Where did all the Theranos money go and did they actually do 'work' ?

[MathWizard]

I missed this story, but I'm just wondering like did they have a big office building/lab, and did a bunch of people do some research? Did they have board meetings and what did they think they were getting done ?

The Holmes lady doesn't seem like the party type, but what did she do all the time? Just jet around living the high life? Did they all have mansions and fast cars? Did they party all the time ?

Where'd all the money go ?

[Caliaxy]

My understanding is that they worked really hard, with lots of people (including real scientists) employed and long hours of work (in an Apple inspired building). The problem is that they were not getting what they wanted and lied to the investors about the actual progress, pretending they are much more advanced than they actually were. “Fake it till you make it”. And they got caught before “making it”...

[tooki]

I missed this story, but I'm just wondering like did they have a big office building/lab, and did a bunch of people do some research? Did they have board meetings and what did they think they were getting done ?

The Holmes lady doesn't seem like the party type, but what did she do all the time? Just jet around living the high life? Did they all have mansions and fast cars? Did they party all the time ?

Where'd all the money go ?

Party? On the contrary, Holmes was an obsessive workaholic. Her downfall was being so convinced in her idea that she resistant to feedback (read: reality checks). I honestly suspect she didn’t set out to defraud people, she truly believed in her idea. The problem is that her idea is incompatible with real-world physics, chemistry, and medicine, at least what’s possible with today’s technology. Rather than accepting this reality, she somehow descended into fraud, pretending the machines worked while in fact sending out samples to be assayed in traditional labs.

There are numerous documentaries about the Theranos downfall on YouTube. I suggest watching some, it’s fascinating.


As an aside, she failed on one of the key thoughts about inventions: asking yourself not why you should try doing it, but rather why it hasn’t been done before. Because it’s rarely that nobody has ever thought of it. A cursory exploration of medical laboratories would make it obvious that if it were possible, somebody would have done it already. Whether a lab device manufacturer wanting to sell it to labs, or labs themselves developing it to give themselves a competitive advantage, if it were technically achievable, somebody would have done it. The arrogance to believe that existing companies and research institutions that specialize in analytical biochemistry couldn’t do it, but some random, untrained 19 year old could…

[edavid]

Holmes was known for leading an extravagant lifestyle, to the extent that this will be part of the prosecution's case:

https://www.vanityfair.com/news/2019/02/inside-elizabeth-holmess-final-months-at-theranos
https://www.cnbc.com/2021/05/23/elizabeth-holmes-jury-can-hear-limited-evidence-of-ceo-lifestyle.html

Theranos had a very fancy office in Palo Alto, and a large but crappy lab building in Newark, CA.

I think Holmes seems like a sociopath, but then so do most of the Silicon Valley CEOs I have met or read about.

[Alex Eisenhut]

Where did the money *go*? I'd like to know where it came from in the first place, I have lots of ideas that don't work!

[PartialDischarge]

Where did the money *go*? I'd like to know where it came from in the first place, I have lots of ideas that don't work!

Welcome to the world of startup funding, where what matters is how good your PowerPoint presentation is and how well you lie, how much social attraction you gather via emotions not rationale. Investors don’t know about technology so they can be easily fooled

That is why Holmes first found support in a few key people, then the rest come join in a similar manner to how people join someone looking alone to a building window in the street, eventually to form a crowd.

Most people don’t think rationally, they just follow the rest via emotions.

[james_s]

I worked at a somewhat sketchy startup for a while in the mid 2000's, it was an interesting experience. We had a dedicated team that was trying to make it happen, and our product was not an insurmountable challenge but the guy who started it had a history of essentially throwing a bunch of stuff at the wall hoping something would stick. His goal I'm sure was to pump it up to the point that it could be sold to some other company and the investors giving us money I'm sure were of a similar mindset, fund a bunch of startups and hope one of them takes off. The company continued to exist long after the last of the engineering staff had left or been laid off. The website remained for years, as if nothing had ever changed. The stock reached a point where my former boss's boss made the humorous remark that it was now necessary to use scientific notation to denote the stock price. Later I was discussing this with a coworker at a later job who did some day trading for fun and he explained how people make money buying and selling penny stocks, it's essentially low stakes gambling.

I think most companies like this have a bunch of people working there who believe in the product and are genuinely trying to succeed. Whether those higher up the chain believe in the vision they're pushing probably varies. Some probably even start out pushing a scam and eventually get sucked into their own reality distortion field.

[Bassman59]

Where did the money *go*? I'd like to know where it came from in the first place, I have lots of ideas that don't work!

Welcome to the world of startup funding, where what matters is how good your PowerPoint presentation is and how well you lie, how much social attraction you gather via emotions not rationale. Investors don’t know about technology so they can be easily fooled

That is why Holmes first found support in a few key people, then the rest come join in a similar manner to how people join someone looking alone to a building window in the street, eventually to form a crowd.

Most people don’t think rationally, they just follow the rest via emotions.

I find it oddly comforting to realize that these venture capitalist investor types who all think they are the Smartest People In The Room and Masters Of The Universe, are actually neither. The only problem is that when their investment gets wiped out, they still have plenty of money on which to live.

While intelligence may make you wealthy, being wealthy is no true sign of intelligence.

[james_s]

I don't think there is much correlation at all between wealth and intelligence. The people who are most successful at obtaining wealth tend to be the ones who are the most driven and ruthless. Intelligence can help, but it is far from the defining characteristic. Lots of brilliant people never achieve any significant wealth, although intelligence can certainly enable a person to make a solid middle or upper middle class living.

[floobydust]

It's a new mega-business paradigm - you don't need the technology, engineering or manufacturing in place anymore. I've learned engineering and business have absolutely nothing in common.
Just hype something that you don't even have, raise cash, lure investors in. Get some orders, then flog the engineers to come up with something. I think the stock options must keep them trying, or they enjoy the ride of these fantasy ventures despite knowing there is a cliff ahead.

Holmes likely to have pre-paid lawyers through Theranos before going defunct, she has nine of them. So a shell game was also going on with the money.
The Edison machines apparently sorta worked for testing herpes but people got false results. 7-10M tests performed. What a mess.

Fyre Festival - total fantasy, nothing about the event was put together, just the sexy marketing video. The two documentaries about it are worth watching.
Nickola Motors - ride a fake electric truck down a hill for the marketing video, use other company's motor, drive/battery etc. Give $567M stock awards to the exec's.

The sad part is the technologies could actually get developed given the massive amounts of money involved in these scams, and what remains is a poisoned well where nobody would want to invest in anything sounding similar.

[james_s]

I remember reading about that Fyre Festival disaster. That probably could have worked if it had been planned better. It didn't violate any laws of physics, it didn't require the invention of any new cutting edge technology, it was not unlike numerous other large events that have taken place in the past. IIRC the promoters just did a lousy job of planning things, made promises that were thwarted when other things fell through and overall what could go wrong did. I don't really think they set out to defraud people, they just failed in their execution and then failed every step of the way in mitigating the unfolding catastrophe.

[MathWizard]

She sure loved stringing marketing buzzwords together in word soup, while saying nothing.

[wilfred]

There is this book " Bad Blood: Secrets and Lies in a Silicon Valley Startup" by John Carreyrou.

https://www.goodreads.com/book/show/37976541-bad-blood#

[fourfathom]

Investors don’t know about technology so they can be easily fooled

This isn't always true.  I've been part of a couple of startups, and the VCs usually came from a technical background and were pretty sharp.  Also, the VCs I've worked with often brought in experienced engineers and technologists and businessfolk to help evaluate a potential investment.  After my last startup (quite successful) I had the opportunity to be an "Entrepreneur in Residence" at one of the VC firms, and that role would have included active analysis and participation in the portfolio companies.  I ultimately decided not to take the job as there were other things I wanted to do.

But I will admit that it can be very hard for even an experienced outsider to accurately gauge the likely success or failure of a company.  There is the technology of course, but that might be the easy part.  There are many other factors at play.  And of course some companies are pretty obviously doomed to failure (uBeam for example, at least as seen from a distance).  And some investors are indeed clueless.

[james_s]

But I will admit that it can be very hard for even an experienced outsider to accurately gauge the likely success or failure of a company.  There is the technology of course, but that might be the easy part.  There are many other factors at play.  And of course some companies are pretty obviously doomed to failure (uBeam for example, at least as seen from a distance).  And some investors are indeed clueless.

If it was easy, everyone would fund successful startups and we'd all get rich. In the real world it's almost impossible to know what will succeed. Starting with a plausible idea that doesn't violate the laws of the universe is a good start, but even a lot of things that are technically possible to do still run into insurmountable snags.

[floobydust]

Theranos, Fyre Festival, Nikola Motors etc. did one thing all these "tech" scams do.
Defy the Laws of Physics - the time required. The speed limit of tech is what investors, SPAC's etc. are all pushing up against nowadays. There's billions $ out there but the crop takes time to grow.
If you don't have any money, sell a fantasy, some product yet to be made. Pre-sell, get orders before you have anything tangible 
(a festival is not tech but professionals knew these events take years of planning (and an island with space, sewer, water, facilities, no sharks) yet the whole thing ripped along faster than feasible).

With technology, that's an expected ("the schedule") failure because large portions of it are non-deterministic. How long to invent that tech? When will it be ready? You can't know or forecast it.
Compare with manufacturing. Making a Big Mac, scheduling that is easy. All the parts are known, in stock and just a delay to cook the pattie and assemble the burger.

I once told an old boss, "you could put 100 engineers on the project and it wouldn't go any faster". Himself, exec's business MBA types just don't understand why they can't clap their hands and tech projects miraculously speed up as they "push the engineers".

[Ed.Kloonk]

Where did the money *go*? I'd like to know where it came from in the first place, I have lots of ideas that don't work!

Welcome to the world of startup funding, where what matters is how good your PowerPoint presentation is and how well you lie, how much social attraction you gather via emotions not rationale. Investors don’t know about technology so they can be easily fooled

That is why Holmes first found support in a few key people, then the rest come join in a similar manner to how people join someone looking alone to a building window in the street, eventually to form a crowd.

Most people don’t think rationally, they just follow the rest via emotions.

Yes. The was indeed a bit of FOMO there. (Fear Of Missing Out)

A bigger paradox is facing the prosecutors. There are a lot of people who lost a lot of money and the law men do want to throw the book at her.

But, big billionaires are secretly wishing this would all go away quietly because it is embarrassing that they got hoodwinked and it's not like incarcerating Holmes will get them their money back. They should have known better not to eat a bullshit sandwich.