6 https://archive.md/XN6i6 > Precisely how Theranos accomplishes all these amazing feats is a trade secret. Holmes will only say–and this is more than she has ever said before–that her company uses “the same fundamental chemical methods” as existing labs do. Its advances relate to “optimizing the chemistry” and “leveraging software” to permit those conventional methods to work with tiny sample volumes. Interesting how that reads in retrospect > Holmes counters that because, as noted, her tests employ “the same fundamental chemical methods” as existing tests, peer-review publication of validation studies is both unnecessary and inappropriate. Incredibly arrogant to the end fits well with her past behaviour > Theranos, which does not buy any analyzers from third parties, is therefore in a unique position. While it would need FDA approval to sell its own analyzers to other labs, it doesn’t do that. It uses its analyzers only in its own CMS-certified lab. All its tests are therefore LDTs, effectively exempt from FDA oversight.

xyzelement 5y ago

I have a vivid memory about the first time I found out about Theranos and Holmes. It was in the business school setting, and the point the professor was making was about how cool it is that a young woman is disturbing an old industry. Not the science, not the business, but the age and gender of the protagonist. It struck me as a bit weird intellectually - DEI is important but let's first establish that the thing being done is great, and then second take a look at who's doing it. It seemed like this short circuited in the speaker's mind because it was such a cool narrative. I wonder if that happened more broadly - it's a story that you easily wish were true!

jack_riminton 5y ago
This was definitely one of the main reasons. I remember at the time how gushing the media were. They were desperate for a female Jobs and she preyed upon that.
- diogenes123 5y ago
  Media pushes an agenda. Why this one? The answer is there, but let's see if this crowd can solve the puzzle. What questions did Meyer Lansky ask when forming a partnership?
trentnix 5y ago
> I have a vivid memory about the first time I found out about Theranos and Holmes. It was in the business school setting, and the point the professor was making was about how cool it is that a young woman is disturbing an old industry. Not the science, not the business, but the age and gender of the protagonist. And now her defense is that she was used, abused, and manipulated by men. Occam's razor says she was a fraud then and is a fraud now.

diogenes123 5y ago

There's more to this than meets the eye. Hint: "spooky". A girl ripping-off the richest men in the country doesn't go to jail: she disappears. That these same men still back her should make you wonder, eh? Try ripping off Larry Ellison, and see what rogue LAPD sharpshooter he sends your way...

meepmorp 5y ago
What?
- diogenes123 5y ago
  What happened to the CTO? Damn shame, eh.

trident5000 5y ago

What kind of psychopath has a baby right before a trial that may send her away to prison.

trentnix 5y ago
The kind that uses image and fraud in pursuit of their own ambitions. I'm guessing her child will be used to argue why she shouldn't go to prison. Convenient timing, isn't it?

alfiedotwtf 5y ago

Afraid to ask, but wouldn't the VCs be victims of her fraud rather than enablers?

diogenes123 5y ago

There are 2 tiers of people in Theranos: 1) those 'in the club' - Epstein-tier 2) those 'not in the club' - rich but still outsiders #1 had an agenda #2 got clobbered

Grustaf 5y ago

Is the article trying to say that the investors somehow wanted or at least tolerated that Holmes skirted the rules and scammed patients? That would seem incredibly short sighted. It's much more likely that she misled investors, and isn't that exactly what the lawsuit is about? > This dismal success rate is why venture capitalists historically have rarely invested in these companies. So why then did they collectively put $1.3 billion in Theranos? > Greed. Well in that sense, most venture capital investment stems from "greed", but surely that's the whole point, to leverage the "greed" of risk loving investors into funding new ventures?