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Theranos' Death Rattle

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40 minutes ago, Nice Guy Eddie said:

Some Silicon Valley companies look to throw around stock in an attempt to not miss that next thing.  Facebook bought some teenage social media app (tbh) last fall only to announce they are shutting it down this week.  It was so good 8 months ago that it was worth acquiring, but now it's worthless? I suppose the purchase could have been to acquire some patents or great talent or it could have just been a huge mistake.

Or it could be benching a potential competitor

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There definitely seems to be a higher frequency of narcissism and sociopathy among startup founders and CEOs than the general population. She was a snowflake in her parents’ well connected world, and like any first semester college kid in a science class, a simple and likely unoriginal idea came to her for a new product. Unlike the average Chemistry 302 freshman in Welch Hall though, her narcissism made her believe she was unique and worthy to pull something like this off with no scientific basis while her parents’ social enabled her to get started. 

Does the book say when she started raiding Steve Jobs’s closet for black turtlenecks? It was early on and I never knew if it was her own vanity (or perhaps admiration of Jobs and his similar ability to promise and make millions before there was a product?) or were the SV forces grooming her down to the wardrobe to be the next big female CEO tech founder megatron?

While I was working for an Austin biotech company, we would spend a day about once a month scanning around for new tech that may have crossover to what we did. We became aware of Theranos in 2012 or 2013 and were highly skeptical of the technology description especially in light of her and how the company was founded. Funny enough, our own narcissist sociopath CEO actually liked her MORE in 2015 after the shit started falling out of the bag. I think he respects cons more than actual hard work and innovation in the tech field, and proposed we set up a meeting with Theranos. I don’t know if it’s funny, insulting, meaningless, or all of the above, but whoever was answering the emails rejected our requests for an in person meeting or a call with some c-level person. 

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Good book - Shitty, lying, narcissistic couple.  

I guess I get vaporware concepts for software, but they took that shit to new levels and flat out lied their way into what I hope are matching 8x8 cubicles with vanity tags for  their cell block numbers

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On 6/21/2018 at 3:41 PM, bularry1 said:

you may be right.  I was assuming advisor and legal fees to be huge on the fundings.  if all private placement as you say, then maybe not as much.  usually in these deals (my knowledge is limited, admittedly), initial investors are releasing stakes to the following groups.

Not if they were doing them as a 'Series A/B/C' investments.  

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the amount of money she raised on nothing but shit is fucking amazing.  The damn thing was a fraud and worth $9B at the last raise.  The fact that no legitimate healthcare VC in SV invested in the thing should've been a huge flag to everyone.  Can't believe Rupert Murdoch dropped in $125mm as the WSJ was writing their initial piece.  All he had to do was ask.  The book is great.

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4 hours ago, babysdaddy said:

the amount of money she raised on nothing but shit is fucking amazing.  The damn thing was a fraud and worth $9B at the last raise.  The fact that no legitimate healthcare VC in SV invested in the thing should've been a huge flag to everyone.  Can't believe Rupert Murdoch dropped in $125mm as the WSJ was writing their initial piece.  All he had to do was ask.  The book is great.

I’m not a lawyer but I don’t think Murdock can ask the wsj if they’re about to publish a hit piece on a potential investment. 

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I’m not a lawyer but I don’t think Murdock can ask the wsj if they’re about to publish a hit piece on a potential investment. 


I was most shocked that when they told Murdock about the upcoming story after he’d invested, he didn’t get in the way at all. He did sell sell all his stock back for $1 so he took a $125M loss on his taxes.

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13 hours ago, CooterBrown said:

 


I was most shocked that when they told Murdock about the upcoming story after he’d invested, he didn’t get in the way at all. He did sell sell all his stock back for $1 so he took a $125M loss on his taxes.

 

He also pulled the ultimate Kevin Morgan deal -- buying MySpace for $580 million right before everybody hauled ass to Facebook and Twitter. It's rumored he sold it for as little as $35m.

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https://www.wsj.com/articles/blood-testing-firm-theranos-to-dissolve-1536115130

Quote

Blood-Testing Firm Theranos to Dissolve 

Firm, tarred by scandal, will pay creditors its remaining cash 

By 

John Carreyrou

Updated Sept. 5, 2018 12:10 a.m. ET

Theranos Inc., the blood-testing company accused of perpetrating Silicon Valley’s biggest fraud, will soon cease to exist.

In the wake of a high-profile scandal, the company will formally dissolve, according to an email to shareholders. Theranos will seek to pay unsecured creditors its remaining cash in coming months, the email said.

The move comes after federal prosecutors filed criminal chargesagainst Theranos founder Elizabeth Holmes and the blood-testing company’s former No. 2 executive, alleging that they defrauded investors out of hundreds of millions of dollars and defrauded doctors and patients. 

The executives have denied the charges and face a coming criminal trial.

The dissolution process was precipitated by the fact that Theranos breached a covenant governing a $65 million loan it received from Fortress Investment Group last year. Under the loan terms, Fortress was entitled to foreclose upon the company’s assets if its cash fell beneath a certain threshold.

In the email to shareholders, sent Tuesday, Theranos General Counsel and Chief Executive Officer David Taylor said the company is trying to negotiate a settlement with Fortress that would give the New York private-equity firm ownership of the company’s patents but leave its remaining cash—estimated at about $5 million—for distribution to other unsecured creditors.

Under a liquidation process known as “an assignment for the benefit of creditors,” getting that remaining cash to the unsecured creditors could take six to 12 months, Mr. Taylor said in the email. Most of Theranos’s two-dozen remaining employees worked their last day on Friday, Aug. 31. Only Mr. Taylor and a handful of support staff remain on the payroll for a few more days.

The action followed a failed bid to sell the company. Over four months, investment bank Jefferies Group LLC reached out on Theranos’s behalf to more than 80 potential buyers, and executed nondisclosure agreements with 17 of those parties, the email said, adding: “We assisted those parties with diligence and had numerous follow-on conversations.”

The big-name investors who poured money into Theranos will get nothing. All told, investors in Theranos have lost nearly $1 billion.

Theranos’s founder and chairman, Ms. Holmes, and her ex-boyfriend, Ramesh “Sunny” Balwani were indicted on nine counts of wire fraud and two counts of conspiracy to commit wire fraud in June. Mr. Balwani was Theranos’s president and chief operating officer until he retired from the company in May 2016. If convicted, they each face a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution to those found to have been defrauded, on each count.

The indictments followed months of reporting by The Wall Street Journal that raised questions about the company’s technology and practices.

Ms. Holmes sought to disrupt the blood-testing business. At the height of her fame, the Stanford University dropout claimed to have invented groundbreaking new technology that could run the full range of laboratory tests on just a drop or two of blood pricked from a finger.

On the strength of her claims, Theranos rolled out its vaunted finger-stick blood tests in Walgreens stores in California and Arizona and rocketed to a valuation of more than $9 billion, making Ms. Holmes a billionaire and media celebrity. Her bold talk and black turtlenecks drew comparisons to Steve Jobs. The pharmacy chain has said it was misled by Theranos about its technology and prospects.

But as the Journal revealed in a series of articles beginning in October 2015, Theranos’s blood-testing device was unreliable and the company used it for just a fraction of the more than 240 tests it offered to consumers. Behind the scenes, it performed the vast majority of the tests with commercial analyzers purchased from other companies.

Theranos become a symbol of the excesses of the current technology boom. Its failure was dramatic and painful for many. A biochemist who worked at Theranos for eight years committed suicide in 2013 after becoming distraught by its culture of fear and secrecy and its lack of progress with its technology, according to his widow. Tyler Shultz, a grandson of former Secretary of State George Shultz and the first employee to blow the whistle to a state regulator about what he saw as troubling practices, became estranged from his grandfather, a Theranos director.

The roster of Theranos investors—most of whom poured money into the company after its commercial rollout in Walgreens stores in late 2013—included the Waltons, heirs to Walmart Inc. founder Sam Walton; Atlanta’s Cox family; the family of Secretary of Education Betsy DeVos; and Rupert Murdoch, executive chairman of 21st Century Fox and of News Corp , the Journal’s parent company. Each invested $100 million or more in Theranos—investments that are now worthless.

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Attorneys are going to negotiate 6 to 12 months to save $5mil cash left. That exemplifies the spirit of pro bono work like nothing I have ever seen.

From above: "the company is trying to negotiate a settlement with Fortress that would ...leave its remaining cash—estimated at about $5 million—for distribution to other unsecured creditors.
Under a liquidation process known as “an assignment for the benefit of creditors,” getting that remaining cash to the unsecured creditors could take six to 12 months, Mr. Taylor said in the email."

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On 7/18/2018 at 10:02 PM, CooterBrown said:

 


I was most shocked that when they told Murdock about the upcoming story after he’d invested, he didn’t get in the way at all. He did sell sell all his stock back for $1 so he took a $125M loss on his taxes.

 

That's like 500 lifetimes of carry-forward deductions. I mean, assuming he's a prole like me whose losses are in his personal e-Trade account.

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so how many years does she ultimately get in prison?  Looking forward to reading her post prison autobiography and the follow-up movie starring Jennifer Lawrence.  I think a women's prison movie with her is gonna kick all kinds of ass.

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Theranos Criminal Case Is Broader Than Publicly Disclosed, Prosecutors Say
 

https://www.bloomberg.com/news/articles/2018-10-12/theranos-criminal-case-is-broader-than-disclosed-u-s-says

Quote

The government’s criminal fraud case against former Theranos Inc. Chief Executive Officer Elizabeth Holmes and former President Ramesh “Sunny” Balwani runs deeper than what’s been publicly disclosed, prosecutors said.

After a hearing Friday in San Jose, California, Holmes and Balwani lost a bid to block the Justice Department from combing through more than 200,000 company documents. The judge also ordered lawyers for both sides to work out a procedure by which protected and confidential documents are shielded from prosecutors.

U.S. Magistrate Judge Susan van Keulen rejected Holmes’s and Balwani’s request after the hearing. In her order, she also referenced undisclosed “charges and activities” in the government’s broad, ongoing investigation that may extend beyond the former Theranos executives.

The ruling could give prosecutors additional leverage at trial or in any plea deal, including any potential agreement by one defendant of the former couple to aid the prosecution of the other. Assistant U.S. Attorney John C. Bostic defended the government’s request for the Theranos documents, describing the June indictment of Holmes and Balwani as “just an event in the ongoing investigation,” rather than the culmination of the probe.

“This story is bigger than what’s captured in the indictment,” Bostic told the judge. Prosecutors may not yet have particular “targets,” he said, but the indictment “doesn’t capture all the criminal conduct” the investigation has uncovered.

 

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5 minutes ago, Kyle said:

More of these folks should end up in prison. A lot more harm than some guy robbing a convenience store, violence notwithstanding.

Agreed.  The problem is a difficult one, and that is that judges, regardless of political affiliation and even race in some cases, tend to identify more with these kind of defendants than with less-educated/privileged/white defendants.  Also, the argument can/will be made that these have been or will be "productive" members of society, whereas I believe that their crimes are actually more grotesque than those committed by less "productive" members of society and should be treated at least as harshly.

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What was the basic science of her initial idea? All I have heard her explain is babble about putting a "tiny drop" into a "tiny tube", and being able to run hundreds of tests from it. 

 

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8 minutes ago, immortal13 said:

What was the basic science of her initial idea? All I have heard her explain is babble about putting a "tiny drop" into a "tiny tube", and being able to run hundreds of tests from it. 

 

yeah see that's where the problems started....

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iirc there weren't any VCs invested in theranos before they got exposed.  all of the early funding came from personal connections.  

the product behind the idea was originally a medicine-delivery system via an arm-patch.  that evolved into a finger-prick diagnosis and medical delivery system, which then evolved into just a finger-prick diagnosis device.  none of those products had a chance.  there was no science behind the ideas and they never made a viable prototype for any of those systems (they had prototypes they showed regulatory agencies and prospective clients, but none performed the attributed functions either in scope or precision.)  

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3 hours ago, smokebomb said:

Here is hoping they will include the prison scenes in the Jennifer Lawrence movie...

I, too, like most men, enjoy a good prison movie on occasion, if properly done like this one:

 

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2 hours ago, gsoda3 said:

iirc there weren't any VCs invested in theranos before they got exposed.  all of the early funding came from personal connections.  

the product behind the idea was originally a medicine-delivery system via an arm-patch.  that evolved into a finger-prick diagnosis and medical delivery system, which then evolved into just a finger-prick diagnosis device.  none of those products had a chance.  there was no science behind the ideas and they never made a viable prototype for any of those systems (they had prototypes they showed regulatory agencies and prospective clients, but none performed the attributed functions either in scope or precision.)  

Yep- according to the book and the other articles I've read, they had no data whatsoever indicating that the desired tests could be done accurately with the amount of blood in the finger stick.  They just "created" the technology and then started trying to create a product to fit the dream.  No harm done in dreaming, but they sold the "product" before they had it and hid the shortcomings from their investors and partners.  Then they rolled it out and pretended to be running tests that they couldn't do.

This kind of stuff happens with software development firms I'm sure, but you can't compare the impact and ramifications of a partially developed software program to those of a test consumers and doctors are relying upon to make healthcare choices. 

She and her boyfriend basically thought if they wished it hard enough it would happen.

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Here is her earliest patent, dating back to 2003.  https://patents.google.com/patent/US7291497B2

At first glance, it looks pretty serious and sophisticated, but on slightly deeper review (and with the benefit of hindsight), it is clear that it's a "here's how this might work, but I have no idea if it really would" patent filled with illustrations borrowed from a book on microfluidics.

Also, digging around, it was written on her behalf by a PhD biotech attorney who could fill a lot of speculative gaps for her dropout ass.

Edited by TwiceHorn

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28 minutes ago, babysdaddy said:


She is insane. Full sociopath

Yep, really interesting case. 

Bet she dynamite in the sack.

Totally in.

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Shit got real interesting when the depos revealed she was shacked up with the old Indian(?) dude serving as president 

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8 minutes ago, Beau Vine said:

Jeez, her voice...

Sounds like a girl in middle school trying to sound like her mom on the phone while trying to order some beer delivery.

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