Sad Postmortem on Theranos Inc.

[Lakewood90712]

www.marketwatch.com/story/the-last-...re-as-overhyped-as-the-blood-tests-2018-10-16 The company has effectively been a zombie for some time IMO. Still not quite as bad as Fleischmann - Pons " Cold Fusion" .

When credit tightens up, all kinds of funky financial things seem to surface.

 

[Fedup]

I’m surprised why she’s not in the same jail house as Maddoff.

 

[Sunset]

I’m surprised why she’s not in the same jail house as Maddoff.

She is prettier...

 

[donheff]

Read John Carreyou's, "Bad Blood." Holmes and her Svengali Sunny Balwani were not just felons, they were evil. They both belong in a very dark hole.

 

[Aerides]

Nothing sad about it. Holmes is a fraud. In addition to screwing shareholders and employees, how many people got incorrect blood results...that's where my sympathy lies. Imagine someone got a false positive and didn't get treated somewhere in that mess.

 

[Mdlerth]

A fool and his money

Wow, a thoroughly researched article! Remarkable, in an era when almost all reporting is fluff.

Three observations stand out:

• Way too many names for me to recall them all, but an awful lot of people who [-]ought to [/-]know better put their reputations and money into bankrolling that outfit.
• "That same month, Theranos agreed to pay $4,652,000 in consumer restitution — more than Theranos had in fact collected for all lab tests throughout the life of the company." Under what collective hallucination is a company with only 4.6 million in sales valued at 9 billion? I have difficulty feeling sympathy for the [-]investors[/-] speculators who got burned dumping truckloads of cash into a company that produced neither any products nor a valid financial statement for a decade.
• "Warmenhoven told MarketWatch he blames engineers for the final sinking of Theranos. 'They lost the recipe. The tests were not coming out right. That 60 to 90 days extra to figure it out took away the runway we thought we had.' " So a bunch of incompetent, corrupt senior executives of a company spend a decade lying through their teeth, and suddenly the firm's failure is the engineers' fault? Give me a break.

 

[jazz4cash]

Yup. Too many folks that should’ve known better threw so many $ into the pot with no due diligence. That makes them complicit IMO. The venture capital process places way to much value on potential vs verified results. One comment made me laugh: “it was the engineers fault”. I’ve read that the work was extremely compartmentalized so that no one except Holmes and Balwani could see how everything was (dis)connected. Yet they did produce valuable IP that could have made them viable if it was nurtured responsibly.

 

[joeea]

Nothing sad about it. Holmes is a fraud. In addition to screwing shareholders and employees, how many people got incorrect blood results...that's where my sympathy lies. Imagine someone got a false positive and didn't get treated somewhere in that mess.

This.

 

[Fedup]

Read John Carreyou's, "Bad Blood." Holmes and her Svengali Sunny Balwani were not just felons, they were evil. They both belong in a very dark hole.

I’ll wait until this book is in my library so I can check out and read. Not buying any books at the moment.

 

[sweetana3]

The book Bad Blood is an excellent read. It is all about greed. Bring on the snake oil salesmen or saleswomen.

 

[Maenad]

"Warmenhoven told MarketWatch he blames engineers for the final sinking of Theranos. 'They lost the recipe. The tests were not coming out right. That 60 to 90 days extra to figure it out took away the runway we thought we had.'" So a bunch of incompetent, corrupt senior executives of a company spend a decade lying through their teeth, and suddenly the firm's failure is the engineers' fault? Give me a break.

A-men. Didn't VW try the same "blame the little guy" b.s.? Then again, how many of us have seen management refuse to acknowledge when a problem starts at the top?

Such boldface-name investors as Mexican billionaire Carlos Slim; Betsy DeVos, now secretary of education; Oracle founder Larry Ellison; the Walton family of Walmart fame, who invested $150 million in Theranos; Greek shipping heir Andreas Dracopoulos; and members of South Africa’s Oppenheimer family, which controlled the diamond company De Beers Group, lost their entire investments.

Oh my heart bleeds for them. They didn't do their due diligence, that's the price they get to pay. Isn't that what we little people hear when we lose money on our investments?

 

[Totoro]

In 2015 there was an interview and panel with Jack Ma, Bill Clinton and Elizabeth Holmes.

Really interesting to watch it knowing what we know now. Imagine a very bad case of imposter syndrome. Only you actually are an imposter ..

 

[jollystomper]

I’m surprised why she’s not in the same jail house as Maddoff.

From the article:

The indictments of Holmes and Balwani, who was not only Theranos’s former president and chief operating officer but also Holmes’s boyfriend, came after a 2½-year investigation by the U.S. attorney’s office in San Francisco, sparked in part by the reporting of the Wall Street Journal’s Carreyrou. Those charges are still pending.
Each faces a maximum sentence of 20 years in prison and a fine of $250,000, plus the cost of potential restitution to investors for each count of wire fraud and each conspiracy count, according to the U.S. attorney’s office.

 

[jebmke]

A-men. Didn't VW try the same "blame the little guy" b.s.? Then again, how many of us have seen management refuse to acknowledge when a problem starts at the top?

Such boldface-name investors as Mexican billionaire Carlos Slim; Betsy DeVos, now secretary of education; Oracle founder Larry Ellison; the Walton family of Walmart fame, who invested $150 million in Theranos; Greek shipping heir Andreas Dracopoulos; and members of South Africa’s Oppenheimer family, which controlled the diamond company De Beers Group, lost their entire investments.

Oh my heart bleeds for them. They didn't do their due diligence, that's the price they get to pay. Isn't that what we little people hear when we lose money on our investments?

Mattis was on the board. So far he has kept a pretty low profile on this.

 

[NW-Bound]

I was aware of the downfall of Theranos and its CEO, but never cared to research further.

Just now read the article in the OP.

Elizabeth Holmes founded Theranos in 2003 after dropping out of Stanford University as a 19-year-old sophomore. Her goal was to revolutionize the diagnosis and treatment of disease...

Less than three years after starting the company, Holmes pitched investors in an effort to raise $30 million for what was referred to as a “pre-IPO transaction,” with a presentation published by Axios that claimed Theranos already had six deals with five companies and would have $120 million to $300 million in revenue in the following year and a half. The business model at that time was focused on clinical and preclinical trials for pharmaceutical companies, not consumers.

The company raised the money, and, on Sept. 29, 2014, Holmes was named one of the richest women in America by Forbes as a result of her 50% stake, worth $4.5 billion, in the startup, which was valued at that point at $9 billion...

How were investors so gullible to believe that a young inexperienced woman with no formal education could produce something that eluded thousands of researchers throughout the world? If the work was produced by experts she hired, I would demand to know who they were to check their credentials.

This is so bizarre. I think people were so blinded by the promise of money, they threw caution to the wind.

 

[Fedup]

I was aware of the downfall of Theranos and its CEO, but never cared to research further.

Just now read the article in the OP.



How were investors so gullible to believe that a young inexperienced woman with no formal education could produce something that eluded thousands of researchers throughout the world? If the work was produced by experts she hired, I would demand to know who they were to check their credentials.

This is so bizarre. I think people were so blinded by the promise of money, they threw caution to the wind.

One of the investors is from Perkins VC, he still defends her today. Since he is such a well known name as an investor, everybody thought he did the due diligence and so like sheep they followed the herd.

The brave one is Schultz’s grandson who’s also a Stanford grad and he did the whistle blower I think.

 

[bobandsherry]

How were investors so gullible to believe that a young inexperienced woman with no formal education could produce something that eluded thousands of researchers throughout the world?

I dunno, maybe because of the success from people like these?

10 ultra-successful millionaire and billionaire college dropouts

 

[NW-Bound]

It is different when a youngin got into software in the early days of PC, or another one discovered the use of Internet for social networking. These have no precedent.

But when someone claims a major discovery in a branch of established science, people should ask questions using the established knowledge in that field.

 

[Fedup]

It is different when a youngin got into software in the early days of PC, or another one discovered the use of Internet for social networking. These have no precedent.

But when someone claims a major discovery in a branch of established science, people should ask questions using the established knowledge in that field.

Don’t forget this is not software, it’s medical stuff. It affects real people.

 

[bobandsherry]

It is different when a youngin got into software in the early days of PC, or another one discovered the use of Internet for social networking. These have no precedent.

But when someone claims a major discovery in a branch of established science, people should ask questions using the established knowledge in that field.

So it wasn't software, but you asked why and I gave a possible reason. I'm sure people doubted many of the things the others told them. But the difference is somehow she was able to produce data and results that gave investors comfort to shovel their cash into the company. She did have some experience having worked a summer in the Genome Institute labs on groundbreaking SARS research. She also went to Stanford for chemical engineering, and during her time there, filed her first patent in 2004 at age 20 for an advanced drug-delivery patch (it was approved in 2007). She had other patent submissions for medical related applications and there were quite a few that were approved. So I suppose pretty impressive to investors who wanted to take a gamble. No different than a ponzi scheme I suppose, only after it all crashes is the obvious exposed.

 

[Fedup]

One of the investors is from Perkins VC, he still defends her today. Since he is such a well known name as an investor, everybody thought he did the due diligence and so like sheep they followed the herd.

The brave one is Schultz’s grandson who’s also a Stanford grad and he did the whistle blower I think.

Corrected. It’s actually Tim Draper, another VC firm, Not Perkins and Klein’s VC, he was her neighbor, that’s give a lot of credence.

https://money.cnn.com/2018/03/15/technology/elizabeth-holmes-theranos/index.html

 

[NW-Bound]

So it wasn't software, but you asked why and I gave a possible reason. I'm sure people doubted many of the things the others told them. But the difference is somehow she was able to produce data and results that gave investors comfort to shovel their cash into the company. She did have some experience having worked a summer in the Genome Institute labs on groundbreaking SARS research. She also went to Stanford for chemical engineering, and during her time there, filed her first patent in 2004 at age 20 for an advanced drug-delivery patch (it was approved in 2007). She had other patent submissions for medical related applications and there were quite a few that were approved. So I suppose pretty impressive to investors who wanted to take a gamble. No different than a ponzi scheme I suppose, only after it all crashes is the obvious exposed.

I glanced through the patent list, and the ones I saw were all recent, or at least after 2010. She would have many real researchers working for her, and it is quite customary to put your boss's name on the inventor list.

Her first patent in 2004 is for sure her own. She is most likely a bright woman, and had some new innovative ideas, and needed some money to develop it (along with many coworkers that she would hire with the invested money).

As with any venture, it may or may not pan out. In this case, she decided to fake it until she made it. And she was caught.

 

[bobandsherry]

I glanced through the patent list, and the ones I saw were all recent, or at least after 2010. She would have many real researchers working for her, and it is quite customary to put your boss's name on the inventor list.

Her first patent in 2004 is for sure her own. She is most likely a bright woman, and had some new innovative ideas, and needed some money to develop it (along with many coworkers that she would hire with the invested money).

As with any venture, it may or may not pan out. In this case, she decided to fake it until she made it. And she was caught.

I'm sure she was convinced she would actually create what she was selling. But just wanted to show she was just not some average 19 year old who walked into an office one day and said she had a great idea as what I took from the original post. And building a strong team is how all the great ones with an idea have become great, so no surprise there either. Just look at Space-X and Tesla, the "team" took the division and made it reality.

 

[NW-Bound]

I'm sure she was convinced she would actually create what she was selling. But just wanted to show she was just not some average 19 year old who walked into an office one day and said she had a great idea as what I took from the original post. And building a strong team is how all the great ones with an idea have become great, so no surprise there either. Just look at Space-X and Tesla, the "team" took the division and made it reality.

No, she was definitely not your average 19-year-old. She had to be very smart and convincing in order to attract money. But would you not check out the science behind what she said before signing the check?

And exactly because of her youth and lack of educational and work experience credentials that investors should be more careful, compared to investing with, say, a Nobel laureate who has taught many years at a university?

 

[athena53]

When credit tightens up, all kinds of funky financial things seem to surface.

Or, as Buffet says, "when the tide goes out you can see who's been swimming naked".