Theranos Executive to Depart Amid Regulatory Probes | Hacker News Reader

Theranos Executive to Depart Amid Regulatory Probes

wsj.com

106 pointsjoering276 comments

"Mr. Balwani, the Journal reported, told them in an email, “I am extremely irritated and frustrated by folks with no legal background taking legal positions and interpretations on these matters.” He wrote, “This must stop.”

He then ordered the employees to only report to the accrediting organizations results from proficiency tests performed on conventional devices, and not the results of those tests obtained from the company’s proprietary Edison machines, according to former employees."

Yikes.

It's a shame that their problems stem first from lying to investors, rather than to regulators and consumers.

>It's a shame that their problems stem first from lying to investors

From what I know about money men, I'm not so sure that some investors weren't aware, or at the very least turned a blind eye. I certainly don't think they're all innocent.

I don't know the financiers enough to comment on what they know. Sending the SEC after Theranos seems similar to sending the IRS after Al Capone.

He's frustrated by people with no legal background making legal judgments.

We're frustrated by people with no medical background making fake devices.

Theranos general counsel Heather King told the Journal last year that Mr. Balwani’s instructions were consistent with the company’s “alternative assessment procedures,” which it said it adopted because it believes its unique technology has no peer group and could be thrown off by the preservatives used in proficiency-testing samples.

It's really Theranoax.

"For a successful technology, reality must take precedence over public relations, for nature cannot be fooled."

-- Richard Feynman

She said the following a while back:

"I think that the minute that you have a backup plan, you've admitted that you're not going to succeed."

I bet she wishes she had a backup plan now...

http://www.inc.com/deborah-petersen/elizabeth-holmes-avoid-b...

Their backup plan was already executed: they switched from their testing methodology to acting as a service provider for somebody else's testing methodology (http://www.businessinsider.com/bill-maris-explains-why-gv-di... """So, we just had someone from our life-science investment team go into Walgreens and take the test. And it wasn't that difficult for anyone to determine that things may not be what they seem here."

That employee found that when he went to get a test done, Theranos wanted more than just a drop of blood in one of its "nanotainers." He denied a full venous blood draw, and ended up getting called back a week later because they wanted him to give more blood.""")

Were they even able to get their Edison device into a functional state?

it was approved for a single test. http://fortune.com/2015/07/02/theranos-fda-approval/ dunno if they ever got the device in a functional state, outside of extremely controlled conditions in a lab.

I can't imagine the stress that Holmes goes through on a constant basis. There is the usual startup founder stress, but this feels like another level.

Holmes has already cashed out enough to be in a perfectly fine situation. I have little sympathy for her stress level, as it Holmes that has poorly handled the situation while profiting personally.

I worry much more about the stress from regular, honest people that are now associated with Theranos. It would suck to spend many years there, assuming that other parts of the company were doing their job correctly, only to be abandoned so completely by upper management's handling of this situation.

Whatever Holmes has cashed out aside, she comes from a highly privileged background. There was never any danger to her of ending up destitute, regardless of whether Theranos worked out.

Really? Would her family disown her?

What jobs would she get?

Given she was able to swindle investors out of hundreds of millions of dollars, I don't think she'll have any difficulty convincing her family not to disown her.

She probably doesn't need a job, given her family's wealth, but her father is well-connected government official. I'm sure he could get her a position at some agency or other, if she really wanted one.

> Elizabeth’s father, Christian IV, grew up in California, raised by his mother, a former Powers model, whose second husband was a prominent San Francisco businessman. The family moved in powerful circles. Mr. Holmes took a Hearst daughter to a debutante cotillion in 1967.

> Mr. Holmes had a distinguished career in public service, holding a number of senior government positions in Washington.[0]

0: http://www.nytimes.com/2015/12/20/business/theranos-founder-...

Do you know for certain that she's worth millions? Aren't her stock options tied to performance? And if she has tons of stock but it goes to zero...

Her stock options are tied to whatever the Theranos board decides, and she has full board control. So she can make her options tied to whatever she wants.

No, I don't know her net worth for certain, but it isn't a stretch to say that she comes from wealth. It's a lot easier to get wealthy people to give you a ton of money if you're also wealthy.

Just about the only thing a majority shareholder cannot do is vote themselves a massive pay rise, violating their fiduciary duty to the minority shareholder's equity stakes.

You feel compassion for someone who knowingly attempted to peddle a medical product just shy of snake oil, only to have it blow up in their face?

Their product was absurdly broken, and the results were essentially a coin flip (I believe the FDA said results were accurate around 50% of the time). They wanted real doctors and patients to base important medical decisions off of this...

There's never a good enough reason to withhold compassion. That's the whole point of it.

Yes there is, she was selling bogus blood tests! Who cares about her feelings when innocent people made actual medical decision based on her junk science? And really what is there to be compassionate about? That she will be less rich?

We know that money is not a great thing to measure to ascertain happiness, so I feel her bank account is irrelevant. And compassion is not a finite resource.

It is really hard to feel happy when you are poor (first hand experience), Money can buy happiness[1][2]. Conversely we do feel much joy when we see someone we envy fail, more so if we feel (rightly or not) that their success was ill deserved[3].

[1] https://si.wsj.net/public/resources/images/WE-AA766B_HAPPY_1... - from page 12 of [2]

[2] http://www.brookings.edu/~/media/research/files/papers/2013/...

[3] https://blogs.princeton.edu/research/tag/schadenfreude/

Wrt money - I'm just pointing out that assuming someone is happy because they are rich is flawed.

3 is interesting, and backed up by what's happening in this thread. My question is really: is that the world we want to live in? Throughout human history we have gradually been curtailing our violence as a species, and I hope everyone here thinks that's been a good thing, and hopes it will continue. Wishing suffering on anyone for any reason is a form of violence.

It's not suffering in some abstract sense, it's accountability - in no small part for causing suffering and loss to others.

Talk is cheap. Most people won't actually do all that much to back up their big feels. I have a good sob story. I doubt you would do more for me than pat me on the head.

Mind you, I don't actually want pity. What I really want is respect for my competence and assistance in becoming successful in my own right. But I run into a lot of people who spend a lot of time on their high horse about wanting the world to be a better place. In most cases, these are the people who have treated me the worst -- who neither will give me genuine respect as a competent human being and a hand up nor so called compassion and a hand out.

I think if you really think that bad thoughts are a form of violence and you want this to be a nicer world, then arguing with people here and criticising them is a kind of violence as well, plus a form of hypocrisy. What are you doing to actually make the world a better place?

Yes, maybe I am being hypocritical.

Just my 2c but I really dont think wishing suffering on somebody is a form of violence. How can it be when they arent even aware of it. Wishing is something that just occurs in your own head and I think portraying this as violence would be insulting to people who have been the victim of real violence.

I like Alain de Botton's take: money and status are essentially a proxies for love, in that people feel worthwhile if others "pay" attention/respect/cash to them. (Heavily paraphrased)

Now consider that Buddhist monks are forbidden from handling money, preparing their own food, and are willingly entirely dependent on the charity of others. It is a kind of self-imposed poverty that demonstrates how much a person can achieve without much more than the shirt on his back.

I'm having trouble following the jump from proxies for love to the practices of Buddhist monks. Monks don't own anything (except for their robes and alms bowl) and don't prepare their own food (and don't do many other things) in order to avoid attachments, which as we know is one of the fundamental causes of suffering and an obstacle to achieving enlightenment.

In bringing up the monks, I was trying (maybe unsuccessfully) to challenge the idea that "poverty" is, ipso facto, a miserable, unhappy existence. De Botton makes the point that soldiers often endure conditions that are far worse than abject poverty, but are not unhappy due to the sense of a noble status given to them by their countrymen. Likewise, I think, for the monks who have nothing to their name, but are respected and honored for their discipline, etc.

It's a bit off-topic, but in a way being a Buddhist monk is a very selfish lifestyle. You don't have to take care of yourself, society will take care of you. You don't contribute much to society apart from perhaps some religious services. In my opinion it's not a good way of life.

I've always understood the relationship between societies and monks (priests, ministers, nuns, etc.) to be one of "offset". Monks are taken care of so they can pursue the esoteric studies that the common person has no time for. In exchange, the common person's spiritual/religious/etc. enrichment is guided with assistance from the monk, similar to how patronage happens in the arts.

I'm sure this could be explained in an even more conduct way, but I'm having a hard time putting down in words how I see the relationship works in my mind.

Someone should build a Patreon for Monks.

"Monks" are not one, monolithic community, so it's hard to argue one way or another whether they contribute anything meaningful back to a community. Here in Japan, many Buddhist orders are downright wealthy (from donations), and use their considerable resources to preserve traditions and history. I doubt that you can put a dollar value on the benefits of keeping cultural history alive. In a sense, it's not too much different from the function of the Metropolitan Museum in New York. Of course, Buddhism is a many-facted religion that manifests differently in different places.

On the one hand, I completely agree with you about having some degree of compassion towards everybody regardless of what they've done, but on the other hand, I'm not exactly sure what it would change, or if I could remotely justify telling people that their feelings are "wrong" despite them being deceived.

It's perfectly reasonable for people to feel anger/resentment/distrust towards somebody that has done them wrong, just as much as it is perfectly reasonable for a person to feel horrible once they start being the center of attention for having done something wrong. The key difference between these two emotional states, is that one side knew what was happening (i.e. the one committing the act of deception), and the other one didn't. That gives the person committing the deception the upper hand in predicting the outcome of the whole situation, because they must know to some extent that getting caught is one of the possible outcomes of their actions; willfully ignoring this reality isn't equivalent to never even knowing it could exist (as would be the case for victims).

Now typically, anger isn't very productive, but neither exactly is total compassion. Pure indifference is the closest thing to a neutral state in such a situation, and from such a vantage point, people getting angry at being deceived and people getting depressed at being caught is completely logical, and admissible as long as there isn't any real destruction or bodily harm going on. I mean, we could feel sad for a shady person feeling sad in addition to all that, but what will that accomplish?

Huh, under your logic, is there any amount of misconduct that Holmes could commit (which might harm others, including harm through being misled) that would make you feel more compassion for those harmed or potentially harmed?

If you want to apply Buddhist ethics to influential people misusing their power, uh, I guess I follow what you're trying to do, but it seems cray-cray to me.

Just for the sake of discussion, is it possible to have compassion for the victimizer and the victim? Is there a way to quantify compassion such that you are able to assure yourself that you have given a proper amount to the person who has been wronged?

But she is not different from any Ponzi schemer. Talk up your amazing investment expertise or chemistry genius and get people to trust you with money. The people who invested with her are VCs and wealthy accredited investors. As were Madoff clients.

all your emotion is finite. We are ignoring the battle against malaria in Africa, to chat and feel about theranos.

How about redirecting your compassion towards someone more noble?

Isn't this what one deserves if one tries to peddle something that doesn't work to investors, and then gets hundreds of millions of dollars for it?

This is advocating revenge, and being pleased to see someone suffer. Imagine she had a breakdown due to stress and her life went off the rails - would you feel that was fair? How much would she have to suffer before you are satisfied?

She benefited greatly from a cult of personality on the way up and is now finding out it goes both ways. I myself don't feel bad for someone who enriched herself while peddling snake oil and knowingly giving junk test results to real patients. It is despicable.

revenge is a second action that is a constructed response to a first action. You would not call a swarm of bees attacking a person who knocked down the hive, "revenge".

Of course there is a subjective line here, but the things that have happened so far seem to be organic, natural, and maybe even predictable responses to the actions that that preceded. That's not revenge, that's just desserts.

I'd say that when the inevitable criminal probe is done, we'll have a better answer to that particular 'question'.

yes, it's fair, because in exchange, she has been paid millions of dollars. you think she's giving any of that back?

I would say the fair amount of stress is equal to the amount of joy she must have experienced when her net worth went from $0 to 4.5 billion. The stress she is experiencing now is simply part of the way to 0.

It's not revenge. It's accountability, and there can never be enough of it. If business leaders aren't held to account for their actions, then they are incentivized to misbehave and deceive others, which has a negative impact on everyone——especially those who would put capital to better uses.

How is self-inflicted pain considered revenge? She caused her own stress by taking money she didn't deserve and is now reaping what she sowed since she knew it didn't work.

Do we know that outright fraud occurred here?

For a venture like this the investors would have been contributing only research and development funds, correct? Just because it has failed, doesn't mean that there wasn't anything worth pursuing to begin with.

> Do we know that outright fraud occurred here?

Judging by https://news.ycombinator.com/item?id=11687660 the answer is 'yes'.

Maybe not fraud, but the recklessness is pretty staggering.

I wonder who's writing the movie script?

How about this guy: https://news.ycombinator.com/item?id=11523822

Thanks for linking that. I had missed it. It's hilarious!

Person from privileged background drops out of Stanford and raises hundreds of millions of dollars, in part due to family connections, to produce a fundamentally unsound blood testing product. Person then proceeds to sell a broken blood testing product to consumers as a way of digging themselves out of their obligations to shareholders. Person then lies to regulators, instructs employees to lie to regulators, and witnesses one of their chief scientists commit suicide after, according to his wife, the scientist claimed "nothing was working".

I don't care about this person. I care about all the people hurt due to this person's actions. And I am greatly saddened by the high likelihood that this person will, despite the absolute carnage, profit tremendously from the situation.

yea, fraudulent and illegal activities generally up the stress level of anyone

she definitely deserves every bit of it.

I am just curious, would you have the same level of concern for Madoff?

Similar to the stress Bernie Madoff must have felt?

I feel quite a bit more sorry for the family of Dr. Gibbons.

So Balwani has been thrown to the wolves.[1] Who's next?

[1] http://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=27...

Thrown to the wolves? Sounds like he was deserving to be sacrificed.

The article clearly states: "Mr. Balwani isn’t being blamed for the company’s regulatory problems."

Of course that's what the PR person says.

Anybody have any clever ideas about how to short Theranos?

Start a blood testing company.

LH (NYSE) ? (LabCorp)

Long the competitors?

Will there be a perp walk?

Reply on news.ycombinator.com