The rise and fall of 23andMe: How DNA testing startup 23andMe went from $6 billion valuation to penny stock

23andMe, a genetic testing company that was once riding high with a valuation, is now fighting for its survival. Only a short while back, 23andMe stood out as one of Silicon Valley’s most promising startups. However, the DNA testing firm has since suffered a staggering 98% drop in valuation from its peak of $6 billion. The company is now plagued by privacy concerns and battles with hackers who managed to steal genetic data from its platform.

Facing challenges with its business model and ongoing worries about data privacy, 23andMe has seen its valuation plummet to nearly zero, putting it at risk of being delisted by Nasdaq. The company is currently going through tough times as it struggles to survive in this challenging environment.

Founded in 2006 by Linda Avey, Paul Cusenza, and Anne Wojcicki, 23andMe was initially a standout startup in Silicon Valley. It gained popularity by offering genetic test kits as gifts, with the vision of using genetic information to revolutionize healthcare. The company’s goal was to empower people to understand their health through accessible genetic tests.

Despite CEO Anne Wojcicki’s bold initiatives, 23andMe has struggled to turn a profit, putting its ambitious goals at risk. While the home DNA test for ancestry and health risks was initially successful, the challenge arose from the fact that customers only needed to take the test once. This forced 23andMe to continuously find new revenue streams, leading to unsuccessful attempts such as a subscription service and drug development.

As we reported late last year, 23andMe confirmed hackers stole ancestry data of 6.9 million users, including records of the “wealthiest people living in the US and Western Europe.” The company initially said that hackers managed to breach the personal data of around 0.1% of its customers, which amounts to roughly 14,000 individuals. But according to a report from TechCrunch, it turned out that a substantial number of “other users” fell victim to this data breach – a total of 6.9 million individuals were affected.

The company’s stock price has taken a nosedive, putting it in jeopardy of being delisted from NASDAQ. To salvage its situation, 23andMe is exploring options like splitting its consumer and drug development businesses.

“They have big ambitions, but not a lot of money. So after all these years, one thing that 23andMe has not been able to do is profit. The DNA tests don’t make money. And so, of the $1.4 billion or so that they’ve raised, through various rounds of venture capital and a SPAC deal they did in 2021, they’ve spent about 80% of it. And their stock today, the value of the company really is worth about 120, $130 million-ish, which is down from a peak of over 6 billion. After they did that SPAC. And look, last year they had to do three rounds of layoffs, sold a subsidiary. They’ve really had to, in some ways, dial back their ambitions. But in other ways, Anne Wojcicki, she is a driven person with big vision. And as much as she’s cut things, she’s also still pursuing significant parts of this vision that are going to be difficult to pull off,” The Wall Street Journal reporter Rolfe Winkler told host Alex Ossola in an interview.

In a Wall Street Journal video, reporter Rolfe Winkler and host Alex Ossola delve into 23andMe’s history, business model, challenges, and the missteps that brought it to this point. The discussion reflects on the uncertain future of 23andMe, acknowledging the hurdles it faces while recognizing its potential. Whether the company can reverse its fortunes and regain success remains uncertain, with only time holding the answer to 23andMe’s fate.