We Shouldn’t Be Surprised at the Theranos Fraud

During a bubble assets are overvalued even when everyone has the known facts. If a valuation is based on fraud then it's not indicative of a bubble.

Those stupid scooters and e-bikes will be the Aeron chair of this cycle.

While Theranos relied heavily on excessive optimism about technology's potential to solve a major problem, it also relied heavily on outright fraud. It's true that they had assembled a board of non-experts that were duped by unrealistic promises, but when the investors were lied to (as is being alleged in court) it seems difficult to say this is a symptom of some sort of cultural problem among investors.

Kinda. The community of lower back pain sufferers continues to shop for ex-Dotcom-bust aeron, because the product actually works: its a damn fine chair.

E-Bikes coming into the 'cheap as chips' bucket because of a dotcom oversupply, thats good for any city which has 2-stroke fuel nightmares. I've been in China before and after the e-bike craze, and the difference is marked.

Its better with e-bikes.

But as signifiers of 'it was a craze' -sure, Tru dat.

I just finished reading the new book on Theranos.

I’ve seen very similar things at other science based/biotech startups. In particular, over-promising and misrepresenting the state of development. Quite often these companies are funded by traditional tech investors who don’t know how to do DD on science-based/biotech startups.

The difference with Theranos is that they messed with the FDA. They did consumer testing, and publicly raised their profile to the point where they couldn’t be ignored.

If they hadn’t started doing consumer testing with a device that essentially doesn’t work, I doubt we would have heard of them.

Most of the investors would be happy right-off the investment. Even with Theranos, I believe it’s only the smaller investors who are making a fuss now. Larger investors know the money is gone, and there’s not much point in suing.