It's not just a Kindergarten-style "ooh great idea, let's trade this" (although we've quite a bit of that).
On a higher level of abstraction, following a good journo is akin to machine-learning: exposing your brain to examples of behaviors, corporate and individual, to train the brain and create pattern-recognition templates.
The advantage in reading such examples is the ability to absorb many more variations than your personal experience could ever give you. This is one of the reasons we spend so much time on non-publicly traded situations. If you follow a company such as Uber for a few years you will see many different manifestations of dysfunction that may stand you in good stead should you come across something similar in the market.
Ditto for Theranos which was showing signs of being a fraud before Mr. Carreyou ripped the bandage off to expose the suppurating pustule that was Ms. Holmes' creation. See our 2015 "Theranos: She's Young, She's Rich, Is She A Marketing Huckster?" if interested. And apologies for the pustule line, I was channeling another fraudster we've highlighted, more after the jump.
Here's the headline story:
about the authorFrom Wired, May 21:
John Carreyrou is a two-time Pulitzer Prize-winning investigative reporter at The Wall Street Journal. For his extensive coverage of Theranos, Carreyrou was awarded the George Polk Award for Financial Reporting, the Gerald Loeb Award for Distinguished Business and Financial Journalism in the category of beat reporting, and the Barlett & Steele Silver Award for Investigative Business Journalism.
When a chemist raised concerns about the blood testing machines' high error rates, she was ignored. So she resigned.
Alan Beam was sitting in his office reviewing lab reports when Theranos CEO and founder Elizabeth Holmes poked her head in and asked him to follow her. She wanted to show him something. They stepped outside the lab into an area of open office space where other employees had gathered. At her signal, a technician pricked a volunteer’s finger, then applied a transparent plastic implement shaped like a miniature rocket to the blood oozing from it. This was the Theranos sample collection device. Its tip collected the blood and transferred it to two little engines at the rocket’s base. The engines weren’t really engines: They were nanotainers. To complete the transfer, you pushed the nanotainers into the belly of the plastic rocket like a plunger. The movement created a vacuum that sucked the blood into them.From last year's "Faraday Future issues bombastic statement accusing former CFO of ‘malfeasance and dereliction of duty’":
Or at least that was the idea. But in this instance, things didn’t go quite as planned. When the technician pushed the tiny twin tubes into the device, there was a loud pop and blood splattered everywhere. One of the nanotainers had just exploded.
Holmes looked unfazed. “OK, let’s try that again,” she said calmly.
Beam1 wasn’t sure what to make of the scene. He’d only been working at Theranos, the Silicon Valley company that promised to offer fast, cheap blood tests from a single drop of blood, for a few weeks and was still trying to get his bearings.
He knew the nanotainer was part of the company’s proprietary blood-testing system, but he’d never seen one in action before. He hoped this was just a small mishap that didn’t portend bigger problems.
The lanky pathologist’s circuitous route to Silicon Valley had started in South Africa, where he grew up. After majoring in English at the University of the Witwatersrand in Johannesburg (“Wits” to South Africans), he’d moved to the United States to take premed classes at Columbia University in New York City. The choice was guided by his conservative Jewish parents, who considered only a few professions acceptable for their son: law, business, and medicine.
Beam had stayed in New York for medical school, enrolling at the Mount Sinai School of Medicine on Manhattan’s Upper East Side, but he quickly realized that some aspects of being a doctor didn’t suit his temperament. Put off by the crazy hours and the sights and smells of the hospital ward, he gravitated toward the more sedate specialty of laboratory science, which led to postdoctoral studies in virology and a residency in clinical pathology at Brigham and Women’s Hospital in Boston.
In the summer of 2012, Beam was running the lab of a children’s hospital in Pittsburgh when he noticed a job posting on LinkedIn that dovetailed perfectly with his budding fascination with Silicon Valley: laboratory director at a Palo Alto biotech firm. He had just finished reading Walter Isaacson’s biography of Steve Jobs. The book, which he’d found hugely inspiring, had cemented his desire to move out to the San Francisco Bay Area.
After he applied for the job, Beam was asked to fly out for an interview scheduled for 6 pm on a Friday. The timing seemed odd but he was happy to oblige. He met with COO Sunny Balwani first and then with Holmes. There was something about Balwani that he found vaguely creepy, but that impression was more than offset by Holmes, who came off as very earnest in her determination to transform health care. Like many people who met her for the first time, Beam was taken aback by her deep voice. It was unlike anything he’d heard before.
At the time, Theranos was on the cusp of becoming a tech darling. Founded by the charismatic Stanford dropout in 2003, its promises to revolutionize blood-testing—and by extension, the vast industry of medical diagnostics—would be swallowed whole by most of the technology press, which would lavish Holmes with glowing coverage. (WIRED was not exempt). Only later—in October 2015—would the truth come out: Theranos was a fraud built on secrecy, deliberate fabrication, and hype. After I revealed that fraud, the company would begin an implosion that continues to this day....MUCH MORE
...And my all time favorite bit o'bombast, recounted as the intro to 2007's "Planktos Highlights Real Ocean/Climate Crises & Responds to Recent Misinformation Campaigns" about a Euro-American reinsurance scam that had reverse-merged its way onto the American Stock Exchange, gotten onto the Fed Board's margin list and then, rather than doing the dump half of a pump-n-dump as they gunned it from 50 cents to $15.00, had just margined the hell out of their brokerage accounts, requested the excess buying power be wired out and skedaddled, picking up the remaining cash in the corporate bank accounts on their way out the door:
...But first, one of my favorite examples of a stock scam (I told you, I have a morbid fascination with the underbelly of the markets, it's like watching the lions approach the wildebeest at the watering hole, you don't want to see it but you can't look away):
...Peter Uttley, Equisure's chairman and a former Lloyds of London executive, took control of the company this week, assuming the chief executive post....
...Uttley said in the press release that his chairman role had been a "passive" one, but he now plans an active reorganization of the company, whose reputation has been stained by allegations that it is a scam insurance operation.......In an unusually emotional statement to the press, sent from an Equisure board meeting Friday in London, Uttley told his version of events over the summer, which eventually led to the delisting of Equisure shares on the American Stock Exchange.
He then proceeded to tell a story of three men, whom he described as "liars," "cheats," and "scallywags," who worked with law enforcement officials and the press to spread false rumors about the company with the intent of buying Equisure out at 50 cents a share, a tiny fraction of the stock's trading price of $15, before AMEX suspended trading Aug. 1."The simple truth was consumed in the belly of deception, but now has been vomited for the world to see," Uttley began.
Isn't that damn fine bloviating? It's hard to research but I think Uttley et. al. got away with $100 mil.Who's going to top "The simple truth was consumed in the belly of deception, but now has been vomited for the world to see," in a press release?
Here's Russ George of Planktos responding (I think) to Greenpeace's submission to the recent meeting of the International Maritime Organization...
Scallywags is a nice touch as well.