The rise and fall of 23andMe

• A class action lawsuit, resignations, layoffs, and other problems have plagued 23andMe.

• The company’s issues have led to consumer concerns about how it handles genealogy data.

• Here’s how 23andMe rose and then fell.

23andMe is struggling.

The biotech company that helped usher in the era of consumer DNA test kits nearly two decades ago has faced several recent setbacks, including a class action lawsuit and user privacy concerns.

A spokesperson for 23andMe told Business Insider in a statement that “the company’s mission of helping people live longer, healthier lives through a preventive approach to health, and providing access to potentially life-changing genetic information, hasn’t changed.”

Here is a timeline of the company’s meteoric rise and steady fall.

2006: 23andMe is founded in Silicon Valley

23andMe CEO Anne Wojcicki co-founded the company in 2006 with biologist Linda Avey and Paul Cusenza, who previously worked at the now-defunct Perlegen Sciences, which was a biotech startup that studied human genomes.

The company planted roots in Silicon Valley, where other startups like Twitter and YouTube were taking shape at the time.

“The team of three worked out of a small office in Palo Alto, complete with an overcrowded, hardworking computer server room,” a company blog post says. “Scientific rigor was top of mind; the co-founders spent their early days meeting with regulators, building a robust advisory committee, and figuring out how to give people direct access to their genetic information.”

Avey stepped down as co-president in 2009 and officially left the company in 2011. Cusenza departed in 2007.

2007: 23andMe secures millions in funding from Google

23andMe quickly secured funding from several companies, including Google.

A May 2007 SEC filing said Google invested $3.9 million into 23andMe, taking a minority interest. The filing also said Google cofounder Sergey Brin provided millions in interim debt financing to 23andMe.

“Prior to Google’s investment in 23andMe, Sergey provided approximately $2.6 million in interim debt financing to 23andMe, which was repaid as part of this financing transaction,” the filing said.

The funding coincided with Brin’s marriage to Wojcicki that May. The pair, who share two children, divorced in 2015.

2007: 23andMe launched its first product for $999

23andMe launched its first product — a DNA saliva test — for sale in the United States in November 2007.

The company priced the product at $999.

Users could access information about their risk for certain diseases, their ancestry, and their inherited traits. 23andMe provides data to users through a private online account.

“We believe this information provides intriguing insights into an individual’s genetics, with the goal of expanding the collective knowledge base by enabling active participation in research,” Wojcicki told Reuters at the time.

However, 23andMe’s growing popularity didn’t come without criticism. Some consumers were concerned about privacy related to their data and whether insurers could access it to deny coverage or discriminate against certain individuals.

A 23andMe spokesperson told BI that user data is not shared with other entities unless given consent.

“Beyond our contracted laboratory, with which we work to process a customer’s sample and deliver their results, customer information will not be shared with any other entity unless they provide us with consent to do so,” a statement said.

The spokesperson added that 23andMe did not share user data with “employers, insurance companies, law enforcement agencies or any public databases.”

2008: Time Magazine named 23andMe’s Personal Genome Service its Invention of the Year

Despite the privacy concerns, 23andMe began to gain recognition for the work of its researchers. Time Magazine named 23andMe’s Personal Genome Service its Invention of the Year in 2008.

“Although 23andMe isn’t the only company selling DNA tests to the public, it does the best job of making them accessible and affordable,” Time Magazine wrote.

“We are at the beginning of a personal-genomics revolution that will transform not only how we take care of ourselves but also what we mean by personal information,” Time wrote. “In the past, only élite researchers had access to their genetic fingerprints, but now personal genotyping is available to anyone who orders the service online and mails in a spit sample.”

The company slashed the price of its service from $999 to $399 that same year.

2009: Google makes another multimillion-dollar investment in 23andMe

Google invested $2.6 million in 23andMe again in June 2009, according to an SEC filing.

The filing mentions Brin, who was still married to Wojcicki at the time.

“Prior to Google’s investment in 23andMe’s Series B preferred stock financing, Sergey also invested approximately $10 million in 23andMe’s convertible debt financing, which was converted into Series B preferred stock as part of this financing transaction,” the filing said.

2010: 23andMe gets its first National Health Institute-funded grant

23andMe launched its first National Health Institute-funded study in 2010 after securing a grant, the company announced at the time. Specifically, the company secured an NIH Small Business Innovative Research Grant to “validate our web-based approach to pharmacogenomics research.”

“The purpose of this first phase is similar to that of our first research publication: to demonstrate that we can replicate known genetic associations using the web-based survey data volunteered by our customers,” 23andMe said in its announcement.

The company would later receive more grants from the NIH, including about $1.4 million in 2014.

That year, 23andMe published its first peer-reviewed study.

2011: 23andMe secures almost $31 million in its third round of funding

The company announced in January 2011 that it raised $31 million during its third round of funding after securing an additional $9 million.

MPM Capital and Johnson & Johnson Development Corporation became the newest investors in 23andMe.

2012: 23andMe lowers its price to $99, making the product more accessible

The company reduced the cost of its service to $299 in May 2012 and again to $99 later that year.

23andMe said in December 2012 that it raised more than $50 million in another round of financing, which would help the company reach its goal of 1 million customers. Investors included Israeli entrepreneur Yuri Milner, Google Ventures, MPM Capital, Brin, and Wojcicki.

At the time, the company only had about 180,000 customers.

“The Series D investment, combined with rapidly decreasing costs associated with genetic testing technologies, enables 23andMe to reduce the price of its Personal Genome Service to $99, effective immediately,” the company said.

2013: FDA orders 23andMe to stop marketing its genetic health screening service

23andMe found itself in trouble with the US Food and Drug Administration in 2013.

The FDA instructed 23andMe to stop marketing its genetic health screening service in the United States until it completed the agency’s regulatory review process. The company could continue selling its ancestry service.

23andMe complied with the FDA’s request, meaning it only provided users with Ancestry reports and raw data.

Wojcicki discussed the FDA’s regulation during an appearance at the SXSW festival in 2014.

“It has slowed up the number of people signing up,” Wojcicki said, according to The Guardian.

She added: “We are pioneers. We’ve had a lot of ups and downs but we have lots of tenacity to push on through. It will take time, money, and effort to figure out the path forward.”

The company met the FDA’s standard in 2015.

“The new 23andMe experience reflected almost two years of work with regulators, our scientists, medical experts, and product designers,” the company said. “The result is the first direct-to-consumer test available directly to individuals in the United States that includes reports that meet FDA requirements for being scientifically and clinically valid.”

2015: The FDA authorizes 23andMe to market the Bloom syndrome carrier status report

23andMe continued to evolve its services, and in 2015, the FDA granted authorization to market its screening for Bloom syndrome, a rare genetic disorder, the company said at the time.

“This is also the first time the FDA has granted authorization to market a direct-to-consumer genetic test, and it gives 23andMe a regulatory framework for future submissions,” 23andMe said in a blog post.

The FDA authorized additional reports following 2015, including BRCA1 and BRCA2 Select Variants.

2019: 23andMe slashes its workforce as consumers lose interest in DNA test kits

The company had millions of users by 2019, showing significant growth since its launch.

But demand began to wane that year as the 23andMe business model — which relied on one-time tests — faltered.

Wojcicki echoed that sentiment in a comment to Business Insider, saying, “It’s a new technology, and I think it’s hit a lull.”

Wojcicki remained optimistic that the industry would bounce back, but 23andMe announced it was laying off 100 employees in January 2020 as sales were still down.

The CEO told CNBC at the time that factors like privacy could remain a sore point. Another reason could be consumers’ fear of an economic downturn, meaning the somewhat pricey test is less of a priority.

Despite the downturn, 23andMe continued to collect investments.

In December 2020, 23andMe raised almost $82.5 million in equity funding.

2021: 23andMe goes public and reaches a valuation of over $6 billion

23andMe went public in June 2021 at $11.13 a share, marking a victory for the company after struggling with sales. Before going public, the company completed a reverse merger with Richard Branson’s VG Acquisition.

Wojcicki told Business Insider at the time that her “priority is really the long term.”

“The short term is obviously important for a lot of people, but everything that I do is focused on the long term. I’ve only looked at my stock price because I’ve been doing the news articles and people keep showing it to me,” she said.

The company’s valuation peaked at $6 billion.

2023: Some 23andMe user accounts are compromised

Concerns about privacy always plagued 23andMe, but those concerns grew after news broke last year that some user data had been compromised.

The data — including birth details and names — was sold on the dark web by hackers.

23andMe confirmed that ancestry data for nearly 7 million users were accessed that December. A data breach notification filing in January 2024 said it took 23andMe five months to realize the data had been accessed.

The incident led to a class action lawsuit, which 23andMe settled for $30 million in September, according to Reuters.

The company also said in SEC filings it laid off more employees in 2023, including that June when it reduced its workforce by 9%. 23andMe laid off another 71 employees in August 2023, according to filings.

2024: 23andMe’s board of independent directors resigns

Independent directors on 23andMe’s board announced their resignations in a September letter addressed to Wojcicki.

Although the independent directors said they “wholeheartedly support” the company’s mission, they took issue with the current business strategy.

“It is also clear that we differ on the strategic direction for the Company going forward,” the letter said. “Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the Company’s shareholders that we resign from the Board rather than have a protracted and distracting difference of view with you as to the direction of the Company.”

2024: Wojcicki responds to consumer concerns

The company’s reputation took another hit in September when an SEC filing said Wojcicki “would be open to considering third-party takeover proposals.”

Wojcicki walked back that consideration in a filing later that month.

“Based on subsequent developments, it has become even clearer to me that the best path forward for the Issuer is for me to take the company private,” she said.

“Accordingly, in order to update my prior statement and avoid any confusion in the market, I am no longer open to considering third-party takeover proposals for the Issuer.”

However, Wojcicki’s remarks about selling the company to a third-party issuer raised consumer concerns about what could happen to their data if a sale did take place.

The Atlantic reported that the sale of 23andMe could also mean the potential sale of user data. The director of cybersecurity at Electronic Frontier Foundation, a nonprofit focused on digital privacy, urged users to delete their data in a post that garnered 547,000 views.

A 23andMe spokesperson told BI that Wojcicki “has publicly shared she intends to take the company private, and is not open to considering third-party takeover proposals.”

The statement added: “Anne has demonstrated an unwavering commitment to the company’s mission and values, and to its customers, pledging to maintain 23andMe’s strong security and privacy policies, including following the intended completion of the acquisition she is pursuing.”

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