[cixin]

I'd love to have more insight into how this happened.

It seems like there's a pattern of high profile failures of highly funded science-based startups.

From the outside the science seems faulty from the start, the management team seems to have no strong scientific background.

Do investors really fund purely based on their force of personality? Personal connections? Do they see a big market and then ignore the scientific DD?

I'd love to understand this better.

[metaphorm]

> Personal connections?

In the case of Theranos I believe it was this. Elizabeth Holmes seemed to have an "in" with a lot of Washington D.C. influencers and I'm pretty sure her pitch was based on using those connections to score lucrative DoD contracts.

[trhway]

>Elizabeth Holmes seemed to have an "in" with a lot of Washington D.C. influencers

her father has that "in". USAID is sometimes a cover for CIA, and the "network effect" here has been extremely high.

[jackcosgrove]

The fact that her father is tied to USAID makes a lot of sense. USAID is the soft power arm of the federal government. It exists mainly to bribe foreign leaders to gain desired policy outcomes in their countries. It does do some good things when those align with politics.

If you needed to find government patrons willing to invest in a corrupt organization and engender goodwill at the same time, USAID is not a bad choice.

[frisco]

I think this is availability bias. Many large (> $100M) deals happen all the time in early stage life sciences but don't get picked up by the tech press or covered as "startups". A few high profile stories flame out spectacularly like this but they are typically already the outsiders to the industry.

To the specific scenario, when N is small all kinds of idiosyncratic bad decision making can happen.

[cixin]

Hmm.. this is significantly more than 100MUSD (630MUSD).

I'd love some examples of good plays in this area (that is, those that resulted not just in acquisition but viable products). This area being life science tools/diagnostics.

From the companies I've been it seems to be biased toward crazy plays that had a stack of money thrown at them. Honestly would like to hear about others, know where to read about others.

[EpicEng]

I've been fortunate enough to work at two so far.

At Aperio I was on the team that designed a digital pathology instrument. At the time this was pretty new tech. We were purchased by Leica a little more than four years ago.

After that I went to epic sciences. We will be releasing our first LDT this year in a partnership with Genomic Health. It's a blood based prostate cancer test with demonstrated clinical utility, the first of its kind in the CTC space as far as I'm aware.

[prostoalex]

It seems that if you have a 100% working technology, you are better off filing for patents and licensing the tech to a large incumbent.

The need for venture financing arises when you're anywhere below 100% reliability, and are temporarily in this "fake it 'til you make it" category where the company has to rely on regular doses of cash infusions without much to show for (potentially) years. The problem with that approach is that for some the "make it" never quite materializes.

[RA_Fisher]

I think it'd be cool to get a bunch of statisticians together to review Optimizely. Print out pages of the UI, remove the logo, and then ask them to write down opinions on the validity of the results UI they're shown.

[TeMPOraL]

Please, please, please do so!

https://news.ycombinator.com/item?id=10873226

[RA_Fisher]

The problem is that it's a lot of work and there's really no incentive to do so. At the end I worry the group could be retaliated against and/or be considered complainers. There really isn't any benefit to doing a review like this that I could see. Plus if you're a statistician like me, you already know the conclusion, a kind of blind study would only build credibility for non-statisticians. :-/

[maverick_iceman]

UBeam is another one of these faulty science startup that should fail soon.

[at-fates-hands]

>> the management team seems to have no strong scientific background.

When your CEO founded a company after only a semester of a Chemical Engineering program, there should be red flags everywhere.

[dagw]

Half the founders in Silicon Valley, including many of the most revered ones, are college dropouts.

[bbctol]

Therein is part of the issue: Silicon Valley is built on software, and software development is very different from medicine. Not trying to say one is harder or easier, but one is a much more unconstrained space of creation in which a really good, revolutionary idea and a strong mission can create a company, and in the other... a broad vision might simply be impossible. "We're going to build a social network online where people can post and see their friends' posts" is a nice vision that can be implemented in code; "We're going to diagnose lots of diseases based on a single pinprick worth of blood" is a nice vision that you can't actually do.

[plussed_reader]

I think their is in incongruence to medical development cycles and software development cycles that will keep most tech money from investing too reliably.

[HarryHirsch]

On the other hand, the Boston and San Diego medchem startups are founded by established scientists in their 40s. Computers are quite the anomaly in the space.

[Zanta]

The infrastructure requirements are a lot lower in tech. It's possible to be a college dropout and already have many years and projects worth of experience under your belt. It's pretty damn hard to do bio and chem without a proper lab.

[karthikb]

The vast majority I have run across have more traditional educational backgrounds, many with advanced degrees through the PhD. It's just not as fun for journalists to profile the 37 year old PhD as the 19 year old dropout.

[dagw]

You're right of course. I should have said half the founders that get mentioned on sites like this one and TC.

[driverdan]

Except they're building websites and mobile apps, not complex scientific instruments.

[EpicEng]

Yeah that matters a lot less when you're building web services. We're talking science here, not learning the latest web framework.

[pkaye]

But most of those startups don't need a scientific background to form.

[forgetsusername]

>I'd love to have more insight into how this happened

There's the one story that you can read in articles like this, which will provide details of the rise and fall:

http://www.vanityfair.com/news/2016/09/elizabeth-holmes-ther...

But, there's another side: it happened because you weren't allowed to question Elizabeth Holmes. The beauty of the Internet is its natural history keeping. If you want more insight into how this sort of thing happens, look no further than early discussions about Theranos on these very boards. It was difficult to be critical, and supporters implied that the naysayers were merely "sexist". Of course, this was happening when tech industry sexism was peaking in the news cycle, and I belive that quieted some criticism.

[icebraining]

If you want more insight into how this sort of thing happens, look no further than early discussions about Theranos on these very boards. It was difficult to be critical, and supporters implied that the naysayers were merely "sexist".

Where?

Story from two years ago, before it blew up: https://news.ycombinator.com/item?id=9440595 - Lots of criticism, some even calling it a scam, yet no mention of sexism nor heavy downvotes.

The original submission: https://news.ycombinator.com/item?id=6349349 - Some criticism, not downvoted nor called sexism.

Tell me, where are all those comments warning us about the impending doom at Theranos and getting silenced by supporters calling them sexist?

[forgetsusername]

>Tell me, where are all those comments warning us about the impending doom at Theranos and getting silenced by supporters calling them sexist?

There have been nearly 500 Theranos articles posted here over the years. You conclude it didn't happen after looking at two?

As someone who participated in the conversation, I know it happened. I'm not overly concerned with combing through the articles to convince you. The OP asked "how this happens"; if you don't think "girl power" at a time when sexism in tech was all over the place was one of the factors that led to an unqualified 20-something overseeing a potential giant fraud, I'm not sure what to tell you.

[icebraining]

> There have been nearly 500 Theranos articles posted here over the years. You conclude it didn't happen after looking at two?

I looked at the two I could find with comments from before the whole thing blew up. The vast majority of posts about Theranos are post-blowout, from the past year and half, not those early discussions you were referring to.

> if you don't think "girl power" at a time when sexism in tech was all over the place was one of the factors that led to an unqualified 20-something overseeing a potential giant fraud, I'm not sure what to tell you.

I find your restatement of the previous claims inaccurate. You said "It was difficult to be critical, and supporters implied that the naysayers were merely "sexist"", which is much more specific that her gender having been a factor in story. Yes, it might have. Not in the way you portrayed it, though, in my opinion, at least not in HN.

[jamespo]

I'm sure you can find some examples then

[forgetsusername]

I'm sure I could, as much as I'm sure I won't be bothered to.

[ajeet_dhaliwal]

This is the article I read to learn what had went on last year and it is quite thorough. I'm looking forward to the movie mentioned in the article, seriously, I think it will be fascinating. There are scam companies and people embellishing the truth all over the place but they are usually found out fairly quickly, the fact that Theranos received so much investment and entry into various speaking engagements and clubs is what makes this so interesting. I wonder if it had not been medicine related and putting peoples lives in danger whether the show may have continued for longer.