23andMe's financial troubles, Paul vs. Tyson and Bitcoin to the moon

Summary

Podcast Summary: The Indicator from Planet Money
Episode: 23andMe's Financial Troubles, Paul vs. Tyson and Bitcoin to the Moon
Release Date: November 15, 2024

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Introduction

In this compelling episode of The Indicator from Planet Money, hosts Waylon Wong and Darien Woods delve into three significant topics shaping today's economic and cultural landscape: the financial struggles of DNA testing company 23andMe, the high-profile boxing match between Mike Tyson and Jake Paul, and the soaring trajectory of Bitcoin. Joined by their Planet Money colleague, Alexi Horowitz Ghazi, the trio provides deep insights, engaging discussions, and thought-provoking analysis, peppered with memorable quotes and key statistics.

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1. 23andMe's Financial Troubles

Overview

The episode opens with Alexi Horowitz Ghazi introducing the main issue: 23andMe, a prominent DNA testing company named after the 23 pairs of chromosomes in the human genome, is facing severe financial difficulties. The company recently announced a drastic 40% workforce reduction, signaling deeper underlying problems.

Key Points:

• Company Valuation and Business Model Shift:
  When 23andMe went public in 2021, it achieved a valuation of nearly $6 billion. The initial business plan hinged on leveraging vast genetic data for medical drug development. However, interest in individual genetic tests has declined, disrupting revenue streams.

  Alexi Horowitz Ghazi [02:03]: "All that hoopla helped push the company's valuation to nearly $6 billion when it went public back in 2021."

• Data Breach and Legal Repercussions:
  Last year, a significant security breach compromised the personal information of 6.9 million customers. This breach led to a class-action lawsuit and a $30 million settlement, damaging the company's reputation and financial standing.

  Alexi Horowitz Ghazi [03:16]: "Last year, hackers managed to get their hands on the personal info of 6.9 million 23andMe customers, which led to a class action lawsuit and a $30 million settlement."

• Leadership Turmoil:
  In September, the entire 23andMe board resigned due to disagreements with the CEO over strategic direction, specifically the proposal to take the company private. This move has cast doubt on the company's future and governance.

  Alexi Horowitz Ghazi [03:44]: "In September, the entire 23andMe board handed in their resignations over disagreements with the CEO."

• Operational Downsizing:
  Recently, 23andMe announced the shutdown of its in-house drug development division, further indicating a retreat from its initial ambitious plans.

  Alexi Horowitz Ghazi [03:58]: "This week, the company announced it was going to be shutting down its in-house drug development wing."

• Future Uncertainties:
  There is growing concern that 23andMe might sell its extensive genetic database to salvage value, raising ethical questions about data privacy and commercialization.

  Alexi Horowitz Ghazi [04:12]: "All of this stuff has added up to a growing concern that 23andMe might eventually turn to selling off this massive database of consumer genetic info in order to salvage some value from the company."

• Subscription Model as a Revenue Strategy:
  Despite the downturn, 23andMe is attempting to stabilize its finances by expanding its subscription services. These subscriptions range from $69 to $499 annually, offering personalized health reports and lifestyle advice.

  Alexi Horowitz Ghazi [04:30]: "23andMe offers a couple tiers of subscriptions ranging from $69 to $499 a year, offering things like personalized health reports and lifestyle advice."

Discussion Highlights:

• User Reactions and Data Privacy Concerns:
  The hosts humorously discuss the intrusive nature of genetic testing and the potential risks associated with selling personal genetic data.

  Waylon Wong [04:16]: "So this is Darian's genome being, like, auctioned off or something?"
  Alexi Horowitz Ghazi [04:20]: "Yeah, there's still a chance for us, Waylon, but anyway."

• Ethical Implications:
  The conversation touches on the ethical dilemmas of genetic data commercialization and the importance of consumer consent in data usage.

  Alexi Horowitz Ghazi [05:17]: "Remember, you could also ask the company to remove your data from their database. That's apparently still an option."

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2. Paul vs. Tyson: A Boxing Spectacle

Overview

Transitioning from genetics to the ring, Waylon Wong introduces the highly anticipated boxing match between former heavyweight champion Mike Tyson and social media influencer Jake Paul. This event, featuring eight two-minute rounds, is set to air live on Netflix from AT&T Stadium in Arlington, Texas.

Key Points:

• Event Details:
  The bout consists of eight rounds, each lasting two minutes, making it a relatively short match compared to traditional boxing standards. This setup caters to both boxing enthusiasts and casual viewers.

  Waylon Wong [05:26]: "My indicator is 8. That is the number of rounds that boxer Mike Tyson will go against influencer Jake Paul."

• Netflix's Expansion into Live Events:
  Netflix is diversifying its portfolio by incorporating live events, particularly sports, into its streaming offerings. This strategy aims to attract more subscribers by providing exclusive, real-time content.

  Waylon Wong [05:55]: "Netflix and other streaming services are making a push into live events, which is a relatively new addition to their business model."

• Competitive Market:
  Netflix's move into live sports positions it against established players like Amazon, which already hosts Thursday Night Football, and traditional broadcasters like the NFL and WWE.

  Waylon Wong [06:10]: "Amazon already has a deal with the NFL and is live Thursday Night Football."

• Skepticism Surrounding the Fight:
  There are mixed opinions on the fight's legitimacy, with some boxing experts questioning its authenticity and viewing it as a media spectacle rather than a serious athletic competition.

  Darien Woods [06:47]: "I've read some coverage where some boxing experts are saying this is not a good idea. And then there's also speculation that this is just more of a media stunt and not a real fight."

Discussion Highlights:

• Demographic Appeal:
  The hosts debate whether the event will attract traditional boxing fans or if it targets a broader audience fascinated by celebrity and influencer matchups.

  Darien Woods [06:15]: "I guess whether you're tuning in because you're morbidly curious or you love the sport of boxing. I guess viewers are viewers as far as Netflix is concerned."

• Cultural Significance:
  The fight symbolizes the merging of traditional sports with modern entertainment and influencer culture, reflecting broader trends in media consumption.

  Waylon Wong [07:21]: "Yeah. I mean, everything is a spectator sport these days, including the markets, right, Darian?"

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3. Bitcoin's Meteoric Rise

Overview

Shifting focus to the financial markets, Darien Woods presents Bitcoin as the week's indicator, highlighting its current price at $88,505. The cryptocurrency has experienced significant growth, especially following political developments and market dynamics.

Key Points:

• Current Valuation:
  As of the recording, Bitcoin stands at $88,505, reflecting a substantial increase over recent weeks.

  Darien Woods [07:26]: "My indicator is $88,505. That's how much money you'll need to pay to buy a bitcoin."

• Political Influence:
  Bitcoin's surge is partially attributed to political statements, notably Donald Trump's assertion to make the U.S. a "bitcoin superpower," which has buoyed investor confidence.

  Darien Woods [07:46]: "Bitcoin's been up a lot since Donald Trump won the presidential election. He said he'll make the US the bitcoin superpower of the world."

• Market Persistence:
  Despite skepticism, Bitcoin continues to thrive, underscoring its resilience and the ongoing interest in cryptocurrency as a viable investment.

  Darien Woods [08:02]: "Bitcoin started 15 years ago, roughly. So from the skeptic's point of view, why is bitcoin so persistent?"

Discussion Highlights:

• Psychological Drivers of Speculation:
  Darien explores the psychological aspects that make speculative trading in cryptocurrencies so appealing, likening it to historical gaming crazes that provided mental distractions during hard times.

  Darien Woods [08:36]: "I want to make the case that speculative cryptocurrency trading is perfect for our brains."

• Intermittent Rewards and Dopamine:
  The allure of big, unpredictable financial gains triggers intermittent rewards in the brain, similar to gambling, making investments like Bitcoin and meme stocks perpetually enticing.

  Darien Woods [09:09]: "Psychologists have found that intermittent rewards are like catnip to our brains."
  Waylon Wong [09:41]: "I fully understand this whole dopamine hit thing to our brains."

• Historical Context:
  Drawing parallels to ancient civilizations, Darien underscores how humans have always sought entertainment and distraction during challenging periods, with modern-day financial markets serving a similar function.

  Darien Woods [08:42]: "In the book Playing with Reality, I learned that history is full of gaming crazes."

• Skepticism and Long-Term Viability:
  While acknowledging Bitcoin's persistence, the hosts discuss whether its growth is sustainable or if it's merely a product of psychological tendencies toward speculative investments.

  Darien Woods [10:02]: "It is a way to feel something for sure. Like I will give it that."
  Waylon Wong [10:04]: "This episode was produced by Corey Bridges with engineering by Gilly Moon."

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Conclusion

This episode of The Indicator from Planet Money masterfully intertwines narratives from the realms of genetics, sports, and cryptocurrency to provide listeners with a multifaceted view of current economic and cultural trends. Through engaging discussions, insightful analysis, and the inclusion of memorable quotes, the hosts and their guest offer valuable perspectives on 23andMe's corporate challenges, the evolving landscape of live sports entertainment, and the psychological underpinnings driving Bitcoin's persistent rise. Whether you're a financial enthusiast, a sports fan, or curious about the future of genetic data, this episode delivers a rich and thought-provoking experience.

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Notable Quotes:

• Alexi Horowitz Ghazi [02:03]: "All that hoopla helped push the company's valuation to nearly $6 billion when it went public back in 2021."

• Darien Woods [07:26]: "My indicator is $88,505. That's how much money you'll need to pay to buy a bitcoin."

• Darien Woods [08:36]: "I want to make the case that speculative cryptocurrency trading is perfect for our brains."

• Waylon Wong [05:26]: "My indicator is 8. That is the number of rounds that boxer Mike Tyson will go against influencer Jake Paul."

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Final Thoughts

The Indicator from Planet Money continues to excel in breaking down complex topics into digestible and engaging segments. This episode is no exception, offering a rich tapestry of discussions that cater to a wide audience. Whether dissecting corporate downturns, analyzing entertainment trends, or exploring financial phenomena, the show remains a valuable resource for understanding the intricate dynamics of today's world.

Transcript

[Alexi Horowitz Ghazi]

Npr.

[Waylon Wong]

This is the Indicator from Planet Money. I'm Waylon Wong.

[Darien Woods]

And I'm Darien woods. And you're listening to Indicators of the Week.

[Waylon Wong]

Yes, it is the day where we recap our favorite numbers in the news. And on this edition we are joined by our colleague from Planet Money, Alexi Horowitz. Ghazi. Hello.

[Alexi Horowitz Ghazi]

Hello. Thanks for having me, guys.

[Darien Woods]

On today's show we've got Netflix's blockbuster foray into live sports, a stunning post election cryptocurrency rally, and a struggling DNA company's fight for survival.

[Waylon Wong]

We'll have all that after the break.

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[Darien Woods]

It's indicators of the week. Alexi Horowitz Ghazi, take us away.

[Alexi Horowitz Ghazi]

Okay, so my indicator this week is 23. That is the number of paired chromosomes in the human genome. Big news and big news news you can use. And it's the inspiration for the name of DNA testing company 23andMe, which recently announced that it would be laying off 40% of its workforce.

[Darien Woods]

It just seems to be going from worse to worse. What's happening there?

[Alexi Horowitz Ghazi]

Yeah, well, you know, you may remember this for a while it felt like you couldn't make it past the water cooler without somebody telling you about how they'd recently discovered they were actually 4% Neanderthal or whatever.

[Waylon Wong]

Though I, I'm 98% Neanderthal and proud.

[Darien Woods]

That tall forehead suddenly makes sense.

[Alexi Horowitz Ghazi]

I never personally spit into one of their test tubes but do you guys have spit in the game?

[Darien Woods]

I do, yeah.

[Alexi Horowitz Ghazi]

Wow. All right.

[Waylon Wong]

I don't like spitting. I think I was repulsed by the whole mechanism.

[Alexi Horowitz Ghazi]

Samesies. Anyway, all that. All that hoopla helped push the company's valuation to nearly $6 billion when it went public back in 2021. And a big part of the business plan then was to leverage all of this genetic data into a medical drug development operation. But since that high point, the company's been on kind of this downward spiral, right? Like, orders for individual genetic tests are down. Last year, hackers managed to get their hands on the personal info of 6.9 million 23andMe customers, which led to a class action lawsuit and a $30 million settlement.

[Darien Woods]

Wait, I need to get my hands on that.

[Alexi Horowitz Ghazi]

Yeah. Darian, this is.

[Darien Woods]

I didn't think it was involved.

[Waylon Wong]

Did you not get the email? Maybe it went to spam.

[Darien Woods]

Probably went to spam.

[Alexi Horowitz Ghazi]

Double check.

[Darien Woods]

Darn it.

[Waylon Wong]

Someone's already cloned you. It's too late. Darian.

[Alexi Horowitz Ghazi]

I'm online for an order.

[Waylon Wong]

You ordered a Darien?

[Alexi Horowitz Ghazi]

Yes. I'm still waiting for my ship to blychain problems. In September, the entire 23andMe board handed in their resignations over disagreements with the CEO. CEO's strategic direction to take the company private. And then this week, the company announced it was going to be shutting down its in house drug development wing. And all of this stuff has added up to a growing concern that 23andMe might eventually turn to selling off this massive database of consumer genetic info in order to salvage some value from the company.

[Waylon Wong]

So this is Darian's genome being, like, auctioned off or something?

[Alexi Horowitz Ghazi]

Yeah, there's still a chance for us, Waylon, but anyway. But in the meantime, one of the company's main revenue strategies remains growing in its subscription customer base.

[Waylon Wong]

What do you subscribe to?

[Alexi Horowitz Ghazi]

Yeah, I had the same question. It's a little confusing to me. I just did a Planet Money episode on why so many startups have tethered their financial fate to getting customers locked in like this to recurring payments. And 23andMe offers a couple tiers of subscriptions ranging from $69 to $499 a year, offering things like personalized health reports and lifestyle advice.

[Darien Woods]

But speaking for me, at least it's like I got my info and I don't really need any more.

[Alexi Horowitz Ghazi]

Yeah, then again, Darian, it might be worth, you know, $500 a year or so just to try to keep your data out of the hands of the highest bidder.

[Waylon Wong]

What kind of terrible.

[Darien Woods]

Is this a hostage scenario, Alexi?

[Alexi Horowitz Ghazi]

Or, of course, Darian. Remember, you could also ask the company to remove your data from their database. That's apparently still an option.

[Darien Woods]

Okay, I'm glad there's hope.

[Waylon Wong]

Add it to your to do list today, Darian.

[Darien Woods]

Well, thank you for that, Alexei. Waylon, what should we be concerned about or excited about?

[Waylon Wong]

Well, I'll let you decide. My indicator is 8. That is the number of rounds that boxer Mike Tyson will go against influencer Jake Paul. They're going to be fighting in a live event that airs Tonight on Netflix. Eight rounds, two minutes per round. The fight is being held at AT&T Stadium in Arlington, Texas. And anyone who subscribes to Netflix will be able to watch it as part of their membership.

[Darien Woods]

Wait, is this a sponsored message, Waylon, or is there some kind of economic lesson here?

[Alexi Horowitz Ghazi]

Why are we talking about boxing?

[Waylon Wong]

Right. As I heard my. I was like, why do I just like a commercial? Okay, so we were just talking about subscription models, and Netflix and other streaming services are making a push into live events, which is a relatively new addition to their business model. Sports is a big part of that strategy. This year alone, Netflix announced deals with the NFL and the wwe. That's wrestling. Amazon already has a deal with the NFL and is live Thursday Night Football. So these companies want to sell advertising against these big events, and they also want to draw in more subscribers by having, you know, exclusive programming you can't get anywhere else.

[Alexi Horowitz Ghazi]

Okay, so. So, theoretically, I could finally make my way through Bridgerton and then watch a kind of brutal or slow boxing match between Mike Tyson and Jake Paul.

[Darien Woods]

Yeah, I mean, how old is Mike Tyson these days?

[Waylon Wong]

He's almost 60 years old, you guys, and he hasn't boxed professionally since 2004. Jake Paul is a considerably younger, 27 years old now. I don't know anything about boxing. I think I'm pretty far out of the target demographic for this event. I've read some coverage where some boxing experts are saying this is not a good idea. And then there's also speculation that this is just more of a media stunt and not a real fight.

[Darien Woods]

I guess whether you're tuning in because you're morbidly curious or you love the sport of boxing. I guess viewers are viewers as far as Netflix is concerned.

[Waylon Wong]

Yeah. I mean, everything is a spectator sport these days, including the markets, right, Darian?

[Darien Woods]

Indeed. So there is wild things going on in the cryptocurrency market. My indicator is $88,505. That's how much money you'll need to pay to buy a bitcoin. As of this conversation's recording.

[Alexi Horowitz Ghazi]

Oh, God.

[Waylon Wong]

I spent all my money on a Darien clone.

[Alexi Horowitz Ghazi]

Money well spent.

[Darien Woods]

Bitcoin's been up a lot since Donald Trump won the presidential election. He said he'll make the US the bitcoin superpower of the world. And it's gone up even more this.

[Alexi Horowitz Ghazi]

Week, making me even sadder. I didn't listen to my techno futurist friends back in 2011. Just kidding.

[Waylon Wong]

When they said to buy low.

[Alexi Horowitz Ghazi]

Yeah, get on that blockchain.

[Darien Woods]

So I'm sensing a bit of skepticism. You know, this rise and rise and rise of bitcoin and other cryptocurrencies can be a little painful to watch from those on the outside. It's not turning out to be this flash in the pan craze. You know, Bitcoin started 15 years ago, roughly. So from the skeptic's point of view, why is bitcoin so persistent? And there's many reasons. But at the risk of inflaming some true believers, I want to make the case that speculative cryptocurrency trading is perfect for our brains.

[Alexi Horowitz Ghazi]

Poke the bear, Darian. Go on, go on. Spit hot theory, let's go.

[Darien Woods]

We could always replace you. So in the book Playing with Reality, I learned that history is full of gaming crazes. So for example, about 4,000 years ago, the people who were contemporaries of ancient Greeks, the Lydians, they are documented as using games like dice and knucklebones as a kind of mental distraction from when there was this multi decade famine going on.

[Waylon Wong]

You know, disassociation never goes out of style.

[Darien Woods]

Yes. And psychologists have found that intermittent rewards are like catnip to our brains. It's much more rewarding to get these big spikes in the prices that you might get with bitcoin or meme stocks than say, the steady rise of, say, a bond or an investment in a house. So in some ways, these big jumps that you get after news like Donald Trump getting elected or regulators allowing certain crypto products, those reinforce the very popularity of bitcoin.

[Waylon Wong]

I fully understand this whole dopamine hit thing to our brains. I just think I get it from scrolling social media, you know what I mean, and checking my notifications instead of gambling. But I think it's the same mechanism.

[Darien Woods]

Yes, speculation, whether it's bitcoin or meme stocks is incredibly appealing to our brains. You know, this dopamine rush might at least partly explain bitcoin's persistence.

[Waylon Wong]

I think all of us just want to feel something.

[Darien Woods]

It is a way to feel something for sure. Like I will give it that.

[Alexi Horowitz Ghazi]

Get ready to feel a torrent of angry emails.

[Darien Woods]

Darian I'm ready.

[Waylon Wong]

This episode was produced by Corey Bridges with engineering by Gilly Moon. It was fact checked by Sierra Juarez. Kate Buchanan edits the show and the indicators of production of NPR.

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