On Bad Blood (Part 1)

I have heard about the rise and fall of Elizabeth Holmes in the past but I did not pay much attention to her story. I was already in my 50s then and startups to me were mostly in the domain of Gen Z and millennials. I just surmised her as another Madoff or Bankman-Fried and hundreds of startups that came to the limelight being valued for billions only to end in the dustbin of failures, broken, and imploded. I witnessed this all the way from the dot-com boom, the apps boom, and now, it is the era of the social media boom that promises to make millionaires and billionaires if they get enough likes and followers based on the algorithms of the platforms hosting them. I remember everyone, including myself, dreaming of creating an app or a game or anything that will earn millions from subscribers alone. That was confined to dreams, the reality was, during my university days for my IT degree, I was more attracted to creating online stores to sell something. I honed in on websites that could satisfy my creativity, showcase whatever gifts I possess and be happy to see a beautiful product staring back at me on my monitor. None of my dreams materialized due to real-life responsibilities. I went straight back to my old profession after IT, dashing my hopes, promising that one day, yup, one day, I will return to my programming and take another long shot at creating an app, or a good online store, or of a data processor, or a search engine or a dating site, or a copycat facebook or job search engine or…. Well, you get the picture. It won’t probably happen but as I said, there is nothing wrong with dreaming no matter how improbable it is. Maturity makes us wiser. But it requires patience and learning from little trials and errors before reaching the big kahuna.

Reading Bad Blood, I was immediately struck by the anecdote that triggered all of Holme’s reasons to start her ‘tech’ project. She was in her teens or maybe at 20 when she declared to her family that she’d quit Standord to become a woman billionaire in the tech field. Whoa! That was a red flag to me because in my book, you don’t set out to do something because you want to be a billionaire. To me, venturing into some enterprise should be driven by love. It means you wake up feeling excited about your would-be project. The very people that Holmes emulated, especially Steve Jobs, did not set out in their fields to be famous and rich, with a goal of making billions. Mark Zuckerberg just wanted to have fun with the soon-to-be Facebook and he was programming codes as early as 10 years old using his father’s computer. Bill Gates was obsessed with programming at a time computer use was so valuable that he could only ‘steal’ a couple of hours to fill the need to program. Jeff Bezos wanted to develop his online store primarily. And not sure of this, Elon Musk co-developed PayPal before it was sold for millions.

One thing is pretty much common among these ‘billionaires’. They did not set out to be billionaires. They set out to enjoy what they were doing and advance their projects until they stumbled into their billions. What I am trying to say is monetary gain is the worst goal you can have in pursuing a business, be it a tech or an app or a simple coffee and donut shop.

Holmes’ trajectory was suspect. There was a goal, maybe a business plan. The business plan was very fuzzy if there was any at all. It was like saying to myself that I want to be an Olympic champion with no idea how to become one. She dropped out of Stanford in sophomore year. The reason is to start a very complex medical tech device named Theranos that could read hundreds of blood tests using a minute amount of blood from a finger prick. It is designed to compete with companies like Quest Diagnostics and LabCorp - the established labs used by clinics nationwide.

The concept was very tantalizing, Holmes stuck to the narrative that Theranos would do countless blood tests, to the tune of 120 and on and on and on. This is quite impossible (maybe someday it will be possible) given that blood from finger prick can have insufficient concentrations and could produce false results. Some blood tests require venous blood sources to produce reliable numbers. To me, a young woman without a background in blood science, chemistry and biomedical engineering would require many decades to even come close to her nearly-impossible quest. Even if her IQ was high.

Yet people invested in her idea. Or her dream. And this is where her skills became useful. She had a good salesman’s pitch. She sold, if not oversold, her startup and people snatched it and took out their checks and wallets based on a dream. You might wonder how investors could be this gullible.

Know that Theranos was not the only game in town in those days. The early 2000s were the days of startups like google, facebook, uber, airbnb which produced results and money. On the flipside were the failures that lost money : Fitness Tracker Jawbone, Pets.com, electric car BetterPlace, solar panel Solyndra. All these collected millions of investments through sales pitch and were all as tantalizing as Theranos. Angel investors were on the lookout for the next ‘ big thing’. They did everything by the book, looking at the business concepts of some of these successes and failures, you’d not hesitate to invest. In fact, some of them were pretty much successful at the onset until the overhead and logistics and lack of control to expansion struck them hard and they fell and never had the chance to rise.

These startups emulated the old hands that proved successful before them. Starting with Bill Gates with his Windows OS, Steve Jobs with his highly coveted designs of Apple gadgets, Google’s Brin and Page, Dell founder Michael Dell, online bookstore founder Jeff Bezos now Amazon. More recent at that time were the successful Facebook(Zuckerberg), Twitter (Jack Dempsey) PayPal (Elon Musk).

Every Gen X thought they’d become overnight millionaires with a simple code and good marketing strategy based on the success of previous ones. Unfortunately, a lot failed, very few succeeded, while the rest like me watched from the sidelines. I am close to the ages of Gates, Bezos , Dell and Jobs and if I would have had the same luck as they did, I would be up there already. But I did not. I studied the field of IT for its availability at nights after work, it gave me electives that included programming languages, and languages were my main targets because I wanted to learn the art of web designing, I dabbled in apps, but my overall goal was to showcase my creative outputs in letters and literature through beautiful websites. Later I learned databases and interactive websites using MVC modeling. I did not even think of shifting my career because I was compensated well for my healthcare job. And I needed a more secure job because like any other Filipino who worked abroad, supporting family back home financially was paramount.

And there was one more computer-related hobby that triggered a lot of passion in me. The assembly of the computer from scratch. In my old days, there was a new kernel that supported the creation of different free operating systems. Linux. There was nothing more euphoric than attempting to buy an entire operating system via floppy disks, assemble and boot the system and hear for the first time the static that tells you that you are connected to the Internet. So I was outside the game of the coders, programmers and startups although I had an idea how to play the game.

Theranos was conceived during this exciting time. Elizabeth Holmes’ joined the crowd. She conceived a tech project (albeit no relation to a standard software development) at a time everyone was looking for the first female Steve Jobs tech mogul. She footed the bill. Smart, beautiful, young at around 20, Stanford dropout(intentionally), highly confident, verbally convincing, some claimed her to be a genius. And the future Steve Jobs. Or Bill Gates. And female too.

The first red flag in her startup (in my personal view) was the utilization of software development management tools on a business that is primarily non-software related. It was a device that would read blood. I cannot understand how she ended up with herself (without any medical/engineering background) and her boyfriend Balwanis (with a background in Information Systems, a little Computer science courses, whose only source of achievement is cashing out on a B2B Internet commerce company sold at the time right time so he earned something like 40 million) to create a blood reader device they had no mastery over.

By studying Holmes' approach, it was like an agile software development technique. You compartmentalize the job, integrate, ok the initial product and offer it as the 1.0 version. Along the way you anticipate bugs from the run so you get feedback and re-analyze the project, fix the bugs and resend it out again, and these beta versions 1.1 will advance to beta 1.2, beta 1.3 until there is no more bug to fix. Then you upgrade the software to version 2.0 and repeat the whole process.

The trouble is, this agile technique is useful mainly to software development. You cannot apply this versioning and beta modifications on a device that involves life and death. You cannot send out a trial machine that helps to diagnose a patient and give out wrong numbers. Especially with numbers that determine the type of treatment that will be administered to a potentially sick patient.
2024-04-07 02:10:03
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