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Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

wsj.com

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Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#31

Post by chromagnon »

adventured wrote: post #22
chromagnon wrote: post #8

I bet there are many other boardrooms around Silicon Valley who are panicking over this. There's so much pressure to be immediately profitable and show predictable year over year growth. How many have faked user trials or cooked the books in ways that would make Enron blush?

> There's so much pressure to be immediately profitable One of Silicon Valley's problems continues to be that there is so little pressure to build a profitable business from early on. It's the exact opposite, they overwhelmingly encourage reckless behavior to chase growth over profit, resulting in almost exclusively extreme binary outcomes (as desired by the VCs).

I'm not sure that's true. It's very easy to build a failed business, but to build an overly hyped failed business, you need a taste of success to point to as indicating you are on a rocket ship ride to trillion dollar valuation.

It's pretty damn easy to create a fictious $100 million transaction with other insiders, then gloss over the details on the balance sheet.

Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#32

Post by adventured »

Mz wrote: post #28
adventured wrote: post #24

Earlier quoted context omitted.

It's a frequent fine line in tech. To get a contract, Bob Noyce claimed for a buyer that Fairchild could produce & deliver a new type of transistor, in a large quantity, without having any production capability for it yet, as it had never been built. Excite bid on getting a place on Netscape's browser, before having the money to actually pay for it (they figured they'd get it afterward): http://bnoopy.typepad.com/bno…

I dunno. Those incidents look like brinkmanship, not outright lying and making up evidence. If you think you can get the money and you, in fact, get the money, that may be a gamble, but it doesn't sound on the same order as inventing "evidence" whole cloth.

That's where the fine line comes in.

Did Excite sign a contract saying that they had the funds to pay in the case of winning the bid? I don't know the answer to that, it wouldn't be an uncommon requirement when bidding on a contract like that however.

Microsoft almost certainly lied on multiple occasions about what they already had, in trying to get MITS and IBM to take them seriously. The common historical story goes that they did lie - just how the wording went, who knows, they were clearly being intentionally deceptive regardless to capture the opportunity.

Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#33

Post by adventured »

chromagnon wrote: post #31
adventured wrote: post #22

Earlier quoted context omitted.

> There's so much pressure to be immediately profitable One of Silicon Valley's problems continues to be that there is so little pressure to build a profitable business from early on. It's the exact opposite, they overwhelmingly encourage reckless behavior to chase growth over profit, resulting in almost exclusively extreme binary outcomes (as desired by the VCs).

I'm not sure that's true. It's very easy to build a failed business, but to build an overly hyped failed business, you need a taste of success to point to as indicating you are on a rocket ship ride to trillion dollar valuation. It's pretty damn easy to create a fictious $100 million transaction with other insiders, then gloss over the details on the balance sheet.

> It's very easy to build a failed business, but to build an overly hyped failed business, you need a taste of success to point to as indicating you are on a rocket ship ride to trillion dollar valuation.

What does that have to do with Silicon Valley VCs intentionally forcing extreme binary outcomes because they are willing to burn down 98 companies to get 2 huge homeruns? There's no debate to be had, we have a lot of actual data in regards to the industry, which numerous prominent VC firms routinely publish. We also have multiple bubbles worth of history in regards to VC behavior and the general day to day crunchbase or VC funding news type information. There's a non-stop 20+ year history of Silicon Valley VCs doing exactly what I've described, leaving a vast parade of thousands of dead formerly multi-million dollar start-ups in their wake.

> It's pretty damn easy to create a fictious $100 million transaction with other insiders, then gloss over the details on the balance sheet.

I have no idea what you're talking about or how that pertains to what I said.

Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#34

Post by Brockenstein »

Mz wrote: post #28
adventured wrote: post #24

Earlier quoted context omitted.

It's a frequent fine line in tech. To get a contract, Bob Noyce claimed for a buyer that Fairchild could produce & deliver a new type of transistor, in a large quantity, without having any production capability for it yet, as it had never been built. Excite bid on getting a place on Netscape's browser, before having the money to actually pay for it (they figured they'd get it afterward): http://bnoopy.typepad.com/bno…

I dunno. Those incidents look like brinkmanship, not outright lying and making up evidence. If you think you can get the money and you, in fact, get the money, that may be a gamble, but it doesn't sound on the same order as inventing "evidence" whole cloth.

Yeah, because things worked out and they were ultimately able to deliver before everything imploded.

It can be a fine line. Theranos didn't know where that line was.

Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#35

Post by throwaway4job »

exhilaration wrote: post #21
Mz wrote: post #10

Wow. Okay, this takes it from "Shit happens and people can be totally deluded" to actual, genuine fraud. Edit: Also, how can people be that stupid? You have to know the truth will eventually come out? Right? Or, no? I don't get it.

It's easy to fool yourself into believing that the fraud is just a temporary necessity while you work out the final kinks in your product.

Also, SV has a lot of people who see nothing wrong with defrauding other people if it results in personal benefit.

There are a lot of people who would happily help others die if it makes them a billionaire. Elizabeth Holmes is such a person. Ian Gibbons was not. Ian knew it was all bullshit, couldn't get Elizabeth to stop risking people's lives, and he killed himself.

In a just world, Elizabeth Holmes would be spending life in prison. Her crimes far outstrip those of most "hardened" criminals.

Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#36

Post by fittingin »

palakchokshi wrote: post #4

This explains to some extent why investors might have given the company that valuation of 9 billion. If the company faked demos and portrayed results obtained on non Theranos tech as Theranos tech results, most investors can't be blamed for believing the tech worked and it was only a matter of time before all tests could be performed by the tech. What is baffling to me is unless the data was doctored why didn't any o…

Did you notice what happened to the original whistleblower that exposed Theranos in the first place?

Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#37

Post by Mz »

adventured wrote: post #32
Mz wrote: post #28

Earlier quoted context omitted.

I dunno. Those incidents look like brinkmanship, not outright lying and making up evidence. If you think you can get the money and you, in fact, get the money, that may be a gamble, but it doesn't sound on the same order as inventing "evidence" whole cloth.

That's where the fine line comes in. Did Excite sign a contract saying that they had the funds to pay in the case of winning the bid? I don't know the answer to that, it wouldn't be an uncommon requirement when bidding on a contract like that however. Microsoft almost certainly lied on multiple occasions about what they already had, in trying to get MITS and IBM to take them seriously. The common historical story goe…

What I am saying is there is a difference between "It has not been done, but I believe I can pull it off" and "Look, look, we can totally do this and have already succeeded, here are the (completely faked) test results proving it!"

The former is a gamble, but it may be an informed gamble where you already have some idea of how to make it happen. The latter is a lie.

Startups absolutely should be operating in the realm of "It has not been done, but we think we can pull it off. In fact, we are pretty confident of that." They should not be operating in the realm of outright con artistry and fraud.

If you have the right experience, skills, education, personal assets of various sorts and solid mental models, predicting your expected success in a specific domain does not guarantee you will succeed. But it isn't necessarily just BS either.

The challenge is for other people to know which category you fall in. But you should know whether you are genuinely confident or straight up conning people -- barring serious delusion of some sort.

Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#38

Post by exolymph »

mankash666 wrote: post #14

How is it always WSJ busting Theranos? is a competitor funding their "investigative journalism"? Not to say the article is untrue, just the super hard-on WSJ has for Theranos is mysterious.

Here's how it works: Whoever writes the landmark news-breaking story on a given scandal is the main person that people with axes to grind will go to with more information. Positive feedback cycle.

Re: Theranos Secretly Bought Outside Lab Gear, Ran Fake Tests: Court Filings

#40

Post by drspacemonkey »

fittingin wrote: post #36
palakchokshi wrote: post #4

This explains to some extent why investors might have given the company that valuation of 9 billion. If the company faked demos and portrayed results obtained on non Theranos tech as Theranos tech results, most investors can't be blamed for believing the tech worked and it was only a matter of time before all tests could be performed by the tech. What is baffling to me is unless the data was doctored why didn't any o…

Did you notice what happened to the original whistleblower that exposed Theranos in the first place?

I didn't - what happened?
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