This woman is really amazing!

[writser]

If anything, one of the takeaways of this fiasco (and many other trainwrecks) is that people argued: "X invested a lot of money in this, surely they did their due diligence" or "Y is on the board, surely this is not a fraud". Well, guess what.

 

Also, this thread nicely demonstrates the difference between optimists and pessimists. You know nothing about a company, it sounds super cool and has a $5b valuation, what's your first reaction?

[Spekulatius]

I wonder what would've happened if they had a woman on the BOD.  Maybe another female would've smelled the bullshit?  That's a pretty crazy BOD of who's who.

Yea, maybe a woman would have helped. Also maybe having a few more board members that weren't senile would have helped also. Half that board probably consider it a personal victory if they survived a board meeting.

 

I see that Mad Dog is also on that list. Now I don't doubt his ability to smoke an Iraqi division. But the idea that he would have anything to add in the area of blood testing is laughable. Blood letting is more his thing. Furthermore, as DETJD pointed out this more or less applies to everyone on the board. What a joke.

 

I think anyone with some experience in the field would have helped. All these guys are out of their are of competence by a mile and they retired and most likely haven’t seen anything but staged tours of the operations. You could have learned all you wanted, if you would have spent some time checking out the opereion and talking to some people. You will be amazed what you can learn about a company, fairly quickly. But a Kissinger or Shultz who both are way out of their area of competence and retired a long time ago won’t do that. I do think they choosing a BOD for reputations effect and with none having experience in the field is a big red flag.

[Cigarbutt]

Agreed that a BOD selection based only on reputation is not reassuring.

 

And agreed "that's about as idiotic as choosing board members (or employees) based on their race or gender, which seems to be common phenomenon these days."

 

But I would say that a lack of diversity can also be a relative red flag in terms of assembling a team from the same network (old boys' club) that may result in an echo chamber and an inability to ask tough questions when necessary.

 

The Board of Directors should be an area where tough questions can be asked and discussed (constructively) like this Board perhaps. :)

[Spekulatius]

Agreed, that's about as idiotic as choosing board members (or employees) based on their race or gender, which seems to be common phenomenon these days.

 

It shouldn’t be based on race and gender but all companies should be open to all races and gender. I do think it makes a questionable impression if all top managers are white middle aged men.

 

Contrary example - I visited some companies in my field in Silicon Valley a while ago and virtually all Engineers were Chinese. They would speak Mandarin to each other. I went to the cafeteria and the items for lunch was Chinese food, virtually all of it. The menu was mainly written in Mandarin with English  scribbles next to it. How would you feel working at that place as a white minority engineer?

 

That is how it must feel if you are of a minority and work at a white make dominated work place. I like to see people from different backgrounds in a workplace, and I am a white middle aged majority guy (except my upbringing in Europe perhaps). My wife is of Chinese descent (so I really don’t mind Chinese food) and our family definitely gets some second looks, when you travel through some heartland areas, they you don’t get where families like us are a commonplace occurance.

[ccplz]

Another gem by giofranchi

[Cigarbutt]

"Another gem by giofranchi"

 

Politely submitted:

 

I read yesterday an investment fund annual report where the manager candidly explained that he had underperformed 33% of the time since inception. There was also the typical section describing the podium of the "best 3" most recent mistakes. Valeant was there the year before. This manager, over time, has done very well for himself and the investors in his fund.

 

I'm relatively new here but I have looked back many threads (and learned).

Mistakes happen. They are not the end, they are the beginning.

 

 

 

 

[petec]

"Another gem by giofranchi"

 

Politely submitted:

 

I read yesterday an investment fund annual report where the manager candidly explained that he had underperformed 33% of the time since inception. There was also the typical section describing the podium of the "best 3" most recent mistakes. Valeant was there the year before. This manager, over time, has done very well for himself and the investors in his fund.

 

I'm relatively new here but I have looked back many threads (and learned).

Mistakes happen. They are not the end, they are the beginning.

 

+1 and a politer reply than I nearly wrote!

[Cigarbutt]

The unravelment may become in fact more interesting than the rise.

 

For those familiar with Bre-X (not saying that the situation is the same, saying that there may be some parallels), the most interesting character was not be the one in the limelight. I always thought that the most interesting character was Michael de Guzman, the geologist. Who knows what really happened to him?

 

For Theranos, if a movie is ever made, I hope they focus on the "mysterious tech entrepreneur with almost no digital footprint".

https://www.statnews.com/2018/03/19/theranos-ramesh-balwani/

[rkbabang]

I wonder what would've happened if they had a woman on the BOD.  Maybe another female would've smelled the bullshit?  That's a pretty crazy BOD of who's who. 

 

Every once in a while you look at a member of a BOD and think WTF is he doing on there (like Al Gore on Apple's board), but this board is made up of more than half of those types.  2 insiders (OK), 2 ex-CEOs(OK), 1 epidemiologist(OK), and 7 political hacks(WTF).

 

[rukawa]

FWIW-

 

I have a friend who has worked in the medical device industry for years, an executive at a firm known to everyone here. He says  their DD made it clear the products could not perform to the hype, and they moved on quickly.

 

He's astonished at the 'fools' who invested in Theranos.

 

I had a friend who made the case way before the WSJ story came out that it was a fraud. He knew that the FDA would have a approve the blood test. He also knew the FDA had not approved anything from Theranos. So the only thing Theranos could be doing is take the blood samples they received and sending them to a company with an approved blood test. But they would not have sufficient liquid since the Theranos test was based on a pin prick...so they would have to add some liquid to use a conventional test and then of course the results would be total garbage.

[RichardGibbons]

I am sorry but you are wrong, and all you have to do to see it is look at the case of Martin Shkreli. He was thrown in jail for "securities fraud" even though he ultimately made his investors all of their money back. He was a fraud who came through and did create a lot of value for society, and yet we punished him anyway because he rubbed the establishment's noses in the fact that he was a real Robin Hood type of character. Now Martin has a jail sentence, and for what? Raising prices to reinvest in new product R&D for sick people?

 

This is a pretty awesome perspective.  So if I'm getting what you're saying, it's totally okay for anyone who owns a construction company to burn down your house, since they will have created net positive houses in the world. It's okay for a woman who's had a bunch of kids to commit a few murders, since she's created a net positive for human life.

 

Elizabeth Holmes could have been the same sort of redemption story, but instead we threw the book at her too. There's only one rule in America: don't embarrass the Hillarys of the world or no matter what your contribution to society you will find yourself behind bars.

 

Oh wait, I misunderstood.  What you are actually saying is that there should be no consequences to someone burning down your house because there's a chance in the future that they might build more houses.

 

I find it interesting you could have looked at these cases said, "These people broke the law and faced the consequences. Now we have to fix the system so that everyone faces the consequences, not just those who thumb their noses at power."  Instead, you say, "These people broke the law but because they might contribute to the world, they should not face consequences."

 

(In a way, that's the most left-wing suggestion I've heard on these forums--anybody should be able to break the law without consequences because they might do something later that is a net positive for the world.)

 

[siddharth18]

 

 

I am sorry but you are wrong, and all you have to do to see it is look at the case of Martin Shkreli. He was thrown in jail for "securities fraud" even though he ultimately made his investors all of their money back. He was a fraud who came through and did create a lot of value for society, and yet we punished him anyway because he rubbed the establishment's noses in the fact that he was a real Robin Hood type of character. Now Martin has a jail sentence, and for what? Raising prices to reinvest in new product R&D for sick people?

 

Elizabeth Holmes could have been the same sort of redemption story, but instead we threw the book at her too. There's only one rule in America: don't embarrass the Hillarys of the world or no matter what your contribution to society you will find yourself behind bars.

 

So using your logic, you'd let a future Shkreli defraud you out of your money as long as he insists after defrauding you that he will ultimately make you all your money back and create a lot of value for society?

[rkbabang]

I am sorry but you are wrong, and all you have to do to see it is look at the case of Martin Shkreli. He was thrown in jail for "securities fraud" even though he ultimately made his investors all of their money back. He was a fraud who came through and did create a lot of value for society, and yet we punished him anyway because he rubbed the establishment's noses in the fact that he was a real Robin Hood type of character. Now Martin has a jail sentence, and for what? Raising prices to reinvest in new product R&D for sick people?

 

This is a pretty awesome perspective.  So if I'm getting what you're saying, it's totally okay for anyone who owns a construction company to burn down your house, since they will have created net positive houses in the world. It's okay for a woman who's had a bunch of kids to commit a few murders, since she's created a net positive for human life.

 

Elizabeth Holmes could have been the same sort of redemption story, but instead we threw the book at her too. There's only one rule in America: don't embarrass the Hillarys of the world or no matter what your contribution to society you will find yourself behind bars.

 

Oh wait, I misunderstood.  What you are actually saying is that there should be no consequences to someone burning down your house because there's a chance in the future that they might build more houses.

 

I find it interesting you could have looked at these cases said, "These people broke the law and faced the consequences. Now we have to fix the system so that everyone faces the consequences, not just those who thumb their noses at power."  Instead, you say, "These people broke the law but because they might contribute to the world, they should not face consequences."

 

(In a way, that's the most left-wing suggestion I've heard on these forums--anybody should be able to break the law without consequences because they might do something later that is a net positive for the world.)

 

We will just never know what Charlie Manson would have contributed to society had we left him free.

 

Kidding, obviously, but what I think ScottHall was saying is that Shkreli would likely never had been charged with securities fraud at all if he hadn't raised the price of Daraprim.  If this is true, then his being charged and convicted was politically motivated and it was really for raising the price of a drug not for securities fraud at all. Someone like Jeffrey Dahmer for instance was only prosecuted for murdering and eating people with no political motivations at all.  He was making a distinction that you have missed or chosen to ignore.

 

[LC]

But he was totally free to raise the price of Daraprim without committing securities fraud.

 

I agree with you that laws are sometimes selectively enforced. But that's not a good excuse for breaking them.

[LC]

Hundreds of billions of shareholder wealth has been created this way, you're just neglecting the ugly side of capitalism. Progress isn't all peaches and cream, you need sociopaths to move society forward. It's just how it has always been.

 

I disagree. Plenty of sociopaths have created immense value without breaking laws. Plenty of non-sociopaths have created immense value, also without breaking laws.

[cobafdek]

So if I'm getting what you're saying, it's totally okay for anyone who owns a construction company to burn down your house, since they will have created net positive houses in the world. It's okay for a woman who's had a bunch of kids to commit a few murders, since she's created a net positive for human life.

 

Oh wait, I misunderstood.  What you are actually saying is that there should be no consequences to someone burning down your house because there's a chance in the future that they might build more houses.

 

(In a way, that's the most left-wing suggestion I've heard on these forums--anybody should be able to break the law without consequences because they might do something later that is a net positive for the world.)

 

So using your logic, you'd let a future Shkreli defraud you out of your money as long as he insists after defrauding you that he will ultimately make you all your money back and create a lot of value for society?

 

I agree with you that laws are sometimes selectively enforced. But that's not a good excuse for breaking them.

 

You guys are playing the role of Cathy Newman to ScottHall's Jordan Peterson.

 

 

 

 

 

 

[rkbabang]

So if I'm getting what you're saying, it's totally okay for anyone who owns a construction company to burn down your house, since they will have created net positive houses in the world. It's okay for a woman who's had a bunch of kids to commit a few murders, since she's created a net positive for human life.

 

Oh wait, I misunderstood.  What you are actually saying is that there should be no consequences to someone burning down your house because there's a chance in the future that they might build more houses.

 

(In a way, that's the most left-wing suggestion I've heard on these forums--anybody should be able to break the law without consequences because they might do something later that is a net positive for the world.)

 

So using your logic, you'd let a future Shkreli defraud you out of your money as long as he insists after defrauding you that he will ultimately make you all your money back and create a lot of value for society?

 

I agree with you that laws are sometimes selectively enforced. But that's not a good excuse for breaking them.

 

You guys are playing the role of Cathy Newman to ScottHall's Jordan Peterson.

 

So what your saying is that ScottHall thinks LC should clean his room?

 

[rb]

Your Honor, I would stand here in front of you on trial for armed robbery if I hadn't slammed into that policeman's car. This is totally vehicular motivated.

[siddharth18]

Hundreds of billions of shareholder wealth has been created this way, you're just neglecting the ugly side of capitalism. Progress isn't all peaches and cream, you need sociopaths to move society forward. It's just how it has always been.

 

That's a very myopic way of looking at things. A world filled with Shkrelis and Holmes would be a world where executives would chronically misrepresent their firm's financial position for their personal gain. That would be a transmogrified world where distrust would be rampant, markets would be very inefficient and the cost of capital would be extremely high. It would place the honest executives at a disadvantage due to market's inability to discern the money-good from money-bad. The rising cost of capital and the opportunity cost of society's inability to fund innovation would be a lot more than hundreds of billions.

 

I also reject the notion that Shkreli was somehow unfairly treated or picked on, merely because he opposed a candidate or insulted the regulators or hiked the price of a rare drug. Actually his case had nothing to do with the price hike or unpopularity with the politicians or the media. The feds started probing Shkreli long before media picked up on his price hike or made him infamous. Secondly, he refused to show remorse or admit wrongdoing until he a few hours before sentencing.

 

 

He wanted to loudly vindicate himself and prove his theory that him defrauding his investors was A-OK. So for the regulators, it wasn't just about proving Martin wrong, but all the future wanna-be Martins wrong. Shkreli insisted on a high-stakes, ego-driven showdown and that's what he got.

[siddharth18]

But he was totally free to raise the price of Daraprim without committing securities fraud.

 

 

Well I, for one, do not think he should be punished for raising the price. He played a legal game where the incentives rewarded him for raising the price so that's what he did.

 

I agree with you that laws are sometimes selectively enforced. But that's not a good excuse for breaking them.

If I'm not mistaken, I think Preet Bharara or Eric Holder, in one of their interviews, is asked about this. About why no bankers during financial crisis went to jail. And the answer was basically that the burden of proof required to prove criminal guilt is very high. And prosecutors are reluctant to bring a case that isn't a slam dunk because the loss can set a dangerous/unexpected precedent and is very demoralizing to the staff.

 

 

In some way, winning a case is less about that case itself and more about preventing 10 similar cases. This dynamic is especially exacerbated when the department is understaffed.

[Cigarbutt]

Reflection about blind spots and neglect of the ugly side.

We all do "bad" stuff from time to time and are very good at justifications and rationalizations.

 

It may be about stretching the limit.

Where to draw the line?

 

I find Andrew Fastow's story (Enron CFO) to be very instructive in that regard.

http://www.fraud-magazine.com/article.aspx?id=4294991880

 

He's not sure when he crossed the line but, at some point, he did.

Perhaps best to avoid slippery slopes.

 

For those interested, LongHaul has posted an interesting interview.

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/andy-fastow-video-ex-cfo-of-enron-17-min/msg325318/#msg325318

 

The part where Mr. Fastow talks about the interaction with his son where he had to explain the true meaning of rules may be worth listening to.

Substance over form.

Vicarious learning.

 

[siddharth18]

Another gem by giofranchi

 

https://www.cbsnews.com/news/the-theranos-elizabeth-holmes-deception/

[randomep]

 

https://www.wired.com/story/a-new-look-inside-theranos-dysfunctional-corporate-culture/

 

Is it a surprise a company run by a 20 some year old drop out from stanford is dysfunctional?  The gall they have to think that they can turn an industry upside down.  TBH, that reminds me of Musk.

[Guest jalebijim]

 

https://www.wired.com/story/a-new-look-inside-theranos-dysfunctional-corporate-culture/

 

Is it a surprise a company run by a 20 some year old drop out from stanford is dysfunctional?  The gall they have to think that they can turn an industry upside down.  TBH, that reminds me of Musk.

 

 

All she had was promises. Last time I checked Musk actually managed to land a rockets backwards!

[RichardGibbons]

Is it a surprise a company run by a 20 some year old drop out from stanford is dysfunctional?  The gall they have to think that they can turn an industry upside down.  TBH, that reminds me of Musk.

 

Yeah, to change the world, you need to be like Bill Gates--old and well-educated.

 

Wait a minute....

 

Never mind.