Lila McClellan (4:23)

Thank you for having me.

David Brown (4:25)

Tell us a little bit about how you got into covering leadership for Fortune.

Lila McClellan (4:29)

So I actually used to be a workplace reporter at Quartz and I ended up moving over to Fortune to cover leadership, first covering boards and now just covering leadership more generally. So kind of like flipping my perspective from the employee's perspective to the management's perspective.

David Brown (4:47)

What have you found to be most different about this beat?

Lila McClellan (4:50)

Geez. Well, there's so many different personalities and then there's all of these different sort of power structures, which I think is very relevant to this story. And I've always been able to understand, like, the employee's point of view of a story. But it's been new for me to sort of try to get inside a CEO's head and see someone who's like grappling with big issues, big decisions, trying to do the right thing, trying to keep people employed. It's just not as black and white as it might seem from the outside.

David Brown (5:19)

Yeah, I'm sure that there are a lot of entrepreneurs listening and thinking, nodding their heads. You don't say. But that's just it, because a lot of people look at some of these big corporate entities. You know, you talk about something like 23andMe, and it sort of has this faceless quality. But some of the characters of the people who are actually pulling the levers, that's where this becomes really, really fascinating. And there are few as fascinating a figure as someone like Ann Wuccitzki. Right.

Lila McClellan (5:49)

I would 100% agree. This feels like it has movie potential.

David Brown (5:54)

Yeah, I'll say. Why do you say that, though? What is it about Ann Wucci that sort of fascinates you?

Lila McClellan (6:00)

Well, I think this is the right person at the right time to kind of make this big company happen. And she's a woman working in Silicon Valley. She has a lot of charisma and she has a lot of sort of tailwinds. Right. Things that are going to make 23andMe great. But something goes wrong. And so what goes wrong with this person who really was lauded as a kind of hero? I think that's what's so interesting and so human.

David Brown (6:29)

Does she seem like, based on what you've been able to learn about her, the kind of person who would be a sort of Silicon Valley superstar? You know, you think about some of those big, you know, luminaries in Silicon Valley. Does she fit in or how does she fit in, if so?

Lila McClellan (6:44)

Well, she does fit in. I mean, she grew up on Stanford campus. Her father was a particle physicist. So she grew up from the beginning being surrounded by these brilliant minds. Right. And people who are kind of used to debate and out there to kind of change the world and very, very focused on technology, especially by the time she's like in her 20s, let's say, and then she herself just has that it factor that's hard to explain. But she keeps audiences captivated, and you want her to succeed. And she can really get people to buy into her vision, which I think is something that Silicon Valley leaders are very good at doing.

David Brown (7:24)

Yeah, that sort of star power, charisma kind of thing that you often see. But what about business savvy? How much business savvy?

Lila McClellan (7:32)

Well, I think that's a good question, because she did not run a company before 23andMe. She had been an analyst, and she had actually covered the health care industry and health companies. So she knew about that. But she was not an operator when 23andMe was launched.

David Brown (7:49)

And yet, according to your profile, she was running small businesses from a very early age, wasn't she?

Lila McClellan (7:58)

Yeah. There is a famous story about her taking lemons from a neighbor's tree with her sister and selling lemonade and starting a business when she needed to go on a ski trip that she couldn't afford. So she had that streak from a young age.

David Brown (8:15)

I'm fascinated by how we fit in. The stealing the lemons from a neighbor's tree. I'm just sort of wondering how that all folds in. But more salient to the story of her rise in this field, how did she meet Sergey Brin?

Lila McClellan (8:31)

So Susan Wojcicki, Ann Wojcicki's sister, lived in Palo Alto, and she actually rented out her garage to Sergey Brin and Larry Page when they were just starting Google. So it's like that, you know, iconic place in tech history. And so Anne was hanging around the house, basically visiting her sister, and got to meet both Bryn and Larry Page.

David Brown (8:57)

So we've got the garage, we've got Silicon Valley, we've got Stanford. What about the role of Bryn? How big of a role did he play in her transition from healthcare analyst to founder of a company?

Lila McClellan (9:10)

So what I learned when I was reporting on this is that Brin was initially approached by other founders, a woman named Linda Avey. And there was a third founder who had a more kind of business background, but not a science and tech background. And Linda Avey wanted to pitch this idea she had for what became 23andMe to Bryn. And he was the one who thought that Ann Wojcicki, at that time, his wife, would be the right person to run 23andMe. He saw a good marriage between Av and Wojcicki. And so Avi, she actually talked about this on a podcast fairly recently. She had a meeting with Bryn, and she said that Ann Wojcicki came, like, bebopping in, even though she really hadn't been invited. And for her, it was kind of unnerving because, you know, everyone on her side in the room would have had, you know, NDA signed. It came out of nowhere. It wasn't a normal occurrence.

David Brown (10:13)

So how does Wuccitzki's personality show up in this product? Because it does seem like, well, with her larger than life size, zing factor X factor, whatever you want to call that, she becomes rather instrumental in the launch and the continuity of 23andMe.

Lila McClellan (10:30)

Well, the ethos of the product really becomes about the mission. She doesn't really see the company as just a retail product or just another tech company in Silicon Valley. She sees this as driving toward a mission where people are going to be able to use their genetic information when they're being treated, you know, when they go to the doctor, when they make lifestyle decisions. So I think that becomes apparent in all of the kind of material and marketing around the company. But then her sort of celebrity side is also what drives a lot of press coverage. We have, like, celebrity spit parties with, you know, Hollywood names, other tech names. So it really helps to drive awareness about this company.

David Brown (11:15)

And Oprah sort of embraces it, too, doesn't she, at some point?

Lila McClellan (11:18)

That's right. Oprah puts it on one of her favorite things lists.

David Brown (11:21)

And I understand that a lot of folks then thought, well, if Oprah thinks it's good, then this has gotta be the it thing. You mentioned earlier, Linda Avey, and I want to ask more about her. She was a genetics expert who first proposed this whole spit test idea. But Linda left the company pretty early to pursue Alzheimer's research, or at least that was the official tale. What actually happened from what you learned?

Lila McClellan (11:49)

What actually happened was that Ann Wojcicki in 2009, went to the board and said that she wanted to run the company alone, that she wanted Avi out. Avi has said that it wasn't something that she chose at all. And she also called it, you know, devastating. Like, this was her brilliant aha moment, and it was completely taken away from her. To be fair, Wojcicki did tell me that there were other people at the company who also thought that Linda should leave. So I think there's probably more to that story still. It's only come out in the past year.

David Brown (12:23)

Well, when Avi left, how was the company doing? I mean, their other co founder, Paul Cosenza, had already left a year earlier. Do you think Wojcicki was ready to take sole control?

Lila McClellan (12:34)

I think that all depends on how you measure it. At this point in the game, they are not so focused on turning a profit as much as they are focused on scaling and getting those customers, getting that data. And then, you know, it's all part of the plan to use that data later. So in that sense, she was prepared because the company was undeniably successful at attracting customers. I think, you know, down the road, the questions come in about business decisions and timing decisions and whether or not the person who started the company and created all of the hype and excitement around it is the right person to run it as a mature firm.

David Brown (13:15)

Hey, it's time for a quick break. My guest is Lila McClellan. She's senior writer at Fortune, who's been covering this story. And when we come back, we'll unpack the decisions that led Wucci's board to resign en masse. Stay with us.

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David Brown (14:51)

Hi, welcome back to Business Wars. Our guest is Lila McClellan, a senior writer at Fortune magazine, whose profile on 23andMe founder Anne Wuccitzki late last year shared the inside scoop on how the company began to unravel. Lila, talk to us more about Wu Chicki's leadership style and what you heard from employees. I know you talked to several of them. Seemed like she favored control.

Lila McClellan (15:14)

That's right. First of all, I should say it wasn't easy to get people to talk about this because Ann had a huge following and she is a popular person in Silicon Valley for all of her wonderful traits. She was also controlling or too sort of micromanaging as a CEO and that she wanted to make decisions and that would slow everything down. And so senior leaders felt like they weren't empowered to run things the way that they saw fit. You know, one person said to me that the North Star at 23andMe was is Ann happy?

David Brown (15:51)

Oh boy. Do you think that that actually had an effect on the company's progress or its success ultimately?

Lila McClellan (15:58)

Well, in the sense that you have to wonder what kind of conversations were happening around this major decision to go into drug development, which is pharmaceuticals. Yeah, right. In 2015. At the time, it didn't seem like a smart decision. She has talked about people warning her against this just because it costs as you know, it costs so much money and there's just no guarantee that you're going to walk away with a product. Could take years. And so you have to wonder if there had been a More collaborative CEO, if some of that advice would have been, like, heeded and if the company would have managed its spending differently, you know, and.

David Brown (16:37)

And you can even extend that question to what would eventually happen with the company. I mean, going to 2022, the. The company's stock goes into free fall and never really recovers. And I suppose you have to ask, could part of that be tied back to that question that employees were always asking, is Ann happy? Right. Do you think there's a link to Wojcicki's decision making?

Lila McClellan (17:01)

I think so. Because, you know, I mean, that you're not going to always get the best outcome if that's actually the way it was inside. The right decision for the business might not make Ann happy. So we don't know how many little decisions or big decisions were made to please her rather than move the company in the right direction.

David Brown (17:19)

But from what I understand, you actually wanted to get some answers on this, you know, and you went to check out the Reddit forums where individual shareholders were talking about Wucci's leadership style, right?

Lila McClellan (17:31)

That's right. And, you know, on Reddit, people don't hold back, right? They're like, she is my way or the highway. And that she was holding the company back. Back was the sentiment at the time. And it gets worse from there.

David Brown (17:44)

There was a real breaking point that came around 2024, when the board ultimately says, on behalf of the shareholders, essentially, we can't do this, and everyone on the board resigned. Could you say more about why that happened? What. What drove the board to that point?

Lila McClellan (18:00)

There's a lot of things happening in 2024, but in the spring of that year, I think that's when Ann Wojcicki first started talking about taking the company private because it was clear that it was, you know, running out of money, and she makes an offer by the summer, but it's not detailed enough. There's no sense of how she would finance the deal and the premium itself, it's not that attractive to the board. And so they don't sort of outright say no, but they do say, hey, we need a lot more from you. We need these details. And they give her a deadline for that. She does not deliver. Like, according to the board statement, they don't get what they need from her to. To say yes to the deal. And she's already said that she will not agree selling the company to a third party. And given that she was a controlling shareholder, that makes it really hard for the board to do much of anything. They cannot. They don't have the voting power to fire her, which probably would have happened under most circumstances.

David Brown (18:58)

What does this mean, though, for the company writ large and for Wuczycki?

Lila McClellan (19:02)

Well, at this point, you know, the company is running out of money. They, they shut down their drug development business and investors, of course, are panicking. And it's this absolutely shocking moment when you see seven board members and all people who are very serious Silicon Valley figures walk away like that. That suggests quite a lot of friction and frustration to reach that point.

David Brown (19:30)

It also suggests to, I think, a lot of outside observers, and correct me if I'm wrong here, but it would suggest, I think, to me that they had lost confidence now that all of these movers and shakers for whom there was a considerable degree of respect, that's why they're on the board. Right. That they have now lost confidence in this company.

Lila McClellan (19:50)

Right. And they actually say in their memo about this that they do believe in the mission and what the company could be, but they can't see a path forward. Right. When you hear employees talking about someone who's running in what some people call founders mode, running a company in that mode and not really allowing senior leaders to make decisions, you can kind of see how that may have been what was happening on the board. I mean, clearly it was one person against seven.

David Brown (20:18)

You have just used a magic phrase, founder mode. Okay. This is something that I think a lot of folks in Silicon Valley have talked about. Could you say more about what that is? What is founder mode? And I'm almost wondering, considering how many lions have been made of some of these, you know, men in Silicon Valley, if that founder mode thing might have a little bit of a double standard ring to it.

Lila McClellan (20:45)

I think for a while there it was one of those terms that people like, didn't want to hear anymore because it became. It sort of took over. Everybody was talking about founder mode. And I agree that there is a double standard here. So founder mode just means sort of like not letting go of your baby, right, As a CEO and getting into the weeds on every decision and not allowing people to run the company.

David Brown (21:11)

For a lot of businesses, like you think about Steve Jobs at Apple, right? He leaves and he comes back. And that's seen as the reason for Apple's return to prominence, that were it not for the founder, you know, landing once again. And yet Wojcicki seems to be taking a lot of heat personally after having been a co founder of this company.

Lila McClellan (21:33)

Right. And so you do have to kind of wonder if there's some sexism here. And, you know, even as a reporter working on this story, it was something I wanted to check in with myself about because we lionize people who act this way, who have a large ego and do big things right in this founder mode. And that's what she did. But when women behave that way, but it's just not seen as acceptable. It's like it's coming on too strong. And there's a double standard around that.

David Brown (22:01)

Recently, 23andMe filed for bankruptcy. And that's. It's been in the news a lot in recent months. And I'm curious, what do you think of all of the things that we've talked about? Here was the straw that broke the camel's back, if you will. You know, we saw the sinking stock prices. We saw the board leave en masse. We saw the drug discovery wing not quite deliver on all that was promised. Indeed, a lot of investors would say a lot of what was promised was not delivered. And then of course, there's the Wuczycki factor, the person, the leadership, maybe the leadership style. Was there any one thing?

Lila McClellan (22:41)

I don't know if you can put it on any one thing. I do think that you need to look at the leadership style, because we celebrate CEOs who make things work. So when something collapses this way, yes, there were environmental factors, but ultimately it is the leader who, you know, has to take responsibility.

David Brown (23:00)

Well, once the company files for chapter 11, something really interesting happens. Wojcicki, who's been hanging on to this company for dear life, it seems, decides to resign. What's the strategy there?

Lila McClellan (23:12)

We now know that she probably was never really planning to walk away fully because after the, you know, what happened was there was a bankruptcy. Then Regeneron, a huge pharmaceutical company, purchased the company, and it looked like a done deal. And then weeks later, Ann Wojcicki is back and she has a new research group that she's formed called ttam. And she has issues with the way the bankruptcy proceedings went. And she convinces the court to reopen the whole process and she makes a bid. She comes in higher, 305 million, much higher than the offers that she had made to buy the company back. Even between the board resigning and the bankruptcy, she had made a couple of offers, so she returned that she did not want to let this go.

David Brown (24:04)

I know there are other companies that have tried to be 23andMe. Ancestry got in the game a while back, right. And then you've got some new startups like Nucleus. What's a scene like these days? And where does it seem to be going?

Lila McClellan (24:17)

There isn't a sort of dominant player the way 23andMe was. Nucleus would like to be that player. And it pitches itself as the Netflix to 23andMe's blockbuster and also says that it has newer technology and more. You know, it's sequencing full genomes, whereas 23andMe is now, you know, using older technology. But there's a lot of sort of new companies that are early stage diagnostic companies. And it seems like we are on the precipice of something earth shaking. It seems that we're going to get there. But right now there are so many questions about whether or not these kinds of tests are useful, if we're ready for the information and if the science is worth it, you know, in terms of investments. So I think we're at a really interesting stage.

David Brown (25:08)

Lila McClellan is a senior writer at Fortune, where she covers leadership, CEOs and board shakeups. You can check out her reporting@forte.com Lila, thanks so much for joining us on Business Wars. This has been really fascinating.

Lila McClellan (25:21)

That was such a pleasure. Thank you so much.

Alexi Horowitz Ghazi (25:23)

Coming up, a number of attorneys general around the country have urged 23andMe's customers to delete their data immediately just to.

David Brown (25:30)

Be safe, how 23andMe's bankruptcy led to a run on the gene bank and whether the new owner will make good on its promise to honor the old privacy policy. Stick around. Hi, Zoe Saldana. Welcome to T Mobile. Here's your new iPhone 16 Pro on us.

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Alexi Horowitz Ghazi (28:09)

Thank you for having me.

David Brown (28:11)

Tell us about your Aunt Vovi.

Alexi Horowitz Ghazi (28:13)

Okay, so Aunt Vovi is one of my closest family members and friends, and back in 2017 I kind of became aware of 23andMe intimately because she decided that she wanted to go kind of spelunking in our shared genome for hot ancestral goss. And at the time I was a little bit nervous about that. There had been all these high profile news cases about law enforcement using these genetic databases in new and novel ways, and I just wasn't sure what it actually meant to have our kind of genes tied up in this business model.

David Brown (28:52)

You talk about that genetic spelunking as you described it, which I thought was rather interesting. Is she really into like family history and that sort of thing? Is that what sort of inspired her? I'm just wondering why she would want to do something like this, given that people have been raising concerns in the media for some time about, you know, the sensitivity of this genetic information.

Alexi Horowitz Ghazi (29:13)

Sure. Well, I think Vovi got into this when it was kind of all the rage. Oprah and Ellen and all sorts of people in public were talking about how they discovered things about their family through 23andMe. It kind of went through this golden moment where everybody seemed to be doing it. It was kind of like the stocking stuffer of the season. And my aunt Vovi had taken all these different anthropology classes. She's kind of a lifelong learner. She'd been thinking about the story of human migration, and I think she just wanted to understand how she and how the rest of our family kind of fit into this broader history of how humanity spread out around the world. And she knew a lot about our family, going back a couple hundred years, that our family had been living in Afghanistan and in that region. But she was curious about whether she might be able to find kind of interesting stories of other trajectories from other parts of the world that had made their way into our genome. Initially, Vovi got a report from 23andMe that had some sort of, like, vague, but interesting, exciting, potential genetic origins. Some strains of the. Of the family genome we'd never known about it said that part of her genome showed some relationship to Yakutsk up in Siberia, and also a little bit of Mongolian DNA. And also, very mysteriously, a potential strain from Great Britain somewhere that seemed to have entered the genome in the 1900s, which didn't make a lot of sense, but was kind of an exciting, you know, subplot.

David Brown (30:46)

And so after the preliminary report that 23andMe sent her by email, she got her updated results, and those did not match that initial report. Here's a clip of her reaction.

Lila McClellan (30:56)

The British interloper, all the Mongolian markets, you know, all of those disappeared. And there was actually no indiscretions. Yeah, I had been hoping to for many indiscretions. Maybe I was hoping for a little more surprise.

David Brown (31:15)

Oh, that's epic. So I say epic. Epic letdown. Aside from being almost British, there's none of that, huh?

Alexi Horowitz Ghazi (31:24)

No, no. Like, Vovi had been looking for sort of like bridgerton levels of hot gossip in our genome. And ultimately, she basically found out she had known what she was all along, which didn't include any of these fun subplots.

David Brown (31:36)

Well, still, that sort of reif the family history a bit. But I'm curious, did you or your family have any concerns at the Time. Maybe Aunt Vovi, you shouldn't do this. Anyone ever warn her?

Alexi Horowitz Ghazi (31:51)

No. I always found it kind of ironic. I mean, my Aunt Vovi is one of the more data conscious people, privacy conscious people. I know when she's navigating the Internet, she doesn't really put her credit card numbers out there, all that sort of stuff. So I thought it was kind of an interesting exception that she made for 23andMe. She just really wanted to. To know about this and put this kind of sensitive piece of information into this company's database. I definitely had some concerns at the time that she did it, that we just didn't know where this data would end up or how it was being safeguarded. And so ultimately, I think she was a little bit surprised and upset to find out what ended up happening with 23andMe.

David Brown (32:30)

But this is the thing. I mean, at least it's part of the thing. Because when you are trying to figure out how exposed am I, how exposed is Vovi? Right. It's hard to know what the consequences of all this are really gonna be. And this becomes all the more acute with the big announcement recently that 23andMe is filing for bankruptcy. Going up for sale. Did you have a chance to talk to Vovie at the time about any of that?

Alexi Horowitz Ghazi (32:57)

I did. I mean, when I first saw the news that 23andMe had filed for bankruptcy, I immediately thought, I wonder what Vovee thinks about this. I wonder what's gonn happened to our kind of shared genetic data that's in this pool. And I talked to her. She had heard about it vaguely. She heard that there was this kind of run on the gene bank as everybody was rushing to delete their data from 23andMe. That was one of the stipulations in their privacy policy was that people could get out if and when they wanted to. But she still had a lot of questions about how this process worked and how data like this would be handled in the bankruptcy process.

David Brown (33:34)

Wait a minute. You said stipulated in the data privacy policy. Is that the thing that sort of, the long thing that most people scroll through, they don't even bother to read? I mean, are we talking about the same thing?

Alexi Horowitz Ghazi (33:45)

That's right. This is the kind of mile long terms and conditions agreement that people maybe skim through. It's kind of part of everyday life on the Internet these days.

David Brown (33:55)

Had Vovie read that? How did she know that? I mean, or did she know about what might be at stake?

Alexi Horowitz Ghazi (34:04)

I have to say, Vovie, like, I think most of us basically skimmed through 23andMe's privacy policy. I mean, this is just kind of the water we swim in these days. We kind of skim through it and click accept and move on with our lives until it turns out that there's something at stake.

David Brown (34:21)

Well, you know, who can blame her? I mean, we've all been there, but what are folks missing? Have you had a chance to go through all of those, what is it, 250 pages and then hit accept? I mean, what is it that folks actually agreed to?

Alexi Horowitz Ghazi (34:35)

Well, you know, 23andMe's privacy policy outlines kind of what the company is allowed to do with the data they're collecting. The important one here is that 23andMe customers retain the right to request the deletion of their data from the Data set. And 23andMe agrees to, you know, destroy the initial vial of saliva that the company uses to extract people's genetic information. But on the other side, 23andMe and their privacy agreement reserves the right to sell this data to third parties. And specifically in this case, it allows them to sell this data in bankruptcy.

David Brown (35:11)

But the thing about it is, once it goes to a third party, if it's sold in bankruptcy, you are no longer covered by the old agreement. Are you?

Alexi Horowitz Ghazi (35:20)

One of the kind of standard issue agreements that is being applied to 23andMe's bankruptcy case is the idea that a new company, in order to qualify, to be able to bid and to be able to buy these data assets, they have to uphold the previous privacy policy agreements that customers signed when they entered into the agreement with the, with the first company. The problem is that there isn't anything strictly stopping them from changing the policy going forward. So at some point in the future, whoever ends up buying this data could potentially change their privacy policy. Now, they'll likely have to offer their customers either the ability to opt in or opt out. But these agreements are not set in stone like they can change. And we all know what it's like to get an email from a random company saying that they've changed their terms of service. I think a lot of us get those and kind of ignore them just like we did the original agreement.

David Brown (36:13)

You know, there's this moment where you've talked about all of this with your aunt and she decides, okay, I'm gonna ask it to delete my data.

Lila McClellan (36:20)

Why are you requesting to delete your data?

Alexi Horowitz Ghazi (36:23)

What would you put in there?

David Brown (36:24)

I don't trust you anymore.

Alexi Horowitz Ghazi (36:27)

Sorry, 23andMe.

Lila McClellan (36:28)

Yeah, you messed up.

David Brown (36:29)

Okay, you gotta tell us what's happening here? Were you sitting beside her at the computer? How did this work?

Alexi Horowitz Ghazi (36:35)

Well, we were doing this remotely, so it felt a little bit like a high tech family, you know, tech support port sort of situation. We were on video chat, so it did feel like we were there together doing it. I asked her to hold my virtual hand as we did it. I think by the time Vobi decided that she wanted to delete her data from 23andMe's database, we'd gone through what might happen to her data as it passed into new hands. And I've talked to privacy experts about this decision, about whether or not customers should delete their data or not. A number of attorneys general around the country have urged 23 and these customers to delete their data immediately, just to be safe. And I think for my Aunt Vovi, it was like she learned what she wanted to learn out of this consumer genetics product. She learned the kind of backstory of her genetic origins. And she hadn't signed into the site for a couple years. So this was kind of just a nebulous risk in her mind by the time she decided to delete it.

David Brown (37:35)

As I understand it, in bankruptcy proceedings, it's common to appoint somebody called a privacy ombudsman who sort of works on behalf of consumers. Does 23andMe have one of these? Could you say more about what that is and is that person more performative or really effective?

Alexi Horowitz Ghazi (37:54)

So 23andMe is not the first time that a company has gone bankrupt and in its bankruptcy sale, tried to sell its customers private data that they collected as part of the service. You know, about 20 years ago, Congress tried to respond to this problem. The bankruptcy courts are not, not staffed with privacy experts. They don't always understand the implications of what might happen if a company transfers this private data. And so Congress created a new position within the bankruptcy system called the Consumer Privacy Ombudsman. And the idea is that this is a kind of specialist in privacy, in consumer data privacy law, who can be brought in by the court who can look through the types of information that are going to be sold and can cross reference that over the different types of, you know, national and state privacy laws and can figure out the types of harm that customers might face if this data is sold and figure out ways to kind of mitigate that. They do a kind of crash course on deadline report that they then submit to the bankruptcy court and the bankruptcy judge can decide whether or not to take them up on their recommendations. Usually, most of the parties in a bankruptcy are not incentivized to want a consumer privacy ombudsman. The ombudsman is paid out of the bankruptcy estate, meaning that any money that they're paid will not ultimately go to creditors.

David Brown (39:10)

Right.

Alexi Horowitz Ghazi (39:12)

So companies are often trying to avoid getting one of these people assigned. That is what happened in this case. 23andMe asked if they could have a kind of private, in house privacy expert try to vet the deal. But several parties in this case requested a consumer privacy ombudsman to take a look at the deal and make sure the customers were not being harmed or that that harm would be mitigated. And last month the bankruptcy court agreed and the bankruptcy court made their decision. And they appointed a Washington University law professor named Neil Richards to be the privacy ombudsman in this case.

David Brown (39:47)

Very interesting. Well, since I guess part of me wants to ask you though, given what you have just said, what does this mean for this industry, which seemed like such a thing not that long ago? I mean, you were referring to how Oprah and all sorts of celebrities really pitching this as a fun, exciting way of thinking about our shared humanity.

Alexi Horowitz Ghazi (40:09)

And the ultimate selfie is what it's called.

David Brown (40:12)

Yes. Beautiful. The ultimate selfie. Right. And so now, where does this industry stand? Where are we if people can't trust some of these sites?

Alexi Horowitz Ghazi (40:22)

Well, I mean, I think there are a couple problems they're likely facing. I mean, one is just basically that it seemed like 23andMe and some of its competitors reached a sort of high point, a sort of market saturation at the moment when it was most popular. And, you know, all sorts of people were taking these tests and they were able to grow to this massive size and grow this massive, you know, genetic user database out of that. But after people took the test, they didn't really have a reason to, you know, continue using the company's services. Yeah, there are people obviously who continue to use these services as a sort of social media site or who use it to try to learn more about, you know, far flung branches of their families. But as a business model, it seems pretty clear at this moment that this is not where the growth goes.

David Brown (41:08)

You think Aunt Vovie is gonna try to get some kind of second opinion somewhere now that, you know, I mean, little disappointment on that potential British interloper in the bloodline or you think she's done with all this?

Alexi Horowitz Ghazi (41:21)

I think Vovie has had enough of an adventure to last a lifetime out of her consumer genetic experience. And I think, I think she's happy to put it behind her.

David Brown (41:30)

Alexi Horowitz Ghazi co hosts Planet Money from npr. You can check it out on your local station or wherever you get your podcasts. Alexi, it's been a real treat to talk with you on business words. Thanks so much for joining us.

Alexi Horowitz Ghazi (41:42)

Thanks so much for having me.

David Brown (41:43)

Coming up, Lego is a beloved brand, that's for sure. Practically everyone's tinkered with bricks at some point, but before they became the world's number one toy maker, the company was on the brink of total collapse. So how did they build back? That's next time on Business wars from Wondery. This is episode three of 23andMe's Fatal Flaw. For Business Wars, I'm your host, David Brown. Kelly Kyle produced this episode. Peter A.R. cooney is our senior interview producer. Our producer producers are Tristan Donovan of Yellowant and Kate Young. Our audio engineer is Sergio Enriquez. Our managing producer is Desi Blaylock. Our senior managing producer is Callum Plews. Our senior producers are Emily Frost and Dave Schilling. Our executive producers are Jenny Lauer Beckman and Marshall Louie. For wondering the world needs ingenuity. Ingenuity needs accelerators. That's where you come in. Be the tipping point from Impossible to impact at MIT Sloan School of Management.