Edit: Also, how can people be that stupid? You have to know the truth will eventually come out? Right? Or, no?
I don't get it.
To get a contract, Bob Noyce claimed for a buyer that Fairchild could produce & deliver a new type of transistor, in a large quantity, without having any production capability for it yet, as it had never been built.
Excite bid on getting a place on Netscape's browser, before having the money to actually pay for it (they figured they'd get it afterward):
http://bnoopy.typepad.com/bnoopy/2004/09/persistence_pay_1.h...
Microsoft on multiple occasions said or implied they had something they didn't have at the time, in dealing with MITS and IBM.
There is value in that philosophy in some respects, but claiming that your medical tests are real and reliable when they are not most certainly does not fall under that particular umbrella.
I am a little fascinated with Theranos because it seems like more employees (vs just leadership) seemed to be aware of, or participating in, the deception.
Almost makes more sense in the Enron case, as the people committing the fraud all had so much more to gain.
You have to know, but psychopaths usually don't.
In an equities market defined by quarterly profit statements, "eventually" is far enough away to be irrelevant. The reason this sort of thing happens again and again is because it works -- as the company disintegrates in a blizzard of accusations, the principals safely descend on golden parachutes.
People quite often think they can get away with things that, it turns out, they can't. The fact that something is true does not mean that people must believe it.
A journalist might have become interested in a story early, and his immediate collegues then followed once it started picking up steam, for example. It's a bit like why a university might develop expertise in a new field faster than others.
It's possible that that initial interest came from outside influence of a competitor, but it's also reasonable to suspect that it was an honest skepticism from a journalist. After all, it's not hard to be skeptical of the many startups popping up these days.
"If it bleeds, it leads." True life drama and gossip (for lack of a better word) has always sold papers.
Overvaluation effects us all, these hundreds of millions drive up my rent, your rent and could be better allocated to other startup ventures.
What is baffling to me is unless the data was doctored why didn't any one of the medical consultants or partners bring this up sooner? Why did it take a deposition to reveal this? I'm sure whistleblower protections would have been provided to anyone working there with this knowledge who chose to make it public.
Outside of direct "I physically see this patient", people can forget they work in medicine where their answers can mean life or death decisions.
In that situation people end up not wanting to bite the hand that feeds.
When you have automated stuff that has high throughput with little or no human interaction, you seriously limit the opportunity for humans to raise questions.
Between taking a pay cheque and whistle blowing, the large majority of people will always not rock the boat and take the money.
From the Vanity Fair piece which brought a lot of this house of cards into the public light, it's mentioned that the teams were hyper-segmented and the secrecy even pervaded the organization. Nobody really knew what anyone else was working on.
There are those who want to be part of the team and there are those who can really play on that feeling. Then there are those who just want that buck.
in medicine, you need to be reviewed and mostly provide proof of your methods and results etc, just to publish a single paper.
Are you saying that investors are willing to not only be fooled, but give millions to the one who is fooling them without even checking if their claims are real? Sounds less like investors and more like gamblers tbh.
I don't understand why investors should be absolved from responsibility.
One of Silicon Valley's problems continues to be that there is so little pressure to build a profitable business from early on. It's the exact opposite, they overwhelmingly encourage reckless behavior to chase growth over profit, resulting in almost exclusively extreme binary outcomes (as desired by the VCs).
It's pretty damn easy to create a fictious $100 million transaction with other insiders, then gloss over the details on the balance sheet.
This guy got 6.5yrs in prison for defrauding investors by making it appear the company had value it actually didn't: https://www.law360.com/articles/892055/broker-gets-6-5-years...
It's difficult to find other examples as most investor fraud is based on directly milking investors with obviously false claims.
For example, this SF startup founder lied about being close to acquisition and never handed over shares in the company in return for money: http://www.mercurynews.com/2014/02/20/san-francisco-startup-... that's more directly fraudulent.
The Theranos thing might be more difficult to prove as it's possible the technology was somewhat legitimate but clearly if sharing the fake test data was a critical part of them investing, then it might be much the same.
The early investors who bought into just the idea may not have any claim. But any later investors who invested based solely on claims made with falsified test data may have a claim against the company/her.
Seems like there sure should be.
https://www.washingtonpost.com/news/post-nation/wp/2017/02/1...
What an abomination. 8 years in prison. They should really pat themselves on the back.
I bet $1000 if this lady committed the same crime in NJ, she wouldn't have faced any prison time.
That certainly sounds like a miscarriage of justice, but not really a sensible point of comparison. It's an entirely different domain of law. And even if it were apples to apples, a random green card holder vs an American tech billionaire will get vastly different treatments and outcomes in the American justice system (which is bad, but simply he reality).
> So will Holmes go to prison?
I would bet heavily against it. Holmes maintained panoptic control over all of Theranos's operations (until she was barred from operating labs, presumably), so it seems very unlikely that definitive evidence of fraud will surface from within.
Also, I imagine that the US regulatory bodies that started actions against Theranos in the past two years are or will soon be... significantly less disposed to vigorously pursuing criminal charges, especially of the kind that would assign personal culpability to corporate management.
I predict the next one will be Hampton Creek, given the criminal probe into their fraudulent buy-back scheme.
Neither Zenefits nor Uber meet that definition. Uber particularly isn't even remotely close to it. Unless you consider a company still holding a ~$50 billion valuation, with $9 billion in cash + credit line, chasing down $10 billion in sales for 2017, a total collapse.
Several people -- her professor? I forget -- warned her the blood test wouldn't work, even before she dropped out.
But when Elizabeth Holmes burst upon the scene, she just seemed too good to be true - gee, you're an original, off-the-wall thinker and innovator and you're a goody-two-shoes workaholic of the kind MBAs and investors fantasize about? Nah.
My sister is very much that hard worker/high achiever personality but she's intellectually very conservative and compartmentalized. There's absolutely nothing wrong with this - indeed it's part of what makes her good at her medical profession - but innovators usually also demonstrate a playful streak and a tolerance for failure rather than needing to be perceived as perfect.
I wonder if this apparent fraud will result in criminal prosecution. It would be a sad end for la Holmes to matriculate at San Quentin.
Silly little things like "truth" or "integrity" are just distractions. . .
Theranos running fake tests is just another example of the type of charlatans enabled by socioeconomic lineage.
> Theranos plans to offer investors shares in the company in exchange for them not filing lawsuits against the embattled blood-testing company.
How far removed can you be from reality to even think like this?
This is a one-sided filing by one party to litigation, and we will respond at the appropriate time in the appropriate forum. We disagree with much of what PFM alleges in its complaint. This is not, however, the time or place to contest their mischaracterizations of the record. We will litigate this case in court, where it belongs. What we will say now is that the items on which PFM focuses have nothing to do with why PFM invested, and they amount to a repackaging of allegations the media have already reported for nearly two years.
As for the tender offer: As previously disclosed, Theranos is in the midst of a tender offer involving its most significant shareholders. Elizabeth Holmes’ use of her own shares to recapitalize our C-2 and C-1 investors—and thereby prevent dilution to our other shareholders—is consistent with her longstanding, personal commitment to doing the right thing for the Theranos shareholder base. This tender offer has been in discussion between Theranos and its shareholders since July 2016. To date, more than 99% of C-2 and C-1 investors other than PFM have chosen to participate.
PFM, a multi-billion dollar hedge fund, opposes the transaction, and is asking the Court to stop the tender offer because it is “unfair” specifically and only to PFM. In response to PFM’s suit, the Court suspended the tender offer for a month in order to permit sufficient time for the court to review the transaction. PFM’s effort to enjoin the tender offer is meritless; their legal theories are self-serving and would harm the rest of the Theranos shareholders. The Company is vigorously opposing PFM’s new suit and looks forward to completing the transaction with its shareholders.
From: https://techcrunch.com/2017/04/21/theranos-says-it-has-been-...
There will never be enough popcorn for the Theranos saga.
Uh huh. That's why the offer comes with a "you agree not to sue us" clause, I'm sure.
Just the law of nature ... :)
Theranos,Enron,Volkswagen scandals are just some of the way too many to count scandals that damage citizens.
It's amazing how quickly the winds of the internet shift to absolutely condemn a person/company before all (or any) of the facts are in. The world is a better place when we all extend a benefit of doubt to our fellow humans and there creations.
Also, some reviews here are amusing and frightening:
https://www.glassdoor.com/Reviews/Theranos-Reviews-E248889.h...
[1] http://nymag.com/selectall/2017/04/theranos-staged-fake-bloo...
Holmes?
http://facebook.com/l.php?u=https://www.wsj.com/articles/the...
