This is the story of Theranos, a biotech startup that was supposed to have a revolutionary blood-testing technology but ultimately turned out to be a scam. It turned out the technology didn’t work. It probably didn’t start out as a scam. They probably thought they were close to getting it to work, sold investors and consumers on the idea, thought if they could hide the problems for awhile they could buy some time to make it work and get away with it. But, it never worked and they eventually couldn’t hide the problems.
The most interesting part of the story, to me, is whether the tech startup model will translate to the biotech sector. The article has a little bit to say about that:
Holmes had indeed mastered the Silicon Valley game. Revered venture capitalists, such as Tim Draper and Steve Jurvetson, invested in her; Marc Andreessen called her the next Steve Jobs. She was plastered on the covers of magazines, featured on TV shows, and offered keynote-speaker slots at tech conferences. (Holmes spoke at Vanity Fair’s 2015 New Establishment Summit less than two weeks before Carreyrou’s first story appeared in theJournal.) In some ways, the near-universal adoration of Holmes reflected her extraordinary comportment. In others, however, it reflected the Valley’s own narcissism. Finally, it seemed, there was a female innovator who was indeed able to personify the Valley’s vision of itself—someone who was endeavoring to make the world a better place…
Holmes subsequently raised $6 million in funding, the first of almost $700 million that would follow. Money often comes with strings attached in Silicon Valley, but even by its byzantine terms, Holmes’s were unusual. She took the money on the condition that she would not divulge to investors how her technology actually worked, and that she had final say and control over every aspect of her company. This surreptitiousness scared off some investors. When Google Ventures, which focuses more than 40 percent of its investments on medical technology, tried to perform due diligence on Theranos to weigh an investment, Theranos never responded. Eventually, Google Ventures sent a venture capitalist to a Theranos Walgreens Wellness Center to take the revolutionary pinprick blood test. As the V.C. sat in a chair and had several large vials of blood drawn from his arm, far more than a pinprick, it became apparent that something was amiss with Theranos’s promise…
Silicon Valley, once so taken by Holmes, has turned its back, too. Countless investors have been quick to point out that they did not invest in the company—that much of its money came from the relatively somnolent worlds of mutual funds, which often accrue the savings of pensioners and retirees; private equity; and smaller venture-capital operations on the East Coast. In the end, one of the only Valley V.C. shops that actually invested in Theranos was Draper Fisher Jurvetson. Many may have liked what Holmes represented about their industry, but they didn’t seem to trust her with their money.
I think we are on the cusp of some kind of biotech boom. The question is, what will it look like, who exactly will it benefit, and who will want it? The health care and agricultural sectors are the most obvious fields. In fact, I think it is already pervasive in those fields. We are starting to here about biotech methods of fighting mosquitoes, and I suspect we will pull out all the stops when diseases like dengue and Zika start to affect people in the rich world. Agricultural pests won’t be far behind. Maybe stingless, pesticide resistant bees to replace our lost pollinators. Food science may weigh in with yeast vats that produce food without photosynthesis and animal protein without animals, although consumers are going to be very wary of these products at first. Viruses targeting specific bacteria might be the answer to antibiotic resistance. We may see cures for diseases that have alluded us until now, and a steady uptick in total life span and healthy life span at least among the moderately affluent. New fertility treatments, ways to preserve egg and sperm cells for long periods of time or even across generations, organ and whole organism cloning, ways for same-sex couples to have biological children, children carried by surrogate mothers, etc.
But these technologies all seem like they will benefit a few big corporate players, not the kind of broad-based startup ecosystem we have seen with information technology. Maybe that is okay. The idea of dorm room and garage genetic engineering labs is a little scary after all. But if there was a kind of broad-based, consumer-focused biotech innovation ecosystem, what would it look like? Maybe novel pets and houseplants. Maybe novel bioelectrical devices like radios, batteries, chargers, night lights, phones, computers, watches and other things that glow in the dark. Maybe energy-related devices like solar cells, fuel cells, oil-producing algae and bacteria that produce methane, methanol or other useful organic products from garbage. Maybe new forms of water and wastewater treatment that can work at many scales. Maybe new forms of biodegradable packaging. Maybe building materials and machines that can grow and heal. New forms of manufacturing. Maybe somebody will figure out how to put DNA in a computer or a computer in DNA.
This all sounds like nutty stuff now, when we are just starting to yawn at the wonders of the infotech age that seemed nutty a decade or two ago. They are such a part of our lives now that we have already forgotten life without them, and we think we saw them coming all along. I think biotech is already here behind the scenes, much as infotech was in the 80s and early 90s, and at some point it is going to seem to burst into the public consciousness just as infotech did in the mid-90s with the advent of the internet. I just don’t know what the biotech equivalent of the internet is going to be.