Article link: http://www.wsj.com/articles/theranos-voids-two-years-of-edison-blood-test-results-1463616976

Regarding the delay in delivering the coup de grace, regulators are unlikely to allow a medical testing lab to operate and deliver test results that could jeopardize patient health. Let’s recall several news reports mentioned that bowing to regulatory pressure, Theranos had stopped using its proprietary Edison instruments already back in June 2015. We aren’t privy to the behind-the-scenes back and forth between the regulators and Theranos but everything that’s steadily dripped out over the last few months suggests the regulators are pulling the strings and Theranos appears to be in the throes of a slow death by a thousand cuts.

However, does this story end with Theranos shutting down? Was Theranos alone responsible for this shameful and sorry state of affairs? No, like any morality play worth its weight in gold, Theranos merely personifies the prevailing morals. Several usual suspects were and are involved in creating and sustaining the parasitic feeding frenzy that Theranos represents, a frenzy that persists to this day. Such involvement epitomizes a serious erosion of standards and ethics in professions ranging from technology journalism to corporate governance to law to academics.

Parlous State Of Technology Journalism

Theranos hype timeline: Zero Hedge blog has a helpful list of some 97 or so unique, largely laudatory, intensely hyped, largely credulous puff pieces about Theranos in the media (1). Starting with the San Francisco Business Times on August 30, 2013 to MarketWatch on October 12, 2015, the sources run the gamut from what pretends to be technology journalism to mainstream media to storied names in literary magazines.

So what? Well, where’s the skepticism that’s supposed to personify professional journalism? No tough questions, lack of even cursory attempts to vet the technology by seeking input from experts in the field, a rare exception being the April 25, 2015, Business Insider story by Kevin Loria, which actually did do all of this (2).

Theranos shuts down and we’ll just forget there seems little difference between technology journalism and PR when it comes to covering Silicon Valley darlings, shall we? Oh goody, that means the next Theranos is inevitably just around the corner.

Parlous State Of US Corporate Boards

In the wake of the 1st WSJ (Wall Street Journal) expose back in October 2015, Theranos reorganized its board amidst much fanfare (3). With things only headed steadily downhill ever since, Theranos added new heavyweight Board members in May 2016 (see excerpt below from 4).

‘Along with the announcement of what Theranos described as Mr. Balwani’s retirement, the company also said it had made three new additions to its board that it said would bring “a wealth of scientific, medical and executive leadership to the company.”

The three new directors are Fabrizio Bonanni, a 14-year veteran of Amgen Inc., former Wells Fargo & Co. Chief Executive Richard M. Kovacevich, and William Foege, a former director of the Centers for Disease Control and Prevention.

Mr. Kovacevich and Dr. Foege used to be on Theranos’s board until a previous board reshuffle last October, following The Wall Street Journal’s front-page articles raising questions about Theranos’s technology and operations. They spent the past six months on a board of counselors along with former Theranos board members George Shultz and Henry Kissinger.

During his tenure at Amgen, Dr. Bonanni served as senior vice president of quality and compliance and corporate compliance officer, Theranos said.

“Dr. Bonanni’s leadership and guidance in operations, quality and compliance is exceptional, and we are fortunate to add his experience to our team both on the board and to work with us internally,” Ms. Holmes said in a news release about the new appointments.’

Wait, what? Isn’t this akin to rowing up to board the Titanic as it’s sinking fast? How does this make any sense? In what world? And what have the board members added back in October 2015 been up to? Obviously it means the reputations and future prospects of those who joined then and are joining now at this late stage will stay secure in the future or least that’s the calculation at play. What does it say about current US start-up corporate culture that something that should be ethically abhorrent is instead a fait accompli? That as far as Silicon Valley start-up boards are concerned, accountability is just a word sitting unused in the dictionary, gathering dust and maybe even weight, and that apparently is just as it should be.

Let’s not forget when it comes to the business of science, industry has long sneered at academia (see excerpt below from 5, emphasis mine)

“[Nonprofits are] unable to stop a project – in industry you have to be able to make these decisions. This is the disciplining power of money, which a lot of other incentives don’t have.”

Ah, the mythical disciplining power of money! But with the Wall Street and auto bailouts in our rearview mirror, in this kleptocratic post-Great Recession world, it’s usually someone else’s money at stake. In such circumstances poof through the window vanishes the disciplining power of money.

Theranos shuts down and we’ll just forget that corporate boards of medical technology companies have any duties beyond ensuring their funds safekeeping and potential profits, shall we? Risking the lives of patients? Meh.

Parlous State Of US Legal Ethics

What’s a little conflict of interest when one’s legal counsel is one of the most high-powered and successful in the entire US? David Boies was Theranos’ outside counsel. He apparently joined its board a couple of weeks after, not before but after, the first of WSJ’s damaging exposes on Theranos (6, see excerpt below from 3).

‘The members of the old board that will remain on the new governing board are Ms. Holmes; the company’s chief operating officer, Sunny Balwani; the construction executive Riley P. Bechtel; and James N. Mattis, a retired Marine Corps general. The fifth member of the governing board will be David Boies, a noted lawyer who has been the company’s outside legal adviser.’

Note as well the interesting nugget of Riley Bechtel’s presence on Theranos’ board as recently as October 2015. Mind you, an extensive recent Fortune exclusive on Bechtel (7) points out that he’d stepped down as Bechtel CEO in 2013 following a Parkinson’s diagnosis.

‘In late 2013 his father, Riley Bechtel, who had served for 24 years as CEO, retired four years early at 61 after being diagnosed with Parkinson’s disease. Since then, Bill Dudley, a 35- year veteran of Bechtel, has been CEO.’

Obvious modus operandi to stack the board with influential names to attract and retain investor support. So what if it’s likely their health conditions may preclude due diligence and capability to adequately discharge their duties? Evidently Silicon Valley start-up boards expect to be held to a lower standard and expect to get away with it (8, 9, 10).

Also pertinent, Boies’ staying on as outside legal counsel after joining Theranos’ board creates a serious conflict of interest (see excerpt below from 11)

‘That Mr. Boies is representing an embattled client is nothing new. But this time, the lawyer has raised the ante by becoming a director of Theranos.

Let’s stop here and note that this has the potential to blow up. Mr. Boies is taking on two different roles at Theranos. A lawyer represents a client — here Theranos — while a director, even at a privately held company like Theranos, represents the company’s investors.

Depending on what unfolds at Theranos, Mr. Boies may be put in a position where he either has to protect the company (as its lawyer) or the shareholders (as a director).

I asked one of my colleagues, Jo-Ellen Pozner, a professor at the Haas School of Business at the University of California, Berkeley, who specializes in business ethics, about this potential conflict. She was skeptical of Mr. Boies’s dual role.

“I have a hard time believing that an experienced litigator can adequately represent investors — one of the primary responsibilities of a director — while being attentive to potential legal strategies, which might cause him to privilege the interests of management,” she told me. “It just seems a difficult line to walk.”

No doubt Theranos waived the conflict in lots of documented forms. And the American Bar Association does allow this type of dual role. But just because a conflict is allowed doesn’t mean it will not lead to problems.

If the technology of Theranos turns out to be not what it claims, investors would almost certainly seek to sue the chief executive, Ms. Holmes, and the company, as well as the board that allowed this to happen.

This gets complicated for Mr. Boies, because Theranos is a corporate governance disaster.’

Theranos shuts down and we’ll just forget about the need for legal ethics when it comes to how Silicon Valley darlings are run, shall we?

Parlous State Of US Academics

Back when the world was subjected to only treacly sweet flattery posing as news articles about Theranos, Stanford University Chemical Engineering professor, Channing Robertson appeared as Elizabeth Holmes’ indulgent, avuncular mentor (see excerpt below from 12).

‘Theranos senior technical adviser Channing Robertson admits, “I do worry, because I’ve never seen a person with this kind of drive who doesn’t miss or skip a beat.” Robertson frequently checks in on Holmes, who seems nothing more than bemused by his concern. “She just turns around with a big, wide smile and says, ‘Life is great. Everything is fine,'” he says.’

Mentioned as Theranos’ senior technical adviser in 2015, he’s made clear in interviews that he was involved in confidential aspects of its technology from the earliest stages (see excerpt below from 13).

‘Theranos, which is privately held, is both a hardware company and a medical company, and for many years it has operated with a stealth common to many Silicon Valley startups. “For a long time, I couldn’t even tell my wife what I was working on,” Channing Robertson, a chemical-engineering professor at Stanford and the company’s first board member, told me.’

Theranos’ proprietary technology apparently failing at even the most basic of routine blood tests begs obvious questions. What did this senior technical advisor know about these problems and when did he know them (see excerpt below from 14)?

‘”I was there when it was invented. I was in the laboratory, putting the screws in the first instruments,” Stanford professor emeritus and technologist Channing Robertson said.

Robertson is Holmes’ former mentor and has been working with Theranos for 13 years.

“I expect we’ll be under the microscope and we’ll be scrutinized. We welcome that. We’re not afraid of it. Because we know what we’ve done works,” Robertson said.’

Also relevant, Robertson left Theranos’ board in July 2013 after retiring from Stanford (see excerpt below from 15).

‘The company in July disclosed a makeover of its board of directors, with former Secretary of State George Shultz, Holmes and Theranos President and COO Ramesh “Sunny” Balwani as the only holdovers.

Among those who left are Robert Shapiro, the former chairman of drug company Pharmacia Corp. , venture capitalist Pete Thomas of Redwood City’s ATA Ventures — another early Theranos investor — and Channing Robertson, the recently retired Stanford chemical engineering professor who encouraged Holmes to start her company.’

However, he apparently stayed on as a Theranos executive (see excerpt below from 16).

‘Though she now faces harsh criticism from the outside, she is still surrounded largely by true believers. Her younger brother, Christian Holmes V, is an executive at Theranos, as is her former Stanford professor, Channing Robertson

“I truly was astonished,” Mr. Robertson said. She had come up with an idea for a drug-delivery system that would be able to detect drug levels in the blood and wirelessly transmit those results.

“It had never even occurred to me,” Mr. Robertson said, adding that he considers being Ms. Holmes’s mentor akin to teaching Beethoven to play piano or teaching science to Einstein.’

As the above media snippets incontrovertibly show, Channing Robertson personifies the close ties between Stanford University and Theranos. Lab testing academic heavyweights have vociferously emphasized that independently vetted peer-reviewed publications are the gold standard for verifying new medical technologies. With none forthcoming even till date, Theranos obviously doesn’t believe in hewing to long-established and universally accepted scientific norms. Given Robertson’s close association with Theranos, should we conclude academics from elite universities like Stanford also abjure the scientific peer-review process when it suits their convenience?

Theranos shuts down and we’ll just forget that be it academia or industry, scientists need to adhere to strict scientific norms and standards, shall we? So what if it’s medical technology that directly impacts patients’ lives?

Since the name Theranos is an ostentatious combination of the Greek words, ‘therapy’ and ‘diagnosis’, the last words belong appropriately enough to the Greek, John Ioannidis, who, Cassandra-like, raised doubts back when there was nothing but a Theranos love-fest (17). One year later, with nothing but disaster writ large, Theranos is starting to more closely resemble ‘Thanatos’ (death) (see excerpt below from 18),

‘Hopefully, the name Theranos does stand for well thought-out and useful therapy and diagnosis and does not represent the harms suggested by another similar Greek word, thanatos (death).’


1. Elizabeth Holmes Admits Theranos’ “Technology” Is A Fraud: Restates, Voids Years Of Test Results. Zero Hedge, Tyler Durden, May 19, 2016.

2. Scientists are skeptical about the secret blood test that has made Elizabeth Holmes a billionaire. Business Insider, Kevin Loria, April 25, 2015.

3. Theranos, Facing Criticism, Says It Has Changed Board Structure. The New York Times, Andrew Pollack, October 28, 2015.

4. Theranos Executive Sunny Balwani to Depart Amid Regulatory Probes. The Wall Street Journal, John Carreyrou, May 11, 2016.

5. Wilson, Paul, Sarah Post, and Smita Srinivas. “R&D models: lessons from vaccine history.” Available at SSRN 1099495 (2007). R&D Models: Lessons from Vaccine History

6. Why Theranos Founder Elizabeth Holmes Has Only Two Choices. Inc., Kimberly Weisul, Oct 29, 2015.

7. Meet the Private Company That Has Changed the Face of the World. Fortune, Shawn Tully, June 1, 2016.

8. What Makes Great Boards Great. Harvard Business Review, Jeffrey A. Sonnenfeld, September 2002.

9. Carl Icahn’s criticism of eBay’s board highlights Silicon Valley’s systemic issues. The Washington Post, Vivek Wadhwa, February 24, 2014.

10. Theranos teaches Silicon Valley a hard lesson about accountability. The Washington Post, Jeffrey A. Sonnenfeld, May 23, 2016.

11. David Boies’s Dual Roles at Theranos Set Up Conflict. The New York Times, February 2, 2016.

12. How Playing the Long Game Made Elizabeth Holmes a Billionaire. Inc, Kimberly Weisul, October 2015.

13. Blood, Simpler – The New Yorker. The New Yorker, Ken Auletta, December 15, 2014.

14. Why biotech company Theranos is under review by two federal regulators. CBS News, March 9, 2016.

15. Theranos: The biggest biotech you’ve never heard of – San Francisco Business Times. San Francisco Business Times, Ron Leuty, August 30, 2013.

16. Theranos Founder Faces a Test of Technology, and Reputation. The New York Times, Reed Abelson and Julie Creswell, December 19, 2015.

17. Ioannidis, John PA. “Stealth research: is biomedical innovation happening outside the peer-reviewed literature?.” JAMA 313.7 (2015): 663-664. http://citeseerx.ist.psu.edu/vie…

18. Ioannidis, John PA. “Stealth Research and Theranos: Reflections and Update 1 Year Later.” JAMA (2016). Stealth Research—Reflections and Update