The Rise, Fall, and Resurrection of 23andMe
AI created, human reviewed.
The genetic testing company 23andMe has been through a rollercoaster journey that reads like a Silicon Valley cautionary tale. In a recent episode of This Week in Tech, host Leo Laporte and guests Jason Hiner, Jason Snell, and Harry McCracken dissected the company's dramatic bankruptcy and surprising comeback, offering insights that every tech enthusiast should hear.
Silicon Valley Royalty Meets Business Reality
23andMe's story is deeply intertwined with Silicon Valley's most prominent families. Founded by Anne Wojcicki, sister to the late Susan Wojcicki who ran YouTube, the company has tech royalty in its DNA. Their mother famously rented her garage to Sergey Brin and Larry Page when they were launching Google. Yet despite these connections and what seemed like a promising business model, 23andMe struggled from the start.
The company's board eventually quit due to dissatisfaction with Wojcicki's governance, leading to bankruptcy proceedings. In a twist that surprised many, biotech giant Regeneron initially emerged as the buyer, offering $256 million specifically for the genetic data of hundreds of millions of customers. However, Wojcicki wasn't ready to give up—she returned with a nonprofit called TTAM Research Institute and outbid Regeneron with a $305 million offer.
The Fundamental Business Problem: Then What?
The TWIT panel identified a core issue that plagued 23andMe from its inception: the lack of ongoing value after the initial test. As Harry McCracken noted, "none of these companies have figured out how to help people once they've done this test." Leo Laporte captured the sentiment perfectly: "You're 5% Ashkenazi Jew and 3% indigenous Indian. Now what?"
Jason Snell highlighted how successful competitors like Ancestry.com solved this problem by building comprehensive ecosystems. While 23andMe focused solely on genetic testing, Ancestry created ongoing value through family tree building, archive searching, and community features that keep users engaged—and paying monthly fees.
The genealogy aspect provided some value, with McCracken sharing his experience with Family Tree DNA's McCracken group, where he could connect with distant relatives. However, 23andMe's community features never reached critical mass, leaving users with one-time results and little reason to return.
The Data Dilemma: Privacy vs. Progress
The discussion revealed a curious tension at the heart of genetic testing companies. With 14 million customers, 23andMe possessed incredibly valuable aggregate data: the combination of genetic information (genotype) and user-submitted health questionnaires (phenotype). This data goldmine explains why companies like Regeneron were willing to pay hundreds of millions for it.
Jason Hiner emphasized the medical potential: "Having that much data on that many people is incredibly valuable... there's likely a treasure trove of information that's medically valuable, that could make potential medical breakthroughs."
However, this valuable asset has become a legal battlefield. Twenty-seven states and Washington D.C. have sued, arguing that customers never consented to have their genetic data sold. Oregon's Attorney General Dan Rayfield put it bluntly: "People did not submit their personal data to 23andMe thinking their genetic blueprint would later be sold off to the highest bidder."
The Regulatory Wild Card
Hiner offered an intriguing theory about timing: Wojcicki's willingness to invest $305 million might reflect expectations about changing regulatory environments. The previous administration's strict policies made acquisitions nearly impossible for genomics companies, potentially suppressing valuations and limiting exit strategies. With regulatory changes possible, 23andMe's data could become significantly more valuable.
The Pet Rock Phenomenon
Leo Laporte's characterization of genetic testing as "the pet rock of its time" resonated throughout the discussion. The panel agreed that genetic testing felt like a cultural moment—everyone was doing it about 10 years ago, hoping to learn something meaningful about themselves. Jason Snell shared how the science delivered interesting ancestry insights but fell short of life-changing revelations.
The limitations became clear when Laporte described his experience with Nebula Genomics, which provided his complete genome for ten times the cost. Even with gigabytes of genetic data, the "now what?" problem persisted.
Who Owns Your Genes?
The legal implications extend far beyond 23andMe. As the New York Times noted, this case could help establish not just consent requirements, but fundamental questions about genetic data ownership. Do you hold intellectual property rights to your genetic code? The answer could reshape the entire industry.
Jason Hiner pointed out how this intersects with broader tech trends: "We're starting to give more and more of who we are to the tech companies... with wearables and biometrics." The 23andMe case could set precedents for how personal biological data is handled across the tech ecosystem.
Looking Forward: Lessons for the Industry
The 23andMe saga offers several lessons for tech companies:
- Build ongoing value: One-time products in the digital age need recurring engagement to survive
- Clear data policies: Transparency about data use prevents legal challenges and user backlash
- Choose your business model: Companies need clarity about whether they're consumer-focused or B2B data businesses
- Consider regulatory environments: Policy changes can dramatically affect company valuations and exit strategies
Despite the business complexities, the panel acknowledged genetic testing's genuine human impact. Harry McCracken shared stories of adoptees finding biological families, while Jason Snell traced his family name back to Heinrich Schnell, who emigrated from Germany in 1720. These personal connections explain why millions of people submitted their DNA despite the uncertain business model.
The chat revealed that 15% of 23andMe customers have already deleted their data, while others like Leo Laporte are waiting to see how the situation develops. This split reflects broader uncertainty about genetic privacy in the digital age.
