[codezero]

There has been a lot of critical attention towards theranos. I have no opinion whether it is granted or not, in general I feel critical is always good, but the volume is so high, does anyone have any insight into the intense scrutiny theranos is receiving?

[danso]

The origin story of Theranos is carved from pure Silicon Valley mythril: 19-year-old drops out of Stanford to build a massively disruptive startup and in short-order, receives hundreds of millions in funding and near-decaunicorn valuation. On top of that, the founder is a photogenic woman who dresses and speaks and acts as if she were Steve Jobs incarnate. And unlike Facebook and most other tech startups, Theranos was outright in its mission about achieving a meaningful and life-saving benefit for all of humanity.

In the current debacle, you again have all the classic ingredients in force: pride goeth before a fall, the extreme secrecy, the aristocracy > meritocracy, venture capitalists all wearing the VC equivalent of beer-goggles, the ignorance and laziness of tech media exposed. You even have a co-inventor who committed suicide and, for no obvious reason, Henry Kissinger is just hanging out.

The fact that Theranos aimed so high in its disruptive mission has come to bite it a bit...it's one thing to butt heads against government regulations when just making it easier for people to catch a ride or sleep on a couch. A lot different when you're allegedly subverting regulations explicitly constructed around human health.

Basically, there's popcorn for everyone.

[SilasX]

>You even have a co-inventor who committed suicide

I had to look this up -- I guess you're referring to Ian Gibbons?

>>In 2005, Ms. Holmes hired Ian Gibbons, a British biochemist who had researched systems to handle and process tiny quantities of fluids. His collaboration with other Theranos scientists produced 23 patents, according to records filed with the U.S. Patent and Trademark Office. Ms. Holmes is listed as a co-inventor on 19 of the patents.

>>The patents show how Ms. Holmes’s original idea morphed into the company’s business model. But progress was slow. Dr. Gibbons “told me nothing was working,” says his widow, Rochelle.

http://www.wsj.com/articles/theranos-has-struggled-with-bloo...

[chillwaves]

This is the most legendary synopsis of our times. Seriously, the use of mythril? Brilliant and the rest is so on point. It's hard to believe this whole thing is real. I feel like we are living in a sitcom.

[anon8418]

Lots of similar stories... Check out UBeam. It's basically Theranos-lite: outspoken female founder (also light on the technical credentials), revolutionary vision/product-promises (wireless charging), and tier one VCs (~$30mm raised from a16z, Marissa Mayer, Mark Cuban, etc).

Like Theranos, the story is coming apart at the seams... I haven't seen this discussed here but UBeam is quietly raising another round via some Israeli equity crowdfunding site. Crazy!!! This after raising Series A from a16z!

Will be interesting to see how many of these unicorn type startups are around this time next year.

[codezero]

What does this have to do with the photogenicness of the founder? What exactly did Theranos do wrong here as a company? How does she dress? It didn't even seem like a favor. Does she wear black turtlenecks and jeans? I'm really confused about your comment. Does it address what I asked at all? Can you elaborate?

[danso]

Yes, she wore black turtlenecks...according to reports, every day since the company was started. Why does being photogenic matter? Because you're more likely to have a massive photo spread/cover devoted to you. Steve Jobs himself was very photogenic. But Theranos is much more affected by Holmes as the face of the company. Because the company never talked about its tech in detail, there wasn't much else to focus on except the youth and passion of its founder.

[Nutmog]

Those were reasons why the media and public are interested in it. Yes she does wear black turtlenecks. I'm sure the way she dresses is part of why people are so interested in the stories. It's probably largely schadenfreude, the kind the celebrities are usually subject to when they put on weight or get arrested.

[joezydeco]

I don't agree that this is schadenfreude.

Here was a company that popped up, literally out of nowhere, claiming to have a handle on microfluidic diagnostic assays...something that the major players in the industry haven't been able to get off the ground since ELISA came along in the 1960s.

The skeptics were quiet at first. I mean shit, they landed Walgreen's and Kroeger! It must work, right?

Now we discover a little more of the truth and it's a lot safer to say "put up or shut up".

[kzhahou]

It's absolutely schadenfreude! Company appears to have led VCs, investors, and the public, and is actually getting called out for it. Lots of people (myself included) thought the whole thing smelled funny a while back.

[Pyxl101]

It's a company with a high valuation, that's raised a lot of money and has been in the industry for 11 years (if I recall correctly) by now. Investigative journalism raised concerns that the company is a sham, which the company exacerbated by reacting in a secretive and defensive way - unorthodox approach for a company working in a field where scientific testing and results are the norm, and where breakthroughs are patented and (eventually) shared somewhat openly.

Imagine if a search company like Google had been founded 11 years ago, and claims to have revolutionized web search, but then a reporter exposed that they don't actually use any of their own search technology at all (!), and instead they pay to license Microsoft's search technology Bing instead (!). And a major industry regulator has claimed they're operating outside regulation (FDA in this case for Theranos). When challenged about whether their technology works, they respond with what amounts to hot air and empty claims. That's where Theranos is right now.

I was inclined to side with Theranos initially, since I've seen my own share of reporting hit-pieces where my insider knowledge made it clear the reporting was highly biased and essentially nothing but an all-out attack on the company. However, my opinion of them has been turning toward skepticism since I've seen them respond to criticism in a secretive way and by failing to substantiate their claims about their product. The cynical part of me is beginning to believe that Theranos is refusing to share real details because the data doesn't look good for them.

If Theranos has not developed any commercially viable breakthrough technology for fingertip blood draws, and will continue to operate indefinitely by conducting regular venous draws using other firms' equipment, then their investment value cannot be sustained, because that's a substantially weaker business model, and different than what was claimed. Selling fingertip testing on breakthrough technology would make them highly differentiated (unique, only ones to do it), whereas reselling other firms' venous draw technology is minimally differentiated (they'd just be a lab, same as any other).

Hacker News is a forum of entrepreneurial and hacker-minded folks, and I think we're all worried about what it means for that sector of the industry, or the tech industry as a whole, if the company turns out to have been a sham. It would not be good for Silicon Valley if Theranos turns out to be anything close to a Ponzi scheme. If in the end it's discovered that Theranos' technology does not work, that's how they may be viewed. It's an interesting story that concerns people.

[w1ntermute]

> Hacker News is a forum of entrepreneurial and hacker-minded folks, and I think we're all worried about what it means for that sector of the industry, or the tech industry as a whole, if the company turns out to have been a sham.

Theranos has nothing to do with the tech industry. Recent concerns in the tech industry regarding valuations have to do with the viability of business models, not the viability of technology. No one's questioning whether Uber's technology is feasible - they're interested in things like the unit economics and other factors that impact long-term profitability.

> It would not be good for Silicon Valley if Theranos turns out to be anything close to a Ponzi scheme.

Ponzi schemes are a specific type of fraud involving unsustainable recursive financing. If there's any impropriety at Theranos, that would probably be (another type of) fraud.

[codezero]

Fair assessment. Thanks this is what I'm looking to hear, it really helps.

[Dr_tldr]

So your question isn't "what's going on here?" but "why do so many people want to know what's going on here?"

Is Theranos holding open tryouts for their PR department or something?

[codezero]

Nope. It's definitely what's going on here. Sorry I'm not very good at enunciating that. It sounds like Theranos is providing a really useful service but there are a lot of hurdles and they are either not doing anything new, or they are and it's not better than what already exists, but it is hard for a casual observer which is all I am to know which it is.

[Dr_tldr]

Yeah, I just re-read your original post and realized you're probably not a native speaker of english (or were writing in a hurry on a phone), my apologies!

Theranos is catching a lot of flak right now because they claim to be a company founded on this awesome new technology, but they seem to be use existing technologies for all the services they currently offer, they won't show people their wonder-device, and the story of the way the company was initially funded and valued keeps getting sketchier.

[codezero]

The use of existing technologies seems like an unimportant factor. Uber uses cars, more to the point they started using private limo contractors and still do. They nonetheless provided a service above and beyond what you could get before.

Is Theranos using existing technologies and still not providing value above the incumbents? This is what I really want to know. I just don't know.

[Pyxl101]

No, I think that their use of existing technology is exactly the heart of the issue. They claim to have made a breakthrough in how blood tests are conducted that allows them to run a large set of blood tests on a tiny fingerprick blood sample. An investigative journalist then reported that they're not using this technology at all, and all the tests they sell commercially are regular venous blood draws run through testing machines purchased from other companies.

If Theranos is not using their fingerprick blood testing technology, then they are not using their technology commercially at all. So if this is true, then they're a company that's been in business 11 years, has a massive valuation, and has not developed a commercially viable technology yet. It's as if a web search company like Google had been around 11 years, was worth >$1 billion, and then was found to be exclusively using and rebranding Microsoft's search technology instead. It's a scandal.

Theranos' valuation cannot be sustained anywhere near its current value simply by selling blood tests conducted on equipment manufactured by other firms. Theranos' claim to fame is a breakthrough in fingertip-prick blood testing technology, and they have no way to differentiate themselves in the market without this breakthrough technology - their investment value cannot be sustained simply by reselling technology made by other firms.

[mattmanser]

Unimportant factor?

A better comparison would be if Uber had claimed they had self-driving car before they'd even entered the market, had started doing rides, and then it turned out Lyft drivers were surreptitiously hidden inside the front of the car and were actually driving instead of the mystical self-driving computer.

That's how it looks at the moment with the way Theranos is behaving.

[Dr_tldr]

...I think you just came up with an amazing new startup. All we need now are some Iron Man halloween costumes and some disgruntled Lyft drivers.

[nradov]

The funny thing is that this is exactly what some lean startup advocates would propose as a "concierge MVP" to test the viability of the self-driving car market before spending money on actually developing the technology.

[codezero]

How, and to whom did Theranos over-promise?

[ascorbic]

This is more like if Uber claimed to be using self-driving cars, but actually had a guy sitting in the trunk doing all the driving. Or maybe a chess machine with a person inside it. Sure it works, but it's a little less interesting.

[adevine]

In the beginning, the secret sauce of Uber was still its technology - being able to order a car on your phone, seeing where the nearby drivers are, not having to pull out cash or a credit card at the end. This made the experience much better than ordering a cab.

[codezero]

Yes I get this. I am wondering how Theranos is failing to take advantage of other technologies, despite using existing ones, just like Uber did. What exactly has Theranos failed to deliver?

[codezero]

Writing in a hurry on a phone after a few beers and a hockey game. :)

[Aleman360]

I suspect it's because medical stuff deserves more scrutiny than the average tech startup.

[codezero]

This is a great point. Thanks for pointing it out.

[randycupertino]

It's because Theranos with it's pretty blonde Stanford dropout founder was an absolute media darling for 7 months to a year, could do no wrong, had heaps of fawning puff piece press. Now that their questionable tech has come to light, the press feels burned and is vengeful of being caught giving them a blowjob without due diligence. So now the media swings the opposite way and lashes out at Theranos to overcompensate.

[codezero]

again, why does the attractiveness and hair color of the founder have anything to do with this discussion?

[randycupertino]

Because they used it as a way to cultivate attention to their company. She was a Glamour "Woman of the Year" http://fortune.com/2015/10/29/theranos-founder-ceo-elizabeth...

Her pedigree, looks, family $$, being a Stanford dropout, blonde haircut, blue eyes, Steve Jobs drag and surfer voice (she took vocal coaching to deepen her voice to sound more like a leader) all combined as tantalizing catnip to the press. Theranos knew this and purposely stirred up a media storm focusing singularly on Holmes, NOT on the technology. Almost like it was constructed like a sleight of hand so everyone would be distracted by the cult of personality around the pretty blonde founder and ignore their lack of peer reviewed research that their testing methods actually worked.

[DanBC]

Her looks are mentioned here because her looks were mentioned in all the early promotional coverage. Her looks are not relevant here, but the fact that every media place that spoke about theranos also mentioned her looks is on topic in threads about theranos.

[eruditely]

Your vigilance is cringe inducing. please stop.

[codezero]

You're welcome not to answer questions I ask. I'm not breaking any rules in asking them here in a community where I often get extremely insightful answers to questions. I'm happy to admit ignorance about a lot of the startup drama I read here. I'm sorry this rubs you the wrong way.

[anon8418]

Because it was an influencing factor in the initial media infatuation with Theranos.

If u goto their website a lot of the media and copy is very founder-specific. Almost like they are trying to build some cult of personality around her.

[discodave]

1. Multi billion dollar valuation.

2. In the health space, being trustworthy is kinda important.

[codezero]

Are the incumbents really trustworthy? I don't think so, but I guess it's becaus the entire industry is so nebulous.

[bigchewy]

yes, by and large the incumbents comply with regulations, use industry standard equipment that has been tested and approved as being accurate for its intended use, etc.

[codezero]

Ok so if Theranos is using the same equipment and tests, what are they doing wrong?

[empressplay]

Theranos' initial value proposition was to provide a blood test that didn't require intravenous draw, which most people don't like because it's painful and off-putting. They proposed technology that could do most common blood tests from a drop of blood, collected from a pin-prick.

Their initial value proposition was not that they would simply open blood collection sites in pharmacies or supermarkets. That could have been a serviceable proposition had it been theirs, but it wouldn't have justified their huge valuation. Their valuation is based on the idea that they would be able to do most blood tests from a drop of blood, collected from a pinprick. They have failed to accomplish this.

I hope that clears things up for you.

[pkaye]

It would be like Tesla promising an all electric car but instead having it running on a gasoline engine.

[danso]

Not being forthright about the scope of their technological progress and innovation, which is ostensibly the basis of its $9 billion valuation.

[codezero]

Who must they be forthright to? I mean, I agree, obviously, but if they aren't forthright and their investors are still paying, the investors suffer, how is the consumer suffering here?

Are they promising a product that they aren't delivering?

Sorry, I know I'm being difficult here, I would really love to chat with someone who is very invested either for or against, or both, this approach, so that I can understand better.

Seriously, if you, or you know anyone who has time to chat about this, send me an email. I don't intend to be as contrarian as I know I appear to be (and probably am being) here.

I really care, and just for purely reasons of curiosity. Anyways, ping me if we can chat.