How Elizabeth Holmes's House of Cards Came Tumbling Down(vanityfair.com)
vanityfair.com
How Elizabeth Holmes's House of Cards Came Tumbling Down
http://www.vanityfair.com/news/2016/09/elizabeth-holmes-theranos-exclusive
5 comments
"It's remarkable that non [sic] of the investor or regulators paid half as much of attention."
Actually, the regulators paid just as much, if not more attention to Theranos - the article itself asserts this:
> On August 25, 2015, months before the Journal story broke, three investigators from the F.D.A. arrived, unannounced, at Theranos’s headquarters, on Page Mill Road, with two more investigators sent to the company’s blood-testing lab in Newark, California, demanding to inspect the facilities.
According to someone close to the company, Holmes was sent into a panic, calling advisers to try to resolve the issue. At around the same time, regulators from the Centers for Medicare and Medicaid Services, which regulates laboratories, visited the labs and found major inaccuracies in the testing being done on patients. (The Newark lab was run by an employee who was criticized for insufficient laboratory experience.) C.M.S. also soon 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. The agency found that Theranos appeared to ignore erratic results from its own quality-control checks during a six-month period last year and supplied 81 patients with questionable test results.
Actually, the regulators paid just as much, if not more attention to Theranos - the article itself asserts this:
> On August 25, 2015, months before the Journal story broke, three investigators from the F.D.A. arrived, unannounced, at Theranos’s headquarters, on Page Mill Road, with two more investigators sent to the company’s blood-testing lab in Newark, California, demanding to inspect the facilities.
According to someone close to the company, Holmes was sent into a panic, calling advisers to try to resolve the issue. At around the same time, regulators from the Centers for Medicare and Medicaid Services, which regulates laboratories, visited the labs and found major inaccuracies in the testing being done on patients. (The Newark lab was run by an employee who was criticized for insufficient laboratory experience.) C.M.S. also soon 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. The agency found that Theranos appeared to ignore erratic results from its own quality-control checks during a six-month period last year and supplied 81 patients with questionable test results.
People need to realize their authority comes from regulating sale. They couldn't regulate the device because it was not for sale. At the point that they began selling tests, they could regulate the nanotainer because it's a consumable, essentially sold to the customer with each test. I think they were probably involved as early as they could be.
Money quote:
"While Silicon Valley is responsible for some truly astounding companies, its business dealings can also 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. ... The financial rewards speak for themselves. Silicon Valley, which is 50 square miles, has created more wealth than any place in human history. In the end, it isn’t in anyone’s interest to call bullshit."
"While Silicon Valley is responsible for some truly astounding companies, its business dealings can also 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. ... The financial rewards speak for themselves. Silicon Valley, which is 50 square miles, has created more wealth than any place in human history. In the end, it isn’t in anyone’s interest to call bullshit."
Overall it's an interesting article, but I have a quibble with this paragraph about how it actually backed by much Silicon Valley:
"Silicon Valley, once so taken by Holmes, has turned its back, too. Countless investors have been quick to point out that they did not invest in the company—that much of its money came from the relatively somnolent worlds of mutual funds, which often accrue the savings of pensioners and retirees; private equity; and smaller venture-capital operations on the East Coast. In the end, one of the only Valley V.C. shops that actually invested in Theranos was Draper Fisher Jurvetson."
Crunchbase shows that on top of Draper Fisher Jurvetson, there's ATA ventures in Redwood City, as well as Larry Ellison's firm (Tako) and his personal trust. Depending on how you read that, that's 4 of 6 or 3 of 5 major backers coming out of Silicon Valley. On what basis is Bilton making his claim?
"Silicon Valley, once so taken by Holmes, has turned its back, too. Countless investors have been quick to point out that they did not invest in the company—that much of its money came from the relatively somnolent worlds of mutual funds, which often accrue the savings of pensioners and retirees; private equity; and smaller venture-capital operations on the East Coast. In the end, one of the only Valley V.C. shops that actually invested in Theranos was Draper Fisher Jurvetson."
Crunchbase shows that on top of Draper Fisher Jurvetson, there's ATA ventures in Redwood City, as well as Larry Ellison's firm (Tako) and his personal trust. Depending on how you read that, that's 4 of 6 or 3 of 5 major backers coming out of Silicon Valley. On what basis is Bilton making his claim?
Holmes and Draper were neighbors when she was growing up and his kids were childhood friends. Her dad's friend, Don Lucas was the Ellison connection. (Her parents are well connected in Washington D.C.)
ATA is ATA; I don't believe they are ever the first money into a deal (no slam on them, just FYI). So I'd say ATA is 1 for 5.
In general I don't know why they are described as the toast of SV by non-local journos (though Bilton knows the valley well) -- despite that big building on page mill they were never really that prominent IMHO especially because of their secrecy.
There's a ton to criticize about he culture of the valley but Theranos always stuck me more of a (non-Boston) east coast story that happened to be located in Palo Alto.
ATA is ATA; I don't believe they are ever the first money into a deal (no slam on them, just FYI). So I'd say ATA is 1 for 5.
In general I don't know why they are described as the toast of SV by non-local journos (though Bilton knows the valley well) -- despite that big building on page mill they were never really that prominent IMHO especially because of their secrecy.
There's a ton to criticize about he culture of the valley but Theranos always stuck me more of a (non-Boston) east coast story that happened to be located in Palo Alto.
The Theranos story reminds me of an episode of "The Big Bang Theory". Sheldon gets sent to jail. Why? Why do you think, for doing the same crap he always does but this time to a judge.
Theranos followed a standard SV script, sell the vision, create a barely working product. get people to use it, iterate.
You just can't do that in a regulated space especially when you can put people's lives at risk.
Theranos followed a standard SV script, sell the vision, create a barely working product. get people to use it, iterate.
You just can't do that in a regulated space especially when you can put people's lives at risk.
> One of the only journalists who seemed unimpressed by this narrative was John Carreyrou, a recalcitrant health-care reporter from The Wall Street Journal. Carreyrou came away from The New Yorker story surprised by Theranos’s secrecy—such behavior was to be expected at a tech company but not a medical operation. Moreover, he was also struck by Holmes’s limited ability to explain how it all worked.
Theranos also sounds similar to a cult, which may explain why her staff never figured out that they were a fake company:
> 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!”