what always fascinates me isn't the people who are in on in but the people who are kind of on the edge. From the Theranos case I remember employees not being allowed to enter rooms, secret chat rooms, people being followed by security etc... like, how can you work for a company like this and have a sort of Twilight Zone or Kafka novel experience for years and just be okay with it?
While employees may have doubt, they can justify their actions by thinking they are doing "their" part correctly. Which, I can relate to.
If I am not doing pseudoscience and am working on tech / systems that are good in my domain, why would I bother about the whole picture? Morally, yes. But if you have loans to pay and a family to take care of, and are getting your salary on time, everything else is the management's fault.
I can get a job in a similar field somewhere else.
And, IMHO, it is the management's fault out and out. The reason they get to take the big cheques is because they bear the responsibility.
It's not the responsibility of the average lower level worker to worry about it.
This is providing employees only as much information as needed to do their job. Apple, for instance, seems to do this. So it might not ring any alarm bells with the employee.
I was there at the beginning, then you start to see it. The closed founder meetings, no more team meetings. The hushed conversations at lunch. The rumor mill started to circle - VC money running out. The CEO blew all the money on coke and hookers. Nobody wants to answer basic questions like why the rollout of the new product is taking weeks and weeks to get going.
People KNOW what's going on, but nobody wants to jump off the ship, only to find out the company figures it out and all your co-workers are now millionaires and you're back at some other startup busting your ass for some unknown future.
People hang on, believing its going to happen, then you show up one day and the office is dark, the cop outside says you're not working today or tomorrow or ever really and you should go home. You hold out hope the company can pull out the nosedive, and when it doesn't, you have to go through the five stages of bereavement until you accept that it was really doomed from the start and you should have seen it but didn't want to believe this company was really just a complete façade to fleece money from some big VC firm.
One can only wonder!
I.e, I imagine a lot of Apple corporate culture has similar restrictions, yet as far as we know, they're not committing fraud like that.
Unless your work interfaces with what happens in those silos, you generally don't have any idea about what's going on in the Android Hardware Testing building, or the garage out of which Project Loon ran before it was shut down.
It's a lot stranger in a small start-up.
That's why you have to empower new hires to question your methods: someone from outside will see what is not normal, if you dismiss them you may be missing opportunities to right things before you crash.
Realistically, the best and brightest left early and it's the people afraid of losing their jobs that feel compelled to shut up and toe the line.
“Hun, I think its time to be realistic and provide for us”
But people on the internet said every unideal thing at work means I should get a new job
I guess from the inside it's not always so clear to the little guy what's normal company weirdness and what's fraudulent. Although higher up execs should know.
Most corporate work is like this. Secrets everywhere, managers acting like they have stuff to hide, actual crimes happening off-camera (and sometimes on-camera). If you spend a year or so working in such an environment it just doesn't really raise your eyebrows unless something really extreme happens. Anything below acute grievous bodily harm is background noise.
Are you saying that you had the exact same list of bacteria and % of each?
Test are not identical. I have a collection of hundreds of different results group by a few medical conditions I was researching.
The data is extremely detailed and changes to diet reflect changes to samples.
Can you verify that they changed in ways that corresponded with your diet? It's possible if they were exceptionally lazy that they just generated a new report for each date haha.
If so I suspect most people can see there is a gulf of difference between offering a service on a website and saying its currently unavailable when people hit 'buy' vs "securities fraud, conspiracy to commit health care fraud and money laundering."
That said, it told me my composition was like that of an East African, which I am not. That wouldn’t surprise me as I have gut issues. My big hope for the next 30 years is we meaningfully crack the nut on microbiomes and can bring the next major evolution in medicine to a reality. We need these kinds of companies as a step 1.
Considering how questionable Goop is that the fraud seems about right.
In the meantime the whole medical start up where they suddenly can test, for cheaper, better, etc seems to regularly come up short on the actual testing, results, or even just valid use cases.
Much like Theranos nobody ever seems to explain how these kind of companies can just suddenly test for more so easily where the existing medical industry just hasn't been able to.
Of all the things that the start up ... "system" can do well I kinda question their ability to suddenly become amazing complex medical device inventors / scientists. I recall some folks who work in that industry and they noted that creating new tests and diagnostics and equipment is often incredibly slow and iterative. That doesn't seem very start up-ish. The magical breakthroughs are rare.
This sort of tech hubris is all over the tech ecosystem. Folks who believe their startup prowess means they can tackle any medical device with fake-it-till-you-make-it or fail-fast-break-often mentality that often fails in reality.
It was kinda terrifying the idea that we'd run through COVID with hordes of people hooked up to equipment someone came up with by dorking with a 3D printer and some old parts from a vacuum...
It was telling when you didn't see established ventilator makers coming up with their own ad hoc cheap-o designs... much like you didn't see Theranos's competitors make wild claims of their own similar device ... probably for reasons.
People prefer to believe positive news.
In my recollection, it was far less Silicon Valley CEOs, and more open-source hardware enthusiasts crowdsourcing 3D printer designs. Some of them looked as if they could potentially work, but, of course, it also seemed potentially an incredible amount of hubris.
The "innovation" in the medical start-up space would be "indemnification".
Take a startup that has real results and fund them through FDA approval and backstop them when they get sued because the device isn't 100% (no device ever is).
I had a long talk at CES about 5 years ago with a doctor who created an asthma monitoring device for his daughter that would notify him and the school nurse when his daughter had an attack. I guarantee that device worked pretty damn well due to self-interest.
He couldn't get anybody to touch it. Everybody knew that you were going to get sued the moment some child died and a message didn't get delivered. Nobody would indemnify him even if he somehow managed to get through full FDA approval.
Want innovation in bio? Backstop the little people who have real devices and real results rather than funding well-connected, turtleneck-clad marketing charlatans.
That's because medical testing is hard, more testing doesn't always lead to better treatment, and the people who have devised existing testing processes weren't so stupid that a 20-year old with no background in medicine can just come in and upend the entire system on their first try.
You end up trying to build a startup to solve a decades-old-problem that already has reasonably-good-solutions, in a field where R&D takes decades, costs hundreds of millions of dollars, and where you will have to figure out an in into an established old-boys-network in order to actually sell your product, if you get it built. All in an industry that's both cost sensitive, and highly cost-insensitive at the same time.
If you actually think <some modern medical procedure> is overpriced, and wasteful, it would probably be good for you to work a few years on optimizing an existing lab's processes, before you jump straight from college into trying to optimize a novel process that hasn't even been invented yet.
Well, kind of except Radvac:
https://www.thecrimson.com/article/2020/10/8/radvac-scrut/
But if you had the choice between radvac and Pfizer or AZ, which would you take?
I remember seeing Holmes in that Job’s get up, and knew something didn’t smell right, but was embarrassed to even bring it up——knowing their would be the backlash.
Looking back I don’t think I have ever met a truthful wealthy person? They seemed to make their wad on lies?
He was absolutely the last person I would expect to be caught up in something like this, and when the news first broke a few years ago, I reached out as an act of support, not looking to find out what happened, or anything, just thinking to myself....how did this happen, this isn't the Zach I know, maybe he needs someone to talk to.
The lesson in this I think isn't to just pile on about how SV is full of frauds, and pile on with a bunch of hate, but rather to understand that there is a slippery slope, and people get caught on the wrong side of it. Make sure that doesn't happen to you.
It further strikes close to home because I'm the founder of a sleep-tech company (https://soundmind.co), an industry full of snake-oil and BS. We're extremely conscious of this view of the industry, and call it out where we can.
I've also seen many start-up pitches where the numbers thrown around are absolute BS, companies that I know aren't doing well, and the founders yell about the million dollar deals they have.
It's the one thing I hate about this industry, but the gong continues to bang on about growth, growth, growth and the numbers you need to hit.
Many, many founders take the easy way out, but, to quote Ryan Holiday, The Obstacle Is The Way.
Any suggestions on how we fight this general rah-rah-BS attitude in the industry?
As someone who's interested in quantified self, etc. -- this kind of landing page is exactly what makes me think "bullshit" (and yes, in particular for Soundmind, I've clicked on it few months ago and left quickly). This is a kind of thing I hate about QS startups, I'll elaborate:
Literally the first thing it does is asking me for my email (seriously, who subscribes the first moment they get on the website?). Shiny, takes ages to scroll with useless background images and little actual information. I'd much more trust a simple single-page site which gets straight to the point -- maybe then you can convince me to subscribe.
We're not gathering the emails so we can spam people, we're figuring out where we can reach potential customers, who these people are, and will be sending them question aires to fit them into our trials, and later on the waistlist.
We took a page right out of superhuman, and as far as getting people interested, it's working well enough.
Btw, we're not a QS startup, we're a sleep tech.
When we've got product and people using it, we'll update the website, and perhaps it will be more to your taste then. But at the moment, 5% of people who visit the site are signing up, so apparently we are striking the right nerve with some people.
We start actually punishing white collar crime. Kids are growing up learning there are no downsides to white collar crime - whether you're Elizabeth Holmes or Jordan Belfort, even if you get caught red handed stealing BILLIONS nothing happens.
When there's A LOT of cash flowing around, you're bound to get some fortune seekers here and there.
And it is in the nature of SV to invest early on in companies and industry which might be worth billions 5-10-15 years down the road, even if the concepts are far fetched.
Tbh, I think some investors are more than willing to suspend their disbelief, whether it is the tech itself, or the initial business models. If enough people hop on the band-wagon, and you're the early bird out - you could still make money on something wildly unfeasible idea.
In any case, that kind of culture and environment will surely attract certain people. Or transform people.
Maybe flipping the criteria used for evaluating investments. Instead of having founders give pitches and get evaluated on their confidence and charisma (and made-up numbers), find the most unassuming, drab, dull, but brilliant geniuses and convince them to take a lot of money in exchange for building what they would build anyway? Less Jobs, more Woz.
Shouldn't we expect long-established and well-respected VCs to do a very heavy due diligence, both initially and perhaps even more importantly continously to ensure something like this doesn't happen? Especially in the health field. I mean, the VC brands are used as a stamp of approval.
They are not really focused on the details of your business, especially if it sounds right to some PhD that works for them as a technical expert.
For example, you can pitch to multiple VCs and now they can either start a bidding war (because you either lie or tell the truth of your existing offers, and they do not communicate with each other) or they can communicate together and get a discount because you're not playing the information sharing game.
The dynamics of raising money are not really fair or focused much on what you're doing.
Still: I kind of think that especially in the health area, there's a pretty large risk of e.g. the Andreessen Horowitz brand being tainted. It should be in their self-interest to protect themselves against this in the future, by applying more continous due diligence.
This might be a naive question, but... Shouldn't the lawyers have been involved in the investment rounds somehow? I get that there's attorney-client confidentiality and all, but wouldn't you expect them to at least be able to say "yes, we've looked at the pitch deck and confirmed that there's nothing materially false that we know of"? And shouldn't the lack of such assurance be an immediate red flag?
But you're not totally off base. It's absolutely the responsibility of VCs to do their own due diligence. VCs usually are investing other people's money. It's not a good look for VCs to invest in scams, so VCs typically do some degree of due diligence (which could be virtually zero diligence at seed stage / Series A, to quite a lot of diligence at later stages as the amount of money involved increases).
I’m not sure what level of coverage is normal, but it’s not unheard of to ask for a written opinion from a legal firm saying “this business model is legally sound”.
In this case it sounds like this was not asked for, and they just took the founders’ word for it.
On the other hand worth noting that “taking their word for it” happens to some degree in almost business deals; after all, past a certain point, outright lies will probably land you in jail (or at least with a massive fine).
It could be a sloppy DD process was run here, or it could be that this sort of thing happens infrequently enough that it’s not worth applying a fine-toothed comb to every single claim.
You must be new here.. shrug
I don't remember any mainstream media reports talking about which VCs where early/heavy investors in Theranos though. :/
https://www.ycombinator.com/companies/718 (404)
https://blog.ycombinator.com/ubiome-yc-s14-raises-4-dollars-...
They’re not angels (pun intended)
When I worked at PagerDuty, some of the less ethical aspects of the company (like the product was initially developed while interns at Amazon) were explained to me with this phrase, verbatim:
“Paul told us to be naughty, but not too naughty.”
(Disclaimer: happy PD employee from 2011-2015)
4. Naughtiness
Though the most successful founders are usually good people, they tend to have a piratical gleam in their eye. They're not Goody Two-Shoes type good. Morally, they care about getting the big questions right, but not about observing proprieties. That's why I'd use the word naughty rather than evil. They delight in breaking rules, but not rules that matter. This quality may be redundant though; it may be implied by imagination.
Sam Altman of Loopt is one of the most successful alumni, so we asked him what question we could put on the Y Combinator application that would help us discover more people like him. He said to ask about a time when they'd hacked something to their advantage—hacked in the sense of beating the system, not breaking into computers. It has become one of the questions we pay most attention to when judging applications.
I believe they took that question off the application in the last few years. Perhaps “rules that matter” versus “rules that do not” turned out to be not so cut and dried.
I have no other details, other than I don’t think the alleged crimes committed by them or Theranos are nearly as bad as the ones committed by big pharma and uspto and the rest of the healthcare industry. The whole thing is an f’ing sad joke. So I guess my $200 for the ubiome went down the tube, but what about the $1,800 that HMSA just tried to bill me for going to the doctor for a COVID test last February? How about the 500,000 lives lost to the opioid epidemic? Are any feds investigating USPTO, who was Purdue’s partner in crime? Nah, don’t think so. Let’s go after some small fish in the pond instead.
I blame the 30 something entrepreneurs who grew up in this toxic space a lot less than the 60 year old healthcare execs and government officials who created our f’d up system that we are all suffering from.
If you want to avoid the mistakes of both Theranos, uBiome, and big pharma here's the key strategy: avoid secrecy and #imaginaryProperty at all costs. It puts the patients last and is bad for the world.
Common factors seem to be: secrecy, and sticking to the old mindset of #ImaginaryProperty business models (patents, ndas, copyrights, et cetera).
I want to see the visions espoused by Theranos and uBiome come to fruition. There are *not* a lot of great examples of good biotech companies to emulate. AFAIK, there hasn't been a "don't be evil" moment in biotech.
Some biotech/healthcare company needs to come out and say "fck the old ways, they aren't working—Americans are not healthier, costs are up, and we still haven't solved cancer", and take a radical new approach of openness, collaboration, and forget about the abosolute horsesht practices of secrecy, #imaginaryproperty, and putting patients far down on the list of priorities.
Just because it's a tactic used by shills doesn't mean whenever the point is made it's shilling / irrelevant.
Sometimes it's actually worthwhile to point out when an instance of behavior is actually part of a much larger, much bigger problem.
Investors don't do enough due diligence and trust their own gut too much.
[0] https://www.sec.gov/news/press-release/2020-162
[1] https://www.forbes.com/sites/davidjeans/2020/10/29/fraud-sof...
[2] https://www.justice.gov/usao-edva/pr/california-business-man...
[3] https://www.msn.com/en-us/money/companies/lordstown-motors-a...
[4] https://www.justice.gov/usao-mdal/pr/founder-lee-county-base...
[5] https://abcnews.go.com/US/wireStory/sentencing-set-alabama-m...
A noteworthy (and mostly overlooked) distinction.
" A shareholder lawsuit was filed Thursday against an electric truck startup company claiming it has defrauded investors by making spurious claims about the number of preordered trucks and the progress it has made in starting production " https://www.marketwatch.com/story/lordstown-motors-accused-o...
"The Hindenburg report said a recently announced $735 million deal for 14,000 trucks was to a purported buyer who doesn’t operate a vehicle fleet and is based out of a small apartment building in Texas.
The company received unwelcome publicity in January when a prototype vehicle caught fire 10 minutes into its initial test drive."
Smelling increasingly like fraud.
This is quite true. I'd actually estimate it north of 50% given my discussions with various people over the years.
I would argue that its probably better than this in the "bootstrapped" arena rather than the VC-funded arena. VC lottery tickets seem to attract fraudsters like flies.
> Investors don't do enough due diligence and trust their own gut too much.
This is probably true, but one of the real problems is that serial fraudsters really don't get punished. In addition, the bottom-feeding lawyers that enable them also don't get punished.
A successful lawsuit against one of these fraudsters will cost you at least a megabuck. It's almost always more cost-effective to walk away with whatever payment you can threaten out of them than to actually file a lawsuit.
https://www.ycombinator.com/companies/718
Archived version: https://archive.is/cbIIT
Least favourable assumption: They are doing damage control with their association. This article does not even mention Y Combinator initially funded them.
Edit: I just checked an internal page that I go to when I need info about a YC startup and it says "Removed", so I think that's what happened, and probably rather early in whatever process led to this outcome.
Can we get a new category for "Fraud" under ycombinator.com/companies?
Besides her name being synonymous with fraud, these seem like consequences to me. Also, her criminal case hasn't even taken place yet. (Scheduled for Aug 2021)
So technically Theranos Pt. 2 is still on the cards for her.
Aside from the destruction of her career (justified), it is extremely unlikely that she won't face very serious consequences given the mountain of evidence.
It's also strange that you think "consequences" are not meaningful if they do not include jail time. Non-violent offenders spending time in jail is not the mark of a healthy society. Financial punishments, travel restrictions, restitution, community service, probationary requirements, future joblessness - all of these are "real" punishments.
It is absolutely still a deterrent to anyone thinking of "copy-cat" her failure. She will likely not emerge from this with anything other than personal bankruptcy, and ongoing non-disposable restitution.
What is the point of incarceration of non-violent offenders?
Let the legal system work before you lay judgement on it. It is intentionally slow in order to be deliberate and consistent. I don't subscribe to the mob-mentality that non-violent white collar offenders deserve long jail sentences.
Exactly like with Theranos, ANYONE who invested in this and didn't see this coming or do enough due diligence to, simply deserves to be fleeced!! No sympathy.
This was a science company founded and run by scientists with little-to-no private sector experience.
so Theranos. Having a couple in the leadership is among the worst things for the business. Any chance for even minimum reality check is gone, and instead there is synergetic self-misleadings-amplification and mutually reinforced bubble detached from reality. We had at some point an SVP and a chief architect couple - it was just a twilight, there was completely no way to subject business decisions to technical reality cross-check and vice-verse, and it was a hilarious show how the managers/PMs/directors/etc. were bowing down to that chief architect ...
I though wonder - how and why would one do a scam in poop testing. I mean - why not just collect the poop and test it. Profit! Sprinkle some social on top and you have a fat unicorn.
> Rebekah Victoria Neumann (née Paltrow; born February 26, 1978) is an American entrepreneur and businesswoman. Until September 22, 2019, she served as WeWork's chief brand and impact officer and CEO of WeGrow.
Total scam from start to finish. Throw the book at them.
That's not how it works. The probiotic you took was full of bacteria DNA (maybe, probiotics rarely hold up to their advertised claims) which had to make it through your stomach, several meters of small bowel, and then to your large bowel. The DNA in that probiotic was likely snipped apart so many times its just in the noise at this point.
Fun fact: your small bowel and large bowel have significantly different biomes. Your small bowel has more in common with mouse stool than it it doesnt with your small bowel!
I did try uBiome because I dunno, I was bored. It seemed to give legitimate results (not the same thing every time) but the amount of "material" you submit was so small it can't have had much signal in it.
"In a parallel action, the U.S. Attorney's Office for the Northern District of California today announced criminal charges against Richman and Apte."
Press release from U.S. Attorney’s Office: https://www.justice.gov/usao-ndca/pr/ubiome-co-founders-char...
Criminal indictment: https://www.justice.gov/usao-ndca/press-release/file/1377481...
"Wait, no, it's just like Theranos"
The fact that Kissinger was on Theranos’ board blows my mind every time I remember it.
Hmmm...
I believe there's a joke in all of this...
Something having to do with that old expression about when "something" hits the fan...
I don't know if their (possible) problem is just in money handling or the service, but it would have been kind of funny if the potential fraud had been that the service was all make-believe.
Turns out that was just a herald of things to come.
I have nothing against these two VC firms in particular, but I'm wondering if sitting on the board of a fast growing company should also be seen as a responsibility, in this case to realize that uBiome was a fraud.
