Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

sec.gov

Post reply on HN
Print view View original

381–390 of 557 posts

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#381

Post by Frondo »

mbell wrote: post #209
ChuckMcM wrote: post #23

Ok, this is the money line in that press release for me: “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.” For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your…

"fake it until you make it" generally refers to the product implementation vs pitch on the consumer side. e.g. You pitch "The best automated way to do X!", but in actuality you have a horde of people doing the work initially to figure out the problem before building the actual automation. There is nothing wrong with this and remains a completely viable approach. What you don't do is tell your investors you've already…

If I, an investor, give you money because you tell me you have automated technology, but really it's people in a room, that's a lie and there is absolutely something wrong with it!!

If you can make the automated technology before I find out, well, maybe I won't sue you, but that sure doesn't make it right or acceptable.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#382

Post by AlexCoventry »

minimaxir wrote: post #46
ChuckMcM wrote: post #23

Ok, this is the money line in that press release for me: “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.” For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your…

It's worth nothing that one of Theranos's VC funders, Tim Draper, did defend Holmes despite the fraud allegations: https://news.ycombinator.com/item?id=11973102 https://www.vanityfair.com/news/2017/01/theranos-investor-cl...

He's also stuck by Tezos through its organizational catastrophe, and it's looking as though that might pay off for him.

Generally, "they're family" sounds like a sensible default attitude for a VC towards their investments.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#383

Post by artur_makly »

"Holmes subsequently raised $6 million in funding, the first of almost $700 million that would follow. Money often comes with strings attached in Silicon Valley, but even by its byzantine terms, Holmes’s were unusual. She took the money on the condition that she would not divulge to investors how her technology actually worked, and that she had final say and control over every aspect of her company. This surreptitiousness scared off some investors. When Google Ventures, which focuses more than 40 percent of its investments on medical technology, tried to perform due diligence on Theranos to weigh an investment, Theranos never responded. Eventually, Google Ventures sent a venture capitalist to a Theranos Walgreens Wellness Center to take the revolutionary pinprick blood test. As the V.C. sat in a chair and had several large vials of blood drawn from his arm, far more than a pinprick, it became apparent that something was amiss with Theranos’s promise."

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#384

Post by charlesdm »

onecooldev24 wrote: post #334
charlesdm wrote: post #10

Earlier quoted context omitted.

Martin Shkreli was, honest to god, an idiot. He got several chances to "kiss the ring" and show remorse, and what did he do? He put some extra oil on the fire and kept acting like an idiot until the very last moment. Sometimes you need to realise when to fold and suck it up.

Acting like a idiot is not ILLEGAL !!!

He acted against the law, and was an idiot.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#385

Post by tomtimtall »

yters wrote: post #358

Why is there such a culture of fake it till you make it in SV? If the tech is good, no need for faking. If the tech is bad, figure it out, don't fake it. Otherwise, if it doesn't work and it is faked, things will get really bad and at worst lives could be lost. It seems like there is a lot of stupid money around and a lot of scam artists trying to suck the supply dry.

> Why is there such a culture of fake it till you make it in SV? If the tech is good, no need for faking.

Nothing happens in a vacuum. If you don’t work hard to hype and oversell your cure for cancer, investors will be passing you by to invest in this nonexistant blood analysis product hyped to the skies.

In VC it doesn’t matter what’s you have. The game is to attract enough captital to the point where you can hopefully crate what you sold investors on already having before he house of cards collapses. It’s like one big hype/investment ponzi skeam after another, however companies can openly loose money for years after years without anyone calling bullshit as long as the prospect of gains are hyped enough. Though importantly, you have to work the right line between outright lying and hyping. Prefix everything with “might be” and “could potentially” dumb investors will still be fooled but you might survive the legal fallout more gracefully.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#387

Post by [deleted] »

Balgair wrote: post #280

His name is Tyler Shultz. He is the main reason we know know what Theranos was doing. He had his life destroyed, he knew it would happen, what Theranos would do to him, and he did the right thing all the same. Tyler Shultz is a hero. Never let someone tell you that you don't matter. Try hard to do what is right. We need more people like him, be one of them too. Be like Tyler Shultz. https://www.vanityfair.com/news/20…

[deleted]

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#388

Post by otakucode »

ChuckMcM wrote: post #23

Ok, this is the money line in that press release for me: “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.” For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your…

Well, 'prosecute'... no one is going to jail. White collar crime is normalized and expected in upper class circles. A single case like this is a drop in the bucket. While certainly not a majority, there are absolutely people in this world that believe if someone will not come to you and put a gun to your head, back you into a cage, and lock you in it, then whatever they are doing is fair game. If people really wanted to stop them, they'd take it that far. So they see any other standard as frivolous and silly to pay attention to. Ethics? What ethics?

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#389

Post by AlexCoventry »

tenpies wrote: post #360
jedberg wrote: post #354

Earlier quoted context omitted.

> Works like a charm I dunno, I'd say it kinda failed here.

I'd say it worked fantastically. For the sake of timing lets compare Shkreli and Holmes. She committed a much larger fraud and lost people huge amounts of money. She is spending exactly zero days in prison. She is getting a $500,000 fine - which Theranos is probably paying for - and a slap in the wrist[1]. Meanwhile Shkreli - who's "victims" lost zero money - is going to spend 7 years in jail and has lost at least $1…

It would be hard to punish Holmes worse than Shrkeli at this point. 7 years in a male prison has much more potential to destroy a life than 7 years in a female one.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#390

Post by jnwatson »

pdkl95 wrote: post #309
timr wrote: post #253

Earlier quoted context omitted.

"I have encountered many people who have internalized "fake it" to mean "pretend that you are hitting all your milestones and you executing against your plan". These folks see this as a way to keep the questions of why they aren't actually doing all of that at bay because later when they are "making it" those questions will be irrelevant." This is 100% correct. I also know a fair number entrepreneurs who engage (or h…

> it's a short and murky step ... to outright fraud. Staying vigilant against the normalization of deviance[1] is difficult even in ideal situations. Choosing to normalize deviance as a business strategy is practically guaranteed to rapidly accelerate deviations from acceptable behavior. In any system - including every business - resilience and safety means fixing small problems before they grow into bigger, more dam…

You've hit the nail on the head with "normalization of deviance".

First you shade the truth slightly. You're uncomfortable at first, but the line seems to work, so you try it again. You use it another 10 times and you start to believe it.

And then you shade the truth a little more. After the hundredth pitch, you're a fabulist, and you barely noticed.

Post reply on HN