Isn't her activity like the textbook definition of fraud? Not to mention the dude who she basically pushed into committing suicide. I hope she gets at least as much time as Madoff.
What Madoff did was illegal and malicious from the outset.
Do you believe that when Holmes was handed the opportunity, at 19, to bring the Edison to market that she set out with the intent of defrauding investors?
The only thing she's provably guilty of thus far is believing in her company a little more than is sensible and being preternaturally competent as a fundraiser.
When Musk claims he can get people to Mars for $200k, do we say 'That's preposterous!', and slap him in cuffs? It's up to the investors of Spacex to decide whether or not they want to gamble on that proposition.
Would you put 100 million into Magic Leap because Rony Abovitz says 'it's rad', or would you insist on seeing a demo first? Because none of Theranos investors did that.
There's a difference between saying "I believe we can develop X" and "we currently have X." As I understand it, Holmes and Theranos did the latter. And that's fraud.
The answer is "extremely far, so it's not sensible to compare them."
It's perfectly fine to say "We are going to attempt to build something, here's our plan" and then fail. It's completely unacceptable to say "We have something" when you don't.
The only way Theranos could be analogous to Musk is if he had got up on that stage in Guadalajara and said "we have a Mars rocket ready to go, we've tested it extensively, it works, we'll begin commercial flight soon, the line for reservations is on your left, please bring your checkbooks."
> The only way Theranos could be analogous to Musk is if he had got up on that stage in Guadalajara and said "we have a Mars rocket ready to go, we've tested it extensively, it works, we'll begin commercial flight soon, the line for reservations is on your left, please bring your checkbooks."
Devils advocate but isn't that what SpaceX told facebook when launching their satellite? I would assume they asked for money to launch that thing and I would also assume facebook didn't want it blown up.
There's no comparison to be made between an accident occurring in an inherently risky field and peddling technology that you know doesn't work.
Nitpick mode: Facebook didn't own that satellite and their only involvement in it was a plan (now, obviously, altered) to lease a decent chunk (but by no means all) of its capacity from its owner once it was operational. I'm not sure why everyone decided it was Facebook's satellite.
If Spacecom wanted a demo to prove SpaceX could launch rockets, they only had to look at the previous 28 Falcon 9 launches that all (bar one) launched successfully.
Exactly. If Elon wants to spend his billions building spaceships, as long as they don't routinely fall and kill people, then everyone will cheer for him and that's fair. Screwing up people's blood tests and then seemingly lying about, is a whole different thing.
The fact that Madoff's intent was criminal from the outset and that Holmes' probably wasn't is irrelevant. The point is that it became criminal. And that's why she's in the firing line today.
At what point did she shift from being an optimistic entrepeneur to a criminal? Was it when she started getting magazine covers? Was it when Hwnry Kissinger joined the board of directors? She's still giving her company 110% in spite of everything that has transpired. Usually the correct time for a startup founder/CEO to call it quits is when they run out of capital, until then it's their job to try and make it work come hell or high water.
When diagnostic medicine was being conducted with technology she knew wasn't what it was claimed to be. We threw the Enron guys in prison and they only hurt people's wallets, not their health. I don't think she gets off the hook because she's a Sillicon Valley sweetheart.
> At what point did she shift from being an optimistic entrepeneur to a criminal?
Going out on a limb here, I would say when found out their machine didn't provide accurate results. Yet waited until threatened to be closed for two years before voiding results. This is not Uber for Dogs, and puppy doesn't get to the park to play with its friends, but potentially life or death situations. We are not talking just a 0.01% error rate, this is stuff like like 20-40% error rates in some tests.
> Was it when Hwnry Kissinger joined the board of directors?
Well, some would say it would be a warning sign, for sure ;-)
Basically, when she said "our machines, which we have already deployed in production and doctors are using them to make potentially life/death decisions, can do X". At that point.
The examples you are comparing are not similar at all.
Musk should be collecting money for the situation to be similar.
>being preternaturally competent as a fundraiser.
Why are you trying put a positive spin on this whole mess like a PR agency ? What would you describe Madoff as in that case ? A man of great persuasive ability ?
How do you know that Madoff was malicious from the outset, I wonder? The guy had a 30 year career, have you studied his beginnings? Maybe you did, but knowing nothing I'd find it more plausible that the guy started small fudging a couple of numbers hoping the next year would be better and eventually snowballed out of control.
My somewhat cursory read of Madoff was that he tarbabied himself. He had been running a successful investment company, but hit losses.
The good, and lawful, thing to do would have been to come clean at that point. He didn't, and his downfall began there.
Instead he did the bad, and illegal, thing: doubled down and paid off the small number of exiting investors with new investor's deposits, whilst lying about returns.
If you've read John Kenneth Galbraith's The Great Crash: 1929 (a short and highly readable account), you'll find a very familar story in Madoff. He fell prey to what JKG calls "the bezzle".
There is civil fraud and criminal fraud, which require proving the same things. But generally, the government will only pursue criminal fraud prosecutions when there is a public interest component. Madoff defrauded a large number of people, and his fraud affected little old ladies' pensions. The government will generally stay out of fraud directed at a handful of sophisticated investors.
It seems like clear fraud was directed at the general public and their health outcomes. I don't care much about the investors, they can take it. It was something like 6% of tests were fraudulently performed by their "technology", with potentially dangerous results.
On the other hand, so are some of her investors. And there I think it comes down to protecting their reputations; if they can point to criminal fraud, they can paint themselves as victims rather than fools. We'll see how it plays out.
I think they come off as fools either way; people aren't any prouder to have been conned by a criminal, than having made a stupid investment. If they're concerned about saving face, they'll lay low for a while.
