Truvian CEO Jeff Hawkins sat down with Yahoo Finance's Alexis Keenan to discuss the history of the former tech company Theranos and its former CEO Elizabeth Holmes, who is set to begin trial on fraud charges. He discusses the Silicon Valley startup culture, the shadow Theranos has cast on similar companies looking for investment, and what he hopes to see come out of the trial.
JEFF HAWKINS: Yeah, I think-- let's start with one drop of blood and hundreds of analytes was always science fiction. It still is. It always has been. But there's been a lot of innovation in this field by Truvian and others. So as an example, a desktop analyzer-- something that could fit on a countertop or a desktop, and it can do a broad range of testing-- that exists. Truvian has one of those machines. It can do about 85% of routine testing. And I know others are working on similar types of analyzers.
When it comes to the one drop of blood, one is not feasible. But I think what a lot of us are demonstrating is two drops, three drops, maybe five is still a very small quantity of blood, and you can do a lot of testing. You could do 20, 30, 40, maybe even 50 analytes worth of testing, so a lot of improvement over what we see today in diagnostics.
- So you are based in the San Diego area. And I'm guessing that you're not necessarily immune, though, from Silicon Valley's startup culture and the fundraising culture there. So why do you think that we're seeing so many companies with unproven track records that are achieving these soaring valuations?
- Yeah, you're correct, Alexis. We have Silicon Valley investors in our company as well. I think there's a few factors in play. In general, valuations in the markets are up significantly over the last five years, whether public or private markets. I think with all the success of venture companies-- so many IPOs, so many M&A exits-- you also see more money in venture. And when there's more money in venture, you tend to see more money available early.
And in a late-stage company, we look at things like revenue, growth rates, profitabilities, a more tangible metrics to define valuations. When you get early, it's more about the opportunity size of the technology you have, how much risk is left to deliver. So it becomes a little more subjective. And if you add now large amounts of capital, it has much more of a chance of big valuations because finding a way to put all this capital into the company and have the ownership distribute it appropriately, I think, can inflate the valuations early stage when there isn't that business fundamental to peg it to.
- Jeff, why do you think that in Theranos's case, that the group of people that were surrounding Elizabeth Holmes-- we're talking about board members, we're talking about investors, talking about the advisors who were really top of their field that were surrounding her at the time she was building Theranos-- why do you think that there wasn't more of a demand put on Elizabeth Holmes and company executives to really come up with proven results before taking a product all the way to market?
JEFF HAWKINS: Yeah, I think we have to break investors from board members. So as an investor, with the exception of those who invest and join the board, many investors, the level of data and diligence they do is at the time of investing, and then they're not really involved frequently, day to day, with the business. Their chance to vote with the data they've seen is at that time of writing a check. And to many investors' credit, they couldn't get the data they needed, and they didn't invest. So I think that needs to be said.
On the other side, I think your question really hits home with me around the board and other people surrounding her, whether advisors or executives. It's an area that hasn't been well published or reported on. It's an interest of mine. What did they know? Did they ask for data, and were they given it, and it just wasn't presented factually and accurately? I think that's the unknown.
But the board certainly-- I know with our board, they ask for data. They want to see progress. So the board certainly have that type of an engagement with the company. The question is, did they ask, and were they given accurate information?
The number one for me is, what did the board know, and what level of engagement did they have, especially as some of the reports of false results started to come out? So were they asking for data? Were they asking for any independent experts in the field to assess the quality of results and give them a perspective? What did they know? And if they knew, what prevented them from acting? Or on the other side, were they asking, and they just weren't being given accurate information? So that dynamic of Sonny and Elizabeth with their board and what may have been shared is interesting to me to try to learn more about this trial, and I hope we do learn about it.