Having closely followed the criminal trials of Theranos CEO Elizabeth Holmes and COO and investor Sunny Balwani, I’ve developed a more precise startup radar than I ever had before. Theranos left me with this sense: If something in startupland looks, feels, and smells too good to be true, it almost surely is.
This was borne out again earlier this month as the prosecution in the Balwani portion of the Theranos trial successfully pieced together a not terribly complex puzzle of a company so intent on achieving its vision to become a unicorn that it incessantly lied, in a criminal manner, about many of the milestones necessary to get there.
For those of us thinking there could never be another Theranos, particularly in the narrow vertical of blood collection and analysis, we were pretty surprised to read about another startup beginning to make international headlines.
Osler Diagnostics is a blood-testing startup that has already raised $100 million and appears to be on a trajectory to raise a billion dollars in the near future. While Holmes, a Stanford undergraduate dropout, founded Theranos, Osler was co-founded by Connor Campbell, an Oxford medical school dropout. Campbell’s co-founder is Jason Davis, a chemistry professor at Oxford.
Osler has operated based on a similar premise to what propelled Theranos to raise $945 million: the notion that many medical tests could be successfully and inexpensively performed with minimal amounts of blood (for at least some of the tests) and outside a laboratory setting.
In the Financial Times in March, Campbell highlighted what he sees as a differentiator between Osler and Theranos: “Theranos started from an idea of Elizabeth Holmes. We started based on decades of research from Oxford university from the most successful departments in the history of diagnostics.”
But that argument goes only so far. Theranos had built a black box, Edison, that would represent the pinnacle of decades of Silicon Valley technology research and achievement. As much as Oxford might mean to medicine, it can’t eclipse Stanford’s iconic relevance to technology.
Both Osler and Theranos share the uncertainty of the unknown. For a startup that could raise many more millions of dollars or more, a quick Google search reveals that details of Osler’s technology remain publicly opaque. Anyone who followed the Theranos saga for the past decade can be forgiven for assuming we were finally beyond this. And anyone watching the testimony in the Holmes and Balwani Theranos trials heard famous investor after famous investor assert how they were duped. You could then read the opinion of as many pundits from the investment community as you wanted to, many of whom claimed that such a mass investor deception could never happen again without investors being willing participants.
Unfortunately, I’m concerned that investors in the market might still act out of “fear of missing out” (FOMO), creating similar conditions 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 I can’t overlook is the black box. Both startups sought to build one physical diagnostic machine to perform many different types of diagnoses. For a visceral reminder of the similarities, just take a quick look at both of their diagnostic boxes.
At an absolute minimum, Osler should have instructed their designers to make this box look as different as humanly possible from the Theranos Edison box. Here’s my free advice to avoid this morbid circumstance: Make it pink. Put bells and whistles on it. Because when the hardware you have built makes anyone who remembers Theranos cringe when they look at it, you’re on the wrong path. While they are both supposed to be blood-testing machines, designing your hardware to so closely resemble what will go down in technology history as one of the most significant failures and deceptions is a deeply misguided move.
If the stakes were high with Theranos blood testing, they’re even higher with Osler, which intends to begin by seeking approval for two cardiac tests. While the legal foundation of the Theranos trials is about a fraud perpetrated on investors, many patients were harmed by Theranos’ technology and eventually filed a class action. Considering the importance and significance of the cardiac diagnoses Osler intends to do, we need to approach this with a high level of caution.
I was recently talking with a peer, Michael Epstein, JD, a medical malpractice lawyer in New Jersey, who emphasized that patients need to be the ultimate focus when it comes to any medical startup: “When a new technology has the potential to harm people — especially a medical technology — there needs to be a level of scrutiny in how we view the technology and evaluate its claims. First and foremost, there needs to be an ongoing series of questions and viable answers that relate to the safety of the end-users.”
If Theranos has taught us anything (I’m honestly not sure that it has), it’s to look to veritable and verifiable clinical evidence of a health startup’s claims, especially when the claims border on the fantastical, as those of Theranos often did. Whether the startup comes from Oxford or Stanford shouldn’t factor into the necessary equation of proof of concept and ability to execute.
So, if Osler can provide us with a detailed roadmap of where their technology is today, where it’s ultimately heading, and the milestones that have been met, only then might Osler fulfill the lost promise of Theranos. But if Osler chooses to hide behind the Theranos-esque claims about not wanting to talk publicly about what they’re building — which we heard Theranos investors recount on the stand recently in both the Holmes and Balwani trials — then the skepticism is well-founded. And while the company has patented innovations throughout its development, it hasn’t yet published papers about its works in scientific journals.
No matter how Osler ends up playing out as a company and a concept, to look at it without remarkably skeptical and critical eyes is a massive oversight. Just as some of the most prominent investors in American technology flocked to Theranos, as the Economic Times has reported, Osler has “some of Europe’s greatest billionaires showing up.”
Ultimately, the thing about cautionary tales in technology is that they’re only helpful if we heed the caution. Otherwise, they just add to the pile of failed startup dreams and the damage they can often bring, especially when the tech might literally have our lives on the line.
Aron Solomon, JD, is the chief legal analyst for Esquire Digital and the editor of Today’s Esquire. He has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world.