Biotech's Theranos Offers A Cautionary Tale For Silicon Valley

ROBERT SIEGEL, HOST:

And it's time now for All Tech Considered.

SIEGEL: Elizabeth Holmes fits into the Silicon Valley success mold. A young Stanford dropout who
left school to pursue her entrepreneurial vision, she founded Theranos and said she would
disrupt the world of medicine. Now, her company is under federal investigation for claims it made
about its technology. And as NPR's Laura Sydell reports, it's raising questions about applying the
Silicon Valley business culture to biotechnology.

LAURA SYDELL, BYLINE: Elizabeth Holmes was an alluring figure, young and intense in that kind of
way Apple founder Steve Jobs was. Like Jobs, she wore only black turtlenecks because she didn't
have the time to think about her wardrobe. And of course, there was the TED talk. Holmes
painted a picture of a world in which too many people avoided blood tests because of the cost,
inconvenience and discomfort of giving so much blood. Sometimes they learned too late about a
serious health condition. But her company, Theranos, had the solution.

(SOUNDBITE OF ARCHIVED RECORDING)

ELIZABETH HOLMES: We've made it possible to run comprehensive laboratory tests from a tiny
sample or a few drops of blood that could be taken from a finger.

SYDELL: Holmes had a beautiful vision, backed by hundreds of millions of dollars in investment,
and a board of big names like Henry Kissinger and George Schulz. The media had a love fest. Time
magazine called Holmes of the 100 most influential people in the world. She was profiled in
Fortune and The New Yorker. Even medical professionals like Dr. John Ioannidis, a professor at
Stanford University Medical School, were intrigued.

JOHN IOANNIDIS: My first reaction was, it sounds really brilliant. I would like to collaborate with
these people and maybe even use their technology in my own studies.

SYDELL: Studies - that's what medicine and science is built upon.

IOANNIDIS: The first thing that I did as a researcher, as a scientist, is check the scientific literature.
How much do we know about what they do? And I couldn't find even a single paper.

SYDELL: Then there was the advisory board - big names in politics, not science. And Holmes had
no background in medicine.

IOANNIDIS: This is equivalent to me, being a biomedical researcher, trying to become an architect
and build a skyscraper. Would you give me a few billion dollars, please?
SYDELL: No, no and no. But in the tech world, some of the greatest companies were built on hype
and a big idea, says Jo-Ellen Pozner, a professor at the University of California, Berkeley Haas
School of Business.

JO-ELLEN POZNER: Often the product comes after the money, and so the first job is to get the
investors to give you the money. And that requires that you really sell them on this big idea
before it's actually in hand.

SYDELL: Pozner points to Jeff Bezos and his company Amazon, which started as a second-tier
online bookseller.

POZNER: He called the company Amazon because he wanted it to be the biggest retailer in the
world, so he named it after the biggest river in the world. That projects a certain kind of optimism
about where we're going and what we have in mind and what we're able to accomplish.

SYDELL: Despite years when Amazon made no profit, Bezos drew investors. And in turn, he
expanded and got more customers. Secrecy is also part of the tech world playbook - no studies
needed. Google keeps its search algorithm secret as a way to keep them out of the hands of
competitors.

POZNER: There are so many things going on in our firm, and we're not telling you about them.
And that's part of the allure and the mystique of the organization that keeps people excited
about what's coming next.

SYDELL: This is totally contrary to how the medical and biotech fields work. Studies are published
in journals and reviewed by peers, and products require government approval. This may gum up
the works of Silicon Valley's fast-paced innovation economy, but it's for a good reason, says
Stanford Medical School professor Ioannidis.

IOANNIDIS: It's not such a horrible thing if your mobile phone battery dies an hour earlier than
it's supposed to. But if a patient gets given the wrong results and then going down the path of
making wrong decisions, that's serious. People can lose their lives.

SYDELL: As for Theranos and Elizabeth Holmes, the company is facing scrutiny from the Securities
and Exchange Commission and the U.S. Attorney's Office for the Northern District of California.
Some Theranos supporters believe in the end, Holmes will turn out to be right. Laura Sydell, NPR
News.
 Biotech's Theranos Offers A Cautionary Tale For Silicon Valley

1 Elizabeth Holmes fits into the Silicon Valley success mold. _____________________ who left
school to _____________________, she founded Theranos and said
_____________________. Now, her company is
____________________________________.
2 What is the picture that Elizabeth Holmes painted in her TED talk about blood-testing? And
in what way does her company have the solution?
3 How was Holmes’ vision received initially?
4 Why did Dr. John Ioannidis find Holmes ‘project dubious?
5 What are the 2 key factors that Jo-Ellen Pozner finds in the tech world playbook? What
examples are given?
6 How do the medical and biotech fields work differently from the tech world? Why?