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Medicine Science

Forbes Just Cut Its Estimate of Theranos CEO Elizabeth Holmes's Net Worth From $4.5 Billion To Zero (qz.com) 215

It wasn't long agon when Elizabeth Holmes, the founder and CEO of Theranos, was regarded as one of the U.S.'s most successful female entrepreneurs with Forbes estimating her net work to be $4.5 billion. Thanks to all the evidence that Theranos' technology is largely a gimmick and false advertising, the publication has revised that figure to essentially zero, reports Quartz. From the report: Last year, Forbes pegged its value at $9 billion, based on the sale of stakes to investors. Since that lofty estimate, Theranos has been battered by bad news (paywalled; alternate source), starting with reports in the Wall Street Journal in October that its tests were inaccurate. That triggered an inquiry from the federal Centers for Medicare and Medicaid Services, which proposed banning Holmes from the industry. Forbes went back to its slide rule and, after talking to venture capitalists and industry experts, recalculated Theranos' value at $900 million, based on its intellectual property and money it has already raised. "At such a low valuation, Holmes' stake is essentially worth nothing," Matt Herper writes. That's because Theranos' other investors own preferred shares, and since Holmes owns common shares, they would get paid first if the company were forced to liquidate.
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Forbes Just Cut Its Estimate of Theranos CEO Elizabeth Holmes's Net Worth From $4.5 Billion To Zero

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  • ...such as this is in deep, deep trouble.

    Whatever happened to the value of good honest labour?

    • Whatever happened to the value of good honest labour?

      It got bought out by Angel VC's in Silicon Valley.

    • Bernie's trying to make it $15/hr.

    • by Killall -9 Bash ( 622952 ) on Wednesday June 01, 2016 @02:17PM (#52226993)

      Whatever happened to the value of good honest labour?

      Replaced by 3rd world commodity labor. Soon to be replaced by robots.

      • by ffkom ( 3519199 )
        And after that, to be replaced by human labour again, but this time not working for other humans, but for the robot overlords.
    • Whatever happened to the value of good honest labour?

      To be fair, Elizabeth had a reputation for working very long hours. She arrived early, stayed late, and worked through the weekends. Her tech may have failed, but it wasn't because of a lack of hard work.

      • by NotDrWho ( 3543773 ) on Wednesday June 01, 2016 @02:54PM (#52227313)

        Like my granddad used to say "Working hard at being stupid is much less valuable than half-assing being smart."

        Of course, he also warned me to never trust a kraut or jap, so take it for what it's worth.

      • by DarkOx ( 621550 ) on Wednesday June 01, 2016 @03:50PM (#52227849) Journal

        She arrived early, stayed late, and worked through the weekends. Her tech may have failed, but it wasn't because of a lack of hard work.

        You know that is actually characteristic behavior of financial fraudsters. They avoid delegating large numbers of essential tasks because they don't want others seeing the books and asking questions. They like to be the first there and last to leave to make sure nobody is nosing around too. Finally they like taking care of certain transactions with third parties over weekends and after hours were things get done 'out of process' and it may be possible to evade some other normal checks and controls.

        Its actually considered a good anti-fraud practice to have anyone who handles accounting or inventory to take a least one mandatory five consecutive business day vacation each year! That way someone else has to perform at least some of their job functions for a time and there is a second pair of eyes on things. It also may cause some schemes where things have to be kept in constant motion like 'lapping' to fall apart.

        A fraud investigator would consider her 'work ethic' here a reason to be more suspicious not less.

        • Its actually considered a good anti-fraud practice to have anyone who handles accounting or inventory to take a least one mandatory five consecutive business day vacation each year!

          Accountants who never take a vacation is a classic red flag for auditors, both private and government.

      • by fsagx ( 1936954 )

        Plus, nearly every picture you see of her shows her sporting a black turtleneck! She's hardworking and a visionary.

    • [An] economy built on pipe dreams such as this is in deep, deep trouble.

      Once people stop dreaming our economy will stall to a level not seen in hundreds of years. Most of human history has shown a 1-2% rate of economic advancement until the industrial age. The dreamers are the ones who have given us the advancements our ancestors 200 years ago couldn't even have dreamed of.

      • [An] economy built on pipe dreams such as this is in deep, deep trouble.

        Once people stop dreaming our economy will stall to a level not seen in hundreds of years. Most of human history has shown a 1-2% rate of economic advancement until the industrial age.

        Not hardly. Before the Industrial Revolution the economic growth rate was 0.1-0.2% [warwick.ac.uk], one tenth of what you suggest (actually over the very long term it was just 0.01%). After the IR growth rates shot up to almost 1% initially, eventually reaching 2-3% annually in some decades of the 19th Century (see The Handbook of Economic Growthby Steven Durlauf, Philippe Aghion, 2013, chapter 5).

    • by guises ( 2423402 )
      Honestly, I find this to be moderately encouraging. I had expected her to walk away from this scam with hundreds of millions, even though she had produced nothing of value and the existence of Theranos was a net drain on society. The fact that she's getting nothing, as she should, is one of those rare little hopeful moments which indicate that the system is working. At least, it's working on an occasional basis. That's something.
      • Unfortunately it also means that anyone at Theranos that's has unpaid wages is out of luck. Unsecured creditors are higher up on the BK ladder than employees.
        • " Unsecured creditors are higher up on the BK ladder than employees."

          Could you be any more wrong if you tried?

          • Here's the relevant law. [cornell.edu]

            Unsecured bank debt falls under 11 USC 507(a)(2), unsecured debt incurred after declaring is under (a)(3), and wages fall under (a)(4) and are limited to $10,000. Secured debt is covered under 507(b) and is explicitly declared to be higher priority. Private (i.e. non-bank) debt is in fact lower priority than wages - I actually hadn't known that.

            If you feel I've misinterpreted things, I'm open to discussing it - I've been wrong before and will be in the future, but what I'm
    • by Tailhook ( 98486 )

      Whatever happened to the value of good honest labour?

      They off-shored that to China, which is why they can afford to build a blue-water navy now.

  • by afeeney ( 719690 ) on Wednesday June 01, 2016 @02:11PM (#52226945)

    I'm surprised that it has that high a value at all, given that their legal and accounting expenses must be tremendous (even if they were somehow to win every lawsuit against them) and their liability insurance provider is doubtless going to fight them over every single claim.

    The real question is whether Holmes was as good at deceiving herself as she was at deceiving others. If she was, her net worth may indeed be limited to personal property (which certainly she'll get to keep since it's very difficult to confiscate personal property from the wealthy), but if she was aware of just how much of it was all smoke and mirrors, then I'm sure she found ways to hide as much as she could.

    What she really needs to do is declare that she's found religion, write a book, and then become a talk show guest.

    • Lab equipment is expensive and has a secondary market. Just because their assay is bunk doesn't mean they didn't buy real deep freezers and so on.
    • by AmiMoJo ( 196126 )

      I'm more interested in how much this devalues Forbes. $4bn to zero in one year suggests their opinion on such things is also pretty worthless.

  • by Morpeth ( 577066 ) on Wednesday June 01, 2016 @02:27PM (#52227073)

    What I don't get is did no one bother to see if her so-called game changing blood tests actually WORKED? I get the impression, no

    I'm just kind of dumbfounded that no one thought to check with some actual PhDs, MDs, researchers, etc.

    • Everyone was just too willing to accept the idea that the existing companies involved in blood testing are crooks (Spoiler alert: they are), that they were all too willing to jump on board with "disruptive" technology that will "change the game" and "beat the system."

      • Everyone was just too willing to accept the idea that the existing companies involved in blood testing are crooks (Spoiler alert: they are) [...]

        My third-grade teacher recommended her child doctor to my mother, who took me to see him for various childhood aliments. Each visit ended with the doctor shoving his finger up my fat ass and requesting a blood test from the lab. Turned out he had a financial arrangement with the lab. He retired to Florida in a hurry before the police shut down the lab and the DA office made an announcement to the press.

    • by ledow ( 319597 )

      Nobody cared.

      They have preferred stocks in a company worth millions. The more they are hyped, the higher the price went, until it gets to the point just before the news breaks that they are worthless and pointless... and then they sell making money from - quite literally - investor's stupidity.

      It's up to the investors to investigate about viability at the early stages (i.e. before they put a product to market or out for FDA approval, etc.) and they didn't bother because it's a game of hot-potato and if the

    • by lucm ( 889690 )

      Well did YOU make your own due diligence before coming to the conclusion that it doesn't do what Theranos actually claims it does (as opposed to all the made up bullshit)? or did you just jump on the bandwagon and assumed that if there's a story about it in the WSJ then it must mean Theranos are crooks?

      do you even KNOW what the real story is about, or did you just assume that Theranos claimed miracles of some kind and got caught in their lies?

      post a fucking link that proves that Theranos themselves actually

      • by Morpeth ( 577066 )

        Sounds like you invested in them, financially if not emotionally. 10 secs of searching shows they're under federal investigation for fraud, and have themselves invalidated 2 years of tests basically admitting it was all bogus.

        http://money.cnn.com/2016/05/1... [cnn.com]
        http://www.businessinsider.com... [businessinsider.com]
        http://www.ft.com/cms/s/0/08b1... [ft.com]
        http://www.usatoday.com/story/... [usatoday.com]
        http://www.zerohedge.com/news/... [zerohedge.com]

        • by lucm ( 889690 )

          10 secs of searching shows they're under federal investigation for fraud, and have themselves invalidated 2 years of tests basically admitting it was all bogus.

          Then you should have taken 11 seconds because here's a quote from one of your articles.

          Theranos has also had issues with quality control of tests run on the standard blood-testing devices that Theranos uses for most of its tests.

          See, that whole Medicare thing is not about the "bleeding edge" technology, it's about the regular Theranos business, which is to become the Walmart of private labs. But the way it's spinned in the media, it looks like it's all one big scam.

          They do millions of tests for less money than other labs. Did they cut corners doing that? Apparently so, although some of the complaints in that report seem flimsy (like having a lab

    • Comment removed based on user account deletion
    • by tazan ( 652775 )
      Years ago when when I saw the first article on this I showed it to my wife who's a Med Tech in a hospital lab. She was immediately very skeptical. She said you can't do some of those tests they were claiming with a finger stick. Apparently it's not the volume of blood that's the problem it's the location you get it from. So, no, I guess they didn't.
      • by Morpeth ( 577066 )

        Interesting. It's hard to grasp (to me anyway), that people wouldn't do some pretty basic investigating especially with the kind of money involved.

        Most things still fall under that "if it sounds too good to be true, it probably is" category.

  • by NetNed ( 955141 ) on Wednesday June 01, 2016 @02:54PM (#52227315)
    So Theiranus was full of shit?
  • When you account for potential criminal defense legal fees.
  • by bargainsale ( 1038112 ) on Wednesday June 01, 2016 @03:13PM (#52227463)
    The dead giveaway on Theranos is the splurging of publicity in mass mainstream media without anything at all published in relevant peer-reviewed specialist journals.

    As soon as anyone asks why they would do that, the answer is obvious. You'd think.
    • The argument against publishing in the scientific literature is that there are bucketloads of patented / confidential technology that would have to be exposed. However, they could have gone a long way to assuaging all of the complaints by allowing unbiased observers to give them known samples and observing the Theranos machines in an open room without restrictions. That they never did that suggests that they have something to hide.

      • Patented technology is already exposed by definition. Technology that remains a trade secret should be questioned as to why it hasn't been patented already if it's legitimate.
  • Comment removed based on user account deletion
  • Thanks to all the evidence that Theranos' technology is largely a gimmick and false advertising

    Theranos's main product, by the way, is a blood-testing device, which may or may not actually work as well as Theranos says it does.

    You could have at least briefly hinted at this in the summary.

  • You know over 50% of trades on the markets are made by algorithms? just computers trading with other computers looking at little changes in prices
  • Tech visionary and genius Elizabeth Holmes is changing the medical landscape! [speaking.com]. Specialising in nanotechnology, she successfully shrunk her wealth from $4.5 billion to zero. Book her now!!!

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