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Subprime ‘unicorns’ that do not look a billion dollars

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Re: Subprime ‘unicorns’ that do not look a billion dollars

#71

Post by anon4this1 »

amluto wrote: post #69
akiselev wrote: post #28

Earlier quoted context omitted.

I am on board with your skepticism, but I don't believe your concerns are valid in the context of what Theranos is promising and what they have done ($400 million is nothing to scoff at in an industry where you have $0 revenue until a real breakthrough passes the FDA). The global pharmavertical industry is about $900 billion a year and has a very wide variance in types of products so the normal idea of what what valu…

I'm not entirely convinced that what Theranos is promising is even that great. A couple weeks ago I got a blood test. I walked into the test center, which was staffed by a single person. I waited in line (there was one person in front of me), and told the person my name. She walked me over to a chair, drew enough blood for a whole bunch of tests, and that was it. I was in and out in 12 minutes (I timed it), and it wa…

From experience, a blood sample which has been milked out of a finger is quite different to a venous blood sample.

(I am an anaestheologist and often perform or ask nurses to perform post-op point of care pinprick blood counts to look for anaemia in patients who have had big surgeries. We do 2 readings to check for error, and I often find that samples which have been squeezed out have a haemoglobin value 10-20% different to those which are drawn from a vein due to expression of tissue fluid.)

Re: Subprime ‘unicorns’ that do not look a billion dollars

#72

Post by the_economist »

lmm wrote: post #48
adventured wrote: post #39

Earlier quoted context omitted.

If we're talking only about start-ups that have gotten big during this boom, then you're very wrong. Uber, Xiaomi, Airbnb, Palantir, Snapchat, Didi Kuaidi, Flipkart, WhatsApp, Pinterest, and Dropbox are among the biggest winners so far. There's nothing Wall St or financial engineering about any of those. They're all legitimate businesses and or services that consumers blatantly want.

Uber and Airbnb are very much about financial engineering. Most of their edge comes from tax avoidance and regulatory avoidance.

Uber and Airbnb are about consumer demand first and foremost.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#73

Post by akiselev »

amluto wrote: post #69
akiselev wrote: post #28

Earlier quoted context omitted.

I am on board with your skepticism, but I don't believe your concerns are valid in the context of what Theranos is promising and what they have done ($400 million is nothing to scoff at in an industry where you have $0 revenue until a real breakthrough passes the FDA). The global pharmavertical industry is about $900 billion a year and has a very wide variance in types of products so the normal idea of what what valu…

I'm not entirely convinced that what Theranos is promising is even that great. A couple weeks ago I got a blood test. I walked into the test center, which was staffed by a single person. I waited in line (there was one person in front of me), and told the person my name. She walked me over to a chair, drew enough blood for a whole bunch of tests, and that was it. I was in and out in 12 minutes (I timed it), and it wa…

Theranos definitely has an uphill battle against the ubiquity and cost efficiency of offsite testing labs but their technology is significantly different because it is an onsite test with a tiny amount of blood.

The infrastructure to support the kind of experience you're used to at Lab Corporation or Quest Diagnostics does not exist in much of the world. With the ubiquity of electricity and wireless broadband, a charity like Doctors Without Borders or Red Cross can drop a Theranos test device in a developing country and only have to worry about delivery of consumables to the location instead of shipping samples out, which requires a reliable postal infrastructure instead of a once a month delivery by airplane, boat, train, truck, or rickshaw for that matter.

I'm excited by Theranos' technology because the FDA has strict limits on how much blood you can draw from patients during a clinical trial. As our therapeutics get more and more complicated, we'll need a lot more data but the FDA will not raise this limit much, if at all, in the future. This is a known issue that you have to design around when running clinical trials, especially if you're developing something like a cancer cocktail where you might be looking for half a dozen metabolites and intermediary molecules in extremely low concentrations that each need a vial of blood. This isn't Theranos' target market (intermediaries/metabolites can be much harder to design tests for) but their tech's ability to test onsite with a tiny amount of blood might allow them to move into this market.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#74

Post by pbreit »

birken wrote: post #13
pbreit wrote: post #11

Earlier quoted context omitted.

You're missing how startup equity works. At these multi-billion dollar companies, employee shares are priced way less than the valuations you are seeing published in the media. So you're almost guaranteed a nice payoff even if the company merely treads water.

A low strike price only matters if there is some eventual liquidity for the shares. For common stock this means IPO, acquisition or some other share buyback. Both IPOs and acquisitions generally don't apply to companies "treading water", only the extremely successful and growing ones manage to IPO (and even then it doesn't work out so great for shareholders: see YELP or BOX) or get acquired. Get acquired for less tha…

Any equity compensation depends on future liquidity which unicorns have much more of.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#75

Post by srunni »

anon4this1 wrote: post #71
amluto wrote: post #69

Earlier quoted context omitted.

I'm not entirely convinced that what Theranos is promising is even that great. A couple weeks ago I got a blood test. I walked into the test center, which was staffed by a single person. I waited in line (there was one person in front of me), and told the person my name. She walked me over to a chair, drew enough blood for a whole bunch of tests, and that was it. I was in and out in 12 minutes (I timed it), and it wa…

From experience, a blood sample which has been milked out of a finger is quite different to a venous blood sample. (I am an anaestheologist and often perform or ask nurses to perform post-op point of care pinprick blood counts to look for anaemia in patients who have had big surgeries. We do 2 readings to check for error, and I often find that samples which have been squeezed out have a haemoglobin value 10-20% diffe…

It seems that this isn't an issue for Theranos's FDA-approved HSV-1 assay. See Table 16 and Figure 1: http://www.accessdata.fda.gov/cdrh_docs/reviews/K143236.pdf

However, the skill level of whoever performed the fingerpricks for that data may be significantly higher than the average technician at Theranos's wellness centers. And of course we have no idea about the hundreds of other tests. There seems to be some other correlation data on Theranos's site (https://www.theranos.com/our-lab - scroll down to 'Representative Clinical Correlations'), but there's no captions or text to provide context.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#76

Post by pbreit »

adventured wrote: post #36
pbreit wrote: post #20

Earlier quoted context omitted.

Both YELP and BOX made a lot of people very rich.

Box clearly did not make a lot of people very rich. They made a tiny group of people richer (very early investors). Employees have not done well, as the stock has been a disaster. All of the big rounds that Box raised basically valued them at or above where their stock is now. They're worth $1.6 billion and raised $558 million; their last round was at $2.5 billion. Their latest quarter they did $73m in sales and lost…

Even the late stage investors probably made money. The only employees who didnt make money are the handful hired at the very end when the common valuation finally meets up with preferred.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#77

Post by AndrewKemendo »

potatolicious wrote: post #58
AndrewKemendo wrote: post #19

Earlier quoted context omitted.

How is that not super awesome? All of those employees had market wages well before the IPO.

Opportunity cost - assuming everyone has fair market cash wages, the BigCos are offering more in bonuses and stock - at GOOG/FB it's not uncommon to see $150-200k+ per year in stock, with less uncertainty. You'd expect that for taking on the risk (relatively low as it may be for a unicorn) you'd do better than the extremely low-risk public stock packages being offered by BigCos.

So I am clear, you are saying that it's not uncommon for an engineer at GOOG to be given $150-200k in stock every year on top of their salary?

Re: Subprime ‘unicorns’ that do not look a billion dollars

#78

Post by user_001 »

pen2l wrote: post #59
user_001 wrote: post #31

Earlier quoted context omitted.

Not sure if you noticed, it's a carousel, the second slide mentions FDA clearance, the third mentions about the CLIA waiver.

They got FDA clearance for JUST ONE test, the herpes one. It's not clear if it'll work for the many hundred others, as Theranos has suggested it can.

Sure, it's a start. We would have to just wait & watch.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#79

Post by pbreit »

LukaAl wrote: post #15
pbreit wrote: post #11

Earlier quoted context omitted.

You're missing how startup equity works. At these multi-billion dollar companies, employee shares are priced way less than the valuations you are seeing published in the media. So you're almost guaranteed a nice payoff even if the company merely treads water.

That assumes that the company reaches the IPO and its value holds. And still I don't get how lower they must be priced to be comparable to a growing startup, even risk adjusted. (And consider that the IRS could have something to say...) If the company doesn't reach the IPO and get acquired, well check what liquidation preference means. Check this post to understand better how stocks in a startup works: http://heidiro…

IRS wise, it's easy to demonstrate that common stock, which doesn't having voting rights and preferences, is much less valuable. The secondary market for unicorn shares is pretty vibrant these days.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#80

Post by AndrewKemendo »

rgbrenner wrote: post #37
AndrewKemendo wrote: post #18

Earlier quoted context omitted.

As a (not yet suicidal) founder, I'd love to see some numbers if you have access to any.

This study covered mental health issues of entrepreneurs (results summary starts on page 13): http://www.michaelafreemanmd.com/Research_files/Are%20Entrep... From the study, if you're an entrepreneur, you are more likely to have a mental health issue (49%) than not (48%). Significantly higher rates of suicide, depression, etc. It's higher across the board. But it isn't just from the stress of starting a company.. ent…

Good info, thanks. Makes a lot of sense that ADHD would be prevalent.
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