Transcription
Remember the spit tube? It was the ultimate party trick. You paid $99, got a fun little pie chart about your ancestors, and you felt like part of the future. But it was a trap. 23 and me has collapsed. And in the bankruptcy fire sale, they didn't just sell the office furniture. In a way, they sold you, auctioning off the company that held your genetic code. And if it wasn't sold by them, it might have been stolen by someone else. This is the story of how 23 and me unraveled and how it might have taken bits of you with it.
The company was born in 2006. Co-founded by Linda Ay, Paul Cusenza, and Anne Wajiski. It had the kind of pedigree that most startups would kill for because in the incestuous world of Silicon Valley royalty, an Wajiski was the queen. At the time, she was married to Sergey Brin, the co-founder of Google, and she's the sister of Susan Wajiski, who would later be the CEO of YouTube. This wasn't two guys in a garage eating ramen. It was tech royalty with a new idea. They had easy access to the deepest pockets and the biggest brains in the tech world from the very first second.
What helped was that their vision was intoxicating. Before 23 and me, genetic testing was a scary, sterile medical procedure. It happened in hospitals and cost thousands of dollars. Wajiski wanted to change that. She wanted to make genetics consumerfriendly and most importantly, she wanted to make it retail. Early on, Brin plowed $2.6 million of interim debt financing into the project. Then, less than a year after launch, Google stumped up another $3.9 million. By 2008, Time magazine had named the 23 andme retail DNA kit the invention of the year. The cultural buzz was deafening. They were hosting spit parties at New York Fashion Week. Models and socialites would hawk lugies into tubes while sipping champagne. Perfect collision of narcissism and science.
But beneath the glamour and the celebrity endorsements, there was a dirty little secret about the business model. 23 andme was never really in the business of selling plastic tubes. The kits cost a fortune to process in the early days. The kits started out expensive, costing $999. By 2012, they'd aggressively dropped that to $99. The margins were razor thin. To help keep in profit, they sold other tests related to people's health. It's a good business model as long as you get approval from the regulators. And that was the first problem.
The first sign that their move fast and break things attitude was going to hit a wall came in 2013. In Silicon Valley, you can disrupt the taxi industry or the hotel industry, and regulators will usually catch up later. But when you try to disrupt medicine, the federal government tends to get involved. On November 22nd, 2013, the FDA sent 23 andMe a warning letter that was effectively a nuclear strike. The FDA told the company to immediately stop selling its health related tests because 23 and me hadn't proven they worked. They called the test a medical device that was being sold without approval. They were worried people would get a false positive for a cancer gene and get unnecessary surgery or get a false negative and ignore a real problem. Overnight, the company was crippled. From November 2013 to October 2015, all they could sell was the ancestry data. Those fun pie charts about whether you're Irish or German.
Most companies would have died right there. But Wajiski was relentless. She spent two years negotiating with the FDA, proving the science and running studies. In 2015, they were allowed to relaunch health tests for a rare syndrome called Bloom disorder. This began a comeback that was framed as a triumph of perseverance. The company had grown up and was now safe and compliant, and the public ate it up. From 2016 to 2018, 23 andMe entered its golden age. Oprah named their DNA kit one of her favorite things, and it became a popular Christmas gift for the person who had everything. It seemed like everyone was talking about their Haplo groups.
But the tests were still cheap, and they'd spent a long time in the wilderness battling the FDA. So, how does a company worth billions make money if they're losing cash on every sale? It's simple. You aren't the customer, you're the product. Wajiski and her team realized that if they could convince millions of people to hand over their DNA and sign a consent form, they would build the world's largest library of genetic information, a library worth a lot more than $99 per person. So they sold access to that library to pharma giants. This success culminated in a massive deal in 2018. Glacos Smith Klein invested $300 million exclusively to use 23 andMe's data for research and development. The data mine was open for business.
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By 2021, the hype at 23 and me had reached terminal velocity. The stock market was in the middle of a post-pandemic bubble and spaxs or specialurpose acquisition companies were all the rage. A spa is basically a backoor to the stock market. Instead of doing a traditional IPO where you have to do a road show and scrutinize your books, you merge with a shell company that's already public. It's faster, but it's riskier. And it's perfect for companies that have more hype than profit. 23 andMe merged with a spa backed by Richard Branson, the billionaire founder of Virgin. The company hit the NASDAQ with a valuation of roughly $3.5 billion. And in the euphoria of the moment, that valuation surged momentarily to nearly 6 billion. And Wajiski was on the cover of magazines. She was the visionary who had merged tech and bio. But if investors had looked closely at the numbers, they would have seen that the disease was already creeping in.
The fundamental problem with 23 andme is what business analysts call the one and done problem. If you buy an iPhone in 2 years, you'll need, or should I say want, a new iPhone. If you subscribe to Netflix, you pay every month, but your DNA doesn't change. Once you've taken the test, you have the data and you never need to buy a kit from them again. By 2022, the company had hit a saturation point. The tech geeks and the curious, affluent people who were their early adopters had all bought their kits, and there was nobody left to sell to. The cost of acquiring a new customer was skyrocketing while the revenue per customer was stuck at zero after the initial purchase.
The company tried everything to fix this. In a desperate attempt to create a new revenue stream, 23 andme launched a $29 a year subscription service called 23 andme plus promising regular updates to health reports. But because a genome is static and doesn't need ongoing payments, it didn't work. Then they pivoted to tella health in late 2021 by purchasing a company called Lemonade Health for 400 million. The idea was that 23 andMe would become your doctor. They'd test your DNA, tell you what risks you had, and then prescribe you meds through the app. But it didn't work. Integrating a logistics heavy medical service with a data mining tech company was a disaster. So the cash burn accelerated. 23 and me wasn't a tech company anymore. It was a money losing medical provider with an identity crisis.
While the financials were crumbling, something much worse was happening. On October 6th, 2023, a post appeared on a dark web hacking forum. In that post, a user claimed to have the personal data of millions of 23 andme customers. But this wasn't just a random data dump. The hackers had filtered the data. They specifically released lists of users with Chinese and Ashkenazi Jewish heritage, and some reports claim anywhere from 1 million to 1.3 million people were on that list. And the way the hack happened was humiliating for a tech company. It was a credential stuffing attack. That means hackers took usernames and passwords leaked from other websites like Netflix or LinkedIn and tried them on 23 and me. Because people reuse passwords. Thousands of them worked.
But the hackers didn't just get the data of the people they hacked. They exploited some of the optin features. specifically one called DNA relatives. If you enabled this feature, 23 and me allowed you to see your distant cousins, but to show you your cousins, the system also gave you access to their info. So, by hacking one person, the attackers could scrape the data of thousands of their relatives. In the end, only about 14,000 accounts were actually logged into, but because of the DNA relatives feature, the hackers stole the data of 6.9 million people.
The company's response was a masterclass in how to destroy a brand. Instead of taking responsibility, they sent out letters essentially blaming the users for having weak passwords. They also changed their terms of service to make it harder for people to sue them. Lawyers called it cynical and self-erving. And it was the final nail in the coffin for consumer trust. Who would ever trust this company with their biology again?
By 2024, 23 and me was a dead man walking. The stock, which had once traded above $16, had crashed into penny stock territory. It was trading below $1 for months. That and other issues led to NASDAQ sending them a deficiency notice, which is corporate speak for get your act together or we're kicking you off the exchange. And Wajiski, watching her legacy vaporize, decided the only way out was to take the company private. buy out the shareholders and run the company without the scrutiny of Wall Street. But she didn't have the money. Her offer to buy the company was seen as insultingly low by a furious board of directors. And the tension in the boardroom simmered for months.
That was until September 17th, 2024. In a move that stunned the business world, all seven independent directors of the board resigned simultaneously, leaving behind a scathing resignation letter. They publicly stated that they could not support Wajiski's plan and that they had lost faith in her leadership. Wajiski appointed new, more loyal board members, but that didn't change the fact that the cash reserves were empty. The drug development pipeline was years away from producing a profit and their subscription model was dead.
On March 23rd, 2025, the inevitable happened. 23 and me filed for Chapter 11 bankruptcy. Now, usually when a company goes bankrupt, it's sad, but it's pretty straightforward. You start by selling off your stuff for as much as you can get. A furniture store sells off its sofas. A car rental agency sells off its cars. Creditors get paid an agreed amount and life goes on. But 23 and me didn't have sofas or cars. All they had was us. The most valuable asset 23 and me had left was a database containing the genetic codes of over 15 million people. And under US bankruptcy law, that data is an asset just like a recliner or a Mitsubishi. It can be sold to pay off debts.
This sparked a level of panic that we rarely see in the financial world. Suddenly, privacy advocates, state governments, and former customers realized that the terms of service they clicked agree on 10 years ago didn't protect them from a bankruptcy auction. The bidding war for the company began and the participants were a who's who of privacy nightmares. On one side, you had Anne Wajiski. She was desperately trying to raise cash to buy back her company and she claimed protect the legacy. On the other side, you had Regeneron Pharmaceuticals, a massive biotech company. Although Regeneron were initially the leading bidder, in June 2025, Wajiski won the auction, buying her company back for 305 million.
But the victory was hollow. As of making this video, 23 and me still exists, but it is a shell of its former self. The brand is toxic. No one is hosting spit parties anymore. The idea of mailing your DNA to a tech startup now sounds about as safe as mailing your banking password to a random PO box in the Cayman Islands. Back in May 2025, 23 andMe announced it was voluntarily delisting from the NASDAQ and that erased billions of dollars in market value. And the legal battles are far from over. The company is currently finalizing a $62 million settlement for the 2023 data breach. Anywhere from 30 to 50 million is expected to be paid out to US customers, minus a huge chunk for the lawyers, of course, and the regulators are still circling. In June 2025, New York Attorney General Leticia James sued the company to make sure people's data isn't exposed in future data breaches or used in ways customers never contemplated when they signed up to implement real security measures and to allow victims to actually delete their data.
But the real legacy of 23 and me isn't the bankruptcy, the lawsuits, or the lost money. It's the lesson we all learned the hard way. For years, we treated our genetic data like it was just another piece of digital content, like a photo on Instagram or a tweet. We traded it for a moment of novelty and a cool pie chart to show our friends. But we forgot that in the modern economy, nothing is sacred. And if a company has your data, it doesn't matter what their privacy policy says today. Because tomorrow when the creditors come knocking and the bankruptcy judge bangs the gavvel, you are just a line item on a spreadsheet. The spit tube wasn't a key to self-discovery. It was a contract. And we didn't read the fine print. If you enjoyed this trip into the DNA of company failure, be sure to click on one of the videos above for more. Thanks for watching.