Billion Dollar Blood Test Startup Theranos: is it the next Enron?
Releasing products before they are complete has become the norm for many software products. Back in September I released the first version of my app; it was clunky. But that didn’t matter. It’s a work in progress. I was getting user feedback, putting it in front of people, and gathering information to take the next step.
But Theranos is not in the same category as a iPhone app. A buggy app is not putting anyone's life at risk.
For anyone not familiar with Theranos, it is a privately held health technology company that claims to have produced a blood-testing device that uses only a few drops of blood to run tests. People rely on their tests to make important health decisions. The company is valued at 9 billion dollars.
The problem is that the device does not actually work. And people are starting to catch on. Theranos recently lost Walgreens, which is their biggest channel to get their product to market.
The Wall Street Journal reports that, “U.S. health inspectors have found serious deficiencies at Theranos Inc.’s laboratory in Northern California”
Former executive at Apple, Jean-Louis Gassée highlighted his experience of Theranos back in October with an article entitled, “ Theranos Trouble: A First Person Account”.
The article details how wrong the results of Theranos were in comparison to the tests done at Stanford. He reached out to Elizabeth Holmes to ask her about these discrepancies, but he heard no response.
And Gassée is not the only person who she is ignoring. Holmes continuously denies Wall Street Journal’s John Carreyrou request for an interview. He recently was featured on This Week in Startups; he and Jason have a deep, hour-and-a-half conversation about Holmes and all weird things going on at Theranos.
Jason touches on some points that I think are overlooked. One of them being that Elizabeth Holmes is a college drop-out. She dropped out of Stanford in 2003 at 19 years old to create a biotech company.
“By the time she dropped out she had taken a couple of chemical engineering classes at Stanford, she dropped out as a 19 year old midway through her Sophmore year — I mean think about yourself, when you were in college as a 19 year old… was that something that caught my attention? Very much so. Any PHD scientist will tell you that [medicine] is a field where you need to get your training, you can’t make a contribution without attending the classes and doing the work..” Carreyrou 1:14–6 TWIST
There is also the curious and tragic incident of chief scientists Ian Gibbons. He committed suicide back in 2013. From the interviews Carreyrou had with his wife, we know that before he died, Ian had (in regards to Theranos) repeatedly told his wife that, “nothing is working”.
‘One of her first hires was Ian Gibbons; he was a British biochemist who had worked in Silicon Valley for a long time, and was a well respected scientist. He was among the early employees and worked there for 8 years. They are known in the Valley for having a high employee turnover rate. And for someone to stay that long gives you an idea that this was someone who was at the heart of the company.’ Carreyrou 0:26 TWIST
So what can we make of all this?
Theranos may eventually make a product that works very well. They have a lot of cash to run on, and it seems that Holmes is treating Theranos as her life’s work. But she ought to address Carreyrou, Gassée, or any other respected figure that has serious inquires about her business.
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