Elizabeth Holmes’s Last Pitch | Hacker News Reader

Elizabeth Holmes’s Last Pitch

nymag.com

14 pointspr0zac20 comments

So her "last pitch" is going to be "I didn't really know what was going on"? It didn't work with the SEC, and I can't imagine a jury buying that a at-the-time billionaire CEO was "shocked! Shocked that there were material misrepresentations going on in this establishment!"

"Guilty" of something is almost a given, IMO, it's just a question of how light the sentence will be.

I mean, she did manage to convince some heir to money to marry her. After the SEC made Theranos's issues public. I have no idea how she's doing it, but she does seem fairly skilled at convincing people (almost exclusively men) to ignore obvious facts in front of them.

> ... the dubious abilities of our nominally elite classes ... to competently mediate the difference between artifice and reality.

I wish there were more media introspection over how they fueled the hype. To me, the Theranos story of a 19-year old dropout revolutionizing blood testing technology was always suspect.

The thing I kept wondering through the saga is why didn't they pivot?

Ok, their initial vision was complete science fiction. But what about building a better testing machine even if it requires more than a drop of blood? A cheaper one any small clinic can afford. That's still valuable. They also had access to some of the best software engineers in the Valley. Could have tied their machines to a pretty great SaaS to help with lab data and record keeping.

Not a sexy business, but a business that won't land the founder in jail.

Theranos was obviously impossible because the amount of blood drawn was too small. Just like with homeopathy, there simply aren't enough atoms to make everything work. Despite the physical obstacles, they were able to raise enough money to start disrupting phlebotomists and other health-care professionals, cashing in on their fraudulent claims.

If the most qualified capitalists cannot tell whether a CEO is fraudulent, then it seems that we should alter the CEO appointment system somehow. In particular, I hear stories of automated decision-making algorithms being prototyped to replace executive officers; members of the board/cabinet each submit a machine-readable proposal, and the algorithm chooses one. Would Theranos have been successful in their fraud if they had not had Sunny and Holmes at the helm?

My impression is that the investors were simply rich and powerful, not necessarily the most skilled.

> All of the money Theranos raised came from private placements, fundraising that’s restricted to wealthy investors and disclosed to the SEC via an exemption from registration under securities laws called Form D. Companies can use a Form D to tell the SEC about their fundraising from investors, usually without further scrutiny, as long as the money only comes from “accredited investors.” Accredited investors are either individuals whose net worth exceeds $1 million or who consistently have made over $200,000 per year in income; companies that have more than $5 million in assets also qualify.

> Some well-known venture-capital firms did take a pass on investing in Theranos, because of Holmes’s unwillingness to share information about the blood-test technology and results and the lack of established scientific support for it via peer-reviewed research. The company and its board also lacked medical and scientific experience.

https://www.marketwatch.com/story/the-investors-duped-by-the...

At the beginning, some choice comments:

"The BOD (or "Board" as the company calls it) seems a little strange to me as if she runs in rarified circles"

"That BOD is stunning with heavy national security/ military operations. I almost thought it was a CIA cover company."

"Fascinating that they're all national security related, except for the ex-CEO of Wells Fargo. I'm honestly curious how that came about..."

"Wow. That board of directors is a sight to behold. Looks more like a panel at the World Economic Forum. How on earth did the founder manage to get such high-profile backers?"

"Former heavyweights in the diplomatic, intelligence and military government sectors (George Shultz, Senator Samuel Nunn, Henry Kissinger etc). No big names from the technology or VC space are mentioned however."

"Am I the only one here who thinks all those people imaged on the web site have really weird eyes? Creepy. ... no, you're not. That site looks like an advert for Elysium"

"Wow. She must be a pretty amazing woman to have collected such strong allies. I'd have lunch with her."

https://news.ycombinator.com/item?id=6349349

It certainly seems like a plausible argument that better detectors leads to a smaller necessary sample.

> If the most qualified capitalists cannot tell whether a CEO is fraudulent, then it seems that we should alter the CEO appointment system somehow.

Why do you assume the problem is that human beings select CEOs and not that how we select the selectors is broken. That is, maybe the problem is who we decide are "well qualified capitalists"

>It certainly seems like a plausible argument that better detectors leads to a smaller necessary sample.

But there is a limit to how small a sample can be regardless of the quality of the detectors because what you are looking for has to be in the sample. If the sample is merely a pinprick of blood, as Theranos (at least originally) claimed was enough, it very well might not be.

Sure. As a non-expert, I assume most drops of my blood have enough stuff in them to detect. How much can vitamin levels or viral loads change between drops of blood? Certainly they seem to draw more than strictly needed.

It depends on what you are looking for. Yes, for say small molecules like vitamins a pinprick (less than a microliter) could theoretically be enough. But if you are looking for things like early infection or cancer, the signals you want may not actually be in such a small sample at all.

That is, maybe the problem is who we decide are "well qualified capitalists"

I don't think that's a problem, as I don't think the decision is "well-qualified" as in competent, but rather "won't end up on the dole if this investment falls through". Henry Kissinger isn't signing up for food stamps/EBT because his Theranos investment went belly-up. The problem is that many thought, "well, if Henry Kissinger is in...", without asking about Mr. Kissinger's qualifications to evaluate medical claims.

Oh, "qualified investor" qualifications. In that case, why does anyone think that they would be particularly skilled at hiring CEOs?

Compared to who?

I'm not sure why they would be more skilled than any random people off the street, or a coin flip, etc. There's no reason to think they produce a result better than whatever control group you can think of compared to any other subset of people.

The modal random "qualified investor" is probably a dentist, not Kissinger.

And your point is you think Dentists (or Kissinger) should be presumed to be good at choosing a CEO?

I don't know why the person that started this subthread thought the CEO was chosen by the investors.

Holmes founded the company beforehand, then people gave her money. As far as I know.

So it seems a bit off to frame it as though someone else founded the company and hired her.

A company without investors is a bootstrapped small business. Investors without a company are venture capitalists. Without investors, a company never becomes a startup, never has front-page articles in newspapers and magazines, never gets invited onto cable news for interviews, never hires expensive talent, never buys sports cars for its executives, never spends millions of dollars on advertising, etc.

Without investors, Holmes never would have mattered. The investments are what enabled her to commit the fraud.

I don't see anything obviously incorrect about all that, but it's irrelevant to the fact (if I'm not mistaken) that the investors didn't get a business and hire a CEO to run it, they found a business with a CEO.

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