A charismatic young leader, billions of dollars in valuations and a technology that promised to change the world but failed to deliver: the meteoric rise and fantastic fall of the medical tech startup Theranos has been seen by many as an indictment of the hype-train attitude of Silicon Valley.
Nearly 20 years after Theranos’s launch, its CEO, Elizabeth Holmes, is headed to trial, charged with defrauding clients and investors. Silicon Valley is facing a public that’s wary of its methods and intentions – but the verdict is still out on whether startup culture has fundamentally changed.
“People are more sensitive to scams now – in some ways, there is a pre-Theranos Silicon Valley era and post-Theranos era,” said John Carreyrou, a journalist who has been covering Theranos for six years and now hosts a podcast on the trial. “But in many ways the boom has continued unabated. I’m not convinced there has been a true reckoning, yet.”
‘A particular moment in Silicon Valley history’
Theranos was founded in 2003 by a then 19-year-old Stanford University student, Elizabeth Holmes.
Holmes promised to upend the vast medical testing industry with a technology that could perform a range of health tests on just a small drop of blood. The company reached its pinnacle about 10 years later, valued at a staggering $10bn, before it all collapsed.
“The rise and fall of Theranos reflected a very particular moment in Silicon Valley history,” said Margaret O’Mara, a historian of the region who holds a professorship at the University of Washington.
At the time, the Silicon Valley tech bubble was obsessed with young founders, celebrating the success of startups with “humble beginnings” that managed to take over the world – Mark Zuckerberg from his dorm room, Jeff Bezos from his garage.
At the same time, some investors were increasingly frustrated that the valley’s output was concentrated on social platforms, seen by some as frivolous. As the investor Peter Thiel memorably said in 2013: “We wanted flying cars. Instead we got 140 characters.”
“Then we have Theranos, which was not making an app but selling a promise to transform healthcare,” O’Mara said. “Holmes was targeting an experience – blood testing – that is very familiar and not very pleasant. That was appealing to a lot of people.”
There was another draw to Holmes. As big names like Bezos, Zuckerberg and Bill Gates dominated the scene, women were largely left out of the narrative.
In other words, the time was ripe for a young, female tech leader to take center stage. “Here was a photogenic, telegenic young woman posing as the female Steve Jobs,” O’Mara said. “It was an incredibly alluring narrative that everyone wanted to believe.”
When Holmes was rising to power, tech companies were still seen as innovators that were largely benefiting society, said O’Mara. Bolstered by organizers’ use of technology platforms in events like the Arab spring and Occupy Wall Street, there was an overarching narrative that Silicon Valley was connecting the world and promoting democracy.
“This was a time when companies could say they were making the world a better place and most people believed them,” O’Mara said.
Startups from an array of industries were able to hop on Silicon Valley’s hype train, adopting its ethos of “move fast and break things”. Theranos was primarily a medical device company, while WeWork – another industry darling – was at its core real estate firm selling office space.
A decade later, the startup environment has decidedly changed. Revelations like the Cambridge Analytica scandal have eroded trust in big tech. Legislators and the public are increasingly questioning the monopoly power some major tech companies hold. Social platforms were largely blamed for the rise of Donald Trump and his stunning victory in the 2016 election.
“That’s when the whole conversation around social media and more broadly the tech sector started turning sideways,” O’Mara said. “There started to be more skepticism about what exactly these companies were promising.”
‘Life and death’
But opinions differ on how tech firms, and medical startups in particular, have adapted to the changing climate.
“Theranos has raised awareness that people should take a stronger look at fantastical claims when they are made,” said David Grenache, former president of the American Association for Clinical Chemistry and current chief scientific officer at TriCore Reference Laboratories. “It helped raise some level of caution – it reminded people to look before you jump feet-first into believing in a technology that doesn’t really exist.”
Although scrutiny is healthy, and necessary, for any startup in the field, the intensity of it has backfired on many medical tech companies, Grenache continued, noting there are “legitimate companies” working towards diagnostic technology that are more quickly shut down by investors.
“Healthy skepticism has evolved into complete mistrust,” he said.
John Ioannidis, a Stanford professor of medicine who was one of the first to challenge Theranos, argued that even amid growing scrutiny, medical testing companies in the Valley have continued some of the mistakes the blood testing startup made.
Like Theranos once did, many medical tech companies still operate in “stealth mode”, launching and raising funding for their products without offering legitimate proof the products work, a study Ioannidis published in 2019 found. Of the 18 “unicorns”, or tech companies valued over $1bn, in the field, more than half had “no highly cited papers” on their work, according to the study.
When the secretive nature of Silicon Valley collides with healthcare, very little information gets out regarding the actual research behind products, he cautioned. “Operating in stealth mode, making extravagant claims, and eventually driving people to make uninformed decisions about their health is very scary,” Ioannidis said. “This is not a laptop or a mobile phone, this is life and death.”
Another problem, Ioannidis pointed out, is that many of these companies operate in a regulatory “gray area” because the technology they sell is not directly categorized as medical. While a vaccine or medication would require a more stringent approval process from the Food and Drug Administration (FDA), technologies like those offered by Theranos are able to get products into the hands of the public with little regulatory oversight.
The FDA started reckoning with the problem following Theranos’s collapse, but a long road lies ahead. “This has been a wake-up call for a lot of people, including the FDA,” said John Wikswo, a professor of biomedical engineering at Vanderbilt University. “The experience has exposed a number of weaknesses in regulatory discretion.”
Congress in 2015 held a hearing in Washington to discuss “lab-developed tests”, or LDTs. Like those used by Theranos, such diagnostic tests do not require companies to submit tests to the FDA before using them on patients. Dozens of startups have taken advantage of the loophole in recent years, according to the FDA.
But not much regulatory progress has been made since. The efforts stalled under the previous administration and the fate of LDT regulation appears to be “in limbo” under the Biden administration.
Meanwhile, medical tech companies are continuing to grow. Private biotechs in the US raised $27.2bn in 2020, according to data from Pitchbook, which tracks such deals. That’s an increase from $10.6bn in 2015, when Theranos began to fall apart.
How these companies move forward in the coming years may partly depend on Elizabeth Holmes.
The outcome of the case will be huge for startup culture, Carreyrou, the journalist, said. “There has long been a culture of faking it until you make it in Silicon Valley, and Holmes is a product of that culture,” he said. “To reform that – to change Silicon Valley – it is going to take a conviction.”
Sir Clive Sinclair’s contributions to computing and business are well known, and we’ve done our best to celebrate his life in our obituary of the electronics pioneer, who passed last week aged 81.
To mark his life we felt it appropriate to also consider his impact on Reg readers.
Like many others, your correspondent’s first computer was a ZX Spectrum. The machine led to my presence in these pages, because I eventually joined the Australian ZX Users’ Association (AZUA), which published its own magazine and invited contributions.
A die was cast.
I tracked down AZUA co-founder David Vernon who told us, by email: “We all loved Clive. We loved his foresight, his eccentricity and his desire to bring computing to the masses.”
Referring to the ZX80 and ZX81, Vernon added: “But we found him frustrating in equal measure. Why to save a few pounds did he give us such a crappy touch keyboard? Why not give us 4K of RAM and not 1K?”
“But even these irritations had a silver lining. They showed us that we didn’t have to put up with whatever a manufacturer gave us but we could improve on it. And this is perhaps Clive’s legacy to my generation — we could do stuff that we never imagined. Clive gave us confidence that we could do clever stuff too. And we did.”
“Honestly, it’s thanks to Clive that I now run my own publishing business. Without my early experience of writing and publishing computer programs and help pages I’d not be doing what I do today.”
Author of ’80s classic The Hobbit didn’t know game was a hit
Similar stories poured in from around the world as comments on our appreciation of the great man’s life.
“For me it was the ZX 48K,” wrote commenter Mozzie.
“It got upgraded with a Saga 1, had an astonishing Saisho cassette player that never to failed to load anything except LoTR. Chuckie Egg, Dizzy, Wriggler, Harrier Attack, Target Renegade and even HiSoft Pascal… thanks Clive for giving me the means to feed my family the last 16 years.”
“So, so many aspects of my life are directly or only slightly indirectly related to my love for coding and electronics and tech in general, and that all stems back to those heady days of the early 80s, sat in my bedroom in front of my Speccy,” wrote another forum member, ChrisC.
Linus Torvalds was a Sinclair user: Among those influenced by Sir Clive was Linus Torvalds, creator of the Linux kernel, who worked on a Sinclair QL before he turned to his most famous work. From 00:30 in the video below, he reminisces about his time using the QL.
A commenter named Allwallgbr shared his experience working for Sir Clive for two years in the 1970s and described the time as “amazing hard working, fun packed years servicing audio products and demonstrating at Hi-Fi exhibitions.
“I enjoyed the work and the buzz of the company so much, no other employer came close in my entire working life.”
Readers also remembered Sir Clive as possessing a strange charisma.
“An absolute genius with just the right amount of barminess to be a proper British boffin,” opined a commenter with the handle John Brown (no body). “He even had the proper boffin’s bald patch and glasses.”
Others shared their experiences putting Sinclair kit to work.
“I wrote a text-graphic based D&D game, and fed in the entire D&D stats to help automate games,” wrote a Reg forums member named Danny 2.
Next, he tackled something harder. “I tried and failed to write a conversation simulator to pass the Turing test: more difficult than I expected.”
“I think I freaked my mum out when she heard noises at 6am. It was just my seven-year-old self who was desperate to find out whether SIN and COS would let me PLOT a circle on my birthday present ZX81,” wrote another commenter, who goes by the strangely apt handle 0x80004005. (We’re guessing it’s a Windows error code.)
“I’m currently crying like a baby here. This has hit me a lot harder than I thought it would. This marks the end of the line for the largest chunk of my formative years, and possibly the greatest influence in my entering the career I have,” wrote commenter Stumpy.
“RIP to a massively flawed genius,” our reader added. “A man with ideas often far ahead of their time. I’ll be setting a glass of decent malt aside for you tonight.”
A few readers offered some Sinclair BASIC as tribute:
The legacy lives on: One measure of Sir Clive’s contribution was that emulators for his computers remain available to this day, even if some homages such as the Spectrum Vega+ went awry.
Classic games developed for the ZX Spectrum remain available in many forms, not just as image files for emulators. Manic Miner is now an app, as is Lords Of Midnight. Some other Spectrum classics have even been ported to Microsoft’s XBOX.
One of the folks we reached out to for a Sinclair memory was Shane Muller, an Australian tech entrepreneur who in 2019 threw a very good party to celebrate his thirty years in the tech business. At that event he brandished the ZX81 that started it all.
Shane’s response to news of Sir Clive’s death was to write him a letter:
Taara’s wireless optical technology was able to beam nearly 700TB of data in 20 days across the Congo River.
Alphabet’s internet balloon project Loon may be a closed chapter, but the company is finding new ways to use some of this technology to bring high-speed internet to remote and underserved areas.
Project Taara is Alphabet’s attempt to harness wireless optical tech to make fast internet accessible and affordable. In a blog post yesterday (16 September), the project’s director of engineering, Baris Erkmen, said that its wireless optical communications links are now beaming light-speed connectivity across the Congo River.
“I’m delighted to share that working with Liquid Intelligent Technologies, we recently helped bridge a particularly stubborn connectivity gap between Brazzaville in the Republic of the Congo and Kinshasa in the Democratic Republic of Congo,” he wrote.
Brazzaville and Kinshasa are only 4.8km apart, but because of the speed and depth of the Congo River, it wasn’t possible to establish fibre connection between the two cities. Instead, cables have to travel more than 400km to loop around the river.
Erkmen said that after installing links on both sides of the river, Taara’s technology was able to beam across nearly 700TB of data in 20 days with almost 100pc availability. While the connectivity won’t always be reliable in all weather conditions, he said he was confident it will “play a key role in bringing faster, more affordable connectivity” to the 17m people living in the two cities.
“Being able to deliver high-speed internet (up to 20Gbps) most of the time is a vastly better option than having millions of people miss out on the benefits of connectivity because the economics of laying hundreds of kilometres of cable in the ground simply don’t stack up.”
Project Taara’s predecessor Loon brought helium balloon-based internet to Kenya and delivered communications services to Puerto Rico and Peru following natural disasters in those countries.
Like Project Taara, it was part of Alphabet’s X research division that invests in ambitious but costly projects. However, Loon was shut down in January because it was unable to make a business case for the project and its path to commercial viability was “much longer and riskier than hoped”, according to X lab head Astro Teller.
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In July, off the Turkish port city of Bodrum, Kerim Sabuncuoğlu stepped from the edge of a boat into the azure Aegean Sea and began to descend. A scuba diver with more than 30 years’ experience, he took up underwater photography in 2002 and has since devoted considerable amounts of time and money to his “out-of-control hobby” – capturing the wonders of the ocean on camera so that “the less fortunate people above” can also marvel at them.
Sabuncuoğlu has travelled the world, photographing marine life in Palau, Cuba and the Galápagos islands and winning several awards for his work. Closer to home in Bodrum, he was embarking on a standard dive with a group of friends, equipped with a Nikon D800 camera. The camera had an 85mm micro Nikkor lens and was clad in Nexus underwater housing, with a single Backscatter snoot to train light on the subject.
Soon after reaching the sandy bottom and making a right turn towards a cluster of rocks, he spotted a broken fishing line on the sea floor. A grouper was caught on one of the hooks, still alive, so he took it to the surface, removed the hook and set it free.
“I went back to see what else was there, with the pliers,” says Sabuncuoğlu from his home in Istanbul, where he runs an event management company, “and that’s when I found this poor animal: a moray eel. Its favourite food is octopus, and of course when it found the arm of an octopus on the floor, it took a great bite.” A hook concealed in the octopus arm went straight through the moray’s jaw. It spun its body frantically to free itself, but succeeded only in entangling itself in the fishing line. Eventually the eel suffocated and died.
Sabuncuoğlu had witnessed the result of what’s known as ghost fishing. “When a fisherman leaves his equipment under the water, like a fishing net or line, it keeps on killing fish for many years to come,” he explains. “If I had left this moray eel, some other fish would have eaten the hook, and died as well.”
It’s a worldwide problem. Ghost fishing gear accounts for around an estimated 10% of all marine litter. On the west coast of the US, the National Marine Fisheries Service reported an average of 11 large whales entangled in ghost nets every year between 2000 and 2012. The number of smaller fish and sea life caught annually in nets and pots and on discarded hooks is impossible to estimate, but Sabuncuoğlu puts it in the millions. It is also dangerous for divers, he adds, “because you can get tangled like the moray eel under the water”.
Sabuncuoğlu took 60 or so shots of the eel, but it was only afterwards, as he was editing the images on his computer, that he felt a pang of sadness at how it had died. “You realise it was helpless there,” he says. Everyone he showed the image to reacted in the same way: “They went, ‘Eeeeee, ai ai ai!’” and shuddered. When he submitted it to this year’s Ocean photography awards, under the title Silent Scream, it was shortlisted in the conservation category.
The National Geographic photographer and conservationist Cristina Mittermaier was among the judges who picked Sabuncuoğlu as the ocean conservation photographer of the year. “It’s a fantastic image,” she tells me. “Underwater wildlife communicate in a very different way to terrestrial wildlife, and they don’t have the same facial expressions that an animal like a grizzly bear or a wolf might have. Therefore, making images that create an emotional connection with humans, when you’re photographing fish, is really hard. In this image, the photographer was able to capture a dramatic moment, and the eel actually has a facial expression that conveys emotion. It caught me as soon as I saw it.”
It’s not just the inscrutability of sea creatures that makes it difficult to get humans emotionally involved. Images of environmental devastation can be off-putting too. “You really need to balance the storytelling with beautiful photography,” says Mittermaier, who co-founded the conservation network SeaLegacy, “and I think this image does that really well. When something outstanding comes along that has the power to make people stop, even for just a second, and internalise what they’re looking at, that’s when we start moving the needle.”
It helps that the technology around underwater photography is improving fast, allowing for more vivid shots and illuminating parts of the ocean that were previously obscure. Sabuncuoğlu mentions blackwater photography, which entails diving into deep ocean at night to photograph larval fish and invertebrates as they rise to the surface.
“It’s only in the past 10 years that the technology has advanced enough for us to be able to take our cameras deeper than 30 metres,” says Mittermaier. “And the sensors now available are allowing us to see in the inky depths of the ocean things that we could not capture just five years ago. So it’s advancing very quickly, and it’s becoming more affordable. And as more and more photographers take to the ocean to capture images, we’re slowly building an army of underwater storytellers reporting from the furthest corners of the Earth.”
Sabuncuoğlu likens the experience of exploring the ocean to space travel. “If you don’t have the technology or the funds to go to another planet, just gear up and jump into the water,” he says. “That’s another planet.” Reporting back from that other planet, and showing the extraordinary profusion of life there, is “the most wonderful thing I can ever do in my lifetime,” he says. “I hope I will do it for many years to come, and I hope I can teach more people how to do it. Because if we don’t show the beauties of the underwater, nobody will realise what’s down there, and if you don’t realise it, you don’t protect it. It’s that simple.”