Sunday, September 26, 2021

The False Narrative Around Theranos

One of the interesting aspects of the Theranos trial is the degree to which some folks are buying into part of the defense's narrative that "Theranos was just acting like every Silicon Valley startup". This is of course blatantly false, but it is being adopted as some form of truth. 

The claim is that every tech founder somehow pushes the envelope of truth, and therefore that is all Theranos did (versus potentially committing fraud over a 15 year period, lying to regulators, physicians, employees and investors while endangering patients).

This analogy breaks down on multiple levels. 

There is a big difference between drunk driving at 90 mph in a school zone versus driving 5 miles too fast on the freeway. (Or, in the case of most tech companies, simply respecting the speed limit).

While there are obviously some bad actors in tech, there does not appear to be quantitative evidence to suggest this is any worse than in non-profits, finance, mediahollywood, or any other sectors

Where the analogy breaks down between Theranos and the "average" tech company:

1. Most technology companies do not lie about their product or service. If they did so, they would not be able to attract or retain great employees, or scale revenue and product adoption so rapidly. If their product did not work, no one would use it. This is especially true over a decade+ journey. Despite some high profile counter-examples, most tech companies are honest companies run by people who want to do good.

2. Over its 15 year history (and $700 million raised), Theranos never had a working product. It appears possible Theranos' approach was potentially unlikely to actually be able to work based on chemistry/biological contamination of approach. Think about this for a minute. Theranos apparently lied to people about its product's potential for 15 years without ever making it work. 

Additionally, given the small titers of blood, the finger prick as a source of contaminant versus venus blood draws, and other aspects of the chemistry, some believe the Theranos approach is extremely hard to make work from a chemistry perspective.

3. The company launched a fake product to living, breathing patients whose potential course of treatment and therefore life and death situations depended on accurate results. This is different from a telling a CIO that your data science tool for their customer support team would be ready in Q1 and missing the deadline. Real harm happened to real people, who course of care depended on Theranos results.

4. The scale of lying was exceptional. Theranos appears to have misled regulators, employees, investors, partners, physicians and patients. It immersed itself in secrecy, even internally, to be able to keep employees from talking to each other and for the ongoing deceit to be detected. This is different from most tech startups where transparency is often one of its early core principles or approaches. From weekly all-hands to internal Looms, tech startups tend to be highly transparent places to work.

5. Theranos raised no real mainstream venture capital. None of the mainstream tech or biotech funders invested in Theranos. Given that there are tens of reasonably good venture firms, this is striking.

6. Theranos was a diagnostics company, not a "tech" company. It is striking how many non-tech companies that blow up did not really ever have much to do with technology. Theranos fit squarely in the "medical devices & diagnostics" world and its focus and (never-quite-worked) innovation was on the chemistry and hardware for biology side. WeWork - another company often pointed to as a "tech company", which had issues for other reasons (but started off as a viable business) was a real estate company. Branding one's own company as "tech" tends to be give it higher multiples, access to more money, and a brand allure with media. Eventually reality tends to catch up.

An increasing portion of the discourse in the USA today seems to be anti-tech, anti-maker, and anti-success. This stance probably reflects more of what is currently happening in the people writing these negative pieces (or opining in articles) rather than in the tech industry itself. Theranos is being used as a catchall example to drive this false narrative that people can not do good work, benefit millions of people, and make money, without somehow being nefarious. I encourage you to not buy into this false hype. :)