Major Investor Sues Theranos
wsj.com
wsj.com
Perhaps what you might mean is something like "disingenuous" or "biased" or "unethical"
Mainstream journalism will also do just fine.
Nonsense.
I don't know that I agree with it, but it's a valid opinion to have that mainstream is no better than elsewhere.
Would you include in 'journalism' very badly-written articles that are done by a writer collecting or reporting on sources (example: reporting on a tweet and its responses), while using horrific grammar and being very low-quality? You know the kind of link-bait 'articles' I'm talking about - I wonder if you would consider that part of journalism or not.
Mainstream media has FAR higher journalistic standards than independent media.
Major media sites have volumes of books that their reporters follow for their editorial process. AP has a style guide you can buy (and vet).
Independent media follow no such journalistic rules.
Never trust independent media. Mainstream corporate media is far more trustworthy, since they are a known known.
It's such a fallacy to assume that just because it's independent that it's more trustworthy, when the exact opposite is true.
So, the proper response is to do just what honest journalists or even agents in intelligence collection are taught to do: use diverse sources, rate their integrity, identify their biases, and merge them in a way that accounts for the two. It's what I have to do if I rely on the mainstream sources. It's been clear on a regular basis that their goal is to hold interest of specific demographics to keep them looking at ads rather than inform them. They're also very prone to self-censorship of anything that gets in the way of that due to cash flow.
That's pretty much what mainstream media does. That's why you see major investigative articles with lots and lots of cross-referenced sources.
You know about the Theranos fraud because mainstream media, The Wall Street Journal - the largest newspaper in the country - thoroughly exposed them.
Did you thank mainstream media for their work?
This is not what the mainstream media does. What it does is start with the biases and goals of the organization that targets the beliefs and wants of particular viewers. The journalists will have run into this trying to get things by editors in the past. Then, they'll begin on their peace which may use any combination of sources to support its claims with little presented for alternative opinions. They even like to cite "anonymous sources" to push total bullshit. They'll then present the story.
Sometimes I see well-researched stories that cover most odds and ends. Most of the time I see them reporting whatever they saw or heard from one source with their own slant. The funny thing about your comments is that even most viewers of these organizations I run into know they're extremely biased. They'll say "What else do you expect from (Huffington Post or Fox News here)? They always push that (liberal/conservative) BS!" They just think the bias of their preferred outlet is correct most of the time. Of course, that's all the info they see too. ;)
So I take it you don't want to thank mainstream media for uncovering the Theranos fraud?
A media more independent from corporate and government interests would have less of these issues. Especially suppression. Then it's just a matter of gauging accuracy and bias of each.
You're welcome.
If you're reporting clear facts about something unambiguously bad, then it's entirely appropriate for the supporting photographs to support the article.
is this all a male perception of a problem they fully do not understand and therefor think they know how its perceived by the opposite sex?
The question related to gender seems to be somewhat out-of-left-field
Of course it's important for the people in that process to be judicious and scrupulous about their handling of the facts so they can deliver material that provides reliable impressions. But showing unflattering pictures of people found to have done seriously unflattering things isn't some egregious departure from these requirements. Indeed, to the extent that a picture can say a thousand words, it's a useful - and generally appreciated - bit of data compression.
How would facts speak for themselves without being put into words by someone?
Photos, are not based on facts. There is no such thing as a 'neutral' photo - all photographs are editorialized. Timing, framing, composition, lighting, contrast are among the hundreds of variables that contribute to a photo. Most news organisation are well of this and they allow post-processing of photos (to different extents). I would say an unflattering photo goes well with an unflattering article.
The use FoxNews does of this photo-picking with President Obama or liberal politicians is much worse. Or check the tabloids, they're masters at that.
This one? Just fine. I also want to point out that the picture is all but an outtake. Photography agencies publish photos like this on their online collections all the time, they won't discard them. Exactly because they know outlets may pick them for a story where they would fit.
As a non journalist this is what I call manipulation.
...which presumably is almost entirely based on what they read or see in the media?
I can't see how looking crazy with wide open eyes and fake smiles correlates with "sales teams and marketing execs."
That's a completely gratuitous caricature.
Yep. And I wonder what David Paul Morris [1] thinks of having his work used in this manner. It doesn't reflect well upon him as a photographer that's for sure.
1. It's part of the Bloomberg News catalog
2. It may have been published on Bloomberg's own stories of Theranos.
3. WSJ had to pay for the right to use that photo.
How would any of those things reflect badly on the photographer?
4. It's a horrible photograph that makes the photographer look incompetent.
In any case, it's not the publication's job to make someone look good or glamorous. It's not the most flattering photo of Holmes but it's not terribly off from what she normally looks like (in general, photos of someone while they're talking/eating aren't going to be ideal, in terms of attractiveness).
When I shot for Reuters (1996-2002) some of my most 'boring' images played all over the world and my favorite photos only occasionally made the wire. Did I look incompetent? I don't really care; My byline in The NY Times for a crap photo was much more valuable than the 'perfect' photo nobody sees.
Pro news photographers don't care; they aren't trying to audition to be your wedding photographer, they're chasing news and not giving a second thought to where some quick corporate headshot is running.
http://davidpaulmorris.com/If you keep an eye out for it, you may notice the same pattern.
Sometimes HN tries to be too clever and I don't mean to direct that at you but basically every sibling and cousin comment in this subthread.
HN Challenge: next Theranos thread don't upvote comments about CEO's appearance.
preaching to the choir
> It calls the trustworthiness of the entire rest of the article in question. (Although i guess it's kinda nice if it's done blatantly so you already know in advance the article is particularly untrustworthy.)
In a lot of ways it is subconscious, but not always. If you take a objective view and look at US Presidential 2016 race articles, you get a pretty good feel for the base opinion of the editors from the picture they use of the candidates.
Every news outlet has a prejudice, and I find the choice of images to be one of the easy ways to communicate that to you. If you look for it, you can gear your reaction to the information provided.
Thank you. I found that insightful. I must confess that I never noticed that before ( but I am not a people person )
It's not just founders, think about the pictures of Obama and O.J. where they were made blacker. Or the images of James Holmes or Saddam.
People will actually complain and threaten to kill the magazine editors if they don't make the 'bad guys' look evil enough; look at what happened with the Rolling Stone photo of the Boston Marathon bomber.
They weren't complaining about the saturation or hue.
I disagree with the dehumanization of people who do dispicable things (e.g. the Boston Bomber or Nazis) - they were not monsters but humans like you and I; only with very warped belief systems. There danger is that categorizing them as monsters will limit our understanding of how they come about and/or how to prevent this from recurring in the future.
On the issue of appearing on a magazine cover - I do not think the glamorizing was intentianal. Good-looking people dominate covers, and monster or not, the dude was good looking. Hitler was once Time magazine "Man of the Year" - they were not lionizing him, but only declaring he had made the greatest impact of the year.
Would be an interesting art project to collect them all together get people to rate the images on some scale and display a visual political gradient.
Sounds like a very undesirable number of years with little positive to show, although maybe there were some lessons in there. Maybe time for a workaholic recovery program for her, who knows. Sad to hear the prime of a life spent like this... though perhaps not any worse than other destructive paths one could travel.
Hm, I wouldn't call 4.5$ billion "little". I would gladly work 7 days a week for 12 years for even much lesser amount.
If you treat investing as gambling don't sue if you lose a hundred million dollars of your customers money.
The whole Theranos affair interests me very much from a professional point of view, I could not imagine that none of those high flying investors and funds had not done actual due diligence, it is the biggest example of the herd mentality at work that I'm aware of involving only one company.
The really big question - and it is one that will inevitably be asked - is at what point in time did Theranos/Holmes realize that their tech wasn't going to work? If that is hard to establish (and they're probably trying very hard to make that even harder) then she may get away with the whole thing. If it can be established beyond doubt that they knew prior to accepting investment then it definitely is a case of fraud and the investors may be able to recoup some of their investment but it still isn't enough to get them off the hook completely for their own role in this.
Theranos did not comply with their duty to inform truthfully, but the investors did not comply with their duty to research. Asking the company is not research, the technology being complex is not an excuse, you're going to have to do your own homework, you can't rely on the company because they have an incentive to not be truthful.
It's not as if there is accounting with double bookkeeping that was withheld from you, it's a bunch of machinery that should perform in a certain way. Bring your own samples for which only you know the outcome, have them run those through the machinery in your presence and check the results.
That this will take more than some pencil pushing is where things went wrong, they simply didn't feel that on an investment this size they needed to actually look at the technology, they basically lapped up what the company told them and forked over the cash.
FWIW I do this sort of thing for a living and I'd take it quite personal if a company lied and got away with it because I failed to properly look at their technology.
Belief doesn't enter into it.
edit:
Downvoters are invited to discuss what they think is wrong with this comment or where the disagreement lies.
To an extent I actually agree, but I don't think that should preclude an investor from suing. If a business went to extraordinary lengths to fake some working tech then I think it's fair for the investor to get their money back, and it should be up to a court to decide whether or not that happened and what 'extraordinary lengths' means in any given case.
It's fair for them to sue but I think the court will ask them why they didn't do any independent verification of the technology to make sure it actually worked. That's pretty much the bar for anything that's labeled 'revolutionary' or that you perceive to be 'too good to be true'.
If it were a much more normal product with proven tech then I'd be more inclined to let them get away with 'belief', but in this case (and uBeam, to name another) you really want to see the technology for yourself and you want to verify that it works.
Short of stage magic they shouldn't be able to get away with this.
One of the most interesting DD's I ever did was a company that tried to rig a demo, they didn't get away with it because I went in assuming it was a rigged demo and I figured out how they did it. What makes it interesting is that today what was 'magic' in the 80's is actually quite normal... But back then you'd have to be doing something quite impossible with the technology available in the day to be able to give that demo unless you rigged it.
There are lies, and there are illegal lies. If you go to the IRS and put in writing a different number, you go to jail. If you go to the bank and get a loan, but you use photoshop to prove your colateral is worth 1 million, you'll also go to jail, albeit the process will take longer.
Here I expect the process to take longer still, but for this degree of lying, jail is definitely on the table.
This is why I suspect that nobody of the DD team ever went to the lab to have an actual sample (or preferably several of them) tested in their own presence. Which in this case would seem to be the minimum level required for satisfaction given the radical departure from the standard of the time.
Given that Theranos claimed their tech was too secret to share or be peer reviewed anybody that lost money (theirs or others) should look in the mirror for the cause.
"When I’ve asked V.C.s why they didn’t pour millions of dollars into a company that appeared to be changing the world, I was told that it wasn’t for lack of trying on Holmes’s part. She met with most top venture firms. But when the V.C.s asked how the technology worked, I was told, Holmes replied that it was too secret to share, even to investors. When they asked if it had been peer-reviewed, she insisted once again it was too secret to share—even to other scientists."
The way it works with such parties is that they hire people who are versed in the technology to prepare a report on the subject at hand. This is called 'due diligence', specifically, technical due diligence.
So if you cross the t's and dot the i's there will be a nice report saying 'this technology is a-ok' by some party in a drawer somewhere. If so then that party shoulders a large part of the blame. Absent such a report (and I find it hard to believe the investors did not perform due diligence, but then again, so far none of them have stepped forward to point the finger at their technical advisors) the investors themselves are far more responsible.
The failure to conduct diligence does not idemnify Theranos. They weren't exaggerating-- they were making claims that just weren't true -- and the knew those claims weren't true and still went to investors with the lies. That shows criminal intent and not just incompetence.
I would agree that a certain amount of healthy...embellishment is to be expected from a company when talking to investors. Maybe I'm just naive since I don't play in the VC games, but if our first interaction as businesspeople is a lie, you aren't getting anything from me.
Bending the truth is one thing: evidence shows that Theranos at the direction of Holmes herself outright fabricated evidence to show their testing worked, knowing damn well it didn't.
I honestly don't understand what is taking so long. Everyone involved in this companies board should be behind bars for the remainder of their life. This wasn't some fucking ordering food app that went wrong, this was thousands of people's medical decisions. This shit matters but it gets the same kid gloves treatment that everyone worth more than a few million can count on from our pathetic justice system.
Really? I'm not naive enough to believe that everything you get to hear during due dilligence is 100% truth but I also don't think we live in a world where everyone can get away with deception and lies. After all the civilized world has developed a constitutional state with a law that offers some level of protection.
So there is a point where business between a company and an investor is conducted in good faith. If it comes out later that the company has forged technological results to defraud investors, to me that's a very good reason to sue. Saying the investors didn't look well enough is futile as a) you could use the same argument to justify pretty much any case case of fraud and b) it's impossible to do perfect due dilligence.
The state will protect you if you have done your own homework.
I'm not saying the investors didn't look well enough, I'm saying that if they hired some party to look at the technology that party was asleep at the switch or they didn't do due diligence at all. There is no way that outside expert in the field would have been fooled if they came prepared to look at the technology in depth.
If the investment was done before the technology was realized then they probably would have raised some issues with respect to the fact that the core tech was unproven and might very well not work for a number of reasons.
Due diligence will never be perfect, that we agree on. But to get the core issue wrong is extremely rare, first and foremost you verify each and every claim the company made. It is not a discovery process, it is a verification process and given the fact that Theranos made some pretty strong and very verifiable claims is what makes me wonder how much DD was actually done.
From the outside looking in it looks as if a whole bunch of totally clueless investors couldn't wait to fork over their money to not miss the boat without so much as a shred of doubt about the miracle machine.
Even doing due diligence, you rely on their information, expertise and record-keeping. Lying or misleading is unacceptable.
This whole story is messed up. I still detect a bit of apologism on these boards, even though it looks like fraud was committed. Assume everyone lies? Really? What sort of world are you doing business in?
As for what world I'm doing business in: I work hard to keep the money of my clients safe by detecting mistakes/fraud/omissions/issues before the deal is consumed and I have a hard time believing anybody competent signed off on the Theranos deals from a technical point of view.
It's a fact of life that when you're an investor every now and then someone will attempt to take you for a ride, this is why investors perform due diligence to begin with, to make sure that they have covered their responsibility towards those whose money they manage.
If you present results that are cherry picked, or problematic in how they were obtained, how much of a practical difference is there to your example?
Let me give you one sample of what DD entails:
If you're going to buy a factory with a warehouse in another town you could believe they have a warehouse in another town, or you could go there to look at the warehouse, make sure it's up and running and that there is stock roughly in accordance with what you were told. You check the ownership of the lot and the building if the company claimed it is their property. You count the number of employees, how many trucks there coming and going during your visit and what got loaded / unloaded.
Of course 99% of the time you'll find that everything is in order and that any errors are accidental or immaterial. But that 1% (actually, probably more than 1% but never mind) of the time where things are not as they should be you realize what DD is for.
It's not a rubberstamp, it is a verification that the picture the company painted was error free and complete.
Asking the company what the address of the warehouse is would in my opinion not be enough, even though you could assume that all is as it should be.
I've had the weirdest stuff surface during DD's, and I've had a few eyebrows raised for stuff like 'ok, I'll visit your warehouse tomorrow please alert them' (or other stuff in that vein) but for real companies with actual products and honest management this is never any problem, at most an inconvenience. Whenever there is significant pushback to such a request you can bet there is trouble and it usually doesn't take long after that to find something really bad (which typically signals end-of-deal).
Letting the company pick the examples or the results in the case of a company that provides test equipment is not an option, you'd want to walk in with your samples have them analyzed on the spot and follow the whole chain from entry to results and then you'd compare those results to a control that you possess. Anything less would not do.
Otherwise, why do DD at all? If you're going to go on what the company provided then you may as well skip DD and become a true believer.
Do we know the scope of the DD that was done?
I agree that they would be negligent if they did not run DD with a scope that included a review of the Theranos platform technology and implemented devices, but it is entirely possible to do proper DD and be fooled by a skilled charlatan.
Then please provide some proof that proper DD was done. I haven't seen any, and funny enough, Theranos did not defend itself at all by saying the investors did their own proper DD, which would be the easiest way out for them.
> it is entirely possible to do proper DD and be fooled by a skilled charlatan.
Sorry, I do not subscribe to that. You don't get to cheat on physics, biology, math. This is not some kind of magical device, it is an ordinary, real world device with very specific inputs and very specific outputs. In fact, such devices already existed which gives you a control. The disruption came along one parameter only, the amount of blood required to do the test.
It is trivial to come up with a foolproof test to see whether or not Theranos has a working device.
If they did not at the time have a device then you are investing in a company that your DD partner will tell you may very well fail because a device as specified may fail to materialize. If they had a process but no device then that too could have been tested.
Yes, it is hindsight because it is after the fact, but this is how the job is normally done and that wouldn't change before or after. It's just that we happen to live after the fact that doesn't make everything automatically hindsight. Just like naming your variables properly in a piece of software can't be called hindsight if you find a project failed because of not naming variables properly. It is simply not good practice, irrespective of the timing.
If you are stating that "they [investors] failed to do due diligence", then the onus is on you to provide proof that the proper DD was done if you don't want your argument referred to as speculation. I am not drawing a conclusion one way or the other.
> The disruption came along one parameter only, the amount of blood required to do the test.
That wasn't the only disruption and I'm not sure that was the primary one: I would argue the primary disruption was regulatory (using/abusing the LDT framework and consumer-initiated testing).
> It is trivial to come up with a foolproof test to see whether or not Theranos has a working device.
I would never use the words trivial and foolproof for anything in medicine or laboratory testing: there is nothing simple about running a comparison between labs, especially for biological samples. Run an identical sample at Quest and Labcorp and the values will differ, perhaps in a statistically-significant way.
I agree in that I would expect that proper due diligence should have recommended against an investment in Theranos. Not participating in the scientific community is a giant red flag. I completely disagree that technical DD on the technology platform would necessarily reveal the flaws in Theranos.
> That wasn't the only disruption and I'm not sure that was the primary one: I would argue the primary disruption was regulatory (using/abusing the LDT framework and consumer-initiated testing).
The technology enabled that. Without the tech that failed to materialize and is not the core of the innovation that Theranos represents.
> I would never use the words trivial and foolproof for anything in medicine or laboratory testing: there is nothing simple about running a comparison between labs, especially for biological samples. Run an identical sample at Quest and Labcorp and the values will differ, perhaps in a statistically-significant way.
Yes, but if you run enough samples then you should converge at something amounting to statistical equivalence. If that doesn't happen then either one of the tests is invalid.
> I agree in that I would expect that proper due diligence should have recommended against an investment in Theranos.
ok. That's probably the most important point anyway.
> Not participating in the scientific community is a giant red flag.
As are secrecy, refusing access to labs, not providing full details on the technology under NDA, refusing to run a sufficient number of blind tests at the request of the DD team. Keep in mind that we're talking about a 100M investment, there isn't a whole lot that you won't be able to do when doing DD for a deal that size.
> I completely disagree that technical DD on the technology platform would necessarily reveal the flaws in Theranos.
If that were true that would mean they had working technology, which they did not have at all. Even for some of the most basic testing they had to fall back on equipment supplied by others and this would have definitely turned up in a real DD, barring magic I don't see how they could have gotten away with it in any realistic setting.
This doesn't tell us one way or the other if DD took place and if so, the scope.
> The technology enabled that. Without the tech that failed to materialize and is not the core of the innovation that Theranos represents.
The technology is orthogonal to their regulatory machinations. They could have developed an in-house ELISA (or whatever, something more conventional) and made similar regulatory plays as they did with their microfluidics system.
> Yes, but if you run enough samples then you should converge at something amounting to statistical equivalence. If that doesn't happen then either one of the tests is invalid.
That handwaves over the complexity of the study, which goes to my point that your trivial and foolproof experiment is neither. A proper one probably needs a CRO. For a sizable investment it could be worthwhile, but I think you've underestimated the scope of your proposal.
> As are secrecy, refusing access to labs, not providing full details on the technology under NDA, refusing to run a sufficient number of blind tests at the request of the DD team.
Some of that in context isn't outside the behavior of other medical technology companies. It would be negligent to allow someone that wasn't with the government to walk through my lab without making some sort of arrangement ahead of time, and certainly under no circumstances unsupervised. I also have withheld key technical details to someone running DD despite having an NDA because NDAs cost money I didn't have to enforce if needed. The last item about testing is certainly a huge red flag, but [citation needed] if you're saying that Theranos did it (I find it possible to believe, but I haven't read that until your comment).
> If that were true that would mean they had working technology, which they did not have at all.
That might be an overstatement? I've followed this case closely, and I've had a very difficult time understanding what was claimed to work and did, what was claimed to work and didn't, what wasn't claimed by Theranos but is rumor transmuted into fact by the internet, etc. I've been operating under the assumption that the technology did work under controlled conditions and had problems when scaling up, but that is speculative on my part. I'm not aware of any scientific or medical reasons to believe that their platform cannot work, I am however aware of medical reasons to expect challenges to overcome (off-hand, sample volume, collection site), have violent disagreement as to the importance of consumer-intiated testing, etc. Unlike uBeam, there doesn't seem to be fundamental reasons to believe that Theranos' platform could not work and microfluidics being known to the art is supportive. If there are fundamental reasons that the technology cannot work, or if you have good hard sources for what Theranos had working and when, please do share!
> Even for some of the most basic testing they had to fall back on equipment supplied by others and this would have definitely turned up in a real DD, barring magic I don't see how they could have gotten away with it in any realistic setting.
"That's a great observation. It's true we do use conventional equipment for some basic tests and we are up front about that with our strategic partners, and it's simply because it's cheaper to run basic tests on the conventional equipment than on the Edison 1.0. Rather than waste money by insisting all testing run on Edison 1.0, we actually take the savings from running the basic tests on the conventional equipment, and roll that into the development budget for Edison 2.0 which we project will handle 98% of our full panel. Being intimately familiar with conventional equipment has other benefits: it's an important element of our development process to help us to better understand how we can deliver value-based differentiators on Edison 2.0." (or something like that) If they're willing to lie, they can spin a nice yarn and back it up with phony data. It won't fool everyone, but they don't need to fool everyone.
At that point they could stall, pretend the machine isn't currently working (ok, I'll be back later), that processing samples and preparation takes a really long time (ok, I'll wait) (which would be dissonant with the turn around time for the results claimed in their publications, see 'breakthrough in instant diagnosis') and so on.
At some point the rubber will have to meet the road and they'll have to stick a sample into their machine and give up the results and that really is all you need.
As for unsupervised access to the labs, that wasn't what I intended to say with 'access', just access, to verify that what they claim their processes are are indeed the processes as practiced.
> Unlike uBeam, there doesn't seem to be fundamental reasons to believe that Theranos' platform could not work and microfluidics being known to the art is supportive.
Agreed, maybe it could work, but there is no proof that it ever did work, and the company has admitted the results were invalid:
http://www.zerohedge.com/news/2016-05-18/elizabeth-holmes-ad...
And that's a huge difference. For uBeam the physics just isn't there, for Theranos there was a lot of skepticism about sample variability when you are using that little fluid drawn in that particular way.
But if any or all the components in that chain don't work then the chain won't work and the impression Theranos has made to the world is that it all worked.
> If there are fundamental reasons that the technology cannot work, or if you have good hard sources for what Theranos had working and when, please do share!
Yes, of course I have that, but you're going to just have to believe me, after all, why hold me to a higher standard than Theranos ;)? This is too secret to share, even with fellow participants on message boards and I'm not even asking for your money.
Kidding aside, what Theranos had working (if anything was working at all, my assumption based on their own admission is that it did not work at all beyond the simplest proof of concept) and when they had this on a timeline with their messaging to both investors, customers, employees and board members besides Holmes is a document that their investors would kill for right now. Some of that information is public or known to specific parties but it would take an insider leak or something to that effect to fill in the blanks.
Theranos has done a lot of damage to other companies trying to improve the world of medical diagnostics, that's an aspect that is far worse than any funds lost by investors.
To the public, yes.
1. The lawsuit is calculated to bring Theranos to insolvency sooner while they still have money in the bank
2. It's a way for an investor to convert unsecured equity into a secured debt - pushing them up the seniority queue in bankruptcy (I think specifically that damages from a successful fraud lawsuit can't be discharged)
lol. no one even wants to put their name to this nonsense
'Staff writer' will have a busy time in the next coming weeks.
Lexis-Nexis owns the site that maintains the court's entire docket.
Do you believe that when Holmes was handed the opportunity, at 19, to bring the Edison to market that she set out with the intent of defrauding investors?
The only thing she's provably guilty of thus far is believing in her company a little more than is sensible and being preternaturally competent as a fundraiser.
When Musk claims he can get people to Mars for $200k, do we say 'That's preposterous!', and slap him in cuffs? It's up to the investors of Spacex to decide whether or not they want to gamble on that proposition.
Would you put 100 million into Magic Leap because Rony Abovitz says 'it's rad', or would you insist on seeing a demo first? Because none of Theranos investors did that.
Going out on a limb here, I would say when found out their machine didn't provide accurate results. Yet waited until threatened to be closed for two years before voiding results. This is not Uber for Dogs, and puppy doesn't get to the park to play with its friends, but potentially life or death situations. We are not talking just a 0.01% error rate, this is stuff like like 20-40% error rates in some tests.
> Was it when Hwnry Kissinger joined the board of directors?
Well, some would say it would be a warning sign, for sure ;-)
Read this article.
It's perfectly fine to say "We are going to attempt to build something, here's our plan" and then fail. It's completely unacceptable to say "We have something" when you don't.
The only way Theranos could be analogous to Musk is if he had got up on that stage in Guadalajara and said "we have a Mars rocket ready to go, we've tested it extensively, it works, we'll begin commercial flight soon, the line for reservations is on your left, please bring your checkbooks."
Devils advocate but isn't that what SpaceX told facebook when launching their satellite? I would assume they asked for money to launch that thing and I would also assume facebook didn't want it blown up.
Nitpick mode: Facebook didn't own that satellite and their only involvement in it was a plan (now, obviously, altered) to lease a decent chunk (but by no means all) of its capacity from its owner once it was operational. I'm not sure why everyone decided it was Facebook's satellite.
If Spacecom wanted a demo to prove SpaceX could launch rockets, they only had to look at the previous 28 Falcon 9 launches that all (bar one) launched successfully.
Playing fast and loose with health care, that may be key to determining whether you have some life-threatening disease, is a big deal.
This is not like taking some VC money for the next social network, and having no chops to pull it off. Peoples lives could come into play.
That gave him the clout he needed. Then he used that clout to scam wealthy people starting in the 90's.
The good, and lawful, thing to do would have been to come clean at that point. He didn't, and his downfall began there.
Instead he did the bad, and illegal, thing: doubled down and paid off the small number of exiting investors with new investor's deposits, whilst lying about returns.
If you've read John Kenneth Galbraith's The Great Crash: 1929 (a short and highly readable account), you'll find a very familar story in Madoff. He fell prey to what JKG calls "the bezzle".
Musk should be collecting money for the situation to be similar.
>being preternaturally competent as a fundraiser.
Why are you trying put a positive spin on this whole mess like a PR agency ? What would you describe Madoff as in that case ? A man of great persuasive ability ?
There are 13 major life sciences venture capital firms and not one of then would touch Theranos with a ten foot pole. You'd think, in theory, that whomever it was at Partner Management LP who makes the big investment decisions would make a few phone calls first before deciding to pull the trigger.
Startups making bold promises about unproven technology are a dime a dozen.
Soon, universities will have courses in 'Mastering the art of cheating and lying'.
>I think humanity is literally evolving to lie and cheat at a biological level.
Eh, what? Where are you getting that from? Any organism with cooperative dynamics also has to contend with cheaters, and yet cooperation is extremely prevalent in nature. There's a reason parasitism isn't considered the norm in the animal kingdom.
I sincerely doubt that primitive human tribes widely tolerated healthy adults who contributed absolutely nothing to the group.
> I sincerely doubt that primitive human tribes widely tolerated healthy adults who contributed absolutely nothing to the group.
The existence of cooperation or the desire to cooperate does not disprove that cheating and lying are embedded instincts in living beings. Cheating and cooperation are not mutually exclusive concepts. The parent comment was suggesting that we are somehow evolving to lie and cheat and I'm suggesting that we have been more than capable of this behavior all along. In fact, I've gone so far as to say that not only were we immediately capable since the dawn of humankind, but we have actively suppressed these "survival skills" because they are deemed bad qualities.
No, although I could trivially say that any group of humans living together will be a society in some respect (and thus "natural" human behavior involves being in a society anyway).
Ignoring that, though, removing cheaters doesn't need to involve any sort of centralized group decision making. Your immune system doesn't convene and decide what kind of foreign bodies are unacceptable, and it's largely effective at what it does.
> ...does not disprove that cheating and lying are embedded instincts in living beings.
Sorry, the burden here is on you to prove that cheating and lying are embedded instincts (which I'm assuming means "typical in primitive humans" here). You're the one who made an affirmative statement.
My counterpoint is that cooperation is plentiful in nature (with many examples of cooperation in comparison to parasitism) and thus cheating is unlikely to be typical behavior in the wild.
You need to prove otherwise.
> Cheating and cooperation are not mutually exclusive concepts.
Are we defining cheating differently? What's your definition of cheating?
> The parent comment was suggesting that we are somehow evolving to lie and cheat and I'm suggesting that we have been more than capable of this behavior all along.
Humans are capable of any type of behavior. If your definition of "embedded behavior" is "humans are capable of doing that," then sure, it's trivially true because humans are numerous and any type of behavior can be found with such a large population.
> but we have actively suppressed these "survival skills" because they are deemed bad qualities.
Right, and my argument is that they're primarily suppressed because they're inferior survival skills in aggregate. Cheating and lying are classic "tragedy of the commons" behavior.
Instead I would argue that 'cheating' behaviors are rewarded by some current economic and taxation models (tax loopholes that are created and used by already wealthy individuals to avoid taxation, rewards for destroying jobs only to increase profit, rather than avoid loss).
One can even look at American culture, and see how too often the value of a human is derived from the amount of wealth that they have. I'm not suggesting that all Americans do this, I'm simply suggesting that it's something that underlies so many arguments against taxing the rich and helping the poor; that the position that they are in is due to some kind of karmic result.
So, instead of saying that these are new, I'm arguing that we've just begun to reward behaviors that work against the cooperative goals of society.
PR: "And this, kids, is our Fraud, Swindle & Embezzlement Department"
Kids: "the fuck does that mean"
PR: "Well, this is the magical place where we figure out how to steal other people's money. "
Kids: "Oooooooh, magical? But wait... isn't that bad?"
PR: "Free pizza & pop for everyone!!"
Kids: "Yaaaaaay!"
• SF-based hedge fund, Partner Fund Management LP, is suing "Theranos and its founder", alleging they lied to attract nearly $100M in funding.
• Sources are an internal "fund document" and "people familiar with the matter."
• The fund document was reviewed by WSJ and states:
"Through a series of lies, material misstatements, and omissions, the defendants engaged in securities fraud and other violations by fraudulently inducing PFM to invest and maintain its investment in the company"
• Suit was filed in Delaware Court of Chancery this afternoon.
• A Theranos spokesperson responded:
"The suit is without merit and Theranos will fight it vigorously. The company is very appreciative of its strong investor base that understands and continues to support the company¹s mission."
The rest of the article is catch-up background on Theranos' controversy.
You need to open the "web" link in an incognito/private mode then click the WSJ link.
http://www.nasdaq.com/article/major-investor-sues-theranos-2...
* e.g., exclude anything after the "?"... if link is example.com/site/page.htm?foo=bar, google example.com/site/page.htm
Like it's nice that for once it's not the "little guy" getting screwed over.
I can't tell you if your schadenfreude over hedge funds losing money is right or wrong, because that's based on normative values. But I'd encourage you to adjust your understanding of the financial dynamics involved.
Would it be the "little guy?" Or would it be the fund managers, and all the "insiders."
It goes hand and hand with the notion that the system is rigged.
A hedge fund is an investment fund that pools money from investors and then invests it according to the hedge fund's strategy. So, the primary people who will benefit or lose are the people who invested their money with the hedge fund. Hedge funds also tend to take a percentage of profits as part of their compensation.
I don't see what connection there is to the notion that the system is rigged. No one is obligated to invest in hedge funds and the people who do are aware of the hedge fund's compensation structure. Anyone who invests money is aware that investments have risk and can fail. The purpose of a hedge fund is to invest money to generate (better-than-market) returns, and so the hedge fund will be compensated if that happens. The fact that they're compensated from profits acts as an incentive for them to actually generate profits.
I would think so. You feel sympathy for small investors who get bilked but not large ones, purely because the large ones have more money?