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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Replying to @s_r_constantin
This bit is wrong. You literally just had to go get tested by LabCorp or another real business and compare this to results from Theranos. In what world is this a highly technical thing to do that only an engineer is capable of thinking of?
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Replying to @mchapiro
It would take maybe a week of clock time and several hours of person time at a minimum to do that, and Theranos would sue anyone they thought was getting too snoopy.
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Replying to @s_r_constantin
Hmm, yes, while I questioned whether it should require technical literacy you point out how absurd it is that any VC would actually expend a few hours in due diligence. I suppose in VC time sending a couple emails to have their assistant set it up might also constitute a week.
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Replying to @mchapiro
I don’t think it’s absurd that any VC would. I just think it’s possible that some wouldn’t (or would focus their diligence efforts elsewhere, like going through financial documents.)
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“Gullible VCs exist” != “All VCs are gullible.”
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