>In April 2014, she got a long email from another employee. The employee alleged that Theranos had cherry-picked data when comparing Edison machines to traditional lab machines to make the Edison look more accurate, according to a copy of the email.
>For one test, the device’s accuracy rate increased sharply after some information was deleted and manipulated, the employee wrote. Edison machines also allegedly failed daily quality-control checks often.
>Ms. Holmes forwarded the email to Mr. Balwani. He replied to the employee, who no longer works at Theranos, denied all the claims and questioned the employee’s understanding of statistics and lab science.
Oh man. If you read through Theranos' reviews on Glassdoor [1] this anecdote seems totally legitimate. Multiple reviews talk about the toxic culture and how management does anything to cover their behinds. Quite a few of these were written before the scandal broke so I think they're quite honest about what's going on.
I wrote a parody of Theranos as a TV pilot that is increasingly becoming true: http://www.pricks.com/
(I'm sharing this here because the Hacker News community seemed to enjoy my Season 3 premiere of Silicon Valley [https://news.ycombinator.com/item?id=10179894], but apologies if others feel it detracts from the discussion.)
I was just thinking that someone needs to write a novelization of this Theranos nonsense & turn it into a screenplay and voilà:- Silicon Valley's "Wolf of Wall Street" or the next "The Social Network" ... I'm sure someone is already writing it up.
No matter how this story ends (whether they eventually ends up with having a fully functioning product or not) this should be a cautionary tale to anyone wanting to actually change the world in healthcare.
Science speaks for itself and does not care how much you raised at what valuation. It requires a rigorous approach to testings and facts and data or it will be merciless if you aren't living up to your own claims.
So hopefully next time someone has a great disruptive idea in healthcare, they will spend a little more time getting the science and tech right before they start worrying about becoming a unicorn.
Does the composition of Theranos' board strike anyone else as very weird? It seems much more like the board of a foreign policy think thank than a biotech start up. There are three former cabinet secretaries (state and defense), two former very senior military officers, two former senators (one regarded as a foreign policy expert), a bigshot DC lawyer, and the former CEOs of Bechtel and Wells Fargo. The only physicians are former Senator Frist and a very credentialed epidemiologist, but it's not clear to me that either would have much knowledge about laboratory testing.
I'm really curious what the rationale for this board composition is. [Edit: I'm curious if this is connected to Holmes' father's experience in the foreign policy establishment]
I think they wanted a bunch of Washington power players because their real money grab was pushing regulation changes so that patients could go and do their blood tests themselves, without a doctor's order. Surprisingly, they were actually successful in getting this passed in 1 state already- Arizona. If they were able to push that through it would be a HUGE gamechanging cash cow, because people could either self pay or even try to get Medicare to pay for it if they wanted to run their own bloodwork without seeing a PCP and getting an order.
Physicians groups, insurance companies and biomedical ethics groups aren't really hip to this idea because patient self-testing bloodwork may open pandoras box to a lot of unnecessary expenses, especially if the patient is trying to bill this through their insurance. False positives can and do happen, and they lead to unwarranted appointments, specialist visits, exploratory surgeries, etc. Other reasons physician groups are opposed to it is because they view it as profiting off people who are hypochondriacs, and a huge amount of the customers would probably be drug abusers and steroid users. Most likely, people who would go and do their own blood work are the system's "super ultilizers" and they are the ones who are already costing the insurance companies and the states $3-4 million per patient per year in healthcare expenses. It's not uncommon to have a fibro/rheumatoid arthritis/hypochondriac patient who bills $10 million per year. If these people go to the ER and cost 3k per visit every time they can't fall asleep and have anxiety (~12x per month), imagine how often they might want to go and run their own bloodwork.
Not being able to order our own labs as patients is the reason there are moral objections to for-profit hospitals selling "full body scans" and dermatologists doing unwarranted full body mole checks. Generally the proper guidelines is to only administer testing when you suspect that something is wrong.
If you were trying to get military contracts that might be pretty helpful. The military has a huge healthcare system. So does the Department of Veterans Affairs.
I suspect that Holmes is the "front" for someone connected to her father (who is a "civil servant" -- dunno why the article isn't more specific). Probably someone connected to military, government, etc.
I like how Holmes' recollection of meetings is always different than the other attendees. Only one machine had an error message, not all three. She didn't abruptly walk out of the meeting. She didn't refuse to answer a question due to "trade secrets". And so on.
Interesting, Theranos' funder's behavior is what you would expect from someone who knows nothing about Science:
- make bold claims
- avoid going into details ("trade secrets", sheesh)
- make investors believe in your "vision"
- give talks about successful entrepreneurship to polish one's image
And still nothing reliably demonstrated.
What amazes me the most is how clueless investors are. If they don't care about Science, what do they care about when it comes to providing new Healthcare solutions? What's next, a new take on homeopathy ?
Many in SV find it hard to grapple with traditional startups not penetrating health care to a greater degree; in Rise of the Robots (one of the Financial Times and The Economist books of the year) it's lamented for an entire chapter.
Traditionally the level of fundamental research and development displayed by Theranos - in areas of health or national defence - are done for years behind closed doors and then slowly rolled out to the public to mitigate any questioning of the underlying tech since the standards are understandably higher (i.e - it has to work from the start). This stands in contrast to the "move fast, break things" attitude pervasive in start-up culture.
I don't think there's anything necessarily fraudulent about Theranos, from what I've read, which seems to be the not-so-subtle undercurrent in much of the commentary. Rather they flipped the model startups should use in health, which is establish a business model that works and then work on preparatory tech in the background until it's ready to be rolled out. This seems to be largely what Theranos has done, but not what it's purposely chosen to articulate to the public and investors as it surely would have garnered less attention/funding. At this point Theranos seems to be playing the waiting game; waiting for their technology to reach a point where they can make a more transparent case for their business model and change the narrative once they've reached a point that's more aligned with the aspirations that have been articulated by Holmes for the past decade.
Once again, Peter Thiel's approach with Palantir looks to be extremely well executed and one that perhaps Theranos should have emulated.
Stating that your company has tech it does not have in order to lure investors and obtain contracts would be fraud. Whether that's in fact the case with Theranos will become clear eventually.
Thing is, the approach your describing is fundamental dishonest... Leading investors to believe that you have technology that will be ready in 2011 when in reality you expect it to be ready in 2016 is not flipping a start up business model... It's just lying to get investor money
It's seems like there has been enough deception of investors, employees, partners and customers over the 12 years with little/nothing to show that "fraudulent" is probably the correct word.
Would you please qualify Peter Thiel's approach here? and why it would have been a better model? Palantir is pure software company. Theranos is a suite of biomedical tests. This has a major lab/hardware component.
Theranos exists in a regulated industry where at a minimum as a lab developed test you have to abide by CLIA regulations. In addition you have to have validation, verification, design history and a whole bunch of documentation to prove that what you developed does what it should do and actually works.
The thing about Theranos is that the rules are well established.. You just have to follow them. If you don't know the rules you have to be a quick study or you have to hire experienced folks who know the rules and how to guide you through the process.
> Sunny Balwani is an entrepreneur and a computer scientist. Sunny joined Theranos after dropping out of the Computer Science program at Stanford University. He received his MBA at UC Berkeley and undergraduate degree from UT Austin.
Honest question, can you claim to be a Computer Scientist if you drop out from a computer Science program ? To me it sounds like calling yourself a Doctor after dropping out following the first year of Medicine Studies.
Needless to say, this smells of arrogance more than anything else.
Sounds like he dropped out of a graduate degree from Stanford. If his undergrad degree from UT Austin he might have a plausible fig leaf to go around calling himself "a computer scientist". Though I certainly wouldn't call somebody who with just an undergraduate degree a "scientist" in any field unless they've proven themselves by practicing such science in a credible manner for a reasonable period of time.
> He replied to the employee, who no longer works at Theranos, denied all the claims and questioned the employee’s understanding of statistics and lab science.
> Quality-control failures were due to the “newness of some of our processes, which we are improving every day,” Mr. Balwani wrote.
> He added: “This is product development, this is how startups are built.” The reply ended with an edict that the “only email on this topic I want to see from you going forward is an apology that I’ll pass on to other people.”
I would rather question Balwani's understanding of Lab Science and Statistics as someone who has never had a remote experience of lab science in the first place. And about his understanding of Statistics, I have no idea where he thinks he has any authority either. MBAs are not particularly known to be very good at grasping probabilities.
I'm honestly getting kind of annoyed with seeing stuff about Theranos, since everyone writing about them is beating about the bush, and only ends up describing how Theranos communicates with a startling lack of earnestness.
Example from the video, paraphrased:
Mod: "What prick tests are you able to do, using no commercially available lab equipment?"
Holmes: "[lots of waffling] We're currently only doing the Herpes test. [proceeds to not answer the question]"
Mod: [accepts the non-answer and moves on]
This kind of reporting is entirely useless, unless it's some kind of attempt to subtly out Theranos for being dishonest.
A media interview is not a police room interrogation, nor a courtroom cross-examination. The interviewer (most probably) realises the question has not been properly answered but understands that they have to keep the interview moving. Also, if they go in too hard, it can have a backfiring effect of causing the audience to start sympathising with the person being interviewed (even though that person is clearly waffling and dissembling).
The interview is still effective in that hard-headed people watching the interview who need concrete answers and actual information will still draw their own (likely negative) conclusions.
The media was caught off-guard after years of writing puff pieces, and it's only now that they are doing any investigative journalism. The only thing they have to go off of right now are hype-filled interviews, sources, and he-said / she-said conversations.
I'm sure the major newspapers are all preparing full investigative pieces, but those take time. In the meantime we'll get articles full of circumstantial evidence and insinuations.
You are just used to confrontational rating grabbing interviews. The fact that someone does not answer a specific question is valuable, just not as entertaining. The more questions the interviewer can deliver, the better. She dug her own grave.
For awhile, I kept seeing job posts at Theranos, which is how I know the name. I didn't know whether they were expanding or just had high employee turnover. The WSJ articles and the strange Glassdoor reviews (either totally love the company and CEO or extremely negative about the company and its ethics) leads me to believe that the WSJ is correct. The latest article with the video interview of the CEO, makes me think that she is incredibly smooth at spouting the BS, to the point of being a pathological liar. This company will be VERY interesting to watch during the coming year.
I'd be interested to be the results from a bot monitoring/archiving the Glassdoor page. I'm sure Glassdoor has some ability to audit or approve the review statements before they posted publicly which would provide some degree of damage control, but given the negative reviews it seems some would get through.
As the article says, "blood tests sometimes provide life-or-death answers." If these allegations of fraudulent testing are true, then the executives belong in jail.
The key questions that needs to be addressed, is how homogenous or heterogenous are blood markers at the level they want to measure at? The machines may be reporting results accurately, but a pin-prick-sized droplet may simply not be a large enough sample size for the tests they want to run.
> Bond and Richards-Kortum found that averaging the results of the droplet tests could produce results that were on par with venous blood tests, but tests on six to nine drops blood were needed to achieve consistent results.
>prick-sized droplet may simply not be a large enough sample size for the tests they want to run
This was always the main criticism of Theranos. Finger-stick blood tests have never been considered reliable for clinical diagnostic tests because you don't get enough blood and the blood you do get can be contaminated.
Holmes' backstory is getting so redundantly covered. It's like how every Superman movie has to walk us through how he was sent to Earth when Krypton was destroyed.
I suppose if the author didn't talk about Holmes' history, though, they wouldn't have half the damn article. Certainly nothing interesting to talk about with that company by itself, were it not for the headline grabbing founder.
That said if I read about how this "inspiring" person dropped out of Stanford when she were only 19 one more time I might lose my mind.
This is yet another downside of unicorns ;). Though I doubt investors need much help at this point to realize how overvalued it is. Theranos will never raise at anything close to a $9B valuation again.
It's a long shot gamble funded by some people who maybe should and maybe shouldn't know better - I don't pretend to be in a position to judge the science in this case. So, who cares? I don't mean that in a derogatory sense, I mean it in the sense that you might set yourself a limit of a few hundred pounds for a game of poker one night. If it pays off, great. If it doesn't, no biggy. If they're committing fraud, then there are regulatory mechanisms in place around that - how far you trust those is an issue, but it's a much larger issue than one company.
The big sin that you mustn't commit, and that many do anyway, is to trust a private company's data where a potential conflict of interest like this exists. Run your own trials.
[+] [-] tristanj|10 years ago|reply
>For one test, the device’s accuracy rate increased sharply after some information was deleted and manipulated, the employee wrote. Edison machines also allegedly failed daily quality-control checks often.
>Ms. Holmes forwarded the email to Mr. Balwani. He replied to the employee, who no longer works at Theranos, denied all the claims and questioned the employee’s understanding of statistics and lab science.
Oh man. If you read through Theranos' reviews on Glassdoor [1] this anecdote seems totally legitimate. Multiple reviews talk about the toxic culture and how management does anything to cover their behinds. Quite a few of these were written before the scandal broke so I think they're quite honest about what's going on.
[1] https://www.glassdoor.com/Reviews/Theranos-Reviews-E248889_P...
[+] [-] blakeross|10 years ago|reply
(I'm sharing this here because the Hacker News community seemed to enjoy my Season 3 premiere of Silicon Valley [https://news.ycombinator.com/item?id=10179894], but apologies if others feel it detracts from the discussion.)
[+] [-] nikcub|10 years ago|reply
I can imagine an entire episode dedicated to trying to get Pricks onto Product Hunt. The double entendre's and puns write themselves.
[+] [-] randycupertino|10 years ago|reply
[+] [-] Cyberdog|10 years ago|reply
[+] [-] mrbonner|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] ThomPete|10 years ago|reply
Science speaks for itself and does not care how much you raised at what valuation. It requires a rigorous approach to testings and facts and data or it will be merciless if you aren't living up to your own claims.
So hopefully next time someone has a great disruptive idea in healthcare, they will spend a little more time getting the science and tech right before they start worrying about becoming a unicorn.
[+] [-] GabrielF00|10 years ago|reply
I'm really curious what the rationale for this board composition is. [Edit: I'm curious if this is connected to Holmes' father's experience in the foreign policy establishment]
[+] [-] randycupertino|10 years ago|reply
Physicians groups, insurance companies and biomedical ethics groups aren't really hip to this idea because patient self-testing bloodwork may open pandoras box to a lot of unnecessary expenses, especially if the patient is trying to bill this through their insurance. False positives can and do happen, and they lead to unwarranted appointments, specialist visits, exploratory surgeries, etc. Other reasons physician groups are opposed to it is because they view it as profiting off people who are hypochondriacs, and a huge amount of the customers would probably be drug abusers and steroid users. Most likely, people who would go and do their own blood work are the system's "super ultilizers" and they are the ones who are already costing the insurance companies and the states $3-4 million per patient per year in healthcare expenses. It's not uncommon to have a fibro/rheumatoid arthritis/hypochondriac patient who bills $10 million per year. If these people go to the ER and cost 3k per visit every time they can't fall asleep and have anxiety (~12x per month), imagine how often they might want to go and run their own bloodwork.
Not being able to order our own labs as patients is the reason there are moral objections to for-profit hospitals selling "full body scans" and dermatologists doing unwarranted full body mole checks. Generally the proper guidelines is to only administer testing when you suspect that something is wrong.
[+] [-] michaelhoffman|10 years ago|reply
[+] [-] pkaye|10 years ago|reply
[+] [-] hackaflocka|10 years ago|reply
[+] [-] ekianjo|10 years ago|reply
[+] [-] geomark|10 years ago|reply
[+] [-] ekianjo|10 years ago|reply
- make bold claims
- avoid going into details ("trade secrets", sheesh)
- make investors believe in your "vision"
- give talks about successful entrepreneurship to polish one's image
And still nothing reliably demonstrated.
What amazes me the most is how clueless investors are. If they don't care about Science, what do they care about when it comes to providing new Healthcare solutions? What's next, a new take on homeopathy ?
[+] [-] epistasis|10 years ago|reply
Not too far off, actually:
http://blogs.sciencemag.org/pipeline/archives/2015/12/04/and...
[+] [-] MathsOX|10 years ago|reply
Traditionally the level of fundamental research and development displayed by Theranos - in areas of health or national defence - are done for years behind closed doors and then slowly rolled out to the public to mitigate any questioning of the underlying tech since the standards are understandably higher (i.e - it has to work from the start). This stands in contrast to the "move fast, break things" attitude pervasive in start-up culture.
I don't think there's anything necessarily fraudulent about Theranos, from what I've read, which seems to be the not-so-subtle undercurrent in much of the commentary. Rather they flipped the model startups should use in health, which is establish a business model that works and then work on preparatory tech in the background until it's ready to be rolled out. This seems to be largely what Theranos has done, but not what it's purposely chosen to articulate to the public and investors as it surely would have garnered less attention/funding. At this point Theranos seems to be playing the waiting game; waiting for their technology to reach a point where they can make a more transparent case for their business model and change the narrative once they've reached a point that's more aligned with the aspirations that have been articulated by Holmes for the past decade.
Once again, Peter Thiel's approach with Palantir looks to be extremely well executed and one that perhaps Theranos should have emulated.
[+] [-] saretired|10 years ago|reply
[+] [-] apalmer|10 years ago|reply
[+] [-] pbreit|10 years ago|reply
[+] [-] sjg007|10 years ago|reply
Theranos exists in a regulated industry where at a minimum as a lab developed test you have to abide by CLIA regulations. In addition you have to have validation, verification, design history and a whole bunch of documentation to prove that what you developed does what it should do and actually works.
The thing about Theranos is that the rules are well established.. You just have to follow them. If you don't know the rules you have to be a quick study or you have to hire experienced folks who know the rules and how to guide you through the process.
[+] [-] ekianjo|10 years ago|reply
Honest question, can you claim to be a Computer Scientist if you drop out from a computer Science program ? To me it sounds like calling yourself a Doctor after dropping out following the first year of Medicine Studies.
Needless to say, this smells of arrogance more than anything else.
[+] [-] chetanahuja|10 years ago|reply
[+] [-] morgante|10 years ago|reply
Yes, absolutely. Plenty of luminaries in computer science don't have actual CS degrees.
[+] [-] ekianjo|10 years ago|reply
> Quality-control failures were due to the “newness of some of our processes, which we are improving every day,” Mr. Balwani wrote.
> He added: “This is product development, this is how startups are built.” The reply ended with an edict that the “only email on this topic I want to see from you going forward is an apology that I’ll pass on to other people.”
I would rather question Balwani's understanding of Lab Science and Statistics as someone who has never had a remote experience of lab science in the first place. And about his understanding of Statistics, I have no idea where he thinks he has any authority either. MBAs are not particularly known to be very good at grasping probabilities.
[+] [-] Mithaldu|10 years ago|reply
Example from the video, paraphrased:
Mod: "What prick tests are you able to do, using no commercially available lab equipment?"
Holmes: "[lots of waffling] We're currently only doing the Herpes test. [proceeds to not answer the question]"
Mod: [accepts the non-answer and moves on]
This kind of reporting is entirely useless, unless it's some kind of attempt to subtly out Theranos for being dishonest.
[+] [-] oska|10 years ago|reply
The interview is still effective in that hard-headed people watching the interview who need concrete answers and actual information will still draw their own (likely negative) conclusions.
[+] [-] in_cahoots|10 years ago|reply
I'm sure the major newspapers are all preparing full investigative pieces, but those take time. In the meantime we'll get articles full of circumstantial evidence and insinuations.
[+] [-] AJ007|10 years ago|reply
[+] [-] trevyn|10 years ago|reply
[+] [-] aceperry|10 years ago|reply
[+] [-] draker|10 years ago|reply
[+] [-] timrpeterson|10 years ago|reply
Investors can you please get better at realizing that sometimes experience and know-how can help?
[+] [-] wpietri|10 years ago|reply
I can certainly say I don't like what they're doing, but I'm not sure I can say that they won't make money on this.
[+] [-] asdfologist|10 years ago|reply
[+] [-] rdlecler1|10 years ago|reply
[+] [-] srunni|10 years ago|reply
> Bond and Richards-Kortum found that averaging the results of the droplet tests could produce results that were on par with venous blood tests, but tests on six to nine drops blood were needed to achieve consistent results.
[+] [-] onewaystreet|10 years ago|reply
This was always the main criticism of Theranos. Finger-stick blood tests have never been considered reliable for clinical diagnostic tests because you don't get enough blood and the blood you do get can be contaminated.
[+] [-] FussyZeus|10 years ago|reply
I suppose if the author didn't talk about Holmes' history, though, they wouldn't have half the damn article. Certainly nothing interesting to talk about with that company by itself, were it not for the headline grabbing founder.
That said if I read about how this "inspiring" person dropped out of Stanford when she were only 19 one more time I might lose my mind.
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] Animats|10 years ago|reply
[+] [-] nradov|10 years ago|reply
[+] [-] shoyer|10 years ago|reply
[+] [-] 6d0debc071|10 years ago|reply
The big sin that you mustn't commit, and that many do anyway, is to trust a private company's data where a potential conflict of interest like this exists. Run your own trials.
[+] [-] devanti|10 years ago|reply
[+] [-] unknown|10 years ago|reply
[deleted]