The recent developments with 23andMe.
If the narrative concluded there, it would be reminiscent of the ideal Silicon Valley fable that entices numerous aspirants to pursue their tech billionaire aspirations. However, 23andMe's recent setbacks hint at a somewhat different narrative, serving as a warning tale.
This week, all seven of the company's autonomous directors stepped down collectively, voicing their displeasure with the CEO's strategic planning and intentions to privatize 23andMe. The departures occur at a time when the company, which has never turned a profit, is reportedly burning through cash at such a rapid pace that it might exhaust its resources by the following year, as per The Wall Street Journal.
The CEO and co-founder, Anne Wojcicki, expressed dismay and astonishment over the directors' decision but remains resolute in her pursuit of taking the company private.
A 23andMe spokesperson chose not to comment beyond the company's public filings.
What transpired?
The last couple of years have been challenging for 23andMe. Summer of this year, in particular, has been particularly difficult for its influential CEO, who has been engaged in a power struggle with her board regarding the company's future. Meanwhile, Wojcicki's sister, former YouTube CEO Susan Wojcicki, sadly passed away last month at the age of 56.
23andMe went public in 2021, capitalizing on the SPAC trend of that era when multiple companies opted for "special purpose acquisition companies" — essentially mergers with shell companies that enabled quick public listings when investor enthusiasm was high.
The stock skyrocketed, temporarily valuing the company at $6 billion. Wojcicki (whose name is pronounced "wo-JIS-kee"), who owns 49% of the company, thus became a billionaire.
However, since then, 23andMe has been grappling with discovering a sustainable business model.
Their main consumer product, an at-home DNA testing kit, promises "personalized genetic insights" that allegedly pinpoint potential health risks such as your likelihood of developing Alzheimer's or certain cancers. The firm's investor page claims that 80% of customers consent to allow their data to be utilized for genetic research and drug development.
The kits gained celebrity endorsement, including a slot on Oprah's "Favorite Things" for about $100. For that price, you'd receive a test tube in the mail, fill it with saliva, send it back, and await your tailored report.
The issue lies in the fact that post your initial purchase and result analysis, there's...not much else to do.
23andMe has attempted to convert one-time customers into subscribers based on the chance of continued feedback and personalized wellness plans. However, as The Wall Street Journal reported in January, the company has failed to meet its own subscriber objectives.
While 23andMe's drug research (a notoriously expensive and usually futile enterprise) has yet to generate substantial revenue, the company is presently valued below $200 million — a staggering 97% reduction from its 2021 high. Layoffs took place throughout the company last year.
Wojcicki, 51 years old, seems to be expanding her revenue-generating horizons.
Last month, 23andMe discontinued its internal drug research division. Simultaneously, it announced that its telehealth platform, Lemonaid, would provide weekly semaglutide injections (the active component in Wegovy and Ozempic) through a new subscription service — joining a host of businesses capitalizing on the growing popularity of GLP-1 medications for weight loss.
In her memo to staff this week, Wojcicki reiterated her intentions to take 23andMe private, stating "we will be better positioned to accomplish our mission and goals outside of the temporary pressures of the public markets." She added that the company would promptly look for new board members, with Wojcicki being the sole member at present.
The collective resignation of 23andMe's autonomous directors this week is a direct result of their disapproval towards the CEO's strategic plans for privatization and financial mismanagement, as the company is reportedly burning through cash at an alarming rate and may exhaust its resources by the following year (The Wall Street Journal).
Despite the challenges and setbacks, CEO and co-founder Anne Wojcicki continues to pursue taking 23andMe private, citing the company's potential for better growth and achievement of its mission outside of public market pressures.
(Note: The second sentence is a slight modification and rephrasing to maintain coherence with the first sentence).
