25 Jan 23andMe lays off 100 people as DNA test sales decline

DNA test | CNBC | Christina Farr | January 23, 2020

Home DNA-testing company 23andMe is laying off about 100 people

The layoffs include the operations teams, which were focused on the company’s growth and scaling efforts, as well as other teams. In the coming months, the company plans to tighten its focus on the direct-to-consumer business and its therapeutics arm while scaling back its clinical studies arm.

CEO Anne Wojcicki told CNBC she’s been “surprised” to see the market starting to turn.

Wojcicki has theories, but she doesn’t have clear proof for why consumers are shying away from getting tests that reveal their percentage of Irish heritage, propensity for a favorite ice cream flavor, or whether they have a limited set of variants that are associated with breast cancer. Either way, she notes, she’s downsizing because it’s “what the market is ready for.”

“This has been slow and painful for us,” she said.

DNA test sales decline: privacy and economic downturn concerns

Wojcicki notes that privacy could be a factor. Fears about people’s DNA ending up in the wrong hands might have been heightened in the aftermath of the Golden State Killer case. Criminal investigations honed in on a suspect involved in a decades-old rapes and murders by running DNA found at the scene through a free online database where anyone who got their DNA tested through a company like 23andMe could upload it. A suspect was found because a distant relative had shared their genetic information — showing how DNA data, unlike other kinds of data, is unique because it’s linked to and potentially exposes information about family members.

She acknowledges that “privacy is top of mind” both for consumers and her executive team. She said the company hired a new chief security officer, who previously ran security at Okta, earlier this week.

“I think the tech world needs to own this better communicate privacy standards to build trust,” she said. “I want to jump in and really own it.”

Wojcicki said another factor could be that people fear an economic downturn, and they don’t want to spend a few hundred dollars on a genetic test. […]

DNA test sales: clear signs of a slowdown

The first clear signs of a slowdown in the space came last summer when Francis deSouza, chief executive of Illumina, maker of DNA sequencing machines, noted in its earnings call that the entire segment was down. DeSouza didn’t share an explanation, but said his company is taking a “cautious view” of the market for ancestry and health tests. Illumina’s customers include Ancestry and 23andMe.

Other companies in the sector have also pivoted or struggled, including Veritas Genetics, which shuttered its U.S. operations late last year.

Meanwhile, Color Genomics raised capital in recent months after focusing on the enterprise market, which involves selling to companies, and not just consumers. Its has relationships with Jefferson Health, a major hospital chain, and Apple, among others.

Investors in 23andMe include Google parent-company Alphabet, where Wojcicki’s sister, Susan, is the CEO of YouTube, plus GlaxoSmithKline and Sequoia Capital, among others.

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