After closely following the criminal trials of Theranos CEO Elizabeth Holmes and COO and investor Sunny Balwani, I have developed a more accurate startup radar than ever before. Theranos left me with this feeling: If something in startup land looks, feels, and smells too good to be true, it almost certainly is.
This was reaffirmed earlier this month when the prosecution in the Balwani portion of the Theranos trial successfully pieced together a not-so-complex puzzle of a company so determined to realize its vision of becoming a unicorn that it incessantly lied, in a criminal way, about many of the milestones it takes to get there.
For those of us who thought there could never be another Theranos, especially in the narrow vertical of blood collection and analysis, we were quite surprised to read about another startup starting to make international headlines.
Osler Diagnostics is a blood testing startup that has already raised $100 million and looks set to raise a billion dollars in the near future. While Holmes, a Stanford dropout, founded Theranos, Osler was co-founded by Connor Campbell, a high school dropout at Oxford. Campbell’s co-founder is Jason Davis, a chemistry professor at Oxford.
Osler has operated on a similar premise to what led Theranos to raise $945 million: the idea that many medical tests could be performed successfully and cheaply with minimal amounts of blood (for at least some of the tests) and beyond. a laboratory environment.
In the Financial times in March Campbell highlighted what he sees as a differentiator between Osler and Theranos: “Theranos started with an idea from Elizabeth Holmes. We started based on decades of Oxford University research of the most successful departments in the history of the diagnosis.”
But that argument only goes so far. Theranos had built a black box, Edison, that would represent the culmination of decades of technology research and achievement in Silicon Valley. As much as Oxford may mean to medicine, it cannot overshadow Stanford’s iconic relevance to technology.
Both Osler and Theranos share the uncertainty of the unknown. For a startup that could fetch many more millions of dollars or more, a quick Google search reveals that details of Osler’s technology remain publicly opaque. Anyone who’s been following the Theranos saga for the past decade can be forgiven for assuming we were finally over this. And anyone who looked at the testimony in the Holmes and Balwani Theranos trials heard celebrity investor after celebrity investor claiming how they were duped. You could then read the opinions of as many investment community experts as you wanted, many of whom argued that such deception of mass investors could never happen again without investors being willing participants.
Unfortunately, I fear that investors in the market are still trading out of “fear of missing out” (FOMO), creating conditions similar to those that allowed Osler to raise $100 million. The problem is that FOMO can hide a clear sense of whether the technology dream is realistic.
Another parallel between Osler and Theranos that I can’t overlook is the black box. Both startups wanted to build one physical diagnostic machine to run many different types of diagnoses. For a visceral reminder of the similarities, all you need to do is take a quick look at both diagnostic boxes.
At the very least, Osler should have instructed their designers to make this box look like: other than humanly possible from the Theranos Edison box. Here’s my free advice for avoiding this sickly circumstance: Make it pink. Put bells and whistles on it. Because if the hardware you’ve built makes everyone who remembers Theranos cringe when they look at it, you’re on the wrong track. While they’re both supposed to be blood testing machines, it’s a very misguided move to design your hardware to so closely resemble what will go down in technology history as one of the major failures and deceptions.
If the stakes were high with Theranos’ blood work, they’re even higher with Osler, who plans to seek approval for two heart tests. While the legal basis of the Theranos lawsuits is about investor fraud, many patients were harmed by Theranos’ technology and eventually filed a class action. Given the importance and significance of the cardiac diagnoses Osler intends to make, we should approach this with great caution.
I recently spoke with a colleague, Michael Epstein, JD, a medical malpractice attorney in New Jersey, who emphasized that patients should be the ultimate focus when it comes to a medical startup: “When a new technology has the potential to harm — especially medical technology — there has to be a degree of control in how we view the technology and evaluate its claims, first of all there has to be an ongoing series of questions and achievable answers related to safety of the end users.”
If Theranos has taught us anything (I’m honestly not sure if it has), it’s to look at real and verifiable clinical evidence of a health startup’s claims, especially when the claims border on the fantastic, like those of Theranos often did. Whether the startup is from Oxford or Stanford should play no part in the necessary comparison of proof of concept and ability to execute.
So if Osler can give us a detailed roadmap of where their technology stands today, where it will ultimately go, and the milestones that have been reached, only then can Osler deliver on the lost promise of Theranos. But if Osler chooses to hide behind the Theranos-esque claims that he doesn’t want to talk publicly about what they’re building—which we heard Theranos investors talk about recently in both the Holmes and Balwani trials—then it’s the skepticism well-founded. And while the company has patented innovations during its development, it has not yet published articles about its works in scientific journals.
No matter how Osler ultimately turns out as a company and concept, to look at it without remarkably skeptical and critical eyes is a huge mistake. Just as some of the most prominent investors in US technology flocked to Theranos, such as the Economic Times has reported, Osler has “showed some of Europe’s biggest billionaires.”
Ultimately, the thing about cautionary tales in technology is that they are only useful if we heed the warning. Otherwise, they only add to the pile of failed startup dreams and the damage they can often do, especially when technology can literally put our lives on the line.
Aron Solomon, JD, is the principal legal analyst for: Esquire Digital and the editor of Esquire of today. He taught entrepreneurship at McGill University and the University of Pennsylvania, and was named Fastcase 50, a recognition of the top 50 legal innovators in the world.