Not Everyone is "The Next Theranos"

I've written a lot about Theranos in previous posts, principally because they are the poster child (in my opinion) of pretty much everything that's wrong with the startup/tech press/VC ecosystem. I'm not alone in the press for doing so, as "apparently falsifying health tests in order to boost company value" is fairly straightforward to understand. It's such a compelling story that there will reportedly be a Hollywood movie about it, starring Jennifer Lawrence as Elizabeth Holmes. Given who the director is, I'm thinking it will not be too flattering to Ms. Holmes. 

It seems everyone wants to write about 'The Next Theranos' and the phrase is bandied around without much consideration for the flaws of that company. To me, Theranos need to be highlighted for a number of reasons:

• Company defining the press narrative - a 'story' company
• Hagiography of the Founder/CEO, with an exaggeration of their technical talents
• Technical claims bordering on the impossible
• Claims that all the technical hurdles are solved, and productization is here or 'imminent'
• An apparent disregard for ethics, regulation, law, and safety
• A software like "ship it then fix it later" mentality
• Reported legal intimidation of critics and former employees
• Apparently being less than 100% truthful with investors

Theranos are a particularly egregious example of the "boost valuation by any means until you sell to a greater fool" mentality prevalent in Silicon Valley as it directly affects people's health. Their methods are what exist in other Silicon Valley companies, they just took it to the extremes and made it obvious to all. Many of these points, taken on their own, are reasonable for a company to do. It wants good press, and it can't be expected to speak negatively of their own products in public, and it has to do what it can to raise money as bills need paid - however they are expected to remain inside the bounds of the law, to not fabricate results, or to lie to investors and customers. That last part is what's going to cause the biggest issue for Theranos and its officers, as the Justice Department, FDA, and SEC investigations look likely to be turning up some damning evidence, and their only commercial outlet, Walgreens, ending its contract with them.

Beyond the legal and safety activities of Theranos, my frustration with them is that not only did they deny the funding they got to other, potentially useful, technologies but they have "poisoned the well" for future investment in blood testing, biotech, and made it harder for legitimate technical companies to make headway (especially those led by a younger female founder) with investors and customers.

On the positive side, it has highlighted many of the excesses and problems in the startup world, hopefully causing the tech press to be somewhat more skeptical and less willing to publish a company press release as fact, for investors to be more careful and demanding in their due diligence, and for companies to be more restrained in their claims.

So when I see stories talking about "The Next Theranos", I look for the hallmarks of what I list above, and that's why stories like Vanity Fair's "Is Google's Biotech Division the Next Theranos" had me spending some time investigating to see if there was anything to that claim.

For those of you who are unfamiliar, Verily is Google's biotech division, now under their Alphabet company. It was spun out from Google X, the company's research division whose goal is to "Tackle Big Problems", and aims to transform life science. Wikipedia lists some key projects as:

• Contact lenses that allow people with diabetes to continually check their glucose levels using a non-intrusive method
• A spoon for people with tremors
• The Baseline Study, a project to collect genetic and molecular information from enough people to create a picture of what a healthy human should be
• A disease-detecting nanoparticle platform
• A health-tracking wristband
• Advancements in surgical robotics, in partnership with Johnson & Johnson

This seems to be a fair mix of short, medium, and very (very) long term projects, with items like the tremor reducing spoon already available, health-tracking wristbands being a staple of the wearables market, and examples of surgical robots in actual use today. The Baseline Study seems to be technically possible but a Herculean task, though more importantly there have been questions raised over the ethics of this data collection and its actual practicality. The nanoparticle disease detection and contact lens efforts are on the verge of science fiction and what draw the greatest concern in the press.

The nanoparticle disease detection was hailed as the equivalent of Star Trek's Tricorder, and the details of it are explained here by Andrew Conrad, the CEO. To summarise, magnetic nanoparticles are injected into the body, and float around picking up information on what's going on, and as they pass the wristband (or collected there magnetically) then the information is uploaded and analysed. One of those "simple in concept, hideously hard in practice" things, and questioned by experts in how it can be readily productized, but not lacking in grand vision or societal value should it be made to work. Further, from what is reported in the press, and from what I hear from colleagues in the business, there is an impressive team of scientists and engineers behind it all.

While some find Conrad's statements to be too bold, I found his statements in the above YouTube link, and other sources, pretty reasonable for a CEO and not over selling. The company itself states the project to be:

a "very early-stage” project, “ambitious and difficult,” with “unsolved technical challenges. It’s our aspiration, with our partners, to solve these challenges, even if it takes years.”

Similar questions are raised about the contact lens project, aimed at monitoring glucose levels through tears with many pointing to the science showing the superiority of blood testing, but Novartis, their partner describe it as "in the research phase." Their Chief Medical Officer, Jessica Mega, goes further and says

Verily is not a products company... But it’s a company really focused on trying to shift the needle when it comes to health and disease.

Overall, Verily don't seem to be ticking off too many issues from my list, and the company and their partners seem to be aware of the realities of the work they are doing. They are not providing test results to doctors with which healthcare decision are made for patients, they are not passing off another company's tests as their own, have a range of products and research that by their own admission is challenging. While they do need to be watched to ensure that they treat the information they gather legally and ethically, the fact that they are taking on huge problems is overall a great thing. It's been a long time since industry invested so heavily in blue sky research, with the likes of Bell Labs producing key technological developments much of our modern world is based on. That a private company, with their own money - not a pension fund, not crowdfunding, but their own money - should be encouraged.

Too often a company has to be focused on the next quarter and puts aside long term development, leaving that to national level funding such as from the NIH or NSF, and if they maintain honesty with the public and their management about difficulties, timelines, and realistic expectations, then grand goals are to be encouraged. Just this month, Elon Musk spoke of sending a human to Mars in less than 10 years, and has received applause for his grand vision, and I don't see anything different here.

So to summarize:

• The CEO talks about the company mission - Tackling Big Problems - not himself
• They make technical claims ranging from the straightforward to extremely hard
• Make clear that these challenges may take years to solve to both the public and partners
• So far have not been accused of bypassing regulations or breaking the law
• Products shipped appear to work, and are not life threatening if they break
• Have not intimidated those who speak negatively of them, including former employees
• Are using their own money, not that of investors

I'm not seeing a problem here. Let's not throw the baby out with the bathwater, not every company is the next Theranos.