Is Theranos Truly Disruptive, or Is It All Smoke and Mirrors?

Have you heard of Theranos? The name might seem vaguely familiar because they are a wildly successful start-up that’s raised over 9 billion dollars! They claim they have a faster, more efficient way to test blood using a drop instead of the traditional blood drawn from the vein. Unfortunately, it looks like the enthusiasm over their idea may be misplaced.

Is Theranos Truly Disruptive, or Is It All Smoke and Mirrors?

The Theranos controversy started in October, when the Wall Street Journal ran a very harsh article indicating the company had some very questionable results on their new technology [Hot Startup Theranos Has Struggled With Its Blood-Test Technology (this is behind a paywall, so if the link doesn’t work try Googling the full title)]. The Journal also all but said the company had some ethical issues as well, sharing anecdotes from former employees who claimed they felt uncomfortable with how the company reported results to the FDA and other government agencies by obfuscating the specific methodologies and cherry picking only the best results.

Predictably, there was a backlash against the Wall Street Journal for criticizing a startup darling. Techcrunch ran a very incoherent article trying to defend Theranos, proclaiming “so what” in response to the allegation that Theranos was selling themselves as using a groundbreaking new technology when in reality only 1 of their 150 tests actually uses their proprietary “nanotainer”, where they use a tiny drop of blood from your finger instead of the usual huge vials used by other labs.

They went as far as to say it’s no big deal because Theranos isn’t public, and if consumers don’t like it they don’t need to use a Theranos lab. That is, of course, ignoring that Theranos was being trialed at Walgreens, so it was readily available to many consumers, as well as the fact that most consumers don’t think too closely about which lab processes their tests. For most of us, our choices are Quest Diagnostics or Labcorp, and the deciding factors are either availability of tests or insurance coverage.

It’s reasonable to assume that any lab is equally capable of safely processing and testing a blood sample, but the Wall Street Journal raised serious red flags about that, citing a few examples of truly outrageous Theranos results (that caused patients to be retested by other labs, which determined the Theranos numbers were wrong). But Theranos was a unicorn, a private equity success story, and therefore they should be considered right, science and testing notwithstanding!

As it turns out, the Wall Street Journal was likely right to raise those concerns, as Theranos was hit with even more bad news this week. The Centers for Medicare and Medicaid Services (CMS) threatened to withdraw their certification of Theranos, stop paying for Medicare/Medicaid tests done by them, and start fining them up to $10,000 A DAY. While the exact violations aren’t clear, at least one was said to relate specifically to patient safety; whether that means more bad test results, or if it’s something else that was not stated.

But the FDA has only approved one of Theranos’ tests using their nanotainers, CMS is breathing down their necks, and the response from Theranos is that 90% of their blood tests are being done via traditional means at their regular lab, not the one being cited for violations. Basically, Theranos isn’t disrupting or inventing anything new; they’re just running yet another blood testing company. Can they make money doing that? Absolutely. Is it exciting, and worthy of accolades like “unicorn” or “disruptor”? Probably not.

No matter what ends up happening with Theranos, this is an important lesson for consumers (and anyone following technology startups closely). It’s easy to be dazzled by new ideas, and to convince ourselves that someone has truly invented something so amazing, so special, that the flaws don’t matter because it’s just part of growing something big. And if your Kickstarter for a new kind of iPhone case falls flat, well, it didn’t disrupt the way you thought. But if you’re looking to reinvent medicine, and putting that invention in the path of everyday consumers, the answer is not to shrug and say such failures are part of being a start-up.

The FDA and other organizations clearly don’t see “Well, it might work, but not yet, so we’re just going off of whichever gives us the best results” as an acceptable answer, nor should they. It seems Theranos and their supporters fell into the mistake of figuring that disrupting medicine was like disrupting taxis and hotels; you try a few things, you tweak it, and you see what works. But you can’t be a medical startup that caters to the average person and also still be figuring out which tests actually work!

Disruption is certainly the buzzword of this decade, and it has a place in innovation, but as Theranos is demonstrating, you can’t disrupt basic safety and standards and expect to get a free pass!

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About the Author

Zek has been a gadget fiend for a long time, going back to their first PDA (a Palm M100). They quickly went from researching what PDA to buy to following tech news closely and keeping up with the latest and greatest stuff. They love writing about ebooks because they combine their two favorite activities; reading anything and everything, and talking about fun new tech toys. What could be better?

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