What happened to 23andMe?

New York (CNN) — The history of DNA-testing startup 23andMe reads like a formula for a screenplay set in turn-of-the-century Silicon Valley: A Yale grad grows tired of hedge fund life and returns to her roots in the Bay Area. Marries the co-founder of Google. Becomes CEO of an ambitious new company. Raises gobs of cash. Takes the company public.

If the story ended there, it’d be the kind of Silicon Valley fairy tale that inspires hordes of budding entrepreneurs to chase their tech billionaire dreams. But 23andMe’s recent stumbles suggest its story will be more of a cautionary tale.

Here’s the deal: This week, all seven of the company’s independent directors resigned en masse, citing their frustration with the CEO’s “strategic direction” and efforts to take 23andMe private. The resignations come as the company, which has never made a profit, is burning through cash so quickly it may run out next year, according to the Wall Street Journal.

The CEO and co-founder, Anne Wojcicki, told employees she was “surprised and disappointed” by the directors’ decision but remains committed to taking the company private.

A 23andMe spokesperson declined to comment beyond the company’s public filings.

What happened?

It’s been a rough few years for 23andMe. And an especially rough summer for its high-profile CEO, who has been battling with her board over the future of the company. At the same time, Wojcicki sister, former YouTube CEO Susan Wojcicki, died last month at age 56.

23andMe went public in 2021, jumping on the SPAC trend of the era, when a bunch of companies went public via “special purpose acquisition companies” — essentially shell-company mergers that let firms go public in a hurry when investor appetite is strong.

The stock shot up, briefly valuing the company at $6 billion. Wojcicki (pronounced wo-JIS-kee), who owns 49% of the company, became a billionaire.

But since then, 23andMe has struggled to find a sustainable business model.

Its core consumer product, an at-home DNA testing kit, offers “personalized genetic insights” that the company says can flag potential health risks such as your likelihood to develop Alzheimers or certain cancers. The firm’s investor page says that 80% of customers opt in to let their information be used for genetic research and drug development.

The kits got a lot of celebrity buzz, including placement one year on Oprah’s “Favorite Things.” For about $100 or so, you could get a test tube in the mail, fill it with spit, send it back and wait for your personalized report.

Side note: I did my own 23andMe test, in 2019, motivated by a millennial compulsion to spend money on any product that promises to alleviate and/or deepen my corporeal angst. In the end, the test confirmed much of what I already knew, didn’t show any serious red flags (phew!) and even had fun little insights into things I didn’t know were genetic. Like my predisposition to prefer salty snacks over sweet ones, to consume above-average amounts of caffeine and to be afraid of heights. (Check, check and very check.)

Trouble is, once you buy one kit and get your results, there’s … not much else to do.

23andMe has tried to convert one-time buyers into subscribers with the promise of continued feedback and personalized wellness plans. But, as the Wall Street Journal wrote in January, the company has fallen short of its own subscriber goals.

Meanwhile, 23andMe’s drug research (a notoriously expensive and often fruitless business) has also failed to generate significant revenue.

The company is now worth less than $200 million — a more than 97% drop from its 2021 peak. Last year, it went through several rounds of layoffs.

Wojcicki, 51 years old, appears to be casting a wider net in search of revenue.

Last month, 23andMe shuttered its internal drug research group.

At the same time, it announced that its telehealth platform, Lemonaid, would offer weekly injections of compounded semaglutide, the active ingredient in Wegovy and Ozempic, through a new subscription product — joining a rash of companies trying to profit from the growing popularity of GLP-1 medications for weight loss.

In her memo to staff this week, Wojcicki reiterated her commitment to taking 23andMe private, saying “we will be better positioned to achieve our mission and goals outside of the short term pressures of the public markets.”

She said the company would “immediately” look for replacements on the board, which currently consists only of Wojcicki.

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