Theranos Retracts Its Needles
An embattled blood-testing innovator struggles for a reboot. Theranos, the Silicon Valley company that once promised a health revolution, is beating a full retreat from the consumer blood-testing business on which it built its name (The Wall Street Journal). In an open letter, founder Elizabeth Holmes announced that from now on Theranos will shut down its partnership with Walgreens, shed 40 percent of its workforce (about 340 jobs), and concentrate on producing testing equipment to sell to doctors and healthcare facilities. The retrenchment follows Wall Street Journal stories earlier this year that raised troubling questions about inflated claims Theranos had made for its blood tests,and the company’s forthrightness with investors and the public. All along, the lesson from the Theranos affair has been that you can’t build public trust on a foundation of obsessive secrecy. Yet Holmes’ terse, opaque letter suggests that little at Theranos has changed on this front. Sure, she’s treading a legal minefield. But she offers the world no reason to give Theranos a second chance; she doesn’t even acknowledge the problem.
MailChimp is the anti-startup startup. It’s in Atlanta, not the Bay Area. It didn’t load up on venture-capital money early in its life. It grew slowly, and says it has always been profitable. That means that MailChimp, the popular email-list management tool, is still wholly owned by its two co-founders, even as it’s become a company with 550 employees and a projected $400 million in revenue for 2016. (We use it here at NewCo.) Profiling MailChimp in The New York Times, Farhad Manjoo argues that this model deserves more glory than it gets, and might be eminently more sensible for many startups than the VC-backed model, particularly for the kind of small business that makes up MailChimp’s customer base. MailChimp is not immune to funky conference-room names or crazy decor (like a boardroom decorated with skate boards), but in most substantial ways it bucks every Silicon Valley trend yet seems to stay true to the core of the startup ethos — focusing on a mission and serving customers.
Electric cars will radically change the sound of the street. With Alexa, Siri, and all the other helpful voices that tech companies are adding to the mix of our lives, audio has become the new interface frontier. That’s taken the niche field of sound design — long nurtured by producers of computer startup sounds — to a much grander level (Jack Hitt in The California Sunday Magazine). The next big leap is arriving with a government mandate that all electric vehicles emit distinctive noises by 2018 (for the benefit of blind people, and everyone else who’d prefer to stay alive). This opens the door for sound designers to reimagine the entire aural soundscape of city life. Cars are about to make the same transition that phone rings made in passing from mechanical bells to digital ringtones. This isn’t just a technical shift; it’s an emotional passage.
Horatio Alger never lived here. Americans love to say theirs is the “land of opportunity,” but a new study finds that inequality here is not only worse than we thought, it’s locked in more tightly, too (Ana Swanson, The Washington Post). Using Census numbers back to 1910, economists at Harvard and Berkeley studied four generations’ worth of data, giving them a clearer picture of how wealth and poverty perpetuate themselves over time. The longer time- frame reduces the impact of “one-generation blips.” (Say a banker’s child becomes a poet of modest means, and then the poet’s kid returns to banking. If you just go back one generation, you’ll tally a win for social mobility that’s illusory.) The conclusion: We’ve been underestimating the correlation between parents and children in income and education by about 20 percent. For anyone determined to reverse inequality, that means even more work.
Platforms kill other platforms. Platforms disrupt incumbent businesses — that’s the way of our economy today, right? Uber vs. the taxis. Airbnb vs. the hotels. Amazon vs. Walmart. Facebook and Google vs. old media. But that picture might be off, write David Evans and Richard Schmalensee (Harvard Business Review). Most often, it’s not traditional incumbent companies that are being disrupted, but rather existing “matchmakers” — businesses that connect buyers and sellers, whose “value comes from serving as an intermediary between different groups of customers.” In this argument, the taxi companies that Uber is displacing represent just a different (and inferior) kind of platform. Google and Facebook may have displaced plenty of newspapers and magazine companies, but they also knocked off AOL and Yahoo. The message: If you are in a matchmaker business and you don’t stay on top of technological change, you will indeed be disrupted.
Featured in NewCo Shift: Is The IPO Market Poised to Rebound? NewCo editor-in-chief John Battelle talks with Bruce Aust, the vice chair of NASDAQ, about how the marketplace’s Entrepreneurial Center is training a new generation of founders, with 2000 alumni in its first year, and why things look sunnier for IPOs next year. Also, Two Million Miles Closer to a Fully Autonomous Future: Dmitri Dolgov, who runs Google’s self-driving technology program, celebrates a two-million-milestone. That gives the company’s autonomous cars “the equivalent of 300 years of human driving experience.”
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