YC-backed uBiome is basically Theranos-lite

https://twitter.com/Carnage4Life/status/1510683233347796992

by donsupreme • 4 years ago

261 173 4 years ago

faangiq• 4 years ago

Huh. Another SV darling of the past 5 years ends up being a massive fraud. Sad there’s no real media in this country to cover these stories.

simulate-me• 4 years ago

This was covered by CNBC and WSJ. What media sources did you check?

detaro2• 4 years ago

This really needs a "XYZ's law" label by now: If someone didn't see it, or doesn't remember seeing the reporting a year ago, or doesn't remember the headline accurately, it's the fault of the evil media not reporting things.

toomuchtodo2• 4 years ago

Prescient comments from 3 years ago.

https://news.ycombinator.com/item?id=18041106

“The grapevine says this place is a dog and pony show.”

https://news.ycombinator.com/item?id=18042433

“Grapevine is true. What they are doing is extremely questionable. They are billing insurance thousands of dollars for tests that are rudimentary and only look at absence or presence of microbes.”

detaro2• 4 years ago

Some of the media reports are literally linked from the Twitter thread here as sources.

anamax2• 4 years ago

Theranos was not a "SV darling".

Yes, Theranos was headquartered in SV, but, the vast majority of the investment money came from outside. (The only SV money was some very early stuff from Draper, which was a relatively small amount, and some later money from Larry Ellison.)

Yes, George Schultz lives in SV, but he's not of SV.

tptacek• 4 years ago

Not so much? They raised from DFJ and ATA, not to mention Ellison. Definitely feels like an SFBA tech company to me.

pyuser5833• 4 years ago

Yeah I noticed this too … it seemed like Holmes was putting on a “Silicon Valley” show for Washington, DC.

Most of the big names connected with Theranos are former/future cabinet secretaries.

I can’t think of any other time anyone talked about “Henry Kissinger” and “Silicon Valley” in the same sentence.

jb1991• 4 years ago

Yes, George Schultz lives in SV, but he's not of SV.

He is also not alive.

reureu6• 4 years ago

Having worked in health tech for the past ten years, I can name other companies that are equally massive frauds that just haven't been discovered yet. All you need is a good PR team and some big name investors, and it doesn't matter if what you're creating is real or not... you can get away with a lot.

Health care and medicine isn't a "fake it till you make it" type of industry, but that's the entire model that's preached in the startup world. So, almost by definition, startups + health care is really ripe for fraud and deception.

metadat• 4 years ago

If you know of similar frauds, then please name them here.

adampk2• 4 years ago

That is a big ask for someone that probably doesn't want all that noise in their life?

reureu6• 4 years ago

Two that I'm comfortable sharing are:

Cerebral (cerebral.com): first, their whole business model is about being a pill farm for controlled substances. So, out of the gate that's pretty concerning (but, yes, you can make a lot of money by providing easy access to adderall and ativan). Beyond that, they're having a hell of time recruiting providers and so their lead time for appointments is pretty high. They're still taking customers on a subscription basis, but can't provide appointments. I think it's just a matter of time before that whole mess collapses.

One Medical (onemedical.com): in early 2021, they were caught letting people skip the line for covid vaccines. The house select committee on coronavirus investigated them and released a pretty damning report back in December, and their SEC filings have indicated that they're under further investigations by some various organizations. Based on this information and other chatter I've heard, I don't think that's the only questionable thing they've done.

sampo• 4 years ago

The "we will deep freeze your brain, and resurrect you in the future" company, Nectome.

antattack• 4 years ago

Maybe not 'fake it till you make it' but certainly 'it's not illegal until you get caught'.

iancmceachern• 4 years ago

I've found the same thing to be true. The successful medtech startups are consistently from experienced folks that have spent years in that industry who identify an unmet need and go after it. Every single medtech startup that has been led by a startup bro right out of school with personal connections to money has been successful in raising money, building hype and a PR machine, but not in creating meaningful value to the patient and caregiver, and not making it to the clinic.

hef198987• 4 years ago

There seem to be industries that cannot be disrupted by dumping hundreds of millions of VC dollars on PR and marketing and undercutting the competition until you're the last man standing. Health care and pharma for one, I'd say aerospace as well (exceptions like SpaceX notwithstanding, and they have a top notch team and Shotwell who seem to be perfectly able to manage both an aerospace company and its tech bro founder).

1vuio0pswjnm72• 4 years ago

"Having worked in health tech for the past ten years, I can name other companies that are equally massive frauds that just haven't been discovered yet."

You say you can name other companies that have not yet been "discovered" yet, and yet you name zero companies. Are you just teasing. Please name them and let's have a look.

bdcravens• 4 years ago

Presumably they don't want to be sued into oblivion.

reureu6• 4 years ago

I did name companies-- Cerebral and One Medical-- I just named them in a later comment. A few bonuses: BetterHelp and Noom, both rely on dubious studies of their efficacy to promote their products. 100Plus (prior to acquisition, I know less about it with its current leadership) was playing a game that was really close to insurance fraud.

They're not Theranos-level situations... that was just insane in how brazen its fraud was. But more the uBiome-type, where it's illegal or deceptive and at risk of being shut down as a result. And, not to mention, their behavior might be actually harming patients.

adampk2• 4 years ago

It seems like health tech is the most "scammable" vertical, or is most "scam-prone"? (scam might be a strong word, bs maybe more accurate?)

Maybe it is because health-insurance billing is already so opaque and error-prone it provides cover for questionable services. Also, if the service is "free" to end-users (because it is covered by health insurance) then why not try anything in the name of self-health?

It seems the most sanctioned vertical to fake-it-till-you-make-it till you hit critical mass and then you are too big to fail because big SV names have already anointed you a winner.

https://www.theinformation.com/articles/the-inside-story-of-...

pedalpete8• 4 years ago

As a founder in the health-tech space (sleep-tech/neuro-tech in particular), I think it's more than just related to health-insurance.

My take is it isn't just the tech side of health that is scammy. In sleep and neuro, we see all sorts of products which make outrageous claims that they say are backed by "science" from leading research organizations, but when you go looking for the research, there is nothing there!

I think sometimes people want to believe their own BS. I wonder how often the people selling/peddling their wares believe what they are saying, or just don't care.

We're being very cautious in our GTM to make sure we build a lasting and trusted company at https://soundmind.co

mountainriver• 4 years ago

This is cool!

robg• 4 years ago

What are you using to benchmark sleep quality?

vimy7• 4 years ago

Is this a Zeo replacement? I miss having access to an at home EEG headband.

kalimanzaro• 4 years ago

IMHO it doesn't help that the middle class in California especially are health obsessed. Couple that with a kind of contrarian or rationalist/conspiratorial mindset in the public intellectuals(think Phil Dick or even Musk/Thiel -- I wanted to say not medically knowledgeable but you have got various Stanford profs too) -- you get healthcare very ripe.. eg cancer warnings on pretty much every consumable? "Science" is like a means to what an end!

pyuser5833• 4 years ago

Whenever I visit California I’m shocked at how many things have “cause fetal deformity” signs.

rossdavidh• 4 years ago

Or that the fake-it-till-you-make-it has actual laws against it that get you in trouble in health, but if you are a new social media or search engine or electric scooter or ridesharing or whatever, you may get into some trouble but not as much. The health industry has a lot more laws about telling the truth and getting consent, than most industries, and they're enforced better.

dogleash• 4 years ago

pmuch this. My experience is specifically devices/MDDS, but Facebook style “We are not actually doing what we say we do publicly” [0] is one of the biggest sins possible.

[0] https://www.wsj.com/articles/facebook-files-xcheck-zuckerber...

s1artibartfast• 4 years ago

I think part of it is the industry at large has a speculative and probabilistic nature to development. Much of it is betting on yet to be developed science, so so you rarely have a prototype that can be tested and infected. This is certainly the case for devices and drugs. When you couple this lack of objective performance data with an opaque and extremely entrenched Market sector, there's a lot of room for shady business.

To top it off, when Healthcare start up over-promise and under-deliver it gets a level of criticism and outrage that is higher then many other sectors

ramraj07• 4 years ago

Importantly, many many companies I’ve seen yc fund in the past on the biotech side seem sus like this. Except maybe ginkgo?

uncomputation2• 4 years ago

My hypothesis is that those biotech companies which pitch to YC, largely a tech/Silicon Valley incubator, are more likely to be, if not scams, then embrace the “move fast, break things” mentality which for biotech can be either dangerous or bullshit (100+ “therapy” and “mental wellness” apps)

axg11• 4 years ago

You covered the main driving reasons that involve insurance. I think there are also factors inherent to medicine that make health tech “scammable”.

There are few objective truths in medicine. Our understanding of human health is still fairly basic. On top of that, many of our best interventions, drugs, and procedures produce only middling results. When the state of the art is poor, it’s easy to sell a vision for improvement.

Measuring the success of health tech is very difficult. What does product market fit look like for early cancer detection? From afar, it may seem as if success for a cancer screening company should be simple to measure: how many cancers can the technology/company detect?

That’s not the case. In medicine there are always confounding factors. For example, in cancer detection, many cancers are low threat (not the same as benign). Identifying a cancer that is unlikely to threaten your life, or worse a false positive result, will end up making your health worse. You will undergo unnecessary biopsies and stress until the issue is resolved.

You might think: OK, but that’s measuring the wrong thing, the real metric to measure is how much longer those patients live with or without the cancer screening tech. You’d be right, but accurately measuring that takes 5+ years.

All this is to say, health tech is a difficult path, perhaps the most difficult path to production in all of tech. Along that road, there are many opportunities for unethical operators to cut corners.

raverbashing• 4 years ago

Or because founders can get away with a wishy washy description of the tech that looks good at first but is full of issues

Most investors have a very low understanding of actual biology, or even anything outside of "IT". See: uBeam

nowherebeen• 4 years ago

This is part of the problem. None of these investors, including YC, have domain expertise. They only preach that the founders themselves should have it, but they are the ones giving the funding. So, in the end, they only look a perceived credentials of the founder and not the tech, which is BS. No one with strong credentials and solid tech would need VC funding, they already have grants. And by then, private equity would be lining up.

ethbr02• 4 years ago

Maybe it is because health-insurance billing is already so opaque and error-prone it provides cover for questionable services.

At least in America, it seems a consequence of the stratified, multi-party market.

Each participant only has limited visibility into the entire stack, which allows scams to appear more legitimate than they might in industries where each participant has a better view of the whole.

Also, as you say, it's just ridiculously manual for data entry. :-( But slowly getting better. But that means that the sort of heavyweight detection or correction algorithms one would use elsewhere would just spew nonstop false positives.

refurb2• 4 years ago

Medicare (public healthcare for those over 65) has rampant fraud. So does Canada's single payer system.

0des3• 4 years ago

How does this happen so often with YC companies? You'd think the amount of applicants would raise the bar of scrutiny a little.

Can't tell if I'm getting older or if more often now some of the newer YC inductees are getting accepted on factors other than their tech accumen.

clpm4j• 4 years ago

Out of the thousands of startups they've funded, how many have been confirmed as scams?

ergocoder• 4 years ago

"so often"

jacquesm4• 4 years ago

< 10 afaik

pedalpete8• 4 years ago

Zach from UBiome actually has the science background and was an adjunct professor at (I think) Berkeley.

With YC, they are judging companies at 10 minute interviews, I'm guessing they aren't able to do much due diligence.

dang• 4 years ago

I'm curious how you arrived at that impression? YC has funded thousands of startups and as far as I know there have been very few bad eggs. Occasionally they've had to disown one, but it's surprisingly rare. I don't know if there were any signs of uBiome being bad when YC funded them in 2014.

0des3• 4 years ago

Lol I like how you sneak in here like a regular commenter. Due to how close you are to YC I don't think I could in good faith try to convince you one way or the other, its just an outsiders perspective from someone who has been here just as long as you, but is not employed by YC, that's all

sub7• 4 years ago

YC has gone from 7 super high quality startups in a yearly class to some 300 founderitis startups twice a year.

Nobody who knows anything thinks it's actually a quality signal anymore, it's really just a high passthrough noise filter

From their perspective, they still just need the 1 giga unicorn a year to give their LPs excellent returns so it is what it is

uncomputation2• 4 years ago

Not too often (although Dreamworld, Balto, and Zenefits come to mind) given the scale. What is more troubling to me than outright scams is just brand dilution and noise. The classes have been rising and show no signs of stopping. With 300 companies per class now, I get the impression it’s a numbers game (we just need one big win to make up for all the duds) than anything really mission-driven.

toomuchtodo2• 4 years ago

Returns are the mission as a fund. If you have this enormous pool of capital due to well placed bets (which YC has), would you not, over time, make more speculative bets to win even more over time? As your scale grows, the odds of suboptimal choices increases (even with domain expertise assisting in due diligence).

The reputational risk is minimal, and bad eggs can be written off as mistakes/chance character failures.

jacquesm4• 4 years ago

Installmonetizer.

sydthrowaway• 4 years ago

What happens when YC goes outside of SaaS or Airbnb for X.

vimy7• 4 years ago

Their tech wasn’t fraud as far as I know. There are a dozen other companies using the same technology. 16S rRNA gene sequencing. I used them and never felt deceived with the data I got.

https://journals.plos.org/plosone/article?id=10.1371/journal...

Edit: https://www.justice.gov/usao-ndca/pr/ubiome-co-founders-char...

Nowhere here does it say the tech was fake. Mostly insurance fraud. I don’t think the label “theranos-lite” is correct.

jwithington• 4 years ago

What kind of information did it give you?

vimy7• 4 years ago

What bacteria my gut was missing or had too much of. My Firmicutes/Bacteroidetes ratio was skewed. I then changed my diet and did several more tests to see the evolution of my gut microbiome. The periods where I felt better correspond to the test results that showed an almost normal result. When I got worse again so did the tests.

There were several useful tools on github and other sites: https://github.com/ubiome-opensource/microbiome-tools

https://blog.adafruit.com/2018/02/26/biohacking-comparing-mu...

https://microbiomeprescription.com/

I now use https://biomesight.com/ instead of ubiome.

chowells• 4 years ago

Most of what made Theranos a scam wasn't that their tech was impossible. It was that they were committing mass fraud by making a lot of claims about what they were doing that were false.

It seems like if your underlying technology actually works but you run the rest of your business with the same scams as Theranos, you qualify as Theranos-lite

bpodgursky• 4 years ago

Theranos gave patients clinical results based on technology was not accurate or reliable. The test results were practically random noise.

That is dangerous and could have seriously hurt, or killed, someone. No amount of billing fraud, however egregious, could possibly match that level of irresponsibility.

fastball• 4 years ago

Theranos' tech is impossible though, as far as everyone else in the field is concerned.

Blood from a finger prick is just not homogenous enough to give accurate levels of pretty much anything Theranos said they could test.

The most egregious thing uBiome has been accused of doing basically amounts to insurance fraud, which isn't great but also isn't on the same level as lying to customers about the accuracy of the test results they've received.

Insurance fraud isn't what made Theranos "Theranos" at all, so I wouldn't call a corp doing that "Theranos-lite".

disillusioned2• 4 years ago

Yeah this is an important distinction here: Theranos's technology never reached the level of accuracy it needed in order to do the thing it set out to do: report accurate blood tests. uBiome's core technology _did_ work: it revealed counts of various flora in your gut.

What they did that was problematic was they basically offered the service with a nod and wink guarantee that they wouldn't bill you for the service, but would rather have a doc in their employ rubber stamp a "prescription" for the test, to then bill your insurance. They would bill insurance some fairly astronomical amount, too, like, IIRC, $3k-$4k. They'd warn you the entire time "if the insurance company sends you an EOB telling you there's a balance you may owe from us, don't worry, we won't charge you!"

Multiple layers of problematic, both with regards to how they threaded the needle to get a script written for the test to be defensibly "covered" by insurers, and the rates they were charging.

But at least the tech seemed validated and fairly accurate.

hef198987• 4 years ago

Fraud comes in multiple flavors, there is product fraud, there is business fraud and there is accounting fraud. uBiome may not be Theranos-style product fraud, if their business practices are fraudulent it is still fraud. Saying otherwise would be saying Enron wasn't fraud because the tech worked...

a123b456c• 4 years ago

If it wasn't Theranos-style fraud, then why is theranos in the headline

Fomite• 4 years ago

Myself, and a large number of folks I know in medicine, microbiology, etc. were pretty worried when it turned out they were doing most of their work without an IRB back in 2013.

throwawaylinux2• 4 years ago

Germany doesn't extradite to the US? Surely that's not true.

edgyquant• 4 years ago

According to this Germany doesn’t extradite its own citizens https://se-legal.de/schlun-elseven-lawyers/lawyer-for-extrad...

France is the same, as they claim the US system favors the rich and is unfair (or so I’ve heard)

hiq• 4 years ago

France is the same, as they claim the US system favors the rich and is unfair (or so I’ve heard)

No need to make it about the US, France doesn't extradite its citizens to any other country. It has nothing to do with any claim regarding the US legal system.

fsh• 4 years ago

Of course it doesn't [1]. Most states won't extradite their citizens.

[1] https://www.gesetze-im-internet.de/englisch_gg/englisch_gg.h...

throwawaylinux2• 4 years ago

Oh my mistake I never actually realized that.

It does happen in some cases though.

Semaphor• 4 years ago

I’m not sure if she is a German citizen? That seems a bit quick. I’d assume it has something to do with her medical condition and him (the citizen) being her caretaker instead.

rndgermandude• 4 years ago

Early naturalization for spouses in Germany can happen after 3 years of legal residence, but they only moved mid-2020 according to wikipedia, so she shouldn't be a citizen just yet.

However, extraditing just her (cannot extradite him, he is a citizen) will be probably hard due to technicalities and bureaucracy. The health condition may be a factor in a German court decision. Furthermore the alleged crimes and penalties are a major hurdle... According to the twitter thread, she'd face up to 95 years imprisonment, which creates two legal problems for any extradition: It is a vastly longer sentence than what she'd face in Germany for equivalent crimes - so a German court might require assurances first that in the US she wouldn't face a maximum sentence so vastly different than one she'd face in Germany [0] - and 95 years could be considered by a German court as an effective death sentence and Germany does not allow death sentences - this was the case when Turkey wanted some PKK people extradited on terrorism charges, and had agreed to max life imprisonment without parole instead of a death penalty, but the highest German court then ruled against extradition, saying life imprisonment without parole / likely death in prison is equivalent to a death sentence, as it removes any hope for the prisoner to one day become a free person again, and considered that cruel and inhumane[1].

I'd think she might not have been extradited yet because behind the scenes the US and Germany might be still haggling about what charges with what maximum sentences she might be charged under, before the German state prosecutor office files for extradition on behalf of the US. If she manages to become naturalized before that, that may mean game over for any extradition.

Germany could refuse naturalization based on her alleged criminal behavior, but that's unlikely, as she wasn't convicted and as the alleged crimes are non-violent; Germany will usually only refuse naturalization of spouses when there have been previous convictions or solid allegations of extremist and/or grossly violent crimes.

[0] E.g. Puigdemont, one of the leaders of the Catalonian separatist movement, was requested to be extradited from Germany to Spain on the charge of "rebellion". German courts found that there is no equivalent crime in the German penal code, and refused to extradite on this charge. Spain would have had to drop the rebellion charge, and have him extradited on the lesser misuse of public funds charge, which they weren't willing to do, so the extradition proceedings were aborted.

[1] https://www.bundesverfassungsgericht.de/SharedDocs/Entscheid...

locallost• 4 years ago

Caught my eye too... in theory possible if they had fled 2019, but only barely. You need 2 years of marriage and 3 years of residence in Germany to get it.

MrBuddyCasino• 4 years ago

„ Ten years ago today, a Theranos employee went to Reddit for help. He didn't name the company, but it was all basically right there in the post.

I wonder what secrets are being shared by anonymous accounts today that we will only understand in 2032.“

https://twitter.com/alanmcole/status/1510809555143438348?s=2...

jacquesm4• 4 years ago

Funny, with a name so close to uBeam you'd think someone would pick up on the joke. There is some precedent for German residents extradited to the United States, it all depends on how grave the crime is (fraud is explicitly mentioned) and on reciprocity, ie if the same crime were enacted with the countries reversed whether or not the extradition would happen as well.

Some information here:

https://se-legal.de/schlun-elseven-lawyers/lawyer-for-extrad...

Regardless: marrying to avoid extradition may work, but it may also work against you if it appears that the marriage was a sham to avoid extradition. Finally, the US is required to cooperate in order to give up your US citizenship, which for fugitives they are unlikely to do.

G3rn0ti• 4 years ago

Fundamentally, article 16 of the German constitution explicitly prohibits extraditions of German citizens. Of course, there are precedents in certain cases of severe crimes but the legal barriers are high.

jacquesm4• 4 years ago

But they're not, at least, not yet afaics and as I wrote above if the only reason you obtain that citizenship is to avoid prosecution in your home country you might just lose it again.

sjg007• 4 years ago

It's very odd. If they had not committed insurance fraud they could have done pretty well. Just saying what your microbiome is and then offering up probiotics, vitamins, supplements and food etc... with the standard disclaimer that this is not medical advice.

YC-backed uBiome is basically Theranos-lite

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