Elizabeth Holmes in Conversation with Michael Krasny

Michael Krasny interviewed Elizabeth Holmes, founder of Theranos at the Computer History Museum on December 9, 2014.
  • Elizabeth had a low, husky voice—she appeared to be suffering from a cold.
  • Her dad was in disaster relief, Elizabeth always saw herself doing something that would have an impact on the world.
  • Elizabeth is fluent in Mandarin and spent time in China. She was a presidential scholar and read Moby Dick at age 8.
  • She is terrified of getting blood drawn. Has been wearing black turtleneck sweaters since she was 11.
  • Lab data drives 80% of clinical decisions
  • All too often, we find out too late about a disease, when treatment has become difficult. Type II diabetes drives 20% of the U.S. health cost, but 90% of pre-diabetic people don’t know that they are in that state.
  • The initial funding for Theranos came from her folks using their retirement savings. (Her father and brother were in the audience tonight). They literally started the company in a basement, as opposed to the proverbial garage.
  • They turned down the initial offers for the company. Instead they focused on people who had built companies for the long term.
  • Theranos represents a new concept of preventative medicine
  • The company hopes to make decentralized testing available, providing better access, so people don’t have to drive long distances and are able to have a test done on any date and any time.
  • Theranos believes that you need a lot of assurance data before the data that you provide will be actionable.
  • The legacy of Silicon Valley is to obsolete yourself.
  • John Hopkins has found that they can find markers in blood that enable seeing pancreatic cancer, 17-years before it becomes virulent.
  • Theranos has had some litigation on trade secrets—it has been operating in stealth mode for ten years. Why the low profile? Why alert competitors or hype up the company when you aren’t ready to run? We have a crawl, walk, run strategy.
  • Other labs fight the FDA. In contrast, Theranos works closely with CLIO and the FDA.
  • The company currently has 700 employees. It looks to apply technology to mitigate human error and make tests affordable.
  • In 2013 we stated that we will charge less than 50% of what Medicare will pay. Some of our tests will cost 10% the Medicare reimbursement rate.
  • We are building a model in Arizona. When we can provide the level of service and excellence we desire, we will deploy it elsewhere.
  • Why aren’t more girls in technology? Elizabeth related a conversation she had with the Girl Scouts CEO. They asked a group of girl valedictorians to raise their hands if they saw themselves as a leader of a company. None did. The problem is that there aren’t enough role models. When Elizabeth was at Stanford, she was the only girl in her electrical and chemical engineering classes.
  • The biggest challenge for Theranos? Getting the right people—it’s hard.
  • Channeling the body’s immune system is a very promising avenue for medical advancements.
  • For blood tests, there is the legal right for a patient to have the data, versus knowing what the data means.
  • Why don’t patients get blood tests? Two major reasons are they can’t afford it and they are terrified of the needle.
  • Elizabeth is at the office, seven days a week.
  • The importance of the arts? The best engineers and scientists find they provide tremendous insight.
  • Theranos is a certified high complexity lab.

Other references

Elizabeth Holmes: The Breakthrough of Instant Diagnosis, by Joseph Rago, September 8, 2013, WSJ

Theranos: The biggest biotech you’ve never heard of, by Ron Leuty, San Francisco Business Times, August 30, 2013

Blood, Simpler; by Ken Auletta, December 15, 2014, The New Yorker

Catherine Hoke, Defy Ventures

Laura Sydell interviewed Catherine Hoke, the founder and CEO of Defy Ventures at the Computer History Museum in Mountain View, CA on Wednesday, December 17, 2014.
  • Defy Ventures transforms criminal hustlers into entrepreneurs.
  • Catherine is 37. She went to the University of California, Berkeley where she graduated with a degree in Business Administration. She got married at 22, then worked at Summit Ventures for three years in Palo Alto, before going to New York to work for a private equity firm, American Securities Capital Partners. At age 26, in 2004, a friend invited her to tour Texas penitentiaries as part of a prison ministry program. She subsequently moved to Texas and started PEP (Prison Entrepreneurship Program).
  • When I started PEP, my friends and family thought that I had lost my mind. I invested $50K in savings and my 401K into it. Going broke, I became a professional beggar.
  • 80% of PEP participants had committed violent crimes. The result of the PEP program was a 98% employment rate and less than a 5% recidivism rate.
  • Felons that were involved in drugs typical worked for criminal organizations that had bylaws, a board of directors, and are good at sales and marketing. They just sucked at risk management.
  • Executives were recruited by asking them to be judges in business plan competitions.
  • Catherine got divorced when she was 31 due to her tunnel vision. She subsequently made some bad decisions and mistakes and had relationships with some of her graduates. When she was 32 she tried to commit suicide. The Texas prison system forced her to resign from PEP. She sent 7500 letters explaining what had happened to everyone involved in the PEP program and got 1000 responses in support of her. She found it liberating to not have to hide about her failures.
  • She started Defy in 2010 at age 33. Similar to PEP, they provide intensive therapy and self-help to help participants develop business plans, hen tone them up. It took about a year to raise the money for Defy, hire staff and develop the course curriculum. The first two years of Defy was a brick and mortar program during which is started 71 simple companies, mostly service organizations such as catering, carpet cleaning, and dog watching. Deft is now working on an online format to make it more scalable.
  • Participants have to take ownership of the past and want to transform their future. They have to have some skin in the game—Defy charges a modest tuition of $100 per month, along with the means for the participants to earn the money to pay for the tuition.
  • Many of the students have daddy issues—they come from single households. For them to succeed, they have to defy the odds, both legal and illegal. Defy provides no pity or sugar coating. Only 5% of prisoners are women.
  • Defy’s courses teach a wide range of topics: the five types of love language—touch, words of affirmation, …; the language of apology, social and dining etiquette
  • The students have grown up being put in the trash all of their life. They come from dysfunctional families. It is more comfortable for them not to change.
  • As of December 2014, Defy announced that it received a $500K grant from Google to create 500 EIT (entrepreneurs in training) in the Bay Area. As a result, Catherine anticipates spending 50% of her time in the area.
  • The United States imprisons more people per capita than any other country in the world with 2.3 million Americans behind bars
  • Of the 600,000 people released from prison each year, 76.6% will be re-arrested for a new offense, a very high recidivism rate. Part of the reason is that former prisoners can’t get a job due to their rap sheet.
  • Defy judges its success in terms of the revenue, profit and number of employees of the businesses it helps to establish.
  • There are other organizations doing functions similar to Defy such at the Network for Teaching Entrepreneurs.
  • One of Defy’s EITs came on stage to be interviewed. He is 32, and spent 3 years in prison for dealing drugs. While he had two parents, he grew up poor. His parents each had two to three jobs. He was mowing the lawns in front of apartments where his classmates lived, and he thought that there had to be an easier way to make money.
  • He heard about Defy from reading an article about it in Inc. about four months ago.
  • He is working on the business plan for Diamond Level Apparel. It is athletic clothing with a social component—when you buy an article of clothing, they make a donation of the same item to kids in poverty.
  • Defy has taught him, “Yes, you can!”
  • Currently he is working at a temporary job at a toy manufacturing warehouse for $12/hour. If anyone knows of a better job, let him know! He has a pregnant wife who is in the audience.

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