Theranos Burned Through $2M a Week as Investors Were Given Rosy Projections (arstechnica.com) 69
Around the time that Theranos was losing nearly $2 million per week, investors in the blood-testing startup were being told that the company would soon be bringing in almost $1 billion per year. From a report: It's not uncommon for startups to lose money in their early years, and it's not entirely unusual for the fastest burn rate to happen right before things turn around. Instead, Theranos continued to produce mounting losses. But that's not what the company was telling investors, according to new documents shared during the jury trial of Theranos founder and CEO Elizabeth Holmes.
In court yesterday, jurors heard testimony from the company's longtime chief financial officer, Danise Yam, who also goes by So Han Spivey. Yam said that Theranos lost $16.2 million in 2010, $27.2 million in 2011, $57 million in 2012, and $92 million in 2013. In 2013, things had "started to get a bit tight," Yam said. There were weeks where the company was burning through around $2 million per week, and there wasn't any revenue to help ameliorate the losses. In 2012 and 2013, Yam didn't even bother adding a line for revenue -- there was none.
In court yesterday, jurors heard testimony from the company's longtime chief financial officer, Danise Yam, who also goes by So Han Spivey. Yam said that Theranos lost $16.2 million in 2010, $27.2 million in 2011, $57 million in 2012, and $92 million in 2013. In 2013, things had "started to get a bit tight," Yam said. There were weeks where the company was burning through around $2 million per week, and there wasn't any revenue to help ameliorate the losses. In 2012 and 2013, Yam didn't even bother adding a line for revenue -- there was none.
Ok so we have no revenue! (Score:2)
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Why separate this incident from other startup implosions?
Perhaps it isn't so much _how_ or _why_ the money was lost, but _whose_ money was lost.
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SO, how do they get that "burn rate" money back into their own pockets?
Are PACs or "dark money" useful since they do not give visibility into the donor or supplier?
Or, would it be necessary to have part ownership if the marketers or media channel?
Just askin for a friend...
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The proper LEGAL way to do it is to produce a valuable product or service that others willingly pay good money for. If it's valuable enough and enough peop[le want it, you get enough money to cover all of the burn and produce Return On Investment.
The really questionable way is for a major investor to steer that burn into buying products or services from a company that he "JUST HAPPENS" to own. He gets his own investment plus the investments of others back through the other company's profits. This is related
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Thank you!
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Holmes is just the one that got pulled over by highway patrol for speeding even though everyone was speeding. WeWork, Uber, all these places are losing money hand over fist. She got nabbed because 1.) she did wrong 2.) she's a bit unlucky compared to her counterparts who also sell vaporware, and 3.) because she made a really big deal about being high profile. The person flaunting the red Porsche on the freeway will be targeted by the authorities over the Volvo doing the same speed. And not for nothing
Re:Ok so we have no revenue! (Score:5, Insightful)
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Uber and WeWork are skirting the line on the legal side. They're selling magic beans but they identify them as magic beans (at least in the fine print). Theranos stepped obver the line. They claimed they had a backing of science rather than magic and then turned out to not even have dubiously magic beans.
At least in Uber's case, they press much closer to the illegal side when dealing with drivers, but the drivers have no money, so they get away with that.
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0) She got nabbed because she ripped off wealthy people.
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I think one of Holmses major faults is to play this game in the medical sector. You know, the field full of doctors and scientists.
Uber can deliver a shitty service and there will always be people using it.
With blood tests, where people's lives are at stake, it's a different story and you need to deliver.
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I think the rational approach is not to persecute an innovative Job Creator just for failing at what no one else even attempted. (especially if they're a woman, though it would have been better if she'd been a woman of color, or at least a transwoman but we can't have everything).
Instead, we should re-consider our mythological and unjustified valuation of human life in the face of global competitive markets. There is no reason for doctors and scientists to have this much influence over what is, or should be
So which is it? (Score:2)
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Dunno about reporting losses, but they certainly lied about projected revenue. According to TFA, Homes' projected revenue to her CFO was $100million for 2015, but she told investors it was almost $1billion.
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No, that's not at all what the summary says. TFS says Theranos had a high burn rate and kept telling investors substantial revenue was right around the corner while having no reason to believe that was true. The usual disclaimers in off-white on white text in a 2 pt. font about forward looking statements applies.
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I don't know the details but it might have to do with where the money went.
Money you spend on R&D isnt a loss unless and until the products of the effort are assessed and found to be a lessor value than the inputs. So blow 2 million on research, and hopefully you are closer to product, have some patent portfolio you can license, something.
Money you spend paying others to do the blood tests you say you can do but can't is a pure expense. Its a direct cost against the earned revenue (whatever you charged
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I think that is the key to the prosecution. If they based rosy future estimates on claims of having in hand technology they did not have in hand, they're in trouble.
If they were skirting that by publicly saying, "we're a blood test company (but currently outsource all the actual tests until we can get our breakthrough technology to work)" they might come out OK - but I am unclear on whether the part in parentheses was actually stated publicly.
Lies about progress, not cash were the problem (Score:5, Insightful)
Look, no one cares if you burn through a million a day, even if you do not have revenue.
What they care about is:
1) Does your tech work in theory?
2) Are you actively turning theory into practice?, i.e. solving the practical issues.
3) Once your tech works in practice, then how much can you make selling it?
They lied about 1 and 2. They could not take a drop of blood and give you back multiple test results that each currently take a test tube by themselves. They were not solving the practical issues
If they had burned through 10 million a day, but had working technology, they would be billionaires now, instead of criminals.
Re: Lies about progress, not cash were the problem (Score:3, Insightful)
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Or maybe simple questions. Like, "do you have any medical background, whatsoever?", and then later "well, that's strange, but at least you have some technological background, right?", and even later, "well, you at least DO know how to run a company?" But instead it was all "omg, you're blonde with dark roots and have a black turtleneck, you must be serious so please take my money!"
Re: Lies about progress, not cash were the problem (Score:4, Interesting)
"do you have any medical background, whatsoever?"
Once the blood is drawn, the testing is chemistry, not medicine. Holmes has a background in chemical engineering. She also worked in a chemical process research lab at Stanford University.
"at least you have some technological background, right?"
Plenty of people at Theranos had technological backgrounds, including Holmes.
"well, you at least DO know how to run a company?"
Theranos had several C-level executives with successful business backgrounds.
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Holmes also never graduated. It's not like Bill Gates where you can still drop out and hack up some bad code, or Zuckerberg where you can drop out after stealing the twins' code. She programmed a bit in high school, but Theranos wasn't about coding for the most part, and that part that was needed experts. She was a lab assistant at Stanford while a student only, which really says nothing at all about her chemistry background (wow, a lab assistant, take my money now!). No business experience though her d
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Her only real skill...
And that's just exactly the reason, the other executive types knew they couldn't bring in the money that she could, so she was the face of the company. I don't think she should be the only one going to jail here, pretty much everyone in the executive suites knew it was a scam and just wanted to let it ride as long as possible.
Re: Lies about progress, not cash were the proble (Score:3, Interesting)
The media and the corporate world was hyping her beyond belief. Finally, a female Steve Jobs they can hold up as proof that women can do anything a man could do! It was utter bullshit. Most men can't do this, and even more women can't. The reality is that men will continue to dominate the top and bottom rungs of achievement.
I don't suspect a pump and dump. I think it was hysteria over the unicorn. Ironically, while they lauded this fraud they entirely overlook people like AMD's Lisa Su. She's actually an im
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Even Steve Jobs couldn't do it. Woz was the brains of the thing at the start.
Re: Lies about progress, not cash were the proble (Score:2)
If it were Woz alone he'd likely have ended up working for another company. While he was a technical genius, that's not much use without direction.
As with families, complementary traits and abilities matter.
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See its little things like the above that reveal the truth. The people that scream the loudest and cheerlead the most aggressively for things like 'diversity', 'inclusion', and the like are actually the closeted racists, and sexists.
Deep down they don't believe these various groups are as capable as you or I. So they have to shout it from the hill top every-time they spot what they think is an exception to prove how modern/progressive/open minded/civilized/fair they are. Mind you they always pick the least
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Deep down they don't believe these various groups are as capable as you or I.
[citation needed]
And no, OANN is not a valid source.
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When find a way to know a mans heart such that we no longer have to infer from their actions - you let me know
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So you admit that you've got nothing and are just babbling out your own fantasies. Good to know.
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I admit to making an unfalsifiable and therefore unscientific claim. However we form beliefs about the minds and motives of others all the time in both our personal and professional lives, as well as in society. We often act on those decisions as well with really important stuff like do you trust this person to babysit your child and our courts sometimes use these judgements to literally chose between life and death for a defendant.
So if I am "babbling about fantasies" it leaves you on no higher ground beca
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I'm pretty far off to the left
Oh really? I'm really far to the right actually.
The proper way to achieve diversity and inclusion is to start from the roots and tackle all the reasons for that.
Yup, like stamping out bigoted assholes, (the real ones).
So why not lift them up, make them as successful on the same playing field based on equal merit? It's harder work, but that's the only way to truly succeed, instead of cover up the issue and set them up for later failure and a reputation for being 'useless diversity hires'
Wait a dang minute, why's it hard? And who needs lifting up? Oh, those undercover bigots really burn my nipples. Man, I wish we could put everyone responsible for that reputation in a box and forget to poke holes in it, if you know what I mean.
they simply don't believe some groups are capable of it.
Well I don't know what faith has to do with it, people need to pick themselves up by their own bootstraps, fuck your beliefs, but I can see how we can actually
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Finally, a female Steve Jobs they can hold up as proof that women can do anything a man could do! It was utter bullshit. Most men can't do this, and even more women can't. The reality is that men will continue to dominate the top and bottom rungs of achievement.
See its little things like the above that reveal the truth. The people that scream the loudest and cheerlead the most aggressively for things like 'diversity', 'inclusion', and the like are actually the closeted racists, and sexists.
Deep down they don't believe these various groups are as capable as you or I. So they have to shout it from the hill top every-time they spot what they think is an exception to prove how bigoted they are. Mind you they always pick the least exceptional exception.
Bro, we know exactly where the sexist bigots are.
Re: Lies about progress, not cash were the proble (Score:2)
Yep, Su should in theory be a household name among feminists. Oddly, those I've spoken with sho decry the lack of women in tech had not heard of her.
I've nude idea what her political views would be. I don't see her speaking on 'diversity' or wamen in STEM. Maybe that's why she's overlooked by the media and these weirdos. Certainly they've shown a tendency to ignore or even attack people of supposed oppressed identities who succeed, as these identitarians claim they want to see, yet fail to sing the party an
Re: Lies about progress, not cash were the probl (Score:2)
Re: Lies about progress, not cash were the prob (Score:2)
My pleasure. Her track record and her work at AMD puts her top of my list of tech CEOs.
I'm done ways I'm glad we don't hear more about her. She's doing a great job and doesn't need to be dragged into the schemes of these identitarian bandits.
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The problem is that in a lot of cases, the company won't let those outside scientists see how things work because they have legitimate worries about leaking trade secrets. To some extent, investors have to take some of this stuff on faith. Many of the articles discussing Theranos point out that a lot of what they were doing is not very different from what many other startups do: overhyping technology, faking demos with a mockup of the actual product, and so forth. Lots of companies pull a "fake it 'til y
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She was just an idea person. It was her lazy workers who couldn't make the time machine work by the deadline. Need more whips!
I've run across people like this; they are so convinced that they are doing all the work by having the idea and bemoan the fact that nobody is implementing their idea for them. This sort of dovetails into those sorts of kooks who think they've found a huge flaw in Einstein's theories who claim they just need someone's help to get the math part of it written down correctly.
In some
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If they had burned through 10 million a day, but had working technology, they would be billionaires now, instead of criminals.
Billionaires?
That's spending three and a half billion a year! A bog standard, boring index fund would turn that into like a billion a year profit, without lifting a FINGER. Why not skip all the stress of running a complicated biotech company and all that bullshit, when you could .... and just spend the... oh, wait.
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I was born on a commune called East River Farm, you lying sack of shit. I've lived what I talk.
I've also lived in Belgium. Now tell me Belgium isn't socialist, so I can say "Cool, then we can do what they do, here. Right?" And then you can say "No! That's socialism!" Because you are simply a talking parrot, and never had an original thought in your life.
But hey, at least I'm not pretending to be other people. How do you even justify that? Oh wait, I know. You don't think we're actually real people. We're so
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If Belgium isn't socialist, then why can't we do what they do, hmmm?
What, exactly do you dislike about socialism? You never specify.
Here's what I want: the workers control the means of production through democratic decision making. Most people call that socialism, but I really don't care what you call it. Tell me why you think having the workers control the means of production is bad?
You won't though. You won't ever debate in good faith. You don't even know how to start. What you'll do, if you answer at all
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Looked in a mirror, did you?
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Investors should have thought twice.. (Score:2, Insightful)
Re:Investors should have thought twice.. (Score:5, Insightful)
We were all shocked that a 19 year old could start a revolutionary biotech company. They didn't do their due diligence to vet the technology before forking over billions. I personally feel like the investors got what they deserved. This is capitalism, no risk, no reward. But these days capitalists can't accept losses from the risks they took.
I feel some of this was due to how the media lionized Holmes, almost exclusively because of her youth, gender, and beauty. Any article about a "strong, successful woman bucking the patriarchy" was immediately elevated to biblical status in the mad search to promote "women breaking the glass ceiling." They were so invested in making her out to be Joan of Arc they never stopped to check whether what she was claiming was even possible. Her claims could've been easily debunked many times before everything came crashing down. Not only did nobody try, nobody -- especially the press -- seemed even interested in trying.
Put simply, if Holmes had instead been a middle-aged, overweight, glasses-wearing, slightly balding male, does anyone think for a moment this would've gone as far as it did? Possibly, but very doubtful. Never underestimate the power of charisma when separating people from their money.
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There were plenty who didn't believe her...at first. When she countered them with false evidence, they accepted it at face value. It's a bit like buying a used car where a sexy salesperson swears the car is in perfect condition and you're getting a fantastic deal. You express skepticism. The salesperson says "trust me." And suddenly, you do. No further questions. No kicking the tir
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We were all shocked that a 19 year old could start a revolutionary biotech company. They didn't do their due diligence to vet the technology before forking over billions. I personally feel like the investors got what they deserved. This is capitalism, no risk, no reward. But these days capitalists can't accept losses from the risks they took.
I feel some of this was due to how the media lionized Holmes, almost exclusively because of her youth, gender, and beauty. Any article about a "strong, successful woman bucking the patriarchy" was immediately elevated to biblical status in the mad search to promote "women breaking the glass ceiling." They were so invested in making her out to be Joan of Arc they never stopped to check whether what she was claiming was even possible. Her claims could've been easily debunked many times before everything came crashing down. Not only did nobody try, nobody -- especially the press -- seemed even interested in trying.
Put simply, if Holmes had instead been a middle-aged, overweight, glasses-wearing, slightly balding male, does anyone think for a moment this would've gone as far as it did? Possibly, but very doubtful. Never underestimate the power of charisma when separating people from their money.
Holmes didn't pull it off due to her youth, gender, and beauty, she pulled it off because she came from an incredibly privileged background.
Her dad was an Enron VP (foreshadowing!), her friend's dad was Tim Draper. These were the folks pumping money and legitimacy into Theranos, it wasn't about the tech, it was about backing one of their own.
The physical attraction and charisma were a big part of it, but I could imagine a similarly situated guy pulling off the scam just as easily.
On the other hand, if she c
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A lot of the board people weren't Venture Capitalists in the traditional sense, they were just investors, and they were told by others that this was a risky but potentially very valuable company. Word of mouth. VCs, as dumb as so many of them are, usually will embed one of their own peeps in the startup; either to help run it and give these garage band guys a hand with the business side of things, or to spy on them. And of course, they stock most of the board. Because startups do lie, cheat, and swindle
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As I recall almost no traditional VC firms ever ended up investing in Theranos for exactly this reason. Theranos was never willing to divulge enough details of their technology for the firms to independently verify that it existed and was viable so they walked away. So most of Theranos investors ended up being non-VC investment companies and individuals enamored with Elizabeth Holmes' story.
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I think part of it is a general ignorance toward "science and technology" on the part of "the general populace".
It's all a hand-waving mystery to most people, such that they cannot tell the difference between:
(1) "college dropout creates amazing software startup" which is entirely plausible
(and if this college dropout has been delving deep into software since childhood because of an obsession with computers, it's more than possible he/she is actually *more* knowledgeable/a better coder than many CS grads ou
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When people like Henry Kissinger and Riley Bechtel, and George Shultz get ripped off someone either goes to jail or dies horribly along with most of their family. She was too high profile to off, so jail it is.
Playing The Victim Card (Score:2, Interesting)
Interesting how Holmes is trying to play the victim by blaming an “abusive relationship” for her behavior.
Nobody is responsible for their own actions.
(shrug) (Score:2)
Star Citizen has had a burn rate of $4mill/mo for a decade now, without a trace of actual product to sell.
https://variety.com/2018/gamin... [variety.com]
It's like an economic refutation of the 3rd law of Thermodynamics.
Let's See...That's 28 BMW M3's a Week (Score:2)
Or 7,695,267 of these expensive ping-pong-balls: https://www.amazon.com/White-3... [amazon.com]