...or, perhaps more accurately, the Center for Medicare and Medicaid Services has banned Elizabeth Holmes from running any kind of blood testing laboratory[1]. It seems a little odd to write a letter making it sound like you're just pivoting when in fact your chief executive is not permitted to carry out the kind of business they were previously carrying out.
They had a combination of non-working technology, and semi-working labs. They were using the labs partly to hide that their tech didn't work, and to tide them over until they could make it work.
They had to run their own labs in order to take advantage of the laboratory developed test (LDT) regulatory framework. Selling their devices for others to use would have required FDA clearance.
From an ethical standpoint, I think they should've just wound down the company. If there are parts of the business that still have value, sell them. Otherwise, give employees decent severance and try to help them find new jobs. Return any remaining money to investors.
Eh, no, but actually owning the wrongdoing would be a start.
Theranos fradulently conducted their business on a wide scale over a long period. Literally nothing they've said in public since the revelations (which just keep getting worse) have ever truthfully addressed the matter.
But regardless of the scale of wrongdoing, the bare minimum expected of both companies and individuals when they've done wrong is:
- An acknowledgment and admission of the wrongdoing, without equivocation or deflection. No "it was wrong but..." or any such thing. Own the wrongdoing, it's the least you can do to respect the people who you've done wrong by.
- Demonstration of self-awareness and introspection as to what led to the wrongdoing. Again, without equivocation or deflection. Neither corporation nor individual can be trusted not to commit the same wrong if they can't openly demonstrate why they did it.
- A plan to both prevent reoccurrence of the wrongdoing and, if applicable, a plan to make whole those who were harmed in the original wrongdoing. This doesn't need to be monetary, but may be (especially when businesses are involved).
These are the bare minimum prerequisites before anyone can be granted even the tiniest shred of credibility back.
This statement (like all other statements by Theranos) demonstrates literally no component of the above, so yeah, we'll keep (rightfully) raking them over the coals until they do.
Beyond not wrestling the letter of the language of the letter to Theranos's best but inaccurate presentation, I would suggest Elizabeth Holmes live the next half-decade with a much lower profile. Step away from the medical devices industry, and upper management in general, either to study or work in a different field/within a different authority structure. If she has any aspirations towards family and children, now would be the time to pursue those particular goals. She is visibly intelligent and ambitious, and I would be very interested to see her return after an extended recollection of her prowess, tempered by some character-building not profit motive oriented experiences. Given the evidence thus far, I fear for her further march into a high-time preference mode, and ultimately burn-out.
Almost every day we have people who ran startups that didn't work out who end up here posting legitimate and honest thoughts about what went wrong and how they can move forward.
Contrast that with this, where instead of owning literally any responsibility for the farce that their product was, she continues to go on this same distortion tactic: Never say anything that's actually a lie, just say a whole lot of things that aren't the truth.
The only thing she seems to have learned is a lot of regulation that her company ran into, and how to work around it.
No, it is factually accurate. Instead of firing the CEO, they decided to pivot. Regardless if it was the decision they would have made with no restrictions placed on the company, it is the decision they made, all external factors included.
I love that. In a shop I often go, they sometimes say they "had to remove/recall some food because of probable presence of salmonella". The truth being that the government food security agency forced them to do so because they did find some salmonella, after controlling them on the quality of their operations.
That's what "communication experts" are for, I guess.
> In a shop I often go, they sometimes say they "had to remove/recall some food because of probable presence of salmonella". The truth being that the government food security agency forced them to do so because they did find some salmonella, after controlling them on the quality of their operations.
This is a place that has poor quality control to the point that the government has forced them to do multiple recalls for salmonella and you still go there often?
I feel bad for those 340 employees. I can't imagine what it would feel like to have years of your work be exposed as (basically) a farce. I can barely stand working a week without getting results much less x years of my professional life.
I wonder, would one have legal recourse in such a case? Is it conceivable, in principle, to seek remedy for damages arising from your stunted career?
Any litigation experts care to weigh in? What would need to be established beyond the obvious (e.g. that damages were committed)? Has anything of this sort occurred in the past?
It's not likely that any of these employees can reasonably claim a tort or breach of contract here. The company messed up, but luckily it's not illegal to disappoint your employees.
Not that I think Theranos should not face some consequences, I just think drawing the line would be highly fraught.
"seek remedy for damages arising from your stunted career"
Stunted career? As adults I'm sure they would have been capable of leaving any time they wanted from legal point of view. It's not goverments job to protect people from partaking in risky ventures. Who would want to create a startup after litigating "too risky product that turned out to be bogus".
Yeah. Having the big "T" on the resume might be one of the few red flags signalling fraud and corruption worse than a few years at SAC capital after a internship at Enron and Lehman Bros. Maybe the employees themselves will sue the company for fraud and damage to their careers. Crazy situation.
SAC Capital is a much bigger stain for former employees than the others, in my opinion. SAC allegedly had a deeply ingrained culture of finding and exploiting insider knowledge that permeated multiple levels. Basically, Cohen had employees do his dirty work, while he maintained plausible deniability.
At Theranos, by contrast, Holmes intentionally kept employees in the dark. If I were interviewing an ex-employee, especially one at a lab outside of California, I would certainly press the candidate on the issue, but I would be willing to believe that they were honestly trying to build and deploy a novel technology that never ended up working. It is not the case that the entire endeavor was a scam. They thought that they could develop this technology, and then the leadership covered it up as they were failing to do so.
Also, do you have any sources that document employment at Lehman Brothers as being a stain on the majority of their employees? Thousands of the employees immediately moved to Barclays and Nomura when they bought parts of Lehman Brothers. That doesn't sound like a horrible stain to me.
Working at SAC Capital is only a black mark on your name to those outside of finance. Within the world of hedge funds SAC alumni are doing extremely well:
We happily hired people from Lehman after the financial crisis. Sometimes bad things happen to good people, and it is tragic that the good people frequently overestimate their role in one-off events.
I work in IT so I'm used to weeks without results.
But yeah this is going to be a huge black mark on people's resumes and how the hell do you hide 3 years with a company that was basically all about committing fraud?
"I didn't know and I was doing good work," probably isn't going to fly.
I do too, but having met several people who worked there briefly and left, I wonder how many of those 340 have even been there for years. Seems like they have a lot of writing-on-the-wall related churn.
Good old common sense is lacking all throughout this farce. It's one thing to build a company on an existing technology, like Jobs did, but promise to implement it better. It's another to come up with a wouldn't it be nice if... scenario, and raise capital on it.
Are Silicon Valley investors stupid enough to throw their money at any bright young dropout with a change-the-world idea? The fact that some Ivy League dropouts found billion dollar companies does not mean a particular Ivy League dropout chosen at random (or one of the many who express a desire to change the world) has a non-zero chance of returning $$$ on investments.
Demonstrating that inteligence and common sense are seperate traits, the latter not always accompanying the former.
Holmes had extremely good family connections. I'm sure it sounded credible at the time. From VC:s point of view the type of people she had connections to functioned as social proof and some of them even probably as celebrity advocates (i.e. Rumsfeld).
If you wait for all the pieces of a proposed business to be functioning properly, you will have missed the boat as an investor. It's perfectly reasonable to take a bet on someone who appears intelligent and well connected, with a "maybe" idea.
There's all sorts of hurdles that a company might not get over:
- Tech turns out to be a red herring
- Tech works, but competitors also get it to work
- You can't scale the team
- People buy the product, but you need critical mass to make it worthwhile
- etc
“We will return our undivided attention to our miniLab platform. Our ultimate goal is to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care.”
People who are expected to die before they can sue. Also kids. Am I reading this correctly?
Also known as vulnerable patient populations -- a critical group for healthcare needs. That part is definitely not a conspiracy. From Theranos' perspective they have families that are quite capable of litigation.
That angle is a bit of a stretch to put it mildly.
Assuming the press articles are correct, Theranos class B stock has 100x voting power. Investors may not have sufficient voting power to overrule the founder(s).
Maybe I'm missing something, but...nothing? Just looking at google maps there are like 10 theranos labs just in Phoenix (my hometown).
Recently, I was talking to a doctor-friend, and they recommended that if I was curious about something like my blood sugar, but didn't want to go for a whole doctor visit, to just go over to a theranos lab and have them do it.
There is nothing left of the business. They are finally trying to come up with a product they can sell before running out of money. If they try to raise more money the valuation will be pennies on the dollar. There is no way they are close to unicorn valuation after this fiasco.
The whole company is full of delusional characters it seems... Read recent article, apparently during recent company meeting the entire auditorium of Theranos employees chanted "F... Y.. Carreyrou! F... Y.. Carreyrou! " What kind of mentality people need to have to behave like that? Professional Scientists? Come on. I will not be sorry to see this dirty company go down the drain.
Does anyone else think this is the type of behavior expected of supposedly world class, cutting edge researchers? Cussing at the person who is challenging them? With the approval of the management?
Theranos, MAY have a chance to build a successful product if they replace ALL of their decision makers who got them here in the first place and then clean up the ranks and build appropriate science team. Only then they have a SHOT at making a good product.
If this does not happen then it is RIP for Theranos 2016..
She's a mighty good leader. It takes a rare and special talent to build a 9 billion dollar company using only smoke and mirrors. Even after all that has transpired she hasn't given up, she's still trucking.
She doesn't see herself as a fraud at all, her faith in her mission, however delusional, is ironclad. She inspired her investors to take insane financial risks without so much as a whiff of due diligence. Elizabeth Holmes is a modern day Joan of Arc.
>She sounds like a modern day politician caught with their hands in the cookie jar whose response is to change the issue to fit their own narrative.
Yeah, but isn't that exactly what true leadership is? After all, people are perfectly happy, by the millions, to follow such people, and they've been doing it throughout history.
In July 2011, Holmes was introduced to former Secretary of State George Shultz, who joined the Theranos board of directors that same month.[48] Over the next three years, Shultz helped to introduce almost all the outside directors on the "all-star board," which included William Perry (former Secretary of Defense), Henry Kissinger (former Secretary of State), Sam Nunn (former U.S. Senator), Bill Frist (former U.S. Senator and heart-transplant surgeon), Gary Roughead (Admiral, USN, retired), James Mattis (General, USMC)
I guess, but it didn't work. She was probably hoping all the political connections would help push back the regulators. But the regulators have come down hard.
If letting them use equipment that was never seen by regulators and hidden from inspections for 2 years before sounding the alarm is "coming down hard" then you're right.
Clearly you are implying exactly Condoleezza Rice, but if you look at the other companies she is a board member/advisor for you find a diverse groups of companies. It makes sense for someone who wants to stay current with the latest in business to seek a diverse portfolio of companies to be a part of.
One board member being formerly involved in politics doesn't strike me as valid the way you are comparing it to Theranos.
Yes. At least Dropbox isn't selling snake oil. I find it just appalling that these high ranking officials were seemingly cashing in by sitting on the board of a corrupt company.
I wish we could adopt Taleb's idea of capping lifetime earnings for anyone who takes a job as a high ranking public servant.
Readit News
...or, perhaps more accurately, the Center for Medicare and Medicaid Services has banned Elizabeth Holmes from running any kind of blood testing laboratory[1]. It seems a little odd to write a letter making it sound like you're just pivoting when in fact your chief executive is not permitted to carry out the kind of business they were previously carrying out.
[1]:http://www.wsj.com/articles/u-s-regulator-bans-theranos-ceo-...
http://www.fda.gov/MedicalDevices/ProductsandMedicalProcedur...
"We're the worst, we'll never try at anything anymore, sorry for existing."
Would that make you happy?
Theranos fradulently conducted their business on a wide scale over a long period. Literally nothing they've said in public since the revelations (which just keep getting worse) have ever truthfully addressed the matter.
But regardless of the scale of wrongdoing, the bare minimum expected of both companies and individuals when they've done wrong is:
- An acknowledgment and admission of the wrongdoing, without equivocation or deflection. No "it was wrong but..." or any such thing. Own the wrongdoing, it's the least you can do to respect the people who you've done wrong by.
- Demonstration of self-awareness and introspection as to what led to the wrongdoing. Again, without equivocation or deflection. Neither corporation nor individual can be trusted not to commit the same wrong if they can't openly demonstrate why they did it.
- A plan to both prevent reoccurrence of the wrongdoing and, if applicable, a plan to make whole those who were harmed in the original wrongdoing. This doesn't need to be monetary, but may be (especially when businesses are involved).
These are the bare minimum prerequisites before anyone can be granted even the tiniest shred of credibility back.
This statement (like all other statements by Theranos) demonstrates literally no component of the above, so yeah, we'll keep (rightfully) raking them over the coals until they do.
or to mirror the original statement "We have been forced to close our clinical labs."
It's not that they need to grovel, it's that the phrase "we decided" is not an accurate representation of the situation.
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Contrast that with this, where instead of owning literally any responsibility for the farce that their product was, she continues to go on this same distortion tactic: Never say anything that's actually a lie, just say a whole lot of things that aren't the truth.
The only thing she seems to have learned is a lot of regulation that her company ran into, and how to work around it.
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That's what "communication experts" are for, I guess.
This is a place that has poor quality control to the point that the government has forced them to do multiple recalls for salmonella and you still go there often?
Dead Comment
Any litigation experts care to weigh in? What would need to be established beyond the obvious (e.g. that damages were committed)? Has anything of this sort occurred in the past?
Not that I think Theranos should not face some consequences, I just think drawing the line would be highly fraught.
Stunted career? As adults I'm sure they would have been capable of leaving any time they wanted from legal point of view. It's not goverments job to protect people from partaking in risky ventures. Who would want to create a startup after litigating "too risky product that turned out to be bogus".
At Theranos, by contrast, Holmes intentionally kept employees in the dark. If I were interviewing an ex-employee, especially one at a lab outside of California, I would certainly press the candidate on the issue, but I would be willing to believe that they were honestly trying to build and deploy a novel technology that never ended up working. It is not the case that the entire endeavor was a scam. They thought that they could develop this technology, and then the leadership covered it up as they were failing to do so.
Also, do you have any sources that document employment at Lehman Brothers as being a stain on the majority of their employees? Thousands of the employees immediately moved to Barclays and Nomura when they bought parts of Lehman Brothers. That doesn't sound like a horrible stain to me.
http://www.bloomberg.com/news/articles/2016-02-23/sac-alumni...
But yeah this is going to be a huge black mark on people's resumes and how the hell do you hide 3 years with a company that was basically all about committing fraud?
"I didn't know and I was doing good work," probably isn't going to fly.
Working as a researcher in one of the labs committing the fraud? I can't imagine you getting a job with a reputable company for years.
Working as a developer on their website? It's entirely conceivable you had no idea what was really going on.
Hopefully people will be level-headed about this sort of stuff.
As far as I know they never provided any scientific data that their product works. What do you expect working for such a company?
Are Silicon Valley investors stupid enough to throw their money at any bright young dropout with a change-the-world idea? The fact that some Ivy League dropouts found billion dollar companies does not mean a particular Ivy League dropout chosen at random (or one of the many who express a desire to change the world) has a non-zero chance of returning $$$ on investments.
Demonstrating that inteligence and common sense are seperate traits, the latter not always accompanying the former.
There's all sorts of hurdles that a company might not get over:
- Tech turns out to be a red herring - Tech works, but competitors also get it to work - You can't scale the team - People buy the product, but you need critical mass to make it worthwhile - etc
People who are expected to die before they can sue. Also kids. Am I reading this correctly?
http://www.wsj.com/articles/theranos-retreats-from-blood-tes...
That angle is a bit of a stretch to put it mildly.
Recently, I was talking to a doctor-friend, and they recommended that if I was curious about something like my blood sugar, but didn't want to go for a whole doctor visit, to just go over to a theranos lab and have them do it.
Theranos, MAY have a chance to build a successful product if they replace ALL of their decision makers who got them here in the first place and then clean up the ranks and build appropriate science team. Only then they have a SHOT at making a good product.
If this does not happen then it is RIP for Theranos 2016..
She doesn't see herself as a fraud at all, her faith in her mission, however delusional, is ironclad. She inspired her investors to take insane financial risks without so much as a whiff of due diligence. Elizabeth Holmes is a modern day Joan of Arc.
She sounds like a modern day politician caught with their hands in the cookie jar whose response is to change the issue to fit their own narrative.
My only shock is they haven't trotted it out as if her company was treated differently because of the sex of the leadership.
Yeah, but isn't that exactly what true leadership is? After all, people are perfectly happy, by the millions, to follow such people, and they've been doing it throughout history.
There's some crony capitalism for you.
One board member being formerly involved in politics doesn't strike me as valid the way you are comparing it to Theranos.
https://www.crunchbase.com/person/condoleezza-rice/advisory-...
I wish we could adopt Taleb's idea of capping lifetime earnings for anyone who takes a job as a high ranking public servant.