An embattled blood-testing innovator struggles for a reboot. Theranos, the Silicon Valley company that once promised a health revolution, is beating a full retreat from the consumer blood-testing business on which it built its name (The Wall Street Journal). In an open letter, founder Elizabeth Holmes announced that from now on Theranos will shut down its partnership with Walgreens, shed 40 percent of its workforce (about 340 jobs), and concentrate on producing testing equipment to sell to doctors and healthcare facilities. The retrenchment follows Wall Street Journal stories earlier this year that raised troubling questions about inflated claims Theranos had made for its blood tests,and the company’s forthrightness with investors and the public. All along, the lesson from the Theranos affair has been that you can’t build public trust on a foundation of obsessive secrecy. Yet Holmes’ terse, opaque letter suggests that little at Theranos has changed on this front. Sure, she’s treading a legal minefield. But she offers the world no reason to give Theranos a second chance; she doesn’t even acknowledge the problem.
MailChimp is the anti-startup startup. It’s in Atlanta, not the Bay Area. It didn’t load up on venture-capital money early in its life. It grew slowly, and says it has always been profitable. That means that MailChimp, the popular email-list management tool, is still wholly owned by its two co-founders, even as it’s become a company with 550 employees and a projected $400 million in revenue for 2016. (We use it here at NewCo.) Profiling MailChimp in The New York Times, Farhad Manjoo argues that this model deserves more glory than it gets, and might be eminently more sensible for many startups than the VC-backed model, particularly for the kind of small business that makes up MailChimp’s customer base. MailChimp is not immune to funky conference-room names or crazy decor (like a boardroom decorated with skate boards), but in most substantial ways it bucks every Silicon Valley trend yet seems to stay true to the core of the startup ethos — focusing on a mission and serving customers.
The tragedy of Theranos. As the media’s attention today turns to the latest iPhone unveiling, here’s a morality tale that suggests the perils in over-imitating Apple. A Wall Street Journal investigation was the proximate cause of the downfall of med-tech startup Theranos, which once promised to revolutionize the blood testing business. But a new look at the story of the company’s implosion (Vanity Fair) suggests that Theranos founder Elizabeth Holmes built the firm on sand from the very start by choosing a path of secrecy rather than transparency. Holmes’ emulation of Steve Jobs extended to more than the superficial shared preference for black turtlenecks; like Jobs, she applied control-freak tactics to prevent rivals, neutral third parties, and even Theranos employees themselves from obtaining information about the company’s products. That meant that, when the Journal finally raised questions about its work, Theranos had no defenders. If Theranos was as bogus as it now appears, maybe there was never much to defend. Either way, the lesson for the rest of us couldn’t be clearer: Don’t trust anyone’s revolution unless the data is shared, the science is reviewed, and the conversation is open.
The Clinton campaign’s strength in numbers. If this year’s two presidential campaigns were startups, Trump’s would be the one that prefers winging it to wonking out. Clinton’s, meanwhile, would be the one that lives and dies by data. A profile of her campaign’s director of analytics, Elan Kriegel (Politico), shows how thoroughly statistics drive the Democratic candidate’s efforts — the timing of email campaigns, the houses that on-the-ground volunteers visit, the targeting of postal mailers and online advertising and TV campaigns. Trump famously scorns deep-diving into data, while Clinton has organized her entire effort around a “culture of testing.” In a few weeks we’ll know which candidate bet right. (If you’re betting against data smarts, though, hope you’re wealthy enough to take the loss.)
Today’s Top Stories — Theranos Tries To Take It All Back — Douglas Rushkoff on How Growth Became the Enemy of Prosperity — Danny Hillis on How to Think Long Term (And Still Stay in Business) — Holacracy as a Service — The Do’s and Don’ts of M&As
Theranos Tries To Take It All Back Recent days have seen a number of tough-minded analyses of the problems afflicting troubled medical device maker Theranos, ranging from FiveThirtyEight’s contention that new blood tests aren’t the answer to a post from the former chief scientist of Express Scripts arguing that Theranos’ rise is a symptom of our thinking the wrong way about disease. But last night came the shocker: a Wall Street Journal scoop that the company is voiding two years of its test results in an attempt to avoid threatened regulatory sanctions. This follows an executive reshuffle and a series of “broad corrective actions.” The sharp pivot to transparency is certainly welcome from a company that works with such critical data, but this change of strategy likely comes too late to make a difference for regulators, partners, and customers, all of whom feel burned.