Getting Blood Work Done with Elizabeth Holmes of Theranos | Disrupt SF 2014 | Summary and Q&A

Summary

In this video interview, John Cheevers interviews Elizabeth Holmes from Theranos. They discuss the process of the TherraKnows blood testing system, the challenges of operating in stealth mode for 11 years, the company's revenue generation, the cost of testing, and the potential applications of the technology beyond wellness centers. They also talk about the board members involved in the company, the goals for the future, and the importance of having the right people in the company.

Questions & Answers

Q: How did Theranos manage to operate in stealth mode for 11 years without any leaks or word getting out about their technology?

Theranos was able to keep their operations secret by focusing on building the solution before talking about it. They didn't have a public website and the clients they did have were under non-disclosure agreements. The first rule of Theranos was not talking about it until they finished developing it.

Q: How did Theranos convince customers to commit to their technology even though it was still in development?

Theranos made their technology accessible to people as an alternative to traditional phlebotomy, where blood is drawn with a big needle. They had people try it out, and if it performed well, they would work with Theranos. One of their main customers was pharmaceutical companies, which helped them build relationships and deploy their systems.

Q: How did Theranos generate revenue and how does it balance profitability and the need for additional capital?

Theranos started generating cash from operations through their work for pharmaceutical companies about a year or two after the company started. They tried to move away from relying solely on equity by focusing on generating revenue. As a private company, Theranos hasn't disclosed their revenues, but they have raised $400 million and have a valuation of $9 billion.

Q: How did Theranos manage to drive down the cost of testing and make it more accessible?

Theranos priced their tests at 50% off of Medicare reimbursement thresholds to change the cost curve of testing. They have further reduced the rates at which they make the tests available, making them 90% off Medicare reimbursement rates in some cases. This means that some tests could cost as little as $1.99.

Q: What happens to the minuscule amount of blood that Theranos tests in their labs?

The blood sample, collected in a tiny nano tainer with a barcode, is sent to Theranos' labs. They have developed the necessary chemistry to run any laboratory test using just a few drops of blood. Novel analytical systems are used to analyze the sample, and the results are electronically sent to the ordering physician and integrated into their electronic medical record systems.

Q: What are the applications of Theranos' technology in the military and rural areas?

In the military, close to real-time and comprehensive laboratory data can make a difference in saving lives in trauma situations. In rural or remote areas that lack centralized laboratory infrastructure, Theranos' decentralized testing infrastructure can provide access to comprehensive laboratory information and lay the foundation for decentralized care delivery.

Q: Why does Theranos have such an accomplished board?

Theranos believes that technology has a role to play in resolving policy issues, and in healthcare, technology can bring about systemic change and cost savings. The board members, who have experience in policy-making and healthcare, provide valuable advice and guidance in achieving this mission.

Q: What is the goal for Theranos in the next five years?

Theranos' goal is to provide access to their technology for every person, regardless of their financial situation or location. This means making testing accessible through tiny blood samples and operating in locations close to where people live or receive care. The goal is to expand globally and not just rely on wellness centers like those in Walgreens.

Q: Does Theranos plan to sell or license its technology to set up centers globally?

Theranos is currently operating centers inside Walgreens in the US. The model may be different outside of the US and will depend on the local infrastructure. Theranos is exploring systematic approaches based on location and is open to different options to bring their technology to more people.

Q: What is the biggest obstacle to the adoption of Theranos' technology?

The biggest obstacle for Theranos is ensuring they have the right people in the company and providing an excellent service to each person. They focus on building a long-term mindset and pacing their growth around providing a wonderful experience to every individual.

Takeaways

Theranos has developed a blood testing technology that uses tiny samples and reduces the cost of testing. They have operated in stealth mode for many years, building the solution before talking about it publicly. The company has generated revenue through its work for pharmaceutical companies and aims to provide access to their technology globally. The board members of Theranos bring valuable expertise to the company. The goal for Theranos is to ensure access to testing for every person, regardless of their financial means or location. The company faces the challenge of finding the right people and providing excellent service to drive adoption of their technology.