Nitpick: defame is defined (by Merriam-Webster) as “to attack the good name or reputation of, as by uttering or publishing maliciously or falsely anything injurious; slander or libel; calumniate:”
Theranos’ agreeing to the settlement makes it appear that the government’s case was not falsely injurious.
This has been a weird situation, with the WSJ getting credit for dogged investigative reporting (Theranos hates the WSJ) that helped lead to the company’s downfall.
I don’t think Holmes “got a pass” because of her appearance. Some backers and reporters may have been overly enthusiastic about her company “disrupting” the industry because she was a young flashy figure touting a flashy new technology that was way unready for prime time.
Interesting factoid: James Mattis, current Secretary of Defense, was on Thaneros’ board of directors from roughly 2012 until his nomination to Trump’s cabinet.
Far me it from me to defend a Trumpist, but the reality is that part time board members are just as dependent upon the honesty of the CEO, CFO and their minions as anyone else, and can’t be expected to hire PI’s. If Mattis made honest decisions based on phony information that was given to him by con artists, he isn’t legally liable and probably isn’t ethically liable.
The accusations against Holmes are that this was not just a few casual lies or one or two bullshit balance sheets, but a sustained and dedicated program of fabrication. They were literally moving machines around their “business factory” when guests showed up to make it look like their tech was doing all the work.
It does open the question of how much a company can “fake it 'til you make it”. How many bidders, especially in government contracts, will promise to do something to given specifications by a given timeline only to fall short on both? Didn’t Bill Gates bluff his way into big contracts in the 80s by assuring would-be customers that Microsoft had the software they wanted only to scramble to actually make it afterward?
In research and technology, doing something that’s never been done before is likely to involve running into many unknown unknowns. The more revolutionary the technology, the less you know about whether and how you can get there.
From what I understand, Holmes said that they did have a working product, correct? Did no one ask why the company wasn’t selling this revolutionary product on a large scale to generate revenue? Or are tech companies presumed to run without much in the way of customer-provided cash until the IPO?
As for Martin Shkreli, authorities took a closer look at him after he became infamous for being cutthroat within the bounds of the law. He probably partly paid for the bankers that didn’t in 2008-2009.
I am not sure about her legal troubles, but as far as attracting investors and board members, I am willing to speculate that her looks played a part not only in getting attention, but also in luring money and talent into the scheme.
Meh. Maybe in a Tom Brady sort of way, i.e., his QB performance is what is most important, then his endurance, then his leadership, etc… oh, and by the way, his looks really help his brand.
Think about what happened: she had science that Stanford types loved and which we’ve heard is a big deal in the field these days. So, at that time, the issue wasn’t the value of the innovation, it was the ability to scale the tech so it could be a real business. The fraud began when the tech couldn’t function at scale, so they used old tech instead.
It was obviously incredibly tempting to hear about this real, amazing innovation - and all we need is that pesky bit of operational excellence to be able to scale it up. Easy to see how folks would bet that they had figured something out. The fact that this story was told by a “pretty blonde Stanford dropout genius” probably give it a cooler spin.
Sure her looks helped, but the Stanford connection helped as well. And there’s the whole “disruptive” aspect of the business, much as Airbnb is disrupting the hotel business and Uber the taxi business (or Amazon disrupted retail). People are more or less looking for the next Big Disrupter.
IIRC, some members of the HP board did indeed hire PIs to investigate some of the scandals there. The whole point of a board is to serve as a check on the CEO. They should be alert to suspicious items - for instance, when she claimed that the DoD was using the product, they could have asked for confirmation.
Now since they were chosen for star value, not because they knew anything about either the subject or even finance, it is not surprising they failed in their duties. But so many board members take the job because of the good pay for little work, and are shocked, shocked to be held responsible for anything.
Mattis, btw, is about the only member of the Trump Cabinet with a shred of moral decency. I mentioned him because it is interesting he was involved, not because I find him particularly culpable.
And the Board should have dug deeper. I don’t know how legally liable they are, but I hope there is at least an investigation, instead of them getting to say, “oh well, the investors lost hundreds of millions, but the lunches at meetings were real good.”
A Times article said that one of the VCs was a neighbor. Did she grow up in Palo Alto, or in one of the even ritzier towns? Being a Stanford undergrad usually doesn’t give you super VC connections.
Her father held “a number of executive positions” at the US Agency for International Development (USAID), her mother was a congressional staffer and political lobbyist. She attended the St. John’s School in Houston, a well-regarded preparatory school, and seems to have largely impressed the people she worked with there and at Stanford, where she managed to get an undergraduate researchship with the Dean of the School of Engineering. Her actual technical aptitudes are unclear (she left Stanford after her freahman year, and even the most precocious nineteen year old is unlikely to have enough basis of knowledge to be doing truly ground-breaking work in genomics, a field that has become so diverse in avenues of research that just keeping abreast of major developments is a full time lit review job) but she certainly worked her way into the consciousness of major venture capitalist investors with various promises of what the medical technologies she promoted could do, including advanced non-invasive diagnostics, ‘designer’ pharmaceuticals, anti-aging treatments, and so forth; essentially everything but gene resequencing.
Although some here have attributed her success to her appearance, the reality is that she was very good at sussing out what investors were personally interested in and promising to deliver with enthusiastic but non-specific claims and purported proof-of-concept that were falsified or grossly exaggerated evidence; a medical “Music Man” as it is, albeit without any clear endgame. It seems to have been well known within Theranos that the diagnostic technology it sold to numerous companies did not work as promised and that much of the research being performed did not show promising results. Aside from fleecing all-too-eager to profit investors (of whom one might be inclined to say “Caveat emptor, motherfuckers!”) Theranos may have put the medical diagnosis of serious illnesses at risk for tens or hundreds of thousands of patients.
Yes, she should go to prison as an example of what happens when you get too deep into a collapsing house of lies, as well as for endangering the affected patients. More than likely she’ll just be censured in some meaningless way, and investors will probably be compensated at least in part from the public purse, because that’s what you do when a lie gets so big that ‘everyone’ believes it.
Did she/Theranos endanger patients? My understanding is that they lied about how they tested the blood (how much would be needed, what machines were used), but the results they provided were accurate. Are they also accused of falsifying results or something else that caused harm to patients?
I don’t see how or why the US government would bail out major banks for making fraudulent estimations of risk on collatoralized debt obligations and mortgage-backed securities and yet hold no one legally accountable, but they did.
No, the results were not accurate and while Theranos has settled with most of the major claimants it has done so without accepting any liability. It is unclear what recourse individuals impacted by voided or inaccurate results have other than to sue Walgreens or other point-of-sale providers of the testing services. Regardless of who is held to be legally at fault, yes, Holmes and Theranos knowingly provided suspect or bogus medical services as legitimate results, impacting patients’ informed decisions about medical care. Even if these weren’t being used for critical diagnostic applications, it is still willful indifference and yes, Holmes should be held responsible for deliberate criminal negligence for her part in concealing information about the lack of accuracy of test results.
Nor do I, but what does outrage at the banking bailout have to do with this?
I can’t imagine why you think the government might bail out the shareholders of Theranos.
Because a lot of those investors are politically well connected and are already making the claim that the FDA failed in adequately investigating or imposing restrictions on Theranos’ technology, even though Theranos avoided the regulatory process and failed to respond to repeated requests to sub it their products for evaluation.
Well, that’s awful. I was thinking that while what Holmes did was worse than what Shkreli was actually arrested for, Shkreli caused much more harm than her by raising prices of critical medications. That puts them more neck in neck. Thanks for the info.
Shkreli directly impacted people who badly needed medication for no reason other than his own dickish arrogance and sociopathy. (It can’t even be attributed to profitability because he raised the price so much that it is arguable that the company lost more than it gained.) Holmes seems to have had some sincere wish for the technology her company was developing to work, but somewhere fairly early along the way understood that she had way overpromoted the capability of that technology and then just kept spinning a bigger web of lies. Both rightfully deserve to be villified, but I’d also like to see Shkreli skewered on a thousand rusty spikes, while I’d just like to see Holmes gently slapped with a wet trout a couple hundred times. Both are likely to come through their particular infamies and find some future ‘success’ scamming the shit out of credulous investors, because that’s how these kinds of people get on.