Theranos, an infamous case of a tech startup gone bad, was valued at over 9 billion dollars for audacious claims of revolutionizing the blood-testing industry. The trouble is, it had done so with absolutely no evidence that it could accomplish what it claimed. How is this possible?
One may counter that many startups offer ridiculous, unsubstantiated claims - but none to this extent of success and (I would argue) none with such an easily-substantiated promise. I'm sure people scoffed at the valuation of Facebook or Uber, but these services are investing in social changes that are, by their very nature, nebulous. Theranos made a very simple claim and failed to deliver for over two years, accruing enormous amounts of funding in the mean time. I have never seen a story focus on this aspect, merely how "shocking" it was that they were defrauding investors. Not to victim-blame, but to me the bigger story is how anyone continued to give money to a company that couldn't demonstrate that it could do its most basic function.
As a casual investor, it's shocking to me that companies can achieve this level of financial success without a functioning service. This would be like someone discovering that McDonald's didn't actually have any physical locations at all, and had never served a single patty. It's absolutely mad. Was there something unique about the Theranos case that made it immune to even the most passive of investigation?
To be more specific, Theranos claimed they could perform a myriad of tests with only a single drop of blood. They used competitor's equipment/existing technology to perform their tests instead (which cannot do it with only a single drop of blood) - meaning they could not, even while obfuscating the process, achieve their stated goal of "one drop of blood => many common blood tests".