Often, we look at the negative in what Ms. Holmes wrought (rightfully so).
Instead, for a sec, look at one positive point in what Tyler Shultz brought forth through his heroic actions against Theranos[0]. His story showed us what SV is and what it can be. Though never guaranteed, he has a happy ending as he recently launched Flux Biosciences in 2017[1].
I hear this a lot about Tyler. It just shows that the commentor never read the linked articles or did any research. Tyler and his Grandfather are not on speaking terms due to the whistle blowing and likely never will be. Tyler very much forgave any inheritance and was likely to be bankrupted due to his heroic actions, yet he did them anyways because it was the right thing to do. Maybe his grandfather's position got him into the job in the first place, but Tyler very much was facing a life of endless poverty for his whistle blowing.
I still can't believe how Elizabeth Holmes got away with just a slap in the wrist. Is it because the board was full of connected people? Or because it's a successful woman CEO story? Either way, it's a disgrace. Sociopaths will pick this signal as a boost of confidence.
No question this Theranos situation would have inspired a whole new wave of startup con artistry, but I think all those people are currently peddling shitcoins.
When the shitcoin bubble completely falls apart (a process which it may be going through right now), we might see a bunch of Theranoses popping up.
Everyone forgets the role that TED played in launching this crap. Something about that venue and presentation method turns off peoples' bullshit-detectors.
I feel like it has lost its influence over the last few years as folks are a bit more clued in now, so I see another Theranos as _slightly_ less likely.
> a process which it may be going through right now
Eh, I dunno. I'm not a big cryptocurrency fan, but that doesn't really sound like the current reality. It may have lost a lot of its December peak value, but the value of cryptocurrencies is still about where it was in November and has been stable there for a month or two. That's still a lot higher than the first ten months of 2017 (and previous years), so "completely falls apart" seems a bit strong.
You've mistaken what I mean when I say "shitcoin bubble". I'm talking about the thousands of ICOs that are utter garbage. At some point that has to fall apart.
Eventually you burn enough people and there's nobody left to scam, or governments step in to regulate it. There's a reason you don't see stock peddling scams anymore.
There's a big difference between the 'regular' crypto market (btc ltc eth) and the shitcoin/ICO market.
Watching 'dominance' of the various coins is an informative indicator (IMO) of the overall health of the system. https://coinmarketcap.com/charts/ (3rd chart down) Obviously market cap is an extremely fraught metric for coins (trade one token for $1.00, with a supply of trillions, and it's 'worth' trillions), but it should average out somewhat.
Bitcoin is recovering a bit of dominance (which I think is a good sign), but that growing 'other' portion suggests that there's a lot of garbage, and that's only growing. So I agree with you; the crypto space is taking on more dubious value, more shitcoins, etc.
It absolutely blows my mind how she avoided jail time over this. If I had called someone on the phone and scammed their credit card for $1,000, I'd be looking at 3-5 years in Federal prison. There truly are zero consequences in life beyond a certain level of net worth.
She never earned that worth in the first place, it was effectively a zero risk bet for her with non-zero damages to others. This sort of thing should not be allowed to happen.
They sold medical diagnostics that did nothing. They did this knowing that they did nothing.
In a way, it's worse than the ads on the internet promising to cure cancer with nettles and probiotics and yoga. Online ad scammers can plead ignorance that what they sell isn't actually useful, and I'm sure there're legal disclaimers in fine print saying the products are sold purely for entertainment. Theranos, on the other hand...
IIRC, the securities fraud is based on them claiming to perform tests that were actually performed on standard blood test equipment made by Seimens, as well as claiming to perform more diagnostics than they actually could.
The whistleblowing is based on the data 'grooming' that their machines did, which made it look like the machines were more accurate than they actually were. Tyler Shultz brought up his concerns and was rebuked, and then went to the WSJ.
The basic idea is that their machines didn't actually work.
It's a blood testing company that has been shady about its methodology and results. Does is really take an ELI5 to see how it could end being harmful to people.
They sold a new type of blood test. Turns out the company was making false claims about their blood tests so the entire company ended up being one big sham.
Specifically, what got him in trouble is probably his public persona as much as his actual crimes. Plus... he was stupid enough to violate the terms of his probation and got thrown into jail. I don't think most executives are anywhere as stupid.
You might argue that what kept Elizabeth Holmes out of trouble was her public persona as well. Neither case has the aroma of justice as far as I'm concerned.
Shkreli operated as, essentially, a lone wolf on the margins of the financial world. Holmes is completely enmeshed in the ruling political-financial-military nexus.
I'm sure a lot of them are pissed at her, but that's the point. Being part of the ruling class means that if they're pissed at you, you get exiled to the fringe of the ruling class and have to live in the outer darkness of mere affluence instead of fantastic wealth and power. Not being part of it means that you get locked in a cage for a substantial portion of your remaining lifespan.
To use a crude analogy, if you're wronged, are you more likely to be vindictive if the transgressor is a close relative, or a complete stranger?
>Is it because the board was full of connected people?
The board was scammed by her and lost billions of potential dollars, so that's probably not why. If anything, I wonder the opposite, why the connected people didn't do more; I'm guessing it's because destroying her further isn't worth their time?
Wait. They still had a workforce? What the heck are they working on? How are they still extant? The entire operation was revealed to be a world-historical fraud! How is this company still in operation on any level? I don't get it.
AFAIR, they have switched focus to some other bullshit idea called miniLab:
> “We will return our undivided attention to our miniLab platform,” writes Holmes of the new device she unveiled in early August at the American Association for Clinical Chemistry’s convention in Philadelphia. She added that “our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care.”
What's the opposite of "nobody every got fired for choosing IBM"?
This woman needs to steer far, far away from anything in the medical field for a LONG time. If she does end up back in that field, she needs to be way behind the scenes. Not presenting at a conference.
I can't imagine anyone entrusting this person with anything ever again, particularly a position of leadership. Though, the cynic in me is sure she'll be showered with funding the next time she deigns to start a new venture.
Ellen Pao was an excellent CEO. The subs she got rid of were hateful and she didn't believe in editing comments. The current CEO won't ban subs inciting violence and instead gets rid of peaceful ones trading individual bottles of beer.
> This woman needs to steer far, far away from anything in the medical field for a LONG time.
Sadly I think she would do great in the field. "Oh look she managed to raise all this money and start a company based on bogus results. We clearly need her on our team. She can deliver!". I guess it depends how you view the field and their ethics and business perspective.
It was observed long ago that there is no such thing as bad publicity. It may not be quite that black-and-white but there is definitely some truth to it.
She's actually banned from being an officer of ANY company.
Associated Press, March 14, 2018:
"Under an agreement with the Securities and Exchange Commission on Wednesday, Holmes is barred from serving as an officer or director of a public company for 10 years. The SEC said it will pursue its case against the president of the company, Ramesh "Sunny" Balwani, in federal district court in the Northern District of California."
Someone needs to auction off the remaining office furniture and lab equipment, and renegotiate the lease. If they had thousands of employees at their peak, a couple of dozen seems reasonable.
My understanding is that Lehman Brothers still has a few employees left. Mainly to sort through the mess of paperwork left behind. Here's an article from 2013 where they still had employees working on liquidating the assets.
Are any patents they hold licensable? Just because they committed fraud and couldn't get their product to actually work doesn't mean the patents are worthless.
They were doing fake it till you make it[1] - deceiving investors and their customers, while making a hail Mary R&D play at trying to make their technology work.
[1] Just to be clear, 'fake it till you make it' does not require deception. If you're up front about what you're doing with the people paying you, and are following the law, there is nothing wrong with doing things that don't scale.
The idea of "faking it till you make it" is about projecting the self-confidence of someone whose already successful. I've never heard anyone use this phrase as a justification for providing materially false statements to investors or whatever.
I think the problem is that people often get away with doing ethically dubious things in early-stage startups. It only makes news when they got caught.
For example: Airbnb started out by scraping Craiglist for their listings. This was not only ethically dubious, it was against Craigslist's terms of service.
They got away with it, though, and have obviously gone legitimate since. Same with YouTube and copyrighted content.
In previous threads on Theranos numerous posters defended the practice of early-stage companies lying to investors about their capabilities in order to gin up capital, the rationalization being it was okay if the capital let you eventually actually build those capabilities.
I think most folks are working with lies like, "I'm a people person," or "I am confident in this interaction," rather than "I have a PhD in $obscureField."
1-Page.com also had a very similar, although not as well known story. 1-page managed to be a "public startup" without having a product or (real) customers. Very much into the "fake it till you make it". Very fascinating story: https://www.forbes.com/sites/ryanmac/2017/05/18/rise-and-fal...
I think the real "fake it till you make it" does work and is very common. But you have to "fake" things that are reasonable. So when a customer or employer asks if you can do something, you say yes. It's one thing if you have never done it before. You can surely learn. It's another if you are saying you can do something that no one has ever done before.
They just raised $100M from Fortress Capital backed by their patent portfolio. If I had to guess this money is probably coming from a subset of their existing stuck investors banding together in a magical thinking exercise to win back. A good lesson in human frailties. It's hard to watch something you had that you thought was worth billions go to zero. They might as well have funded a whole new company.
unbelievable. After seeing this, can anyone doubt that luck is a major factor in success? These investors won't even take the time to do the most basic due diligence. They have no business managing millions of dollars.
Venture capital tends to be a badly performing asset class. Here a VC's motivation is easy to discern, it's a way to kick the can down the road. You take a liability (your shitty investment) and Fortress magically transforms it into something that looks vaguely asset-like (a portfolio of shitty investments). The only question is if the top up you pay will be worth it to the LPs. To the VC it is, because it saves embarrassment. Due to this moral hazard, there is a maybe an argument to be made here that distressed asset industry kind of breaks capitalism.
I appreciate the insight. There is more nuance here than my comment would suggest. What I said probably applies more to the initial investors, before Theranos was fully exposed as fraudulent.
That could be true, but I suspect not. Fortress does have a reasonable sized distressed business which include both debt and credit. Also the loan Fortress gave them was contingent on certain milestones being met, so its not like they just wired the $100M. It's a good bet that the milestones are not being met. It's also unlikely that Fortress's distressed business is likely to fund a growing startup. They are specifically looking for assets that look bad but they can find value in.
Now take a minute to think about the actual employees. Most of them did nothing wrong. Many relocated of left their previous jobs, their carriers are disturbed, their CVs tainted.
You'd have to be pretty stubborn to remain at this company after all of the bad news it's been getting lately. The writing was on the wall like a year ago that this ship was sinking, why would anyone stay?
I'm sure there's people that would take a few months of free paychecks while they work on side projects or just take a break from the grind.
Also, chaos is a ladder. There's probably a huge vacuum of leadership within the company. That's an opportunity for lower-level employees to take on more responsibilities than they'd be given at a normal company. If staying for another few months gives you a good resume project then it might be worth it, even if that project is literally helping shut down the company.
I don't know, I can't imagine Theranos looks good on your resume, especially if you worked there after all this came out. For your second point I feel like having a higher position makes you look more culpable.
Because they need a paycheck. Searching for a new job is incredibly stressful and emotionally draining, and is not the best option for everyone, at any particular time.
I suspect the average HNer is much more employable than the average corporate/office worker, and it's something we all probably lose sight of from time to time (particularly when I see comments like "just get a different job!")
Not to mention the fact that healthcare is tied to your employer, so if you are the sole breadwinner for a large family, you pretty much have to have another job in hand before you can jump ship. The recession ended a while ago, but it was a relatively jobless recovery and non-tech sectors still haven't recovered fully.
Having Theranos on your resume might not help things along either. HR is often risk adverse and might think staying clear is a good move even it is paranoid.
Obviously it's hard absent having had a decent job but people can and do take time off between jobs or take some time to find new employment. Health insurance isn't cheap but, given some savings, it's not in the couldn't possibly afford range any more than rent/mortgage is. I've been between jobs, albeit not for very long, and it was an expense but never a particular issue.
Even for a lot of people in technology, getting a new job isn't something you do on your lunch break as some people seem to think. Yes, people who have popular skills, are younger, and live in areas with greater employment density may be able to get something relatively quickly but it's absolutely not the norm for most people who lose their job.
In every group I've been in where things went south, there's always one guy with a nest egg and a firm sense of self who shows up every day, puts in the work, brushes it off and goes home to hug his family and pursue outside interests.
Typically the same guy, when I was somewhere between panic and burnout, would gently try to tell me that I take this stuff way too seriously. For a long while this horrified me. It can be hard to distinguish between letting go and giving up, and I often assumed the latter.
Where does Elizabeth Holmes go from here? Does she have a future somewhere else, or is this something that will be hard to come back from? I don't see her as someone who would willingly work for others. Thoughts?
It's really up to if the investors felt she defrauded them all. Some clearly do but others? It's not so clear to me. For whatever the reasons, she seems to be loved by at least a few investors, enough so that it puts dorks here on HN off.
Unicorn funding makes it a little different but I've worked with multiple CEOs that lost investors millions of dollars, had companies fail and then had the same investors bank roll them again. So long as the investors feel like they're running things the right way and communicating with them the right way, they appear to think a 40% hit ratio is stellar. Greed has a very limited memory. She'll take a break, probably get some sort of sweetheart deal either as a CEO or C-level officer of some small existing company in a different space (ad analytics or something, who knows?) and if they knock that out of the park, she'll be a champion again ready to get funding for whatever hot idea turns up. I also wouldn't be surprised to see her working at a VC firm.
If the DOJ swoops in and has charged, that would make things different.
I actually found it incredible that they had 125 people still working for them. Why would anyone continue to spend their time working for such a disreputable company?
Do not know why you are getting downvoted for simply stating established facts. Wake up people, and read this Pulitzer Prize-finalist expose of this heinous criminal and his puppet Nixon: http://www.pulitzer.org/finalists/gary-j-bass
One of the whistleblower on Theranos was Tyler Schultz, grandson of George Shultz. Tyler took a lot of heat for doing this. Hopefully he feels vindicated by all this.
I guess I don't know what his payout was, but he attached his name to something embarrassing which couldn't have possibly made him that much extra cash.
Instead, for a sec, look at one positive point in what Tyler Shultz brought forth through his heroic actions against Theranos[0]. His story showed us what SV is and what it can be. Though never guaranteed, he has a happy ending as he recently launched Flux Biosciences in 2017[1].
Remember: Be like Tyler Shultz.
[0]https://www.vanityfair.com/news/2016/11/explosive-new-detail...
[1]https://www.forbes.com/sites/elliekincaid/2017/10/03/after-b...