An Open Letter From Elizabeth Holmes | Hacker News Reader

An Open Letter From Elizabeth Holmes

news.theranos.com

287 pointsalva206 comments

> "We have decided to close our clinical labs"

...or, perhaps more accurately, the Center for Medicare and Medicaid Services has banned Elizabeth Holmes from running any kind of blood testing laboratory[1]. It seems a little odd to write a letter making it sound like you're just pivoting when in fact your chief executive is not permitted to carry out the kind of business they were previously carrying out.

[1]:http://www.wsj.com/articles/u-s-regulator-bans-theranos-ceo-...

Why were they even doing labs already anyway? If they can actually make the technology work, they can relatively easily print money. Focus on that.

They had a combination of non-working technology, and semi-working labs. They were using the labs partly to hide that their tech didn't work, and to tide them over until they could make it work.

They had to run their own labs in order to take advantage of the laboratory developed test (LDT) regulatory framework. Selling their devices for others to use would have required FDA clearance.

http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedur...

They could go to Europe or elsewhere like many do.

The EU strategy can solve regulatory problems seen in the US, but it introduces other problems to be solved: funding can become more difficult (although the normal rules wouldn't seem to apply to this group), import/export and taxes become complicated, management from a distance is hard, etc. Keeping in mind that Theranos was trying for a US government contract, their US focus makes sense and the LDT pathway was a good idea. It's a shame that their corporate culture and management were wholly inadequate.

Sometimes you guys are after blood, what do you want them to say?

"We're the worst, we'll never try at anything anymore, sorry for existing."

Would that make you happy?

From an ethical standpoint, I think they should've just wound down the company. If there are parts of the business that still have value, sell them. Otherwise, give employees decent severance and try to help them find new jobs. Return any remaining money to investors.

Nah, it would have been this:

"Our foray into nanotainer tech was too early for the market. However, we've established that there is a market for disruptive tech in the stodgy lab biz. In terms of leadership, we're moving on from Ms. Holmes who saw this from the start, and she's agreed that the best for the stakeholders is to step aside due to the misunderstanding around her tech, but the company itself will persevere in breaking the stranglehold Big Lab has on healthcare costs, while Ms Holmes moves to an role in charge of disruptive R&D use of nanotainer and other disruptive tech in the lab/testing biz."

Damn that's full buzzword compliant.

You should work for Monsanto (a sustainable agriculture company) :-)

You mean Bayer, a "we pretty much just make asprin, don't worry about it" company.

This reminds me once again to re-watch "Thank You For Smoking".

Eh, no, but actually owning the wrongdoing would be a start.

Theranos fradulently conducted their business on a wide scale over a long period. Literally nothing they've said in public since the revelations (which just keep getting worse) have ever truthfully addressed the matter.

But regardless of the scale of wrongdoing, the bare minimum expected of both companies and individuals when they've done wrong is:

- An acknowledgment and admission of the wrongdoing, without equivocation or deflection. No "it was wrong but..." or any such thing. Own the wrongdoing, it's the least you can do to respect the people who you've done wrong by.

- Demonstration of self-awareness and introspection as to what led to the wrongdoing. Again, without equivocation or deflection. Neither corporation nor individual can be trusted not to commit the same wrong if they can't openly demonstrate why they did it.

- A plan to both prevent reoccurrence of the wrongdoing and, if applicable, a plan to make whole those who were harmed in the original wrongdoing. This doesn't need to be monetary, but may be (especially when businesses are involved).

These are the bare minimum prerequisites before anyone can be granted even the tiniest shred of credibility back.

This statement (like all other statements by Theranos) demonstrates literally no component of the above, so yeah, we'll keep (rightfully) raking them over the coals until they do.

"We are closing our clinical labs."

or to mirror the original statement "We have been forced to close our clinical labs."

It's not that they need to grovel, it's that the phrase "we decided" is not an accurate representation of the situation.

Sure they decided. They could fight back with legal challenges. They could spin off the labs into an independently run entity. There are lots of choices besides shutting them down.

"Due to regulatory pressure, we have decided to..."

"We decided to" devoid of any qualifiers makes it sound like it was a decision made with full autonomy, and not a decision made because you were backed into a corner.

Are your inferences really the important thing? Does it ultimately matter to anyone on any timeframe beyond a two minute hate?

The typical press release doesn't matter at all to most people at a timeframe beyond two minutes.

But to the extent that it does, it should be based on an accurate representation of reality and not misdirection.

Technically, it was Theranos that was after our blood.

No, they really only rolled dice to determine their results anyway, so there was in fact no blood needed.

Beyond not wrestling the letter of the language of the letter to Theranos's best but inaccurate presentation, I would suggest Elizabeth Holmes live the next half-decade with a much lower profile. Step away from the medical devices industry, and upper management in general, either to study or work in a different field/within a different authority structure. If she has any aspirations towards family and children, now would be the time to pursue those particular goals. She is visibly intelligent and ambitious, and I would be very interested to see her return after an extended recollection of her prowess, tempered by some character-building not profit motive oriented experiences. Given the evidence thus far, I fear for her further march into a high-time preference mode, and ultimately burn-out.

Almost every day we have people who ran startups that didn't work out who end up here posting legitimate and honest thoughts about what went wrong and how they can move forward.

Contrast that with this, where instead of owning literally any responsibility for the farce that their product was, she continues to go on this same distortion tactic: Never say anything that's actually a lie, just say a whole lot of things that aren't the truth.

The only thing she seems to have learned is a lot of regulation that her company ran into, and how to work around it.

Every single one of those founders who come on HN and give honest opinions also wrote press releases just like this.

You have not heard from Elisabeth Holmes because of this, you've heard from the CEO of Theranos, whose name is Elisabeth Holmes. I don't know what she has/hasn't learned, but the audience for this was not HN, and she's not giving her personal experience in this letter.

Writing for yourself is completely different than writing for a company, but you know that. Come on, we can do better.

It's more than "a little odd". It's a blatant lie.

No, it is factually accurate. Instead of firing the CEO, they decided to pivot. Regardless if it was the decision they would have made with no restrictions placed on the company, it is the decision they made, all external factors included.

She's owns it all. They can't fire her. She has controlling shares of everything.

No. Deciding is when you have a choice. They didn't have a choice. This is a lie.

Yes, they did. They had a choice to fire Holmes and keep on with the blood testing what have you, and didn't. It is factually accurate and not defending them nor spin to say that. I'm sure it was considered.

This outcome was not a certainty. I think the feds wanted that choice, to be honest. It's a smart play: we don't like Elizabeth Holmes or the work you're doing, but we maybe sorta kinda want to see you succeed because it's a pretty good idea if you'd get your shit together, so pick one and fix it.

>They had a choice to fire Holmes

According to

http://www.vanityfair.com/news/2016/09/elizabeth-holmes-ther...

>Holmes, meanwhile, isn’t going anywhere. As the C.E.O. and chairwoman of Theranos, only she can elect to replace herself.

Technically true but I think it's practically false. Theranos isn't in the black and won't be any time soon. They need the indulgence of investors to continue. My guess is a large fraction of current stockholders preferred this outcome.

Honestly, it hard to see why. She does have name recognition, but it's like Martin "I'll jack up the price of your drug and laugh about it"-type notoriety

I imagine it was because the technology that they were pushing didn't work. So even with Holmes out of the way and the ability to continue doing what they were doing g there was no point, it didn't work they were never going to get it work the way it was supposed to, so they pivot and keep her on as the oonly way they could potentially still make a return for investors. I imagine a lot of people have invested a lot of money and now want to get some sort of product out the door and an IPO or Military Contract to recoup some costs.

CEOs of pre-IPO companies rarely get pushed out?

What is an investor saying if they choose to fire a CEO? Fundamentally they are saying that they misjudged the CEO... they're a poor judge of character.

* CEO gets sued: bending the rules seems to be totally ok. Just another risk factor.

* Company spending years in R&D: Science takes time.

* CEO runs out of money: There's always an element of risk. Was an interesting play but didn't pan out, NEXT!

Here's the best possible exit for a failing science based startup:

* Acquisition with large dollar value in the press release based on "reaching certain technical milestones".

But anyway... I think in Theranos' case the investors are still... invested.

There's still a lot of money coming in from China, maybe they think someone in China will buy them for a huge chunk of change regardless? (does happen, and acquisition and investment often don't reflect how good the basic technology is).

Maybe there's already a private market in Theranos shares, giving them some liquidity?

Maybe they still genuinely think it's a good idea. Honestly, neither you nor I would have invested in them. But they already DID!

Surely there are enough negatives surfacing about Holmes and Theranos in general that... while firing the CEO may admit that they had been a bad judge of character, not firing her indicates that they still are.

Maybe. Or perhaps now they're going to keep her on a very short leash. In their shoes I could see bringing in a strong executive team, people with significant health care experience, while putting her in the role of visionary founder who does a lot of PR and rah-rah but has very low operational control.

Exactly. You have an individual at the head of the corporation that has done fraud. Do you really believe that's going to change from this point? Most people would have enough sense to let shame see them out. That's even more alarming.

Tangential, but what's really bad is even Martin Shkrelli commented that the EpiPen pricing was outrageous. That's kinda like Hitler saying you're too much of a tyrant.

Hmm. Surely under the circumstances, assuming she's somewhat rational and aware of fiduciary duty, she'd entertain the idea with her board. Can always bring her back. Then again...

Is it 100% true that all that would be needed was to fire Holmes?

maybe they would have to have a functioning product also

No, we mean then they wouldn't have had to pivot. She was banned.

They're under investigation for basically lying about the tech behind their core business model. There are fundamental problems not fixed by simply firing Holmes. Pivoting or closing shop seemed inevitable.

yes but to be fair blatantly lying has been their business model from the very beginning

They could still stay open and not accept Medicaid/Medicare payments. It would just be terrible for business.

I love that. In a shop I often go, they sometimes say they "had to remove/recall some food because of probable presence of salmonella". The truth being that the government food security agency forced them to do so because they did find some salmonella, after controlling them on the quality of their operations.

That's what "communication experts" are for, I guess.

> In a shop I often go, they sometimes say they "had to remove/recall some food because of probable presence of salmonella". The truth being that the government food security agency forced them to do so because they did find some salmonella, after controlling them on the quality of their operations.

This is a place that has poor quality control to the point that the government has forced them to do multiple recalls for salmonella and you still go there often?

Are you suggesting that Holmes is distorting the truth???

Ha ha! I see what you did there.

I feel bad for those 340 employees. I can't imagine what it would feel like to have years of your work be exposed as (basically) a farce. I can barely stand working a week without getting results much less x years of my professional life.

I wonder, would one have legal recourse in such a case? Is it conceivable, in principle, to seek remedy for damages arising from your stunted career?

Any litigation experts care to weigh in? What would need to be established beyond the obvious (e.g. that damages were committed)? Has anything of this sort occurred in the past?

It's not likely that any of these employees can reasonably claim a tort or breach of contract here. The company messed up, but luckily it's not illegal to disappoint your employees.

Not that I think Theranos should not face some consequences, I just think drawing the line would be highly fraught.

Well my reasoning was that Theranos' criminal fraud might taint a given employee's CV. It seems like prima facie it might be possible to argue that this translates into monetary damages.

If you hung around for too long at the place that might signal the capacity to put up with institutional corruption. It's a character trait viewed positively in some places.

Back to academia with you!

It's your choice to continue working at the company during hints of fraud. Anyone concerned about it tainting their future should have left 6 months ago.

Thank god this is not possible. Every employee that joined a failed company would have the potential for litigation.

Also, I think the fundamental premise that working for a failed or even fraudulent company would taint your resume is false, unless you were at a level where you were responsible for some of those fraudulent decisions. If some company is looking for a lab tech they would be stupid to write someone off just because they worked for Theranos.

No, it's too bad it isn't possible. This isn't about a "failed company", this is about outright fraud. Having Theranos on your resume now is going to be a huge resume stain, and probably prevent you from getting any kind of decent job. It's completely normal for hiring managers to discriminate based on odd factors like this: what school you went to, what other companies you worked for, etc.

These employees absolutely should be able to sue for damages. They aren't responsible for their executives' fraudulent actions, but they're harmed by them.

> Having Theranos on your resume now is going to be a huge resume stain, and probably prevent you from getting any kind of decent job.

From my own history I've seen this to be false. I was previously at a place that had a lot of ex-Enron employees (after Enron imploded). I think most smart employers understand the vast majority of people at places like Enron or Theranos are not "tainted" by their employment and just had the misfortune of working for a company with ethically challenged management.

"seek remedy for damages arising from your stunted career"

Stunted career? As adults I'm sure they would have been capable of leaving any time they wanted from legal point of view. It's not goverments job to protect people from partaking in risky ventures. Who would want to create a startup after litigating "too risky product that turned out to be bogus".

Only it doesn't really work like that. A lot of the employees would have been innocent. Secretaries, lab workers, mechanics, janitors, scientists. These weren't risky ventures, they were a job. While they might have been able to leave at any time from a legal point of view, not all of them would have known that it was that risky. You know, because it is a job. It is a bit different if you are investing money in it, getting paid less, and so on.

And lets not forget this wasn't really a small operation: Over 300 employees. Multiple cities.

And the government does do some things to protect workers - such as unemployment and labor laws. But again, this is different than protecting risky investments. I'd even argue that this is partly the governments job by requiring disclosure of known risks and by prosecuting folks taking advantage of others - the rest is the discretion of the money holder.

I wonder how many of them knew and were accessories to whatever crime took place, be that legal or (merely) ethical.

Yeah. Having the big "T" on the resume might be one of the few red flags signalling fraud and corruption worse than a few years at SAC capital after a internship at Enron and Lehman Bros. Maybe the employees themselves will sue the company for fraud and damage to their careers. Crazy situation.

SAC Capital is a much bigger stain for former employees than the others, in my opinion. SAC allegedly had a deeply ingrained culture of finding and exploiting insider knowledge that permeated multiple levels. Basically, Cohen had employees do his dirty work, while he maintained plausible deniability.

At Theranos, by contrast, Holmes intentionally kept employees in the dark. If I were interviewing an ex-employee, especially one at a lab outside of California, I would certainly press the candidate on the issue, but I would be willing to believe that they were honestly trying to build and deploy a novel technology that never ended up working. It is not the case that the entire endeavor was a scam. They thought that they could develop this technology, and then the leadership covered it up as they were failing to do so.

Also, do you have any sources that document employment at Lehman Brothers as being a stain on the majority of their employees? Thousands of the employees immediately moved to Barclays and Nomura when they bought parts of Lehman Brothers. That doesn't sound like a horrible stain to me.

Are you serious? You would press employees on the behavior of their CEO?

I don't know about ryporter, but I sure would. I'm looking for people who are both smart and of good character. Working for what is apparently a giant fraud suggests that they may lack one or both of those attributes. I'd definitely have them talk about their experience there and what they learned, and I'd be looking both for their emotional reactions and the actions they took.

As an example of somebody who handled working at dubious place well, consider this blog: http://liesandstartuppr.blogspot.com/

I appreciate the comment, though I think the situation is often more nuanced - a junior employee may simply not have all the facts, and a more senior one may either have a 'gag order' on exit or worried that saying anything negative will affect their chances with future employers. Whistleblowers can end up harming their careers despite doing the right thing, and a halo doesn't pay the mortgage or buy the kids Christmas presents.

But onto Theranos - I just posted something on this at my blog. More than the employees, look at the Board of Directors and ask why they didn't do their jobs and enforce change. If they can't alter the ridiculous plans of the Founder/CEO due to the voting structure then they should resign. It's not their full time job, they won't go hungry if they leave, so what is their excuse for not speaking out?

Oh, yeah, I'd expect a junior employee to not figure it out right away. I'd just be looking to see what they noticed in retrospect. And senior employees can have their own legitimate reasons for saying. I'm not saying I wouldn't hire them. I'm just saying I'd ask.

For me it's similar to having worked for a failed startup. I have no problem with it, but I'm definitely going to ask. The difference between a bad failure and a good one is how much you learn.

So you would press anyone who has worked for Google and Facebook as well right?

How do you mean? Both of those are functioning businesses that build products that actually work. I'd have different concerns about people at those companies, but I wouldn't be asking them, "So when exactly did you realize it was a fraud and what did you do then?"

I am serious, and I didn't say that. I would press them on what they knew and when, and I'd be willing to believe that they didn't know much more than readers of the WSJ did.

Working at SAC Capital is only a black mark on your name to those outside of finance. Within the world of hedge funds SAC alumni are doing extremely well:

http://www.bloomberg.com/news/articles/2016-02-23/sac-alumni...

Those outside of finance don't know what SAC is.

That's very interesting, and it makes some sense now that you mention it. After all, SAC made it clear to investors that that would cover all of the legal expenses and fines, so they were just left with returns from the fund itself, and insider trading works.

in other words, its only a black mark from people who dont matter anyway

They'll probably change their name (why hello Accenture), and the people associated can now put the untainted name on their resume.

Heh, had no idea about that one!

I had recently been thinking about how terrible it would be to have a resume with a Wells Fargo job ending in the last couple months.

That's a good point, but I would hope employers would be able to distinguish situations clearly created solely on:

a) the upper management level (Wells Fargo, Theranos)

from:

b) the employee level, whereby the employees themselves use private data for advantage and personal gain - DraftKings comes to mind here[0][1]

[0] http://www.nytimes.com/2015/10/06/sports/fanduel-draftkings-...

[1] http://www.businessinsider.com/draftkings-daily-fantasy-spor...

I disagree. 5,300 low level employees actively chose to create fictional bank accounts in order to meet their goals. Even if some middle management tier recommended that they do it, I think it says something about the moral fiber of every one of those employees to be complicit in that.

We happily hired people from Lehman after the financial crisis. Sometimes bad things happen to good people, and it is tragic that the good people frequently overestimate their role in one-off events.

I work in IT so I'm used to weeks without results.

But yeah this is going to be a huge black mark on people's resumes and how the hell do you hide 3 years with a company that was basically all about committing fraud?

"I didn't know and I was doing good work," probably isn't going to fly.

I think it depends upon the role.

Working as a researcher in one of the labs committing the fraud? I can't imagine you getting a job with a reputable company for years.

Working as a developer on their website? It's entirely conceivable you had no idea what was really going on.

Hopefully people will be level-headed about this sort of stuff.

I do too, but having met several people who worked there briefly and left, I wonder how many of those 340 have even been there for years. Seems like they have a lot of writing-on-the-wall related churn.

Feel bad for some of them, not the ones who delusionally chanted "F--- you, Carreyrou!" at the all hands meeting after the big scam started coming to light: http://www.vanityfair.com/news/2016/09/elizabeth-holmes-ther...

Was there any point in time where a reasonably skeptical person wouldn't have thought that Theranos is a scam company?

As far as I know they never provided any scientific data that their product works. What do you expect working for such a company?

Worth reading: http://www.vanityfair.com/news/2016/09/elizabeth-holmes-ther...

Good old common sense is lacking all throughout this farce. It's one thing to build a company on an existing technology, like Jobs did, but promise to implement it better. It's another to come up with a wouldn't it be nice if... scenario, and raise capital on it.

Are Silicon Valley investors stupid enough to throw their money at any bright young dropout with a change-the-world idea? The fact that some Ivy League dropouts found billion dollar companies does not mean a particular Ivy League dropout chosen at random (or one of the many who express a desire to change the world) has a non-zero chance of returning $$$ on investments.

Demonstrating that inteligence and common sense are seperate traits, the latter not always accompanying the former.

Holmes had extremely good family connections. I'm sure it sounded credible at the time. From VC:s point of view the type of people she had connections to functioned as social proof and some of them even probably as celebrity advocates (i.e. Rumsfeld).

If you wait for all the pieces of a proposed business to be functioning properly, you will have missed the boat as an investor. It's perfectly reasonable to take a bet on someone who appears intelligent and well connected, with a "maybe" idea.

There's all sorts of hurdles that a company might not get over:

- Tech turns out to be a red herring - Tech works, but competitors also get it to work - You can't scale the team - People buy the product, but you need critical mass to make it worthwhile - etc

I don't think it's too much to demand a scientifically verified "proof of concept" before investing. There's still a very long road from that to a real functioning business.

What Theranos had was merely the hope of developing such a process, with many reasons to believe that it's simply impossible. That's insanely risky.

She is also thin, good looking, eventually blond, charismatic, and connected.

What I see is a cult leader who happens to be recruiting in Silicon Valley rather than (say) Hollywood.

Be right back, buying turtlenecks and blonde hair dye. We're gonna be a unicorn!

Seems she made a literal black box.

“We will return our undivided attention to our miniLab platform. Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care.”

People who are expected to die before they can sue. Also kids. Am I reading this correctly?

http://www.wsj.com/articles/theranos-retreats-from-blood-tes...

Also known as vulnerable patient populations -- a critical group for healthcare needs. That part is definitely not a conspiracy. From Theranos' perspective they have families that are quite capable of litigation.

That angle is a bit of a stretch to put it mildly.

How long are they going to continue this farce? When will the investors step in and try to save what's left of the business?

Assuming the press articles are correct, Theranos class B stock has 100x voting power. Investors may not have sufficient voting power to overrule the founder(s).

What would they do? If they can maintain say 5% of its hype valuation that's worth more than the market/product they have (nothing).

Maybe I'm missing something, but...nothing? Just looking at google maps there are like 10 theranos labs just in Phoenix (my hometown).

Recently, I was talking to a doctor-friend, and they recommended that if I was curious about something like my blood sugar, but didn't want to go for a whole doctor visit, to just go over to a theranos lab and have them do it.

You could also get it tested at a lab like LabCorp. There are a few websites that let you select the tests and pay for them online and then visit the lab. You can get a standard panel of 25 or so blood tests for $50.

Why wouldn't you just ask a pharmacist?

EDIT after downvotes: Maybe it's an English thing, but if I wanted to know my blood glucose I'd ask my local pharmacist.

http://www.nhs.uk/NHSEngland/AboutNHSservices/pharmacists/Pa...

Those are the labs they're being forced to close, right? So not much of an asset, besides maybe the equipment and stuff they could sell.

Sure... local grocers/pharmacies offer flu shots and blood glucose testing. Why pay for Theranos branding?

Actually, it's pretty cool you can do this in Arizona. Wish this was possible in California.

I've installed the Theranos app on my iPhone, and was pleasantly surprised at their very affordable a la carte clinical lab testing.

It feels pretty empowering for a consumer to order whatever clinical test they want without having to consult a doctor first (at least in Arizona).

There is nothing left of the business. They are finally trying to come up with a product they can sell before running out of money. If they try to raise more money the valuation will be pennies on the dollar. There is no way they are close to unicorn valuation after this fiasco.

What do you mean what's left of the business, the money on the balance sheet?

I'm expecting Elizabeth Holmes to announce having herself, Sunny and a core force of bodyguards put into cryonic suspension.

The whole company is full of delusional characters it seems... Read recent article, apparently during recent company meeting the entire auditorium of Theranos employees chanted "F... Y.. Carreyrou! F... Y.. Carreyrou! " What kind of mentality people need to have to behave like that? Professional Scientists? Come on. I will not be sorry to see this dirty company go down the drain.

Does anyone else think this is the type of behavior expected of supposedly world class, cutting edge researchers? Cussing at the person who is challenging them? With the approval of the management?

Theranos, MAY have a chance to build a successful product if they replace ALL of their decision makers who got them here in the first place and then clean up the ranks and build appropriate science team. Only then they have a SHOT at making a good product.

If this does not happen then it is RIP for Theranos 2016..

She's a mighty good leader. It takes a rare and special talent to build a 9 billion dollar company using only smoke and mirrors. Even after all that has transpired she hasn't given up, she's still trucking.

She doesn't see herself as a fraud at all, her faith in her mission, however delusional, is ironclad. She inspired her investors to take insane financial risks without so much as a whiff of due diligence. Elizabeth Holmes is a modern day Joan of Arc.

You need to read up on Joan of Arc, unless I am missing the idea your entire post is in jest.

She sounds like a modern day politician caught with their hands in the cookie jar whose response is to change the issue to fit their own narrative.

My only shock is they haven't trotted it out as if her company was treated differently because of the sex of the leadership.

>She sounds like a modern day politician caught with their hands in the cookie jar whose response is to change the issue to fit their own narrative.

Yeah, but isn't that exactly what true leadership is? After all, people are perfectly happy, by the millions, to follow such people, and they've been doing it throughout history.

In July 2011, Holmes was introduced to former Secretary of State George Shultz, who joined the Theranos board of directors that same month.[48] Over the next three years, Shultz helped to introduce almost all the outside directors on the "all-star board," which included William Perry (former Secretary of Defense), Henry Kissinger (former Secretary of State), Sam Nunn (former U.S. Senator), Bill Frist (former U.S. Senator and heart-transplant surgeon), Gary Roughead (Admiral, USN, retired), James Mattis (General, USMC)

There's some crony capitalism for you.

I guess, but it didn't work. She was probably hoping all the political connections would help push back the regulators. But the regulators have come down hard.

If letting them use equipment that was never seen by regulators and hidden from inspections for 2 years before sounding the alarm is "coming down hard" then you're right.

You know who Dropbox has on their board right?

Clearly you are implying exactly Condoleezza Rice, but if you look at the other companies she is a board member/advisor for you find a diverse groups of companies. It makes sense for someone who wants to stay current with the latest in business to seek a diverse portfolio of companies to be a part of.

One board member being formerly involved in politics doesn't strike me as valid the way you are comparing it to Theranos.

https://www.crunchbase.com/person/condoleezza-rice/advisory-...

Rice is an architect of the Iraq War. It reflects horribly on Dropbox that they would have her on the board.

I have approximately the same take. But why do we think Drew Houston recruited Rice for his board? Is it the Stanford connection? Does Dropbox do a large amount of GSA business we haven't heard about? Surely it can't be because he supports Rice's performance as National Security Advisor.

I think Rice is towards the bottom of a list of architects of the Iraq War, for what it's worth; only Powell is further removed from it. It probably goes Cheney, Rumsfeld, Bush, {Wolfowitz, Feith, Bolton, &c}, a bunch of other people, and then Rice and Powell. She's a critic --- not very credibly, but a critic nonetheless --- of the actual execution of the war.

I wouldn't hire her, but my reaction to her involvement with Dropbox is less visceral than, I don't know, puzzlement?

That's all a matter of values. By hiring her, Dropbox gives the impression that they are endorsing her and what she did in the past, or that "her past does not matter". Which is a very sad call to make when you respect human life.

I understand why people believe this, but strictly speaking, it isn't true. Employing someone isn't an endorsement for all their positions, and even more to the point, employing someone who was in the past affiliated with an organization isn't an endorsement of the whole organization.

Again: I wouldn't hire her, and I'm more confused by her presence on the board than anything else.

I think a board seat is rather different than employment. I am comfortable with political and "values" tests for company directors that I would consider inappropriate for an employee.

Don't get me wrong! I'm not uncomfortable with the values test here! I'm just confused as to the logic behind appointing her, and thus about what her appointment says about Dropbox.

"Formerly involved in politics" hardly scratches the surface of what Rice is. Rice got on national television and told America that Iraq had nuclear weapons. Rice was also instrumental in leading the CIA to torture of certain detainees. Rice should be on trial at the Hague, not collecting honoraria for sitting on corporate boards.

This is not related to the implication made that she is an equivalent to the board at Theranos.

One one side you have people who are actively using their political influence to help a company avoid laws and regulations and operate an extremely careless, dangerous, fraudulent, etc. company in a very sensitive industry dealing with people's lives.

On the other side is a former politician who appears to be diversifying her experiences by being a member of the board of several venture-backed tech companies, one of which is a pretty decent way to share files.

The motivations and sinisterness of one of them stands in stark contrast to the other in the example made.

When did Rice claim that? Please choose a different forum the spout political lies.

http://www.nytimes.com/2003/01/23/opinion/why-we-know-iraq-i...

Nuclear program != nuclear weapons. See Iran

Seems intellectually dishonest to accuse honkhonkpants of lying when Rice was claiming they could produce a nuke at any time.

'Can produce' and 'has produced' are two very different things.

Just because you can punch me, have already rolled up your sleeve and clenched a fist does not mean you have punched me, does it now?

No, she leaves it up to the reader's imagination (note the evocative final sentence) to bridge the inch-wide gap between what she's willing to say, and want she wants to be able to say. Clearly the type of person you want on your board.

And that's a very curious example you cite considering Iran was the place the neocons wanted to invade next under the same set of false pretenses.

> Nuclear program != nuclear weapons. See Iran

The parallel is easy to make. Repeat if often enough and people will end up saying they have nukes.

You're on HN, so you have access to the Internet. This information isn't hard to find...

I find this kind of comment cropping up - can you find a source for your claim that Rice claimed Iraq had nuclear weapons?

My source is I saw it on live TV.

"We know that he has the infrastructure, nuclear scientists to make a nuclear weapon. And we know that when the inspectors assessed this after the Gulf War, he was far, far closer to a crude nuclear device than anybody thought -- maybe six months from a crude nuclear device. The problem here is that there will always be some uncertainty about how quickly he can acquire nuclear weapons. But we don't want the smoking gun to be a mushroom cloud."

When I started reading the quote, I thought it was going to back your argument up. It was a surprising disappointment when it did not.

You realize that that quote doesn't actually support your claim?

You do know that quote is factually accurate?

There's this website where you type in things and it searches those things for you. The url is google.com, you should check it out.

http://edition.cnn.com/2003/US/01/10/wbr.smoking.gun/

Claims made in the quote:

* Iraq has the infrastructure [for a nuclear program]

* Iraq has the nuclear scientists with the know-how

* Iraq was "far, far closer to a crude nuclear device than anybody thought" after the 1st gulf war

* Specifically, maybe six months from a crude device

* There is uncertainty about how quickly Iraq could acquire nuclear weapons

Sorry, but these are all facts. Saddam DID have a nuclear weapons program at the time of the 1st gulf war, and to the surprise of inspectors he was in fact very, very close to building a 1st-generation bomb. That's why there was an ongoing international inspection regime thereafter.

Although the specific uranium enrichment plant was destroyed after the 1st gulf war, a lot of dual use equipment was kept around. Those nuclear scientists didn't go anywhere. And for reasons that to this day seem bizarre, given what played out, Iraq was playing "cat and mouse games" with the nuclear inspectors (quote from Hans Blix) and there was a great deal of uncertainty about the current status.

Those are facts. Google them yourself.

Did Iraq actually have weapons of mass destruction? No. Did the US and UK oversell the case for war? Yes. Did a great humanitarian tragedy happen as a result? Yes. But that didn't make Ms. Rice a lier when she said what specifically what was quoted above. We must pay careful attention to factual accuracy.

I think Saddam wanted to actually create the suspicion that he had WMDs, to scare off potential invaders (and he was probably right).

I believe he is on record for saying this, after he was captured. He was probably right, given that both Iran and Israel wanted to wipe him off the map. Iraq uber Saddam was a pariah state. But he underestimated the willingness of the US and UK to actually go to war.

I didn't say they weren't facts, I was just pointing out that if you have a quote and want to know it's correct, you just google it. Don't you agree with that?

No, there is wrong information on he Internet. Factual provenance is a trickier issue than just "Google it."

Yes. At least Dropbox isn't selling snake oil. I find it just appalling that these high ranking officials were seemingly cashing in by sitting on the board of a corrupt company.

I wish we could adopt Taleb's idea of capping lifetime earnings for anyone who takes a job as a high ranking public servant.

No, who?

Condolezza Rice

https://www.crunchbase.com/person/condoleezza-rice/advisory-...

"An Open Letter From Elizabeth Holmes" posted by Staff Writer

It wouldn't surprise me if a shadow writer indeed wrote this letter "from" Elizabeth Holmes. That's how the world of open letters from CEOs works, right? But usually they wouldn't expose the farce this way?

I doubt she actually wrote this but to be fair all of their posts are written by "Staff Writer" except an op-ed linked by "Theranos Staff."

From John Carreyrou,the Wall Street Journal writer who wrote the investigatory series on Therano: "Patients are finally safe tonight. I did my job. #theranos""

Carreyrou will probably get a Pulitzer for his work on this story.

i'll say it again, there's a really cool Don DeLillo book in this Theranos burn out ..

"Through it, we see a world in which no one ever has to say ‘goodbye’ too soon, and people are able to leverage engagement with their health to live their best lives." -- bunch of BS :]

You might enjoy Zero K, a Don DeLillo book that is more or less about cryogenic suspension.

+1 this would make a kickass Don DeLillo book.

From an outside perspective, the "mini-lab" sounds like a slightly different name for the same thing they already promising five years ago. What am I missing? Anything?

I think they are trying to pivot from a dumpster fire. The original "product" was blood tests with microliter volumes. That is essentially a farce. Now they are trying to sell lab automation in a box.

Right. But as they are describing the "lab", it seems to be for doing blood tests with microliter volumes. No?

Yes, so the "pivot" is more from a service to an instrument -- with a different set of regulations that they haven't yet burned to the ground. It's more of a 90 degree pivot than a 180 degree pivot.

> We have a new executive team leading our work toward obtaining FDA clearances, building commercial partnerships, and pursuing publications in scientific journals.

hm, that's funny, no mention of products or services...

I think it's more like she's been banned by regulators from running a lab and given their history no sane person would purchase such services from them anyway... but you know, details.

"She also controls a majority voting stake in the company and can’t be easily removed from her position, according to people familiar with the matter." From the Wall Street Journal.

The most frustrating part of this whole situation is that this is going to cause VC deal flow to be impacted for those entrepreneurs who actually know what they're doing.

Unlikely -- this deal didn't really get any VC deal flow. DFJ invested because Draper's kids were childhood friends of Holmes'. Ellison (not a VC) invested because his investment manager was a college friend of her father's. ATV invested because, well who knows -- perhaps because DFJ invested. Those are the three investors.

No life science VCs invested.

I guess I was speaking more broadly. Not that it's necessarily a bad thing, but my hunch is that there are more elements at play such as the economy that is slowing early stage deal flow. But this whole situation sure is making it easy for someone investing in a company to spend more time scrutinizing the team and company. Again, may not be a bad thing. Time will tell.

I'm a really uninformed opinion but doesn't public perception impact VC at some level, even subliminally? If public perception goes to shit, might the market (and VC) follow?

Life science investors need to invest in life science deals -- it's the promise they made to their customers (err...LPs) and what the need to do to make any more than the management fee.

If anything, they can tout their prowess in passing on the Theranos shitshow.

As far as I can tell right now life science investing is doing fine. I am advising one company (and in the device diagnostic space, same space, if different application than Theranos) which is deciding over multiple offers.

The last dying gasps of a Silicon Valley fraud..

It's strange that there are so many people at the company. If I were one of them, I would jump ship long time ago.

> "An Open Letter From Elizabeth Holmes"

> "By Staff Writer"

I think this encapsulates this phony in two lines perfectly.

This is after several papers were published on inherent inaccuracy of small blood volume based tests..

In the future you will be able to run a multitude of blood tests on a single drop of blood. Just the future is not here just yet. Just like DNA. You amplify. And amplify. And a very cool guy got a Nobel prize for that.

It's not at all clear that that is the case. On of the problems, as I understand it, is that there's just not enough material in a drop of blood to run many tests.

I'm not an expert, but while improvement may be possible, miraculous improvement may not be.

The initial plan was to sell the technology to the Defence Department for use in battlefields. Theranos might still be able get a few billion out of them.

Preparing for charges to be levied, you have to hope.

I'm not sure what people are so pissed about (unless they are investors). A little help here?

Did they cause actual medical harm to someone?

Had the minilab worked they would have had a functioning commercial service available to test and finetune the process immediately. Isn't field testing and shipping products what's important when developing new products and services?

Sure, there is the chance it's a psychopath bullshit scenario from start to the end but do we have any actual proofs that this is the case?

Actually, you know what people are pissed about? Poor investments like this create a business environment where it's harder to get really useful things done.

It becomes impossible to bootstrap, and then get funded because VCs a) are looking at all the wrong metrics b) make development more expensive because the money they've thrown into the sector has pushed up costs.

Poor investments as an employee, that when you're looking for an interesting, innovative hard science company to work for, you're comforted by a stream of companies that have been evaluated, not on their scientific merit but on their ability to sell an image of themselves. As an employee who doesn't just want to take a pay check, but would like to actually do something useful this is frustrating.

You might say "it's their money, they can spend it how they want". As far as I'm aware that's not really true. The majority of the money invested in these kinds of companies ultimately comes from Banks. It's either money created out of thin-air (and doubly diluting every dollar you own) or it's a debt owned to the banks customers.

I understand all but the last of your arguments:

"the majority of the money invested in these kinds of companies ultimately comes from Banks. "

I suppose from the point of view of economy this is a problem if the funds exit circulation. If, on the other hand, the funds are mostly used for payroll and purchasing goods and services to maintain the business this means the whole economy benefits. Or am I totally clueless of fundamental economics (which might be the case, computer science and physics are more familiar to me)?

It's a problem with how society allocates it resources to make technological progress.

Payroll goes to pay people to do something non-optimal. As for equipment, well it's great for me because I can pick up used lab equipment cheaply on eBay. But when a startup buys, say low-yield back-thinned CCD cameras and then never uses them human effort is wasted.

As an aside, the startups themselves rarely purchase used equipment (how do you present it in your budget, how do you explain the increased risk that comes with buying a used piece of equipment to your investors?).

So, the economy keeps functioning... but the economy is just money moving around, not necessarily people doing actually useful things.

Edit: Not sure I really understand the downvote. It would be great if you'd comment directly. Particularly given I was attempting to clarify my previous comment as requested.

They had to invalidate multiple years worth of blood tests. People would have made medical judgements and decisions based on those tests that they can no longer trust. This could (and likely did) result in people not receiving appropriate care, or receiving unnecessary care due to their results being inaccurate.

> Sure, there is the chance it's a psychopath bullshit scenario from start to the end but do we have any actual proofs that this is the case?

We have tons. You just haven't been reading the news.

"You just haven't been reading the news."

No, I probably haven't in this particular instance. I don't follow US business scene that closely beyond what HN offers.

She was used by greedy VCs. She's a victim. Take pity folks. (No sarcasm)

Death by a thousand cuts.

More precisely, 340.

"Stop breaking the law, asshole!"

https://www.youtube.com/watch?v=Zx40udwQvZI

I went to the technology page which was a whoops 404 error.

How perfectly apropos!

Ha they fixed it. Someone at theranos reads hn.

Still getting a 404: https://www.theranos.com/technology

Either broken again or maybe you hit a cache.

When I click the link in the footer now, it directs to the homepage. The /technology page is still 404.

Yes. That would be a start.

The downvotes are comical. Never seen so much sympathy for people who defraud investors and put healthcare at risk.

One needn't sympathize with those things to downvote unsubstantive snark on HN.

We detached this comment from https://news.ycombinator.com/item?id=12649468 and marked it off-topic.

Snark begets snark, dang. I didn't perceive the parent comment to be particularly substantive either.

We'll agree to disagree. Voters seemed to agree with my sentiment after all.

Voters upvote snark routinely. That's a weakness of the voting system, not a sign of quality. HN can't live by upvotes alone.

How does this become top post with only 79 points and 21 comments posted 1 hour ago?

To simplify, lots of votes in a short time gets the article to the top, unless penalties kick in. If you're interested in the HN scoring algorithm, I wrote about it in 2013: http://www.righto.com/2013/11/how-hacker-news-ranking-really...

Some changes have been made to the algorithm since then, but it's still roughly accurate.

Realistically: for a while, this company has been engendering a lot of ill will, enough that many people recognize it by name, and many of those same people will quickly upvote any bad news about it.

That's more than 1 upvote per minute, pretty high. The 2nd story has 55 votes in >1 hour.

RIP THERANOS.2016.

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