VC Tim Draper Blames Fall of Theranos on ‘Hyena’ Reporter
The idea of “fake news” that has become a hallmark of the political landscape has made its way into the biotech world. Venture capitalist Tim Draper, a longtime supporter of medtech company Theranos, blames the slow demise of the company on a “hyena” reporter.
During a CNBC interview, Draper blamed investigative journalism for the downfall of “another great icon,” according to a report in The San Francisco Business Times. Draper said she was approached by Theranos founder Elizabeth Holmes when she was 19 years old with a vision to change healthcare. Draper said that Holmes was “bullied into submission.” This is of course after years of failing to deliver a workable product, scandals involving inaccurate blood test data that patients used to manage their healthcare and recently paid a $500,000 fine for fraud.
Although Draper never singled out The Wall Street Journal’s investigative reporter John Carreyrou by name during the CNBC interview, it was clear who he was referencing. Carreyrou did most of the groundbreaking investigation into Theranos and its products, including finding a whistleblower who provided him with a great deal of information about the failings of the company’s blood-testing product that Holmes had originally promised would revolutionize the healthcare industry. One whistleblower turned out to be the grandson of a company director who was concerned about the failings of the Theranos technology and its impact on patients. Much of Carreyrou’s work laid the groundwork for other news organizations to begin reporting on Theranos – a company that despite its failings and secrecy had a valuation of about $9 billion at one point due to Holmes’ ability to convince investors to fund her company. Carreyrou’s new book about Theranos, “Bad Blood,” comes out this month. In the book, he chronicles the rise and fall of the company.
Carreyrou was apparently so hated at Theranos that the Business Times reported employees at the company created a “Space Invaders-like video game” that allowed them to shoot images of Carreyrou. During his CNBC segment, Draper criticized the work of Carreyrou and said that Theranos is now worthless “because this writer was like a badger going after her, like a hyena going after her."
Theranos is now on the verge of shutting down. Reports in April refer to an email Holmes sent to investors suggesting that the company could shut down and liquidated by June or July if she is unable to secure any additional funding. In early April, about nine days before Holmes sent the note to her investors, Theranos laid off an additional 100 employees as it sought to prevent bankruptcy. At that time the Holmes made an appeal to investors for additional financial support in order to hold off the possibility of shutting down. Holmes and Theranos need to have an approved product to market in order to secure a second tranche of $10 million from a debt financing agreement struck last year. Holmes has been pushing for new investors in order to prevent the company from falling below a $3 million threshold established by Fortress Investment Group, the financiers who provided the company with up to $100 million in December.