Disrupted: A Resonant Tale

History Does Not Repeat Itself, But It Rhymes

Mark Twain (maybe)

I finally managed to get some time off last week, and had a great time in Vancouver meeting up with an old friend, followed by taking a cruise back home. This was the first time I'd been on a cruise ship, and I can guarantee you it will also be my last. I have a hard enough time boarding an aircraft, with slow people who wander aimlessly, can't get out of the aisle, and are seemingly unable to follow even the simplest of instructions - however that's nothing compared to a cruise ship. 

Imagine 3000 people, from families to your local retirement home outing, trying to board one ship, all in the space of a couple of hours. While I have some sympathy for the cruise lines in trying to deal with all this, being herded like cattle from pen to pen is not what I consider a fun time. It didn't get much better once on the boat, but fortunately I had a couple of good books with me and I pretty much sat on the room balcony and read them through. The first was "Disrupted: My Misadventure in a Startup Bubble" by Dan Lyons.

"Disrupted" is a book that hit home for me, and I read it cover-to-cover in one sitting. Here was a person who had built his credentials through 'traditional' companies, a focus on high-tech, had looked on with incredulity through his career as the most ridiculous companies were funded then sold, and eventually jumped into that world only to learn that it's more ridiculous than you could have imagined, and that in the end you just can't stop being who you are. 

Lyons was a former tech journalist who had joined "HubSpot", a company producing software tools for "Inbound Marketing". This attempts to have the customer come to you, not the old fuddy-duddy approach of having farms of workers cold-calling from paper lists and reading scripts to grab a sale. HubSpot were "disrupting" the old way of doing business and receiving huge valuations based on that fanfare - yet behind the scenes were using those "boiler room" techniques to promote their own product, and appeared to be pushing the appearance of growth at any cost to ensure the money kept flowing.

HubSpot is also famous for its Culture Code, their set of rules for a workplace designed to attract and keep the best talent. When I first read it (along with the Netflix equivalent) I was really pleased to see the main themes (minus the touchy-feely bits) were what I had tried, as best I could within the confines of a larger company, to employ when I ran a small division selling high tech software. Sadly, it turns out they were more "aspirational" than "actual" and mostly geared to reducing company financial liabilities such as paid vacation. I'll be coming back to these Culture Codes in a future post.

Lyons' experience had both similarities and differences to mine. Being on the inside of a startup and watching the insanity is something I'd had to deal with myself, and there were plenty of parts where with a simple name change to the characters it could have been something that happened to me. On the other hand Lyons joined later in the company growth, where it was nearly $100 million raised with 500 people in the company, and watched more from the 'regular employee' viewpoint, whereas I had been there from pre-funding, developed large parts of the core technology, and was involved (at least as an observer) in most business decisions for a period, giving me some insight into the interactions with the investors. (I'll add this experience was at more than one company.)

One of the themes that's clear in Lyons' writing is that the ageism in HubSpot was rampant - the idea that "younger people are just smarter" and do better for the business, when in reality it simply means "too inexperienced to realise they're being taken advantage of" and both cheaper and disposable. Hardware engineering, compared to marketing, makes this business ploy almost impossible to pull off. Most hardware problems are so interdisciplinary, and require so much understanding of the technology, processes, planning, and the realities of development that it's really only achievable with experience and talent. They also require time to move through to completion, often four or more years, plenty for naive new hires to wise up. Generally, once they're put into a real world hardware development role, even the most capable and arrogant engineer quickly learns not just that experience matters, but the problems are so large that there's no way to solve it on your own - you have to work in a team, and know your role in it. That ageism, fortunately, isn't something I have really encountered.

Another aspect of his experience that doesn't match with mine was with the "Kool-Aid" drinking of his co-workers. At HubSpot, the young staff truly believed they were working on something world-changing, that they had a mission, and they were part of a glorious revolution, prophets of a new religion that it was their destiny to bring to the masses. It seems apparent from his writing however that the founders and leaders of the company knew exactly what they intended to do, and it was a cold calculated method to game the system and make the company look attractive for an IPO. 

If anything my previous experience has tended to the opposite, where the Board and "C" level are the Kool-Aid drinkers, the true-believers, who ignore technical reports that point to failures, issues, and problems, as they are just the work of "heretics", or incompetent/lazy engineers. The average engineer, however, is under no illusion as to the real status of the company and the work - if they are any good, then facts and evidence are paramount to an engineer. Measurements, numbers, statistics all matter more than perseverance and pig-headedness. Maths and physics don't lie or bend to management directives. 

If C-level directives fly in the face of sensible technical choices, it's noticed and questioned. Sometimes you accept a poor engineering choice due to business reality of cost or timing, but if it's purely fantasy and you're being told to accept an impossible/stupid engineering choice then it simply forms an "us and them" mentality. It creates an odd situation where the lunatics are running the asylum, one where the patients are all sane and know it.

Lyons on the other hand was the sole sane man in the asylum, constantly surrounded by the insane, with no-one to turn to and laugh with. You can tell from his writing that at some points he questioned his own sanity, and was it he himself that was wrong and out-of-touch? It chips away at his self-belief, which had already taken a hit due to his earlier layoff from Newsweek. The whole process is insidious, as by breaking their self-belief, the company culture prevents someone from the clarity of thought and confidence to simply walk out, leaving the person feeling trapped and powerless - which I've learned over the years is something a lot of bosses like to have in their employees. You want to scream "Just get out!" at him, and fortunately he does have some friends simply tell him that. 

The psychological turning point for him seems to have been landing the gig writing for the show "Silicon Valley", spending weeks talking and working with other sane, rational people and laughing at the insanity he was dealing in with his regular job. At that point, he regains his self-belief and it's just a matter of time before he leaves, but he does what always amazes me about abused staff and shows a remarkable professionalism even in the face of egregious behaviour by his management. He continues to work and deliver product until it all finally blows up, and resigns giving them plenty of notice, but unsurprisingly is "graduated" (fired) immediately (definitely familiar to me).

Where the book really meshes with my experience though is in the observations of the startup and funding ecosystem - the game whereby VC's and founders manipulate the metrics not to produce better product or to satisfy customers, but to garner the appearance of growth to inflate valuations, and sell on to a greater fool, be it another larger VC, or the general public in the form of an IPO. It's not about creating an effective product, or improving productivity, it's about manipulating the employees, the unquestioning tech press, and the investment analysts into keeping the charade going long enough that someone has put so much money into it that either it's not allowed to fail, or you've banked the gains before it collapses. To quote from Disrupted:

"The one thing people do not appreciate is that these companies are incredibly fragile. There is so much less than people believe... The whole thing is based on companies trying to achieve escape velocity before they blow themselves up."

The book resonated with me on two main levels - the first being that Lyons is our "everyman" in a bizarre world, and he reacts as a sane man should, though often questioning his sanity. He reminded me of the titular characters in "Life of Brian" and "Blackadder", simply trying to make his way through life and doing what he can in the weirdest of circumstances. 

The second, stronger, resonance for me is his tying of the experience to the startup ecosystem, pointing out that, like the financial crises of the past, these valuations and investments are based more on sizzle than the steak itself, and that it's impacting our society in significant ways. Chapters like "Glassholes", "Escape Velocity", and "The New Work: Employees as Widgets" are really where the meat of the story is - a small fraction of the book but highlight the insidious effect "The New Work" is having on all our lives. These chapters alone made it worth reading, and the humour of the rest keeps your attention - go buy it. 

I'll leave you with a final quote from the book that in a few sentences perfectly covers what I have been trying to put into words. I doubt I'll ever be able to phrase it better than this:

"I've been in the Valley a long time. As far as I can tell, nobody here ever feels guilty about anything they do. What I have observed from these guys is that they have a strong sense that they are moral actors. They believe very strongly that they operate with high integrity. They believe they are the most moral folks on the planet. But they are not."

These are the people who claim they are making the world a better place. And they are. For themselves.

The Expert

I've been meaning to post this video for some time. It was sent to me a year or so ago, and I actually couldn't make it all the way through, I think it was some form of "Startup PTSD". Fortunately I got over it pretty quickly, and I just marvel at the insight and genius. Truly awesome work.

 

Buying Legitimacy: The Advisory Board

It is a tale. Told by an idiot, full of sound and fury. Signifying nothing.

Macbeth(A5,S5)

Something that seems universal among startups is that, at some point, they'll get negative press - sometimes deservedly, sometimes not. How that company responds to the negative press can also tell you a lot about them and where they are. Clear, concise rebuttals containing facts and data usually serve to dampen any story (and if provided to reporters prior to publication, may kill the story entirely). It's common, however, that companies that hit rocky times have the PR team swing into action and distract from the core questions, never actually addressing the concerns but instead creating fanfare and the appearance of action, but that ultimately mean nothing. One such method is the "Advisory Board".

An Advisory Board is a panel of experienced people in a given field, supposedly there to make comment on an organization's progress or approach within that field - these Boards can be general, for business, IP licensing, technology, media, or any other topic that can affect the company. Done well, these Advisory Boards can serve as an excellent resource for the company and staff, giving advice, providing connections, and a seasoned second set of eyes. 

A company serious about an Advisory Board starts it early in the cycle, before it is needed. The Advisors have recent working knowledge of the field, are compensated, usually with expenses and some stock, and meet on a regular schedule to receive company reports and then give their advice. Relevant staff have direct access to this board, and can use them as a resource when needed. Started early, they become part of the process and grow with the company and teams. The Advisory Board rarely has any actual powers or teeth but rather operates with the goodwill of the staff and executive.

Unfortunately, these Advisory Boards are rarely used for this but instead are either a method of publicity or of assuaging fears. The Advisory Boards are started or populated late in the company cycle, past the time when they can be easily integrated into processes, and perhaps with 'big names' who have not been at the 'coal face' for many years. There is much made in the press of their joining the Advisory Board, but following that, there is nothing they can do or say that is of interest to the company.

For example, Theranos recently expanded their Scientific and Medical Advisory Board with eight new very prominent doctors and researchers, claiming to have fully opened up their technology and processes to scrutiny. "Adult supervision is finally there!" you think upon reading it. But is it really?

How well qualified are they to judge the processes and technology Theranos uses? Microfluidics is a pretty specialised topic, and I don't see any engineers who build those systems there. Generally the end users of the technology, the doctors, don't know how it actually works beyond the basics. Are they capable of finding flaws, or fraud, if it's there? More importantly, how much access are they given to the systems? Is it open, free, and unsupervised, or is it closely restricted and monitored, perhaps shown a specific test? Why is this going to be effective when the actual Board of Directors had a former CDC director as a member? I've seen Advisors look at a very well scripted "show and tell" and then proclaim it a fantastic demonstration, without digging into it themselves. 

Critically - if they find anything, can they speak out publicly and have direct access to the Board of Directors (who should have real power to correct), or does the NDA they inevitably have to sign before seeing the technology restrict this? It's entirely possible that after the initial PR announcement of their joining that they are never contacted again by the company, but they can't even reveal that publicly. Getting someone to sign an NDA, and then showing them just enough of what you do, is also a great way of silencing a potential critic.

In the case of a company like Theranos, there is only one way to truly prove their technology works well - and that's an independent, third party, running standard tests in a remote location, without company personnel there, with guaranteed public release of the results regardless of outcome. That's standard in medical technology - usually multiple studies and peer-reviewed papers presenting the data for all to see.

Energous pull this trick too - for example in 2015 they had Martin Cooper, the "Father of the Cell Phone", join their Advisory Board. It was quite a coup for them, and made for some good publicity. Looking at the investor forums discussing Energous, it's not uncommon for people to write:

"Plus, if Martin Cooper is on board as a Director, The Father of the Cellphone, well, that's good enough for me. "

Quite literally, this person's presence is persuading an individual investor that the company is a sound investment. That's how valuable this type of 'endorsement' is. Like a fading TV star doing an infomercial for real estate or stocks, their name closes the deal. It's used alongside the TED talk, the article in the tech press, and the big name investor - none of which proves anything of value in the company - to cause the critical faculties of investors to switch off.

Sadly, the Advisor often doesn't even realise what their name is being used for. They are often true experts and highly ethical people, who come in with the best of intentions, but with limited knowledge of what's really going on (until after the NDA, then it's too late). It's not committing to a full time job, so they don't scrutinize too hard. They don't understand that the biggest value they give to the company is simply the use of their good name, a name they likely spent a lifetime building. That good name is used by the company to "Buy Legitimacy". 

So when you see companies like Theranos and Energous talk about their Advisors, understand what in my opinion is likely really going on. These aren't adults coming in to sort out the situation, they're generally just window dressing to distract. If these companies were serious about transparency they'd have created the Advisory Board from the beginning, not just during a crisis. To gain the real trust of the investors (and remember, it's all about selling on to a greater fool), they need to do the one thing that would silence every critic, and that's a real public demonstration of their technology.

How many of you expect to see that happening with any of those companies anytime soon? Exactly, so don't be distracted by the window dressing of the Advisory Board, keep asking to see the real results. It's the only honest way to buy legitimacy.

Whooops...

Hey, have I mentioned to you a company called Theranos at any point recently? Well, it seems after vigorously defending their product from the awful, nasty, vindictive press, and those "disgruntled former employees with an axe to grind", demanding things like "proof" and "evidence" of accuracy of their tests, that there might have been something to those allegations after all.

"Theranos Inc. has told federal health regulators that the company voided two years of results from its Edison blood-testing devices, according to a person familiar with the matter...

The company has told the Centers for Medicare and Medicaid Services that it has issued tens of thousands of corrected blood-test reports to doctors and patients, voiding some results and revising others, according to the person familiar with the matter.

That means some patients received erroneous results that might have thrown off health decisions made with their doctors."

In summary - they've issued an "Ooops. Our bad."

I'm really shocked to hear all this, because so many people who know CEO Elizabeth Holmes so well, characterized the "attacks" in the press as unfair and unfounded.

Dick Kovacevich, the former Wells Fargo CEO and current Theranos board member, defended the embattled lab testing start-up's boss Elizabeth Holmes on Wednesday.

"I think there will be some information coming out soon that will show that indeed there was misinformation that was put out in the public domain," he told CNBC's "Squawk on the Street," adding what has happened to her is "unfair."

So let me summarise again, since this is so incredible: A company with a reported private valuation of $9 billion just said that their only product, which has been used to diagnose conditions and inform treatments for patients, doesn't work, and that all those accusations that were vehemently denied for months (see Big Lie - basically, "Keep lying in the face of all evidence and eventually people will believe you") are looking to be true.

That the company is abandoning the "Big Lie" means it's game-over. Someone has looked at the data and said "Yeah, it doesn't work" and the threat of actual jail-time means they aren't going to cover it up anymore. All those heavy-handed legal threats to intimidate people into being quiet aren't going to cut it anymore, as people are way more scared of the Feds than they are of Theranos' legal team.

Having worked in FDA governed medical fields, on and off, for nearly 20 years, I'm just stunned that anyone would even think about faking the results on anything that informs patient diagnoses or treatment. Apart from the obvious ethical issues, it's just stupid - you will be found out eventually, they will come after you.  This isn't like a software package where you can just push an update to v1.1 and keep improving it and fixing bugs - it has to be right first time.

The FDA are there for a reason. Sure, regulation is a giant pain, and they can be too bureaucratic and slow, but they are there to protect lives and health from people who would risk you and your family's health to make a quick buck. Safety takes precedence over speed for a reason. This mentality of "we can fix it later, it doesn't matter, just get it out there" has moved from software apps to healthcare. It needs to stop now. This is more than just a "canary in a coalmine", this is "twenty miners trapped in cavein". How long until the "village falls into sink-hole"?

As for Theranos - let me put this simply:

People's health and lives were directly impacted by this. Someone is going to jail.

Theranos 101 - One Tiny Drop Changes Everything

Theranos and Elizabeth Holmes have been discussed multiple times on this blog, and for those not familiar with them I thought I'd give a very quick summary of them and the controversy surrounding them.

Elizabeth Holmes was a chemical engineering student at Stanford when she dropped out at age 19 to start the company - the goal was to create accurate medical tests based on drops of blood rather than vials, so it can be from just a finger prick and not a full vial draw. If it can be achieved, it's a great simplification of the whole blood testing process, and the company hoped it would spur an increase in the number of tests given how easy it would be.

This is not an easy task, and there were significant questions over the ability to accurately do testing on small drops of blood - the drop itself may be so small that even with a perfect test the result may not be accurate or reproducible - but it's a worthy goal for research.

They received some initial seed funding from a regular VC and over the next 12 years developed tests for over 200 conditions, and inked a deal with Walgreens to use the tests in-store, with the PR machine claiming that a revolution in blood testing was coming. By mid-2015 they had raised nearly $700 million which valued the company at around $9 billion, with Elizabeth Holmes as the youngest self-made billionaire. (Note Theranos is a private company so it can be hard to gauge exactly the funds raised, this article estimates $750m)

Holmes was front and center with the company, synonymous with Theranos, and painted as a role model for others. To be compared to Elizabeth Holmes was a great compliment, and entrepreneurs everywhere vied to be 'the next Holmes' - such as this up-and-comer:

@DeanZ_Kellogg @ubeam @theranos @msuster @OurCrowd wow, what a compliment! Thank you so much!

— Meredith Perry (@meredithperry) June 24, 2015

It was something of an odd company, with a non-medical board full of former Senators, Admirals, Generals, Secretaries of State and Defense - but not a single person capable of understanding the technology - and going against the grain of almost all biomedical companies never published peer-reviewed results on their tests, simply instead saying (in effect) "trust us".

Now, there had been rumblings from inside the biotech community for sometime that something was not right at Theranos, but the press loved their story of the self-made founder/CEO, and everything was going wonderfully until October 2015 (Fun Fact: Same day I left uBeam!) and the Wall Street Journal released a bombshell story questioning the accuracy of these tests and whether Holmes had been exaggerating the capabilities of the tests. Wired released an article raising the questions that "exposes a deeper problem with the way Silicon Valley tries to spin hype into startup gold."

Startling among these revelations was that Theranos weren't even using their own technology for the tests, but standard off-the-shelf equipment other companies use, as their equipment gave highly variable results.

This was soon followed by other more detailed analysis by the press, along with apologies for prior poor reporting, but more importantly the FDA got involved and stated only one of their many tests was approved (a Herpes test, which is a simple yes/no), and then Centers for Medicare and Medicaid Services wrote to Theranos stating its tests "pose immediate jeopardy to patient health and safety." 

This Business Insider article gives a great timeline of events for Theranos. It has made Elizabeth Holmes, who rode the publicity all the way up and took more of the spotlight than the Company itself, a household name beyond just Silicon Valley and for all the worst reasons. She even has her own parody Twitter account 'NotLizHolmes'

It's been a rollercoaster of negative press for them since then, with damage control from Theranos in the forms of expressing surprise and lack of knowledge, of claiming that data on their tests will be released for public assessment (not happened to date), and that they are working with the authorities to deal with these issue. They added a well qualified medical board too ("look, big names with titles, stop asking questions!"). From an article in the NYTimes, there were some sections that stood out as very familiar to me:

"She (Holmes) stays relentlessly on message, as a review of her numerous conference and TV appearances make clear, while at the same time saying little of scientific substance."

As I've pointed out before - even when you are exposed, stick to the message is the best game plan. But this next section from Professor Frank Partnoy of University of San Diego School of Law was just a stunning quote, what I have been trying to put into words and say in this blog:

“We’re deluged with information even as pressure has grown to make snap decisions. People see a TED talk. They hear this amazing story of a 30-something-year-old woman with a wonder procedure. They see the Cleveland Clinic is on board. A switch goes off and they make an instant decision that everything is fine. You see this over and over: Really smart and wealthy people start to believe completely implausible things with 100 percent certainty.”

You can have experts in the field publish peer reviewed papers, or simple maths that demonstrates the engineering near impossibility of it all, but show a TED talk and an article in Marie Claire and the chequebooks still come out. To quote myself regarding Energous:

"We had, through the use of physics, mathematics, and reasoning, completely demolished their claims and proven that what they are saying is unachievable ... but it got complicated and so you just switched off, ... overall you just didn't care."

To be blunt - technology has gone beyond the capacity for most people to be able to comprehend, even some otherwise very intelligent and educated ones. That deluge of information 'overloads' most people and they fall back on the simplest of solutions - they look for authority figures who have already made decisions for them, or rely on the 'wisdom of crowds' and simply go along with the majority. Actual reasoning shuts down, and following that the idea that someone as smart and educated as you could have got it wrong just can't be entertained (or in the case of existing investors, ever acknowledged).

Something needs to change in how billions of dollars of funding, much originating from retirement funds, is distributed. The system is setup to reward certain behaviours, and good stewardship of this money, and the efficient application of efforts of thousands of workers to benefit our society, in my opinion are not among them. 

Theranos, and others like it, were simply inevitable and the symptom of a much deeper problem.

Lions led by Donkeys

So here's another first for me, this story landed on Slashdot. There's not too much activity so far, possibly because it's the weekend, however one post in particular caught my eye. I have no idea who this person is, and I'm not inclined to go find out, but in my opinion it's mostly a very well written post. 

"The technology is real. Ish. It works, but was still in very early alpha stage. The power loss is high, the equipment is large, thermal issues, and there's a lot of other problems. The acoustic waves are highly directional. Otherwise, you'd need kilowatts to give microwatts of power to a device. So you need a number of steerable beams to transfer power. That's not easy. Big enough and it's not a problem. Getting it down to realistic consumer sizes takes serious engineering talent. Ironically she had it on hand. It's definitely possible, but admittedly with the level of funding it'd be hard. Possible, but very hard.

Problem is, Meredith either fired all the competent engineers or drove them out. Anyone that stayed did so because they were more agreeable than their technical merits. Meredith also had an issue with overstating capabilities of the technology. The theoretical maximums became the baseline. That's a niche engineering field. The engineers are not replaceable cogs, but Meredith gambled that they were. It's a very small field, and word spreads fast.

Essentially Meredith is a CEO without significant experience or engineering knowledge. The company will crater in two or three years, someone will buy the IP for pennies on the dollar, look up the actual names on the patents, cut them consulting checks, and you'll see functional equipment two or three years after that. The investors already know this. But they can't yank the funding or can the CEO over PR issues. Better to take a loss than be unsupportive of women in STEM. It's only $20 ish million, so probably the right call. Meredith won't change. She definitely won't retire, step aside for more experience leadership or somehow mend things with the original engineers she drove away."

There's something I want to take issue with though - and that's the comment on the quality of the engineers at uBeam. I can only speak to those who were there prior to my departure, however that engineering team (and I mean every engineer in it) was second to none, and the best team of size it has been my good fortune to work with. The weakest engineer could be described as "Excellent" and for a brief moment there were perhaps as many as 5 or 6 truly world-class engineers there. When we could concentrate on engineering, it was an incredible atmosphere, with challenges to ideas not taken as insult but instead used to become better, and a time when I found I learned an enormous amount from those engineers around me, even those with many years less experience.

I feel it's truly a tragedy the opportunity that was squandered, and what could have been.

I blogged early on about why I joined, and I want to repeat part of what I said there:

"In my opinion, don't take the presence of smart engineers as confirmation of a technology's viability (either way), and don't think the engineers at a company you find questionable aren't smart and are fully aware of the technical issues of what they're working on. They just want to play with fun toys."

To those who question why I stayed at uBeam so long, while it's a complex many-factored issue that I will cover in a future post, the simplest answer is that engineering team. Like others before me, leaving them behind, with the feeling of having abandoned them, was one of the hardest things I've ever had to do. I knew it was the necessary choice, but it did not make it any less difficult.

I hope I will find myself working with each of the engineers again at some point in the future, and would gladly give all of those I know a reference. To those of you commenting on their talents or their character - do not demean them, to me they are lions led by donkeys.

Couldn't have said it better myself

I'd been sitting debating what to write as a post tonight, when someone sent me a link to a blog post entitled "What Mark Suster Missed In His Blog Post Defending uBeam". After reading through it, I was amazed at not only how insightful it was, but how well written, and how quickly it appeared. I have no idea who this person is, but they did a better job than anything I could have written today, so I'll just quote this section below, and strongly encourage you to read the full piece.

"So the message to women in STEM from those like Perry seemed to be to not worry about getting Bachelor’s degrees let alone advanced degrees in a particular field of expertise relevant to a future career (or indeed in the case of Elizabeth Holmes of Theranos, another women-in-STEM inspiration, a college degree at all), but have a vision, be dogged and hire sheep like Scientists, Technologists, Engineers with PhDs and experience – all ironically male it appears for uBeam and Theranos –  to constantly prod them out of their unimaginative stupor to produce the idea in the visionary founder’s head.

Indeed what Perry (and Holmes) represent is symptomatic of an anti-intellectualism where advanced degrees and fundamental research instead of being seen as a progressive way to deeply understand and investigate issues in a systematic manner under the guidance of experienced mentors and peer reviews and communication, leading to the creation of new ideas, are seen as impediments to true progress."

Well that was an interesting couple of days...

I think my blog may have been noticed...

Something told me that when it went from 1000 views total in three weeks to 2000+ views per hour that it wasn't just friends and family reading anymore. Of course it happens on a day when I have to get to multiple meetings, a multi-hour drive to the airport, and a long haul flight home that was delayed enough I finally got back in at 5am.

During this time my email was packed with requests for confirmations, interviews, and comments, and I grabbed a few minutes between each meeting and at rest stops to talk - you may have noticed some of the results of all that.

I had expected that at some point the blog would be noticed and that there might be some interest, but I never expected it this fast, nor the interest to be this intense. It's been something of a bizarre experience, and I'll discuss it in more depth another time. 

So to confirm, I am Paul Reynolds, former VP of Engineering at uBeam, responsible for transducers and acoustics. I was hired on as a consultant in the summer of 2013, was offered the VP position soon after, and like everyone else remained a consultant until our funding round in Sept 2014 when we all converted to actual employees. As part of the team that pitched the Series A round, I saw the company grow from literally working in a garage on a shoestring budget, to a total of around $23 million raised, until my departure in October 2015.

What am I here to post about? Going back to my first post almost exactly a month ago, I made it pretty clear that I wanted to cover "how the whole ecosystem of startups actually works". This seems to have been lost in the flurry of press, though understandably so. Of course I talk about uBeam, it's been a large part of my life for the last three years, but also Theranos and Energous, primarily as prominent but differing examples of the outcome of a system that incentivizes certain behaviors that I think most people know are detrimental to our society.

Once I've managed to get some sleep, I'll get back to talking about just that.

Unoriginal

Time to take a look at one of the other components of the whole VC/startup/biztech world - the Entrepreneurial Book. These are the books you see in the airport promising to teach you how to be a better leader, manager, inventor, or whatever you believe you are in 10 easy to digest feelgood chapters. I've read a few myself and usually they're like a sugary treat - makes you feel good when you read it, but no long lasting benefit, and might actually rot your teeth a little.

Recently Adam Grant published "Originals" about "How non-conformists move the world" and online put up part of one of the chapters to be read as a sampler - in this case it's the chapter about Meredith Perry and uBeam. I read it expecting to read at least part of a story I was familiar with.

As it happens, the bits I was around for, and I was around for a lot of them, I will politely describe them as "not at all how I recall them". Let's start with the biggie.

She (Perry) did something that flew in the face of every piece of wisdom she had heard about influence. She simply stopped telling experts what it was she was trying to create. Instead of explaining her plan to generate wireless power, she merely provided the specifications of the technology she wanted. Her old message had been: “I’m trying to build a transducer to send power over the air.” Her new pitch disguised the purpose: “I’m looking for someone to design a transducer with these parameters. Can you make this part?”

Let's continue with the obvious. About 10 seconds after you get someone contacting you to do work for them, their name or the company name has been Googled and you're reading all about them. In case you hadn't noticed, Meredith Perry gets plenty of publicity for uBeam, and the press coverage made it very, very clear what she was trying to do. So apparently us engineers are super tech savvy but can't Google some articles? No - before I'd even replied to the first contact, I knew exactly what they were doing.

Next is the practical. I'm being spoken to because I'm highly experienced in the field you're needing work in - I've seen a lot of different problems in this space. Once I get the general idea of what you're trying to do, I already know the rough specs of what you are looking for. If you give me specs that are different, I'll try to find out why, whether it's that I'm not understanding your requirements, or you're not understanding the issues. The converse is this - if you give me specs, I have a pretty good idea of what you're trying to do. I've shocked plenty of cold callers when I've worked out what their "super secret" project is from just a couple of questions.

Then there's the engineering side of things. If you give me a spec for something way, way different (let's say less difficult) than what you actually need, I'm going to make choices and compromises in the design to hit that spec, and not the 10x you really want. Like most engineers I pride myself on delivering a good product that meets (and maybe slightly exceeds) your needs in an economical manner - if I overbuild like that, you as a customer will likely be unhappy with the invoice, and reasonably so. Those design choices and compromises mean it's most likely not something that could ever scale to that further 10x. I probably will have to do something different for that, and then tell you that I have to start all over again. Give me something too simple and most times I'll point you to someone that already sells it, because pedestrian stuff is not something I'm interested in. 

I've taught this to people who've worked for me - If the person sitting opposite you is smart, experienced, and knowledgeable then don't bullshit them, they know what it smells like.

So that part from the book is not how it was pitched to me, nor is it how it was pitched to anyone else when I was present, in my recollection.

Then there's this:

It was enough to attract a first round of funding and a talented chief technology officer who had initially been highly skeptical. “Once I showed him all the patents, he said, ‘Oh sh*t, this actually can work.’ ”

Now I wasn't there for this part, however to me this does not sound like the CTO I came to know very well, nor does it resemble any of the 'origin stories' that I heard from him. I have to wonder, did the author confirm this statement with the CTO? Which of the engineers that work(ed) for uBeam did the author interview to confirm their initial skepticism, or that the pitch to them was anything other than what we all see in the press? Not me.

So in summary, and as a rehash of what I've said before - for me joining uBeam was principally because of that CTO, and that the engineering problem was hard. Had it been pitched any other way, I would have passed.

Adam Grant might want uBeam to be the story that's another proof point for his thesis, but in my opinion it doesn't hold water. And now I wonder that if I happened to know as much about all the anecdotes in these books, would I have the same opinion of all of them as I do this?

Wasn't Me

So I've been asked why I talk about Theranos and uBeam coverage. Well, it was first brought to my attention around Nov 12 last year when Meredith Perry retweeted a StartupLJackson tweet.

Theranos, blond woman running deep tech co. uBeam, blond woman running deep tech co. Hmm…https://t.co/OStYrWSHo5

— Startup L. Jackson (@StartupLJackson) November 8, 2015

So who first suggested the similarity in coverage? Not me.

Hypotwit

Following the CFO's departure from uBeam, I was reminded of a Tweet from a little while ago.

1/ There are just as many women on the planet as men. Just as pigment doesn't correlate w a person's intelligence, neither does a chromosome

— Meredith Perry (@meredithperry) December 4, 2015

Checking uBeam's LinkedIn info, it seems there are no women working at uBeam as either engineers or executives. I'm shocked to find that a CEO would say something that they themselves do not adhere to simply to get publicity. 

Edit: Someone pointed out, there might be women working there, they just might be hiding it on LinkedIn for some reason.

Acoustic Nonlinearity

I'm often asked "What is Acoustic Nonlinearity?" (No, really, it's actually surprisingly common. Bet you're jealous.)  Seeing as I have the smartest readers, both of them, I thought I'd do a basic explanation of it here. For something really detailed, I'd suggest these lecture notes, a book like "Nonlinear Acoustics" by Beyer, or "Diagnostic Ultrasound Imaging: Inside Out" by Szabo - I'll be borrowing some images from each of those in this post.

Nonlinearity means "not linear". Obviously. We tend to simplify things and think of them as linear - everything scales together. I kick a ball twice as hard, it travels twice as far - that's linear. I work 40 hours a week I get my salary, I work 80 hours a week and I still get the same salary - that's nonlinear. And stupid. The image below shows how this happens in real physical systems.

Every physical system is nonlinear, but we can often just simplify things and pretend they are linear, right up until they aren't. Once you have to include nonlinearities, things get really complex, really fast. Some smart people spend their lives working on this type of thing. With sound this can happen in a number of ways, some beneficial, and some not.

With acoustic nonlinearity, what happens is this: An acoustic wave travels through a medium - this can be through human tissue for a medical scan, or through air for a sound. You can keep increasing the amplitude of this wave, and as you double the amplitude the wave gets twice the size. At some point, there's enough energy in this wave that at the top half of the cycle it actually compresses (squeezes together) the medium, and at the bottom half it's a rarefaction (pulls it apart). The propagating medium gets denser at the top half, and less dense at the bottom. 

Once this starts to become significant, the density change actually starts to effect the velocity of the acoustic wave - the denser part goes faster, the less dense part slower - and so the wave starts to 'tilt' and one half catches up with the other. That's what you can see happening in the top parts of the image below.

Once the top part of the wave catches up with the bottom part, the middle row of the image, then you get a 'saw tooth' wave. What is happening is that energy that is at the fundamental driving frequency starts moving higher in frequency - for example in a medical ultrasound image if you send out at 1 MHz and nonlinearity happens, you create signal that's 2MHz, 3 MHz etc by 'sucking away' some of the energy at 1 MHz.

If you've had a medical ultrasound scan in the last 15 years you've probably benefited from this. You can use acoustic nonlinearity to get a much better resolution in your scan with that 2 MHz component without some of the difficulties of building a system to transmit at that higher frequency.

The downside to pushing all this energy higher in frequency is that if you need to use it at the lower frequency, well it's gone from there, and more critically the attenuation is almost always higher at higher frequencies. Attenuation is where you lose some of the energy of the acoustic wave over distance, so basically higher frequency waves die off faster. The bottom line of the image above shows the saw tooth wave getting smoothed out by attenuation.

Szabo, Chapter 12, has some more great images.This shows how the wave changes as it travels out, and the graphs on the left show the shift of energy away from the fundamental frequency to the higher harmonics.

How far can a wave go before this occurs? Well, there are some basic equations that can tell you when it does. If you don't like maths, I've put all of that at the bottom and I'll cut to the interesting example right away. For those of you who really like maths, see below, then check out the lecture notes linked to above, or go to Chapter 3 of Beyer's book.

TL;DR. Nonlinear distance gets shorter with:

• Increasing frequency
• Increasing wave amplitude
• Increasing nonlinear properties of the medium

Let's pick a couple of examples and test them. I'm going to take some acoustic numbers from here. Two cases, 45 kHz and 145 dB, and 75 kHz and 155 dB. (dB is a logarithmic way of referring to sound pressure, in this case that's about 500 Pa and 1600 Pa respectively).

For 45,000 Hz and 500 Pa in air, that's about 30 cm when nonlinearity starts.

For 75,000 Hz and 1600 Pa in air, that's about 5 cm when nonlinearity starts.

Wow that's a short distance (it's actually slightly longer than that in reality due to attenuation, but not much). And it doesn't tend to happen slowly - it ramps really quickly and within around 1.6 times that distance (48 and 8cm respectively), huge amounts of the energy are moved to higher frequencies. 

Then the increased attenuation in air removes that acoustic energy entirely, converting it to heat. To give you an idea of the degree of nonlinearity, if you look at the energy available at 1 meter at the fundamental frequency with 155 dB vs 145 dB, then you've driven 10 times harder, but you only get about half as much again (around 95% of the additional energy is lost as heat). Not very efficient. 

This is what's known as saturation - when you keep driving harder and harder, but you just can't get any more energy in. The medium (in this case air) is saturated and can't really absorb any more, most of what you add is lost. There are some basic equations to work this saturation pressure out, one is listed on page 510 of Szabo, it's detailed below. For air, at 45 kHz, at 1 meter, it's about 450 Pa, or 144 dB. Past that value of pressure, at that frequency, you're just running faster and faster to stand still, and getting very hot in the process.

So there you have it, a basic explanation of nonlinear acoustics. Here's a summary:

• Nonlinear acoustics are simple in concept, really complicated to fully understand
• Once you start driving an acoustic wave hard, eventually it becomes nonlinear
• Nonlinear acoustic waves start shifting energy from the fundamental to higher frequencies
• Attenuation converts that energy to heat, sometimes very quickly
• Onset of nonlinearity is sudden, and can happen very close to the source
• Propagating media such as air can saturate when you drive hard, which means it can't take any more energy

Stop reading here if you don't like maths.

Some equations (Beyer page 104):

Nonlinear Distance = 1. / ( Beta * Mach Number * Wavenumber )

Beta (for air) = 1.2
Mach Number = Pressure / ( Acoustic Impedance of Air * Sound Velocity in Air)
Wavenumber = 2 * PI * Frequency / Sound Velocity in Air

The Acoustic Impedance of Air is 410 Rayls, and the Sound Velocity in Air is 343 m/s.

So :
Mach Number = Pressure / 140600
Wavenumber =  Frequency / 56

And

Nonlinear Distance = 1. / (1.2 * ( Pressure/140600) * ( Frequency / 56 ))
Nonlinear Distance = 6500000 / ( Pressure * Frequency )

Finally (Szabo, Page 510)

Saturation Pressure = ( Acoustic Impedance of Air * Sound Velocity in Air ^ 2 ) / ( 2 * Beta * Frequency * Distance )
Saturation Pressure = 20100000 / ( Frequency * Distance )

Abandon Ship

Today I looked at the LinkedIn profiles of the uBeam staff and was interested to see that Monica Hushen, the CFO, has left the company. Hushen was lauded in the tech press (I won't call it journalism) as a heavyweight and an amazing win for uBeam.

"Perry has hired some hardware industry veterans to whip the business into shape. Former Apple and Palm finance leader Monica Hushen will be uBeam‘s new CFO"

Now I need to first comment, that the engineering team was sorely pissed at the idea that we needed whipped into shape by two people who we felt had no idea what to do at a technical startup in the R&D phase. We were almost as pissed as when another article was placed in Techcrunch talking about uBeam achieving the physically impossible, such as charging through a pocket. In my opinion, the addition of these two "C's" marked the end of any hope of the company achieving anything - I left two weeks after that article was published, and I think history is proving my feeling correct.

But back to Catbert, as she was sometimes referred to. Bizarre that a person so critical to the company, so important, and so knowledgeable as to the state of the company and its dealings would leave, and maybe even leave prior to the 1 year vesting cliff. It's almost as if she has no faith that the company will ever achieve anything of value and it's best to leave now rather than waste time on a sinking ship.

This CFO is leaving at the exact time that, according to numbers published by Mark Suster the lead uBeam investor, that the company needs to start raising their next funding round - around 6 months prior to an estimate of their funds running out.

When I left it was an ugly departure, but was reported to the investors as "the VP Engineering left for personal reasons" - personal reasons being "sick of putting up with this bullshit". I wonder what uBeam's excuse for Hushen will be? "Spending more time with her family", "Having achieved everything she had set out to, it was time to move on to other things", or like me has she left for "personal reasons"? I'm betting on the first.

Note: Since this afternoon, Hushen has relisted herself as working at uBeam on LinkedIn, no doubt someone spotted it and she's trying to dodge the press. But she's left.

Note2: Now LinkedIn has the new position as "CFO at Wonder Workshop".

Toddler vs CEO

Someone sent this to me and asked if it was what it was like having Meredith Perry as a CEO. I told them no, it wasn't.

I don't recall Meredith ever having special made-up words.

Beat me to it

So I was going to do another amazing post about how poor journalistic standards are in part contributing to money being wasted in startups, but Vanity Fair and the Twitterverse beat me to it.

The secret culprit in the Theranos mess is the tech press, which may be as responsible as Elizabeth Holmes. https://t.co/RhcSov69nX

— Nick Bilton (@nickbilton) May 2, 2016

@nickbilton @paulvieira A similar story is Ubeam. Electricity transmission via ultrasound that's never been demonstrated to be efficient.

— Stephen Green (@StephenGreen82) May 3, 2016

True Genius

Maybe Elizabeth Parish should start this company with them?

We're pleased to reveal our partnership with ubeam. Soon you'll have your finger pricked ultrasonically while you're sitting in Starbucks.

— Not Elizabeth Holmes (@NotLizHolmes) February 27, 2016