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Comment by Naritai | Hacker News Reader

400M isn't that much. Per Glassdoor Theranos has 790 employees; assuming that was before layoffs and the numbers in the news (~340 layoffs) are accurate, that's 450. Since it's an R&D company in Palo Alto, average total comp is likely north of $250k per person, but even at that it's $110M a year in payroll alone. And medical research isn't exactly cheap, I bet it easily spends over $100M in research costs. So at that burn rate Theranos has 2 years to keep the lights on. It takes more than 2 years for a medical company to bring a new product to market.

Go ahead, halve all my numbers and argue that Theranos actually has a burn rate of 4 years: It still doesn't matter, there is no way they'll get something through the FDA (especially given recent history) in 4 years.

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Honest question. Why isn't the board just shutting everything down rather than let it continue to burn through cash? Are there sufficient insiders tin whose interest it is to continue their payday?

Board can't make that decision if the CEO has majority voting rights.

Honest question: what's the point of having a board then?

It's valuable to have prestigious board members when fundraising, even if they're essentially powerless and have no experience in your industry, like a retired United States Marine Corps general [1]. It give you legitimacy and credibility.

[1] https://www.theranos.com/leadership/board-of-directors

Why should an old military figure lend credibility to a biotechnology firm?

Because you're being pitched on the biotech firm being able to land fat military contracts.

That's the question we all asked.

Generally speaking, it is for their contacts

To represent the owners of the company. The founder is over half the owner of the company. So the system is working as intended.

In all fairness, though generally lawsuits represent a failure on some level, this kind of situation is kind of why we have courts. That's a proper venue to determine what to do next in this unusual and extraordinary situation.

I believe the founder has a controlling interest. The board can't do much without her say so.

I was on a small company board, was an officer, and was the (vast) majority shareholder, at least for voting rights.

Technically, the board could have fired me, and it would taken something like 2 or 3 months to have forced my way back on. (Calling a major shareholder meeting to elect the board out of cycle, plus calling a new board meeting to vote myself in, takes time and organization.) The political cost of overruling the board in that manner also wouldn't be null for me, and likely would've caused key staff to quit and key backers to stop supporting the project. I definitely would have had to do a lot of explaining for such a power play, and it's likely my reputation never would recover at the company.

As a lot of kings have learned: your word may be law, but nobles pay the taxes, provide the swords, etc. You can't make enemies of everyone.

That's why we are pivoting into the exciting unregulated area of medical document management with: The Thernos Wellness Document Platform!

Keeping only the "best" 50 engineers of course.

that's what complete voting control means!

or she go could extreme, cut down to 50 employees (250k total comp per person) get down to a 20 mil a year burn rate which would give her 20 years or she could go even more extreme and be more or less set for life

Nothing about her being able to pick a new business plan as she pleases implies that she'll retain all (or any) current Theranos staff, equipment, or offices.

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