## Theranos

How not to buy a brick in a box off the back of a truck.
Anaxagoras
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### Theranos

Came across an interesting history of the downfall of Theranos and its CEO Elizabeth Holmes in Vanity Fair.

It's a good case study for skeptical thinking. A lot of smart people bought into the whole company narrative. One skeptical reporter did not.

Here's how it begins:
It was late morning on Friday, October 16, when Elizabeth Holmes realized that she had no other choice. She finally had to address her employees at Theranos, the blood-testing start-up that she had founded as a 19-year-old Stanford dropout, which was now valued at some $9 billion. Two days earlier, a damning report published in The Wall Street Journal had alleged that the company was, in effect, a sham—that its vaunted core technology was actually faulty and that Theranos administered almost all of its blood tests using competitors’ equipment. The article created tremors throughout Silicon Valley, where Holmes, the world’s youngest self-made female billionaire, had become a near universally praised figure. Curiosity about the veracity of the Journal story was also bubbling throughout the company’s mustard-and-green Palo Alto headquarters, which was nearing the end of a$6.7 million renovation. Everyone at Theranos, from its scientists to its marketers, wondered what to make of it all.
There is an almost cargo-cultish aspect here. This is Holmes:

Notice the black turtleneck. Remember who else was famous for wearing black turtlenecks?
At Theranos, Holmes preferred that the temperature be maintained in the mid-60s, which facilitated her preferred daily uniform of a black turtleneck with a puffy black vest—a homogeneity that she had borrowed from her idol, the late Steve Jobs.

Holmes had learned a lot from Jobs. Like Apple, Theranos was secretive, even internally. Just as Jobs had famously insisted at 1 Infinite Loop, 10 minutes away, that departments were generally siloed, Holmes largely forbade her employees from communicating with one another about what they were working on—a culture that resulted in a rare form of executive omniscience. At Theranos, Holmes was founder, C.E.O., and chairwoman. There wasn’t a decision—from the number of American flags framed in the company’s hallway (they are ubiquitous) to the compensation of each new hire—that didn’t cross her desk.

And like Jobs, crucially, Holmes also paid indefatigable attention to her company’s story, its “narrative.” Theranos was not simply endeavoring to make a product that sold off the shelves and lined investors’ pockets; rather, it was attempting something far more poignant. In interviews, Holmes reiterated that Theranos’s proprietary technology could take a pinprick’s worth of blood, extracted from the tip of a finger, instead of intravenously, and test for hundreds of diseases—a remarkable innovation that was going to save millions of lives and, in a phrase she often repeated, “change the world.” In a technology sector populated by innumerable food-delivery apps, her quixotic ambition was applauded. Holmes adorned the covers of Fortune, Forbes, and Inc., among other publications. She was profiled in The New Yorker and featured on a segment of Charlie Rose. In the process, she amassed a net worth of around $4 billion. After the story was published: Absent a plan, Holmes embarked on a familiar course—she doubled down on her narrative. She left the war room for her car—she is often surrounded by her security detail, which sometimes numbers as many as four men, who (for safety reasons) refer to the young C.E.O. as “Eagle 1”—and headed to the airport. (She has been known to fly alone on a$6.5 million Gulfstream G150.) Holmes subsequently took off for Boston to attend a luncheon for a previously scheduled appearance at the Harvard Medical School Board of Fellows, where she would be honored as an inductee. During the trip, Holmes fielded calls from her advisers in the war room. She and her team decided on an interview with Jim Cramer, the host of CNBC’s Mad Money, with whom she had a friendship that dated from a previous interview. It was quickly arranged.

Cramer generously began the interview by asking Holmes what had happened. Holmes, who talks slowly and deliberately, and blinks with alarming irregularity, replied with a variation of a line from Jobs. “This is what happens when you work to change things,” she said, her long blond hair tousled, her smile amplified by red lipstick. “First they think you’re crazy, then they fight you, and then, all of a sudden, you change the world.” When Cramer asked Holmes for a terse true-or-false answer about an accusation in the article, she replied with a meandering 198-word retort.
I think I've heard that line before. It's a variation on the Galileo gambit: They said Galileo was crazy too!
Except here, almost everyone believed in her and her company, until this one reporter came along. She did not encounter a lot of resistance from "the establishment", they embraced her and threw money at her.
After he wrapped up, the leaders of Theranos stood before their employees and surveyed the room. Then a chant erupted. “Fuck you . . .,” employees began yelling in unison, “Carreyrou.” It began to grow louder still. “Fuck you, Carreyrou!” Soon men and women in lab coats, and programmers in T-shirts and jeans, joined in. They were chanting with fervor: “Fuck you, Carreyrou!,” they cried out. “Fuck you, Carreyrou! Fuck. You. Carrey-rou!”
Anyway, I think it's a good read.
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Pyrrho
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### Re: Theranos

The pharma trade for a very long while was focused on "blockbusters", but those salad days are pretty much gone, except possibly for innovations in gene splicing. The device sector of the pharma market is highly competitive but the ROI is fairly low, because there's not much profit margin per test. Therano's alleged innovation would have meant cheaper costs per test and potentially better profit margin per test. That's why investors were so eager. Why they failed to perform due diligence is another question--I suppose it's a form of high-stakes gambling. It was always suspicious because of the failure to produce data. That is always a red flag.

There is a "long game" involving the FDA that all pharma companies play. This one failed.
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Anaxagoras
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### Re: Theranos

Two years later the wheels of justice have finally turned.

https://www.sec.gov/news/press-release/2018-41
Theranos and Holmes have agreed to settle the fraud charges levied against them. Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares. Due to the company’s liquidation preference, if Theranos is acquired or is otherwise liquidated, Holmes would not profit from her ownership until – assuming redemption of certain warrants – over$750 million is returned to defrauded investors and other preferred shareholders. The settlements with Theranos and Holmes are subject to court approval. Theranos and Holmes neither admitted nor denied the allegations in the SEC’s complaint. The SEC will litigate its claims against Balwani in federal district court in the Northern District of California.
Seems like she kinda got off easy, all things considered. No admission of wrongdoing, no crime. Just a fine and a sort of very mild probation.
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Doctor X
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### Re: Theranos

"Screw the laws, I've got looks and money!"

--J.D.
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Pyrrho
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### Re: Theranos

Any compensation to the patients who were diagnosed based on the bogus blood tests?
The flash of light you saw in the sky was not a UFO. Swamp gas from a weather balloon was trapped in a thermal pocket and reflected the light from Venus.

Anaxagoras
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### Re: Theranos

Doesn't appear to be. I'm sure they could have a class-action lawsuit if some people were harmed.

Haven't really heard much about that side of things, tbh.
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shemp
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### Re: Theranos

She should have been stripped of everything she owns and sent to Lesbo Bitch prison.
"It is not I who is mad! It is I who is crazy!" -- Ren Hoek

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Anaxagoras
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### Re: Theranos

Is there a lesbo bitch prison? I should Google that to find out.

Oooooh!
A fool thinks himself to be wise, but a wise man knows himself to be a fool.
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sparks
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### Re: Theranos

shemp wrote:She should have been stripped of everything she owns and sent to Lesbo Bitch prison.
No. Turn her brain into a fine pink mist with High Velocity Hollow Point Lead Poisoning. Save tax payer dollars.

As an example to others... of course.
You can lead them to knowledge, but you can't make them think.

Doctor X
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### Re: Theranos

Anaxagoras wrote:Is there a lesbo bitch prison? I should Google that to find out.
--J.D.
Mob of the Mean: Free beanie, cattle-prod and Charley Fan Club!
"Doctor X is just treating you the way he treats everyone--as subhuman crap too dumb to breathe in after you breathe out."--Don
DocX: FTW.--sparks
"Doctor X wins again."--Pyrrho
"Never sorry to make a racist Fucktard cry."--His Humble MagNIfIcence
"It was the criticisms of Doc X, actually, that let me see more clearly how far the hypocrisy had gone."--clarsct
"I'd leave it up to Doctor X who has been a benevolent tyrant so far."--Grammatron
"Indeed you are a river to your people.
Shit. That's going to end up in your sig."--Pyrrho
"Try a twelve step program and accept Doctor X as your High Power."--asthmatic camel
"just like Doc X said." --gnome

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shemp
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### Re: Theranos

sparks wrote:
shemp wrote:She should have been stripped of everything she owns and sent to Lesbo Bitch prison.
No. Turn her brain into a fine pink mist with High Velocity Hollow Point Lead Poisoning. Save tax payer dollars.

As an example to others... of course.
But I approve of my taxpayer dollars being spent on Lesbo Bitch Prison. With live webcams and on-demand video of course.
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### Re: Theranos

Then vote for Trump.

Again.
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Pyrrho
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### Re: Theranos

https://www.wired.com/story/a-new-look- ... e-culture/
The biggest problem of all was the dysfunctional corporate culture in which it was being developed. Holmes and Balwani regarded anyone who raised a concern or an objection as a cynic and a nay-sayer. Employees who persisted in doing so were usually marginalized or fired, while sycophants were promoted.

Employees were Balwani’s minions. He expected them to be at his disposal at all hours of the day or night and on weekends. He checked the security logs every morning to see when they badged in and out. Every evening, around 7:30, he made a flyby of the engineering department to make sure people were still at their desks working.

With time, some employees grew less afraid of him and devised ways to manage him, as it dawned on them that they were dealing with an erratic man-child of limited intellect and an even more limited attention span. Arnav Khannah1, a young mechanical engineer who worked on the miniLab, figured out a surefire way to get Balwani off his back: answer his emails with a reply longer than 500 words. That usually bought him several weeks of peace because Balwani simply didn’t have the patience to read long emails. Another strategy was to convene a biweekly meeting of his team and invite Balwani to attend. He might come to the first few, but he would eventually lose interest or forget to show up.
The flash of light you saw in the sky was not a UFO. Swamp gas from a weather balloon was trapped in a thermal pocket and reflected the light from Venus.

Doctor X
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### Re: Theranos

Now criminal charges.

--J.D.
Mob of the Mean: Free beanie, cattle-prod and Charley Fan Club!
"Doctor X is just treating you the way he treats everyone--as subhuman crap too dumb to breathe in after you breathe out."--Don
DocX: FTW.--sparks
"Doctor X wins again."--Pyrrho
"Never sorry to make a racist Fucktard cry."--His Humble MagNIfIcence
"It was the criticisms of Doc X, actually, that let me see more clearly how far the hypocrisy had gone."--clarsct
"I'd leave it up to Doctor X who has been a benevolent tyrant so far."--Grammatron
"Indeed you are a river to your people.
Shit. That's going to end up in your sig."--Pyrrho
"Try a twelve step program and accept Doctor X as your High Power."--asthmatic camel
"just like Doc X said." --gnome

WS CHAMPIONS X4!!!! NBA CHAMPIONS!! Stanley Cup! SB CHAMPIONS X5!!!!!

shemp
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### Re: Theranos

I wonder how many false or inadequate test results resulted in unnecessary deaths?

Hanging's too good for her.
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### Re: Theranos

Changed my mind: A bullet is too good for her. Put her in the stocks and let her starve to death. Free to view on cable of course.
You can lead them to knowledge, but you can't make them think.

Anaxagoras
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### Re: Theranos

shemp wrote:I wonder how many false or inadequate test results resulted in unnecessary deaths?

Hanging's too good for her.
My understanding is that the actual blood tests that they performed were done on other equipment, the fraud here was the claim that they had invented a new way to do it. Their own devices didn't actually work, but they had others from other equipment makers which they claimed they were using only for verification purposes, but in fact they were passing off the results they got with the verification equipment as their own.
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shemp
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### Re: Theranos

Anaxagoras wrote:
shemp wrote:I wonder how many false or inadequate test results resulted in unnecessary deaths?

Hanging's too good for her.
My understanding is that the actual blood tests that they performed were done on other equipment, the fraud here was the claim that they had invented a new way to do it. Their own devices didn't actually work, but they had others from other equipment makers which they claimed they were using only for verification purposes, but in fact they were passing off the results they got with the verification equipment as their own.
In that case, I guess the guillotine will do.
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Abdul Alhazred
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### Re: Theranos

To my way of thinking, the most interesting part about this story is the big shots she fooled into investing. A veritable Who's Who of deep state evil bastards such as Henry Kissinger.
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