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Vanity Fair Blames The Failure of Theranos On Silicon Valley (vanityfair.com)
"I was only a day or two behind FBI agents who were trying to put together a time line of what Elizabeh Holmes knew and when she knew it," writes Vanity Fair, in what Slashdot reader PvtVoid describes as "a compelling story of hubris, glamour and secrecy about the unicorn Silicon Valley company that turned out to be founded on bullshit." Another anonymous Slashdot reader writes:
Holmes raised $700 million "on the condition that she would not divulge to investors how her technology actually worked," according to an article detailing how Silicon Valley can "replicate one big confidence game in which entrepreneurs, venture capitalists, and the tech media pretend to vet one another while, in reality, functioning as cogs in a machine that is designed to not question anything -- and buoy one another all along the way... In the end, it isn't in anyone's interest to call bullshit."
Theranos employed "hundreds of marketers, salespeople, communications specialists, and even the Oscar-winning filmmaker Errol Morris," as well as a chief scientist who eventually became suicidal. But then the Centers for Medicare and Medicaid Services "discovered that some of the tests Theranos was performing were so inaccurate that they could leave patients at risk of internal bleeding, or of stroke among those prone to blood clots." A reporter at the Wall Street Journal says "It's O.K. if you've got a smartphone app or a social network, and you go live with it before it's ready; people aren't going to die. But with medicine, it's different."
He became suspicious after reading the answer that the company's CEO, a Stanford dropout, supplied for a question about their technology. "A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel."
Theranos employed "hundreds of marketers, salespeople, communications specialists, and even the Oscar-winning filmmaker Errol Morris," as well as a chief scientist who eventually became suicidal. But then the Centers for Medicare and Medicaid Services "discovered that some of the tests Theranos was performing were so inaccurate that they could leave patients at risk of internal bleeding, or of stroke among those prone to blood clots." A reporter at the Wall Street Journal says "It's O.K. if you've got a smartphone app or a social network, and you go live with it before it's ready; people aren't going to die. But with medicine, it's different."
He became suspicious after reading the answer that the company's CEO, a Stanford dropout, supplied for a question about their technology. "A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel."
the signal is to NOT invest in this company.
The fact that she's a nice young woman probably helped... a little. But it's probably mostly down to being a charismatic and likable (as an entrepreneur) person with a great story. There are plenty of people of all genders who are able to sell anything to anyone. If a stranger in an expensive sports car pulls up in your driveway and tells you about the investment opportunity of a lifetime, would you give him $10.000 to invest? No one in their right mind would, right? And yet it still happens all the time.
What I wonder after reading this sorry story is: was Holmes aware that she was selling snake oil all along, or did she start out with the genuinely belief that her company could make the technology work? I'm willing to believe the latter: they did try, but the longer their breakthrough failed to materialize, the more they had to shift their efforts towards keeping up appearances, or "controlling the narrative" as it's called.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
But once they determined the trace multipliers thye had come up with didn't work, they should have come clean right there and then. Not turned it from a failed venture into a fraudulent one.
Still, I feel like I could understand how a person could get into that situation. Imagine you have a company with investors, employees, facilities, everything. Your investors are pressuring you for results. There's a lot of pressure to get results, and you're failing to produce them, but you think your scientists might come up with a solution at any moment. You might be fooling yourself, but you have a lot of people counting on you, and if you can pull through it, you'll be filthy rich.
All you have to do is stall, and keep it all together long enough for your scientists to make your promises a reality. You expect it to be difficult, but everyone seems happy to look the other way. Your investors don't really care as long as their investments are growing in value. Your employees don't care as long as they get to keep their jobs. Keeping things going requires some secrecy, but everyone involved is just looking for an excuse to believe whatever your tell them.
After a while, you're too deep in. You started out just stalling, misleading people a little until you could figure out how to make it all legit. But that was months ago-- years ago now. You've already accidentally crossed the line into fraud a while back, without even realizing it at the time. Now you have no choice but to keep it all afloat and hope for a scientific breakthrough, or some other miracle,
I'm not saying that this is Holmes's story. I'm just saying that it's not hard to imagine how a relatively young and inexperiences person could fall into a situation like this. After all, they do say "fake it 'til you make it," and she might have been hoping that at some point, her company would "make it". Either way, it does seem like Vanity Fair is right to assign a fair amount of the blame on the Silicon Valley system. Somehow people invested massive amounts of money in a 19 year-old who was claiming to do something experts claimed wasn't possible, and they did so without doing due diligence?
The fact that she's a nice young woman probably helped... a little.
Think you mean a lot. Ask yourself how many times you've read about someone trying to get VC funding for something as shitty as this and they never showed up to dump the money on it. If you don't keep up on VC crap, or don't have friends with an interest in it, you probably don't know what I'm talking about. But you can find plenty on websites that cater to VC's, and some of them are also pushing the "it's women, throw money at them" type of clickbait articles. Keep in mind that SV and VC culture currently has a big push on the "but it's womens, so throw money at it" just like other sectors of society(programers, IT, government and pretty much anything except hard labor jobs or trades) in order to get more women in it. Sometimes going as far as placing people who are incompetent into those jobs for the sake of diversity and everyone likely has a story on that one. You also can't forget the big push on the "we need more womens, because if we don't it's sexist" BS that the media and various marxist feminist organizations have been pushing the last ~5 years either.
This stuff along with the current state of the economy though is drying up not only for this type of BS, but general BS scams in general. Which is good, but I've seen at least 4 articles in the last 6mo saying something along the lines of "funding is drying up, help the women with this project!" The project of course is usually so scam ridden even laymen can look and go NOPE.
Om, nomnomnom...
The whole reason that the patent system replaced trade secrecy is that in return for a specified period of exclusive use an inventor has to reveal how his device works. Theranos treated its process as a trade secret, which should have been a red flag to any investor to not chuck his money into an unknown technology. The Silicon Valley VC culture just got pwned.
Silicon Valley went along for the ride. The person responsible for the whole thing is Ms. Holmes, who is nothing but a scammer.
You will rarely find a scam this size where just one person is responsible. What about the engineers who HAD to know that the whole thing was bullshit (or were incompetent if they didn't)? How about the investors who couldn't be bothered to do any due diligence before writing a large check? How about the customers for the product who didn't demand adequate demonstrations of effectiveness before deploying the technology? What about the company management who had to know about the problem but lacked a moral compass?
No, there is plenty of blame to go around. Ms Holmes might be the lead singer in this particular band but she's hardly the only one playing.
In this case, "misleading people" meant putting their health at risk - either from lack of necessary treatment, or causing them to get unnecessary treatment. That right there overrides any right you have to stall. Protecting people's lives is the top priority - the whole reason the company even existed was because it promised to help prolong people's lives.
Come clean, explain that the test results aren't coming back as accurate as in early trials, and ask/beg for more time to figure out why the difference and to try to correct it. A slight delay is acceptable because you need time for the statistics to solidify enough for a 95% or 99% confidence interval (idiots who claim they "knew all along" notwithstanding - there are always a few of these people holding every possible position, so some of them are always "right" just by pure chance, not because they actually knew anything). But once your collected stats reach that confidence interval, you need to act to protect lives, even if it means admitting your product doesn't seem to work and that the investors may have wasted their money.
Research almost always results in failure. Edison tested over 6000 materials as a filament for a light bulb, and every one of them failed before he stumbled upon one that worked for an acceptably long period of time. But for some reason popular culture sees failure as something shameful, rather than an inevitable and necessary part of the learning process. It's resulted in a government populated by professional liars who (almost) never admit their failures - because we tend to vote for the people who claim they've never failed, when all they are is better at hiding their past failures (usually by pushing the blame onto others). Eliminate the negative stigma associated with failure, and something like Theranos becomes a non-story of an un-notable startup which failed early, instead of a multi-billion dollar scandal putting over a million lives at risk.