Live data from Hacker News

Safeway, Theranos Split After $350M Deal Fizzles

wsj.com

21–30 of 75 posts

Re: Safeway, Theranos Split After $350M Deal Fizzles

#21
post #9

Some important points from that article: > Current and former Safeway executives said Theranos missed deadlines for the blood-testing rollout. They also said several Safeway executives questioned the accuracy of results Theranos gave to Safeway employees tested at a clinic in the supermarket chain’s headquarters in Pleasanton, Calif. > Theranos often drew the same employee’s blood twice, first with blood from a finge…

One of the most irritating things about Theranos's defenders is their argument about how Theranos should be given lesser scrutiny because of how important and noble its mission is...that's the exact opposite of how it should be, IMO.

Using Facebook as the archetypical unjustifiably-rich-startup (not my opinion, just well-repeated), in which the goal is to lower friction between friend-network-contacts...even if FB's news feed algorithm was corrupt, users have multiple ways of assessing the quality of their experience -- including out-of-band assessments (um, hanging out with friends IRL) and being able to defriend/filter lists...

The whole point of Theranos is to reduce the friction in personal health assessment...which is a great idea regardless of noble motives...but lowering friction essentially means being able to more frequently collect and analyze data about yourself. If the assessment process is bad, then using more of the product is fundamentally terrible for the person. But the bigger problem is that it isn't easy to compare health tests...if getting an old-fashioned blood draw test was trivial, then Theranos would have no purpose in the first place. So with Theranos, the easily imaginable bad-case scenario is literally that people die because of false positives and negatives, no matter the kind motives and ambitions of Holmes.

But I have to admit...at least Theranos believes in their own product? Because if it were just snake oil, they probably would've worked out a way to not use their flawed procedures for the Safeway executives, who have much interest and motive (and money) to do comparative quality testing. (unless of course the Safeway execs conducted their own blind tests...which is obviously what they should do but obviously, not all big money executives have been that skeptical of Theranos)

Re: Safeway, Theranos Split After $350M Deal Fizzles

#22

>Safeway Inc. spent about $350 million to build clinics in more than 800 of its supermarkets to offer blood tests by startup Theranos Inc. >The $350 million price tag was equivalent to more than half of Safeway’s net income of $596.5 million in 2012. Safeway had revenue of $44.21 billion. Safeway also invested more than $10 million in Theranos, one former Safeway executive said. >Two of the former Safeway executives…

It certainly will be interesting how he justifies this in front of the shareholder plaintiff lawyers.

Re: Safeway, Theranos Split After $350M Deal Fizzles

#23
post #19

Earlier quoted context omitted.

Yep. I think this unicorn has a broken leg.

Where is the line between grossly exaggerating ones product and criminal fraud drawn? Personally I view things where you give someone a false health diagnosis to be among the most egregious deceptions possible, a step beyond running a Ponzi scheme and in line with other things where users are severely hurt or killed.

I will be very surprised if Elizabeth hasn’t crossed the line over to fraud at some point. She is pulling down some very well connected people - she had better like orange.

Re: Safeway, Theranos Split After $350M Deal Fizzles

#24
What options are there for founders to liquidate shares in the process of fundraising but before going public? Are founders typically able to liquidate some amount of shares in funding rounds in order to take home cash, or do investors disallow that entirely until a company is sold or goes public?

Theranos is 12 years old at this point, and raised $400 million at a $4.5 billion valuation. Would a founder of a company in those circumstances have been able to liquidate - let's say - 1% of their ownership along the way, or in the last fundraising round, for cash? Or is that out of the question and founders are expected to retain their ownership aside from investment dilution until sale?

I suppose the answer depends on the terms the company is able to work out with their investors. But perhaps someone can comment on what terms are common in such situations.

Re: Safeway, Theranos Split After $350M Deal Fizzles

#25

Read the informed comments on Derek Lowe's blog about Theranos [1]. This is the money shot quote from johnnyboy "@Pete: it is entirely justified to have doubts about the validity of blood results obtained from finger pricks. The blood you get from a prick will be a mixture of blood from small venules, small arterioles, capillaries and lymph vessels, mixed with whatever loose tissue and cells have been cut by the pric…

No doubt that a blood sample from a finger prick is different than from a vein.

That said, diabetics just use finger pricks for their blood glucose tests. Is the result calibrated for a finger prick test or do we just assume it's close enough?

Re: Safeway, Theranos Split After $350M Deal Fizzles

#26

>Safeway Inc. spent about $350 million to build clinics in more than 800 of its supermarkets to offer blood tests by startup Theranos Inc. >The $350 million price tag was equivalent to more than half of Safeway’s net income of $596.5 million in 2012. Safeway had revenue of $44.21 billion. Safeway also invested more than $10 million in Theranos, one former Safeway executive said. >Two of the former Safeway executives…

Mr. Burd declined to comment, citing a nondisclosure agreement. He retired in May 2013.

Re: Safeway, Theranos Split After $350M Deal Fizzles

#27
post #21
post #9

Some important points from that article: > Current and former Safeway executives said Theranos missed deadlines for the blood-testing rollout. They also said several Safeway executives questioned the accuracy of results Theranos gave to Safeway employees tested at a clinic in the supermarket chain’s headquarters in Pleasanton, Calif. > Theranos often drew the same employee’s blood twice, first with blood from a finge…

One of the most irritating things about Theranos's defenders is their argument about how Theranos should be given lesser scrutiny because of how important and noble its mission is...that's the exact opposite of how it should be, IMO. Using Facebook as the archetypical unjustifiably-rich-startup (not my opinion, just well-repeated), in which the goal is to lower friction between friend-network-contacts...even if FB's…

> But the bigger problem is that it isn't easy to compare health tests...

It ought to be relatively easy. I mean, not easy for the average Joe, but easy for anyone seriously interested in doing it.

Draw blood twice: once with the finger prick, and once with a regular vein draw, and then test the two samples using the different methodologies. Compare the results. Seems like a fairly trivial experiment to run and reproduce.

Re: Safeway, Theranos Split After $350M Deal Fizzles

#28
post #25

Read the informed comments on Derek Lowe's blog about Theranos [1]. This is the money shot quote from johnnyboy "@Pete: it is entirely justified to have doubts about the validity of blood results obtained from finger pricks. The blood you get from a prick will be a mixture of blood from small venules, small arterioles, capillaries and lymph vessels, mixed with whatever loose tissue and cells have been cut by the pric…

No doubt that a blood sample from a finger prick is different than from a vein. That said, diabetics just use finger pricks for their blood glucose tests. Is the result calibrated for a finger prick test or do we just assume it's close enough?

You don’t need the accuracy that you need for the other tests plus glucose is in really high concentrations relatively to the other compounds they want to measure. If you are out by 20% on the glucose concentration in diabetes it does not matter too much, but it does for everything else. It is not like the current machines are 100% accurate anyway even though the ISO threshold is +-20% [1].

1. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3317395/

Re: Safeway, Theranos Split After $350M Deal Fizzles

#29
post #24

What options are there for founders to liquidate shares in the process of fundraising but before going public? Are founders typically able to liquidate some amount of shares in funding rounds in order to take home cash, or do investors disallow that entirely until a company is sold or goes public? Theranos is 12 years old at this point, and raised $400 million at a $4.5 billion valuation. Would a founder of a company…

Biggest example is Snapchat, they got and keep asking for millions of dollars money when fundraising.

Last year's big drama was Secret app's founder taking $6MM when they raised $25MM then proceeded to buy fancy cars. The product growth stalled and the company shut down in less than a year.

Happened with Buffer.

Re: Safeway, Theranos Split After $350M Deal Fizzles

#30
post #24

What options are there for founders to liquidate shares in the process of fundraising but before going public? Are founders typically able to liquidate some amount of shares in funding rounds in order to take home cash, or do investors disallow that entirely until a company is sold or goes public? Theranos is 12 years old at this point, and raised $400 million at a $4.5 billion valuation. Would a founder of a company…

Not having been in that situation directly, I believe that it is fairly common for founder(s) to take some cash in exchange for their shares at the later stages, if only so that they don't feel the immediate need to cash out. It sucks to be cash poor while being worth $X billion on paper, so I believe investors would rather the founder turn some stock into $10m and not worry about money than to have a fidgety CEO.
Post reply on HN