In recent months, medical testing company Theranos has been criticized by media reports and federal inspections saying its blood testing equipment is inoperative. Amid the revelations, the company’s president resigned, Theranos invalidated tens of thousands of blood test results, or Walgreens corrected its scheme. Theranos now faces hefty federal sanctions, criminal charges, and several lawsuits from former clients. It has seen its valuation fall from $9 billion to just $800 million.
Still, “nothing went wrong with Theranos,” according to ground floor investor Tim Draper.
In a Thursday interview with Bloomberg, Draper accused competitors and others of unfairly spreading negative publicity and excessive criticism of Theranos and its founder and CEO, Elizabeth Holmes. “Theranos is under attack from the powers that be in big pharma, in [Holmes’] competitors, in the world of medical insurance, the people in government who are going to be very affected by a really cheap, really effective, wonderful solution,” he said. Those attacks reflect “the way Uber was attacked by the taxi drivers and Bitcoin was attacked by the banks,” he explained.
Instead of those negative messages, he argued, people should focus on what Theranos does for consumers. They “love” the company, he added, despite the fact that thousands of consumers have had their blood test results — results that may have led to incorrect treatments — corrected or invalidated. And several consumers have filed lawsuits seeking class action status against Theranos.
Nevertheless, Draper is unwavering, possibly due to his long history with Theranos. According to The Wall Street Journal, his daughter was a childhood friend of Holmes. And Draper, founder of the venture capital firm Draper Fisher Jurvetson, gave Holmes the first million in seed money to start Theranos when she dropped out of Stanford University in 2003 at age 19. Since then, the company has raised at least $750 million from investors.
Everything was going well for Theranos until he started digging Wall Street Journal reporter John Carreyrou discovered problems with the company’s blood-testing device, codenamed Edison, last fall. The machine could perform more than 200 medical tests with just a few drops of blood from finger pricks. But Carreyrou’s stories revealed that only one Edison test was approved by federal regulators, and the company didn’t use the machines for most of the others.
In Thursday’s interview, Draper suggested that Carreyrou should be fired over the news coverage, saying: “I hope ultimately whoever pulls the strings for the man at The Wall Street Journal– I hope they finally cut his wires.
To Draper’s likely dismay, Carreyrou’s coverage of the troubled company will be made into a movie, with Jennifer Lawrence taking on the role of Holmes.