Transcript
David Brown (0:00)
Wondery subscribers can binge all episodes of Business Wars. 23andMe's Fatal Flaw early and ad free right now. Join Wondery plus in the Wondery app or on Apple Podcasts. It's March 2023, and Anne Wojcicki has won a rare honor. She's no longer merely the founder of the DNA testing company 23andMe. She's now a Barbie doll, too. Tomorrow is International Women's Day, and to mark the occasion, toy company Mattel is honoring seven female leaders in STEM with their own Barbie dolls, well, at least in their likeness. Among the featured women are the Bay Area Wojcicki sisters Susan, CEO of YouTube, Ann, CEO of DNA testing company 23andMe.
Ann Wojcicki (0:50)
And Janet, professor at UC San Francisco.
David Brown (0:54)
Wojcicki and her sister's transformation into doll form is part of an effort to encourage more girls to seek a career in science, tech or engineering. It's also great advertising for 23andMe. With a new Barbie movie starring Margot Robbie about to be released and 23andMe valued at $1.75 billion, things are rosy. It feels like 23andMe is delivering on the big promises Wuczki made to investors in its startup days. She said then it would help people discover the secrets of their DNA while creating a valuable pool of genetic data for medical research. And now that promise seems to have come true. But 13 years earlier, it looked so different. 23andMe lacked customers and was getting heat from regulators for selling DNA tests without approval. So how did Wojcicki go from that to to being so successful? She's now been made into a doll? And is this a transformation built on solid ground or a castle made from sand? This is worth pondering, because there's a fatal flaw lurking deep in 23andMe's business model, and it's set to bring the whole business tumbling.
Ann Wojcicki (2:17)
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David Brown (2:46)
Can AI predict the source of the next global pandemic? Or at least help convince a Hollywood studio to buy a new screenplay from Scott Z. Burns, the writer of Contagion, with special guest appearances from director Steven Soderbergh Laurence Fishburne and Jennifer Ely. Don't miss what Could Go Wrong? A deeply thoughtful, occasionally frightening and often hilarious Audible Original podcast that delves head and heart first into today's burning question. Can humankind and AI actually work hand in hand? Follow Scott and an ever expanding cast of AI generated partners including Lexter, an extraordinarily gifted sharp tongued AI as they co write and pitch Hollywood execs the Contagion sequel. Make sure to hear what Could Go Wrong right now on audible. Go to audible.com what could go Wrong? The next act begins with a prompt prom wondering. I'm David Brown and this is Business Wars. In the last episode, Ann Wucitzki started DNA testing business 23andMe in 2006 with investment from her then boyfriend, Google co founder Sergey Brin. But after four years in business, it found itself struggling to get customers and facing a federal government crackdown on the sale of DNA tests. Now it's early 2011 and the pressure's on. Wuyitzki needs to do something big, or 23andMe may end up as nothing more than spit at the bottom of a test tube. This is episode two, Defying Gravity. It's March 2011, and in Los Altos, California, Wick is opening her latest business, a kid friendly cafe called Bumble. She's decided her hometown in Silicon Valley is short on the amenities she wants as a new parent, so she's changing that. Bumble's just the start. In the next few years, she'll also open a craft store, an arcade, and an indoor play space. While the community's spirit is laudable, there's a warning sign here. As an entrepreneur, your focus is one of your most valuable assets. To run your business, you have to be obsessional about the details. Wuccicki is now juggling five other ventures besides 23andMe and is investing in real estate. Her roving, eager mind has always been one of her most notable traits. But is she getting distracted right now? 23andMe is in trouble. Five years and several investment rounds on from launch, it's still short on customers. Not many people are willing to pay $400 to dribble into a tube to learn about their personal genetics. At the same time, the FDA is objecting to the company, suggesting its tests are useful for health care, which threatens to eliminate a big chunk of its potential audience. And in medical journals, scientists are criticizing consumer gene tests for misleading consumers. So outside of the cheerful interior of Bumble, clouds are gathering. But Wojcick's always working at something. And now she's working on a new plan to turn 23andMe's fortunes around. In December 2012, Wuccitski secures another round of investment. It's 23andMe's biggest yet. $50 million. That massive cash injection is going to allow 23andMe to make aggressive plays to get sales. Moving. Price has long been a major deterrent for potential customers. So 23andMe is going to use investors money to drop the price of its tests to just $99. A price cut like that means a significant drop in revenue. But there is method in this madness, because Wojcicki now believes that the big money isn't in selling tests. It's in packaging the results from those tests and selling the anonymized data to researchers. And the more people's DNA it has to sell on, the more valuable that data becomes. So by selling its kits at bargain prices to millions of people, 23andMe will build a DNA database and hopefully generate big bucks. But it's not just cutting prices. It's also funneling investor dollars into advertising.
