Theranos and the limits of Hype

[paxmao]

Theranos was super cool, amazingly led by a young talented woman and a company that was going to revolutionize the world of blood testing. From one drop of blood, hundreds of test would be possible, making the process cheaper. Except that none of this was true.

Founded in 2003 by 19-year-old Elizabeth Holmes,[6] Theranos raised more than US$700 million from venture capitalists and private investors,[7] resulting in a $10 billion valuation at its peak in 2013 and 2014.[8][9]

A turning point came in 2015 when medical research professors John Ioannidis and Eleftherios Diamandis, along with investigative journalist John Carreyrou of The Wall Street Journal, questioned the validity of Theranos's technology. The company faced a string of legal and commercial challenges from medical authorities, investors, the U.S. Securities and Exchange Commission (SEC), Centers for Medicare and Medicaid Services (CMS), state attorneys general, former business partners, patients, and others.[10] By June 2016, it was estimated that Holmes's personal net worth had dropped from $4.5 billion to virtually nothing.[11] After several years of struggle, lawsuits, and sanctions from CMS, what remained of the company was dissolved on September 4, 2018.[12]

On March 14, 2018, Theranos, Holmes, and former company president Ramesh "Sunny" Balwani were charged with fraud by the SEC.[13] On June 15, 2018, the United States Attorney for the Northern District of California announced the indictment of Holmes on wire fraud and conspiracy charges. Balwani was also indicted on the same charges.[14] The trial was scheduled to commence in August 2020,[15] but was delayed due to the COVID-19 pandemic and Holmes's pregnancy. Holmes's trial began on August 31, 2021,[16] while Balwani's trial has been postponed until January 11, 2022.[17] Holmes was found guilty on four counts on January 3, 2022.[18]

For those of us who have been around in the crypto, we are well aware that everything is great when they as for you cash and most of it goes "ninja smoke bomb" the minute after they get it.

While Elizabeth Holmes was a super-hyper, there is some degree of hypocrisy on the whole fraud charges as Silicon Valley is perfectly know for inflated and unjustified claims. Is there a limit between wishful thinking and plain lies?

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[hatshepsut93]

For those of us who have been around in the crypto, we are well aware that everything is great when they as for you cash and most of it goes "ninja smoke bomb" the minute after they get it.

Unfortunately, very few people are actually aware of this. Most people, especially the beginners, think that there are "bad projects" and "good projects", and that they can "do their research" to find the good ones. This is not the case because blockchain technology is so fundamentally limited that it basically almost has no uses in real world. Medical records, supply chains, property rights and so on - all of that doesn't work, it has been tried and it failed. So even if the devs seriously believe in what they are doing, they are still going to fail.

[The Sceptical Chymist]

While Elizabeth Holmes was a super-hyper, there is some degree of hypocrisy on the whole fraud charges as Silicon Valley is perfectly know for inflated and unjustified claims. Is there a limit between wishful thinking and plain lies?

That's true, but Holmes and Theranos went well beyond outrageous promises which are standard fare in the Valley.  Theranos actually partnered with Walgreens and was doing clinical tests on actual patients with a testing system that didn't produce accurate results.  Doctors can and do prescribe treatment and/or further (expensive) testing based on bloodwork, so she was putting the patients that Theranos tested blood for at risk of receiving whatever unnecessary drugs/procedures/etc.  

I read Bad Blood a while back, but I can't remember if there was actually any harm done to patients (and I haven't read all of this thread yet or the details of the verdict).  By the way, it's a very good read.  I think Holmes really thought she could do what she promised everyone Theranos was capable of.  I don't think she ever had any intentions to pull off a typical cash-grab scam.  There was some serious research going on at Theranos, and I think Holmes thought they could catch up in time as far as their testing system went before anyone noticed that what they had wasn't working properly.

This is not the case because blockchain technology is so fundamentally limited that it basically almost has no uses in real world. Medical records, supply chains, property rights and so on - all of that doesn't work, it has been tried and it failed. So even if the devs seriously believe in what they are doing, they are still going to fail.

Spot on.  I remember seeing a whole bunch of ICO projects aimed at revolutionizing....everything.  Some of them were medicine-related, but none of them caught on.  If businesses were going to start using blockchain tech, they'd have done it by now--and it wouldn't involve some 3rd party ICO dev.

[hello_good_sir]

You'll find that equity raisings rarely make any sense in terms of valuations, and it's probably worse than any crypto right now.

Theranos is one of the prime examples, along with Enron.

Accounting statements as well as the actual technology used within the company can all be forged with enough sophistication and courage, and there is certainly no shortage of bad actors looking to exploit these loopholes.

[mk4]

While Elizabeth Holmes was a super-hyper, there is some degree of hypocrisy on the whole fraud charges as Silicon Valley is perfectly know for inflated and unjustified claims. Is there a limit between wishful thinking and plain lies?

I wouldn't say it's a bad thing per se. Having very ambitious goals for a startup isn't a bad thing, because that's what some entrepreneurs try to achieve — create great products to change the world. Wishful thinking in this case, that may or may not amount to anything.

On Holmes' case, they were claiming that they can already do the blood thingy, which was obviously a lie. Quite a huge differentiating factor. And it definitely doesn't help that the media hyped her up into stardom just because she's apparently some female version of Steve Jobs or something similarly dumb.

[davis196]

I find similarities between the Silicon Valley startup industry and the crypto industry(all crypto projects,DeFi,ICOs,IEOs,NFTs,etc).
Both have a really low success ratio,which is normal for high risk industries.99% of the crypto and Silicon Valley startups end up as a failure or a scam.Only 1% end up being successful and growing.
Both industries rely heavily on building hype and having lots of wild promises,in order to raise funds.
Lots of manipulative sociopaths are CEOs of both crypto and Silicon Valley startups.Elizabeth Holmes is one of them.Theranos is a total scam,nothing more and nothing less.
All those "angel" investors buying shares in startup companies know that their money will be wasted 99% of the time,but they are betting money on that 1% "Unicorn" companies,which will later turn into the new Facebook,Google or Apple.

[slapper]

Having no supervisor might be the reason why Theranos makes such a successful fraud.

In general, I think the main reason is that people are not aware that they are too easy on any project. The only thing they believe is money. If the project has the possibility to give them income (mostly by listening to promises rather than products), they will invest without asking anything further.

[mu_enrico]

This is a good case study on unethical marketing and fraud, also the importance of skeptical mindset. I once also gullible and ignorant (I'm here because of 2017 ICO hype lol) but thankfully this forum made me realize that this disinformation practice and fraud are rampant on social media. Especially if it's involving money, you must really be skeptical about any type of projects, whether or not it makes sense. Nowadays, even if some post receive hundreds or thousands likes/upvotes/whatever, I won't trust it before I do my own research.

The current trend of startups seeking for funding (like in Silicon Valley) also makes it worse. You cannot just value something based on idea, the team, the cool product/prototype. "The value of a business will always about the profit aka money" - wise guy.

[avikz]

While Elizabeth Holmes was a super-hyper, there is some degree of hypocrisy on the whole fraud charges as Silicon Valley is perfectly know for inflated and unjustified claims. Is there a limit between wishful thinking and plain lies?

Unfortunately, 99% of the crypto market is based on hype only! Otherwise coins like Floki Insu or Shiba Inu wouldn't get inflated to such levels. Creating hype is a marketer's job but when this hype is based on white lies, it dies a miserable death at some point in the future. It is true for both stock market and crypto market.

Probably that's the reason why many people is talking about an upcoming crypto winter where the fittest will survive and rest all will go down to drain. It's the need of the hour!

[fiulpro]

I do remember reading about it today, it's literally everywhere, the woman did not just fool the doctors, the investors, the scientists working on it but at the same time  the fake promises attracted the attention of many.

While Elizabeth Holmes was a super-hyper, there is some degree of hypocrisy on the whole fraud charges as Silicon Valley is perfectly know for inflated and unjustified claims. Is there a limit between wishful thinking and plain lies?

Unfortunately, 99% of the crypto market is based on hype only! Otherwise coins like Floki Insu or Shiba Inu wouldn't get inflated to such levels. Creating hype is a marketer's job but when this hype is based on white lies, it dies a miserable death at some point in the future. It is true for both stock market and crypto market.

Probably that's the reason why many people is talking about an upcoming crypto winter where the fittest will survive and rest all will go down to drain. It's the need of the hour!

99% ??
I don't think so!
What I do know is that the coins have their own values, the reason I joined bitcoins was not because of the hype, many people here joined it for their own reasons. It was not even popular back then! 99% of the Altcoins which are new those I do believe and then comes the manipulators like Elon musk, buying a Shiba puppy or posting on Twitter. Those are the people responsible for such things.

-

Having no supervisor might be the reason why Theranos makes such a successful fraud.

In general, I think the main reason is that people are not aware that they are too easy on any project. The only thing they believe is money. If the project has the possibility to give them income (mostly by listening to promises rather than products), they will invest without asking anything further.

People are also running after Pfizer stocks right now because of some obvious reasons, but this time it's the pandemic doing it's marketing, whatever is the need of the hour is something that would make people super anxious and they usually skip reading further into anything else.

The woman literally had 11 fraud charges and she was found guilty of 4! Plus the amount of money she made!! Her net worth is 4.5 billion $. People are like sheep most of the times they see something that's rising in popularity they run towards it.

[Silberman]

I find similarities between the Silicon Valley startup industry and the crypto industry(all crypto projects,DeFi,ICOs,IEOs,NFTs,etc).
Both have a really low success ratio,which is normal for high risk industries.99% of the crypto and Silicon Valley startups end up as a failure or a scam.Only 1% end up being successful and growing.
Both industries rely heavily on building hype and having lots of wild promises,in order to raise funds.
Lots of manipulative sociopaths are CEOs of both crypto and Silicon Valley startups.Elizabeth Holmes is one of them.Theranos is a total scam,nothing more and nothing less.
All those "angel" investors buying shares in startup companies know that their money will be wasted 99% of the time,but they are betting money on that 1% "Unicorn" companies,which will later turn into the new Facebook,Google or Apple.

True, while not as extreme as what we see in this market the truth is that the majority of the new projects released at Silicon Valley eventually fail, and that is to be expected, however the issue is when the hype reaches such a degree in which companies promise they can do something when that is not the case and in the process they put lives at risk, which is exactly what happened with Theranos and Elizabeth Holmes.

[The Sceptical Chymist]

You'll find that equity raisings rarely make any sense in terms of valuations, and it's probably worse than any crypto right now.
<snip>
Accounting statements as well as the actual technology used within the company can all be forged with enough sophistication and courage, and there is certainly no shortage of bad actors looking to exploit these loopholes.

I'm not sure what you mean by the above--especially the second statement, although I can't remember what kind of financial shenanigans Theranos was up to.  The only thing I recall from the Bad Blood book is how they were basically lying to their partners and investors and that the workplace environment was one of paranoia and extreme micromanagement by Holmes. 

But since they did receive money from investors and weren't truthful about what they were doing with it (if I remember correctly), it makes sense that the SEC was involved.  I just don't remember any accounting trickery.

The current trend of startups seeking for funding (like in Silicon Valley) also makes it worse. You cannot just value something based on idea, the team, the cool product/prototype. "The value of a business will always about the profit aka money" - wise guy.

Let me tell you, that trend isn't current--or at least it isn't new.  The same thing was going on over 20 years ago when the internet was starting to explode.  Everyone was throwing money at these companies that had ideas about solving problems using the internet, and it was wild.  Now that I think about it, it was almost like the ICO market.  If you had an idea, you got money showered on you.

[magneto]

Good to see that at least some justice is served.

In way too many instances vapourware or phantom companies that have no product are able to raise money pre-revenue. I think that is a symptom of an underlying problem, especially when most investors who put money into Theranos were large institutions with various connections.

Decentralising and democratising access to capital is absolutely crucial.

[aoluain]

While Elizabeth Holmes was a super-hyper, there is some degree of hypocrisy on the whole fraud charges as Silicon Valley is perfectly know for inflated and unjustified claims. Is there a limit between wishful thinking and plain lies?

I wouldn't say it's a bad thing per se. Having very ambitious goals for a startup isn't a bad thing, because that's what some entrepreneurs try to achieve — create great products to change the world. Wishful thinking in this case, that may or may not amount to anything.

On Holmes' case, they were claiming that they can already do the blood thingy, which was obviously a lie. Quite a huge differentiating factor. And it definitely doesn't help that the media hyped her up into stardom just because she's apparently some female version of Steve Jobs or something similarly dumb.

Yup as per mk4, A lot of new startups need to hit the ground running to attract
investment, this often results in a product not being quite ready when it is supposed
to be, that doesnt mean the product wont do what its supposed to do.

In this case it was a matter of attracting investment based on lies and wishful thinking
but mostly lies. The machine was claimed to be used by the defence forces and would
be used by every hospital, medical centre and pharmacy, not though if it couldnt do
what was claimed.

[TimeTeller]

Good to see that at least some justice is served.

In way too many instances vapourware or phantom companies that have no product are able to raise money pre-revenue. I think that is a symptom of an underlying problem, especially when most investors who put money into Theranos were large institutions with various connections.

Decentralising and democratising access to capital is absolutely crucial.

I have watched the documentary - The Inventor before.
And I can say, she really did great job in attracting big investors.
If only the product was true, she would have made a difference in this world.
But I am wondering, in what stage of the product development did she honestly realize that that they don't have the product?
Maybe it was already too late for her and she only covered up and continued the pretensions to save the reputation of the company.
Sometimes if you are already in the top level, you have no idea what's going on from the ground level scenario.
But thanks to the whistleblowers, without their courage, their product may have been in this market.

[stompix]

99% ??
I don't think so!
What I do know is that the coins have their own values, the reason I joined bitcoins was not because of the hype, many people here joined it for their own reasons. It was not even popular back then! 99% of the Altcoins which are new those I do believe and then comes the manipulators like Elon musk, buying a Shiba puppy or posting on Twitter. Those are the people responsible for such things.

Coingeko currently lists ~12300 coins and tokens, assuming only 98% of them would be useless you would still need 246 coins that have an actual reason for existing other than pump and dump schemes.
Do you think you can come with that many? 
And older coins mean nothing, look at Dash, Eos, Waves, Neo, Iota, all of them were supposed to...do something special. The actual results? Same as Theranos tests, zero.

Good to see that at least some justice is served.

Wait till you see the actual sentence.
https://time.com/6132954/elizabeth-holmes-prison-sentence/

The 37-year-old Stanford University dropout was found guilty on Monday of a massive fraud at Theranos Inc., the blood-testing startup she founded, and faces as long as 20 years behind bars. But prison consultants and legal experts say that Holmes may serve as little as three years at one of the federal penal system’s less restrictive facilities for non-violent, white-collar criminals. She is likely to appeal to her conviction and could spend even less time incarcerated if she prevails.

[pinggoki]

It wasn't all just hype though, Theranos have a lot of right people paid to make it all seem real, and the CEO of the company, Elizabeth Holmes is an accomplished sociopath that was able to lie to the doctors that visited her laboratories and even one of the former Secretary of State. Holmes really found a great niche in an industry so important that she knew that they're going to ignore some small problems or anomalies here and there that she was able to pull off the scam.

[mu_enrico]

Let me tell you, that trend isn't current--or at least it isn't new.  The same thing was going on over 20 years ago when the internet was starting to explode.  Everyone was throwing money at these companies that had ideas about solving problems using the internet, and it was wild.  Now that I think about it, it was almost like the ICO market.  If you had an idea, you got money showered on you.

Yeah, I should've said "ongoing." Since tech adoption was incredibly slow in my country, I don't recall having internet access 20 years ago
I only get these startups, seed funding, VC, pitching, and other crap related to this ideology 10 years ago.
It was interesting, but I noticed something odd when people tried to sell the business, not to own it. It's like making quick bucks just for ideas and stuff.
If I have a good idea, I'll do it myself, and get 100% of the rewards. If someone wants to buy my business, they'll have to squeeze their wallet cause I'm not selling. <- This is the correct mentality IMO.

[cabron]

Good to see that at least some justice is served.

In way too many instances vapourware or phantom companies that have no product are able to raise money pre-revenue. I think that is a symptom of an underlying problem, especially when most investors who put money into Theranos were large institutions with various connections.

Decentralising and democratising access to capital is absolutely crucial.

I have watched the documentary - The Inventor before.
And I can say, she really did great job in attracting big investors.
If only the product was true, she would have made a difference in this world.
But I am wondering, in what stage of the product development did she honestly realize that that they don't have the product?
Maybe it was already too late for her and she only covered up and continued the pretensions to save the reputation of the company.
Sometimes if you are already in the top level, you have no idea what's going on from the ground level scenario.
But thanks to the whistleblowers, without their courage, their product may have been in this market.

This news is all over TV today. So many believed in her and the diagnostics that his company did but it's proven to be fraud this time. So many pregnant women were forced to do the abortion because the diagnosis was that the baby inside them could have down syndrome. Proven wrong after all because there was one woman who was said to have this diagnosis pursue to have the baby but turned out to be a normal kid.

There was also a man diagnosed to be diabetic, go for a 2nd opinion and found the diagnosis was incorrect. This is playing god to the patients.