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Comment by madaxe_again | Hacker News Reader

I've been maintaining for a while that Theranos is a very cynical investment vehicle, and has little to do with medicine. The backgrounds of those connected, of her family, of the trajectory and direction of the company (everything has been very PR and financial press oriented) suggests that their key mission is to grow the value of the company, rather than do anything novel.

The sad thing is, this seems to be an increasingly common strategy in a certain segment of the business world, and it brings value to nobody ultimately - it just separates optimistic investors who just see a wunderkind and incredible new technology from their money.

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their key mission is to grow the value of the company, rather than do anything novel

I propose that this is the majority of startups and an even higher percentage of companies generally.

I even wrote about that distinction last week (https://medium.com/@andrewkemendo/startups-need-to-start-val...) and the response was basically: The only way anything should be evaluated is based on return.

Very few of us actually give a shit about doing something novel.

> Very few of us actually give a shit about doing something novel.

Most novelty presents outside of business in general, including startups. Startups generally are applying the novelty (that is no longer novel) that is perceived as potentially valuable to see if it actually is.

Ideally, startups should be focused on doing something _well_, rather than doing something _novel_. To the extent that novelty occurs, it should be a side effect of that objective.

I think the whole ethos behind a high-tech startup is that you do something well by implementing a novel (in the sense of adoption rate) process or technology.

There is certainly room for disagreement, but all of the "high tech startups" that make up the startup zeitgeist, were exactly that.

> I think the whole ethos behind a high-tech startup is that you do something well by implementing a novel (in the sense of adoption rate) process or technology.

That might be the ethos, but it isn't the reality. Most startups aren't first movers, and most of the ones who succeed aren't either.

Throwing in "in the sense of adoption rate" is kind of silly though, no? Every mom & pop shop has its own unique process that hasn't been widely adopted.

I swear, those Zappos shoes are just like the ones you get on other web sites.

Most startups aren't first movers

I'm not talking about those, and it's not even necessary to be a first mover so long as the startup is overhauling how things get done outside of the current dominant market leader.

I'm talking about Microsoft, Uber, Amazon etc... the ones who have literally changed the way people live.

Those are the ones that actually held up the ethos.

> I'm talking about Microsoft, Uber, Amazon etc... the ones who have literally changed the way people live.

...or they road a wave...

You didn't mention Walmart. ;-)

Uber has had a number of competitors, back in their day when they were "changing the world", so did Microsoft & Amazon. Hell, Microsoft's operating system ride started with an operating system they bought from someone else.

If you grow at a crazy fast rate to become a household name, you inherently are riding some kind of wave change. I don't think that was what the MIT Microfluidics PhD friend was referring to as "novel". If you want to call that "novel", then you are going to have a much harder time making the case that Theranos isn't trying to be novel.

You didn't mention Walmart. ;-)

Well they are the ones being disrupted currently. They did it in the 80s and 90s to Sears and the rest.

you are going to have a much harder time making the case that Theranos isn't trying to be novel.

I actually think Theranos is trying to be novel, my initial response was that maximizing value isn't something new in the valley. I have no clue on whether they are or not in reality, but they portray themselves as actually making new technology - my guess is that they just can't do it and are trying to buy time.

It's not exactly true that startups that have no desire to innovate provide a negative or zero value to their industry. In competitive strategy, a small company that threatens to take a slice of the market of a large monopolistic company is good persuation for the monopolistic company to innovate.

While I am not going to question your cynicism, it would appear the aim was more to exploit the USA military not do a standard pump and dump. Look at the board.

Sounds like an accurate description of a ponzi scheme.

I believe the phrase is "Fake it 'til you Make it" - whether this is a legitimate approach tends to only be obvious in retrospect.

It is troubling if this is the mantra of a manufacturer of medical equipment, however.

> their key mission is to grow the value of the company, rather than do anything novel.

Well, from an investor's perspective, doing anything novel is fraught with risk, and growing the value of the company is what feeds my ROI. If there is a way to grow the value without taking that risk, they ought to do it. Be novel only when necessary.

Not everything is about ROI.

Of course not everything is about ROI. However, the VC model is predicated on outsized returns. Without that they don't exist. Novelty's value to a VC is that it makes it more credible that they'll see such outsized returns.

When founding a new organization, you have a choice of making it for-profit, or non-profit. If you choose for-profit, you are making a statement about your priorities; when you take VC money, the term sheets are very clear about the ambitious ROI you are going for.

I think your point about profit vs non-profit is a good one.

Unfortunately I have yet to see a non-profit or FOSS bring widespread changes to the way people live and work - so we are kind of stuck for a while with this model eh?

I dunnoh. The Linux Foundation/EFF/FSF/etc. seem to have done a fair bit. ICANN too.

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