[subpixel]

I haven't found an article or comment that gives me any insight into what Ms. Holmes might have been thinking. Did she earnestly believe she was on the cusp of some breakthrough, or that one was inevitable with enough brute-force application of investor money? Or was she shrewd and cunning to the core, calculating that she could siphon off enough money to make it worthwhile and spend enough money to spin the facts? I'm totally perplexed trying to put myself in her shoes and understand her motivation.

[headmelted]

I would expect the truth exists somewhere in between. I wouldn't rule out the possibility that:

* Holmes started with the best of intentions

* Theranos raised capital from starry-eyed investors that didn't carry out proper due diligence

* Realization set in early on that it wasn't going to work out

* Theranos got scared as so much of their time and other people's money had been invested

* The questions mounted

* Stalling became outright deception

* The realization of the consequences after the WSJ article became starkly obvious

* Theranos got spooked and doubled-down on covering up out of fear

.. but this is all speculation, and we'll never really know.

It does seem though that this didn't turn into fraud (which by the end it's quite clear it was) until late on.

It's a bit tragic, really. It seems Holmes could have come clean early on and avoided the worst of the fallout (but for whatever reason that didn't happen).

[ianstallings]

That part about due diligence is what gets me. How do you sink $700M into a company without going over it all with a fine-toothed comb? Where were the scientists and skeptics for the investors? They fell for the "here's a single customer saying it's good, and here's us in the news" routine. I could understand if this was a seed round for a few million in some software venture, but $700M for healthcare tech? This is incredibly negligent.

[ethbro]

If things working out better are predicated on rising tech stars admitting they're wrong and forgoing the accolades and adulation that accompany the identifier... I can see why things went the way they did.

That said, from a personal perspective, I honestly hope Ms. Holmes is either a sociopath or was actually in the dark about how bad things were (e.g. her direct reports were lying to her).

It seems like it would be a pretty excruciating mental burden to go into work every day for an extended period of time, knowing your company was inevitably failing, and just trying to keep the plates spinning. Ugh.

[tinymollusk]

Madoff said he is happier in prison than he was while fearing his scheme would be discovered. [0]

That doesn't really make me any more sympathetic to his criminal and unethical activities.

[0] https://www.cbsnews.com/news/bernie-madoff-happiest-ive-been...

[Sangermaine]

Yeah, committing fraud is pretty nerve-wracking. Won't anyone think of the con men?

[ethbro]

Let's not assume the VCs weren't somewhat complicit here. At best through lack of due diligence and thereby messaging their ongoing support for the enterprise.

At worst active or passive concealment because they had a large financial incentive that the fraud remain undiscovered.

Given that Theranos didn't IPO, I have a hard time feeling bad for investors (hopefully) taking a loss on this one.

[Nomentatus]

If you want completeness, there may be another possibility: we know that venture capitalists (who spend other people's money, for the most part) have used their positions to improve their sex lives (#metoo) contrary to the interests of their investors. It's just assumed none of them have ever actually handed over millions of other people's money to hairbrained projects in order to accomplish this. I very much hope that's so. But this is a risk of having too many male (or worse, bro) VC executives.

[subpixel]

Well, that line of thinking opens up a whole other angle of speculation (and of course that's all it is, so I won't detail it) regarding how events may have unfolded in this debacle.

[headmelted]

If the implication in this is that in some way investment was made in exchange for anything "else" from Elizabeth Holmes, then I have to say that I haven't seen any reason to think that and it's offensive to suggest that any kind of sex-for-investment scenario was happening without any basis for believing that.

I may have completely misunderstood what was being suggested here though..

[Nomentatus]

Not sure what you mean by "won't detail". Do you mean "won't include in the list"? Since you've tried to list all the possible speculative causes of this sort of debacle, without committing to any of them... it would surely be odd to omit one because, like the others, it's speculation. But I'm not sure what else you could mean, since no elaboration of the concept is required.

Granted, I've raised an especially unpleasant possibility (as no more than that), especially for consideration going forward; but fraud from other causes is also unpleasant and has to be considered despite being unpleasant and, according to the article, not necessarily an act of commission. To quote: "But the fact that Theranos was a gigantic fraud doesn't quite mean that it committed fraud." You've considered it, nonetheless, and I think that's reasonable - as speculation.

[joezydeco]

I honestly believe Holmes, as a sophomore at Stanford University, believed she had come across an idea that nobody had ever thought of before (low-volume microfluidic immunoassays).

The exception is that this science had already been explored, for decades, by the major companies that specialized in this technology. There simply was nothing to show that worked, yet, so there was nothing to commercialize. And the big players aren't going to publish their interim research, or Holmes wasn't motivated to actually do the homework.

She wasn't the first to think of it, but had enough traction (combined with a vaccuum of commercial products) to convince people she had, or had some mystery secret sauce that was going to make it work.

The fact that Theranos hired Cass Grandone, an Abbott Diagnostics exec that pioneered the previous generation of microparticle immunoassay/ELISA technology, and Grandone walked away after six months shows that he knew their science never worked, and was never going to work.

[kolpa]

Holmes' lab lead / advisor and orignal bizdev lead was a Dean of Engineering at Stanford. It's not just a sophomore not doing her homework; it's a $$$-eyed senior tenured professor at a premier research university who perpetrated and perpetuated this.

[Nomentatus]

A Steve Jobs-like ability to live in her own reality distortion field, plus much of the salesmanship, but minus Steve's very acute (not perfect) sense of what currently impossible problems were on the cusp of being solved, creating future practical products.

There were two companies that I simply couldn't understand, at all, from media reports in the last couple decades. One was Enron, 'tother Theranos. Turned out there was a reason why.

[kolpa]

Jobs's job was to look at stuff and see what he could sell, and to demand that employees invent more stuff to sell. Holmes' job was to invent stuff on demand. She tried (and failed) at a much harder job.

[Nomentatus]

Jobs set the tasks, often demanding very specific inventions and advances - plug and play networking for NeXT, a vastly cheaper mouse mechanism, etc, etc. Only in hindsight can those marked advances be taken for granted. Often very correctly. He was an engineer, starting on the front line as she did, just not the best - I don't know that she was, either.

[Sangermaine]

Yeesh, the Hacker News spin on stuff like this is absurd.

[wpietri]

My (limited) understanding of people like this is that they're not really thinking.

Among startup founders, puffery is endemic. You have a vision and you try to talk it into being. Whatever you're doing probably won't work, but you can't say, "Well, there's a 90% chance we'll fail," because nobody gives you money or labor then. You have to develop this (unjustified) confidence, and a deep understanding of what people want to hear. Silicon Valley culture definitely encourages this.

To succeed, one also of course has to develop an equally deep understanding of the reality of the business domain. But as we see with Theranos or Hampton Creek or uBeam, you can get surprisingly far on vigorous self-promotion and creating the appearance of success.

The thing that really keeps me awake at night is that there are surely a lot of companies that faked it nearly as much but managed to find a real business before things caught on fire.

[growlix]

On the "Delusion <-> Con Artist" continuum, I'm inclined to think she's more on the delusion end. If your intent is to defraud, you'd want to avoid a domain that's 1) scientifically accountable, and 2) subject to heavy oversight and regulation. She seems smart enough to know that.

This Vanity Fair piece provides a fair amount of character background: https://www.vanityfair.com/news/2016/09/elizabeth-holmes-the...

[eftychis]

> If your intent is to defraud, you'd want to avoid a domain that's 1) scientifically accountable, and 2) subject to heavy oversight and regulation. She seems smart enough to know that.

I would like to comment jokingly here with the saying "If you wish to [defraud] go into politics." But let's not support people in that cause.

Seriously, in this case it appears to me it was more and more a series of cascading lies that had to be added to cover the original lie. Which either stemmed from hope, misconception or lack of due dilligence.

If she thought actually her idea was going to work, and nobody raised a flag from her peers, faculty, ..., I think after some point the weight of capital invested made the executives follow the "fake it till you make it path".

I think in that case there was a lot of emotion, pride and "our name is on the line" that came into play.

However, in that case I wonder, if it is believable that major investors did not do their homework? Or are they also part of the game. Cass Grandone bailing on such a promising project should have been a red flag for any serious investor. I bet in that case, a lot of major investors knew and chose to follow the path. In that case they are accountable.

If the story reported about Tyler Shultz is right that means that George Shultz, and his peers, knew but turned a blind eye. In that case, I wonder if Holmes ended up as the scapegoat just to keep the boat floating a bit longer (or even recover). In that case her mistake was writing down a lie in an official document and signing it. Alas, I see clues everywhere that the whole board and investing body are complicit in this deception.

[ethbro]

It also takes a borderline impossibly strong will to have someone look at you, say "You're brilliant, and I want to give you money", and reply "No." Especially when there are others around you who (for their own profit) are echoing the same things.

I decided in undergrad that Honors programs exhibited a lot of the same characteristics. Kids in those tracks are treated with velvet gloves by professors, come to believe their own superiority, are inevitably unprepared for the real world / a colleague proving them wrong.

Hype trains create their own RDFs that effect even the subjects.

[tinymollusk]

Richard Feynman's famous quotation is applicable here: "The first principle is that you must not fool yourself — and you are the easiest person to fool".

False positives are often more dangerous than false negatives. This is why the "fake it until you make it" trope can come back to bite you in the read end.

[DoreenMichele]

I apologize for the formatting issues. It is one of the reasons I shut this blog down. But here are some of my thoughts from a few years ago:

http://micheleincalifornia.blogspot.com/2016/05/theranos-cul...

[magic_beans]

Wow this is a fascinating argument that rings — to me, also a woman, very much having also experienced some of this - so vividly true.

[AlexCoventry]

I'm skeptical that this a gender-specific issue. Lots of men complain about the difficulty of getting helpful feedback, too. And feedback is hard to provide, regardless of the recipient's gender. You're always walking a line between being sharp enough to be heard versus gentle enough to avoid offence. Ultimately, the recipient is still responsible for the consequences of their actions, and you just have to let them play it out.

[ScottBurson]

I can only speak personally, but I sure haven't experienced any of this alleged difficulty of getting feedback, especially of the negative variety. Sure, it's not the case that everyone I've mentioned one of my bad ideas to has objected to it, but there's always been someone willing to give me the bad news as they saw it.

I think it's entirely plausible that there's something gender-related going on. Women are often seen as less tough than men.

[DoreenMichele]

Lots of men complain about the difficulty of getting helpful feedback, too.

Yes, feedback is generally hard to get. But this situation really blew up crazily. It was valued at $10 billion at one time and was a whole lot of hot air.

My argument is that the "Gee, golly, whiz I am talking to a charming, pretty girl!" factor dramatically magnified the problem and allowed it to get blown far out of proportion, more than would have happened with a male CEO. I can't think of any other debacles of this proportion. This is one whale of a debacle. And I think the gender of the CEO is a contributing factor.

That doesn't mean it wouldn't have been a debacle with a guy at the helm. But the essence of my argument is that it would not likely have run on for so very long and hit such crazy big numbers before the bubble burst if the CEO had not been a pretty, charming young woman.