Private companies’ content censorship raises important public concerns of a magnitude meriting book-length treatment. Not here, however, and not by me. The left, for example, saw its near-absolute content control of most public media – print, broadcast, movies, education – as insufficient because of talk radio. Leftist radio programs fell flat while Rush Limbaugh, intolerably, soared to prominence. We know that tolerance has a very restricted meaning for leftists, thus their regulatory effort to quash conservative talk radio with the “fairness doctrine” was a case study in the use of state power in furtherance of their illiberal – totalitarian, actually – impulses and tactics.
The left never hesitates to enforce its rubrics, on pain of abusive name-calling (amplified by their “media”) or ruination at the hands of some public agency or other with enforcement powers. For instance, a Christian baker in Colorado is being singled out yet again. All sense of proportion has been lost, to such an extent that definitions of basic language and process must be re-examined. Does what we have referred to as media up until now still qualify as media?
Are newspapers and TV newscasts merely neutral means of communication for all or do they now zealously advocate one single worldview, to the vituperous exclusion of all others? It is no longer merely a medium when the New York Times “news” pages are blatantly editorial and read like daily DNC talking points. Do administrative agencies, whose rules are enacted at every level – federal, state and local – by leftist activists (who are the pervasive and permanent denizens of these administrative swamps) really represent the will of the voting majority? There are literally scores of thousands of such rules – many with huge fines or even prison sentences for non-compliance – at every level of government, so that virtually anyone could be ruined by merely coming to the attention of a “public servant” with an axe to grind – particularly vis-à-vis an uppity, outspoken conservative. Legislative or judicial oversight of such agencies, as a practical matter, is non-existent.
While it would be a terrible idea to attempt to impose a “fairness doctrine” on Silicon Valley, I am heartened that President Trump tweeted today on the subject of censorship of conservative viewpoints by social media and said “…we won’t let that happen”. As a proponent of small government, I do not advocate promiscuous use of state power to right all wrongs. However, the situation today is intolerable. With the status quo – where we cannot even be heard to object – we can only lose our rights. The power of the state is being used regularly to stifle non-progressive speech and this is being perpetrated in part by state-sanctioned companies with monopoly power. Trump’s statements are useful push-back and very necessary, as the progre$$ive $ilicon Valley types have had a free ride up until now, doing as they like to squash our views.
While I am not thrilled with use of state power generally, one of its necessary powers is to “secure” our fundamental rights – like freedom of political speech. Maybe we ought to recall Obama’s rejoinder that, “You didn’t build that…” These huge companies, to some extent after all, exist at the sufferance of the entire public and the state functionaries which represent us. It is unacceptable for companies with monopoly power to censor speech with which they disagree and to do it by subterfuges such as “offensive” or contrivances like “hate speech”. Although they are private companies and do have substantial commercial rights, such rights are not without limit and may not legitimately be used to infringe fundamental personal (and essentially political) freedom of speech rights of millions of individuals. To say otherwise is to make the Constitution into a suicide pact for conservatives and libertarians..
It is high time these behemoths began to fear negative consequences for some of their business practices, including censorship. If he chooses, President Trump can make their lives difficult and their bottom lines shrink by executive actions (and not necessarily executive orders). It is time, I think, to set the Department of Justice about the task of examining antitrust aspects of the business practices of Google (YouTube), Facebook, Twitter, Amazon, Apple, etc. The exercise will likely prove salutary.
A comment John made (#18) on a recent post by 10 cents (“Programming Question”), reminded me I had reviewed one of John’s books. The review was posted a while back on the legacy site. As this is one of the most worthwhile books I have ever read, I thought it should be posted it here.
A work of non-fiction is understood in a context. A great work actually articulates the context before anybody else gets it. A review of such a book may go seemingly far afield, if the book’s power can be construed to provoke and, indeed, license the inspired musings of its readers. Such is the case here, as “The Autodesk File”’s roots are deep in the intellectual, technological, economic, financial, and even spiritual soil of this, the spring garden of the information age.
When was the last time you couldn’t put down a book which had not a single murder, courtship, love or sex scene? OK, I’m not counting some ancillary trysts consisting of mergers and takeovers, which some might construe as sexy, or at least allude to being on the receiving end of a certain Anglo-Saxon gerund. This book contains no obscenities, save a rare mention of taurine spoor. That serves as a welcome reminder: important ideas and even emotions are amenable to description sans vulgarity.
Lest one think this a narrow commercial exposition, “The Autodesk File” is in the public domain in multiple formats. Neither is it a mere exposition of commerce. About half way through, amidst essays explaining the nature of businesses dealing in intellectual property (rather than capital-intensive equipment), the reader is treated to a short science fiction story whose theme is no less than a plausible tale of the origin of human life. Our bodily construction is, after all, prescribed in lines of code, albeit compressed into helixes wound around themselves then wrapped around histones. Like some of their software counterparts, they, too, must be unzipped before use.
Also punctuating this eclectic opus are quotes from Aristophanes. It is a tour de force, a truly awe-inspiring account of much more than the building and workings of one trailblazing company. It encapsulates the noblest of human aspirations, idealizations, creativity, ingenuity and critical self-examination; inescapable is the conclusion that voluntary cooperation and exchange of ideas, knowledge and capital is a great boon to the world at large. If a business is built to serve the needs of customers by creating products of the highest possible quality, greed is not a good; it is irrelevant. Also inescapable is the perhaps ironic conclusion that ongoing success requires continual vigilance, lest arrogance take hold. The fruition of critical self-examination can be seen in renewal of that same humility which was so essential in powering that first whiff of success.
Nonetheless, apart from arcane sections dealing with technical matters of computer hardware and programming (these, too, may be great for the cognoscenti; this writer simply knows too little), this book is a spellbinder. Readers may be surprised to be persuasively regaled with the fundamentals of various disciplines, including economics, finance, taxation, corporate law, engineering, computer science, thermodynamics, rocket science, quantum mechanics, cosmology and the nature of reality. That is, readers who don’t know John Walker. For those who do, none of this is surprising.
Have you ever had a million dollar idea? I have – lots of ‘em. Have I turned even one of those ideas into a product? Nope. Why not? Because I lacked the understanding, the talent, and the single-minded discipline to even get one idea off the ground. This book, edited by Ratburger’s own John Walker (himself author of most of the collected writings), is a chronicle of birth, growth, crises and maturation of Autodesk Inc., whose products helped unleash the creativity and productivity of millions of people. It did so beginning with a key insight: that the infant personal computer was a general tool and not a specific workstation. As a general tool, through the intelligent design of software, it would rapidly evolve in utility in virtually every field of endeavor, beginning with design. Design, in this line of thinking, is a logical first step down the path which aims, eventually, to capture all of reality in the box we call a computer. This stunning insight occurred while all the rest of us still went through our days typing on an IBM Selectric, without once even using the word “computer.” Way back then in 1980, virtually none of us thought about computers or any of the other words and things without which our lives today would be unimaginable. Historically speaking,1980 happened yesterday.
An additional insight guided Autodesk’s ethos: that personal computers would grow exponentially in processing power and become useful by ordinary people (with no computer or programming skills) to undertake virtually any task. Autodesk’s first product,AutoCAD, moved design from a small number of dedicated, expensive CAD workstations operated by highly-trained people, to desks virtually everywhere where drawing might be needed. In the process of “squeezing too much code into too small a box,” Autodesk did not compete with previous generations of single-purpose CAD workstations which cost 10 – 50X as much. Instead, it created and increased a market for CAD by the same orders of magnitude, by bringing this tool to the 98% of designers and draftsmen who could not afford dedicated CAD workstations.
In less than one year, this new company had a hit product. Time to rest on one’s laurels? How about after the IPO? Time to coast? Not quite. Going into the CAD business – and that is the business, as opposed to the software business (read the book to learn why), is something like launching a rocket from Earth and hoping to land on a comet and send back data – all except that the precise trajectory of the comet cannot be known, and its surface material and contours are completely unknown. The difficulties were perhaps not unlike those encountered by the ESA’s $1.8 billion Rosetta/Philae spacecraft which did rendezvous and land on comet 67P. Philae’s tether harpoons failed to fire, so the probe bounced and wound up in a permanently-shaded spot (due to an unanticipated hard surface, they likely would not have worked anyway), preventing use of solar power. Batteries enabled an estimated 80% overall mission success. AutoCAD’s launch – with $59,000 in capital, mid-course hardware and software corrections and “landing” on users, by contrast, remains successful to this day.
“The Autodesk File” attributes success to the company’s understanding that it represented what it coined “The New Technological Corporation.” This is an an enterprise which does not conform to traditional capital-intensive business, as it can deploy intellectual, debt-free leverage. Such businesses embrace an unpredictable but essential element: “wild talent.” This talent is a necessary but not sufficient condition for success when it comes to creating software, which is unlike most all prior businesses. Rather than capital, such entities require a peculiar kind of talent – one which grasps the present desires of a market, knows what is possible with present hardware and the correctly plots the trajectories of both the market and evolving hardware. I believe it to be objectively true that the editor is faithfully and humbly describing the truly awe-inspiring talent he, himself, brought to Autodesk. Other such individuals, like Jobs or Gates, are known in the early computer and software businesses. Few, however, have operated as willing members of an extended team with humility, dedication to excellence and human decency. If nothing else, “The Autodesk File” shows how this can be accomplished.
Attempts to find individuals with “wild talent” are most difficult, maybe impossible. “Wild talent” illustrates the essential difference between aggregate information, traditionally used by analysts to “value” companies which trade on public exchanges, and actual events which take place within any company. For instance, money spent on R&D is aggregate data which subsumes the activities of many employees of a given company. Whether it means the company will grow really depends on what individual employees accomplish. When it come to software, the outcome will be notably different for R&D teams which play it safe versus ones which continually push the envelope of what may be remotely possible. Intellectual leverage is such that the cost of failure of 8 out of 10 ideas is far outweighed by success in only 1 or 2 of them. The presence of such loyal individuals is also a bulwark against hostile takeovers. You can lead a programmer to the R&D department, but you can’t make him plink – at least not in the way which is essential to success.
Perhaps most revealing about this unusual book is the ongoing critical self-examination engaged in by the primary author. These analyses were distilled into the form of internal company communications as essays and information letters.At many points in the journey, the author is able to adumbrate the – sometimes previously un-articulable – principles which guided his often momentous insights. These usually arose in chaotic circumstances with incomplete information. The essential humility of this approach is demonstrated at various points in the book. Repeatedly, the author makes clear the importance of open communication and understanding of the roles of all the other parts of the company. A programmer, for example, must understand management’s plan, what customers want, how a product will be marketed and shipped, what competitors are doing, etc. Only then can a “wild talent” be effective.
“The Autodesk File” is a much-needed reminder that human beings are still capable of doing awe-inspiring, creative and even noble things; that they can voluntarily collaborate and, working in their own self-interest, set off endless waves of non-zero sum games in their wakes. This is also a success story, then, a chain of decisions, clearly rooted in the philosophy of Classical Liberalism – in some of its untidy and altogether messy human details. Without aiming to, this story affirms the primacy and value of the individual, both as producer and consumer; it convincingly shows that communication – positive and negative feedback – between individual, voluntary buyers and sellers – is the essence of what a market is. This is in contrast to statist dirigisme, where aggregate data and arrogance rule, in derogation of the value of the individual.
Diametrically opposed to today’s received collectivist wisdom, “The Autodesk File” shows how individuals create markets where none previously existed, to the betterment of all. From those roots emerge timeless operating principles: 1. build the best products, period – with open architecture so as to invite developers to customize and find as yet undreamed uses (an essential form of feedback for software companies), thereby further expanding markets; 2. invite, quickly assess and respond to this feedback from customers in the form of improved new releases; 3. employ owners, not merely ‘investors’ – pay well for results – with ownership whenever possible. This is a story which demonstrates the huge difference between owners, whose time preference is long and investors focused only on the forecast for the next fiscal quarter. The tyranny of industry analysts, a form of economic lunacy where short time preference is brutally and pervasively enforced on behalf of “investors,” operates so as to threaten the short-term existence of sound public companies which actually attempt to pursue the best long-term business practices.
In a somewhat philosophic interview around the tenth anniversary of Autodesk, the author/editor describes the operation of a new “design cult” of engineering as a “form of creationism, which thinks its members are so omniscient that they have no need for market-driven evolution to perfect their efforts.” This view, coupled with the information letters, again displays an essential humility in the ethos of Autodesk. Management must lead toward explicit goals. Every part of the organization must understand and communicate with all others, particularly as it affects product development. This is not the typical hierarchical corporate ethos. Neither is it anarchy. Management must lead, but not without listening, understanding and explaining.
It is difficult for this writer to refrain from drawing parallels to the author’s description of this “design cult” of engineering. Such an attitude is not surprising, given that we live in a society which increasingly and officially denies the existence of a supreme being, while at the same time acting – through a “cult” of increasingly centralized authoritarian government – as though it were omniscient and omnipotent; as though its policies have no unintended consequences; as though no cost is too high to accomplish its goals, whose only feedback is its own reverberating positive-feedback echo chamber. It is hard to know which cult is imitating which. In either case, the state-erected obstacles to starting and running a business, while not emphasized, are on display in this epic. This common ethos of the state and large corporations has inevitably given us today’s pernicious corporatism.
It may be that the most significant intellectual error of our time is the belief that society can be modeled and manipulated as well as physical reality now can be, thanks in large part to private companies like Autodesk. Unlike government, though, companies are forced to relearn their limits – i.e., lessons in humility are given, at least annually, and enforced as necessary by balance sheets and owners. The fear of going out of business would be a highly salutary fear for modern government to experience. Instead of a healthy humility, however, the state often displays antipathy toward private enterprise – ironically, the very source of its own financial power. The public relations nature of this attitudelikely represents either envy of private successes and/or virtue signaling in an effort to garner votes in the incessant lust for yet more power.
God is traditionally described as a jealous God. Do you suppose that our deity/government has its own version of the Ten Commandments, the first of which explains its animus toward private enterprise? “Thou shalt have no other Gods before Me…” …otherwise put, “Trust me. I’m from the government.” “I’m here to protect you from those big, bad, corporations.”
Thus, as you may see for this reader, the story of Autodesk led to much contemplation of human nature and the whole spectrum our interactions – both voluntary and coercive. It is an inspiring and epic tale of the utility and nobility of voluntary cooperation.
I write a weekly book review for the Daily News of Galveston County. (It is not the biggest daily newspaper in Texas, but it is the oldest.) My review normally appears Wednesdays. When it appears, I post the review here on the following Sunday.
‘Shale Boom’ an even-handed look at fracking
By MARK LARDAS
July 24, 2018
“Shale Boom: The Barnett Shale Play and Fort Worth,” by Diana Davids Hinton, Texas Christian University Press, 2018, 192 pages, $30
Twenty years ago, the United States was running out of oil and gas. Fracking changed everything. Today, the United States is the world’s largest producer of petroleum products.
“Shale Boom: The Barnett Shale Play and Fort Worth,” by Diana Davids Hinton tells the history of a key part of that transformation. It examines how the Barnett Shale helped trigger the fracking revolution, and explores its consequences.
Hinton puts fracking in its historical context. It was not new. Some form of fracturing was done as early as the 1920s. This included injecting liquids into wells under high pressure — hydraulic fracturing. Hinton reveals what was new. The Barnett Shale is a large but narrow layer of oil bearing rock beneath Fort Worth and the area west of it. Fracking techniques of the 1980s and 1990s meant wells failed to yield economic levels of gas and oil.
George Mitchell owned lease rights in the area. Hinton shows how the Galveston-born Mitchell financed new fracking techniques. The new technology unlocked the Barnett Shale, producing unprecedented levels of natural gas. Directional drilling techniques developed during this century’s first decade multiplied yields.
It kick-started a shale gas boom around Fort Worth. Much of the best yield area was under Fort Worth, complicating things. What followed included some craziness of the type accompanying every oil boom. Hinton traces the action.
Hinton looks at the impact urban drilling had on both drillers and residents. She also examines the bust inevitably following a boom, the backlash against drilling, and the impact of environmental concerns fueled by fear of fracking.
Hinton is refreshingly even-handed. She looks at both the benefits and costs (societal and environmental as well as financial) of drilling and the hydrocarbon industry. She also explores both the benefits and excesses of environmental opposition to fracking. Hinton is unafraid to expose the follies and dodgy activities of individuals in both drilling and the environmental movement.
Hinton closes with an examination of the impacts of fracking — long and short term — around Fort Worth, and its global implications. “Shale Boom” a fascinating and balanced look at what technology revolutions yield.
Mark Lardas, an engineer, freelance writer, amateur historian, and model-maker, lives in League City. His website is marklardas.com.
The drawing of blood for laboratory tests is one of my least favourite parts of a routine visit to the doctor’s office. Now, I have no fear of needles and hardly notice the stick, but frequently the doctor’s assistant who draws the blood (whom I’ve nicknamed Vampira) has difficulty finding the vein to get a good flow and has to try several times. On one occasion she made an internal puncture which resulted in a huge, ugly bruise that looked like I’d slammed a car door on my arm. I wondered why they need so much blood, and why draw it into so many different containers? (Eventually, I researched this, having been intrigued by the issue during the O. J. Simpson trial; if you’re curious, here is the information.) Then, after the blood is drawn, it has to be sent off to the laboratory, which sends back the results days later. If something pops up in the test results, you have to go back for a second visit with the doctor to discuss it.
Wouldn’t it be great if they could just stick a fingertip and draw a drop or two of blood, as is done by diabetics to test blood sugar, then run all the tests on it? Further, imagine if, after taking the drop of blood, it could be put into a desktop machine right in the doctor’s office which would, in a matter of minutes, produce test results you could discuss immediately with the doctor. And if such a technology existed and followed the history of decline in price with increase in volume which has characterised other high technology products since the 1970s, it might be possible to deploy the machines into the homes of patients being treated with medications so their effects could be monitored and relayed directly to their physicians in case an anomaly was detected. It wouldn’t quite be a Star Trek medical tricorder, but it would be one step closer. With the cost of medical care rising steeply, automating diagnostic blood tests and bringing them to the mass market seemed an excellent candidate as the “next big thing” for Silicon Valley to revolutionise.
This was the vision that came to 19 year old Elizabeth Holmes after completing a summer internship at the Genome Institute of Singapore after her freshman year as a chemical engineering major at Stanford. Holmes had decided on a career in entrepreneurship from an early age and, after her first semester told her father, “No, Dad, I’m, not interested in getting a Ph.D. I want to make money.” And Stanford, in the heart of Silicon Valley, was surrounded by companies started by professors and graduates who had turned inventions into vast fortunes. With only one year of college behind her, she was sure she’d found her opportunity. She showed the patent application she’d drafted for an arm patch that would diagnose medical conditions to Channing Robertson, professor of chemical engineering at Stanford, and Shaunak Roy, the Ph.D. student in whose lab she had worked as an assistant during her freshman year. Robertson was enthusiastic, and when Holmes said she intended to leave Stanford and start a company to commercialise the idea, he encouraged her. When the company was incorporated in 2004, Roy, then a newly-minted Ph.D., became its first employee and Robertson joined the board.
From the outset, the company was funded by other people’s money. Holmes persuaded a family friend, Tim Draper, a second-generation venture capitalist who had backed, among other companies, Hotmail, to invest US$ 1 million in first round funding. Draper was soon joined by Victor Palmieri, a corporate turnaround artist and friend of Holmes’ father. The company was named Theranos, from “therapy” and “diagnosis”. Elizabeth, unlike this scribbler, had a lifelong aversion to needles, and the invention she described in the business plan pitched to investors was informed by this. A skin patch would draw tiny quantities of blood without pain by means of “micro-needles”, the blood would be analysed by micro-miniaturised sensors in the patch and, if needed, medication could be injected. A wireless data link would send results to the doctor.
This concept, and Elizabeth’s enthusiasm and high-energy pitch allowed her to recruit additional investors, raising almost US$ 6 million in 2004. But there were some who failed to be persuaded: MedVentures Associates, a firm that specialised in medical technology, turned her down after discovering she had no answers for the technical questions raised in a meeting with the partners, who had in-depth experience with diagnostic technology. This would be a harbinger of the company’s fund-raising in the future: in its entire history, not a single venture fund or investor with experience in medical or diagnostic technology would put money into the company.
Shaunak Roy, who, unlike Holmes, actually knew something about chemistry, quickly realised that Elizabeth’s concept, while appealing to the uninformed, was science fiction, not science, and no amount of arm-waving about nanotechnology, microfluidics, or laboratories on a chip would suffice to build something which was far beyond the state of the art. This led to a “de-scoping” of the company’s ambition—the first of many which would happen over succeeding years. Instead of Elizabeth’s magical patch, a small quantity of blood would be drawn from a finger stick and placed into a cartridge around the size of a credit card. The disposable cartridge would then be placed into a desktop “reader” machine, which would, using the blood and reagents stored in the cartridge, perform a series of analyses and report the results. This was originally called Theranos 1.0, but after a series of painful redesigns, was dubbed the “Edison”. This was the prototype Theranos ultimately showed to potential customers and prospective investors.
This was a far cry from the original ambitious concept. The hundreds of laboratory tests doctors can order are divided into four major categories: immunoassays, general chemistry, hæmatology, and DNA amplification. In immunoassay tests, blood plasma is exposed to an antibody that detects the presence of a substance in the plasma. The antibody contains a marker which can be detected by its effect on light passed through the sample. Immunoassays are used in a number of common blood tests, such the 25(OH)D assay used to test for vitamin D deficiency, but cannot perform other frequently ordered tests such as blood sugar and red and white blood cell counts. Edison could only perform what is called “chemiluminescent immunoassays”, and thus could only perform a fraction of the tests regularly ordered. The rationale for installing an Edison in the doctor’s office was dramatically reduced if it could only do some tests but still required a venous blood draw be sent off to the laboratory for the balance.
This didn’t deter Elizabeth, who combined her formidable salesmanship with arm-waving about the capabilities of the company’s products. She was working on a deal to sell four hundred Edisons to the Mexican government to cope with an outbreak of swine flu, which would generate immediate revenue. Money was much on the minds of Theranos’ senior management. By the end of 2009, the company had burned through the US$ 47 million raised in its first three rounds of funding and, without a viable product or prospects for sales, would have difficulty keeping the lights on.
But the real bonanza loomed on the horizon in 2010. Drugstore giant Walgreens was interested in expanding their retail business into the “wellness market”: providing in-store health services to their mass market clientèle. Theranos pitched them on offering in-store blood testing. Doctors could send their patients to the local Walgreens to have their blood tested from a simple finger stick and eliminate the need to draw blood in the office or deal with laboratories. With more than 8,000 locations in the U.S., if each were to be equipped with one Edison, the revenue to Theranos (including the single-use testing cartridges) would put them on the map as another Silicon Valley disruptor that went from zero to hundreds of millions in revenue overnight. But here, as well, the Elizabeth effect was in evidence. Of the 192 tests she told Walgreens Theranos could perform, fewer than half were immunoassays the Edisons could run. The rest could be done only on conventional laboratory equipment, and certainly not on a while-you-wait basis.
Walgreens wasn’t the only potential saviour on the horizon. Grocery godzilla Safeway, struggling with sales and earnings which seemed to have reached a peak, saw in-store blood testing with Theranos machines as a high-margin profit centre. They loaned Theranos US$ 30 million and began to plan for installation of blood testing clinics in their stores.
But there was a problem, and as the months wore on, this became increasingly apparent to people at both Walgreens and Safeway, although dismissed by those in senior management under the spell of Elizabeth’s reality distortion field. Deadlines were missed. Simple requests, such as A/B comparison tests run on the Theranos hardware and at conventional labs were first refused, then postponed, then run but results not disclosed. The list of tests which could be run, how blood for them would be drawn, and how they would be processed seemed to dissolve into fog whenever specific requests were made for this information, which was essential for planning the in-store clinics.
There was, indeed, a problem, and it was pretty severe, especially for a start-up which had burned through US$ 50 million and sold nothing. The product didn’t work. Not only could the Edison only run a fraction of the tests its prospective customers had been led by Theranos to believe it could, for those it did run the results were wildly unreliable. The small quantity of blood used in the test introduced random errors due to dilution of the sample; the small tubes in the cartridge were prone to clogging; and capillary blood collected from a finger stick was prone to errors due to “hemolysis”, the rupture of red blood cells, which is minimal in a venous blood draw but so prevalent in finger stick blood it could lead to some tests producing values which indicated the patient was dead.
Meanwhile, people who came to work at Theranos quickly became aware that it was not a normal company, even by the eccentric standards of Silicon Valley. There was an obsession with security, with doors opened by badge readers; logging of employee movement; information restricted to narrow silos prohibiting collaboration between, say, engineering and marketing which is the norm in technological start-ups; monitoring of employee Internet access, E-mail, and social media presence; a security detail of menacing-looking people in black suits and earpieces (which eventually reached a total of twenty); a propensity of people, even senior executives, to “vanish”, Stalin-era purge-like, overnight; and a climate of fear that anybody, employee or former employee, who spoke about the company or its products to an outsider, especially the media, would be pursued, harassed, and bankrupted by lawsuits. There aren’t many start-ups whose senior scientists are summarily demoted and subsequently commit suicide. That happened at Theranos. The company held no memorial for him.
Throughout all of this, a curious presence in the company was Ramesh (“Sunny”) Balwani, a Pakistani-born software engineer who had made a fortune of more than US$ 40 million in the dot-com boom and cashed out before the bust. He joined Theranos in late 2009 as Elizabeth’s second in command and rapidly became known as a hatchet man, domineering boss, and clueless when it came to the company’s key technologies (on one occasion, an engineer mentioned a robotic arm’s “end effector”, after which Sunny would frequently speak of its “endofactor”). Unbeknownst to employees and investors, Elizabeth and Sunny had been living together since 2005. Such an arrangement would be a major scandal in a public company, but even in a private firm, concealing such information from the board and investors is a serious breach of trust.
Let’s talk about the board, shall we? Elizabeth was not only persuasive, but well-connected. She would parley one connection into another, and before long had recruited many prominent figures including:
George Schultz (former U.S. Secretary of State)
Henry Kissinger (former U.S. Secretary of State)
Bill Frist (former U.S. Senator and medical doctor)
James Mattis (General, U.S. Marine Corps)
Riley Bechtel (Chairman and former CEO, Bechtel Group)
Sam Nunn (former U.S. Senator)
Richard Kobacevich (former Wells Fargo chairman and CEO)
Later, super-lawyer David Boies would join the board, and lead its attacks against the company’s detractors. It is notable that, as with its investors, not a single board member had experience in medical or diagnostic technology. Bill Frist was an M.D., but his speciality was heart and lung transplants, not laboratory tests.
By 2014, Elizabeth Holmes had come onto the media radar. Photogenic, articulate, and with a story of high-tech disruption of an industry much in the news, she began to be featured as the “female Steve Jobs”, which must have pleased her, since she affected black turtlenecks, kale shakes, and even a car with no license plates to emulate her role model. She appeared on the cover of Fortune in January 2014, made the Forbes list of 400 most wealthy shortly thereafter, was featured in puff pieces in business and general market media, and was named by Time as one of the hundred most influential people in the world. The year 2014 closed with another glowing profile in the New Yorker. This would be the beginning of the end, as it happened to be read by somebody who actually knew something about blood testing.
Adam Clapper, a pathologist in Missouri, spent his spare time writing Pathology Blawg, with a readership of practising pathologists. Clapper read what Elizabeth was claiming to do with a couple of drops of blood from a finger stick and it didn’t pass the sniff test. He wrote a sceptical piece on his blog and, as it passed from hand to hand, he became a lightning rod for others dubious of Theranos’ claims, including those with direct or indirect experience with the company. Earlier, he had helped a Wall Street Journal reporter comprehend the tangled web of medical laboratory billing, and he decided to pass on the tip to the author of this book.
Thus began the unravelling of one of the greatest scams and scandals in the history of high technology, Silicon Valley, and venture investing. At the peak, privately-held Theranos was valued at around US$ 9 billion, with Elizabeth Holmes holding around half of its common stock, and with one of those innovative capital structures of which Silicon Valley is so fond, 99.7% of the voting rights. Altogether, over its history, the company raised around US$ 900 million from investors (including US$ 125 million from Rupert Murdoch in the US$ 430 million final round of funding). Most of the investors’ money was ultimately spent on legal fees as the whole fairy castle crumbled.
The story of the decline and fall is gripping, involving the grandson of a Secretary of State, gumshoes following whistleblowers and reporters, what amounts to legal terrorism by the ever-slimy David Boies, courageous people who stood their ground in the interest of scientific integrity against enormous personal and financial pressure, and the saga of one of the most cunning and naturally talented confidence women ever, equipped with only two semesters of freshman chemical engineering, who managed to raise and blow through almost a billion dollars of other people’s money without checking off the first box on the conventional start-up check list: “Build the product”.
I have, in my career, met three world-class con men. Three times, I (just barely) managed to pick up the warning signs and beg my associates to walk away. Each time I was ignored. After reading this book, I am absolutely sure that had Elizabeth Holmes pitched me on Theranos (about which I never heard before the fraud began to be exposed), I would have been taken in. Walker’s law is “Absent evidence to the contrary, assume everything is a scam”. A corollary is “No matter how cautious you are, there’s always a confidence man (or woman) who can scam you if you don’t do your homework.”
Carreyrou, John. Bad Blood. New York: Alfred A. Knopf, 2018. ISBN 978-1-984833-63-1.
Here is Elizabeth Holmes at Stanford in 2013, when Theranos was riding high and she was doing her “female Steve Jobs” act.
This is a CNN piece, filmed after the Theranos scam had begun to collapse, in which you can still glimpse the Elizabeth Holmes reality distortion field at full intensity directed at CNN medical correspondent Sanjay Gupta. There are several curious things about this video. The machine that Gupta is shown is the “miniLab”, a prototype second-generation machine which never worked acceptably, not the Edison, which was actually used in the Walgreens and Safeway tests. Gupta’s blood is drawn and tested, but the process used to perform the test is never shown. The result reported is a cholesterol test, but the Edison cannot perform such tests. In the plans for the Walgreens and Safeway roll-outs, such tests were performed on purchased Siemens analysers which had been secretly hacked by Theranos to work with blood diluted well below their regulatory-approved specifications (the dilution was required due to the small volume of blood from the finger stick). Since the miniLab never really worked, the odds are that Gupta’s blood was tested on one of the Siemens machines, not a Theranos product at all.
In a June 2018 interview, author John Carreyrou recounts the story of Theranos and his part in revealing the truth. There is substantial background information in the question and answer period which does not appear in the book.
If you are a connoisseur of the art of the con, here is a masterpiece. After the Wall Street Journal exposé had broken, after retracting tens of thousands of blood tests, and after Theranos had been banned from running a clinical laboratory by its regulators, Holmes got up before an audience of 2500 people at the meeting of the American Association of Clinical Chemistry and turned up the reality distortion field to eleven. Watch a master at work. She comes on the stage at the six minute mark.
How Understanding the Answer for Yourself and Your Employees is Vital to Engagement.
When I was a boy my father taught me a story by the great Zig Zigler. You may have heard it, Zigler’s Rail Road Story. Robert Terson repeats it in full here. It’s about the railroad president named Jim, who one day stopped to pull a line worker, Dave, into his car, where they sat and chatted for an hour.
When Dave’s friends on the crew asked what was going on he told them that he and Jim had started working on the same day 20 years ago. They wondered to themselves, how could one man become president while the other was still working on the line?
As Terson reminds us:
“Dave looked wistfully up into the sky and said, “A little over 20 years ago Jim Murphy went to work for the railroad; I went to work for a $1.75 an hour.”
The truth of this story was so powerful that when I heard it I decided that I would probably never work simply for a paycheck, but always “go to work for the railroad.”
Most people believe that there is only one motivation that triggers our behaviors. As a therapist, I have discovered there are many motivations that drive the things we do, and, often, unconsciously. In therapy, much of the work is uncovering these motivations. So, the answer to the question, “Who do you work for?” is not binary. Jim worked for the railroad. He also worked for a salary, but it was not the primary reason.
The fact is that people work for far more than those two reasons. I am driven to work to support my family. I don’t think I would work as hard without three other people in my life, especially with college ahead for two of them. Being unemployed for half a year has been a grind and a time for personal growth. Much of our self-worth is tied up in how productive we are.
Sometimes, however, work is not for yourself or your family. One of the Gallup’s Q12* survey questions asks about having a “Best Friend” at work. Gallup has shown that if someone says they have a best friend at work, they are more likely to be engaged. It’s about the relationship they have formed with the people on either side of them. The starkest example of this is combat. Veterans will tell you in the moments of combat they are fighting for their brothers and sisters.
The late Bill Mauldin, the wonderful cartoonist who did Willie and Joe all through World War Two, captured this foxhole relationship many times in his years-long series of cartoons. There was one with Willie telling Joe, “Joe, yestiddy ua saved my life an’ I swore I’d pay ya back. Here’s my last pair of dry socks.”
For supervisors, it is vital to understand what your personal motivations are for working, as well as to understand the motivations of your employees. If your motivations are centered on your income, the people working for you will know it. If your goal is focused on the advancement of your own career, they are going to know that too.
These are important goals. But if they are the sole focus, they can be self-defeating. Employees know when you care about their careers. They know when you are dedicated to discovering and develop their goals.
We have sayings for someone who is just working for a paycheck: “Phoning it in”, “Doing the bare minimum not to get fired”, “Waiting for retirement”. These all mean the same thing: the employee is disengaged and not going to do his or her best.
Leaders and managers in the 21st Century need to understand the employees’ reasons for working. Otherwise the “Jims” will move to someone who does understand them, and you will be left with the “Daves”. If you are a “Jim” and your current employer does not seem to care, start looking for someone who will.
Bryan G. Stephens is an executive on a mission to transform the workplace. He is the founder and CEO of TalkForward, a consulting and training company, utilizing Bryan’s clinical and management expertise to develop managers and teams in a corporate environment. As a licensed therapist with strong understanding of developing human potential, he is dedicated to the development of Human Capital to meet the needs of leaders, managers, and employees in the 21st Century workplace.
Bryan has an Executive MBA from Kennesaw State University, Coles School of Business, and both a Master’s and Bachelor’s degree in Psychology.
Amazon uses a “hate list” compiled by the Southern Poverty Law Center (SPLC) to determine which charities are eligible for its “Smile” charity program. As a private company, it can do as it wishes, however cynical or stupid. As a customer, of course, I have the same privilege, which resulted in the following letter:
Dear non-hierarchical gender-free Amazon person:
I am a long-time customer and Prime member, who has spent many thousands of dollars with you over the years. In such mercantile matters, I prefer to leave politics aside. Unfortunately, Amazon has made this impossible as it has taken blatantly political steps which are actually starkly un-American, by using the Southern Poverty Law Center’s (SPLC) scurrilous and despicable list of “hate groups” in some of its business decisions. As a result of your adopting the SPLC’s categorization of virtually anyone who does not subscribe to its radical leftist, Marxist agenda as a “hater,” this “non-profit” (with scores of millions of dollars held in offshore accounts) serves to stifle the very candor and dialogue upon which a democratic republic depends for its lifeblood. The SPLC’s idea of political discourse and freedom of speech is “shut up;” “you are a racist, sexist, xenophobic, misogynistic, etc.,etc., generally bad person.”
The vast majority of the hate practiced in America today originates not from groups listed by the SPLC, but from the left, from radical, “politically correct” and zealously ideological groups just like the SPLC. To them, only speech with which they agree is permissible. They are the ones who are authoritarian and intolerant in the extreme. Their righteous indignation knows no bounds. If they disagree with the beliefs or policies of any individual or group,do they engage in civil, rational discourse? No. They simply lump everyone in with neo-Nazis and white supremacists and call them “racists” too. Were they trying to change minds, they might try to inform their opponents where they believe they are wrong. That approach, however, is never taken by the SPLC. Its only answer to disagreement is name-calling.
Not everyone who disagrees with leftist received wisdom is a “racist” or a “hater.” Surely, an organization such as Amazon knows this, yet it still chooses to defer to the SPLC. Ask Dr. Ben Carson. This decent, intelligent and accomplished individual was listed as a “hater” by this august group for months until they were shamed into begrudgingly removing him from the list. They are currently being sued for libel by Christian organizations, a religion much over-represented on the SPLC’s list of haters. The latter, fatuously labeled as “haters” by the SPLC, I note, haven’tkilled or beheaded anyone lately. By way of contrast to the many Christian groups labeled as “haters,” let’s look at the treatment of Muslim groups, which make no secret of their views of gays, Jews, women and “infidels” generally.
In fact, the SPLC named scarcely any Islamic groups as “haters.” Particularly missing from the list are those which do make a practice of murder and beheading and explicitly state their hatred of those the SPLC purports to care most about. Those who dare quote, exactly, a certain Holy Book’s commands to kill infidels, on the other hand – those are deemed to be the “haters” by the SPLC.Would not a reasonable person be afraid if another’s religious commands that they – as non-believers – must be killed by adherents to that religion as a matter of religious duty? Is is not the command to kill and not the fear of being killed which constitutes the hatred?
What says the SPLC about this? Nothing. But it affirmatively labels those with reasonable fears of one religion’s explicit beliefs as hate-filled “-phobics!” Odd, isn’t it, that phobias are, by definition, irrational, imagined fears with no basis in fact. Reasonable fears based upon objective fact are not phobias and they are definitely not hatred – except in the eyes of an organization which sees hatred everywhere except within its own rubrics. In short, the SPLC’s list of “haters” is based upon its own radical, tortured political ideology, and not facts or reality.
Sure of the non-violence of Christian bakers, some might say the SPLC knows it need have no fear of retribution when calling them names; with other religions, not so much and such obvious cowardice, surely, does not comport with the moral high ground claimed by the SPLC.Even the FBI has dropped SPLC’s “hate” list; Charity Watch gives the SPLC an ‘F’ rating. After all, fat salaries for executives and hundreds of millions of dollars in assets while spending a few thousand annually on legal matters doesn’t seem very charitable. The fact is that a formerly-admirable civil rights organization has descended into one which now practices uncivil wrongs for political and financial gain. And surely Amazon knows this, too. By the way, when was the last time that name-calling changed anyone’s mind about anything?
The fact that Amazon has aligned itself with this extremist and, make no mistake about it – profoundly un-American group – means that that I will no longer support Amazon with my Prime membership or purchases; you have made our relationship explicitly political and obnoxious and I will respond in kind. You need to be reminded that politics flows in both directions. If Amazon cannot understand this, that is another powerful reason to not do business with you. And best to recall – once you start playing the game of political correctness with them, history suggests that radical revolutionaries eventually get around to eating their own supporters, benefactors and enablers.
Shame on you for derogating a large proportion of your customers who are caring, decent people who hate nobody and are actually far more tolerant than your illiberal associates at SPLC. As your political alliance with this abominable organization becomes more widely known, don’t be surprised if, like me, many choose to become former Amazon customers. You may find that inane and disingenuous virtue signaling costs more than it is worth.
Starbucks, always much in the news and on the lips for the wanna be elites prides itself as the gathering place where the elite meet to transact business over burned and expensive coffee as a vehicle for sugar delivery.
I have spent my time meeting a certain class of clients at such places, usually off the rush hours. It has all the aspects of a tribal place, with the common rituals and intonations.
My current clientele is more oriented to construction trades and manufacturing. Their place to meet seems to be the ubiquitous Golden Arches.
I had to meet my excavator in Chapter 11 client today to exchange data and a review of upcoming contracts he is bidding. He chose the usual place and I pulled up in my F150 around 10am. It seemed the parking lot was about 90% similar Fords, Rams, Silverados, all fairly new with a variety of racking rigs.
Inside it was guys and gals in jeans with laptops, blueprints and folders of bids and RFQs, all reviewing stuff with a serious eye over black coffee and egg mcmuffins.
McDonalds even had a hostess who walked around refreshing coffee and greeting the patrons.
I looked out at the Starbucks across the parking lot and wondered if the cultures would keep moving farther apart, like galaxies after the big bang.
One parking lot full of Beemers, Priusi and Volvos, the other Pickup trucks.
Heck, at least the coffee is not burned beyond recognition at the Arches, and still a dollar a cup with free refills.