
How Elizabeth Holmes's House of Cards Came Tumbling Down - atupem
http://www.vanityfair.com/news/2016/09/elizabeth-holmes-theranos-exclusive
======
jonknee
This article shows how much the Wall Street Journal really knocked the
Theranos story out of the park. It's remarkable that non of the investors or
regulators paid half as much of attention.

> One of the only journalists who seemed unimpressed by this narrative was
> John Carreyrou, a recalcitrant health-care reporter from The Wall Street
> Journal. Carreyrou came away from The New Yorker story surprised by
> Theranos’s secrecy—such behavior was to be expected at a tech company but
> not a medical operation. Moreover, he was also struck by Holmes’s limited
> ability to explain how it all worked.

Theranos also sounds similar to a cult, which may explain why her staff never
figured out that they were a fake company:

> After he wrapped up, the leaders of Theranos stood before their employees
> and surveyed the room. Then a chant erupted. “Fuck you . . .,” employees
> began yelling in unison, “Carreyrou.” It began to grow louder still. “Fuck
> you, Carreyrou!” Soon men and women in lab coats, and programmers in
> T-shirts and jeans, joined in. They were chanting with fervor: “Fuck you,
> Carreyrou!,” they cried out. “Fuck you, Carreyrou! Fuck. You. Carrey-rou!”

~~~
dzhu
"It's remarkable that non [sic] of the investor or regulators paid half as
much of attention."

Actually, the regulators paid just as much, if not more attention to Theranos
- the article itself asserts this:

> On August 25, 2015, months before the Journal story broke, three
> investigators from the F.D.A. arrived, unannounced, at Theranos’s
> headquarters, on Page Mill Road, with two more investigators sent to the
> company’s blood-testing lab in Newark, California, demanding to inspect the
> facilities.

According to someone close to the company, Holmes was sent into a panic,
calling advisers to try to resolve the issue. At around the same time,
regulators from the Centers for Medicare and Medicaid Services, which
regulates laboratories, visited the labs and found major inaccuracies in the
testing being done on patients. (The Newark lab was run by an employee who was
criticized for insufficient laboratory experience.) C.M.S. also soon
discovered that some of the tests Theranos was performing were so inaccurate
that they could leave patients at risk of internal bleeding, or of stroke
among those prone to blood clots. The agency found that Theranos appeared to
ignore erratic results from its own quality-control checks during a six-month
period last year and supplied 81 patients with questionable test results.

~~~
enzamatic
People need to realize their authority comes from regulating sale. They
couldn't regulate the device because it was not for sale. At the point that
they began selling tests, they could regulate the nanotainer because it's a
consumable, essentially sold to the customer with each test. I think they were
probably involved as early as they could be.

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leroy_masochist
Money quote:

"While Silicon Valley is responsible for some truly astounding companies, its
business dealings can also replicate one big confidence game in which
entrepreneurs, venture capitalists, and the tech media pretend to vet one
another while, in reality, functioning as cogs in a machine that is designed
to not question anything—and buoy one another all along the way. ... The
financial rewards speak for themselves. Silicon Valley, which is 50 square
miles, has created more wealth than any place in human history. In the end, it
isn’t in anyone’s interest to call bullshit."

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bishnu
Overall it's an interesting article, but I have a quibble with this paragraph
about how it actually backed by much Silicon Valley:

"Silicon Valley, once so taken by Holmes, has turned its back, too. Countless
investors have been quick to point out that they did not invest in the
company—that much of its money came from the relatively somnolent worlds of
mutual funds, which often accrue the savings of pensioners and retirees;
private equity; and smaller venture-capital operations on the East Coast. In
the end, one of the only Valley V.C. shops that actually invested in Theranos
was Draper Fisher Jurvetson."

Crunchbase shows that on top of Draper Fisher Jurvetson, there's ATA ventures
in Redwood City, as well as Larry Ellison's firm (Tako) and his personal
trust. Depending on how you read that, that's 4 of 6 or 3 of 5 major backers
coming out of Silicon Valley. On what basis is Bilton making his claim?

~~~
gumby
Holmes and Draper were neighbors when she was growing up and his kids were
childhood friends. Her dad's friend, Don Lucas was the Ellison connection.
(Her parents are well connected in Washington D.C.)

ATA is ATA; I don't believe they are ever the first money into a deal (no slam
on them, just FYI). So I'd say ATA is 1 for 5.

In general I don't know why they are described as the toast of SV by non-local
journos (though Bilton knows the valley well) -- despite that big building on
page mill they were never really that prominent IMHO especially because of
their secrecy.

There's a ton to criticize about he culture of the valley but Theranos always
stuck me more of a (non-Boston) east coast story that happened to be located
in Palo Alto.

------
jpm_sd
Next: Verily? [http://www.fool.com/investing/2016/09/03/how-google-plans-
to...](http://www.fool.com/investing/2016/09/03/how-google-plans-to-reinvent-
healthcare.aspx)

------
gmarx
The Theranos story reminds me of an episode of "The Big Bang Theory". Sheldon
gets sent to jail. Why? Why do you think, for doing the same crap he always
does but this time to a judge.

Theranos followed a standard SV script, sell the vision, create a barely
working product. get people to use it, iterate.

You just can't do that in a regulated space especially when you can put
people's lives at risk.

