yes indeed, this opens up new possibilities for monitoring what's going on in our bodies. But we would need more knowledge / education so we don't jump to conclusions when a value out of bounds.
We already monitor all sorts of anticoagulation. Fingerstick samples are particularly bad for this (even though there are current point of care devices that do this).
The important thing about this article is not her age, her gender or her net worth: it's the enormous change her company is saying is possible in blood testing.
Ignore the comparisons with Steve Jobs and other crap and think about what her company is doing and what it means.
I remember reading something quite awhile ago about her and her company, which was very dismissive of the entire subject. Is anyone familiar with what this was in reference to, because this articles does seem rather convincing to me!
You have a brilliant founder who has a background in the tech (Chem Engineering) and the upbringing and connections to take research trips out to Singapore.
Second, you have the tech: microfluidic assays, and the idea of collecting them all in the same place.
Third, an existing industry that's been content to sit around and charge high prices due to low competition: LabCorp & company.
Finally, a generous funding environment.
Unfortunately, their secrecy is kind of a turn off. How can I know to trust their numbers?
Their secrecy is a turn off - as well as the people who are orbiting around the company. Do we really want the ideologies of the likes of Henry Kissinger and Donald Rumsfeld - people who have extraordinary track records of not doing good in the world - to be involved in the next generation of health care technology innovation - particularly its control and application? Kissinger-doctrine style politics and healthcare do not mix.
Rumsfeld was also the Chairman of Gilead. I doubt it's a question of "do we want these people involved?" - the reality is there's nothing that can stop it. They're the ultimate insiders. Rumsfeld can easily clear the deck for whatever approvals you need, and solve any problems you have, just as he did for Gilead. In exchange, you make them richer. That's how the FDA system works. You can't play in the medical / healthcare field without having a devil on your shoulder protecting you from the other monsters that will use the regulatory environment to destroy you. That's also how the business world at large works in general now, ala Al Gore on Apple's board, helping to protect Jobs from the options scandal. It's why Dropbox picked up Condoleezza Rice. It's ugly, but it's what you get when you have extreme government regulation, and when lobbyists can crush you by bribing the right people in DC, all major businesses must have their own power brokers.
You are dead on. This is also the scariest part of net neutrality legislation. Corporations always end up in control of the regulatory bodies that were meant to keep them in check...
Oh please. The FDA loves antagonize Congress about it's independence. Are there shady dealing? Sure, but don't make it out to be some secret cabal who always gets their way through shady backroom dealings.
To me it sounds like you'd love to have some sort of "political leanings filter" on people who do business. If their politics agrees with yours, great, if not, we need to make sure those people don't get into positions of power.
FDA loves to talk a good game about independence, but they are far more driven by political trends then they'd like to admit. Case in point: in 2008, the Democratic house jumped up and down about the under regulation of medical devices and diagnostics. FDA Warning Letters (a big deal that largely prevents a company from releasing new products) to device/diagnostic companies doubled the next year.
Positions of power are of little concern in a free market economy. The influence that comes with wealth is not the same as having political power, which is power at the barrel of a gun. The problem is, America is not a free market economy.
Hilariously I'm the exact opposite of what your false conclusion proclaims.
I'm neither liberal nor conservative - in fact I'm anti partisan - and I'm a laissez-faire Capitalist. I'd prefer the government be completely outlawed from creating economic regulations, and I believe in the separation of state and economy for the exact same reason state and church is separate: they infect each other. That instantly wipes out all lobbying for special treatment, special laws, and competition-by-government. The government returns to doing what it's only job should be: protection of individual rights.
The US is becoming a fascist oligarchy, dominated by a massive consolidation of select few winners that are then protected by the government from competition; this has occurred in nearly every segment of the economy.
The FDA rarely does anything that isn't shady. It is fully dominated by the mega-corps that can afford to buy political influence, from Pfizer to Merck to Gilead.
I'm baffled by why you don't understand that what you're describing isn't an inevitable outcome of low-regulation, laissez-faire capitalism.
You only get stability with negative feedback. Capitalism is all about positive feedback, and leads inevitably to systems that conglomerate, stagnate, distort, and eventually either implode or blow up.
Where do you think the negative feedback to prevent that is supposed to come from?
And please don't say 'markets' because there is no evidence that I know of that markets have ever done any such thing, or even that a market economy is capable of it.
Kissinger's interest would be eugenics. I mean, it was Kissinger who said "Depopulation should be the highest priority of the US towards the Third World". Bet he's gleeful at Ebola
Edit: I assume we're all big fans of Henry Kissinger over here then? I fail to see what his interest in this could be outside of the potential eugenic applications.
Depopulation is everyone's highest priority towards the third world. My dad works in public health in the third world, and one of his specialties is family planning (i.e. how to get villagers to stop having so many kids). When George W. Bush temporarily withdrew the U.S. support for family planning projects in Africa, he got hammered for it by the left.
There's a big difference the reduction of growth and maintenance of sustainable levels of population (family planning), and depopulation (eradication of/reduction in population).
I understand the arguments of the eugenicists - that there are excess mouths - that "most" people are "useless" - but I do not agree that depopulation is the solution - rather, sustainable growth or steady-state maintenance through education and decreased societal need for redundant offspring.
As the idea of just marching in and shooting people is abhorrent and would undoubtedly be undermined by ethical concerns, would the gentle profiling based on blood and genes of a population, and the "oh, sorry, you can't have that job/child" that this type of technology will bring about not be a "nice", subtle way of steering the population curve in a "desirable" direction?
Hence, I believe this is Kissinger's principal interest in this.
Edit: to be absolutely clear, I am NOT saying that there is some variety of conspiracy here. I am, however, saying that Kissinger understands what I understand - which is that any tool or technology will ultimately be used in ways which aren't immediately anticipated or obvious, and that the very availability of this variety of tech will almost certainly lead to profiling based on the contents of ones blood. If it can be done, if it can happen, it will be done, it will happen. It's just a question of when.
His principal interest is almost certainly that they are giving him money.
Serving on a board doesn't have to be a big job, especially if the company is interested in having you on the board to get access to your connections and influence.
He might also be getting eugenic jollies from it.
(To be clear, I think this is a more cynical story; buying influence is a lot more likely than an aging eugenicist having the awareness and position to get himself on board with a biotech company that might create vastly better predictive medicine.)
Of course he got hammered for it because it was a) ideologically driven by his religious supporters and b) a terrible idea because handing out some free condoms and teaching women and men family-planning techniques leads to a more prosperous and stable environment at every level of society.
Just another one of the many poorly-thought-out policies he pursued during his presidency.
> Depopulation is everyone's highest priority towards the third world.
Which is utterly misguided if the motivation behind the goal is to conserve energy and resources. The population growth rate of first world countries is lower, however we consume far more resources per child than third world countries do. Calling for those countries to make drastic changes without examining and curtailing our own overuse of resources is problematic and irresponsible. Al Bartlett[1] addresses this in his engaging lecture[2] on population and energy.
If the primary motivation is instead humanitarian, e.g. to raise the quality of life, then I am not knowledgeable enough to comment on it.
It's been a while since Kissinger said that (1974, as far as I've been able to determine). I wonder if the new stats that show that affluence (the creation of a middle class) results in a slower population growth would change his opinion.
It's not a strange reason. The ideologues in the GOP and some Democrats restrain the Federal Government from negotiating lower rates because these politicians fund-raise from companies that would have to lower their rates as a result of that negotiation.
And some of them are just crazy nuts who actually prefer that companies soak the government (tax-payer) for every cent they can.
The most important thing: Holmes still owns half the company.
It's extremely rare for such a young founder to still be in control of the company, and to own 50% after more than a decade. That's not only a huge accomplishment, it's a testament to the strength of Holmes' conviction in the company's mission.
Getting rich all comes down to ownership—every single percentage point counts.
If you just want to get rich, a few points of a serious company would do.
She could have cashed out a long time ago and been very rich. The reason her ownership is important isn't the substantially inflated valuation and digits on her net-worth, it's the control it enables to steer such a young company long-term.
Getting rich doesn't come down to counting every single percentage, it comes down to creating a lot of value. If you do that, whether you own 14% or 40%, you're going to be rich.
It's interesting they've pegged the company at a $9 billion valuation. Labcorp at this moment has a $9 billion valuation (with $6 billion in sales, and $573 million in profit...).
Nice catch. However, Labcorp has almost no revenue and profit growth in an increasingly competitive industry. A valuation at 15.5x LTM profit does not seem unreasonable.
Comparing the valuation of a growing startup with a stagnant incumbent is always going to look strange if you only consider a snapshot of financial numbers.
I think Labcorp's valuation is perfectly reasonable.
I think Theranos is overvalued by a factor of ten fold.
The market eventually forces a sane valuation on companies based on revenue and earnings. It's extraordinarily unlikely a company charging vastly less for its products will produce a dramatically greater economic outcome than Labcorp which dominates the industry (Labcorp has the best of both worlds, high prices, and high market share, the only thing they could improve is volume).
Theranos investors have had all their future returns pulled forward. Even in a wildly successful outcome, Theranos is unlikely to be worth much more than 2x what they already are, 20 years from now. That assumes they can one day grow to have ten billion in sales and a billion in profit, based on much lower prices and higher volume. That day is so far off, there's zero chance of Theranos sustaining their crazy valuation between here and there as capital markets turn negative after this hyper bull market run.
The shape of lab testing in the U.S. seems to be bad: from the article I get that significant advantages include _upfront prices_, wide network of sampling stations, and results being emailed within 24 hours. In Moscow (recently in other cities as well) we've had InVitro Labs for several years, which do everything mentioned. No doubts there are some billionaires.
As a practicing doctor (albeit a junior one) I simply cannot foresee any more than 1 or two conditions where direct to consumer lab testing would actually be of practical use.
If on the other hand her technology is radically cheaper than the hospitals own lab then it would rapidly achieve huge market share and help cut healthcare costs. Just yesterday I had 2 sets of coags on the same patient sent back necessitating retaking (not an easy job on an elderly severely demented woman), one because it had clotted (apparently) and another because there was not enough blood. Smaller volumes required would be great for a whole bunch of situations.
I see dozens of conditions this would be good for. I think you get biased once you spend 8-10 years becoming a gatekeeper to healthcare.
People want to take their health into their own hands and not have to have every test blessed by a $150 doctor visit plus a separate lab visit.
Conditions to test for:
Hemachromatosis
Many other genetic conditions
Vitamin deficiencies (D, B, potassium)
Blood sugar for people prone to diabetes
Lyme disease (test after every tick bite after waiting the required time period)
And that's just off the top of my head.
Many of those are tests I'd like to a few times a year, but don't want to schedule a doctor appointment, take off work, make a copay, schedule a lab test, take more time off, another copay, etc.
I can't agree with you more. I go hiking a lot and have gotten tick bites. There is nothing worse than having to schedule an appointment and going to the doctor just to have something simple done. Biggest waste of time, vacation/sick days and all to do something that is so easy.
As an extreme but interesting case, I know someone who has had a majority of his endocrine system surgically removed and now relies on self-treatment of hormones. He has had in the past extensive excel sheets tracking his dosages alongside behavior, appetite, energy, etc. It's utterly amazing the amount of correlation he could derive between various hormone levels once he was made directly aware of them.
Similar kinds of information about day-to-day blood chemistry might be available through retail-available blood testing. This is QS all over again, but with a significantly more powerful bite—blood chemistry is a quantitatively powerful look into your body's current state. It's a human debugger.
Here is a straightforward use - patient visits the testing center and states their symptoms. Testing center runs the tests. Then the patient shows up in your office, most likely with the labs you'd have ordered already complete. Saves an hour of your (very expensive) time.
If ExpectedValue[Unnecessary Test] < Cost of doctor prescribing tests, this is a win.
That could be the flowchart now where I work if the docs wanted it. It they allowed it, I could walk into the testing center that's already there- and do things exactly as you say.
As it is, for my predictable appointments this is exactly what I do.
She seems to be doing an end-run around the AMA and the states that require a Certificate of Need by installing these devices in drugstores. I think the ultimate goal would be for doctors like yourself to have one in their office.
I think it's more interesting that these are installed in drugstores. Doctor's offices will get them eventually, sure, but there are more drugstores than MDs.
The recent FDA ruling on lab-developed test means this company is now massively disadvantaged, as their entire secrecy is based on not needing to get FDA approval. Now they need it.
I think what is important is the LACK of critical articles out there. Where was the counterpoint in this article, or the recent Fortune article. I run a hospital laboratory in Seattle, and I am a clinical pathologist. Like Elizabeth Holmes, I studied Chemistry at Stanford, although I did graduate. Everyone in the lab world is a-twitter about Theranos right now, up to the CEOs of the big companies, largely because no one knows what they are doing. Everyone who goes and talks to them, including interviews for a job, signs a CDA, so this isn't surprising. However, there are several things we can know:
1- the big name folks on the board are Hoover Institution connections. No surprise there, I knew all those guys were there when I was at Stanford, and she was connected with them early. The person who commented about the importance for these links when it comes to FDA problems is right on.
2- what these people are doing for lab testing, in terms of technology, sounds totally revolutionary IF YOU DON'T KNOW ANYTHING ABOUT CLINICAL LABS. If you did know, you would understand that most of our routine instruments ALREADY use a couple microliters for an assay, and that results are available in seconds to minutes. There has never been an article about Holmes that mentions this. What she has done with microfluidics is to reduce dead volume quite a bit to allow overall lower sample volumes, but this is an evolutionary, not revolutionary, change to instrumentation. It is also of dubious clinical value (more on this later).
3- the fact that they list their prices IS revolutionary, and it's the best thing about the company. I wish I could do at for my lab. Secrecy of pricing is one of the major problems with Us healthcare.
4- no one writing any of these articles about her understands that fingerstick blood is not the same as venous blood. It is blood mixed with interstitial fluid from the tip of the finger. The results of tests are different for analytes in venous bold and fingerstick blood. Thus,they need to do a clinical validation that their results are meaningful, in addition to an analytical validation to prove that they're accurate. This is where the FDA, as they did to 23andme, is going to get involved, unless Don Rumsfeld can head them off. If LAb Developed Tests get regulated in the coming years, though, they are totally screwed, just like I am.
5- many people don't know that you can already get lab tests done on finger stick blood, ie prick your finger at home and mail in the blood or take it to participating Walmarts. The reason for this, I suspect, is that the companies that do this are not headed by an attractive blond woman and enveloped in the shroud of mystery of a Silicon Valley.
I will be interested to see how long it takes before a serious "the emperor has no clothes" article will come out in a mass media outlet, and someone who actually runs a lab or knows any of the rules of running labs is asked even one question. It is much less sexy of a story when told that way, so maybe never.
This comment isn't an article, but here's some criticism anyway: seems like an AWFUL place to work. I phone-interviewed there, and the thing the guy on the phone stressed the most is that they work 60+ hour weeks and would I be okay with that. He said they were especially proud that it used to be 80 hour weeks but they had gotten it down to 60.
Where do you see room for improvement, if any, for blood testing? As far as I can tell based on what I've read and what you've said, they've basically made certain types of blood tests easier, cheaper(?), and accessible via an app? Is that accurate? If so, even without any new technology, that seems like it could be interesting, if only as a business with a marketable product. Not sure about $10B interesting, but hey...
The 10b valuation is nuts. That's more than LabCorp or Quest, two companies that already do lab actual lab tests on real instruments for hundreds of millions of people. Yes, it looks like you can get results online from Theranos, but you can do this for lots of labs, as well. Theranos' app is undoubtedly slicker...Silicon Valley can afford better software people than labs can. As for improvements in labs today.... Our financial structure is crazy. Fee for service drives more testing, when in fact the main problem in US medicine right now is that we do too much testing (overall...there are still some areas where we need to do more). The solution to test overutilization is not making tests cheaper so folks can get more tests at Walgreens. One answer could be the current ACO model (or it's logical extension, single payer or socialized medicine) in which the goal of care is the health of the patient, not the profit. Once hospitals and labs are payed by the person, not by the test, we're gonna find lots of surprising ways to stop letting folks get tests they don't need, since the answers to those tests will often be misleading, require expensive follow up, etc... To the folks on this discussion who think that they would prefer to be able to go and get frequent tests (or, god forbid, get frequent Lyme serologies, which borders on outright quackery), I would say this: you can't handle the truth. Really. There is a reason why we put doctors as gatekeepers between patients and medical services like MRIs, lab tests, and chemotherapy. It's called Bayes Theorem (it's on Wikipedia). If it's exceedingly unlikely that something is wrong with you before you get a test, then it's still exceedingly unlikely you have the condition even when you get a positive test for it. This breaks down when the doctor does a bad job, since it's the doctor's job to select tests only in those with higher pretest probabilities, but it is an inescapable issue. I realize also that suggesting that laypeople are too ignorant to take their own health into their own hands sounds not even a little elitist, but it is sorta true. One of the main concerns for healthy people should be staying OUT of the medical care system, because we hurt people sometimes, even when we help them. The lab is a gateway to the medical care system, so unless you want to go through the gate, stay away.
If you have tests that don't provide information, that's the problem of the test, not the person getting it. Doctors are still the people actually handing out prescriptions, so if they start telling people, "Look, this $10 test from Theranos isn't reliable as a predictor, stop doing it.", it will create a feedback loop that will stop people from doing those tests that, as you say "border on quackery".
Meanwhile, if I suspect that, for example, that my BMI veers into the obesity range when my TSH is high, it should be perfectly fine for me to try and get a $50 test to examine if there's a correlation. Better than spending that on a DVD of Keeping Up With the Kardashians, don't you think? Might even increase awareness about general health in the US.
>Silicon Valley can afford better software people than labs can.
LabCorp made (income) $600 million last year. Quest made $1.5 billion.
They can afford teams of very capable developers. They can have the best software, the best presentation, slick mobile apps, speedy information systems.
They don't not because they can't afford it, but because they don't want to afford it. As is the case with many of these companies that get disrupted by tech startups, they see it as a cost center and minimize it.
Software rules the world. Any business that doesn't adapt to this will see strange little upstarts steal all of their thunder.
Is there really an over-utilization of blood tests? MRIs, yes, but I'm not sure that right now we're really doing too many blood tests.
Regarding your point on Bayes Theorem, that's valid in some ways and invalid in some ways. Suppose someone gets a vitamin D test back at 8 ng/mL. There's not really a chance of a false positive. He's deficient and needs supplementation. Making the test cheaper, faster, and more accessible can really only improve the health of the population. It will likely also drive down the cost of healthcare overall, because vitamin D deficiency has all sorts of unpleasant effects.
Furthermore, the literature suggests that the vast majority of doctors do not understand Bayes Theorem. Source: http://yudkowsky.net/rational/bayes
You are demonstrably wrong about the vitamin d. What if it was a specimen swap, and the lab screwed up and tested someone else's blood instead of yours? This happens.
Let's be real, the vast majority, even much of what is and comes out of YC is barely more than what used to be snake oil salesmen and infomercial scam artists. (sorry, YCers, for causing that cognitive dissonance, but I would also like YC to focus on primary products that produce value in and of themselves and not just as, e.g., a dependency on something else)
There is maybe some marginal streamlining or process improvement possible, but you can already get blood drawn and a little while later have the results accessible on a mobile device. Sure, maybe the blood can be processed faster and those results should be available sooner and available to outside parties so you can use various apps and services; but that a policy and political problem, not really a technology challenge.
This company is just another one of those paper tiger companies... or maybe paper unicorn is a better metaphor ... who make something that is wholly unnecessary and the only thing they are good at is manufacturing buzz. Their technology solution seems to be an unnecessarily complex solution to a simple problem. We don't need to "know what your body is doing so you can live a healthier life", we just need to eat better and exercise far more. It's that focus on symptoms rather than causes that annoys the heck out of me. But I guess they have learned from the perpetual dependency model. You don't get to be a paper billionaire by telling people to stop being unhealthy, you become a paper billionaire by selling unnecessary stuff.
"make blood tests simple, timely, unalarming and cheap" sounds pretty valuable to me. I suspect there are billions of people who rarely, if ever, have blood tests (impoverished areas, children). And then in developed areas, I could easily see blood tests becoming a daily thing (or multiples daily). Athletes might do them every few minutes. Etc.
I always felt the big story was not the tech but the business. Publishing prices and distributing to retail pharmacies is revolutionary. Sure, it's been possible in the past, but this appears to come at a totally new level of transparency and availability.
The FDA question is still really vital, of course.
Seemed like a big advert to me even without knowing all the things above but you certainly confirmed it.
The only thing interesting here is the amount of founding she has however the comparison with other start-ups and Steve Jobs is a very obvious marketing plot.
90% of success in any business is marketing. That drops to 40% in a heavily regulated industry, with the other 50% being who you know.
Holmes is really smart for connecting with the right people early. Every account I've read of the woman is that she is incredibly smart and a relentlessly hard worker. Chances are she was able to impress a number of powerful people who backed her early, and she has been able to build a functional company (no small feat in itself) that is attempting to disrupt the medical testing industry.
A large part of successful disruption in heavily regulated industries is building a popular brand. Uber and Square are perfect examples of this: regulatory agencies are willing to bend over backwards to accommodate them in ways that they have never done. A large part of this is their popularity. I'm guessing that's why we're hearing so much about Theranos -- this is an industry that's largely hidden from the public eye, and she feels the best chance to disrupt the industry is if it's brought into the spotlight with Theranos at the forefront.
It could all be marketing fluff, but it's likely to be effective.
Glad someone is pointing this out. I just wrapped my biomedical engineering undergrad at Johns Hopkins.
Theranos' technology is likely not going to blow my mind but I have to give them a lot of credit for incredible PR and (depending on how good the product actually ends up being) execution.
"I think what is important is the LACK of critical articles out there. Where was the counterpoint in this article, or the recent Fortune article."
This is a very good point. My guess would be that we're seeing -- in this article, and in the Fortune profile linked on HN a few months ago -- the results of an incredibly well orchestrated and tightly controlled PR strategy. Say what you will about Elizabeth Holmes, but she is no dummy. She knows exactly what she is doing. The comparisons to Steve Jobs that seem to pop up in all of these articles are no accident. They feel intentionally cultivated, and perhaps to some degree, they're warranted. [1] Jobs also had a knack for image-making, be it in the tight control he exercised over the flow of information inside and outside his company, and in the image he ensured that the media portray.
Does the emperor wear no clothes here? I have no idea. I know next to nothing about the inner workings of the company, or about the medtech world (though I do find it fascinating). I do know that marketing matters a great deal, and traditional biotech and medtech companies don't seem to care too much about consumer image. They rely on time-tested sales channels and retail strategies. Theranos is different in the respect that it's running an Apple-esque marketing and PR playbook in an industry that traditionally does not.
"what these people are doing for lab testing, in terms of technology, sounds totally revolutionary IF YOU DON'T KNOW ANYTHING ABOUT CLINICAL LABS."
Yes, and I think Theranos/Holmes are well aware of that fact. If anything, they see it as an opportunity to seize a beachhead in consumer consciousness. The thinking process seems to be: most consumers know virtually nothing about how this all works, ergo, we can appear as gods before them. That is a speculative and perhaps cynical read, but at the same time, I admire their savvy. I admire it a great deal.
[1] Preemptive note: I am saying "to some" degree here. :) I'm not saying she is Steve Jobs, or that the comparison need extend any further, to any other dimensions, than in the specific area I'm talking about in this case. But I think you can make the case that someone who always appears in black turtlenecks, and has a way of invoking the name "Steve Jobs" in almost every major article about her, is intentionally aiming for the comparison. Which is exactly what Steve Jobs himself would have done, in a manner of speaking. (Cf., his intentional evocations of Edison, Ford, Picasso, etc.)
Yes, hence my point about how the comparisons feel "intentionally cultivated." She may be going a little too far in that direction, and I'd agree that the black turtlenecks are a little too on-the-nose. Anyone who's ever worn a black turtleneck knows they're not the most comfortable garments in the world, least of all in Palo Alto in the summer. If you're always posing in black turtlenecks, you're doing it for a reason. :)
Image does not mean anything when you are entering a business that is already super competitive, and is amongst the most highly regulated industries. Suppose they actually do get direct to patient testing going, what is to stop Quest/LabCorp for doing the same thing for cheaper? They have massive volume and price advantages.
"Image does not mean anything when you are entering a business that is already super competitive, and is amongst the most highly regulated industries."
I'd say it matters a great deal. Theranos has assembled a board with very strong ties to the government and, presumably, with an eye toward overcoming -- prophylactically or reactively -- any regulatory challenges that may arise. So, with the regulatory "defensive line" in place, so to speak, Theranos is free to focus on image, consumer marketing, and a steadily growing media blitz.
I would presume that its strategies right now include business development and channel alliances. As such, growing its mindshare and establishing itself as a breakthrough company -- and courting emotional comparisons to Apple -- will help with those goals. They will help by establishing awareness among partners, and indirectly, they'll help by fueling consumer demand. That's a time-tested channel marketing strategy. Companies as diverse as Apple, Nike, and Procter & Gamble are very good at running that playbook. Theranos is in a very differently industry, with a very different rulebook, and very different competitors. And it remains to be seen to what degree these efforts will matter. But they're not wasted efforts.
I also have worked in the Clinical Laboratory field and the above poster is right. The laboratory business is already very competitive, and unless they have some crazy technological revolution going on this is a lot of hot air. Getting these tests approved by the FDA for diagnostic use is HARD and in addition to have the consumer send in a sample the tests need to be CLIA waived. What that means is that there is an even higher burden to prove the test is not very prone to error.
One thing that is good here is pricing transparency and legislation is moving now in states requiring that lab results have to be delivered from the lab directly to the patient if the patient requests it (New York recently did this). BUT that does not mean you can draw your own blood. You still need to have your blood drawn in the traditional way and sent out to a reference lab. So while direct to patient testing will certainly pan out, I do not see how this hot start up has any advantage over the many very large reference labs out there. With competition over HMO contracts for testing so fierce, testing margins have gone down a lot.
Currently Quest Diagnostics has a market cap of 8.4 billion, and is the largest reference lab in the USA. Valuation of 9.5 billion for a company with no specifics, no actual product and huge risks is absolutely ridiculous.
Point 2, 4 & 5 are just spot-on. I guess either Quest Diagnostic, LabCorp, or even automatic analyzer makers should at least start to study about Theranos.
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[ 5.7 ms ] story [ 153 ms ] threadIgnore the comparisons with Steve Jobs and other crap and think about what her company is doing and what it means.
INVALID. You are not eligible for this product/job/life.
You have a brilliant founder who has a background in the tech (Chem Engineering) and the upbringing and connections to take research trips out to Singapore.
Second, you have the tech: microfluidic assays, and the idea of collecting them all in the same place.
Third, an existing industry that's been content to sit around and charge high prices due to low competition: LabCorp & company.
Finally, a generous funding environment.
Unfortunately, their secrecy is kind of a turn off. How can I know to trust their numbers?
To me it sounds like you'd love to have some sort of "political leanings filter" on people who do business. If their politics agrees with yours, great, if not, we need to make sure those people don't get into positions of power.
Hilariously I'm the exact opposite of what your false conclusion proclaims.
I'm neither liberal nor conservative - in fact I'm anti partisan - and I'm a laissez-faire Capitalist. I'd prefer the government be completely outlawed from creating economic regulations, and I believe in the separation of state and economy for the exact same reason state and church is separate: they infect each other. That instantly wipes out all lobbying for special treatment, special laws, and competition-by-government. The government returns to doing what it's only job should be: protection of individual rights.
The US is becoming a fascist oligarchy, dominated by a massive consolidation of select few winners that are then protected by the government from competition; this has occurred in nearly every segment of the economy.
The FDA rarely does anything that isn't shady. It is fully dominated by the mega-corps that can afford to buy political influence, from Pfizer to Merck to Gilead.
You only get stability with negative feedback. Capitalism is all about positive feedback, and leads inevitably to systems that conglomerate, stagnate, distort, and eventually either implode or blow up.
Where do you think the negative feedback to prevent that is supposed to come from?
And please don't say 'markets' because there is no evidence that I know of that markets have ever done any such thing, or even that a market economy is capable of it.
Edit: I assume we're all big fans of Henry Kissinger over here then? I fail to see what his interest in this could be outside of the potential eugenic applications.
I understand the arguments of the eugenicists - that there are excess mouths - that "most" people are "useless" - but I do not agree that depopulation is the solution - rather, sustainable growth or steady-state maintenance through education and decreased societal need for redundant offspring.
As the idea of just marching in and shooting people is abhorrent and would undoubtedly be undermined by ethical concerns, would the gentle profiling based on blood and genes of a population, and the "oh, sorry, you can't have that job/child" that this type of technology will bring about not be a "nice", subtle way of steering the population curve in a "desirable" direction?
Hence, I believe this is Kissinger's principal interest in this.
Edit: to be absolutely clear, I am NOT saying that there is some variety of conspiracy here. I am, however, saying that Kissinger understands what I understand - which is that any tool or technology will ultimately be used in ways which aren't immediately anticipated or obvious, and that the very availability of this variety of tech will almost certainly lead to profiling based on the contents of ones blood. If it can be done, if it can happen, it will be done, it will happen. It's just a question of when.
Serving on a board doesn't have to be a big job, especially if the company is interested in having you on the board to get access to your connections and influence.
He might also be getting eugenic jollies from it.
(To be clear, I think this is a more cynical story; buying influence is a lot more likely than an aging eugenicist having the awareness and position to get himself on board with a biotech company that might create vastly better predictive medicine.)
Just another one of the many poorly-thought-out policies he pursued during his presidency.
However, George Bush was one of the best presidents ever for Africa: http://news.bbc.co.uk/1/hi/world/africa/7831460.stm
Which is utterly misguided if the motivation behind the goal is to conserve energy and resources. The population growth rate of first world countries is lower, however we consume far more resources per child than third world countries do. Calling for those countries to make drastic changes without examining and curtailing our own overuse of resources is problematic and irresponsible. Al Bartlett[1] addresses this in his engaging lecture[2] on population and energy.
If the primary motivation is instead humanitarian, e.g. to raise the quality of life, then I am not knowledgeable enough to comment on it.
[1]http://en.wikipedia.org/wiki/Albert_Allen_Bartlett
[2]https://www.youtube.com/watch?v=DZCm2QQZVYk (The video's title is hyperbole and is not the title of the lecture, though the lesson is certainly important.)
The NHS is much better every 6 weeks I go in and get about 6 or so tests done plus my quarterly's god only knows what that would cost me in the USA
And some of them are just crazy nuts who actually prefer that companies soak the government (tax-payer) for every cent they can.
It's extremely rare for such a young founder to still be in control of the company, and to own 50% after more than a decade. That's not only a huge accomplishment, it's a testament to the strength of Holmes' conviction in the company's mission.
Getting rich all comes down to ownership—every single percentage point counts.
She could have cashed out a long time ago and been very rich. The reason her ownership is important isn't the substantially inflated valuation and digits on her net-worth, it's the control it enables to steer such a young company long-term.
Getting rich doesn't come down to counting every single percentage, it comes down to creating a lot of value. If you do that, whether you own 14% or 40%, you're going to be rich.
Comparing the valuation of a growing startup with a stagnant incumbent is always going to look strange if you only consider a snapshot of financial numbers.
I think Theranos is overvalued by a factor of ten fold.
The market eventually forces a sane valuation on companies based on revenue and earnings. It's extraordinarily unlikely a company charging vastly less for its products will produce a dramatically greater economic outcome than Labcorp which dominates the industry (Labcorp has the best of both worlds, high prices, and high market share, the only thing they could improve is volume).
Theranos investors have had all their future returns pulled forward. Even in a wildly successful outcome, Theranos is unlikely to be worth much more than 2x what they already are, 20 years from now. That assumes they can one day grow to have ten billion in sales and a billion in profit, based on much lower prices and higher volume. That day is so far off, there's zero chance of Theranos sustaining their crazy valuation between here and there as capital markets turn negative after this hyper bull market run.
If on the other hand her technology is radically cheaper than the hospitals own lab then it would rapidly achieve huge market share and help cut healthcare costs. Just yesterday I had 2 sets of coags on the same patient sent back necessitating retaking (not an easy job on an elderly severely demented woman), one because it had clotted (apparently) and another because there was not enough blood. Smaller volumes required would be great for a whole bunch of situations.
People want to take their health into their own hands and not have to have every test blessed by a $150 doctor visit plus a separate lab visit.
Conditions to test for:
Hemachromatosis Many other genetic conditions Vitamin deficiencies (D, B, potassium) Blood sugar for people prone to diabetes Lyme disease (test after every tick bite after waiting the required time period)
And that's just off the top of my head.
Many of those are tests I'd like to a few times a year, but don't want to schedule a doctor appointment, take off work, make a copay, schedule a lab test, take more time off, another copay, etc.
Similar kinds of information about day-to-day blood chemistry might be available through retail-available blood testing. This is QS all over again, but with a significantly more powerful bite—blood chemistry is a quantitatively powerful look into your body's current state. It's a human debugger.
If ExpectedValue[Unnecessary Test] < Cost of doctor prescribing tests, this is a win.
As it is, for my predictable appointments this is exactly what I do.
http://en.wikipedia.org/wiki/Graft-versus-host_disease
I will be interested to see how long it takes before a serious "the emperor has no clothes" article will come out in a mass media outlet, and someone who actually runs a lab or knows any of the rules of running labs is asked even one question. It is much less sexy of a story when told that way, so maybe never.
And I think people who work that much are more likely to make mistakes.
Meanwhile, if I suspect that, for example, that my BMI veers into the obesity range when my TSH is high, it should be perfectly fine for me to try and get a $50 test to examine if there's a correlation. Better than spending that on a DVD of Keeping Up With the Kardashians, don't you think? Might even increase awareness about general health in the US.
LabCorp made (income) $600 million last year. Quest made $1.5 billion.
They can afford teams of very capable developers. They can have the best software, the best presentation, slick mobile apps, speedy information systems.
They don't not because they can't afford it, but because they don't want to afford it. As is the case with many of these companies that get disrupted by tech startups, they see it as a cost center and minimize it.
Software rules the world. Any business that doesn't adapt to this will see strange little upstarts steal all of their thunder.
Regarding your point on Bayes Theorem, that's valid in some ways and invalid in some ways. Suppose someone gets a vitamin D test back at 8 ng/mL. There's not really a chance of a false positive. He's deficient and needs supplementation. Making the test cheaper, faster, and more accessible can really only improve the health of the population. It will likely also drive down the cost of healthcare overall, because vitamin D deficiency has all sorts of unpleasant effects.
Furthermore, the literature suggests that the vast majority of doctors do not understand Bayes Theorem. Source: http://yudkowsky.net/rational/bayes
There is maybe some marginal streamlining or process improvement possible, but you can already get blood drawn and a little while later have the results accessible on a mobile device. Sure, maybe the blood can be processed faster and those results should be available sooner and available to outside parties so you can use various apps and services; but that a policy and political problem, not really a technology challenge.
This company is just another one of those paper tiger companies... or maybe paper unicorn is a better metaphor ... who make something that is wholly unnecessary and the only thing they are good at is manufacturing buzz. Their technology solution seems to be an unnecessarily complex solution to a simple problem. We don't need to "know what your body is doing so you can live a healthier life", we just need to eat better and exercise far more. It's that focus on symptoms rather than causes that annoys the heck out of me. But I guess they have learned from the perpetual dependency model. You don't get to be a paper billionaire by telling people to stop being unhealthy, you become a paper billionaire by selling unnecessary stuff.
The FDA question is still really vital, of course.
The only thing interesting here is the amount of founding she has however the comparison with other start-ups and Steve Jobs is a very obvious marketing plot.
Holmes is really smart for connecting with the right people early. Every account I've read of the woman is that she is incredibly smart and a relentlessly hard worker. Chances are she was able to impress a number of powerful people who backed her early, and she has been able to build a functional company (no small feat in itself) that is attempting to disrupt the medical testing industry.
A large part of successful disruption in heavily regulated industries is building a popular brand. Uber and Square are perfect examples of this: regulatory agencies are willing to bend over backwards to accommodate them in ways that they have never done. A large part of this is their popularity. I'm guessing that's why we're hearing so much about Theranos -- this is an industry that's largely hidden from the public eye, and she feels the best chance to disrupt the industry is if it's brought into the spotlight with Theranos at the forefront.
It could all be marketing fluff, but it's likely to be effective.
Theranos' technology is likely not going to blow my mind but I have to give them a lot of credit for incredible PR and (depending on how good the product actually ends up being) execution.
This is a very good point. My guess would be that we're seeing -- in this article, and in the Fortune profile linked on HN a few months ago -- the results of an incredibly well orchestrated and tightly controlled PR strategy. Say what you will about Elizabeth Holmes, but she is no dummy. She knows exactly what she is doing. The comparisons to Steve Jobs that seem to pop up in all of these articles are no accident. They feel intentionally cultivated, and perhaps to some degree, they're warranted. [1] Jobs also had a knack for image-making, be it in the tight control he exercised over the flow of information inside and outside his company, and in the image he ensured that the media portray.
Does the emperor wear no clothes here? I have no idea. I know next to nothing about the inner workings of the company, or about the medtech world (though I do find it fascinating). I do know that marketing matters a great deal, and traditional biotech and medtech companies don't seem to care too much about consumer image. They rely on time-tested sales channels and retail strategies. Theranos is different in the respect that it's running an Apple-esque marketing and PR playbook in an industry that traditionally does not.
"what these people are doing for lab testing, in terms of technology, sounds totally revolutionary IF YOU DON'T KNOW ANYTHING ABOUT CLINICAL LABS."
Yes, and I think Theranos/Holmes are well aware of that fact. If anything, they see it as an opportunity to seize a beachhead in consumer consciousness. The thinking process seems to be: most consumers know virtually nothing about how this all works, ergo, we can appear as gods before them. That is a speculative and perhaps cynical read, but at the same time, I admire their savvy. I admire it a great deal.
[1] Preemptive note: I am saying "to some" degree here. :) I'm not saying she is Steve Jobs, or that the comparison need extend any further, to any other dimensions, than in the specific area I'm talking about in this case. But I think you can make the case that someone who always appears in black turtlenecks, and has a way of invoking the name "Steve Jobs" in almost every major article about her, is intentionally aiming for the comparison. Which is exactly what Steve Jobs himself would have done, in a manner of speaking. (Cf., his intentional evocations of Edison, Ford, Picasso, etc.)
She's literally dressing like him for her self-promotional photos, in a way that was specifically mocked in HBO's "Silicon Valley" series recently.
I'd say it matters a great deal. Theranos has assembled a board with very strong ties to the government and, presumably, with an eye toward overcoming -- prophylactically or reactively -- any regulatory challenges that may arise. So, with the regulatory "defensive line" in place, so to speak, Theranos is free to focus on image, consumer marketing, and a steadily growing media blitz.
I would presume that its strategies right now include business development and channel alliances. As such, growing its mindshare and establishing itself as a breakthrough company -- and courting emotional comparisons to Apple -- will help with those goals. They will help by establishing awareness among partners, and indirectly, they'll help by fueling consumer demand. That's a time-tested channel marketing strategy. Companies as diverse as Apple, Nike, and Procter & Gamble are very good at running that playbook. Theranos is in a very differently industry, with a very different rulebook, and very different competitors. And it remains to be seen to what degree these efforts will matter. But they're not wasted efforts.
One thing that is good here is pricing transparency and legislation is moving now in states requiring that lab results have to be delivered from the lab directly to the patient if the patient requests it (New York recently did this). BUT that does not mean you can draw your own blood. You still need to have your blood drawn in the traditional way and sent out to a reference lab. So while direct to patient testing will certainly pan out, I do not see how this hot start up has any advantage over the many very large reference labs out there. With competition over HMO contracts for testing so fierce, testing margins have gone down a lot.
Currently Quest Diagnostics has a market cap of 8.4 billion, and is the largest reference lab in the USA. Valuation of 9.5 billion for a company with no specifics, no actual product and huge risks is absolutely ridiculous.
http://www.washingtonpost.com/news/to-your-health/wp/2014/08...