A Bloody Mess

So one of the business ideas I’ve been massaging lately is to stuff Peter Dinklage inside a twisting cylinder and have him make beeping sounds in cadence with the contraption’s exterior lighting. That in and of itself isn’t a business, per se. However, if enough wealthy investors can be gulled into believing my R2-Dinklage is actually something other than a dwarf in a trashcan I may be able to monetize my stake in the enterprise via IPO, and let shareholders run with the company from there.

The only reason I’m revealing the plan to you is that I’m once again late to the racket.

Have you heard of Elizabeth Holmes? She is the unnervingly lifelike 32 year-old CEO of Theranos. This being the company Holmes founded as a college sophomore drop-out and, after growing it into a sizable Ted Talk, is now valued at $9 billion. Her own personal stake is reportedly north of $4 billion. This being even more than Hillary earns in a year of droning for bribes from Wall Street.

Though before discussing how this young lady became a billionairess, a couple of notes on what that figure actually means in context of private equity. If I agree to sell a 1% interest in the Kakistocracy to Haim Saban for a million dollars, the financial press would report that “Bigot blogger worth $100 million!” But that would be only technically true. And technicalities often interfere with big-ticket purchases. For it is just Mr. Saban who has valued this enterprise at 100 million, no one else. And that doesn’t spend at the yacht-yard. So what I would actually have post his investment would be a zero-revenue blog and one million in working capital to fertilize our proprietary posting technology. Which is, again, only a pedant’s quibble from having nine-figure liquidity in my own name. This is why, as you will come shortly to understand, Miss Holmes should remain frugal with her purchases of various island chains.

The Theranos business model, in simplest terms, was to offer the public cheap blood tests from very small samples, with quick direct-to-patient results. Expanding slightly, the company marketed a vision of walk-in diagnostic centers where patients would suffer only the loss of a few drops of blood via finger prick, and receive prompt, accurate results at a fraction of current industry pricing. That’s, in Wall Street parlance, disruptive.

And innovative disruptions are the engine of prosperity. Though the blood diagnostics industry is mature and not particularly inefficient. Thus Theranos was obliged to concoct some revolutionary combination of process and/or technology to upend it. That the company apparently did possess these elements was the thesis behind investor enthusiasm that catapulted Miss Holmes (however temporarily) into the #121 slot on the Forbes 400.

The coveted core of Theranos’ proprietary technology took shape in two forms: miniaturized vials called nanotainers, and a secret diagnostic machine called Edison. Used in combination, these would defenestrate the existing industry template and have millions checking their cholesterol levels while in the Starbucks drive-thru. As it turns out this plan landed, as Bob Uecker might say, juuuust a bit outside.

First there were the nanotainers, which is quite an impressive-sounding name for hollowed-out Christmas tree lights. Miss Holmes made a point of always presenting one between thumb and index finger as if in tribute to Mictlantecuhtli.

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For bulk purchasers, nanotainers also come in unlit three-paks.

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Unfortunately, cutesy containers carry credulous investors far more effectively than they do blood samples. As a result, the heralded nanotainers were approved for only one of the company’s 240 available tests. And if you weren’t interested in learning your herpes simplex 1 status, then your blood took coach like everyone else. I only watched half her Ted talk (linked above), though it would have been amusing to see Miss Holmes present her Christmas-light to the rapt audience and aspire that within a year nanotainer functionality would double to two out of 240 tests.

But the company’s true magic was found (or rather asserted) in its Edison machines. Apparently these have never been publicly photographed, and so we have only artist renderings.

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These devices were alleged to require only the nanotainers’ modest sample volumes while producing accurate results at fractions of the standard lab costs. And, unlike the dust-gathering nanos, these machines were actually put to use–in 12 of 240 tests. Though not actually in the past year, since the company ceased using them altogether in June 2015. To cast the technology in even dimmer light, Theranos has recalled all Edison results from 2014 and 2015 in what is essentially a concession that Peter Dinklage doesn’t know the first goddamn thing about analyzing blood samples.

The remainder of tests, that being the vast majority, were performed using completely standard laboratory protocols. Which doesn’t sound very disruptive at all in hindsight. So what accounted for the company’s documented price advantage? If they didn’t possess any comparative technology advantages, how did they undercut competing labs? I’m only going to speculate on that…

There is a difference between what a thing costs and what a business charges. Revolutionizing the industry required Theranos to materially lower the former. But because it appears they had no viable technology to do so, they instead lowered only the latter. Which means investor seed money was likely spent on subsidizing the illusion of lower costs. This in the hopes their technology would mature without scrutiny to meet its present marketing promise. Basically it was Holmes grandiloquently assuring my company can do X, before turning to her engineers and hissing: now go make X happen!

As you can imagine, when one of these corporate shooting stars returns to Earth as a lump of clay the recriminations are intense. Class action lawsuits are already spinning up. In response, Theranos seems to be pulling into its shell with standard Dindu Nuffin disclaimers. One of the more amusing of these being the assertion that “no patients suffered harm due to inaccurate results.”

This is the sort of logic hurdling that only the most gifted con men dare attempt. If you offer your company as the provider of a critical medical service necessary and beneficial to consumer health outcomes, you can not then say that the erroneous results of that service are harmless. Because if they are harmless, then your legal defense is premised on the business as mere frivolity, and the results of its testing being a matter of entertainment only.

Will Elizabeth Holmes actually testify that her $9 billion company was never meant to be taken as anything more serious than medical astrology? I’d be fascinated to watch her investors’ reactions as she does so.

I have no personal knowledge of Theranos or Miss Holmes, though am not inclined to let that interfere with further musing. I’m doubtful that this literally young girl founded a company at 19 with the intention of perpetrating a scam. I also find it likely Miss Holmes wields a precipitous IQ and deployed it in service to what she considered a worthy vision. My guess is that she formed an idea, wrote its narrative, and then set about to make it happen. And in the process learned that reality wasn’t nearly as elegant as her imagination. Faced with an ugly truth she chose a pretty lie.

And without knowing an iota of her politics, the perspective strikes me as the core of white liberalism. It doesn’t work and its results are deeply flawed, but the idea is beautiful and necessary and no one is really harmed and if you racist critics would all just shut up or die everything would eventually come around perfectly.

I think plaintiff’s attorneys will have an entirely different viewpoint. And Dinklage will be freed of his trashcan.

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18 thoughts on “A Bloody Mess

  1. Pingback: A Bloody Mess | Reaction Times

  2. I suspect a goodly part of her nine-billionness was her bangability. She can finger my prick anytime, bankrupt or not.
    I’ll admit I was disappointed at Theranos’ demise. I wasn’t familiar with it, beyond the keywords hot, blonde, cheap, blood, and test; but I was hoping to rely on it to continue my 22-year streak of staying away from doctors. That last visit really irked me, because the ******ess “helf care assistant professional” called me back to let me know my blood test reults were in, and completely normal.
    “How’s my cholesterol?” (I’m not fat, but why not ask)
    “It’s normal.”
    “OK, but what’s the number?”
    “It’s normal.”
    “I get that. So what was my cholesterol reading?” (She still hasn’t asked which one)
    “Um, it’s normal.”
    (Is she numerically illiterate? Should I continue arguing with this tarbaby over the phone, or just fuckit? And how can I even punch a tarbaby over the phone?) “OK. Thanks.”
    I guess the bitch wasn’t lying, because I still haven’t dropped dead yet.
    On this post’s primary topic, if you want to build a Better Dinklage, try to make him black, with maybe a dash of Down’s Syndrome. And 25% hermaphrodite, if it’s still legal to say that. The world hasn’t yet achieved Peak Nadir in its adulation of the genetically inferior, and a Black Tranny Midget Retard is just what the doctor ordered.

    • BTMR: The amazingly perfect encapsulation of the liberal Überman (well, Überbeing, I guess). I couldn’t even think of more descriptors to add. Genius.

      • I am very much looking forward to my black turtleneck interview in front of white backdrop.

        As I sat one night idly sipping cheap whiskey, I pondered what I wanted to do with my life. And I realized that if I could start a RACE WAR NOW nothing else would be so important. So I created a free blog on WordPress and began to type.

      • Yikes. Never seen her on video before. Those eyes… they are the window to her wtf. If she were to say “I’m Talking Tina, and I’m going to prick you”, it would give me the heebies at a minimum, if not sweat-chilled, call-on-Jesus nightmares. Whether she first inhaled a helium balloon would tip the scale in I’m not sure which direction.
        I’m not invested enough to listen to all her speeches, but if they’re anything like that clip, I can’t believe anyone stupid enough to give her capital was smart enough to ever have had capital in the first place. Nobody in history was motivated to invent revolutionary technologies, to save some poor nobodies a few hours of badfeels when a family member croaks “too soon.” Sure, we all have loved ones, but we don’t love all our family. Just think of all the hated relatives who could be kept alive those extra years (or decades). Her finger-prick tech could literally have kept Hitler alive. But optimism aside, our own society’s Street-to-ICU-to-Street pipeline — from the sailfoam 911 call to the amberlamps to the skilled biomechanics in the ER — is already keeping alive too many Shitaviouses. And we only pay their medical bills and future sustenance; we don’t suffer the real tragedy of actually living with those 200-pound tumors. (yet)
        Still, I believe there remains a market for her prick-finger technology. Just not in the billions.

  3. Porter, my man. Porter is an absolute madman. Porter is so savage he was born in the Stone Age. R2-Dinklage. Oh man, I don’t think I’ll ever get my sides back from Alpha Centauri now.

  4. Normally early stage investors are profoundly suspicious and cynical, and take extraordinary measures, including getting key engineers drunk, to make sure the technology is real.

    Looks to me that some one said: “Oh you evil men, you are not investing in technologies developed by women”, so no one dared apply the smell test.

    Same problem as led to the mortgage meltdown. To doubt the derivatives meant doubting the underlying mortgages, and to doubt the underlying mortgagees was RACIST.

  5. The set of all women capable of pulling off disruptive nanotechnology does not overlap with the slightly larger set of all women who are not terribly hard on the eyes, willing to dress like Steve Jobs, and give inspiring TED talks.

  6. You know how I said all those private equity zeros wouldn’t really spend? Well Forbes has reevaluated Miss Holmes’ net worth and now says it is not so much four and a half billion, but well, closer to…nothing.

  7. Forbes has now re-valued Ms. Holmes and Co from 4+ billion down to 0. Silicon Valley was so anxious to create the female Steven Jobs they didn’t bother vetting her Edison Machine invention which just does not work. Lots of investors, government agencies and MSM just got lazy; they fell in love with the hyped up fairy tale.

    By the way the ‘Nanotainer’ was an Uncleared Class II Medical Device formally known in medicine and elsewhere as a vial:/

    http://www.cnbc.com/2016/06/02/forbes-estimates-theranos-founders-net-worth-now-zero.html

  8. Once at WonderCon I heard Ahmed Best (the guy who played Jar-Jar Binks) tell this story of when he was on the set of The Phantom Menace in Tunisia for some of the Tattooine scenes. One day between takes he’s walking around the set, when suddenly a bunch of crew guys go tearing past him carrying fire extinguishers. He turns around to look at what they’re running toward, and sees that one of the prop R2 units they have there for filming has smoke pouring out of it. The guys run up to the R2, get their extinguishers ready, open the top of it (which flips open to allow easy access to the interior)…

    …and inside the R2 is Kenny Baker, holding a humongous joint that he’d bought off some local Arab, hotboxing inside R2-D2.

    True story, bro.

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