I’m not much of a fan of Facebook. It is, after all, just a photo sharing website that took off. What it had that other photo sharing websites didn’t have was founders with friends who had rich daddies. But at least it does work as advertised. There are other issues with it that I will come back to, but it is generally useful to people. This is not always the case. Take the case of Theranos.
Theranos is one of the big new purveyors of Silicon Valley disruption. It created a device called Edison that could test for disease using just a couple of drops of blood instead of a whole vile. Thus, instead of going to a phlebotomists to get blood draw, you would “just” get your finger poked and be done with it. There was just a small problem: it didn’t work that well. The Wall Street Journal reported last week, Theranos Voids Two Years of Edison Blood-Test Results.
But what’s the big deal? People make mistakes. Well, it’s a little worse than that. Theranos is voiding all results from a two year period. Geoffrey Baird of the University of Washington Department of Laboratory Medicine said that this was “unprecedented.” But what’s worse is that this move was really just an attempt by the company to mitigate damage. Back in October, The Wall Street Journal published an investigative report, Hot Startup Theranos Has Struggled With Its Blood-Test Technology. And since then, the heat has been on.
In April, the Centers for Medicare and Medicaid Services threatened Theranos with banning founder Elizabeth Holmes and her second in command, Sunny Balwani, with a two year ban from working anywhere in the blood-testing industry. Balwani later resigned. But the whole thing is a mess. And this is at a company that is supposedly worth $9 billion. But as they were showering the company with money, no one seemed to care that their product could do what it claimed.
More Fundamental Problems With Theranos
But even if the product worked, there are other problems. Like so much Silicon Valley “innovation,” I wonder why we should care. To me, the ultimate example of this is this app that allows you to deposit a check to your bank account remotely. I first saw it with a commercial of a couple who were laying in bed on a Sunday morning and didn’t want to go out to the bank. Well, okay. But there’s no mail delivery on Sunday, so you probably got the check on Saturday. And depositing it on Sunday will be no better than waiting until Monday. So who cares?
One of the selling points of this procedure was that it was less painful. I find this a farcical statement. I have really bad veins and have gotten lots of blood tests. There is basically no pain associated with giving blood unless it has to be drawn from an unusual place like a knuckle. On the other hand, the idea of having my finger stabbed gives me chills. And it isn’t like I don’t have a lot of experience with that too. It’s a minor thing, but typical that Theranos would use a thoughtless lie to sell its product.
A more important issue is whether this is a good idea to allow people to get tested all the time. I know far too many people (I might be one) who would become addicted to this. And having medical treatments are often more dangerous than the disease (or in many cases, non-disease). In my father’s recent problems, we now think that it was just a kidney stone. But in putting a catheter in, they managed to cause a bladder infection. So basically 90% of the pain was due to the doctors.
New Ways to Do Old Things
But what more bothers me about Theranos is that there is nothing truly disruptive about it. It would be innovative in the sense of making blood tests easier. But it is disruptive only in an economic sense. It is a way of putting a bunch of phlebotomists out of work and then keeping all the savings. This seems to be the point of “disruption.” In the past, technologies that put people out of work were worth it because the savings were shared. That’s just not true anymore.
So whether it is Theranos or Facebook, what they really do is provide investors with a better way to make money. They don’t offer customers anything distinctly better. For all the talk of Uber, people aren’t getting anything better. Uber is just a way to skirt existing regulations and make drivers pay more of their own expenses. And it’s still hard to get a ride where it was hard before.
As you may know, I used to work with my brilliant young friend Mikhail on a start-up. And it amazed me that we couldn’t get investors. But now it seems all too clear. We were doing cutting edge technology. It had a clear path to profitability, but it wasn’t a way of siphoning off money from an existing money-making system. And that’s why no one was interested. It reminds me of a conversation I had a long time ago with Jim Hogshire. I mentioned that I wanted to write a book about a particular subject, but that there were already books on the subject. He told me that it was easier to get a book published if there were already books on the subject. The hardest thing to sell to publishers was something brand new.
That’s the same thing in “innovative” Silicon Valley. They aren’t interested in anything new. That’s why Facebook was so big: it wasn’t new. It a distinct example of something that was well worn. So it isn’t at all surprising that investors in Theranos didn’t care if the company could actually do what it claimed.