Theranos promised customers blood tests that were cheap, painless, and hassle-free. And damn did people want those tests. In anticipation of ready access to this democratizing technology---which, reminder, seems to have been plagued with problems---the blood testing company teamed up with Walgreens to create personal wellness centers in some 40-odd pharmacies in Arizona and California. Now, Walgreens has severed those ties. There goes Theranos' biggest link to its customers.
It is still a bit early to give Theranos last rites—the company still has five self-owned storefronts—but ... as go the customers, so goes the business. Though perhaps not the business model. Theranos got a lot of people—physicians included—excited about the prospect of their tests. In economics, they call that a market. And where there's a market, you better believe there are hundreds of hungry entrepreneurs scheming over how to take their bite.
The question is not whether some company can get the science right. They also have to check all the boxes with the feds.
Some pundits (here, and elsewhere) have argued the slow, uncertain pace of medical innovation is fundamentally mismatched with startup culture's move-fast-and-break-things ethos. But some Silicon Valley experts argue that a disruptive diagnostic biotech company can succeed—so long as it paces itself.
"Can it be done? I think it is done," says Stephanie Eberle, director of Stanford Medicine's careers center. She points to companies like Genentech, which began as a venture capital-funded startup in the 1970s. Sure, they were doing recombinant DNA, not blood tests. But that doesn't mean their scientific challenges were any easier. "Science isn't perfect and it isn't fast, and getting it right can't happen without a lot of money, time, testing, and retesting," she says.
So step number one: any successful biotech needs to have an internal culture amenable to science—plodding, but sedulous. And because this is medical science, regulations are part of the process. The government—as an extension of your customers—wants to make sure your product is both safe and effective.
Obviously, sticking to both of those priorities takes money. "For one, you're paying for the scientists, the equipment, the lab space, and also all the attorneys throughout the process," says Eberle.
All the while, you are racing the clock. Your investors are going to set benchmarks. Hopefully the ones who fund you are fluent in biotech's tempo, or else they could have very unreasonable expectations for when they'll begin seeing a return on their investment.
And then a whole slew of other factors—pressure from the media, rumors about competition, legal challenges—can get inside your leadership's heads and pressure them to move faster, faster, faster. "Things like that can have a big effect on decision making by executives," says Hayagreeva Rao, a professor of organizational behavior at Stanford Graduate School of Business. So you have to build in enough time for development---or come up with ways to keep the time crunch from crinkling the science.
One antidote is doubt. That's right. Rao says companies in the midst of scaling up need to have healthy skepticism at every level—from the board of directors, to the executives, to the lab technicians working on test validation. This skepticism should be applied like a brake on a race car. The point is not to stop the driver from winning the race, but to keep her from careening off the track.
Rao offered up some advice to startups looking to inject a little healthy doubt into their culture. "Do something called a pre-mortem," he says. Take five random people picked from every level of your organization and give them a disaster scenario—say, one year from now your promising startup has been the subject of a scathing newspaper investigation that uncovered professional misconduct and doubts in your core technology. "Then have them all write a one page story: How did our company today unspool into a failure?" says Rao. (For balance, have another five employees imagine a timeline leading to spectacular success a year from now.)
An exercise like this will let you see any problems your employees see—lapsed lab protocols, shaky science, out of control spending. Hopefully before your company becomes front page news of the wrong kind.