Comment by mhneu | Hacker News Reader

Comment by mhneu | Hacker News Reader

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There’s one other REALLY important reason why Holmes was able to raise money. Remember venture firms with blood test knowledge like Google V were turning her down.

Holmes was close family friends with George Schultz, and that allowed her to do two things. First, get a bunch of military and government guys on the board. And second, sell to the military.

That was Theranos’ real ace in the hole. Holmes knew top military brass and they were going to give her military contracts to test soldiers’ blood. We don’t know what she was telling investors, exactly, but that seems like a real source of revenue investors would care about.

Carreyrou describes how it was a mid level DoD employee that screwed up the plan - he looked at the data and scuttled the contract even though the generals wanted to award it to Theranos. Hat tip to hard working, honest govt employees.

Board and Schultz details: https://www.google.com/amp/s/www.forbes.com/sites/hershshefr...

That mid level DoD employee should get a bonus, a promotion, and a medal.

How about Tyler Shultz? The main whistleblower and grandson of George Shultz. He was working at Theranos and realized they were a giant fraud. He lost his job, was harassed by lawyers, he and his parents almost had to sell their house to pay legal fees, his grandfather wouldn't speak to him anymore, etc.

Basically the gov't employee, son, and likely others we don't know about lost their jobs and even blacklisted.

I say 90% of VC back companies are blowing smoke to the endpoint investor, public and consumer. 100% of those companies have miracle products that scale forever and work... In 1 specific ise case: the demo booth. They oversell. I see 2 out of 10 startups bring a viable product to the global 2000 table.

Spacex: we can go to Mars, but haven't even launched a Mars rocket. Google: AI is here, and the product? Waymo, logs millions of miles, is just sunny conditions?

The common strategy: lie(aka promise), sell the future, hopefully you get the solution and hit time to market. Holmes was following the same playbook, BUT just gave up, and that's got her investors and comsumers furious. If she apologized, AND stuck with it, investors would still back her, and the public flac would have subsided....VCs were sold on her future.

On the opposite end, aside from real mistakes is a company like Apple: they sell the future and deliver.

> Spacex: we can go to Mars, but haven't even launched a Mars rocket. Google: AI is here, and the product? Waymo, logs millions of miles, is just sunny conditions?

I don't think that is their literal message and goal. SpaceX's real mission is to innovate space travel which they've been capable of doing and have demonstrated with clear achievements.

SpaceX's revenue is in the billions and is very close to profitable. It most likely would be profitable if it wasn't constantly spending money to expand like Amazon in its early years.

I don't think those examples match very well. Theranos really didn't have anything that worked. Spacex has rockets that work and satisfied customers. They aren't going to Mars yet, but most of their current satellite launch customers probably really don't care.

And of the various self-driving car efforts, Waymo seems one of the most careful, both in their engineering and PR. I don't recall them making any claims they can't back up, but I may have missed some.

The difference is that SpaceX realizes the goal is aspirational, and isn’t signing people up for doomed rides to Mars right now.

Exactly. If SpaceX started taking deposits for a Mars ride within the next two years there would be a problem.

Holmes was not following the same playbook, there's a big difference. What you say holds true for the early investors who may have been sold the future expectations, however, long after that Holmes recruited investors by stating that they have a "working Mars rocket" that's being used right now, when in fact it was smoke&mirrors using altered Siemens machines instead of the claimed Theranos technology.

The difference between saying "we expect to have X working within a year" and "we have had X for a year" is that if X doesn't work out, the second sentence is a crime of fraud. And Holmes was on the wrong end of this difference.

They're not prosecuting for the broken hopes of 2004-2006 investors (who were sold a future that didn't materialize, oh well), they're prosecuting for misleading the investors of, say, 2014 by lying about the achievements of their first 10 years.

Agree on Tyler Schultz.

Extremely brave what he did, especially when it means combatting his own (extremely wealthy and powerful) grandfather. The court of public opinion and the history books will see him as the hero in the end, at least. And he's since started his own medtech company.

In the short-term, his life was a nightmare and Holmes and Balwani held all the cards, but in the long-term he'll probably be successful and considered honorable while Holmes and Balwani will be disgraced at best and convicted felons at worst.

Instead, he was forced into retirement or reassignment, as 4-star Dickwad Mattis was head over heels for Theranos: https://www.washingtonpost.com/news/wonk/wp/2016/12/01/trump...

(Note that doesn't mention his retirement, I can't find a link for that, I read it in Carreyrou's book)

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