Theranos lumped with $700M fine
The U.S. Securities and Exchange Commission (SEC) fined blood-testing startup Theranos, along with its founder Elisabeth Holmes, more than $700 million for defrauding investors.
If you didn't follow the circus, throughout 2016 and 2017 it emerged via a shock Wall Street Journal report that Theranos' miracle blood testing machine was hogwash.
Specifically, the technology worked too well with little data to prove why. Theranos' "Edison" technology was miraculously able to drop blood testing time to hours in the lab to minutes in the lab... and required much less blood drawn from the patient than any other technique on the market, killing off scary needles altogether.
The ensuing drama got weird as hell. First, it emerged that Theranos quietly used traditional machines behind the scenes as its technology didn't work properly yet, ran fake tests to mislead regulators and even tried to pass these machines off as their own to directors of the company plus to mislead investors.
From late 2016 to 2017, Theranos was stripped of its licenses to run laboratories, failed inspections, lost its contracts with retailers and ultimately wound up laying off 41% of the company.
The SEC investigation concluded yesterday that Theranos and Elisabeth Holmes engaged in "elaborate, years-long fraud in which they exaggerated [...] the company's technology, business and financial performance."
Both Holmes and Theranos settled on the charges, paying just $500,000 in reparation but she was forced to return millions of shares, give up control of the company and is banned from running a public company for a decade — as well as needing to pay back $750M in debt if she managed to exit with any remaining shares.
Theranos is a fantastic example of a startup that hoped to innovate its way out of a white lie, just like Zenefits, which was also caught dodging rules as it skirted regulation to 'hack' the system while it figured out technology.
How Apple squandered Siri's lead
A fascinating report by The Information (paywalled) based on interviews from former Siri engineers sheds light on why Siri is so behind, and how Apple lost its edge in the voice assistant game.
The report details how Siri was faced with no leadership, fragmented technology and competing teams working on the same technology: "When Alexa shipped, it was rock solid from day one,” said a former Siri team member. “For Siri to get there, they almost need to set everything aside and start over."
Perhaps the most insightful part of the report is how Scott Forstall, who famously was fired for refusing to apologize for Apple Maps' launch fiasco, lead the Siri group for years, and that the company only serviced the tool once a year.
A couple of other fascinating tidbits from the report:
1. Siri's technology stack is problematic:
"Core Siri and Spotlight are powered by a combination of both Topsy's technology and Siri Data Services, which is based on older search technology ported over from iTunes search but modified for Siri and launched in 2013, said the former employee. Siri Data Services deals with things like Wikipedia, stocks and movie showtimes, while Topsy sorts through Twitter, news and web results. The Siri Data Services team was eventually lumped into the Topsy team under Mr. Prakash with the plan to integrate all of the tech into a single stack. But they're based on two different programming languages and are tricky to reconcile."
2. Apple supposedly didn't plan for Siri in HomePod
"In a sign of how unprepared Apple was to deal with a rivalry, two Siri team members told The Information that their team didn't even learn about Apple’s HomePod project until 2015—after Amazon unveiled the Echo in late 2014. One of Apple’s original plans was to launch its speaker without Siri included, according to a source."
3. Siri's developer capabilities were an afterthought
The most notable failure in Siri's evolution is that it still lacks the third-party developer ecosystem considered the key element of the original Siri vision. Apple finally launched SiriKit in 2016 after years of setting aside the project and shifting resources away to other areas.
The report, naturally, should be taken with a grain of salt, but provides a fascinating piece of insight into the company at a time when Siri is clearly languishing while Google and Amazon gobble up market share, while growing their assistant's capabilities.
It's true, nonetheless, that Apple was caught blindsided by Alexa's popularity and has found itself on the backfoot ever since. It's also at a sizable disadvantage due to the privacy model of Siri, which means it's difficult to help it improve quickly or innovate on the product.
The usual narrative is that Apple can turn it around, but it's quite stark how behind Siri is compared with 'next generation' assistants — and if the report is any indication, it's quite the ship to turn around.
Spotify tests voice control of its own
Paving the way for its own smart speaker, which is a very bad idea... more on that soon.