Troubled blood-testing startup Theranos still has one big, vocal fan: the guy that invested the seed money to get the company started, famed investor Tim Draper.
Draper tells Business Insider that of all the startups out there, Theranos is among those he’s most excited about.
“I like Theranos. I’m behind that company 100 per cent. I think they’re great and are doing a great thing,” he says. “I don’t want vampires. I want a company that takes two drops of blood from my finger in a micro-fluid test. I don’t want someone who takes a quart of blood from me and runs two tests.
Draper, a founder of major Valley VC firm Draper Fisher Jurvetson, was famously the first investor in Theranos, contributing its first $1 million.
Theranos founder, Elizabeth Holmes, was a childhood friend of his daughter, the story goes. She launched Theranos in 2003, at age 19, dropping out of Stanford University to do so. By the end of 2015, she had raised nearly another $700 million with an $8 billion valuation.
Today, the company is fighting for its life, thanks to questions over the accuracy of its tests.
Theranos is the subject of a criminal probe by the US attorney’s office, a civil probe from the SEC, one of its two blood-testing facilities was shut down after a government inspection raised concerns about it, Homes could potentially be barred from the industry for two years, and just this week it restructured its leadership.
Cronyism and sexism?
Although Draper is not listed as a board member, his take is that all of the questions about Theranos is smoke and mirrors from the established blood-testing industry that doesn’t want to see itself overthrown by a one-drop-of-blood-alternative.
He says he’s seen this struggle many times in his investing career, how telecom companies fought Skype, taxis fought Uber, car companies fought Tesla and so on.
“Any time a company is doing something transformational to an industry, the industry fights back. And they will pull out all the stops to try to keep to keep that company from succeeding,” he says, including leaking information to the press and asking regulators to step in.
He also suggests a conspiracy of sexism is at play.
“Theranos is different in that it’s run by a woman. Interestingly, the government went after 23andMe. I’m not certain what’s going on over there, but if I were a woman, I’d be asking a lot of questions,” he told us.
In Theranos case, however, there’s one other big thing. The highly secretive company has never published research to prove to the scientific community that its technology works, claiming that doing so would reveal its trade secrets. Theranos has promised to release scientific data in August.
Give consumers what they want
Although the startup is facing a firestorm, it could still pull through, and Draper believes consumers will save the company.
“If the consumer wants it, the consumer wants it,” he says.
“I’m a consumer and I want that company to keep perfect records of what’s happened to my blood and I want to compare that to my DNA, to my Fitbit results, to my BodyBugg. I want that as a consumer and no number of status quo healthcare professionals and government officials should be able to stop that,” he says.
Interestingly, his comments may show a way out for Theranos (and its investors) if the company does wind up being forbidden from running medical tests.
Could it become a consumer-oriented blood testing company? That’s what 23andMe did. It turned to consumer genetics testing during the two years that the FDA banned it from doing health-related genetic testing.