Zero is Cold

I have been long predicting the flying unicorns crash and fall for quite some time. This I suspect is the first of many.

The heralded Theranos with its black turtleneck clad blonde Hitchcock siren has now a zero valuation according to Forbes.

Forbes just cut its estimate of Theranos CEO Elizabeth Holmes’ net worth from $4.5 billion to zero

Oliver Staley Quartz June 1, 2016

Not long ago, Elizabeth Holmes was regarded as one of the US’s most successful female entrepreneurs, with a net worth of $4.5 billion, Forbes estimated.

Today Forbes cut that figure to zero.

Holmes’s wealth is entirely wrapped up in her 50% stake in Theranos, the medical testing start-up she founded in 2003. The privately-held company in Palo Alto became a standout for its bold attempts to revolutionize the diagnostic industry—it claimed it could test for 240 diseases from a few drops of blood—and for A-listers like Henry Kissinger and Bill Frist on its advisory board.

Last year, Forbes pegged its value at $9 billion, based on the sale of stakes to investors. Since that lofty estimate, Theranos has been battered by bad news, starting with reports in the Wall Street Journal in October that its tests were inaccurate. That triggered an inquiry from the federal Centers for Medicare and Medicaid Services, which proposed banning Holmes from the industry.

Forbes went back to its slide rule and, after talking to venture capitalists and industry experts, recalculated Theranos’ value at $900 million, based on its intellectual property and money it has already raised. “At such a low valuation, Holmes’s stake is essentially worth nothing,” Matt Herper writes.

That’s because Theranos’s other investors own preferred shares, and since Holmes owns common shares, they would get paid first if the company were forced to liquidate.

Theranos didn’t provide a comment to Forbes and has yet to respond to an email from Quartz sent before the start of business hours in California today.

I have been looking at economic trends and as this is a major election year and coupled with European, Middle East and China in some type of crisis be it economic or social, I cannot think we are entering a period of recession. There are big building boons in major cities and Seattle and Portland are now the highest cost of housing prices nationally. Irony that we are facing layoffs at Boeing, Microsoft and Nordstrom which crosses all economic sectors. And we have funding problems in schools across the nation with respective State Supreme Courts demanding adequate funding for K-12 schools, which are also bursting at the seams, as this story from Kansas elaborates. 

There are other indicators that we are heading to a type of recession regardless of who wins the crown, whoops I mean the White House, as either of the two presumptive candidates do have a regal disposition.

Eduardo Porter of The New York Times has an excellent interview with some of the current to past players with regards to ways to mitigate a prospective recession.

And businesses are now looking outside the conventional box to fund their business model and many of them are in fact in manufacturing and production versus online app media the love child of VC.

Jobs are created by people creating real products for real people to buy, to sell, to eat, to live and to use. As our economy is now largely a service sector economy we need to evaluate how people earn, what they earn and the ratio of income it costs to live in our increasingly large urban sectors that are driving population and migration.

But why when we have pretty girls selling us bullshit? It makes us feel less cold.

Elizabeth Holmes, Founder of Theranos, Falls From Highest Perch Off Forbes List

By REED ABELSON THE NEW YORK TIMES JUNE 1, 2016

Elizabeth Holmes, the founder of the blood testing company Theranos, lost her place on Forbes’s list of America’s richest self-made women. Credit Kimberly White/Getty Images for Breakthrough Prize

Elizabeth Holmes, the founder of the blood testing company Theranos, was a rare breed, something more rare than even the Silicon Valley unicorn she created: a self-made female billionaire. Forbes, the business publication that has made a franchise of cataloging the rich, had put Ms. Holmes on the top of its list last year of America’s richest self-made women.

The magazine’s new estimated tally of her wealth? It went from $4.5 billion to $0.

Ms. Holmes’s unusual status, as a young woman who created and controlled a company seemingly valued at about $9 billion, captivated the media: She graced countless magazine covers, including T: The New York Times Style Magazine. Theranos, she said, would revolutionize the lab industry by offering blood tests from a single finger prick at a fraction of the cost of traditional testing.

But over the last year, Theranos became the subject of a series of hard-hitting Wall Street Journal articles and intense regulatory scrutiny from an array of federal agencies.

The media is now mesmerized by Ms. Holmes’s fall. Truth be told, the half of the $9 billion valuation ascribed to Theranos and previously listed as Ms. Holmes’s wealth was nothing more than an estimate based on investors’ best guesses. Taking into account all the controversy and uncertainty surrounding the value of the company’s top-secret technology, Forbes is now guessing that the company is worth more like $800 million. While Ms. Holmes still owns at least half of the company, much of that value would be tied up with outside investors.

But, as an article in Forbes on Wednesday about Ms. Holmes is quick to acknowledge, no one really knows. Theranos has not let anyone really kick the tires. Ms. Holmes, 32, who has repeatedly vowed to reveal all, is now expected to present some data to the public in August at the annual meeting of the AACC, formerly the American Association for Clinical Chemistry. Even then, it may be impossible to come up with a better estimate of what her company is worth.

Not surprisingly, Theranos refused to shed any light on the matter, except to dispute Forbes’s analysis.

“As a privately held company, we declined to share confidential information with Forbes,” Brooke Buchanan, a company spokeswoman, said in an emailed statement. “As a result, the article was based exclusively on speculation and press reports.”