🏥 Theranos Fraud Shows How Health is Tech's Final Frontier

In 2019, a member of my close family received a devastating medical test result. Upon further testing and a disheartening session with a specialist physician, the test was revealed to be an unfit indicator for the given ailment. In other words, the person should have never taken that test in the first place.

I always think of this story whenever Elizabeth Holmes and her former company Theranos appear in the news.

Elizabeth Holmes became the world's youngest female billionaire when she turned an undergraduate experimental "blood test" into Silicon Valley's biggest success story. Holmes claimed her test could detect any health defect with a few drops of blood.

Only the problem is that the test didn't work. At all.

This past week, Elizabeth Holmes was sentenced to 11 years in prison for frauding investors (and not clients who got false cancer test results). The smoking gun evidence was a document where Holmes added Pfizer's logo, despite the company never endorsing her test.

Welcome to America, where it is a crime to defraud billionaires but not ruin poor people's lives, I guess.

The trial got extended coverage like it was some Hollywood gossip story. Streaming services are picking up the Theranos debacle for adaptations with blood-related puns straight from my dad jokes playbook. Holmes had a baby during the trial and received her sentence while pregnant with her second child! You can't make this up!

While most of the coverage can be explained by Holmes' penchant for the dramatic and attractiveness, I remain drawn to it due to what the scandal tells us about tech's difficult relationship with healthcare.

🤑 When Business is a Meme

Looking at Elon Musk's success and the fall of FTX, the always-excellent Ben Thompson points out how both Tesla and cryptocurrencies skyrocketed (pun intended) due to the narratives that powered them: Elon Musk turned the Tesla stock into a popularity contest about his own personal brand; crypto tokens without any real-world service behind them are one step away from a Ponzi scheme.  

Theranos was no different. This company was about another Ivy League dropout who, at 19 years old, had solved what Big Pharma couldn't: affordable, easy blood tests. Why couldn't any of these companies achieve this? "They don't want to lose their markets! Like oil companies who lobby against electric cars!" Plus, she's a woman in STEM! She craves the spotlight!

It's not even a narrative: it's a cliché. The New York Mag published a piece on The Rise of Influencer Capital about identical issues where a founder's social media aptness can boost a company's valuation beyond the services they provide.

However, this is as far as a health product can get: when people's lives are at stake, you can't BS your way out of it, because...

💸 Health Tech is Incompatible with the VC Model

Theranos used the bells and whistles of Silicon Valley's venture capitalists. The model is based on emerging software creating a new market or disrupting one. Capital is then pumped into the start-up to accelerate the expansion. Software can be copied infinitely without further costs. The financing model adheres to this frictionless scalability and exponential margins.

Not health services. Ethics prevent automated decision-making on diagnoses. Laws such as HIPAA protect patient confidentiality. The testing machines must be manufactured. Labs must be built and staffed.

Amazon is learning it with the closure of Amazon Care, its telehealth service. Instead of being a full-fledged health service, "Amazon Clinic", which is emerging from the One Medical acquisition, will connect patients to third-party healthcare providers.

Health is the biggest market there is. I am convinced it is the hardest to master as well. There is no disrupting health. Only grinding, incremental progress by sheer force of bureaucracy-bending research and development.

Healthcare does not scale exponentially.

But bullshit does.

⏰ Social Media and Health Misinformation

My biggest concern with Elizabeth Holmes is that we have created a monster. Remember: this is "Big Pharma" and "Big Government" who put her in prison. She has a future as a pundit or as a peddler of misinformation. When you have an audience, you have a business.

After all, the mistake she made was trying to play by the rules. Thousands of shady companies in alternative medicine deliver homeopathic treatments that do not work and nobody is putting their CEOs in prison. Even the King is on the pseudoscience bandwagon! There is still money to be made off our central health system's shortcomings and people's desperation.

My TikTok algorithm is optimized for topics such as mental health, self-help and motivational speeches. I see a lot of weird claims, especially around periods and hormonal imbalances. Going viral is your ticket to profitability.

Yet, despite everything I wrote about companies' capacity to meme themselves into billion-dollar valuations and the dangers of health misinformation, I do not believe the responsibility of content moderation about health rests solely on the Tiktoks and Metas of this world. Science is messy and complex. It involves tradeoffs. Misinformation is harmful, but so is censorship. Plus, content moderation is often like trying to contain the wind.

Do we really want a social media that police videos of a woman claiming to drink her urine before having a coffee helps to boost estrogen?

Our biggest asset is education.

In healthcare or in business, if you see any claim that seems too good to be true, like Theranos' test, then it is not true!

Ask yourself how software and tech companies make money. Are they selling your personal data? Are they burning venture capital based on their founders' rocking abs on their Instagram? Are they pushing value out of thin air?

And most importantly, if social media makes you feel anxious in any way, drop it for a few days. The advice is even stronger if your concerns are health-related. Log off the platform so that when you pick up your phone you have to physically enter your password to see social media content.

The next Elizabeth Holmes will emerge from TikTok. Don't be her victim and don't hope for content moderators to protect you. Choose your own future.

🥊 Quick Hits

• A 40-hour work week is an arbitrary number rooted in industrialism. Overtime is associated with a quality decrease. Reducing mandatory hours translates to a decrease in absenteeism. Allowing employees to set their own schedule and work when they feel most productive yields the best results. My biggest complaint would be: how this applies to domains that need to bill time to make money? (Full study)
• I have never felt so pessimistic about crypto. Crypto exchange FTX went bankrupt last week. The company took investors' money to reinvest elsewhere without keeping liquidity. This fiasco delivers a crippling blow to crypto assets. Unless your crypto is tied to a product or service or your country's currency is subject to awful governments, I am not interested.
• Meta is pissing on the media's graves. Meta drove the media industry to its knees by sucking away its ad income. Then Australia took Facebook to court to force Facebook to share its news revenue. Meta's solution? Drop news content. So newspapers' ad model is broken, and now they lose their biggest source of traffic. (Full story)

🎧 Quote of the Week