When I first heard of uBiome years ago, my thought was “Cool idea, but what’s the medical application? There’s no known disease where the optimal treatment depends on your microbiome profile. I’ve looked for research and it’s not there. Who besides hobbyists will pay for this?”
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In general: there’s more to business success than just revenue & user numbers. You can boost those artificially by shady tactics, in the short run. If the apparent growth is totally out of whack with what you know of the userbase and their needs, something is fishy.
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“Ah yes, health insurers, well known for their willingness to pay for experimental and elective treatments” — wait, no, scratch that, reverse it!
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I see the impulse to go “ok, I can’t see how this helps those customers, it makes no sense, but they’re buying, so the company must be doing something right.” But there’s always another possibility: that it’s fraud.
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The natural comparison to uBiome is Theranos, because that’s another female-founded health-tech fraud. But the types of fraud are actually very different.
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Theranos’s tech would have been unquestionably valuable (to patients, drugstores, insurers, etc) had it worked. And something like it probably could have worked. It just didn’t. Elizabeth Holmes lied to everyone about the tech, and went to extreme lengths to avoid discovery.
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That means that, to avoid being fooled by a Theranos, you’d have to do a bunch of due diligence. Tracking down the extent of the deception was hard.
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uBiome was a different kind of fraud: long before you had any evidence of a specific scam, you should have been able to tell that *the product just isn’t useful enough to enough people* to justify the valuation unless something shady is going on.
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Perhaps the investors *did* know and were trying to find a greater fool? Or perhaps they just thought “she’s a great salesman, she’ll figure it out” and didn’t realize that one way to “figure it out” is to cheat?
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I have met several people who evaded my questions about “how is this startup going to make money?” and “how will this be useful to customers?” and said that didn’t matter, go away little nerd, you don’t understand business. They were never right.
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If a founder, when pressed, straight up denies that business is about mutual benefit, RUN.
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End of conversation
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