After reading Bad Blood (the story of Theranos) I feel conflicted.
Tweetstorm related: https://twitter.com/bioxcession/status/1028322450910732289
Upfront: the basic premise of the book is that Theranos was an exploitative, evil company headed by two exploitative, evil people. It makes an effort to not apologize for Elizabeth, or blame her actions on anyone else. She was sucked into the vortex of literally being a bloodsucker. In fact, the book - at one point - goes so far as to suggest she may be a sociopath.
Now, the book was a good read, and I think the point makes sense - bad company is bad. But it's stirring up a ton of music in my head - especially since it compared Theranos to "vaporware companies" - practices that the Valley has engaged in since forever (promising endlessly and not delivering).
Vaporware: software or hardware that has been advertised but is not yet available to buy, either because it is only a concept or because it is still being written or designed.
Theranos was no different, except it tried selling vaporware in the form of a healthcare device. Insisting that this device worked (it didn't), and insisting that most of their received blood tests were running on it (they weren't).
It's my opinion that Theranos would have been hailed as an enormous success if they had delayed for long enough to make this technology work. I believe that my point is furthered by the fact that Walgreens waited through two years of delays, of and tolerated outright lies. If the tech ever came out, all would have been forgiven.
My argument boils down to this: Elizabeth wasn't a shitty person, she operated correctly in a shitty system.
She took risks, yes - but they were necessary to maintain the illusion that she had a product that amounted to anything. Eventually, she hoped, her team would crack the nut and she'd come out unscathed.
The problem amounts to our system encouraging this type of behavior - she was visited by the vice president, Kissinger, Mattis, had dinners with the Clintons, and was a fellow at Harvard medical school. Nobody thought twice because the tech was so exciting.
Tildes, what can we do to prevent this type of behavior, and am I overlooking something?
I'm going to object somewhat to the analogy with "vaporware". The essence of vaporware is that it's incomplete at the promised delivery date, but not incompleteable. The tantalising thing for investors is that the proposed new product is already technically feasible, such that if you just throw money at it longer, it would be ready for market.
The Theranos model depended on revolutions in basic technology. It was well-known that available microfluidics couldn't handle a substance as viscous as blood. Neither were microsensors able to get reliable analysis results for multiple tests from a protein substrate as complex as blood cells, without substantial chemical processing. [Single antibody tests on a one-time medium, as for HIV or strep, are a different matter.]
However glorious and lucrative the goal, most technical experts were aware that the fundamental technologies are non-existent. That's not simply a matter of throwing a billion dollars at a problem, it's a moonshot requiring far more research and time than a startup would ever be able to manifest.
[As a side note, as unpleasant as Elon Musk's self-promoting methods have become, there's little doubt that the fundamental technologies underpinning electric vehicles are present and approaching maturity. Working models have been delivered. Tesla Motors isn't vaporware, however precarious the financing.]
Elizabeth Holmes' malign genius was in her unfounded assertions that the fundamental problems had already been solved and only a few more steps were required for market. However little she knew in the field, it's clear that she knowingly misrepresented the difference between basic research problems and technical refinements for marketability.
Like any con, though, her success depended on the cupidity of the investors. Had any of them looked past their own ultracrepidation (I learned a word today! "Ultracrepidation" refers to the tendency of experts in one field to confidently proceed to judgments outside that field, whether knowledgeable or not), they would have seen through the scam.
I am by no means an expert in finance, investing, running a company or anything remotely related to this... but I honestly can't help feel most of this stems from the venture capitalist, "growth at all costs and profitability be damned" mindset that seems to have permeated every industry now. Instead of a company needing to establish itself, prove its product was actually viable, get itself some market share, become profitable and relatively stable, and then deciding to launch an IPO, now we have a culture where companies don't need to wait at all, even for a working product, before taking on huge amounts of willing investors. Under those circumstances this sort of outcome is inevitable and Elizabeth Holmes behavior merely human nature, IMO.
So what can we do to prevent this type of behavior? I image very little, other than simply waiting for this insane venture capital bubble to finally burst and hoping the fallout leads to investor mindset changes, more realistic company valuations, and perhaps even some regulations to prevent it from happening again in the future.
Exactly. If I took away anything from the book, it was the Elizabeth Holmes's poor behavior was rewarded with money and status. Who among us can claim to be capable of resisting that temptation?
The biggest miss in the book, IMO, is that her behavior was blamed solely on her - not the environment which surrounded her startup.
In theory, we could come up with regulations, but anything so vague as to have applied to Theranos seems likely to be dangerous to me. The best I can think of is a simple regulation that requires an outside subject matter expert to evaluate a companies worth to the board, if that company is in a critical business (healthcare, safety, etc).
Another thing: If all we are doing is waiting for the terrible Valley investment cycle to burst, should we be happy about what happened with Theranos?
I have not read the book, but I have seen the author say that the main problem was that she ran a medical company like a software startup. Vaporware can work as a component of developing a software biz, but is not at all acceptable in the medical space.
Also, she risked the lives of Theranos customers when they went live in the stores with their vapor product which involved dilution of the tiny blood samples to allow the Siemens machines to work. This gave false results to customers. I really hope she ends up in prison to show others in the medical space that this is illegal.
Theranos lawsuits start to add up
This seems to depend quite a lot (which, I bet, is part of what makes it so personal).
I suspect it's related to how much you've hardened your own morals over time. Elizabeth lived in a world of lies from the age of 19, I imagine it morals became secondary. Sunny (second in charge) did the same, and already had the "cheat/lie til' you make it" mindset, being 40.
Ian Gibbons (who committed suicide due to the pressure Theranos placed on him) was 65, I bet he worked hard to maintain his morals through his life, and couldn't cope with the pressure of having them exploited.
As I have often said to or discussed with my best friend - The deck in life is stacked against honest people. It certainly appears that if you play life strictly by the rules, you will lose, and that to "win", you need to lie and/or cheat, to varying degrees.
It boils down to a very personal question - How much can you lie and/or cheat life or "the system", and still feel that your morals aren't compromised?
Look at who is the President of the USA. Donald Trump. The rules in life say that he should not be President, that he should not have won. He's not moral. He's not a good person. He's not following the rules of using the office to look out for the welfare of all Americans. And yet, there he is, being rewarded.
The "moral person in a corrupt enviornment" element, not so much "promises for innovational technology" reminds me a lot of The Banality of Evil. Reporting on the nazi Nuremberg trials, Arendt (a Jewish survivor of the holocaust) argued that the foot soldiers and even many higher-up commanders were swept into an expansive system of exploitation that made it far easier for individuals to live in denial, "following orders", and optimistic that it was all for the greater good. To break from society and rebel against a monolithic system takes far, far more motivation/courage when you're not the victim of its exploits, and even more so when you're "benefiting" from the campaigns.
At the same time, Arendt condemned Jewish people who enrolled in the ranks of the ghetto police forces, who were well-aware they were facilitating the massacre of their own community.