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Trung Phan

Sep 6, 2021 • 24 tweets • 10 min read • Read on X

As you know, Elizabeth Holmes is on trial for defrauding investors and patients.

Her blood-testing startup Theranos raised $700m+ and reached a $10B valuation before imploding.

Why exactly did Theranos technology (nanotainer, Edison, miniLab) fail, though?

Here's a breakdown🧵

1/ Elizabeth Holmes dropped out of Stanford at 19 and founded Theranos in 2003.

One of Theranos' founding myths is that Holmes had a "traumatic fear" of needles and blood.

Her idea: create a system that could run all medical tests on a single drop of blood (via a finger prick).

2/ You're def familiar with the more common blood test method she tried to disrupt.

Known as venipuncture, a phlebotomist draws "whole blood" -- aka blood with none of the components (plasma, platelets) removed -- from a vein.

Then, these samples are sent to a lab for testing.

3/ Not all blood tests are the same.

Some need whole blood:
◻️ Complete blood count: measures parts of your blood (red/white cells, hemoglobin)

Other tests separate serum/plasma from the blood (via centrifuge):
◻️ Biochemical tests (measure proteins, sugar) to diagnose diseases

4/ Different blood tests also require:

◻️ Certain light spectrums (and sensors)
◻️ Right temperature
◻️ Reagents to facilitate a chemical reaction

An industrial analyzer (like the Siemens one below) can run 100s of samples an hour and do different types of tests.

5/ Drawbacks from traditional testing:

◻️ Needle is painful, draws too much blood and requires a pro (less people get tested b/c they are scared or don't have access)
◻️ Samples go to a lab (= time lag for results)

Holmes set out to make it easier, quicker and more accessible.

6/ In technical terms, Theranos offered immunoassays (a biochemical test looking for antibodies/antigens in blood).

There were 200+ options on the test menu (HIV screens, diabetic tests etc).

Theranos' Edison tabletop lab (below) could "run" the tests on a single nanotainer.

7/ In 2013, Theranos partnered w/ Walgreens to offer 200+ tests in Arizona.

Finger pricks have problems, though:

◻️Puncturing skin more easily contaminates a sample (vs. drawing from vein)
◻️Low blood volumes were diluted to run more tests (this is considered "poor practice")

8/ Remember the blood-testing variables (whole blood, centrifuge, light, temp, reagents)?

Holmes said these could all fit into a microwave-size form factor (eventually renamed: miniLab) AND run 200+ tests on a nanotainer.

She was trying to bend the laws of physics and biology.

9/ The idea of a miniature blood-testing machine is not new.

For decades, Abbot has sold a point-of-care blood analyzer (I-Stat) that produces rapid results.

It can run dozens of tests, but each one requires a different reagent, and those are loaded onto separate cartridges.

10/ Further, Theranos lab practices were awful:

◻️Lack of proper equipment (coat, goggles)
◻️ Work benches not cleaned
◻️ Undertrained staff
◻️ Wrong testing procedures
◻️Facilities didn't have filtration/air lock systems

Regulators would revoke multiple Theranos lab licenses.

11/ At its peak, Theranos ran in 40 Walgreens: it sold 7m+ blood tests to 150k+ patients.

The Edison was only able to do 12 of the 200+ tests (it often malfunctioned). Theranos used a modified Siemens machine for the rest.

In the end, Theranos had to correct or void 1m+ tests.

12/ For the 2015 Pepperdine commencement speech, Holmes said "We code-named our product the Edison, b/c we assumed we’d have to fail 10,000x to get it to work the 10,001st time."

This iterative approach is quite fraught when it comes to people's health.

13/ In fact, the very first person Holmes went to with a startup idea -- Stanford medical professor Phyllis Gardner -- was suspicious of her approach.

An 18-year old Holmes pitched Gardner the Therapatch, an antibiotic-releasing patch:

14/ Ultimately, the Theranos "technology" failed to attract top-tier health investors.

And, its board was crammed with big name statesmen from the Cold War (George Shultz, Henry Kissinger), instead of health experts.

At least the miniLab was an improvement over early prototype.

15/ Holmes lied to investors, health partners, regulators and employees (many whistleblowers were legally harassed) about Theranos' testing capabilities.

However, the clearest victims are the patients that received false test results:

16/ Holmes won't even defend her tech in the trial.

She will use the "Svengali defense", arguing her fraudulent actions were guided by ex-BF and former Theranos COO Sunny Balwani.

Opening statements for the trial start on Wednesday. We'll soon find out if her strategy works.

@TrungTPhan

17/ If you enjoyed that, I write threads like this one business and tech 1-2x a week.

Follow @TrungTPhan to see them in your feed.

Here's one on a machine that is *slightly* more effective than the miniLab:

https://twitter.com/trungtphan/status/1429464889307762688?lang=en

@JohnCarreyrou

18/ Sources

Google Doc of vids and articles: docs.google.com/document/d/12j…

The #1 go-to is of course @JohnCarreyrou who exposed Theranos with WSJ, then wrote the book "Bad Blood".

His new podcast tracking the Holmes trial is a must-listen:

open.spotify.com/episode/3FITMg…

19/ SIDE NOTE: I discuss interesting topics like this once a week (with a healthy dose of dumb jokes) on the Not Investment Advice (NIA) podcast.

🔗linktr.ee/notinvestmenta…

20/ Here's a salient example of Holme's absurd vision: During the Ebola Crisis (2014-2016), Theranos touted the "all-in-one" miniLab as a rapid-test solution for the outbreak.

It was a total flop:

21/ Theranos cast a huge shadow in blood-testing innovation, but these startups are making progress:

https://twitter.com/TrungTPhan/status/1432931727639412736?s=20

22/ An interesting explainer on Holmes' deep voice

https://twitter.com/TrungTPhan/status/1432931727639412736?s=20

23/ Lord give me the confidence of Elizabeth Holmes that time she went on CNBC and defended herself by quoting Gandhi:

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More from @TrungTPhan

Trung Phan

@TrungTPhan

Aug 15

One of the Team USA rowers who won a Gold Medal is an investment banker and actually did the “B2B SaaS Sales” joke on Linkedin. Legend.

Here’s the rest of the post (perfectly formatted to show up in the feed as a shitpost): linkedin.com/feed/update/ur…

Justin if you’re reading this and are available for consulting, the research app team would love to engage your B2B SaaS knowledge for our Q4 sales roadmapBearly.AI

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Trung Phan

@TrungTPhan

Aug 7

Explainer video on science of why the 400m sprint is considered the most painful track & field event.

And why “no person on the planet can run the 400m all out from start to finish".

The race pushes the way the body creates energy to the limit:

▫️0-50 meters: ATP-CP (energy system for very short and explosive movements; used up after 5-10 seconds)

▫️50-200 meters: Anaerobic glycolysis (burns glucose without oxygen, leading to lactic acid buildup and muscle fatigue)

▫️200-300 meters: Aerobic energy (uses oxygen to break down glucose, but cannot keep up with the demand)

▫️300-400 meters: Anaerobic energy reserves tapped while aerobic energy is too slow to fill the gaps (lactic acid buildup is going HAM)

Track athletes can pace for longer distances and shorter ones are just over quicker (obvs).

The Olympic record is a blazing 43:03, set by South African runner Wayde van Niekerk in 2016 (and 2024 Final race is tomorrow).

***

Full video from Outperform:

Usain Bolt ran the 400m early in career but then said training was “too hard”.

The 400m Hurdles is a world of pain too for similar reasons — Vox has a good vid on it:

Here is a great breakdown of Wayde van Niekerk’s record run:

https://twitter.com/trungtphan/status/1705401688478437485

The 400m is also tough because you don’t get the benefit of an absolute baller like Bottle Klaus keeping hydrated

https://twitter.com/trungtphan/status/1705401688478437485

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Trung Phan

@TrungTPhan

Jul 20

The amount of work Hayao Miyazaki and Studio Ghibli team put into a film is mind-boggling.

Each typically has 60k-70k frames, all hand-drawn and painted with water color.

This 4-second clip (“The Wind Rises”) took one animator 15 months to do. Insane.

The docu “10 Years with Hayao Miyazaki” shows him talking to the animator (Eiji Yamamori) after its done.

It’s so good:

Miyazaki: “Good job.”
Yamamori: “It’s so short, though”
Miyazaki: “But it was worth it.”

The animator gets a second of joy (he’s pumped) but on to the next.

Miyazaki doesn’t use digital FX or computer graphics. He believes “that the tool of an animator is the pencil.”

On a related note, here’s something I wrote about another Japanese legend dedicated to the craft (Ichiro Suzuki) and the art of mastery: readtrung.com/p/jerry-seinfe…

Read 4 tweets

Trung Phan

@TrungTPhan

Jul 9

New York City paid Mckinsey $4m to conduct a feasibility study on whether trash bins are better than leaving garbage on the street.

The deck is 95-slides long and titled “The Future of Trash”.

Some highlights:

▫️The official term is “containerization”, which is the “storage of waste in sealed, rodent-proof receptacles rather than in plastic bags placed directly on the curb.”

▫️Two main types of containerization: 1) individual bins for low density locales; 2) shared containers for high-density.

▫️NYC needs to clean up 24,000,000lbs of garbage a day

▫️Containerization has only become the norm worldwide in major cities in the past 15 years.

▫️New York City first considered containerization in the 1970s but never conducted a feasibility study until now (Mckinsey’s sales team has been dropping the ball)

▫️Key considerations for container viability:

• POPULATION DENSITY: NYC has 30k residents per square mile (more dense than comparable big cities)

• BUILT ENVIRONMENT: Few places to “hide” containers due to history of infrastructure development.

• WEATHER: Snow creates challenges for “mechanized collection” in the winter.

• CURB SPACE: Mostly taken up by bus stops, bike lanes, outdoor dining and fire hydrants.

• COLLECTION FREQUENCY: NYC needs to double frequency of pick-up for estimated speed of trash that bins would accumulate.

• FLEET: A new garbage truck will needs to be designed to collect rolling bins at scale.

▫️ The proposed solution (literally garbage bins and shared containers) covers 89% of NYC streets and 77% of residential tonnage.

▫️The three case studies — because you gotta have solid case studies — are Amsterdam, Paris and Barcelona.

▫️There is a slide called “Why containerization matters” and three reasons are “rats”, “pedestrian obstruction” and “dirty streets” (the 21-year intern that did this slide billed at prob $10k an hour is my hero).

The study is actually pretty interesting.

I have no idea if $4m is a rip-off to learn that “yeah, we should put garbage in bins so rats don’t eat it” but I would have happily done it for 10-20% of that budget (and come to a similar conclusion).

It is actually an interesting deck. Just the thought of a 20-year old newly grad getting billed at an obscene rate to say”rats get to garbage” is kinda funny

Four more solid slides:
— By the numbers (daily garbage = 140 Statue of Liberty a day!!)
— City comparison
— Container comparison (looks like they did select the “scalable” trash bin)
— Curb side analysis

Full deck here: dsny.cityofnewyork.us/wp-content/upl…

Think Mckinsey telling NY to “put garbage in bins so rats don’t eat it and people can walk” will work out better than when it told AT&T in 1981 that cellphones would be “niche.”

That cost AT&T $13B and one worst business predictions ever as I wrote here: readtrung.com/p/the-worst-te…

Read 6 tweets

Trung Phan

@TrungTPhan

Jun 23

The Economist latest cover story on solar energy is packed with interesting stats.

▫️Solar energy will be the primary source of human energy use by 2040

▫️$500B spent on buying and installing solar panels in 2024 (nearly same “sum being put into upstream oil and gas”)

▫️Solar on track to produce “more electricity than all the world’s nuclear power plants in 2026, than its wind turbines in 2027, than its dams in 2028, its gas-fired power plants in 2030 and its coal-fired ones in 2032”

▫️Since the 1960s…the levelised cost of solar energy—the break-even price a project needs to get paid in order to recoup its financing for a fixed rate of return—has dropped by a factor of more than 1,000

▫️From the mid-1970s to the early 2020s cumulative shipments of photovoltaics increased by a factor of a million, which is 20 doublings.

▫️Over the same span, the “prices dropped by a factor of 500. That is a 27% decrease in costs for each doubling of installed capacity, which means a halving of costs every time installed capacity increases by 360%.”

▫️The cost of a kilowatt-hour of battery storage has fallen by 99% over the past 30 years.

The chart below — which they made vertical (kind of weird) — shows global useful energy consumption over the past century.

I’ll add two more posts after this one with excerpts on obstacles and opportunities.

Full link: economist.com/interactive/es…

Obstacles from abundance of solar: economist.com/interactive/es…

Opportunities from solar abundance:

— A lot of A/C for Sub-Saharan African (need 2TW of new solar just for Africa to reach India level of electricity use)
— Filter air continuously (reduce spread of airborne diseases)
— Carbon removal
— Water desalination
— AI/Data energy needs

Read 5 tweets

Trung Phan

@TrungTPhan

May 20

Details from Red Lobster’s bankruptcy filing are wild and so much mismanagement:

▫️$1B in debt, $30m in cash
▫️Previous PE owner sold land and leased it back to Red Lobster at “above market rates”
▫️$20 Endless Shrimp cost it $11m but the interesting part is that one of the chain’s owners is Thai seafood firm Thai Union (which also owns Chicken By The Sea) and it may have used Endless shrimp to dump its own shrimp supply through the 578 restaurants in North America
▫️Thai Union became the only Red Lobster shrimp vendor, overcharging for shrimp and skipping quality reviews (Thai Union has written off its $500m+ investment)
▫️Red Lobster has had 5 CEO in the last 5 years (!!!)
▫️Sales down 30% since 2019

Link: document.epiq11.com/document/getdo…

Red Lobster needed Yukitaka Yamaguchi — aka Japan’s Tuna King (sleeps 3 hours a day and knows where any fish is from on a single bite) — to run quality control.

This dude would not have put up with low-quality seafood slop. readtrung.com/p/becoming-the…

Also, never forget Beyoncé name dropped Red Lobster with some R-rated verses in 2016 (“Formation”) and Red Lobster social responded and there was actually a brief sales surge.