They could have and should have seen through this. But she got one important person on board, and then used that “endorsement” to get others. Seemingly smart people wanted to be in on the ground floor of the next “Steve Jobs” breakthrough, and did not do their own due diligence. When potential investors and clients did come to Theranos to see the technology in action, they were duped….they were shown a Theranos “magic machine” and two blood samples were taken: a small sample for the magic machine and a large sample for the traditional blood test. Visitors were then taken to lunch while the samples were run, and when they returned they were shown that the magic machine produced good results. Of course, the “good results” had come from the traditional blood test, not from the magic machine.
And yes, there was a whistle blower…Tyler Schultz…who was almost disowned by his grandfather when he went to him with his concerns. He also felt like his personal safety was in jeopardy—he thought he was being followed and threatened. That you did man, who was fresh out of college, deserves so much respect for sticking to his guns in the face of all of this.
I totally get that all new ideas need a champion, and not all new ideas become successful products. My background is in engineering and I have been lucky enough to see and support many new ideas that have come from Pratt students and faculty. But while Elizabeth saw a need (for blood tests that ran on small samples) she never had a technology or even a concept for a technology that could address this need. That is very different from the entrepreneurs who start with a technology that has the possibility of being developed. Or from those who have identified a need and look for technologies that might be applied to address that need. She seemed to have neither. She didn’t even try to study blood chemistry…she dropped out of Stanford before she could. And when the top scientists at Theranos (some of whom did not have experience in the appropriate area) told her that the idea wasn’t working, she fired them.
And…I do realize you are not defending her, but are simply defending the entrepreneurial spirit and process. And you are absolutely right about innovation being such an important part of US history. Holmes, IMO, and her actions are a threat to that spirit of innovation.
Last edited by Tooold; 01-05-2022 at 02:08 PM.
Quite a few people within the company blew the whistle, but you have to read the book to understand the pressure Theranos put on those people to keep quiet. David Boies threatened many of them personally. It was ugly.
The Columbia prof may be correct in saying that a whole lot of startups do many unethical things, but I don't think many, if any, approach a level of blatant deceit that Theranos did. She set a new standard.
I won't argue that Holmes/Theranos was a particularly egregious case, but the general fact pattern is not at all unprecedented. Plenty of other ultra-hyped startups have played similar games.
https://venturebeat.com/2017/11/08/chicago-unicorn-outcome-health-sued-by-investors-over-fraud-allegations/
https://www.nytimes.com/2021/06/08/business/lordstown-cash-going-concern.html
Holmes was a head case from childhood on. She is a raging narcissist with delusions of grandeur. She has more in common with Keith Raniere than Elon Musk or any of the other tech visionaries.
Genial disagreement. Yes, I used to be in the business, and I know what goes on out there. But saying "plenty of other startups have played similar games" really isn't accurate...these guys were pretty much in a league by themselves. Tons of hype, tons of lying, yes, but this was far more than that.
Have you read the book?
I did read some of the early WSJ coverage, but I have not read the book. Just to be clear, what Holmes and her enablers did absolutely stands apart IMHO, and I hope she does real jail time. No disagreement there. But that doesn't mean there aren't common themes with other fraud/overhype/"no there there" cases in VC land.
Just to clarify, Musk did not found Tesla. He bought a majority stake a year later. He was flush with money after the sale of PayPal to eBay. He would have sold it to Apple if they wanted it for what would be a pittance now. The bulk of their profits are not from selling cars. It still comes from the sale of emissions credits to other manufacturers. It’s worth hundreds of millions a year. It will gradually go down because other EVs are being made now and other industries are going green. He was the example Bostondevil’s husband should have used instead of Holmes. People think Tesla is a car company but it’s not. It’s a company that sells cars to take advantage of a government program to reduce carbon emissions at the expensive of other manufacturers. Eventually it will have to become a real car company because those credit are not going to be there forever. Sorry for the tangent but we are
DBR.
Last edited by Kdogg; 01-05-2022 at 06:06 PM.
If you mean genius at uncaringly manipulating others for their personal gain then I agree but if you mean any other type of genius I strongly disagree. Neither Holmes nor Raniere had an original thought in their head. They had an amazing drive and ability to hoodwink people. That IS a type of intelligence- just happens to be one that tends to be enormously destructive.
tl;dr Holmes was not an eccentric genius or visionary who failed. She was a megalomaniacal charlatan who failed.
Apparently that’s a bit if an overstatement:
“Investing.com – Tesla (NASDAQ:TSLA) stock was up more than 2% in Tuesday’s premarket trading as the company’s second-quarter results threw up not only $1.6 billion in adjusted profit but another pleasant surprise - a falling reliance on selling carbon credits to make money.
The company made $354 million from selling environmental credits, 17% less than a year ago.
….
The share of revenue from carbon credit sales in Tesla’s total revenue more than halved to 3% in the June quarter from 7% a year ago.“
https://finance.yahoo.com/news/tesla-gains-results-show-dependence-053528438.html
yep, I'll agree with that. I only disagreed with the assessment that stuff she did is common in other companies.
Lots of companies raise money based on pure BS, they exaggerate their capabilities, they sell software full of bugs and crappy products; but Therano had companies like Walgreens spending (IIRC) $100 million plus to outfit pharmacies to accommodate her technology which truly never existed. It wasn't like it had some bugs, it was a fantasy. For a long period of time they ran tests on other people's equipment as a ruse to show how good their technology was...that takes some cojones.
I'm betting the judge sends her away for a long time.
I, too, wish she had been found guilty of defrauding patients (and from what I read in the book, I believe that patients were harmed when they received inaccurate results). I heard some discussion that the prosecution simply didn’t provide enough evidence to convict on defrauding patients, which boggles my mind in a trial that was so long and involved so many witnesses. The facts were complicated…could it have been a case of the prosecutors getting too deep in the weeds for the jury to understand, or did they shortchange that part of their case?
Yup, she had nothing, NOTHING! If only she had had at least something, ANYTHING, an article of clothing, a towel or...I know a head cushion...yeah, yeah what do you call em...uh a PILLOW! She could've called it HER Pillow, or Our Pillow our YOUR Pillow...whatever work out the adjective later.
I would've paid real money to anyone on the jury to have yelled out "At least Mike Lindell has a product!"