They pricked investors fingers and implied that a Theranos machine would process the sample, but then they secretly ran the sample on a competitor's machine in another room:
> In demos of the company’s technology, investors would have their fingers pricked for testing alongside one of Theranos’ proprietary devices, but the actual test would be run in a lab away from prying eyes.
This would be the equivalent of a SaaS company setting up an API that just passed the calls through to a competitor's API, but then telling investors that their own platform was operational. You can run the pass-through API long enough to fake demos and raise money, but it's still fraud if you mislead investors to believe that you have the platform operational.
They weren't just hiding error messages or smoothing over rough edges. They were architecting fraudulent claims to investors.
I believe Theranos was worse in many ways, but running misleading demos to drum up hype sounds pretty par for the SV course.
[0]: https://www.nytimes.com/2013/10/06/magazine/and-then-steve-s..., https://www.techspot.com/news/54246-former-apple-engineer-re...
Only if you're not misrepresenting your capabilities to investors or customers.
I've never been in a situation where it literally didn't work though over time, and before customer usage.
Nonsense. I've worked in startups my entire 20+ year career, and while we've certainly spun or promoted things to the extreme, the line of "outright lying" was never gray.
Take for example the initial iPhone demo by Steve Jobs. It's been mentioned many times before that the demo had to be run in a specific, exact order, or else the OS would crash. That's fine, but nothing in those demos were faked. It all did exactly what he demoed, live. It would have been a much different story, if, for example, Jobs just demoed a video with surreptitious pause and play buttons. That would have been fraud, and that's much less than what Theranos faked here.
Yeah, me too. In this case, Theranos was saying they were going to demo their revolutionary lab testing process. They would take the blood sample from the participants being demoed to, put them in a cartridge that then went into the machine, and the machine would light up and start making noises. They would lead the people out of the room and other employees would secretly grab the blood from the machine and process it with a very labor intensive manual process (normally taking a couple of hours). When the participants were given their results, the implication was that Theranos' revolutionary machine did all the work.
Not really.
I mean the iPhone did hit the shelves not long after that demo. So anyone on the street could try one out (they had physical demo units in store). Theranos wouldn't let anyone just play with their machine.
But we're talking about a company that has a track record at shipping OSes (Apple). Even if they faked the iPhone demo, it would still have been believable that Apple could write an OS for a portable device.
The signal strength was hardcoded to always show 5 bars during the demo, but I think your overall point is valid.
https://www.inc.com/minda-zetlin/apple-products-time-941-pho...
Doesn't mean I'm against demos - but normally you can come up with a slice (or two if you're lucky) through it that genuinely works and shows for a representative scenario (and if your arm's twisted you just say that with more money, you can support more scenarios).
Don't try to handwave that away as "the sum of promotional practices". That's abject fraud, not "faking it til you make it".
did you see the part where they ran fraudulent tests on actual cancer patients?
https://www.wsj.com/articles/the-patients-hurt-by-theranos-1...
From what I have read Theranos had nothing. They had no idea how they could make their machines work. There was no new technology or new insight. They just lied blatantly.
That’s on a different level from the usual cheating people do at demos.
What about showcasing devices that pretended to work but then shipping the tests to be run in normal labs?
They didn't even have any basic systems validation / quality management documentation, which is how they racked up their first FDA inspection violations.
This really should have been obvious to anyone doing due diligence in a regulated space (devices, pharma, etc.).
> the actual test would be run in a lab away from prying eyes
That lab could have been using a Theranos machine, but with errors displayed, etc.
If they did a bunch of unethical stuff that adds up to fraud, as you agree, what does it matter if some individual actions, if you completely take them out of context, look at them through the right lens, and create a distinction between “unethical” and “bad,” aren’t necessarily bad? Maybe the reason no one is saying that is because no one is doing that, because it’s not relevant.
The individual actions are certainly sketchy, IMO. And red flags. Is there a definite semantic difference? It seems like splitting hairs. No single action by itself implies fraud, though significant acts of lying make a case.
Theranos’s level of deception is not the norm. Nor is it legal or ok.
You conclude by sort of saying you just aren’t going to focus on the misconduct aspect of things. But it is still there.
Thus, dishonesty means you're skating on thin ice because a prosecutor only needs to show intent to gain (or for another to lose) and you're done. Much better to be honest and eliminate this whole thrust altogether. Intent to gain without dishonesty isn't a crime and would be generally seen as admirable.
I'm convinced based on what I know that Theranos engaged in deliberate fraud. But fraud is more than the sum of promotional practices that can be taken retrospectively or without context as sign of wrongdoing.
Having scripted demos that hide error messages is not really sketchy. It could be part of a fraud, or it could not, but it's not really telling.
I say this because we often see popular ethical judgements where it's made out that there is a clear line between good and bad and that because the key players were unethical, they just did a bunch of bad things. I don't see it that way. There are lots of individual small judgements, most of which could be completely benign, but that add up to a fraud in the bigger picture. It probably makes sense as part of a body of evidence in a trial, but it's not really as sensational as the tabloids would like it to be.
Incidentally, I think that Theranos and Enron are basically the same story (at least Bad Blood and The Smartest Guys in the Room are the same book). And the root cause in both is not direct lack of scruples, but believing that ideas are what's important and execution doesn't matter. The lesson to me, is that a good way to get into trouble you cant get out of (and both of these stories resulted in real people taking their lives) is to think that details don't matter and a good idea is all you need.