Investor to Theranos: Give us back our $96 million


#1

Originally published at: http://boingboing.net/2016/10/11/investor-to-theranos-give-us.html


#2

Not sure why you think we shouldn’t feel sorry for the investors. If Theronos had lived up to their hype — and fraudulent results — Boing Boing would be praising the rise of tiny lab-on-a-chips, and the plummeting cost of running blood tests. It could have been a real Good Thing.

Yes, they’re hedge funds, but someone needs to raise money for these advances. It can’t all happen through Kickstarter.

Maybe they should have done more due diligence, but this doesn’t sound like a case of lack of diligence, it sounds like fraud.


#3

It serves them right, investing in him. Everybody knew the Avengers would kick his ass.


#4

Not saying the government could actually do better, but I’d prefer public money went to real quality advances and all the results are public domain. I don’t feel sorry for people who fund innovation but also expect to make even more money off of those innovations in the form of expensive medications and treatments and services that bankrupt poor sick people and raise insurance costs.


#5

In addition to the Thanos association (whose name was an abbreviation for Thanatos, the personification of death), the name also reminds me of the word teratos, which is Greek for monster.


#6

LOL. Good luck with that. Did you not read the fine print? I am sure she Theranos has no money to give back. Here, have a coffee mug.

As with many types of investments, 1) there are no guarantees, ESPECIALLY when the tech seems implausible right out of the gate. 2) do your home work. 3) when researching innovative techniques, expect it to fail, be happily surprised when it succeeds.


#7

Won’t somebody think of the hedge funds?


#8

Fraud is bad, but not if it’s visited upon hedge funds?


#9

$96.1M - That’ll buy lots of black turtleneck sweaters.


#10

Hey Theranos! Where’s the beef?


#11

They’re willing to throw down nearly $100 million…yeah, they’re on the hook for the background work and my sympathy jar seems to be empty at the moment. Besides, who’s to say that the Next Big Thing will be generated by a $800 million dollar investment rather than 8,000 $100,000 investments?


#12

hashtag healthcare bubble


#13

Hedge funds can themselves be a kind of fraud.
Originally they existed to hedge - i.e. bet against things going the wrong way. Any company that uses metals, for instance, is likely to hedge against sudden price changes. The object is to reduce uncertainty.
The problem is that, like insurance, hedging only works if at any time only a small number of people are affected. If a disaster is big enough, the insurance company can’t fund it. If everybody is trying to hedge metal prices, nobody can because for every future buyer there must be a future seller. If I think house prices are going to drop and want to sell my house, I won’t succeed if everybody else thinks they will drop and tries to sell theirs; there will be a price crash due to the one thing more certain than death and taxes - the Law of Supply and Demand.
So hedge funds have turned to a variety of exotic ways of supposedly hedging. One of these is vulture funds - buying up bad debt cheap and trying to find legal means of recovering it. This is why Puerto Rico got into such a mess. Another one is pump and dump - invest in cheap dodgy stocks, promote them and sell at a profit. Another is pure speculative buying, e.g. gold mines which seem exhausted, in the hope of either striking it rich or finding a sucker. Another, the most popular at the moment, is asset bubble creation - buy something or invest in it, then try to create a market buzz that causes people to offer ridiculous amounts of money to get in (social media). At this point hedge funds are really VCs who are trying to persuade their investors that they can offer security - hedging - which is similar to the misrepresentation of poorly secured property debt as being AAA that led to the 2007-9 crisis.
A hedge fund investing in highly speculative technology without doing due diligence is being reckless with its investors’ money to say the least. If the real investors in Theranos knew it was a kind of VC, they might have expected more hands on management from the fund. If they thought they were hedging, they might now be extremely upset.


#14

I thought that the whole point of investing in startups was to cash in on the few that were successful, using that profit to finance the many that crashed and burned. It doesn’t much matter how they crash and burn.

I suppose the hedge fund people want to keep all the profit while making others bear all the risk.


#15

A nine billion dollar cargo cult.


#16

Caveat emptor. Hire someone smarter than you to do due diligence before you throw $100,000,000 at some startup making outlandish claims.


#17

This is what happens when (a) it’s someone else’s money and (b) paying an expert might eat into your bonus.


#18

I think something is wrong with me, I think I fancy Elizabeth Holmes.
Rationally I think I’d probably run a mile after two minutes in the same room (my tolerance for business type bullshit is low), but every time I see a picture, a bit of my brain goes “mmmmmmm”.

Send help.


#19

There are a lot of contexts here on BB where if you suggest that someone has failed to exert due diligence against criminal activity, you will be mercilessly thrashed for the offense of “victim blaming”.

So before I mock this fund for carelessly letting its pocket be picked, can I be sure that I won’t spend another month in Coventry for doing so??


#20

Fools and their money