Ultrasound in Air: Safety and Regulations

This is a post for references, there's minimal commentary, just links for ultrasound in air background reading, regulatory and safety and a few notes on each. I've previously commented on ultrasound in air and safety considerations across multiple posts, but I wanted to put together a post that will contain relevant information in a single place. I intend this to be a 'living post' and will be updated as more documents/regulations are included, or regulations are updated - so it's a work in progress. If you're knowledgeable in the field and have a reference I should include, please let me know by email or in the comments.

General Reading

Are some people suffering as a result of increasing mass exposure of the public to ultrasound in air? by T.G. Leighton. A great starting point as it covers the history of ultrasound limits in air, details of possible adverse effects, and with recommendations for further study and safety considerations. An extensive list of this author's work, including further research on ultrasound in air, can be found here.

Wireless Power Transfer to Millimeter-Sized Nodes Using Airborne Ultrasound by Angad S. Rekhi, Butrus T. Khuri-Yakub, and Amin Arbabian. Detailed, peer reviewed paper published in Transaction on UFFC in 2017, best paper to date on the topic. Indicates microWatt level power transfer viable.

Damage to human hearing by airborne sound of very high frequency or ultrasonic frequency by B.W. Lawton for the Health and Safety Executive in the UK, a literature and standards survey in 2001.

A Review of Current Ultrasound Exposure Limits, Carl Q. Howard, Colin H. Hansen and Anthony C. Zander. A 2004 study which concludes "Until more definitive data become available, it is recommended that the more conservative standard proposed by the Health Canada [13] and listed in Table 1 be adhered. This means that sound pressure levels should be less than 110dB above 25kHz, regardless of the exposure duration, to prevent the undesirable subjective effects of ultrasound."

Effects of Ultrasonic Noise on the Human Body—A Bibliographic Review Bożena Smagowska. A review of other ultrasound safety papers, with the following quote "According to Allen, Rudnik and Frings, a mouse dies from overheating after 10 s to 3 min of exposure to a signal of 20 kHz and level of 160 dB [10]. According to Danner, a lethal level for signals of 18–20 kHz for an unshaven mouse were 144 dB and for a shaven mouse 155 dB [21]. Acton obtained similar results and extended studies to larger animals such as guinea pigs and rabbits [22]."

Guidelines for the Safe Use of Ultrasound: Part II – Industrial and Commercial Applications by Environmental Health Directorate Health Protection Branch, Canada  Canadian guide to potential harmful effect of ultrasound, with the quotes "In addition, Acton (Ac 74) has reported on unpublished work by Parrack indicating that mild heating in skin clefts has been observed in the SPL range of 140-150 dB...  It is plausible that chronic lengthy exposures to levels between 145 and 155 dB might also be harmful, as they could raise body temperatures to mild fever levels during the exposure periods. However, as indicated in Section 3 of this guideline, such high sound-pressure levels have never been encountered in either commercial or industrial applications... However, in the ultrasonic frequency range, if potential problems due to heating are to be avoided, total linear measured SPL exposure to other parts of the body must never exceed 137 dB. This value is based on the lowest value (140 dB) (see Figure 2) which allegedly has led to mild heating of skin clefts. A safety factor of 3 dB (a factor of 2 in energy) should ensure that no significant heating of a human could occur."

Environmental Health Criteria: Ultrasound. 1982 WHO summary of ultrasound limits and safety studies. 

Regulatory

OSHA and Global dB limits. Covers Occupational Safety and Health considerations, and shows a limit of 115 dB above 40 kHz in the USA for the workplace (not home, consumer etc exposure). No mention of a 145 dB limit. Notes limits around the world are between 110 and 115 dB.

Underwriters Labs (UL) Testing. From UL's website "UL helps companies demonstrate safety, confirm compliance, enhance sustainability, manage transparency, deliver quality and performance, strengthen security, protect brand reputation, build workplace excellence, and advance societal wellbeing". This is a standards document you need to purchase to read in its entirety, the relevant section is 12.5.2, a pic of that section is below. Limits SPL to 110 dB in useable area of most devices.

FDA Requirements for Radiative Devices. Even for non-medical use, any radiation emitting device, including ultrasound, can fall under the jurisdiction of the FDA. An abbreviated report, needs filled out, and cannot be done until there is a product as it requests brand, model number, output levels, frequency, operating conditions etc. Anyone claiming that the FDA does not regulate ultrasound in air devices should be asked to demonstrate why this does not apply. There are also details  under the Code of Federal Regulations Title 21 particularly in section 1002 that states the main exceptions are if the product is only for export or:

"Manufacturers of electronic products listed in table 1 of this section if such product is sold exclusively to other manufacturers for use as components of electronic products to be sold to purchasers"

essentially, if you sell parts to other companies, you don't need to go through the FDA, but whoever sells the final product will.

International Non-Ionizing Radiation Committee of the International Radiation Protection Association. (INIRC-IRPA). 1984. Interim guidelines on the limits of human exposure to airborne ultrasound, and concludes the general public should not be exposed to ultrasound at levels above 100 dB regardless of frequency.

Groups/Societies/Investigative Bodies
Health Effects of Ultrasound in Air (HEFUA). "HEFUA is the UK consortium (encompassing researchers, clinicians, policymakers, and the public) that addresses the fact that humans are being increasingly exposed to ultrasound in air through commercial devices. There is insufficient understanding of how these devices affect health, even when exposures are known." This page also has links to multiple documents on ultrasound in air.

Biological Effects

More specific papers on ultrasound effect on biology

Subharmonic Distortion in Ear Canal Pressure and Intracochlear Pressure and Motion by Stanley Huang, Wei Dong, and Elizabeth S. Olson  which looks at the generation of subharmonics, that is frequencies lower than the transmitted sound, in the eardrum from high intensity ultrasound.

Weaponizing Sound

Acoustic Weapons - A Prospective Assessment by Jürgen Altmanna. A good summary of ultrasound used as a weapon.

WIP

Webinar on Ultrasound in Public Places

For those who may be interested, the Acoustical Society of America will host a webinar on "Ultrasound and High Frequency Sound in Air in Public and Work Places: Applications‚ Devices and Effects" tomorrow, Wed May 9th 2018, 11:25 to 11:45am Pacific Time. If interested, the link to register is:

https://register.gotowebinar.com/register/32291947178648578

I have no participation in this, just listing as a PSA.

Energous' Mid-Sized Watt Up Transmitter - Can It Get FCC Approval?

Reader Lord Stately-Wayne Manor asked me in comments on the last uBeam article:

Would you be willing to give your opinion on whether or not Energous will get FCC approval on their mid range soon? The CEO believes they have a clear path to approval and expects it to happen well before the end of this year. Any thoughts would be appreciated.

In brief - I don't think Energous mid/full range products as stated by the company will be able to be approved by the FCC in any manner, those that could be approved will emit such a low amount of power that they will not charge at any rate practical for consumer devices like phones. Any such approval would require a rewrite of existing regulations, and while I wouldn't put it past the current FCC to do stupid anti-consumer things, the fact that it would simply wreck any current WiFi signals and equipment means there is a massive, entrenched, business interest in making sure that does not happen.

As for the more detailed discussion, including some nerdy stuff since you literally can't analyze the situation without maths/physics/numbers/engineering:

I'll start by saying that the CEO of Energous has made a lot of claims over the years as to outcomes and timelines that are not met - the product promised is always some ways out, on the order of a year. Some call this the "Time to Carrot"(check Seeking Alpha for some good posts, and where I got the above image), which constantly moves forward and you never, ever get the carrot. Here in 2014 is him saying 2015 delivery. You may know of other companies that have promised deliveries of consumer product "by the end of the year" since, say, 2011, that have never materialized.

WATT started with a "full sized transmitter" which was the "~4m, multiple devices, multi-watt" version that no-one could explain with physics without cooking anyone around it. They claimed:

The strength of the charging drops off rapidly with distance; at the moment, 15 feet is the maximum range of the transmitter. At 5 feet, your gadget (actually, four of them at once) can receive a maximum of 4 watts. At 10 feet, it gets 2 watts; at 15 feet, 1 watt.

Which is a "holy crap 20W received we're going to get cooked" statement and had many eyebrows raised in "basic laws of physics" type ways. Quick question - what were uBeam's publicly stated specs before, and after, this announcement by Energous in early 2015?

Eventually Energous announced a 'mini' which at most emitted 300mW when in contact, so basically >10x worse charge rates and less useful than the already available Qi methods, along with a 'soon' medium and full sized which allowed time to carrot to remain at 18 months or so. Such a low charge rate and in-contact requirement, so it could be FCC approved, and allowed claims of "FCC Approval for Energous", but a pointless product.

Now Rizzone stated back in March 2017 he was confident over FCC approval. However - Energous' own filings with the FCC prove they can't get licensed under Part 18, read to the end where they literally say the rules have to change: 

Energous requests OET to interpret its ISM rules to enable WPT AAD conforming devices that satisfy the criteria specified in this Petition to qualify as Part 18 ISM... However, this can only happen if OET adopts a process that enables equipment manufacturers to secure equipment authorization.

How can the CEO argue it's coming when they admit that it can't be approved under current rules? Doesn't make sense to me, so let's dig more.

How about approval under Part 15 instead of Part 18? Part 15 is for "Low Power" so a problem there I think. In these FCC documents you will see that the FCC limit the 5.8GHz band that Energous use to 1W total if spread spectrum - take efficiency etc into account and you are looking at very long charge times (a couple of days to charge your phone if lucky?). If not spread spectrum then it's P=0.3e^2 where E is listed as 0.05 V/m so that's no more than 0.75mW, or to translate to practical implementation - it would take six months or more to charge your phone at 100% efficiency. I can't find the link but I believe Energous state their method is not spread spectrum, so that tells you how useful their method could be under Part 15.

So, basically, unless they either get the FCC to change the rules, in opposition to a vast entrenched business interest and wreck WiFi for everyone, or reduce their power output to the point where it is an utterly pointless product, then I just don't see FCC approval for their devices.

This doesn't even begin to cover the issues of safety or practicality of beamforming to a fine focus with your array is not much bigger than your wavelength. I go into lots of nerdy depth with it here.

One last piece of advice, and it comes from Warren Buffet - Don't invest in companies whose product you can't understand. If the engineers are arguing about the basics of the product working and laws of physics are being called into question, then just run...

uBeam - Still All Sizzle?

An eventful day yesterday on the uBeam front, with Meredith Perry finally giving a demo of uBeam technology and showing it charging a phone at the Upfront Summit - well more precisely showing a big box and then a light on a phone coming on if it was put in front of it. Essentially a slightly more glitzy version of the "All Things D" demo done in 2011, showing what 6 years and $25 million gets you.

Wireless charging of a phone thru the air. Woh. 👏 1st public demo ever @ubeam #UpfrontSummit pic.twitter.com/I6GZx7KDri

— Spencer Rascoff (@spencerrascoff) February 3, 2017

From what we see here, in my opinion, is proof that you can take a non-technical audience and baffle them with bullshit - if you want to know that the phone is charging, you need to do more than turn a screen on. Perhaps there is more not seen here, I'm just going on the info that's public, but you need to show voltage, current (at both transmitter and receiver to get efficiency), and the phone sitting in front of that panel for several minutes and see the actual charge level increase over time. But that isn't what they showed - and if it isn't, please enlighten me and tell me what is the difference between what's shown in that video, and what was shown at All Things D 6 years ago.

It seems at least some are not convinced and there are journalists taking a sceptical view, such as Axios (albeit promoted with a tweet that is more sensational than what was shown and the content of the article, and sadly is all that is quoted by most)

This is a science project that is clearly progressing, but not nearly finished yet.

Pretty faint praise after $25 million. There was also this interesting statement:

we're told Perry picked that particular Android for the demo because of its highly-visible charging icon

Why would that be mentioned so specifically by the company, and why does it make me raise an eyebrow?

Now, let's be clear, no-one ever said that transmitting power via ultrasound is impossible, of course it's possible - but is there a way to do so in a safe, efficient, and cost effective manner? That's the challenge, and in any practical sense it had never been shown publicly. In my opinion, it still hasn't. All that has been shown is a screen lighting up.

I'm sure uBeam now have potential funders lining up outside willing to throw money at them, based on this, even though nothing was really shown. And if I'm wrong about that, tell me what was shown that proves it works. What's the charge rate? How long to charge a phone? What is the efficiency? How does this line up with "4 meters, any angle, multiple devices, faster than a wire" touted before? Is it a safe and legal level? (OSHA now seems to have gone back to a 115 dB limit, not the 145 dB from a few years ago, I certainly hope there's no-one in the way of that beam, or there are any grating lobes giving the audience a facefull.)

Now the fact the phone charge indicator comes on proves they are charging at a minimum of 500mW (around 5 volts at 100 mA) needed on the USB port, which is awesome as that's enough to at least trickle charge a phone over about 10 hours. Or does it? Potentially you could access the Qi chipset on the phone to show the charging light when at <500 mW, or other similar bypassing of standard input methods, but in the end there's no way to know without looking at actual charge rate - which isn't shown in any form. If it works so well, I'm surprised those numbers aren't released - "more than 500mW" is a very straightforward statement to make. Or leave the phone in front of the transmitter and see it gaining battery level during the talk. But that would be too easy.

And at what efficiency? At 30% end-to-end it's incredible, at 1% it's very difficult to justify, at <1% it's ridiculous. We don't know those numbers.

How many devices can this charge at a time? What does the system cost? Can it track the phone? What happens at an angle? Was the beam always on, or did it switch on when it saw the phone? What were the safety measures to stop an always on-beam being pointed at someone accidentally? If this is the best case demo today, why were some people saying they had seen a similar working demo years ago? Weren't they moving to production 18 months ago? All questions still unanswered.

I'm really sad, of course, for the senior staff who just left the company over the last couple of months, and what I guess is the closure of the San Jose office (or that's how it appears if you check the LinkedIn profiles). Amazing they would leave just on the verge of a breakthrough like this, but more fool them I guess, what do they know? Passing by on the billions... 

Overall, with a skeptical eye, there's nothing new here. IMO, no significant new information, nothing to show commercial success or capability, and no path to a realistic product. But it won't stop investors from piling in without doing significant due diligence (investors, feel free to call me and prove me wrong), and it won't convince anyone with one iota of technical capability that there's more there than they thought a week ago. More of the same, move along.

For those of you with a technical bent, I'm including a more detailed analysis from what I saw in that demo below. Anyone non-technical, you may want to stop now.

Taking a technical look at what's there and bearing in mind this is with a lot of assumptions - the video shows an array that seems to be made up of a (approx) 30 by 30 collection of circular transmitters, and given what I see on stage it's about a 30 by 30 cm panel, so each is a 1 cm diameter cylinder. Very much like the Murata MA40S4S used in car parking sensors and available off the shelf at around $3 each in bulk. Of course they couldn't use them because that would be a $2700 transmitter BOM component right there, but let's use them as a starting point.

Assume 40 kHz, and let's say we can drive much harder because why not, something like 6 times more (120 volts p-p, or approx 16 dB in sound pressure) to be generous so that's 120 + 16 = 136 dB sound pressure level. They are circular, so we lose 2 dB from area, that's 134 dB out, across a 0.09 m², and at that level that means a peak pressure of 180 Pa and about 37 W/m² or actual 3.35 W transmitted. Incidentally the capacitance of those devices at 2550 pF means (at P=nCV²f) gives 1.3 kW (900 * 2550e-12 * 120 * 120 * 40e3) so right there is around 0.25% efficient on transmit at best, along with a one bar electric fire (update: this capacitance calculation is not correct, I need to update it). A few million people doing this every day means GW more generation capacity, so I hope I'm wrong or we better start building some power stations. (updated efficiency numbers below - a bit better than here, but still pretty awful).

As a side note, those values of amplitude, if I'm in the right ballpark, may avoid the worst effects of acoustic nonlinearity in the distances shown, but in my opinion (and that of physics), would result in nonlinearity if you tried to increase from there, decreasing efficiency considerably.

Now at 1 to 2 m distance you're probably looking at around 3dB loss in the air (pretty low, yay, but still 50% efficiency), so saying you get all of that power at the phone (about 5 by 10 cm) you'd have an focus gain of around 18 times (25 dB), so now we're at 156 dB (wow, that's loud). Now we convert back to electricity, let's say 30% efficient there (massively higher than the Murata MA40S4S), and around 90% on some awesome conversion electronics, it's about 27% conversion efficiency, and you now get to 450 mW to the battery which is almost enough to charge it. Let's go with that - yay we're charging a phone in about 11 hours. If I'm assuming low numbers, then divide that by about 5 to get a 5% overall rate and 90mW, maybe enough to turn on the charging light (and about 2 days to charge your phone, if you don't move it)

At what efficiency? 0.25% at transmitter (I'm ignoring some losses here, but they're minor in comparison to that capacitive loss), a further 50% in the air, and 27% at the receiver, and you've got 0.034% efficiency. (As noted earlier, not including non-linearity). At 12 c/kWh, that's $2 to charge your phone. Ouch. OK, I'm being mean, let's say it's 10x more efficient, it's 20 cents to charge your phone, only $70 per year done every day, still an ouch. And you can heat your room at the same time with a kW scale transmitter, that costs $7500 because of the high BOM and doesn't make you feel so bad about having spent $1500 on a toaster oven.

As an added note from the original post, I noticed on a Twitter feed that some there indicate that the transmitter seemed to be covered by some form of fabric, which looking again at the video you can see is there. This does not mean that ultrasound can pass through clothing, as was previously claimed, but a thin membrane that is significantly smaller than a wavelength and is of a low enough impedance material will not be 'seen' by the ultrasound, for example a mylar film on the order of 10s microns compared to around 8mm wavelength in air at 40 kHz will likely have a minimal effect. Just as with the membranes or meshes used on car parking sensors like the Murata mentioned above... 

I'll add to this as I have time to do so, and check my calcs for any mistakes. Comments welcome on why I'm wrong, and just a disgruntled former employee :)

Edit: Just an update to some of my numbers here. Looking at the Murata data sheet is seems that SPL was measured at 30cm, not at the source, so some modification needed to the calcs. Using Murata's published factors, a further ~10dB needs applied for the diffraction and absorption (BTW that's quite a good document on how those transducers work), so they could be producing as much as 130 dB at source, so I can reduce the applied voltage by a factor of around 3 to around 40 volts, and does reduce the capacitive loss to around 130 W for 3.35 W acoustic transmitted, meaning 2.5% efficiency in that portion of the calculation, so it's overall 0.34% efficient at best, not 0.034%. Yes, that means the sound field could be of greater intensity and higher power, however that would start to push it into the nonlinear regime, and also you'd then be beaming very high sound levels at that cameraman and of course they totally considered safety in this demo...

Interestingly, this means those Murata's can put out over the 115dB level mandated by OSHA, however I'd note that a) the Murata operate at a duty cycle of about 0.4% or less (20 cycle bursts until return signal at up to around 2 m, another good link on car parking sensors), and b) there is a single transmitter, that is as loud as it will get, and decay rapidly after that - unlike a phased array for power which operates at a 100% duty cycle and uses antenna gain to amplify the sound by a factor of several hundred.

Still busy

"Millstones of Justice turn exceedingly slow, but grind exceedingly fine."

~John Bannister Gibson (1780-1853), American jurist, Pennsylvania Supreme Court

Still ridiculously busy, making it hard to really write anything well - or at all for that matter. I'm going to try and do a few shorter posts just so I at least mention things that are going on in the startup world, and try to get back to them later if they merit it.

One of the big things was the Wall Street Journal story on the patients actually affected by Theranos, "Agony, Alarm and Anger for People Hurt by Theranos’s Botched Blood Tests". Check back in my previous posts to cover the history of Theranos, but the main story this comes from is here, where they admit their results were wrong and withdraw them. It was clear when that story came out this was going to be a major issue, but now we actually have accounts of healthcare and lives actually impacted by the company failure.

In summary of the above - Theranos claimed to be able to do a large number of tests on small amounts of blood, effectively much cheaper than conventional methods, with their "Edison" machine. It turns out that they were mostly using industry standard machines from other vendors, but not even using them correctly, which ultimately results in sanctions from Federal agencies. Their own Edison machines were used for a small number of tests (allowing them to say "less than 1% of tests" were affected, because they rarely used their unreliable proprietary technology - yet they were likely telling investors that is what was regularly used). 

These tests were used in the diagnosis of patient's conditions, and informed and changed treatments. In the WSJ story, one patient changed his blood thinner medication based on these false results, potentially increasing his chance for strokes. Another was led to believe that she potentially had a new tumor having just gone through major cancer treatments - it turns out, after many other tests and worry, that she did not. Theranos's test was wrong by a factor of over 150 (yes, 150 times too high). There will be many more out there.

While things can go wrong with any tests, Theranos simply didn't follow basic procedure and are absolutely liable for missing the basics. As the WSJ says:

While inaccurate tests can occur at any laboratory, Theranos failed to maintain basic safeguards to ensure consistent results, according to regulators, independent lab directors and quality-control experts.

If you have a culture that not just enables but encourages breaking the rules, when it moves into fields that cover our health and safety, you can be sure that there are disasters like this going to occur. The regulatory agencies like the FDA are there for a reason, and this type of thinking is going to be stamped out. I'll bet that it's going to be made clear that this behaviour will not be tolerated, and company officers will be held accountable.

It seems Theranos thought the rules didn't apply to them, that they could mislead investors, customers, and the FDA that they had technology they didn't, raise $700 million dollars, affect people's health, and that no-one would notice. It may have taken years, but right now I can imagine various Law Enforcement Agencies working their way up the hierarchy of Theranos, as each layer points to the one above, until it gets to the very top. As I've said before - In my opinion, someone's going to jail over this, and this time it's not going to be one of the minions.

Theranos Admit Critics Were Right, Closes Blood Testing Service

One week shy of the year anniversary of John Carreyrou's article on Theranos that began to raise the awareness of what was going on at the company, Theranos have finally admitted that their lab testing business is not viable and are shutting it down. I've covered Theranos' history in the past, not just their shameless attempt to ignore the historical failings of the company, but to pull a 'bait and switch' and pivot to a product that has none of the amazing features claimed that enabled the company to raise $700 million. Ordinarily the failings of a tech startup would not have received this level of attention, however when that company's product affects medical diagnoses and they have to withdraw years of tests due to errors (and some say fraud), then it falls into a new category and cannot be ignored. The SEC, FDA, and FBI are all said to be investigating Holmes and Theranos, and the company is facing multiple lawsuits for its actions.

Theranos followed the time-honoured tradition of denying any problems, threatening lawsuits against those who speak out, until the weight of evidence became so strong that it could not be denied any longer. As recently as April, members of the board were continuing the Big Lie approach, and claiming Holmes would lead them to success. It seems however that the ban handed to Holmes by the CMS, preventing her from running a company that carried out lab tests for the next 2 years, is a blow they can't recover from, and the lab testing components of the company are being shut down.

In a sane world, when the CEO of a company is subject to a legal ban that prevents the company performing the only service which results in revenue, that CEO is removed from their position, or has the good grace to resign knowing they are unfit for the role. Not so in the case of Theranos - despite having raised $700 million, Holmes personally was reported to hold over 50% of the stock and had full control of the board, effectively making her immune to Board action. In an act of hubris that only in the closeted world of Silicon Valley elite startups could be considered rational or ethical, Holmes chose not to resign, but instead to shut down the lab testing services and put 340 Theranos employees out of work.

In her open letter, Holmes makes a brief statement which I'll selectively highlight and translate:

"we have moved to structure our company around the model best aligned with our core values and mission. We have decided to close our clinical labs and Theranos Wellness Centers, which will impact approximately 340 employees... We are profoundly grateful to these team members, many of whom have devoted years to Theranos and our mission..."

Translation: Our core values and mission are to protect the CEO regardless of the cost to the company bottom line or its employees. You were all led to believe this would change the world, and worked incredibly hard and well at an impossible task, but we really don't care, and thanks for all the uncompensated hours you put in. One CEO under investigation by the SEC, FDA, and FBI is more valuable than the 340 of you, so you're all fired.

"We are fortunate to have supporters and investors who believe deeply in our mission of affordable, less invasive lab testing, and to have the runway to realize our vision."

Translation: Since we have raised $700 million and the investors can't take it back, we have years of runway to continue to try to make the founder's dream a reality, despite no peer reviewed scientific evidence known to exist to support it. And now that we've fired half of you, we can keep things going for twice as long.

"I look forward to sharing more with you as we progress along the way."

Translation: We'll go on a press blackout from here, you won't be hearing much from us beyond the minimum, and certainly no uninhibited access to our miniLab system to run independent tests. (It's a bit of a staple for companies with no released product to "peek their heads out" with an open letter from the founder that end with promises of more to come, such as with uBeam's latest announcement)

The letter is par-for-the-course these days, full of doubletalk to hide the fact it's a massive climb down from the past claims, no ability to point to a product or market even approaching the scale of the original company goal, and the firing (I'm sorry, they weren't fired, but "impacted") of near half the staff who until yesterday thought that they were part of the "core mission". As with many company press releases it's not what is said but what is not said - in this case it's an admission that the capability of Theranos to run hundreds of tests on a few drops of blood is a fiction, and that they have no expectation of that changing. The claims of Carreyrou and others, derided for so long as "bitter" or "disgruntled", or threatened with lawsuits for speaking the truth, are vindicated.

Now to be fair, the company is in a very tricky position - anyone brought in to save the them at this point has a Herculean task. The blood analysis side of the company is now simply one of many in a low margin market, coming from behind stronger incumbents with a tarnished reputation - a difficult task with minor rewards at best - and not one that the numbers can likely justify continuing in.

One could imagine spinning them off into their own low margin business, with a new CEO not encumbered with a federal ban, however that not even that is happening shows they have nothing. This, however, is likely the elephant in the room at any Theranos board meeting - that the Founder and CEO is the single biggest liability to the company, and any hope of salvaging anything involves her removal - yet it is the only option not on the table.

The promise of simple and ubiquitous blood testing was really what drove the monster valuation of Theranos until earlier this year. What is left is the gamble that the company can produce a table top blood testing system superior to those already in existence, and providing enough of a business to justify a $700 million investment, which means a multi-billion dollar valuation. If anyone knows of a comparable blood testing equipment company with a single product and that kind of market cap, please point me to it.

This isn't to say there is not likely to be useful technology somewhere in the company - there are no doubt talented engineers and scientists at the company who have developed useful techniques and equipment, but in isolation and nothing for a product that is world changing. This smacks more of a situation where that IP could be licensed to other companies to recoup some money.

Without the lab testing, or a new system that massively outperforms the existing methods, Theranos are unlikely to ever show a profit and on a financial basis may simply be better off closing down and returning the money to investors. While Michael Dell said that of Apple in 1997 and was proven slightly wrong, Apple had actual products and weren't facing multiple federal investigations. Given the lawsuit ridden future of the company, this may be the simplest of many complex options.

This is a victory for a variety of groups - patients, investigative journalism, and government regulation - but a black eye for the tech press, venture capital, and boards of directors. John Carreyrou in particular can feel great pride in what he did in breaking this story at the WSJ, as not only did his work save patients from bad bloodtests, he's lifted the lid on some of the dubious practices in Silicon Valley and the billions of dollars invested there. The work he did does not come easy or cheap, and is a reminder to support those journalists who do so - I've made a point of subscribing to outlets such as the WSJ because of this. Without their work, we'd never see this type of story, and (selfishly) bloggers like myself would have no primary material with which to work.

There are now many journalists looking for "the next Theranos", and 'unicorns' are under more scrutiny to validate their claims and ensure their products are safe and effective before moving into truly important fields such as healthcare. Without doubt, there are other Theranos-like companies out there, and perhaps now they'll take the chance to pivot and moderate their claims in the hope they'll not receive the same attention - but if the founders are anything like Holmes, you can expect the "true believers" to continue to the bitter end despite reality.

The story of Theranos is far from over, there are no doubt years of stories to come - however its legacy may ultimately be in helping "clean up" tech investment now it is such a huge part of our economy. Boards of Directors may now actually scrutinise the companies they oversee, and perhaps may be inclined to resign when they cannot make an impact on poor behaviour. The federal government has made it clear that all its regulatory agencies that once turned a blind eye to private tech startups will not be doing so any longer. The FDA, SEC, FCC, and other agencies are not just unnecessary red tape but a real safety check necessary for our health and financial wellbeing - and despite their issues, we're much better off with them than without.

Honestly? Tech Startups are Giving Themselves a Credibility Problem

The last week has seen some intense scrutiny about the honesty and trustworthiness of some tech startup companies, with a former employee blogging about the startup that 'scammed them', Hampton Creek apparently being investigated by the SEC for its business practices, and Theranos admitting that data it recently presented at the AACC conference didn't follow basic procedures to protect patients. Given the frequency of these 'accidental' behaviours that always seem to financially benefit the company or CEO involved, it seems there might be a selection of personality traits that predispose those leading startups towards such actions.

It's certainly not all startup CEOs who are like this, I've had the pleasure of working for two CEOs who went above and beyond to be fair, reasonable, and honest in their dealings with both staff and customers, as well as a few who while not necessarily exemplary, made sure to follow the rules. Unfortunately there are few who have lived in Silicon Valley and worked in startups who haven't encountered a CEO most would consider between unethical and criminal in their actions, and it's often an expensive lesson for those of us who have been through it. There are enough of these 'bad apples' that make you wonder, like with the finance industry, is there something in the Silicon Valley startup system that's attracting and encouraging this type of person?

Looking at the three cases I mentioned earlier, we can get an idea of the types of scams that can be played on employees and investors, and why CEOs try them even when you would think there is a high likelihood of being found out.

Theranos. Again.

I've written about Theranos several times, a company reporting to perform many blood tests quickly with a finger prick of blood, but whose coverage was more focused on the attention seeking CEO, Elizabeth Holmes, than the company itself. It is under investigation by both the FDA and SEC for claims made about their technology to both patients and investors, and recently they presented at the AACC conference in an attempt to win over the scientific community. While they mostly avoided answering pertinent questions, they presented some new data from their systems, especially regarding a Zika virus test. They were attempting to have their FDA approval of this test expedited due to the urgency of the current outbreak, and it would help them sell the system despite their CEO from being banned from running a blood testing company. They did not win the approval of scientists, but were hoping that this would give them the thin veil of legitimacy.

Well it turns out that they didn't follow the standard basic patient safeguards when gathering this data, and have now withdrawn the test from the approval process. John Carreyrou at the Wall Street Journal continues his excellent reporting on this company, and not only do the company try this even under the scrutiny they are under, amazingly they still try to spin this as a positive for the company:

“We hope that our decision to withdraw the Zika submission voluntarily is further evidence of our commitment to engage positively with the agency,” 

They continue in the Big Lie - if they say it often enough, people might believe it. Their 'mistake' though is so basic that you have to wonder if anyone in Theranos has actual blood testing experience, or why those who do still haven't left in shame. Perhaps this is was done under tremendous pressure from the CEO to have data she could use and corners were cut, but regardless it points once again to a disregard for rules and the rights of others, as well as a lack of empathy for potential suffering. Given that the CEO has complete control of the company, this culture that fails to consider safety and process has to either come from, or be condoned by, Holmes herself.

Just Mayo?

Hampton Creek are a startup that claims it will soon be a 'unicorn', (valued at $1 billion or more), as they produce vegan mayonnaise and other 'healthy' products. It does seem that 'healthy food' startups are getting outsized funding and valuations, and as I've covered before there can be great pressure on a CEO to maximise the company valuations especially in the leadup to a new funding round. Hampton Creek are reportedly being investigated for sending consultants into supermarkets selling their mayonnaise and buying the stock, and then recognising this income as revenue just before a $90 million funding round. While claiming this was a quality assurance program, that's 'highly unusual' and even if so should have been accounted for separately. 

This may seem like a minor thing to do, but is far from it. While any company will want to get the best publicity for itself, artificially inflating sales figures or planting untrue stories in the press regarding deals or valuations move into the realm of fraud. The SEC are involved primarily because this was done just before a large fundraising round, and presumably want to know if investors were shown inflated sales figures in an attempt to artificially raise valuation. For many years Silicon Valley startups have assumed that such securities laws do not apply to them, however recently the head of the SEC has made it clear that this is not the case, and these laws will be enforced. I suspect we will be seeing more such cases in the coming years.

Any company that does this shows that lack of regard for the law, the belief that it does not apply to them, and possibly simply a need for admiration and to boost their self image - and once again in a startup, the founders/CEOs usually have near complete control and there is no-one to place a check on their behaviour.

"The Check is in the Mail!"

Penny Kim blogged about her experience after she accepted a job as Marketing Director of WrkRiot, and encountered an extreme form of a very common form of startup experience - being told that "your paycheck is coming soon!" when the money simply isn't there. Now running a startup isn't easy, and it's not uncommon to be waiting on funding coming in to pay bills, but not being honest with employees about the likelihood of their next pay check appearing is disturbingly common and seemingly acceptable to many. Most states view not paying employees very dimly, and there are can be significant penalties for companies that do so - on top of losing the loyalty of your staff. Every reputable boss I've worked for has been clear - employees get paid first no matter what, and if you can't pay them you talk and negotiate with them as soon as possible.

Having worked at a company that in the early stages chose to have everyone as contractors rather than employees, which then failed to tell us the money had run out (despite a week earlier talking about hiring more staff) and abused the monthly invoicing schedule to have us work 6 weeks without pay before telling us, it's not something you forget even when you later receive the monies owed.  (We later found out they actually did have money in the bank, but were saving it for 'more important things') What WrkRiot allegedly did though was even worse - it looks like they may have fabricated evidence of large wire transfers to the company so that the employees could be paid 'in the next couple of days'. If so, this is fraud, and likely easy to prove once a State Attorney General becomes involved. 

Once Penny Kim realised this, and both applied her legal rights and encouraged other employees to do so as well, the company retaliated and fired her (illegal). She finally received her wages, but not the other monies owed by contract, and in a situation I'm familiar with essentially the company makes it clear that to get the rest of what you're owed you're going to have to go to court. They know most people just don't want that hassle and expense.

What they didn't count on was Penny blogging about the experience, and it was soon discovered who the company was. The company, WrkRiot, then responded on their Facebook page calling her a "disgruntled former employee", that her actions were slanderous (even though 'libelous' is the word they were looking for), and the company would be pursuing legal action. This clearly hadn't been vetted by the company lawyer and soon disappeared.

As a "disgruntled former employee" myself, I want to point out that "disgruntled" simply means "angry, dissatisfied, aggrieved, resentful" and has no implications as to whether that is justified or not. Modern usage seems to imply there is something negative about the term - if what Penny Kim wrote is true then she has every reason to be disgruntled.

Overall this is appears to be quite egregious behaviour on the part of WrkRiot, however ask anyone living in Silicon Valley and working in startups for a time, and they'll tell you stories like this, or worse. Often, the companies in question are funded by large well known VCs or in national publications list of "Best Startups to Work For". What goes on inside such startups is often very different than the facade the media often portray.

Warning signs

It takes experience, and a few scars, to learn to spot the signs of companies and CEOs who behave like this - I've worked for a few and each time I've got faster at noticing the signs and protecting myself. It's still tricky, society and companies work better when there is trust, and most people want to believe the best of others - and it's that attitude a few take advantage of. It's only a small subset of society that think this way, but the large sums of money now in tech startups, along with the minimal oversight from the funders, attract these personality types.

How to spot them without going through the pain yourself? Firstly, not all CEOs who do such things are doing so deliberately, some are simply inexperienced, incompetent, or just out of their depth and panicking - regardless, it's your career and paycheque, and they've chosen to be in that position. You have a contract with your company, they need to honour it, and you don't need to do any more than is on paper - if they fail to meet their side of the deal, you don't have to meet yours (when it comes to that, get a lawyer, don't be cheap). Be clear and communicate with them, but in the end, protect yourself whether it's accidental or deliberate.

Watch what the company does and remember that only three things will tell you how they will act in future - their record of actions, their record of actions, and their record of actions. Don't listen to what they say, watch what they do. If they do it to other staff, they'll do it to you. Isolated incidents of problems do happen in startups, but put the onus on them to prove they are being honest. If things happen more than once, trust your gut and get out early.

I'd recommend reading books such as "The Wisdom of Psychopaths" by Ben Dutton and educated yourself on the patterns of their behaviour and how 'normal' they can seem at first. One poster 'Theodores' on the HackerNews thread on Penny Kim's post made a good observation that finally made clear something I've been struggling to tie together - CEOs who don't make the 'psychopath' definition yet have some similar traits and abuse their position seemingly without remorse.

Even if we have gone through the mill several times we may not be educated as to what is only going on. You have to be done over by someone at the extreme end of the spectrum of personality disorder to understand what really goes on with the tyrants and bullies that frequently own companies, start-up or otherwise. We even elect these 'personality disorder' types to high office without anyone pointing out that they are not fit for the role due to having these psychopath tendencies.

He then links to the Wikipedia definition of Personality Disorder Cluster B which lists the following behaviours:

• Antisocial personality disorder: a pervasive disregard for the law and the rights of others.
• Borderline personality disorder: extreme "black and white" thinking, instability in relationships, self-image, identity and behavior often leading to self-harm and impulsivity.
• Histrionic personality disorder: pervasive attention-seeking behavior including inappropriately seductive behavior and shallow or exaggerated emotions.
• Narcissistic personality disorder: a pervasive pattern of grandiosity, need for admiration, and a lack of empathy.

and I realised that this is the type of personality, excessive aggrandisement, attention-seeking behaviour, a disregard for rules, and an overblown view of their capabilities, that I feel many of those funding startups are actively looking for. By funding those who do not 'play by the rules' and inflate their apparent valuations, investors are encouraging this behaviour and inflicting it on all of us.

Solutions

There are no definitive solutions to this - their will always be unethical leaders, especially when money and power are involved, but there are things that can be done to minimise their impact. Employees need to educate themselves as to the personality traits of such people, to know their rights, and be willing to walk away from any such positions. Investors need to take a more active role in selecting more 'reasonable' people to run companies, and to not reward such personalities through funding. Further, once funded, investors need to take a more active role in monitoring their companies, and understand that they can't claim no responsibility, that the actions of these companies are at least in part their fault. It's also in their own interest to do so - a few more stories like the ones above, and potential purchasers of their companies will be more and more wary of buying at a high valuation. Finally, agencies such as the SEC and State Attorneys General must actively enforce existing laws on startups and stop turning a blind eye to it - only once heavy fines are imposed, along with jailtime, will this truly be taken seriously. There seem to be some movement on that enforcement front, and some have been warning that at some point soon, at least one prominent startup CEO will end up in jail for their actions.

As a last point, I want to congratulate Penny Kim on writing about her experience and drawing attention to the abuse heaped on some employees that is rarely covered in the press. It's hard to bring this to light, and the spotlight that falls on you when you speak out can be intense - but the more people who do this, the more awareness is raised, and the harder it will be to happen to others.

Bait and Switch

Raising money from any source can be difficult - you have to persuade whoever has money that you're the best place for it to go, and you're up against a lot of competition. Sometimes you can do that by showing preliminary work and persuading your peers you have a sensible rational approach to moving forward, and the end result is worthwhile - most grants from the government are done this way. Sometimes you can show existing revenue and that market growth will easily allow the money you need to expand to be paid back, and a bank or other lender will see the value. When you are a public company, you have to show returns and potential for growth that make your stock look appealing to retirement funds and the public. With Venture Capital, the goal is to provide outsized returns, billion dollar companies that give 10x or 100x gains or more, ideally to make up for all the other bad bets made and have their VC fund be profitable. It's this last one, and the behaviours it encourages, that we are going to delve into a little deeper.

What Drives Cheque Sizes and Valuations?

When raising from VC, there are multiple things a company needs to take into account. First, there's how much you need to raise, (Many Series A round are in the $3 to $10 million range) and how much of your company you are prepared to part with to get that.  The combination of those two tells you where your company needs to be in valuation to make that possible, for example if you want to give up no more than 20% of your company and to raise $10 million, you need a $40 million pre-funded valuation (that's the value before you take the money) - as the post-value will be $50 million ($40m pre + $10m investment) and then that 20% is the $10 million investment compared to the $50 million post.

Most VCs have an expectation of owning a reasonable piece of the company, usually in the range of 20 to 25% with 15% at the low end, and 30% at the high end. The range of cheque sizes they are prepared to write depends on the size of their fund - how many companies they want to monitor sets the lower bound, and spreading risk to be sure not all their eggs are in one basket sets the upper end. For example, a $200 million fund may decide that a minimum of $3 million and a maximum of $6 million for Series A companies is their comfort zone, leaving some cash over for seed investment and reserved for later stage funding. These numbers vary with each VC, and with time as their fund matures - they typically last 10 years and what they do in year 1 is very different than compared to year 7.

While normally you'd want to boost the valuation of your company to minimize the dilution of your company, setting your expected valuation as very high will immediately remove a number of VCs from your possible pool of funders. For example, if you want a valuation of $100 million with a $10 million raise, then you need to find a VC not only able to write that cheque, but willing to accept under 10% of the company in return (actually, more than one since often there is a lead and then additional companies that split the deal). With a raise of $20 million the pool of VCs willing to fund is even less, but the % of the company on offer is much more palatable. If instead the valuation moves to $40 million then you still have the same pool of VCs as originally, but they will be much more interested in owning 20% of your company than 10%.

Incentives for the Founder to Push Valuation
You as the founder/CEO want to get the most money for the least equity so the goal is to match financial needs, with the cheque size of a VC that is in your area and likes you, and with an idea/company that justifies the valuation to keep VC ownership in the 20% ish area. Seeing as there is an inherent need in people to both raise as much money as possible, and believe the external validation that your company is worth an enormous sum of money, there is pressure to give the 'rosiest' view of the possibilities for your company. As I wrote before, I have even been chastised by a possible investor for presenting a 'realistic' view of revenue and told instead to show the most positive view regardless of likelihood.

A CEO is under that pressure to inflate values, particularly one without a real grasp of the realities of their area such as those who have little or no actual experience in a technical field - Elizabeth Holmes and the like, for example. They can claim ridiculous things to potential investors that no-one who actually truly understands would say, and say so convincingly because they believe it themselves. If you read VCs talk of what they look for in founders, it's almost always a 'fundamentalist religion type zeal and belief in what they are doing'. Notice in that article it's the last 2 of 12 characteristics that what most people consider critical - Domain Expertise and Integrity - and I've found (to my own detriment) that most CEOs I've worked for utterly fail in both of those. 'Tenacity' is the most important to VCs apparently, after all you don't want your investment to be thinking about reality, there might be a sucker somewhere who eventually buys the very dead horse you've been flogging. (Sorry, I mean "overcome the great difficulties being a founder entails")

Basically, VCs set the terms and incentivize what would normally be considered lying or fraud - why are we surprised when that's what we get? Moreover, it weeds out those experienced in a field who simply understand enough to put realistic expectations on what's possible, or have the integrity to refuse to lie.

Exaggerating or Lying?
When does 'rosiest view' change to 'lying'? There is no sharp line before which it's exaggeration and after which it's fraud, it's a grey area. Sometimes you are smart (or lucky) and what you claim turns out to be true, sometimes it's completely wrong, sometimes it kinda does but not nearly as well as you hoped - very occasionally it's massively better than hoped and you end up a Facebook or WhatsApp. Sometimes you might believe you can reach a metric you are claiming, and only have the resources to know for sure post Series A, and when you learn what you are truly capable of you have to 'pivot' and refocus the company on a different, usually smaller, market you can actually address.

What is it, though, when the company knew for a long time that what they were claiming was never achievable? Maybe they always knew, maybe they learned later once they had the staff and funding, but they kept going because to do otherwise was to admit defeat, and give up any chance of that greater fool buying you. So what does someone like that do? Well if we look to Theranos and Energous, the answer is 'Bait and Switch'.

Theranos Poisoning the Well for other Blood Test Tech
Theranos recently Punked the AACC and managed to give a marketing pitch for a new platform rather than actually give results on their old one on which they had raised $700 million. The old system was supposed to have been able to run up to 200 tests on mere drops of blood drawn from a finger rather than a vein, which if achievable would have been a huge leap forward. They were the darling of Silicon Valley, with huge coverage in the press for the founder Elizabeth Holmes (and all on her, not the tech). It turns out that they were not being very truthful in their claims, and now both the SEC and FDA are pursuing criminal complaints against the company as well as eight class action lawsuits from patients who received false diagnoses from the company. These exaggerated claims allowed them to raise that $700 million while still allowing the founder to maintain a majority holding of stock, for a while making her a billionaire until the truth came out.

So what did this new system do? Capillary blood from the finger? No. 200+ tests? No. Cheaper than existing? No. Faster than existing? No. More utility from a single box? Maybe. Essentially everything that made the company viable and worth investing in was a lie, and now they are trying to pretend the company is viable with a far less interesting concept, and one that was stated by experts to not having anything that didn't exist elsewhere. Had they done this two or three years ago, before actually providing patients with false diagnoses, then it would have been a 'pivot' - a company that made a noble and commendable effort but didn't quite work out. But they didn't, they kept the illusion of capability going far beyond when any sane person would have dropped it, and fully moved to the realm of "Bait and Switch". Turns out they get to keep that $700 million despite at some point having moved from 'exaggerate' to 'lie' in their claims - way to reward bad behaviour.

That VCs burn their money (some of which comes from pension funds remember) on a stupid bet is one thing, partly that's what they do, but because they both allowed and incentivized Theranos' behaviour, that target of a fast, cheap, small, versatile, consumer friendly blood testing was the norm for anyone else raising money in that area for the last few years. Imagine you had a product that did literally half of what Theranos claimed, and you pitched to VCs who kept rejecting you because they expected and demanded a company that exceeded Theranos. An honest founder couldn't pitch that, a dishonest or naive one could. By Theranos continuing the charade of their viability they made it harder for those legitimate startups to raise anything at all due to unrealistic expectations. It's great for a company to kill their competitors but not what we as consumers or investors (or I assume LPs in a VC) want.

Energous and the Pointless Product
Energous are wireless power company who claim to use RF (like wifi) to power small devices like phones. No independent third party has ever validated their system or performance, and some claim they are simply using a "Time to Carrot" approach to constantly keep investors thinking that the pot of gold is about 12 to 18 months out, and just put more money in. They have claimed up to 4 Watts at up to 15 feet from the transmitter but there are so many skeptics, myself included, that look at the physics and maths and show that what they claim is simply not possible. After going through an IPO, raising millions of dollars and the top three executives paying themselves almost $5 million a year total with no product or revenue, how do they answer their critics? By releasing a product, but so simple and with specs so low that it is pointless, and calling it "mini" - and now they claim they have a product, and it's just "the big pot of gold is just around the corner...".

The mini-WattUp is a small USB sized device claiming to charge devices, that needs to be in contact to an inch away (not 15 feet), and charges at a rate that would take days at best to fully charge a phone, but it does have FCC approval (because it does nearly nothing). It's like making a car for a soap-box derby and claiming that next year you'll be competing with Tesla. It achieves the goal of continuing the illusion that there is real technology, real hope of a full scale version which will always be "18 months away".

Had Energous tried to IPO the company based on the mini-WattUp then they would have fallen flat on their face - nothing interesting, useful, or better than the competition (by far). If the goal though is to raise the cash, milk it for as long as they can, then a "Bait and Switch" keeps the money flowing, and that's the most important thing. <sarcasm>It's a pity as it destroys any market for real at-distance wireless power companies.</sarcasm>

Speaking of Other "At Distance" Wireless Power Companies
For some reason, I wanted to remind everyone of uBeam's claims of how they will be wirelessly charging at a distance, and by the end of 2016 (only a few months left to wait!). Released specs are:

• 4 meter range in every direction
• At least 1.5 Watts and often 'faster than a wire' (that's over 10W if true)
• Charges while in your pocket

I can't find anything on safety or efficiency that's public from uBeam, though there are some well written articles on the safety aspect. Just keeping this in mind for comparing to the product uBeam must be releasing soon.

Bait and Switch
So looking at Theranos and Energous, if you're wondering why they make the claims they do which have never been backed up by evidence, it's because they've been paid millions of dollars to do so. The system simply encourages it, and it's basic human trait that when you reward a behaviour you get more of it. VCs by their funding approach are selecting for founders and CEOs most willing to exaggerate, and in some cases willing to lie. If we want to see less distortions in our allocation of capital and see it more go to genuine, viable technologies, then something has to change. In large part, one of the culprits is the tech media, who simply reprint PR scripts they are handed, and give up actual ability to criticise in return for access. We need more willing to ask the hard questions in the way John Carreyrou did of Theranos or Lee Gomes did of uBeam, rather than just parrot a PR line handed to them without question.

Until that happens, expect more companies to raise large amounts on the unfeasible, and then finish the "Bait and Switch".

And finally
Just as I was to publish this, I read a fantastic piece in the The Atlantic by Adrienne LaFrance about "Access, Accountability Reporting and Silicon Valley" which says a lot of what I've been trying to say on the media coverage of tech firms, but far more eloquently. I highly recommend it.

Theranos' AACC Presentation: Lack of Data Proves Doubters Were Right

Yesterday afternoon, Elizabeth Holmes, embattled CEO of Theranos, took to the stage at AACC to finally reveal the science and data behind their products and tests. She started with a heartfelt apology for the mistakes the company had made, for the misleading information and marketing both to patients and investors, and proceeded to finally show the actual data and methodology of their tests, warts and all, and then pleaded with the community to help the company move forward and realise the initial promise of Theranos, of multiple, accurate, rapid tests from a single drop of blood. The crowd rose to their feet at the end, and applauded her honesty and humility.

Or at least that's what happened in an alternate reality where shame over fraud and scientific honesty are foremost in the minds of startup CEOs. Instead, what we were treated to was a marketing presentation for a future Theranos product, no apology, no real data, and evasion of any substantive questions. If you have 90 minutes to spare, watch the whole thing, it's a masterclass in abusing the platform given by a professional organisation to do marketing and try to give the company a veneer of credibility to those not versed in the subject.

They didn't just fail to reach the low bar set for them - they didn't even attempt to reach it. To list out what was wrong with this presentation would take a book to cover fully, and there are multiple articles detailed issues with it such as the Wall Street Journal, Wired, and the New York Times. I'll try and cover the main points below - for those of you looking for a history of Theranos, there are some summaries here, here, here, and here.

As someone who has actively organised and managed scientific conferences and talks, I'm stunned by what AACC leadership allowed Theranos to get away with. Theranos committed multiple major faux-pas, and Holmes' celebrity status allowed her to get away with things no other presenter would have been. In a scientific conference the goal is not just to present data, but to withstand the scrutiny of your peers and as such the question component is just as important. The talk was set for 90 minutes, split into 45 minutes presentation and 45 minutes questions. Holmes gave a very polished and well rehearsed talk for an hour - clearly and deliberately done to cut 15 minutes of time from questions. This is an old tactic, commonly used by presenters who fear questions, and one an experienced chair/moderator knows to look for. The session chair was left with the choice of cutting them short and leaving out the component everyone thought they wanted to see, the promised (though never really delivered) final section on actual results comparison, or allowing Holmes to cut into the question time. They went for the latter option, a difficult call to make and one I can understand them doing.

Holmes also committed one of the worst crimes - not presenting what was claimed in the abstract, and instead giving a marketing talk for an upcoming company product. In the Wired article linked above, Stephen Master, professor of clinical and lab pathology at Weill Cornell Medical College. “This sounded like a talk from a manufacturer.” Conferences have commercial presentation sections for that type of talk, and anyone who gives a marketing talk in a scientific slot will never be invited back. AACC leadership should have made comment on this after the talk, stated it was unacceptable, and in being silent they are effectively endorsing this approach.

Her talk was slick and obviously well rehearsed, and covered things in a way that would be ideal for fundraising, but inappropriate for a scientific talk. She used buzzwords that CEOs seemingly have to say, without apparent understanding of their meaning. "Inflection Point" is one of them, which is code to a VC that "we're about to have massive sales, real soon, honest" but everyone else knows is just cover for poor performance to date. For example, Holmes uses it at 42m40s correctly to describe a test function, but tries to pretend at 56m20s that sales of this future miniLab will soon boom. Meredith Perry, Founder and CEO of uBeam that similarly has been questioned about the validity of its technology, said in September 2015 "We’re at a massive inflection point. We are about to head into a completely new phase of growth.” but nearly a year later no sales, no demonstrations, no products. Beware the CEO who promises an inflection point, it's nearly always a false promise.

Instead of answering the many questions scientists had, Theranos presented their future 'miniLab' device, a 'cloud connected' unit that may play well with VCs but fell flat with doctors and scientists who actually use the equipment. Geoffrey Baird, an associate professor in the department of laboratory medicine at the University of Washington, commented in John Carreyrou's Wall Street Journal article:

Every piece of technology they presented has been known for many years, and exists in other platforms largely in the same configuration, or in some cases in much more compact form in competitor’s platforms.

So even the future (non-existent) product they are trying to distract us with does not even move the current state-of-the-art forward in any way. In the initial questions following the talk, all done in comfy chairs and a collegial atmosphere I have never seen at a post-presentation question session, one of the moderators called Holmes on the pedestrian nature of the equipment and the departure from the world-changing claims Theranos had raised $700 million with. Masters noted that the original claim was "Many broad tests, 70 tests from a couple of drops of blood - this falls far short of that... I can buy a point of care instrument today that does a finger stick lipid panel." and received much applause from the audience. Holmes then did what was standard for the rest of the question session, talk a lot, but fail to actually answer the question asked.

Holmes clearly had memorized the line "What we wanted to do here today was..." followed by a few options such as "begin engaging with the community." or "present our future plans to the audience." No-one corrected her that this differed from the abstract of her conference talk, but you could tell people were unhappy with those non-answers.

This continued with all questions designed to elicit information such as "Why present data for potassium with venous not capillary blood?" (a key question about their methods) the reply was "What we wanted to show was..." followed by no answer. When asked about false positives and concordance rate, the reply was that their technique was "Very good" and then no answer, even when asked a second time. It was clear no real answers would be forthcoming. 

Whenever pressed to answer questions on previous methodology based on their Edison systems (which were never mentioned once in the talk despite being the main company product to date), Holmes gave the most frustrating answer of all:

In the appropriate forum, we’ll address those. But today we’re hoping to be able to engage on a scientific exchange on this platform.

A canned answer, giving no indication of when that data would be forthcoming or what that appropriate forum would be - ridiculous given that there probably is no better place than the AACC, and that audience, to address them. The real data everyone wanted to see, the topic everyone wanted to cover, was dismissed in those two sentences, and not a peep from AACC leadership or moderators on that. 

As Wired magazine points out, Theranos just 'pivoted' - that's when a startup company realises their past approach and technology just can't do what it was claimed, and try to shift to another product or market in an attempt to save the company. It's clear from the reactions that no-one was impressed by the miniLab equipment, and that had this been what was pitched to investors, there would have been no $700 million raise. As one of the moderators, Master, said in Wired:

Does this live up to the hype? The answer to that is no.

Finally, no-one raised the most obvious question which should have been:

"Since you (Holmes) have been banned by the CMS from running a company doing blood tests, and you have made it clear that you will not leave the CEO position, how will the Theranos be able to offer this test and equipment?"

That in itself would have been worth the non-answer answer that would have come.

So in summary, Theranos avoided answering any of the questions scientists wanted answered, have abandoned their old technology, and shifted to a new unproven technology that has no advantages over existing available equipment. They truly live in another reality if they think this will be enough to save the company.

Equally importantly though, AACC allowed its prestigious name to be used by someone being investigated by both the SEC and FDA for fraud, to not present real data but instead a marketing talk and to avoid substantive questions, and to fail to press even on the soft-ball questions it asked. Holmes may not have the capability to show remorse, but the AACC should be ashamed for what it has enabled here.

Self Driving Cars - It's That Safety Mindset Again

There's been some attention to the safety aspects of technology in the last week, as reports of a fatality of a driver while using Tesla's 'Autopilot' feature in their Model S. The company reported this in a blog post, and they made sure to highlight that Autopilot was still in beta and it was the first known fatality in 130 million miles of driving, compared to an expected death toll of 1 per 96 million miles. They are at pains to point out that the customer's use of Autopilot "requires explicit acknowledgement that the system is new technology and still in a public beta phase before it can be enabled.", and that neither the system nor the driver noticed the truck, so it's clearly not their fault, time to move on.

We've been hearing about self driving cars for some years - Google have been at the forefront of this, with all the other care manufacturers trying to play catchup, Tesla included. The promise of infallible computers taking control and driving us, eliminating human error, drunk driving, falling asleep behind the wheel, and other causes of injury and loss of life is a enticing. It's something we've seen in science fiction films for decades, and at some point in the future it will be a reality - but there are no companies selling cars that are fully autonomous - in fact on the NHTSA scale of 1 to 5 (4 to 5 being what most people would consider autonomous), Tesla's system might rank at '2'.

Combined Function Automation (Level 2): This level involves automation of at least two primary control functions designed to work in unison to relieve the driver of control of those functions. An example of combined functions enabling a Level 2 system is adaptive cruise control in combination with lane centering.

Google's self-driving car is listed as possibly a '3'. Google itself notes that:

There are test drivers aboard all vehicles for now. We look forward to learning how the community perceives and interacts with us, and uncovering situations that are unique to a fully self-driving vehicle.

So even though the NHTSA rates Google's car as more autonomous than Tesla's, Google do not allow the public to drive it, and make sure there is a test driver there at all times (presumably as paying full attention as part of their job) and are trying to encounter all the unique situations the car is likely to find itself in. The LA Times has an article going into more detail on this here, and why calling a feature 'Autopilot' may lull consumers into a false sense of security. I would place a bet that the engineering teams had a fit when marketing decided to use that term, but were not listened to.

So what's wrong with Tesla putting in these new advanced features? Absolutely nothing, in fact it's a great thing that they are looking to improve the technology in their cars, however I feel they have made some major mistakes in their introduction and their marketing that fail to take into account consumer safety. I've blogged before about "disruptive" way to get new products into the hands of consumers, to have them 'beta test' for you, has moved from apps and games where it's non-critical and so a good approach, to healthcare and other critical infrastructure - such as Theranos and their blood testing - where it's not. There's a generation of tech business leaders and investors who have never dealt with safety critical products, and they fail to approach them in the correct manner medical and other safety critical industries traditionally have - industries where the suggestion of 'beta testing' a new feature with impact on safety would be met with horror, and where if a user died there would be no hiding behind statements like "well, we did put a warning somewhere in the manual".

We accept that nothing is 100% safe, even walking down the stairs can result in a fatal fall, eating your dinner can result in choking to death, but the chance is so low that we don't even think about it, and act as if it's completely safe. In the USA in 2010, prior to any autonomous vehicles, there were 33,000 deaths, 1.5 million injuries, from 5.5 million accidents, and around 1,500 car trips per person per year for near 500 billion journeys over 3 trillion miles. That means 99.9997% of all car journeys in 2010 resulted in no injury at all, and 99.99999% of all trips didn't result in death - yet that's still 33,000 people taken from families and an estimated economic cost of $231 billion per year even though we consider driving 'safe'. Autonomous vehicles can reduce that cost, but how to develop and introduce this capability is still in question.

How safe should something be before it is released for use? There is no set number here to work from, but typically you start by viewing the necessity of the product and who will be using it. For example a new drug goes through many medical trials, FDA approval, and still remains under the control of a qualified doctor before being prescribed to a patient, but a new wireless router undergoes basic FCC and UL testing before being released to consumers.  If the feature being introduced can't cause harm, then a risk of failure is reasonable, but for safety critical it must exceed the performance of the existing system and you must be able to prove that.

Tesla state that 130 million miles have been driven on Autopilot, and this is the first death compared to an expected 96 million miles - proof it is more than safe, it has already saved a life! Except it isn't proven. 130 million miles may seem like a lot, but compared to 3 trillion miles driven a year, it's nothing - merely 0.004% of the yearly total. You would have to drive much more than that to get anything statistically significant, and that's what matters here, statistics. You need to prove that it's safe, that more than 99.9997% of journeys result in no injury (at minimum), by gathering the data in sufficient quantity that all possible conditions are covered, and showing your system is better than the existing before replacing it. 

That is an enormous task, requiring many times the data that Tesla has gathered so far, and highlights the difference between Google and Tesla - one is taking their time, gathering information and data before taking steps forward, the other is working from the belief that their product is safer than before (which it may well be), however they do not have the data to prove it. The data they need to prove it, is currently being gathered, though in a somewhat uncontrolled manner, as Tesla owners drive their cars and use their Autopilot. Imagine the following scenario:

A pharmaceutical company creates a new drug that they really believe reduces heart disease after their lab tests on 5 people. They immediately sell it over the counter to millions of people, with instructions in the packet about not taking with antacids and that it's in 'beta', and monitor everyone taking it. After a few years they have the data and show everyone they were right - it did save more lives than died from taking it incorrectly or side effects.

Was the hypothetical drug company vindicated and right to do that, or reckless in their approach and lucky it worked out well? By our current laws, they'd be shutdown and executives in jail for doing that. We need roll back this recent thinking of safety as something that is suitable for a beta test, and make sure that the critical things we rely on in our lives are proven safe and effective before they reach consumers.