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Comment by quanticle | Hacker News Reader

Yes, but at the same time, she defrauded her investors for billions, and, as was pointed out elsewhere in this discussion, appears to be completely and totally unrepentant. Her position is that Theranos was just a failed startup and that, essentially, she's being punished because she ran out of runway. Whereas, in reality, Theranos didn't work, and, according to its own scientists, could never have worked. It was snake oil from beginning to end.

I don't think 11 years is an unjust sentence for that.

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The investors angle, especially the very early ones, still puzzle me. My only experience with medical labs comes from family. Back the day, when Theranos was hottest thing under the sun, I asked my mom, medical lab tech, about it. Her answer was, I paraphrase, "no way, you need way bigger blood samples for one of the tests if you want proper results". Followed something along the lines of who is providing oversight of the labs and making test equipement is properly callibarted. In Germany, local authoroties do just that.

So, I always wondered, if a lab technician needs a mere glance on the sales pitch to have doubts, how could investors miss it during even the most superficial due dilligence? Or did they catch it, and just say fuck it, we can still dump it through an IPO?

And those celebrities going on its board, was the money so good and the hype so blinding?

In the US there are also authorities making sure (especially medical) machines are in good order. Perhaps the investors trusted the authorities?

they had some big issues with their labs compliance if i remember correctly

She earns the 11 years through the damage caused to people who used her fraudulent product.

Investors losing their skin? That's all risk/reward. They took big risk for big reward but lost.

First part ok, second part wtf

She wasn’t prosecuted for that though.

> Investors losing their skin? That's all risk/reward. They took big risk for big reward but lost.

No, it's not OK and it's not all risk/reward. The risk is whether the product can succeed and be better than others' products/services - not whether the company you're investing in is a fraud - that's what the legal system tries to prevent.

Here’s what confuses me about this. The entire SV culture is have an idea, build a prototype, demo it (whether it works or is just a UI doesn’t not matter because you want to validate the product). Then get capital and go all in on making it work. Now this being a medtech product with heavy research, I am not surprised many things were not working and more engineering/scientist hours were needed. I don’t think she was intentionally trying to defraud anyone, I do believe she ran out of runway before her breakthrough and because no more VC capital was available there was not a clear path forward and people lost faith in her. I mean what was the endgame? So be in research mode forever?

Obviously I don’t condone her unhinged behavior of stalking and threatening whistleblowers, but that should not all amount to 11 years. It will absolutely make any similar startup too risky and they will not find any capital.

You can't defraud people while you seek the end of your RnD journey. In order to finance this search, she committed fraud and completely misrepresented the state of her efforts. Based on her lies, people gave her money to continue her development efforts. There is no excuse for this.

> I don’t think she was intentionally trying to defraud anyone

we very much disagree here.

I'm not a lawyer, but I'm pretty sure this is not nearly as gray an area as you think. Have you ever read an IPO prospectus or a quarterly report from a publicly traded company? They include big lists of risks that can all threaten the performance of the company. Those are there because you have to be truthful with your investors. If you lie to raise money, that's fraud. If it doesn't actually already work and you tell them it does, it's a problem.

What I think in this case is that it's a pity that she wasn't prosecuted for threatening people's health with unreliable test results. They didn't "run out of runway" while in research mode: they were already selling a defective product that is safety-critical. Google Jean-Louis Gasse's piece on his personal experience with Theranos results. It was incredibly callous to gamble with people's lives that way. I do understand that it was easier to prosecute the financial crimes, but it's still unsatisfying that they were not held to account on those actions.

You have never been able to outright lie to your investors and nobody faces the risk of following in Elizabeth's footsteps save for those who faced with a losing technology choose to simply lie to their users and investors. You are as much at risk of meeting that fate as you are "risk" of finding yourself in a bank with a gun and a ski mask. If you find yourself outside the bank loading your gun then simply remove the ski mask, place the gun in your glove compartment, and go home.

In medicine you are indeed expected to stay in research mode forever until you have something that provably works. None of this is controversial or complicated.

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