Theranos might be on life support | Hacker News Reader

Theranos might be on life support

techcrunch.com

70 pointsartsandsci66 comments

If they truly have only $200M cash on hand, no revenue, 220 employees, and nothing set aside for liabilities, then they aren't on life support they are already dead.

Leases on their existing buildings, salary and benefits for 220, capital costs for their 'mini lab', and legal fees to defend their current lawsuit load? The Walgreen's suit alone is asking $140M.

I can't imagine any bank, VC, or even hedge fund going near this. Theranos has to successfully defend all of their lawsuits, execute perfectly on their minilab, and develop enough credibility to actually bring their ideas to market. Any one of those things goes wrong and blam! all that money goes up in smoke.

What I think doesn't matter of course, but I think they would be better off rolling it up, selling off what they can, payout out what they can to their creditors and leaving this chapter behind them. As someone who watched Webvan and Pets.com crash, this one is up there.

The honest question is - how are they able to retain the 220 employees? I'd assume are very talented scientists, engineers, etc. Given this story has been going on for more than a year (or two), how do they keep people around?

I know someone who works there and despite his high level of talent and unusual skillset is having problems finding another position because of the black mark the "Theranos" brand is having on his resume. He's been looking for more than a year. :-/

Unfortunately, he's probably not helping his cause by hanging around at this point. I'm sure he has his reasons - family, mortgage etc - but a lot of recruiters likely treat those who remained despite the damning revelations very differently to those who jumped as soon as the writing was on the wall.

I suspect they won't. If I worked at Theranos, I would certainly be looking for a new job. The only question is, if having Theranos on my resume is a negative, or if I need to say I was backpacking across the Andes during that time.

What makes you think they're talented? At this point I'm sure the only ones left are the guys who can't find another job with the same pay.

I'm sure that some people don't care if it's dying they enjoy their job, I'm sure that some people are hoping it will pull out and their longevity/loyalty will be rewarded, and some may not give it any thought at all.

Also, I'm interested in what their employees are doing every day. Do they have offices to show up to, still?

Yes they have a shiny office in a prime location right on Page Mill Road.

Being laid off is better than quitting. Comes with all sorts of perks from what I've heard.

Not necessarily so if the company goes bankrupt...

In practice, it is largely true due to the WARN act which requires 60 day notice. No employee wants to keep around employees who know they're being let go, so in most cases, this means 60 days severence.

There's no shame in paying the rent, imho.

People still onboard either:

* don't know the risks somehow, so they must be idiots

* know the risks, but think they'll get paid

* know the risks, but haven't put together an escape plan

* know the risks, and are just waiting for last check before they start whatever the next chapter of their life is going to be

If I was hiring a software developer from a similar situation, this would be a huge red flag for me. Competent developers are constant being wooed away, and the fact that you hadn't jumped ship yet makes me think you are in the best case clueless and in the worst case incompetent to the point of unemployability.

The market must be very different for these medical science workers to make this a good idea. It must be much much harder to find a job.

Yeah, I was just about to reflex-respond to your comment before I read the last line, because med science is something that I'd contend the vast majority of HN to be unfamiliar with. Depending on what the pay or benefits or whatever the retention situation for medsci workers at Theranos is, maybe it's just good sense to milk that cash for however long they can before going back to whatever else is there for them.

I agree though, it certainly says something about an employee who worked at Theranos, or Enron, or higher-up Samsung, etc.

220 is a lot of people, too.

Anyways, my point about medsci is that the field of medsci is so diverse and specialized that it might be hard to find somebody with both neuropsychology + pharma experience (just an example) and I think that a few people lingering around are probably just being overpaid so much to stay that it would be foolish to give that money up until you absolutely had to.

Super elite talent (Lattner comes to mind) has some different dynamics to it, but it's the same principle of having such a strong but also highly specialized base of knowledge, that it makes sense to ante up in order to get that talent onboard, and for the talent it'd be ridiculous to turn down the money since you're so valuable that you'd be able to morph your new workload into something that will make you a stronger developer regardless. Similar to someone with extremely advanced medical knowledge, just being around the right environment and tools and stuff would probably give that person tremendous ROI, on top of being paid well, that when the storm passes they'll be stronger because of it.

Lots of angles to think about with all of this!

It's better for society if they make a run at it. What difference does it make if some investors make back $500k off their $20 million investment?

But if there's even a sliver of a chance at having a healthy, innovative medical diagnostic company out there, that's a huge potential upside that multiplies a relatively low probability.

I suspect given Theranos' history, some people would put that probability at zero or close to it. But I doubt it's zero that seems unrealistic.

That $200m could probably be productively invested in more promising companies in the VCs' portfolios...

Pretty much anything else would be better unfortunately :)

Well shutting things down is likely better for the shareholders but not for the person at the helm ;)

It would be nominaly better for her because it would be fair thing to do and would leave at least some good impression, not that I think anyone would give her more money.

At this point the outcomes for her can only really be binary. From a selfish perspective she might as well continue to swing for the fences.

Why is Elizabeth Holmes not in jail? She lied blatantly about their blood-testing medical equipments which can potentially kill people with wrong testing results, and delayed treatments. One of her employees committed suicide, partially because of the pressure she put on him. Why is she not in jail?

My feelings exactly. Moreoever, how do they still manage to have 220 employees? What kind of person would continue working for them with even the tiniest clue about what they're doing?

Someone who cannot afford to leave, I suspect.

Genuinely curious. What law do you think she personally broke?

Lying to the media/public, though largely unethical, doesn't strike me as being illegal.

Piling back-breaking stress on an employee also doesn't strike me as illegal.

> She lied blatantly about their blood-testing medical equipments which can potentially kill people with wrong testing results,

I think is the only one which is actually crime and which she has already been punished for.

Exactly how was she punished? Are you talking about her ban from running a blood testing lab? I don't consider that a punishment, more like a rap in the knuckles. Consider that real people were hurt by her/Theranos's actions, people who were misdiagnosed and as a result given wrong medications.

Lying about medical equipments is like fraud. It is like selling snake-oil to patients.

Though it may be "like" fraud, lying to the public/media is not criminal. So, if that's the charge, she should not be in jail.

Perhaps she misrepresented facts to investors, but that seems extremely hard to prove to a criminal extent.

Theranos may have also misrepresented facts to regulatory agencies. However, my guess is that the CEO of an organization that lies to a regulatory agency can't be held accountable to a criminal extent.

Would be genuinely curious to hear a solid case for her to be put in prison backed by facts.

"Might" be? They've been on life support since 2015, they just didn't want to believe it (or anyone else to realize it). As the lawsuits have piled up, the sanctions have mounted and partners (Walgreens) have pulled out, there hasn't been a single bright spot in the past two years.

Just browse the first few pages of this search: https://www.google.com/search?q=theranos+lawsuit

"Just 200m"! These guys and the VC s are operating in a different realm from any bootstrapped company that don't aim to "exit". This makes me think that sadly bootstrapping high tech in the silicon valley is nearly impossible in this century.

I wondered why Holmes had never been forced out by investors or banks as a precondition of getting more support, but this explains why she's still there - they can't, because she has majority share power and Theranos still has oceans of cash and no need to go begging to anyone. There's simply no way to stop her or force her out aside from long-shot minority shareholder lawsuits (although I think there's at least one of those ongoing), and it'll take years or decades for all the lawsuits to finish appeals and to spend the cash down with a skeleton crew.

Indeed, given how her reputation is radioactive, why would she ever leave Theranos anytime soon? No one is going to hire her for anything anywhere else; she can continue drawing a CEO salary/benefits and keep playing CEO and a sense of self-worth; she gets Theranos to pay her legal bills (which may not be trivial by the end); and can mess around with an enormous fortune of $200m however she likes; and who knows, may even succeed in a pivot to something else - hope springs eternal.

(I wonder how much cash Magic Leap has left.)

> No one is going to hire her for anything anywhere else;

Yes they will. She'll pop back up in a few years. Maybe in a hedge fund, VC/PE firm or something, but she will. For an example of this see Kaavya Viswanathan.

She's in the club now and she's towing the line, it's hard to get kicked out of the club when you're towing the line.

Sadly you are probably right as I do think her actions at least border on the criminal. But there are plenty of bolt holes largely out of the public eye for well-connected people.

I think given her family's connections she's far more likely to end up in politics.

This would be a great longbet.

Elizabeth Holmes also has a special class of shares which gives her 100 to 1 voting rights:

http://www.forbes.com/sites/petercohan/2015/11/03/theranos-l...

Yes, everyone knows that. The point is that if your company is bankrupt and you go to the bank for a loan and they say 'sure, but only if the CEO quits and forfeits all her shares', there's not much the CEO can do about that. The shares become worthless in a bankruptcy anyway. So I wondered why this never happened. But now I know: they have far more cash on hand than I ever dreamed would be left at this point.

>as a precondition of getting more support

Nobody is still putting money into Theranos, are they?

If the price is right, someone will invest in anything.

I wondered the same thing, and this is a great explanation as to why. thank you!

This makes me think that sadly bootstrapping high tech in the silicon valley is nearly impossible in this century

Probably correct.

Do you mean SV the region or SV the industry?

It's possible, but one precondition is that you don't face VC backed competitors in your space.

I'm sorry for the employees that lost their jobs because of the shady practices from management. Other than that, I hope they close doors soon. Putting people at risk for the sake of making a few bucks has no justification.

I think one positive caveat from all the very public bad press about the company is that it's pretty reasonable to think that employees had nothing to do with the demise of the company and being let go / fired can easily be seen as the company's fault rather than the employee's.

I hope that works in the favor of the people being let go.

I suspect $200 million could fund a great deal of life support.

under normal circumstances, absolutely, but considering the number of lawsuits they are battling, that war-chest could dwindle rapidly.

Lawsuits that go to trial are slow, tho - especially those in Delaware. They're likely looking at years++

What I'm curious about is since the value of civil claims against Theranos is now greater than their cash balance what chance do plantiffs have on an asset freeze or forcing administration

I initially thought the lawsuits were about individual parties suing to gain seniority on debt structuring in bankruptcy but it makes more sense that enough parties got together and sued to force bankruptcy so that 20-30c in the dollar could be obtained as opposed to 0

ouch, kind of sad when you put it that way

I'll be interested to see where Holmes ends up after all this. My bet is that she joins a hedge fund, VC firm, or PE firm after the dust settles. Only question to me is which ones wouldn't find the Theranos backstory to be a disqualification.

Where she ought to end up is in jail for fraud, but that's probably wishful thinking.

Well a large part of the reason she got her initial funding was that she grew up with Tim Draper's kids and he's still sticking up for her, so I bet he's got a nice soft landing for her in mind.

[1] - https://www.nytimes.com/2015/12/20/business/theranos-founder...

Oh, she'll be fine. For CEOs it's "fail big, gamble bigger". Only the little people have to carry the burden of responsibility for their work and track record.

Oh, I'm not worried about her well-being. I'm mostly curious to see which PE/VC/Hedge firms genuinely DGAF about public perception.

"""Might"""

Give me a break, Theranos is the biggest disgraceful excuse of a company that I've ever even heard of, and I've been reading this dumb board for 5+ years now.

That people aren't 100% dismissive of Theranos is absolutely mind-boggling. The level of corruption, incompetence, and just the poor organization of it all.

Other commenters have also noted that if they aren't doing well on cash, they're pretty much dead anyways.

I want Theranos to crash and burn as loud as humanly possible, so that people might pay attention for two seconds and look at what happens when you refuse to give a shit about the ethics and competence behind your business/startup.

Now, I suspect a lot of Theranos employees at this point are probably just waiting on that last check, but there's probably some poor souls on that list who really wanted to achieve something, and now they're more or less fucked from having to be associated with Theranos. It will be harder for them to find a new job with that black mark, I'm sure poor severance will make it hard for them to bootstrap their own ideas. They are backed into a corner, because of Theranos.

Life in an unethical business can be nasty, brutish and short.

Just out of curiosity, did you reach to this conclusion based on what you read in the news about Theranos or do you have some other extra information? I have no relation whatsoever to Theranos and I am genuinely wondering how someone can have such a strong opinion on a company that they read about in news, which we all know never tells the full story.

I am guessing that the strong feelings may be to do with the outcomes of the company's bungling. After all, we are talking about people lives being in the balance here.

The constant sugar coating, avoiding, or plastering over of defective methodologies and processes can elicit these sorts of feelings - especially if the person suspects, or knows of issues that should be brought to light.

Its different say, in the case of a soda manufacturer changing the recipe for their best selling beverage. The faux outrage there is probably an overreaction. But if it is a car/aircraft manufacturer that knowingly builds vehicles with a known defect that can cost human lives? Well, then, I think the outrage is justified. I think Theranos falls into the second category.

Wired actually did a fairly good piece on this whole thing. The links within the article link to other Wired articles, but if you keep going back their source articles cite scientific findings, federal investigators and other credible sources.[1]

If the commentor whose comment you're posting to is anything like me, he's probably incredibly mad that such a largescale fraud has happened, but more importantly that someone who represented a new hope in the tech space (Elizabeth Holmes), turned out to be just as scummy as most VC/tech sterotypes.

Theranos had the potential to truly revolutionize blood testing. Not in a super-profitable-startup-tries-to-revolutionize-world kinda way, but in a Tesla success-at-any-cost or Genentech Innovate-or-die way. And Holmes was an unconventional, relate-able, underdog character leading the charge. A lot of us put our faith in her - she would have been one of the best success stories to pass on to our daughters to help inspire them to pursue opportunities in tech. But she abused the opportunity, and it's incredibly heartbreaking. Plus, all of the patients who had been put their faith in Theranos to protect them/their loved ones have been misguided for years now.

What Holmes did is despicable. And she's hiding behind lawyers and money to maintain the charade. It's infuriating.

[1] www.wired.com/2016/05/everything-need-know-theranos-saga-far/

Rise And Fall Of Theranos In A Biotech Cartoon

http://www.npr.org/sections/health-shots/2016/07/18/48617194...

You seem to say this as if people's livelihoods aren't something they'd feel strongly about. I've noticed a certain rhetoric lately wherein Theranos is """just headlines""" but I mean, imagine for a second if YOU were in that situation. It's such a high visibility thing too, I myself am waiting with bated breath for many reasons. Not the least of which being I'd like to hire some of their talent when it explodes, but I think even with that bias, I think my point stands that the situation is in fact much more grave for those involved than the headlines and HN fawning might convey to someone not familiar.

I never said I knew everything about theranos, and anyways I don't care to, but I've been in a situation where my corp was really fucking up and I started to worry about my hirability being affected just by working there. I was only a contractor, but still.

HN might be dumb, but please don't make it dumber by posting rage rants. We're hoping for thoughtful discussion here, even about Theranos.

If you could outline points of what I've posted that aren't substantial or empirically correct, I'd appreciate it.

Otherwise I might be bold enough to note that it would seem you'd like to influence this discussion (which is well within policy afaik) by whinging about good posts, which obviously is horrendously unethical, so I'm sure you are eager to prevent that misunderstanding. Just trying to clarify

So who are the main investors? Seems like a prime opportunity to name and shame.

Only two hundred thousand thousand dollars? Yes you can't possibly run a business on that.

Theranos was still alive?

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