Don’t Blame Silicon Valley for Theranos
nytimes.com
nytimes.com
0: http://www.nytimes.com/interactive/2015/10/12/t-magazine/eli...
Also, this is an opinion piece. I don't think Randall Strauss is an employee of the New York Times, although he once was.
This should be in a textbook as the archetypal "No True Scotsman" argument.
The headline reads "Don't Blame Silicon Valley" not "Don't Blame Top Tier Silicon Valley Experienced Life Science VC Teams"
This is the article's thesis:
"It is tempting to see Theranos as another example of Silicon Valley hype — a company based on a wisp of an unproven idea becomes a multibillion-dollar phenomenon with the backing of pump-and-dump venture capitalists.
In fact, however, Silicon Valley’s most experienced investors in start-ups saw red flags at Theranos before anyone else. The Theranos saga shows just how well Silicon Valley does its homework"
A corrected sentence could be something like "The Theranos saga, while showing how SV fundraising hype can incinerate billions of dollars, also has a small story involving a few specific guys who know life science who aren't as easily fooled."
But they didn't write that.
[0] https://en.wikipedia.org/wiki/No_true_Scotsman
Person A: You can't blame Silicon Valley for this
Person B: But these people are all Silicon Valley players
Person A: Ah yes, but they're not true Silcon Valley players
I think the author's point could be restated as, "if you're going to say that what happened at Theranos discredits Silicon Valley, then let's define what we mean by 'Silicon Valley'".
Specifically, the author is pointing out that "Silicon Valley", when used colloquially, might mean "Silicon Valley venture capital firms with a track record" or it might mean "any qualified investor calling themselves an 'angel' or a 'VC' who buys private company stock". The difference between the former and the latter is not purely rhetorical, as in the definition of the NTS fallacy; it is, as I mentioned in my previous comment, measurable and falsifiable. And the author is basically saying that people in the former group should not be stigmatized by the failings of certain people in the latter group.
He was apparently an accessory to his daughter's best friend ripping off billions of dollars in investor money based entirely on hype and insiderism, descending into a scandal currently under federal investigation. In Silicon Valley.
Page Mill Road to be specific.
Getting op-eds placed in the NYT isn't going to take the stink off this one. Though I am sympathetic to the instinct to try.
Him investing in Theranos only at best shows that he thought that it had been appropriately de-risked enough to justify a tiny pre-seed investment, not that it was later de-risked enough to justify the seed, A, B, etc.
"the start-up ecosystem built around the 15 or 20 venture capital firms in the tech sector and a similar number in life sciences that account for almost all of the successful companies."
That might come as a surprise to most of the people who think they work there.
Within the general context of what "Silicon Valley" means, no.
Is that fair?
In fact, VC firms often make those kinds of investments solely as footholds for potential future investment. To illustrate again that that is a relatively low amount of money from a committment perspective, most VCs have an explicit policy of not investing in companies that compete with portfolio companies, except for companies they funded for seed (e.g. seed is enough of a crapshoot that they won't always hold themselves to not investing in competitors).
If not now, as recently as 1-4 years ago, you could seriously have gotten three times that kind of seed funding by just being a team of two ex-FB/Google/etc employees with a semi-plausible idea and prototype.
Clinkle also lost a ton of money for a lot of pretty smart people. I blame silicon valley because it was their fault they made a bad investment (as much as SV can be a collective group). I mean, I bet like 1/10 companies they fund fail. Some comitted fraud, some had shitty biz plans, some failed for no reason.
Regulations are in place for a reason.
(There was a deaf student in my upper division math courses and I worked for a communications company with deaf coworkers for a bit.)
First "business" has no concept of "ethics". This is one of the classic market externalities which leads to non-pareto-optimal outcomes.
Second, the "culture" doesn't just reward "hyperbole and fraudulent misrepresentation of business success." If we take your statement at face value, there would be no venture capital firms because they would all be throwing away their money, without any return, until they ran out.
The unfortunate truth is that there _is_ money to be made with Silicon Valley type investment. There _are_ economic inefficiencies which lead to undesirable market outcomes, but it's not because venture capitalists are just throwing money away for _no_ reason.
And finally, Theranos appears (at least to me) to be an exception rather than a rule. And while I don't agree with everything the article says or the way it says it, I think there are a few important takeaways.
Theranos was able to get funding because of who they knew...it calls into question whether or not they would have been able to get funding (or the amount they did) if they had been just another start up _without_ connections. It documents the times Theranos was _denied_ funding by Silicon Valley venture capital when they tried to obtain funding the traditional way.
It also points out the disproportionate amount of media coverage they had and questions whether it had a contributory role to Theranos' rocket-like trajectory. Heck, I would bet many people who use/rely on our software have never heard of my start-up, we hardly get covered in the media. In general I think the start-ups that get large amounts of media coverage are exceptions to the general rule.
Anyway, sorry for the long comment, and I don't want to take away from the fact that there ARE problems with Silicon Valley and business regulation in America in general.
Ethics can be modeled as an externality, but they don't have to be.
Hypothetically, let's say investors were taken to task publicly every time one of their investments blows up - not a simple company shutdown, mind you, but when the company is later proven to be doing really shady, unethical things. Ultimately, this would result in a tangible cost to the investment firm, because investment firms value their brand. In the long run, they would adapt, and take steps to guard against this risk before making investments.
Is that ethics? Or is it just the market acting efficiently, by pricing in the risk-adjusted expected future costs?
You can look at it either way, but at the end of the day, it doesn't really matter. Whether or not businesses have a concept of 'ethics', they can be forced to act as if they do, which amounts to essentially the same thing.
Ah excellent point! But your hypothetical offers an external market correcting force. Another external market force would be government regulation (take for example the recent government laws forcing retirement investors to put their clients first).
The lines get pretty gray when you try to figure out what should be considered part of the market and what should be considered external to it. Personally, I would consider public perception outside of a traditional "market" model...but like I said, I am by no means an economist.
I also wanted to mention that most companies think in the short run and therefore often make self-harmful decisions to themselves. This relates to your comment:
> ...pricing in the risk-adjusted expected future costs?
Companies can only sell products to people that can afford them, so by keeping wages low, they are actually pricing themselves out of the market. A classic and oft referenced counter-example to this is when Henry Ford payed his factory workers well-enough that they could afford to buy the cars they were assembling.
Anyways, I obviously like to philosophize about economics far too much and don't want to bore anyone :) I am also NOT an economist so I have a rather limited perspective.
No worries, and thanks for responding.
> Personally, I would consider public perception outside of a traditional "market" model...but like I said, I am by no means an economist. Another external market force would be government regulation (take for example the recent government laws forcing retirement investors to put their clients first).
Speaking as an economist, I'd say it's pretty standard for economists to consider public perception (brand value) to be part of the decision-making model. In fact, it's essential - plenty of decisions can't be explained rationally unless you account for intangible assets and revealed preferences.
Likewise, it's common for non-economists to think of government regulation as an exogenous force, but from an economic perspective, government action is very much a component of the market - it exists as part of the market, not outside it.
> Companies can only sell products to people that can afford them, so by keeping wages low, they are actually pricing themselves out of the market.
This is a common talking point among advocates of wage floors (e.g. 'minimum wage'), but you'd be hard-pressed to find an economist who agreed with that statement as written, even if you're looking only at economists who already advocate for wage floors. (There are some economists who advocate for wage floors, but rarely using that line of reasoning). Labor economics is a complex subfield, though, (not to mention politically charged these days), so I'll just say that companies do price in risk-adjusted expected future costs (just not always with complete or accurate information, or with the outcomes one might like), and leave it at that.
Interesting, I was under the impression that this was sort of the bold new frontier for behavioral economics. I would agree that plenty of decisions can't be explained rationally without accounting for intangible (non-price/revenue driven) effects, but hadn't realized that the specifics were widely accepted by "traditional" economists.
I also, myself, am skeptical of revealed preferences (specifically whether or not they can be revealed with respect to ordinality). But perhaps it is now widely accepted?
> Likewise, it's common for non-economists to think of government regulation as an exogenous force but from an economic perspective, government action is very much a component of the market - it exists as part of the market, not outside it.
Oh gosh, its been awhile, so my command of the proper terminology and referencing is severely lacking. But I agree with what you are saying...what I was trying to (poorly) articulate was that in a non-regulated, laissez faire market involving only Suppliers and Consumers (Demand) without an external correcting force acting on the market the market outcome would be inefficient. Of course from an economic model standpoint, the "new" market incorporates the regulation...and the government is actually an actor within the market. My lax terminology is probably a result of a) not being an economist first and foremost and b) usually having politically oriented discussions with individuals who like to call Right-wing economic view points "capitalism".
> This is a common talking point among advocates of wage floors (e.g. 'minimum wage')
Well, truth be told, I am not a fan of wage floors...I am more a proponent of basic income. And Labor economics is definitely complicated and the actual economics usually aren't the basis for the political positions (at least as I understand it)...but one rather contrived example which stuck with me was: If you are a company selling a $10 good, which market would you prefer: 100 potential buyers with $10 each or 1 buyer with $901 and 99 with $1? Which is what motivated that last comment...which is rather narrow and analysis thereof far above my own narrow view of economic theory. It just resonated with me.
Pushing for hyper growth above all else can lead to cutting corners. It's also a common mistake for inexperienced entrepreneurs to make.
Any way cheers!
A culture where regulation is a hinderance that can be ignored, rather than something that protects businesses and customers.
The difference is in outcome: Uber's ignoring regulation has led to a better outcome for the average person. Theranos.. hasn't. Careful not to conflate "following the rules" with anything but obedience.. the outcome is more important.
No they haven't. Not all regulations are equal. Most of the regulations Uber has ignored are probably examples of regulatory capture and shouldn't exist in their current form. The regulations Theranos ignored are important, even critical, for patient safety and the integrity of medical testing.
The idea that it's not the person's job to decide which regs to abide by implies that all laws are equal. As GP mentioned, that isn't the case.
Some of Uber's regulatory battles are complex, but many are laughably transparent. France's 15-minute mandatory delay before you can be picked up by hire cars? They didn't even pretend it was about anything other than protecting a monopoly.
If a regulation has a decent purpose that you feel it's not fulfilling (especially safety), you should probably lobby against it. If the regulation's entire purpose is to manipulate a market, it becomes pretty easy to defend ignoring it.
And in the process likely led to harm to their clients. Healthcare is one of those things that you don't fuck with, because the failure mode of bad tech isn't just that you go out of business and inconvenience a bunch of people, it's that you actually cause potentially irreparable damage to people (in Theranos's case, by providing incorrect information about people's health which they depended on).
[1] Drivers with eg allergies can get medical certificates to exempt them from having to carry assistance dogs.
And I'm hardly the only one saying this. Bill Gurley, a partner at Benchmark, made it clear that we've been dealing with a bubble, and said that the best possible thing that could happen was "a return to an appreciation for sound business execution". [1]
Nobody minds minds that we have companies that fail. That's the game. But when we create companies that burn ten million, a hundred million, maybe a billion dollars and never could have succeeded, then that is a major fuckup that is on us.
Even if you don't care about wasting OPM at that scale, just think of the number of seed and A-round companies that Theranos's $686.3M could have funded. If our job is to make interesting mistakes, we should be maximizing the amount learned per venture dollar.
[1] http://abovethecrowd.com/2016/04/21/on-the-road-to-recap/
> what are we blaming silicon valley for? Being wrong on a venture investment?
I think the general feeling is that the investors did far more than merely throw a few bucks at Theranos.
They can go out and make deals, do press etc... all within their rights as board members - in fact that's what they are for.
Investments are passive only for non-accredited shareholders.
Having made a bad investment, as a Director or Officer, they had a responsibility to blow the whistle on malpractices, enforce proper procedures, fire the CEO long before the CEO was in a position to be barred from the industry, &c. &c.
Well I haven't made a statement on that either way - but I wouldn't advocate for that.
It is however up to their own judgement how much to do in any case. They represent shareholders, so they do have fiduciary duty there to be sure (though I am unsure if that is true for the high profile members of the Theranos board as it seemed to be largely advisory).
The fact that Holmes has 50+% of the company makes the point in this case pretty much moot. Aside from leaving the board en masse and abandoning whatever shares they have, they really are pretty powerless.
For failing to do due diligence before investing hundreds of millions of dollars in a company.
What are we blaming Silicon Valley for (insofar as we're really talking about VC's)? I don't know about "we" but I'm blaming them for being dishonest. Do I go around being mad about it all the time? No. But I won't pass on an opportunity to rub a lemon on their noses.
I get the feeling that she kind of got wrapped up in something that spiraled out of control. She developed a promising new technology that ended up not working out for the use case they intended; but by that point it was too late to pivot because there were too many deals in place already.
She's obviously brilliant, it's just a shame that her youth and naiveté were taken advantage of by greedy biotech VC assholes.
I always assumed the money came first and then engineers and scientists developed the tech. She provided the vision.
Just like some PR operation in Silicon Valley undoubtedly did the legwork to get this op-ed posted by the NY Times.
Her technology worked, but not as well as they had initially hoped and some of the roadblocks turned out to be bigger than they had anticipated. That's the name of the game with biotech startups.
Theranos just expanded far too early. They made a bet that they could improve the quality before they hit scale, and they lost that bet. Then they tried to cover it up, which seems to be what people will go to jail over.
My guess is that if Theranos had been a success, we would be reading about it as en example of how Silicon Valley is capable of transforming many industries. If it's part pof the club when it goes up, it should be part of the club when it goes down.
"Five Visionary Tech Entrepreneurs Who Are Changing the World"
http://www.nytimes.com/interactive/2015/10/12/t-magazine/eli...
"Since dropping out of Stanford’s School of Engineering during her sophomore year in 2004, she has spent nearly every waking moment working on bio-engineering breakthroughs in diagnostic testing and persuading lawmakers"
It's obviously not Tim Draper's fault that this went so badly, but at the same time he should (and apparently doesn't) well understand that others will use his investment as a proxy for due diligence. Having that kind of clout is a responsibility unto itself. He should either hold all investments to the same due diligence standard, or make his involvement confidential in cases where he is investing for reasons other than those for which he normally invests.
Investing in startups is risky because you can't know all the details. There are plenty of cases where an investor doesn't know for themselves if a technology works, but believes in the founders anyway. In some cases, even the founders don't know yet, but their pitch is more confident than they really are. This is fine because, at least some of the time, the technology does indeed end up working.
If Theranos had gone well, we would be celebrating how Silicon Valley looks for disruptors and is willing to invest in risky, unproven technologies by smart kids who know better than to waste their life getting a Ph.D., no? It's inconsistent to be willing to both praise and criticize VCs for taking risks on technologies they don't understand. If Tim Draper shouldn't have done that for Theranos, other VCs shouldn't be doing it for anyone else. And if it's good for VCs to do it in general, it was good for Tim Draper to take this risk.
Although I can't possibly know the answer to this, I would be willing to bet that the success rates of the former are abysmal in comparison to those of the latter.
Remember that venture capitalists need good opportunities as much as good opportunities need capital. If Theranos had worked out, would everyone have said that Holmes should have given other investors a chance and not just given her next door neighbor an early in?
If you want to have guys like Tim giving smart young people a chance, you can't have it both ways. Either:
A) He can invest in whatever good opportunities come along without making them jump through a lot of hoops, and whoever comes after with big money should do their own diligence OR B) He should take responsibility for the actions of other people seeing his investment as a proxy for due diligence, and thus have the same standards for seed funding as he would have for a later round.
I think there is fault in the SV system, but shouldn't it be laid at the feet of those who put in the $XXX million without DD, not the guy who put in $500k? YC takes similar chances on people, and that's a good thing. The problem is when the prestige attached to being chosen gets out of hand, and other people think Draper or YC have done their job for them.
Full disclosure: I was a founder who worked with Tim for 6 years. I know nothing about the Theranos situation, and I'd never heard of them before the recent press storm. That said, having known Tim, I could totally see him investing based only upon her being smart and making a good case to him. He does really seem to want to invest in smart young people. I say this based on my own interactions with him, having once been a young person who thought I was pretty smart.
This is a bigger problem than one company. This is that funding has been divested from basic technical due diligence. It's one thing to fund a company trying to make a new form of aircraft and another to fund one that makes a pill that will allow you to fly.
If Theranos is full of shit, they'll be dead in a year or two, even the dumbest of VC's start asking probing questions at later rounds, DEFINITELY before IPO.
At this point it'll be the PR shitstorm that'll kill Theranos before any attempt to develop actually functioning tech.
First of all, their fraud endangered people. People rely on blood diagnostics to save their lives and maintain their health - their fraud is not as simple as failing to clean your home or failing to bring you dinner. Much of the anger I think isn't even from the perspective of Silicon Valley, it's simply being angry at a company that put many people at risk via deep, systemic, and willful fraud.
On a tribal level, their behavior also reflects on us, because we're all part of this Silicon Valley pool. When a member of your "tribe" behaves poorly IMO it's entirely natural to feel anger at them.
On a higher and more pragmatic level, Theranos' behavior to some degree threatens the health of the industry, by inviting more heavy-handed regulation, and bringing more intense scrutiny from both outside and inside (one can argue both these things are justified, though). We've generally operated so far under the idea that everyone (for the most part) is behaving in good faith, that startup failures are honest failures, and don't involve unprecedented, deep, systemic fraud.
There is also anger at investors in general, stemming from a general feeling that they aren't doing enough to police bad behavior from their founders. Startup failures are to be expected - they are core to the SV model - but in general whenever SV companies behave egregiously badly their investors are entirely mute. This is doubly infuriating when, like in Theranos' case, the bad behavior has serious consequences.
Fairly common to raise money on a vision, launch an unfinished product (she used the competitors devices to deliver results?) to gauge customer interest, esp in targetted markets, then go gung-ho on Engineering to deliver. Maybe this doesn't work in Bio-tech? I wouldn't know.
I agree this will bring a whole lot of unwanted attention to a new industry, but would argue that this was because of the litany of borderline clickbait articles that have followed the WSJ expose.
Now if Theranos dies, we'll never know if they were actually full of shit, or if they were actually close to solving the problem but died because they couldn't weather the PR shitstorm.
The use of competitor equipment in this case was a tacit admission of their failure to deliver. The business proposition was "we have blood tests that are superior in every way", not "we want to open blood testing centers in Walmart".
How much VC funding do you think they would have gotten on a pitch of opening retail blood testing centers with conventional equipment? It sounds like a boring, low margin business that no VC would want a part of.
Whether it is appropriate for a biotech company to do so (with actual health information on the line) is another matter. At best, the FDA should have space for this kind of beta testing (clearly marked, always cross-checked etc.).
In the VC system - certainly.
When you have startups offering a real service with real profitability struggling to find cash for expansion, while some well-connected placeholder who is incompetent at best and fraudulent at worst ambles in and gets $400m for hype and promises, a "PR shitstorm" is the least of everyone's worries.
It's good that some people weren't convinced. But enough people were convinced for $400m to change hands.
That's really not a good result for a system that likes to pretend it's good at making smart choices about funding.
Saying that people shouldn't be outraged because they will probably fail and be punished is kind of silly. Do we say don't be mad at a murderer just because they are going to go to jail? Punishment or even resolution of a problem doesn't mitigate the emotional reaction to that problem for most people.
Like I said AFAIK, Theranos hasn't taken money away from any more deserving startup. Though, I agree $400M is A LOT of money gone to a supposed undeserved startup. Maybe that's the source of the rage.
There do exist broader harms, and people's behavior can be so egregious that it "offends the sensibilities".
Start with the least of, yet most salient of your stated issues: did Theranos divert money from other more deserving startups -- 'AFAYK, no specific one of those dollars was kept from another specific deserving startup familiar to you, so it's OK'? Really? Are you saying that all other startups are similarly dishonest and undeserving, or that because because no one can specifically track it to your satisfaction, no one should be PO'd?
Related to your other posts, and as another responder commented, this is not a case of a mere unfinished app with noticeable demand, to which funds and effort are applied until it gets built-out until v1.1 gets rolled out.
This is a case where the "app" is a blood test critical to people's lives, determining drug dosages, treatment courses and outcomes, etc. A failure here can really f*$k up someone's life or kill them, not just inconvenience them because the app failed to load and order their dinner.
Moreover, this is a case where Theranos clearly must have known that the basic technology DID NOT WORK and COULD NOT BE MADE TO WORK with any reasonable effort. The right thing to do after a suitable amount of R&D is to shut it down and return remaining money to investors. Many startups have done this.
Instead, Theranos decided perpetrate a continuing fraud on investors, customers and the public. They used competitor's machines claiming to be using their own machines.
This defrauds everyone, pollutes the investing and entrepreneurial ecosystem, and puts patients at risk. (but AFAYK, this is no reason for anyone to be even a bit annoyed...)
Worse yet, and this is one of the bases for the govt's CRIMINAL investigation, Theranos was using hordes of UNQUALIFIED technicians running both the test equipment, and they even CONTINUED to do so after being previously warned by the govt. WTF?!? This is the most simple, basic management -- no science or engineering here -- just use some of your $400MM to hire people with the required credentials to perform tests upon which people rely for their health and life. And the CEO then said that she didn't know about it? This is just obviously a culture of fraud and corner-cutting, in which the only thing that mattered was the image.
Theranos may indeed have started out as an honest development effort (I hope so). But at some point it obviously became clear internally that the tech did not and would not work. At that point, Theranos decided (explicitly or implicitly) to continue to maintain the facade, and wandered off into fraud.
If you don't understand that this kind of behavior violates social and legal norms in many ways, and that people are normally annoyed at these sorts of violations and failures to uphold the norms that bind us together as a society, then I'm not sure anyone could help you.
And saying that it is OK to lie, cheat, and steal as long as nobody can articulate a specific harm to a specific person puts you on the outside of society, and not in a good way.
OTOH, if you're just trolling, then well played.
There is a whole government agency dedicated to making sure this doesn't happen. The 'app' analogy doesn't work. They have the power to shut all of a companies services. My only point was, let the FDA do its thing. I don't want a company to die just because there is an article written about it multiple times a day (seriously, monitor the frontpage of HN for this). There is no way to tell between actual journalism and clickbait.
I'm sure you would agree, at this point these articles are doing nothing but fulfilling a sense of schadenfreude in us. The government and the FDA are on it.
I HOPE at this point that we are all right and the government takes the company down and shuts it down. If it turns out they didn't do anything illegal and just runs out of money in a couple of years, would that be fair?
Of course not -- these federal monitoring agencies/police are a necessary burden, and they only marginally prevent crime -- the crimes still happen, and the agencies/police only come in after to investigate and punish. Meanwhile, people's lives are harmed or ended -- by the criminals -- who act with impunity until caught and punished.
Now, are Holmes and the rest of Theranos' mgt criminals? Of course none of us actually know, we have only a preponderance of second-hand evidence from the press and from government actions. If you are saying that we shouldn't trust any of this, that Theranos is really a bunch of upstanding citizens being brought down by a malicious government and press, then say so.
Otherwise, if there is a reason to put some trust in the actions of the govt and the press, then we shouldn't be the slightest bit surprised at the anger, schadenfreude, and impatience to have them taken down.
IMO, based on the public info, Theranos has become a criminally fraudulent enterprise, and my biggest emotions are anger that they got away with it for so long and impatience at wanting to see them taken down sooner (of course, if it turned out to be a malicious govt and press, then I'd be defending Theranos even more strongly than I now despise them, as a malicious govt and press are an even bigger betrayal of our trust).
Re: If they didn't actually do anything illegal and just ran out of money? NO, simply spending down the funds until they are exhausted on a known dead-end project is not fair.
At this point, they've had and years of time with unrestricted access to hundreds of millions of dollars for R&D. They will have either 1) a known path forward with a method that can be engineered into a usable solution, or 2) the knowledge that there is no such path in sight or that they are obstructed by physical limits, or 3) neither of these.
If 1), they should already be engineering it towards success (and not testing it in the field with unqualified techs).
If 2), they should politely shut down and return unspent funds.
If 3), then they have and incompetent R&D effort and should also return the unspent funds.
Simply continuing to spend down the funds in condition 2 or 3 is at the very least dishonest/fraudlent to the investors (or other entrepreneurs who might access those investment funds), since it is now known that there is no realistic chance for success.
The anger I'm sensing in this thread is one to a convicted defrauding case. Which it isn't yet. For now, Holmes is promising to overhaul the company to comply.
I'm willing to give her the benefit of the doubt and let things play out. If they run out of money, you're right, I'd be pissed. If they have a criminal conviction, I'll gladly join the chorus of anger.
Until then, these articles are just beating a dead horse.
What, pray tell, is the appropriate reaction to watching someone fraudulently incinerate 600 million dollars intended to be invested in taking care of people and improving health?
My point remains, at this point if Theranos fails (and TRULY loses $600M) then it'll be because of the media shitstorm. If they naturally died because the company was full of shit (which it would eventually), then we'd have more reason to be angry at the waste of money.
lolz
So the reason the house of cards collapsed is because the WSJ said "Hey guys that thing might be a house of cards over there"?
I don't know really know what WSJ did that wouldn't have otherwise come up in regular FDA proceedings other than telling a bunch of millionaires they were stupid with their money.
P.S: To my point there are two articles on the HN frontpage about Theranos just today. This now seems like click-bait hoarding. The original WSJ piece was obviously warranted (if for anything then as a warning to SV biotech investors).
When the author says "Don't blame Silicon Valley," he's not referring to the geographical location. He's referring to the culture and ecosystem. That's an important distinction to make. If you feel that the SV culture and ecosystem are indeed to blame for Theranos, you need to show that Theranos has strong ties to players who are a central part of the SV culture and ecosystem. This is surely a nebulous and subjective term, but that doesn't make it any less important. It makes no sense to blame SV culture for something, if the only players involved are fringe players in the ecosystem.
Your assertion that SV culture is at fault, just because person X did something wrong and person X lives in SV, is absurd. By that same argument, if some NYC billionaire were to move to SV today, and bankrolls some company founded by another NYC guy who just moved to SV and proceeds to engage in unethical behavior, it would be a damning indictment of SV culture. Such an argument is patently absurd and violates all common sense.
Tim Draper is not a fringe player.
> “People are saying that investing [$23.4 million] into uBeam is everything wrong with Silicon Valley” uBeam co-founder and CEO Meredith Perry tells me, referencing her startup’s big name investors. They include Andreessen Horowitz, Founders Fund, UpFront Ventures, Marissa Mayer, and Mark Cuban. “But everything else out there is apps and social photo sharing stuff” Perry contends. “We’re building something real. We’re building something that’s insanely difficult. So difficult people think that we’re frauds.”
It's surprising that startups get less scrutiny for hitting hard problems. You'd think it would be the opposite.
If you're a Theranos investor, blame yourself for not doing the proper due diligence.
In addition to the delusion, there was operational mismanagement, but even that is not a scam.
> If you're a Theranos investor, blame yourself for not doing the proper due diligence.
I think we can only get people into non-zero-sum behavior when we talk about things like, cause, power, and responsibility.
For example, I'd accept no blame here. But I do feel responsibility in a couple ways. As a participant in the Silicon Valley ecosystem, this event will effect me. Even if I didn't make the mess, I'm going to have to help clean it up. And looking back, I think about the power I might have had to cause a different outcome. What if I had spoken up more against the hype cycle? What if I had said more clearly that this was a bubble? I'm only one person, but there were a lot of people who could have spoken up more. If we had done it together, could we have reduced the damage of the bubble? Hard to say, but next time I'll try harder and see what happens.
If this sort of thing interests you, you might enjoy Dekker's "Field Guide to Understanding Human Error," which is a brilliant book about airplane safety investigations. I thought it had a lot of applicability in tech.
Let's all worry about blaming someone for a problem instead of fixing it. It's so much more productive.
In the case of Theranos the problem of "what went wrong?" and "who fucked up?" are effectively the same - either the investors didn't do proper due diligence or the founders misled them. You can't fix the problem without knowing the cause. It doesn't really matter whether you couch it in terms of "what" or "who"; knowing one automatically informs you of the other.
If the investors didn't do their proper due diligence, then they can take steps to be more responsible in the future. If the founders misled them, then it becomes an economic and political issue of how to address and further prevent such problems.
Or just throw someone under the bus and keep repeating the same mistakes.
Rarely industry players will invest in security instead of just banking the money. But aviation companies, airports, manufacturers - nobody wants to have any of their products involved in an accident.
Now the same outlets that propped it up with astronomical levels of hype, are taking much glee in writing article after article about how fraudulent Theranos was.
Is anyone taking these media outlets to task for never actually verifying if the crap they were writing was actually accurate?
> Now Stanford and VCs want to distance themselves from Theranos so they call in this guy.
Let's have substantive critique, please‚ not imagining what you think might have happened.