
How Theranos Misled Me - apsec112
http://fortune.com/2015/12/17/how-theranos-misled-me-elizabeth-holmes/
======
poof131
What I really find upsetting, more than Silicon Valley wasting millions on
hype, is the board of directors. Senior government and military officials are
making bad decisions for their own pocket books post retirement. General
Mattis squashed any internal criticism of Theranos in the military and then
left to join the board.[1] This is happening repeatedly with crappy technology
being forced down the throat of the military by senior leaders who
miraculously get board positions after retiring. Retirement needs to mean
retirement for senior government officials. Help a non-profit or teach, but
stop selling out the services and the country.

[1] [http://www.techinsider.io/emails-theranos-elizabeth-
holmes-u...](http://www.techinsider.io/emails-theranos-elizabeth-holmes-us-
military-2015-12)

~~~
randycupertino
And also, why does Theranos need such a sleazy board chock full of senators,
military generals and other political players? They're a freaking biotech
company without scientists and physicians on the board, wtf. The whole
Theranos scam really reminds me of Palantir.

Government contractors masquerading as tech companies. So sketchy.

~~~
bsaul
Palantir was a scam ??

~~~
randycupertino
They're incredibly shady.

$750k in lobbying helps

[https://www.opensecrets.org/lobby/clientsum.php?id=D00005517...](https://www.opensecrets.org/lobby/clientsum.php?id=D000055177&cycle=2011)

Their VC firm was the CIA:

[http://www.wsj.com/articles/SB125200842406984303](http://www.wsj.com/articles/SB125200842406984303)

Cashing fat the .gov to "fight terrorism" doesn't help make US citizens any
safer, but does the founder wealthy enough to buy castles & fly his Stanford
undergrad floozy around the world on private jets. Nice work if you can get
it.

[http://www.nytimes.com/2015/02/15/magazine/the-stanford-
unde...](http://www.nytimes.com/2015/02/15/magazine/the-stanford-
undergraduate-and-the-mentor.html?_r=0)

~~~
ryporter
If $750K of lobbying makes them shady, what do you think of millions of
dollars spent on lobbying per-quarter by the likes of Google, Amazon, and
Apple? [1]

Their VC firm was not the CIA. It was In-Q-Tel, which was founded by the CIA
(yes, there is a difference). In-Q-Tel has also funded companies such as
FireEye. [2] What's your opinion of them?

I don't really know how to respond to the claim about "Cashing fat the .gov",
because I can't parse that sentence. I will point out that Palantir has been
increasingly shifting to a corporate client base.

[1] [http://www.wired.com/2015/07/google-facebook-amazon-
lobbying...](http://www.wired.com/2015/07/google-facebook-amazon-lobbying/)

[2] [https://en.wikipedia.org/wiki/In-Q-Tel](https://en.wikipedia.org/wiki/In-
Q-Tel)

~~~
Kalium
It's semi-public knowledge that In-Q-Tel is the investment arm of the
government. They make investments on behalf of any government department that
puts up the money.

------
gamesbrainiac
I did not know much about Theranos before the recent skeptical articles
started to appear on newspapers regarding the falseness of their claims.

The larger question is, how do you get to a $9B valuation without having rock
solid technology or evidence to prove the effectiveness of their technology?

I would assume that the VCs in SV are a pretty smart bunch. How on earth did
this happen in the first place? If Theranos really did not have the kind of
earth shattering technology that they claim to have, how did they get so much
money?

If you take a look at their angellist page, then you'll see that they did not
even need to raise the money in stages, no seed or series stuff. If you take a
look at one of their investors, DFJ, has invested in a lot of successful
companies like skype and tesla. Also other investors have invested in
companies like Uber and Lyft.

I don't know too much about medicine or tests for that matter. But what I do
know is that people don't invest their money without good reason to do so.

What is confounding is that $45M is not chunk change, and yet they managed to
raise this much cash in an unconventional way.

~~~
JabavuAdams
Have you seen Elizabeth Holmes' pedigree? Have you looked at who's on her
board?

In terms of pattern-matching, her speaking and body language match several
uber-engineers I know. Top it off with a photogenic appearance.

Slam dunk. We're animals with 1 square meter x 2 mm of sometimes-rational
coiled up in our heads.

~~~
randycupertino
All because she put on Steve Jobs drag, affected a surfer dude accent and
bleached her hair blonde? Here she is prior to her tech wunderkind makeover:

[https://tribwxin.files.wordpress.com/2014/10/elizabeth-
holme...](https://tribwxin.files.wordpress.com/2014/10/elizabeth-
holmes.jpg?w=770)

------
ryporter
This is an admirable mea culpa by the author. Sure, he is certainly casting
blame on Theranos. However, he also issues an unqualified apology at the end
of the article, stating "So I blew it. And I should have included all these
colloquies in the original story. I regret the error." Many others in his
position would have concluded with a pseudo-apology such as, "I'm sorry that I
let them deceive me."

------
sbisker
Theranos' reply: [http://fortune.com/2015/12/20/letter-to-the-editor-
theranos-...](http://fortune.com/2015/12/20/letter-to-the-editor-theranos-
responds/)

It reads like it was written by a small team of lawyers who have had little
sleep - not a good sign. :/

~~~
teraflop
That link appears to have been deleted, so here it is, via Google cache:

\----

Letter to the Editor: Theranos Responds

 _Brooke Buchanan is vice president of communications at Theranos_

Both the headline and much of the content of Roger Parloff’s December 17
story, “How Theranos Misled Me” are inaccurate and — ironically — misleading.
Theranos was honest and transparent with Mr. Parloff, and the headline to Mr.
Parloff’s story is not supported by the facts or the story itself. Let’s take
a look.

After two months of reviewing his notes, there is no statement by Theranos
cited in this article that is in any way inaccurate or misleading to support
his headline or the statement in his article that he was misled.

Rather, Mr. Parloff states in this story that he made an error: “I then
started looking back at my research for the original story—which had been
conducted, by then, 17-19 months earlier—to try to reconstruct how I made the
error (italics added).” He concludes, “I regret the error.”

Mr. Parloff’s basis for saying he was misled appears to rest on the last part
of the following statement in his lengthy original article: “I wrote that the
company currently offers 200 – and is ramping up to offer more than 1000 – of
the most commonly ordered blood diagnostic tests, all without the need of a
syringe.”

The fact is that Theranos was, indeed, offering 200 diagnostic tests at that
time, and was ramping up to offer more than 1000 – all via finger-stick. That
is true.

Theranos had also developed over 200 assays to run with small volumes from
finger-sticks, urine, and other sample types at that time, as we explained to
him then. That capability remains today.

Theranos did in fact run certain tests collected through venipuncture on its
proprietary technologies at the time of this article.

Theranos never told Mr. Parloff it was running all of its tests without a
syringe – neither did he ask and neither was this a secret. Our website has
always made clear that was not the case (e.g. “Instead of a huge needle, we
can use a tiny finger stick or collect a micro-sample from a venous draw.
Theranos website, 2014). Indeed, Theranos has always been clear – in
statements on the website dating back to when it announced its retail lab
services in 2013, in statements it made to those who asked, and elsewhere –
that it has always performed some tests via venipuncture. As acknowledged in
Mr. Parloff’s story, Theranos explicitly discussed its use of venipuncture
with him.

To be clear, this topic was also not fact checked with Theranos prior to his
article. Rather, as he readily states, this sentence was based on assumptions
that led to a statement in his article which he is now reading through the
lens of other’s faulty reporting – reporting based largely on anonymous and
uninformed or misinformed sources with respect to our proprietary technologies
and their capabilities.

In his article, Mr. Parloff now says that he feels he simply “assumed” that
Theranos had brought up over 200 tests to run in its clinical lab only on
finger-sticks. Again, Mr. Parloff never asked anyone at Theranos whether that
assumption was correct. Had he done so, we would have corrected that
ambiguity. And if the sentence had jumped out at the time as containing an
erroneous assumption, Theranos would have corrected it.

Finally, it is important to point out that when Mr. Parloff first met with
Theranos about writing the article, in the spring of 2014, it was originally
in connection with a patent troll litigation that Theranos had undertaken. It
was in that context — of demonstrating Theranos’ technological capabilities
and other intellectual property — that Theranos shared data from the
development of over 200 proprietary assays on finger-stick/small volumes of
samples.

If Mr. Parloff now feels that because of recent reporting he got one sentence
in his story from mid-2014 about Theranos wrong, it was not because he was
misled, but rather because — as he states — he now feels he made faulty
assumptions that he now thinks he should have further clarified. The company
has grown and evolved and made many business and regulatory decisions about
its operations along the way. At no point did the company mislead him.

~~~
danieltillett
Still nothing here about how many of these tests were actually reliable. I
have a 100 fairies at the bottom of my garden who can tell me the result of
any test without even drawing a drop of blood. Profit!

~~~
randycupertino
Heh... Akin to how the founder of the mormon church came up with the idea
while getting high and sticking his face into a magic hat. Get loaded, stick
your face in a hat, document your delusional visions & pander them upon the
easily swayed ... voilà! You have created a $7 billion a year religion!

------
msravi
Theranos has always been very careful with their words - they make sure that
it's not an outright lie, but if not read attentively, can very effictively
mask the true meaning.

See this:
[https://news.ycombinator.com/item?id=10397886](https://news.ycombinator.com/item?id=10397886)

But then, I really wouldn't expect a journalist to be taken in by the PR
speak. I'd sort of expect that after years of listening to doublespeak like
this, a journalist would see right through... But I guess not.

------
bpicolo
Hard to not have a lot of doubt in much of what Theranos has claimed to
accomplish. Far too much shroud of secrecy to seem legitimate. Every article
that comes up about it reeks of something not being quite right.

~~~
Afforess
_That which flourishes in the night withers in the light of day_

I definitely feel that vibe from all the news from Theranos. If their methods
were revolutionary, they could show off (and license) their innovations with
patents, instead of hiding behind trade secrets.

~~~
dkbrk
It definitely appears that they had some initial technology which looked
promising but has failed to mature into a viable replacement for commercially
available tests.

What I'm wondering is how well Theranos' investors did their due dilligence.
It's not completely incredible that a VC might fund a company based on its
team and market position even if its core technology isn't a viable product of
a long-term business, but it would be somewhat surprising.

~~~
danieltillett
If I had to bet I would say Elizabeth had something promising at the
beginning, but it just didn’t pan out and she got herself in very tight bind.
It is fundamentally impossible to get results to the level of accuracy the FDA
requires from a single fingerpick for most assays. It is not an issue of
sensitivity, but that there is too much variability due tissue and capillary
effects.

The one thing we can all agree on is it should make a good movie when the dust
finally settles - the supporting cast Elizabeth has will make the film a must
see alone.

~~~
Pyxl101
It seems possible that there wasn't much initial due diligence nor a working
product at the beginning:

> Tim Draper, the venture capitalist, said Holmes, who was friends with his
> daughter growing up, is the first entrepreneur he knows who kept quiet about
> her business

From what I understand, Tim Draper, of DFJ Venture invested in Holmes when she
was a Stanford student.

> DFJ, formerly known as Draper Fisher Jurvetson, became one of Theranos’
> first investors. The firm doesn’t have a seat on the Theranos board,
> Jurvetson said. “We wrote a $500,000 check before anyone else, but she’s
> been somewhat independent and has been going at it all on her own, so I
> don’t have the answer to your question,” Jurvetson said when asked whether
> DFJ would invest again.

It seems most likely to me that this investment was based on her personality
and/or personal connection, rather than due to a technology breakthrough she
had made at the time. If she had something at the time, then it's taken 11
years to get where they are now, which is not having any publishable research
demonstrating the results. My guess based on the situation is that she was
charismatic and asked for money to go start solving the problem, from scratch,
and people gave her money because of her charisma and because they judged the
problem sufficiently tractable. It seems unlikely that she had more than an
idea while still in university.

It looks like DFJ has not participated in the most recent investing rounds (?)

[http://www.mercurynews.com/michelle-
quinn/ci_26147649/quinn-...](http://www.mercurynews.com/michelle-
quinn/ci_26147649/quinn-meet-elizabeth-holmes-silicon-valleys-latest-phenom)

[http://www.bloomberg.com/news/articles/2015-10-19/early-
ther...](http://www.bloomberg.com/news/articles/2015-10-19/early-theranos-
investor-remains-supportive-even-without-answers-ifydlf03)

~~~
randycupertino
> It seems most likely to me that this investment was based on her personality
> and/or personal connection

isn't that how most founders get their initial $$? At least the ones I know.
One got his money from his parents because his dad is a world famous
cardiologist and the other one because he was friends with a bunch of people
on the board of YC.

Heck, even the go pro founder got a ton of $$ from his parents.

Elizabeth holmes was no different.

~~~
pessimizer
_Entrepreneurs don’t have a special gene for risk—they come from families with
money_

[http://qz.com/455109/entrepreneurs-dont-have-a-special-
gene-...](http://qz.com/455109/entrepreneurs-dont-have-a-special-gene-for-
risk-they-come-from-families-with-money/)

------
DanBC
All the investors, and all the journalists had a simple option that none of
them appear to have taken: have your own blood tests done by Theranos.

When they start sticking something into a vein you then know it's more than a
finger-stick.

Still, this is a great article, and it clearly shows that Theranos were
failing in their duty of candour.

~~~
dekhn
Google Ventures said that when they were looking at Theranos as an investment,
they sent an employee to have the test, then were puzzled why a blood draw was
required, and said that was suspicious enough not to invest.

------
linuxkerneldev
These are warning signs I look for. \- politically linked / celebrity types

Eg: [https://www.theranos.com/leadership](https://www.theranos.com/leadership)
David Boies Boies served as Special Trial Counsel for the United States
Department of Justice in its antitrust suit against Microsoft

Henry A. Kissinger

Gary Roughead Gary Roughead is a retired United States Navy admiral who served
as the 29th Chief of Naval Operations.

Seems more like a list of country club members who have dinner parties
together.

------
kzhahou
The subtext of the Theranos story is that it's easy to mislead the press, and
even investors. Silicon Valley still relies largely on optimism and TRUST.
When a wolf in turtleneck clothing comes along and takes advantage of that, it
risks putting all other companies on the defensive.

------
code4tee
The company seems to be grasping at straws in desperate attempts at damage
control now that everyone seems to be catching on that the company is perhaps
more hype than substance. Certainly not the first time in business history
that a product has failed to live up to initial expectations, but if theres a
feeling that people were misled about what was real vs. conceptual then it can
get ugly quite quick.

~~~
firebones
"not the first time..."

What other product/company has not lived up at this scale, and with this
capitalization?

~~~
throwawaymsft
Microsoft wrote down its entire purchase of aQuantive for 6B.

------
tangled_zans
Theranos has been the only biotech firm that I've seen mentioned on the news
lately.

Is there anything GOOD happening in biotech right now?

~~~
srunni
[http://www.technologyreview.com/news/543181/crispr-gene-
edit...](http://www.technologyreview.com/news/543181/crispr-gene-editing-to-
be-tested-on-people-by-2017-says-editas/)

~~~
tangled_zans
Damn, that's great news!

------
asadlionpk
Not to get all tinfoil hat, this sudden press attack on Theranos seems so
synchronized.

~~~
meric
Theranos was offering standard tests at a lower rate. I'm guessing the market
price is so high, it's quite easy to generate positive cash flow from it.
Could it be the incumbent industry players do not want a new competitor into
the market?

Also Martin Shkreli got arrested recently. Who benefits most from arresting
Shkreli? The pharmaceutical industry he shone the light on.

Now where can you buy one of those hats?

~~~
bigchewy
Do you have any knowledge of this or pure speculation? The lab industry I know
(10+ years in healthcare) does not have the 60%+ in waste necessary for
Theranos to offer their prices + generate positive cash flow. Perhaps the
investor dollars are funding the low prices

~~~
meric
No knowledge. Pure speculation.

------
Animats
When you read an article like that in Fortune, you know a company is in big
trouble.

------
jsizz
Parloff spent years publishing pro SCO Group articles and pushing the
undisclosed-Microsoft-patents-in-Linux meme. Do we spot a pattern here?

------
rodionos
Not able to view the articles. Anti adblocker?

~~~
ChuckMcM
Yes, Fortune has been updating their json to attack ad blockers.

~~~
tangled_zans
Clever.

I don't get why people can't just label their ads with random letters though?

~~~
LoSboccacc
because people have a job of building a website with a side of maintaining ads
visible, while ad blockers write filter for a job all day long - in other
words, it's a uphill battle, takes loads of time to test against all ad
blockers and the effort can be nullified in few minutes of any adblocker dev
time. heck, they can even crowdsource rules.

------
carrja99
I thought the title said "How Thanos Misled Me" ... would like that better.
:-D

------
tacos
Reporter Roger Parloff certainly isn't winning any investigative reporting
awards here. He seems genuinely confused why Theranos, despite having the
ability to use its own technology, might also be using existing technology.
One explanation might be that Theranos is collecting blood by industry-
standard means so that they could also verify accuracy of their newfangled
tests using a subset of that sample.

All parties here, from press to company to investors, seem to be maximally
full of shit and in massive cover-your-ass mode.

~~~
ghshephard
I read the original article, and what I understood after reading it, was that
Theranos had developed a new technology for testing small samples of blood
that could be obtained from a finger prick, and could do so inexpensively
(sometimes for 1/10th the prior price).

Theranos never made it clear that (A) many (most?) of the tests were not done
using Theranos equipment, but by third party diagnostic equipment, and that
(B) some (many?) of the tests still required a traditional blood draw.

I understand why Theranos might not want to make that clear (dilutes the value
of their story) - it just seems to be the sort of thing that they should have
realized would come out eventually, and better to get ahead of it.

Still hoping that Theranos manages to accomplish even 1/2 of what I thought
they were doing.

~~~
tacos
Some of the later back-and-forth stuff states that even for the tests they can
do, they were using third party equipment for "scaling" reasons. They're not
good at PR and this reporter isn't good at getting answers. What a mess.

~~~
erdojo
I believe Theranos was almost on to something, and it didn't pan out. You
know, science.

So they used smoke-and-mirrors instead. Countless startups have used the same
strategy - using hubris to hide failure long enough to either fix problems or
get sold.

Most startups don't mess with people's lives. Theranos deserves every bit of
the scrutiny they're under now.

------
padiyar83
Theranos was very clear on this. They have about 200 tests that are successful
in a lab setting with only one in the works to be cleared by FDA. Truth is
that simple ! The rest is just sleazy journalism that sells tabloids

~~~
rabidonrails
They weren't "clear" on this. They said were all about their proprietary
technology and getting everything from a pinprick when it turns out they
weren't doing any of that.

It's like saying I have a great story to tell you but then reading you Moby
Dick.

~~~
padiyar83
They never once said they were not using existing machines to do these tests,
not once, they only spoke about the quantity of the sample needed. Using the
same analogy, saying I have a great story to tell you but then reading Moby
Dick isn't necessarily cheating, because Moby Dick is a great story :).

~~~
rabidonrails
Right, it's not cheating or lying, just kinda misleading.

~~~
padiyar83
Agreed, they should have been upfront on what technology they developed in
house and what it can and cannot do. A simple table outlining that could have
cleared up the air.

