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Comment by bedhead | Hacker News Reader

I wonder how far Liz Holmes is going to take this thing. I wonder when it hits the breaking point where even she accepts the cold hard truth that this company that was famously valued at $9b is pure vaporware, built on little more than smoke and mirrors. Does the company need to file bankruptcy? Do investors need to sue to recover what money is left? Do insiders need to be criminally charged? I wonder...

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Serious question: Even if Theranos goes down in flames, won't she walk away from this with a fortune? Maybe not quite the fortune she thought, but still many millions?

Quite likely. In later rounds, founders are often strongly encouraged to take money off the table by selling equity.

This isn't shady, it's so the founding team stops worrying about money and focuses full-time on the company. Ramen-profitable is good in the short term, but time becomes increasingly valuable as a company grows.

This is true for many companies, but in the case of gross negligence[1], simply the action of her cashing out could be securities fraud and/or grounds for clawing back the money she took out.

[1] which I'm not accusing Holmes of, but it's not out of the question, either.

It's common and its bullshit. If founders take from funding then so should employees. They should be able to stop worrying about money as much as the founders.

> This isn't shady, it's so the founding team stops worrying about money and focuses full-time on the company.

Uh, no. It's so that the founders won't sell the company at a mere 4-5x rather than then 20-100x that the VC's want.

If it was genuinely about the company, they'd let all the initial people take some stock off the table. Instead they only allow the people who could sell the company to take stock off the table.

Big difference.

I'd assume that at this point she sold off at least a few million dollars in shares.

She came from an old money family, so she will inherit millions regardless of whether she made (or will make) anything off of Theranos.

I've seen her driving around town, she has some insane sports car that looks like a rocket ship. I couldn't even recognize what it was (Ferrari? Lamborghini?) it was so unusual looking.

Really ? in the media(i think the new yorker, pretty respectable) she was portrayed with the life style of a monk.

It's quite possible that some clients will find grounds to sue if something serious is proven.

The letter doesn't seem to be saying the tests don't work, or that they're vaporware. It is only finding "noncompliance". Looking at the first item, "Hematology" (https://www.law.cornell.edu/cfr/text/42/493.1215), it could just be that one of the conditions here (https://www.law.cornell.edu/cfr/text/42/493.1269) wasn't met. Those look pretty easy to fix!

Of course, yes, there could also be all sorts of crazy sketchy voodoo. Ya never know.

There is more than this recent fiasco to back up the person you're replying to:

http://arstechnica.com/science/2015/11/new-study-spills-doub...

Interesting, I hadn't seen that! But even if it only works for finding herpes and other there-or-not infections, they still might justify their valuation.

they will pivot. If i remember correctly from the magazine articles her original idea 10+ years ago was cell-phone attached to some diagnostic gadget. May be time to revisit, now with all the money and manpower.

Except the "diagnostic gadget" is the part that is not working here. Attaching a cellphone won't make things any better.

Probably not, but seems like a good way to turn a bad business into a worse one, but one you can claim is "Mobile" and attract more VC cash!

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