Freakonomics Radio - Extra: Why Is 23andMe Going Under? (Update)

Episode Date: April 29, 2024

Five years ago, we published an episode about the boom in home DNA testing kits, focusing on the high-flying firm 23andMe and its C.E.O. Anne Wojcicki. Their flight has been extremely bumpy since then. This update includes an additional interview with the Wall Street Journal reporter who has been investigating the firm’s collapse. SOURCES:Rolfe Winkler, reporter at The Wall Street Journal.Anne Wojcicki, co-founder and C.E.O. of 23andMe. RESOURCES:"23andMe’s Fall From $6 Billion to Nearly $0," by Rolfe Winkler (The Wall Street Journal, 2024)."23andMe User Data Stolen in Targeted Attack on Ashkenazi Jews," by Lily Hay Newman (Wired, 2023).Inheritance: A Memoir of Genealogy, Paternity, and Love, by Dani Shapiro (2019).How To Raise Successful People: Simple Lessons for Radical Results, by Esther Wojcicki (2019).“Diet and exercise changes following direct-to-consumer personal genomic testing,” by Daiva Elena Nielsen, Deanna Alexis Carere, Catharine Wang, J. Scott Roberts, and Robert C. Green (BMC Medical Genomics, 2016).“The impact of communicating genetic risks of disease on risk-reducing health behaviour: systematic review with meta-analysis,” Gareth J Hollands, David P. French, Simon J. Griffin, A. Toby Prevost, Stephen Sutton, Sarah King, Theresa M. Marteau (The British Medical Journal, 2016). EXTRAS:"Does Your DNA Determine Your Weight?" by No Stupid Questions (2023)."What’s Stopping Us From Curing Rare Diseases?" by Freakonomics, M.D. (2023)."We Can Play God Now," by People I (Mostly) Admire (2022)."Susan Wojcicki: 'Hey, Let’s Go Buy YouTube!'" by People I (Mostly) Admire (2020).

Hey there, it's Stephen Dubner. In 2019, we published an episode about the boom in home DNA testing. The key information came from an interview we did with Ann Wojcicki, the founder and CEO of 23andMe. A couple years after we published that piece, 23andMe went public after merging with what's called a SPAC, or a special purpose acquisition company. It was backed by Richard Branson. This looked to be a brilliant move. The company was valued at around $6 billion. It entered the stratosphere because we all decided to take these tests.

And it got very popular. That is Rolf Winkler. He is a Wall Street Journal reporter who covers health technology. And what is 23andMe worth now? Right now, the valuation is zero. So today, on a bonus episode of Freakonomics Radio, we wanted to replay that original conversation with Anne Wojcicki with updated facts and figures. And after that, we'll speak with Rolf Winkler to hear about all the things that went wrong with 23andMe and what might still go right. Thanks for listening.

In 2018, police in Sacramento, California arrested a man who had been eluding them for decades. The Golden State Killer, as he'd been known, was responsible for more than a dozen murders and 50 rapes. This morning, new details of the rigorous investigation that detectives say brought down the Golden State Killer more than 40 years after his alleged killing spree began. Detectives had uploaded a DNA sample from the suspect to an open-source website called GEDmatch. The site provides, in its words, DNA and genealogical analysis tools for amateur and professional researchers and genealogists. We've just learned from multiple law enforcement sources that investigators use genealogy websites to help link D'Angelo to what was previously the unknown mystery DNA of

the attacker. GEDmatch lets anyone upload raw DNA data from home genetics testing companies like 23andMe and Ancestry.com. It turned out that at least 24 relatives of the suspect were included in the GEDmatch database. The police, by cross-referencing the suspect's DNA data against census data and cemetery records, were able to confirm that they had the right guy. Police say the 72-year-old appeared surprised when they swarmed his home Tuesday evening. More than 100 pages of heavily redacted court documents

read like a real-life CSI, revealing that a DNA sample recovered this April sealed the case against him. How remarkable is that? That a bunch of civilians just looking to fill out their family trees had inadvertently crowdsourced the capture of a murder. But not everybody saw it as remarkable in just that way. I'm Anne Wojcicki, and I am the co-founder and CEO of 23andMe. 23andMe has become world famous for their mail-in DNA spit kit. You send them some saliva,

and for around $100, they'll send you an ancestry profile, and for another $100, a lot of health information from your purported risk of various diseases to whether you should be able to detect the smell of asparagus in your urine. But since the beginning, Wojcicki says she was hypersensitive about how and where the personal data of 23andMe customers would be used. In our consent form, we specifically thought about, like, how do we make sure that we're not set up for crime,, you know, for like the FBI to come and use this. One story we read about recently was how the Chinese government has been using DNA testing, much of it driven by technology and data from the U.S., to enforce what some human rights advocates see as discrimination against racial groups like the Uyghurs. Does 23andMe think about

or participate in some kind of international regulatory structure to ensure that this kind of data is not used for discrimination, oppression, etc.? Since the early days of the company, there's a group called the Ethical Legal Social Community that has actively followed 23andMe and what we're doing and what our consequences are. So what's interesting is like people often compare us to the tech world and what's happening now. There's a big difference because there's never really been an ethical, legal, social group following Google and Facebook and others, but we've always been hounded by this group. And frankly, I'm grateful to them now because I think that we premeditated a lot of

what's coming in things like the Golden State Killer. If you think the arrest of the Golden State Killer represents a revolutionary use of personal DNA, just wait, because the revolution is only just beginning. Today on Freakonomics Radio, what the revolution looks like from inside 23andMe. I think we have a long ways to go here. And from the user end. And in the middle of the night, I sometimes ask myself this question. Who am I? Who am I now that I know the truth?

This is Freakonomics Radio, the podcast that explores the hidden side of everything, with your host, Stephen Dubner. Anne Wojcicki's own family tree is pretty impressive. She's the youngest of three daughters born to Stanley Wojcicki, who was a professor of physics at Stanford, and Esther Wojcicki, a journalist and beloved educator who has won many awards. Esther recently published a book called How to Raise Successful People. One of their daughters, Janet, is a globetrotting anthropologist and epidemiologist. Here's Anne again. She's living in Japan now. She has studies in Rwanda and, you know, in rural Alaska.

And then there's YouTube. Come on, don't leave out YouTube, sister. Oh, she's interesting, too. I love her, too. Susan Wojcicki, the oldest sister, was CEO of YouTube, which is owned by Google. She was Google's first marketing manager, its 16th employee overall. But her Google connection predates her employment. When the company was just getting started, Susan Wojcicki rented out part of her house to Google founders Larry Page and Sergey Brin. The Google-Wojcicki link expanded when sister Anne Wojcicki, shortly after founding 23andMe, married Sergey Brin.

They had two kids and divorced eight years later in 2015. Anne Wajiski, who is now 50 years old, went to college at Yale, where she majored in biology and played varsity ice hockey. After graduating, she went to work in finance, primarily as a health care analyst for investment funds. Her focus was on biotech firms. Wall Street was my really in-depth look at the health care system and how it works. And I started to realize that if I was a healthy 100-year-old, if I was never diabetic, I never had heart disease, I never had, you know, walking issues, I'm not generating money for the health care system. There's not a money-making opportunity in saying, well, I'm going to solve how to keep you healthy. Wojcicki realized that the U.S. health care system and its investors were really good at monetizing illness.

What about wellness? Not so profitable. The problem is that the payment system is set up that you pay for treatments of conditions, but you don't pay for ongoing health. If I stay healthy, like no one really cares, except for me. The consumer voice was really not represented. And it's a shame that there's not really a business model in place to say, I'm going to reward you for keeping you healthier. And then I read that Larry Page, one of the co-founders of Google, told you that even though you were doing this, you know, pretty interesting, good work on Wall Street, that you were really part of the problem and not the solution. Was that really, I mean, how true is that story? Was that a really big push for you deciding, hey, I'm going to get out of this business of profiting from this kind

of misaligned healthcare system and instead try to start a company that does something different? Well, by the end of, you know, my tenure on Wall Street, after 10 years, I was sort of in this very cynical place of like, you know, my sister would give a talk. She does work on obesity and she would give a talk about obesity and the coming crisis and how it's going to be detrimental to society. And I would give the corollary talk that's like obesity, the ultimate money-making opportunity. You know, say, oh, obesity in China. You know, like these people aren't just going to, you know, get sick and die right away. It's, you know, 20 years of heart disease, diabetes, this and that. And people would look at me like I was evil. And I was like, no, I'm just reflective of how the system thinks. And so I was becoming really cynical. Like, look, this system, it is meant for making money off sick people. And it was at that point I would brainstorm with people. Like, what can we do?

We need a revolution. So I would complain a lot. And I think one day Larry was tired of me complaining and was just like, in his Larry way, was like, you're either part of the solution or you're part of the problem. And it sounds like you're part of the problem right now. And, you know, it wasn't the only motivating factor, but it's, you know, it's a good reminder. In 2006, Wojcicki co-founded 23andMe with the biologist Linda Avey and the entrepreneur Paul Cosenza. It was one of the first direct-to-customer personal genomics companies.

Since then, a few dozen DNA testing kit services have come to market, and more than 30 million people have taken a test. A lot of people are just in it for the family connections. That's the main appeal of the biggest player, Ancestry.com. But 23andMe has, from the outset, also offered the option of a personalized health report. It's a saliva test, remember, not a blood test. It doesn't diagnose disease. Instead, it purports to link your genetic makeup to potential risk for certain diseases and the likelihood of other traits. With 5 million

customers who've bought the health reports, 23andMe has the world's largest database of genetic information for medical research. And that, as we'll hear today, comes with a lot of complications. When 23andMe was starting out, their health reports were not approved by the FDA. Wojcicki didn't think they needed the approval, but the FDA disagreed. In November of 2013, we got a warning letter from the FDA. Federal law states that any kit intended to cure, mitigate, treat, prevent, or diagnose a disease is a medical device that needs to be declared safe by the FDA. We did not believe at that time that we were a medical device. And to this day, you know, a lot of what we do is very different than traditional medical devices. So it became abundantly clear, you know, with our warning letter, like, there's

no more debate. We are a medical device. And what we were asked to do was to stop returning health information. We could continue returning raw data, and we could continue returning ancestry information, but we had to stop interpreting the health information for our customers, and we could continue returning ancestry information, but we had to stop interpreting the health information for our customers and we had to go through an FDA process. And what was the response in your building to that letter? That must have felt like a punch in the gut. It was more like, wow, well, the onus is really on us. We own the responsibility to prove to the FDA that this is actually a responsible company and product. So we went through, you know, methodically trying to go and get approvals for our past reports. And it was hard work. But if the FDA wants data, like, wow, we're good at

generating data. And so we'll prove it. And frankly, I am grateful to the FDA that when I buy a product, I have a high confidence that it's safe. So as much as I was upset about this, I'm also respectful of the cancer, celiac disease, late-onset Alzheimer's disease, and Parkinson's disease. Here's what the agency said at the time. These are the first direct-to-consumer tests authorized by the FDA, which may help to make decisions about lifestyle choices or to inform discussions with a healthcare professional. We're really trying to make a constructive difference in the healthcare space. And I'm using all that information I had to empower the customer, empower all of us to take charge and make a difference and actually like be healthy. Right. So by pursuing a vision that is about a solution and that doesn't monetize illness, you started a company that's now valued somewhere around between two and three billion dollars. Is

that about roughly right? You know, it's kind of the least of my worries. Like valuations are always important, but to me, the ultimate of my worries. Like valuations are always important, but to me, the ultimate financial success, when I can point to like, hey, like 20 million people didn't die in their 40s because of me, then I'll feel like, yeah, that's worth bragging about. I mean, the irony, though, is that you have successfully monetized the, I don't know exactly what to call it, the curiosity about or the pursuit of wellness and or connection. I think I actually disagree. One thing that drives me crazy in health care is that there's always this assumption that you and I, the individuals, the lay people, the non-PhDs, the non-MDs, that we are incapable of taking care of ourselves. And I think people, when they're

sick or they're given the opportunity, like they actually want to step up. They just need that advice and they need the information. You know, the majority of people who are thinking about getting pregnant don't necessarily get carrier status screening before the pregnancy. But if I walk into my doctor and I say, hey, I'm thinking of having children and I'm a carrier for cystic fibrosis and my partner is a carrier for this mutation, that's a helpful dialogue. So we potentially fill in clues that wouldn't have otherwise come up. And do you feel that physicians and medical providers are taking this information in the spirit that you intend it? Well, I think we have a long ways to go here. We've put a fair amount of resources in the last couple of years in terms of outreach to key providers. The next phase of this company is specifically about helping people take action with this genetic information and also helping the

medical community value consumers coming with their genetic information. The thing I'm most proud of is that we have shown that you can get this information on your own, truly direct to consumer, without a physician and without a genetic counselor. And I think that's a monumental step for the customer, for the individual. And the reality is the average person has, you know, less than 10 minutes with their doctor. This is an opportunity for people to educate themselves in a way that's often incomplete or wrong. So persuade me that you defend that position because it's the right position and not just because you've chosen for your firm to go the route of direct-to-consumer rather than with physician or genetic counseling contact. Well, I think that the consumer today often doesn't

have a relationship with a primary care provider. So I do think that there's a responsibility for the consumer to get educated, to have information, to keep track of it. So as you spoke, you made the assumption like, well, some of the information is incomplete or wrong. Like we just went through the FDA process. We prove the information we have is valuable and it's correct. There are a couple important caveats to consider here. Many other personal genomics companies do require some sort of physician approval or genetic counseling to ensure that customers don't misinterpret the risk information or perhaps make poor decisions based on it. Also, even though a 23andMe risk report is definitively not a diagnosis, you can imagine how learning about a risk can carry some costs in addition to the benefits. It sounds as though you believe in the upside of knowing as much as you can as early as you can,

but I'm guessing you can also empathize with those people who think that, wow, you know, just having that word in my head, Parkinson's or Alzheimer's, might exact a cost that might not allow me to live my life to the fullest. I think this is where I go to that whole choice again. Too much of healthcare is forced on us. I think that healthcare should empower people with more choice. And it's like one of the core tenets that we have is like, if you don't want to know your Alzheimer's results, you absolutely should not know them. And that's your choice. And so that's why we actually do have an additional layer of consent on top of Parkinson's, Alzheimer's, breast cancer. So we want to make sure that our customers are never shocked and surprised. Two years after 23andMe was cleared by the FDA to deliver those 10 risk reports,

it launched a new health report for type 2 diabetes, one of the most common diseases in the world. A recent CDC study estimates that roughly 40% of the adult U.S. population is expected to develop diabetes during their lifetime. It's the seventh leading cause of death in the U.S. The 23andMe risk report for diabetes is particularly interesting in that it was developed exclusively using 23andMe customer data, more than two and a half million customers who consented to participate. It also used a new method of detecting disease risk. One of the most interesting things that's come up scientifically over the last decade is these what's called polygenic risk scores. So not looking at just one gene and a disease, but looking at thousands or even millions of small effect sizes and adding all of those up to see, wow, this really adds up to a

risk factor for people. And we feel like this is a lot of the direction where healthcare is going to go is in these polygenic risk scores. You might have expected that a new diabetes risk test would generate a lot of enthusiasm, but much of the immediate response was critical. Polygenic risk scores work best for people of the same ethnic background

as those who provided the data that goes into the risk algorithm. And 23andMe's database is overwhelmingly composed of people of European descent. Diabetes is an especially significant threat for African Americans. An article in Wired argued that the new 23andMe diabetes risk test is tuned to be most useful for skinny white people. So let me ask you this. I know your database is pretty European heavy, and some people think it's way too white. But, you know, it's also voluntary. So I don't know what kind of diversity you're trying to encourage.

But let me just ask you about one particular element of that question. As I'm sure you well know, there's a really long and terrible history in this country of African-Americans today are still much less likely to participate in the health care system, whether that's a direct cause or not. Who knows? But and that's got a serious downside. So are we seeing that same reluctance now? Do you think among, you know, the African-American population, maybe other populations that there's just a skepticism? The idea of putting their DNA into a database like this is too, you know, frightening. And if that's true, what are we, the universe, missing out on by not having the sample be as representative as we might like? Yeah, I think that's a great question. So first, you know, we have 20% roughly of our customers

are non-European. So while that's a small percent, that said, on our size and scale, it is the largest such communities out there. So we're actually really able to do a lot of research on different communities. That said, I'm absolutely empathetic to some of these communities that have been poorly treated. Secondly, we're doing a lot to try and improve relationships there. And so we actually have a global genetic diversity project where we are recruiting individuals from specific countries like Tanzania and Cameroon, Chad. So we have a bunch of countries where we're actually offering, you know, free testing for people to come in. And part of the reason why we do that is the more people who come in from those communities, then we can actually develop the reports to be representative of all populations.

So building a risk test that's useful for as many people as possible. That's one challenge. But there's another big challenge, perhaps far greater, when it comes to dispensing personalized health risk reports. How do you translate the knowledge of risk into action? How do you ensure that someone who learns they're at risk

for some major disease actually does anything about it other than worry or get depressed? We have a lot of information on the site in terms of like, what are resources for you so that people look at this and they at least know where to go. We're actively now looking at programs of ways to help people better understand food and behavior. And our first step with that was this partnership we have with Lark. It's AI coaching, and it's trying to help people

change their behaviors. And I think that's sort of the next generation of what's coming. So give me whatever evidence there may be that learning about an increased risk via 23andMe or some other genetic test actually leads to changes in individual behavior. Well, we actually did a study with Robert Green at Harvard, and he looked at our saturated fat report, and he was looking at what people want to do with this information. And he found that I think it was even at six months, over 40% of our customers, whether they had an increased risk of being overweight from saturated fat or not, they were looking to make

changes to their diet. What does that mean, looking to make change? And that was sustainable at six months. Like doing it or looking to do it? Well, what we find is a lot of people don't know, like, what is saturated fat? Well, what do I do? People get a BRCA result or they get carrier status information. They write into us and they tell us what they are doing. Customers all over the world that I end up meeting and telling me about what they learned and how they've changed. The study that Wojcicki cited, Robert Green of Harvard, was one of several co-authors. It's not quite as persuasive as one might hope. It's called Diet and Exercise Changes Following Direct-to-Consumer Personal Genomic Testing,

and it involved an online survey of about a thousand users of 23andMe and another personal genetics company. First of all, keep in mind something we've said on the show many, many times. Self-reported data are not necessarily the most robust data. And I'm putting that kindly. This survey asked people about their diet and exercise habits just before they received their health risk reports and again six months later. The study's authors write, although nearly a third of participants reported making diet and exercise changes that were directly motivated by their personal genomic testing results, there was no consistent evidence that specific genetic risk information received from personal genomic

testing were associated with the specific diet and exercise variables that we measured. In other words, maybe people who sign up for a genetic risk report are the kind of people who are already motivated to make a change. And getting the risk report may be a consequence of that change, not a cause. We found another study suggesting this explanation may be the truer one. So I am looking at a 2016 British Medical Journal report about whether genetic testing leads people to alter

their lifestyles or behaviors. And it finds basically it doesn't. It says, quote, expectations have been high that giving people information about their genetic risk will empower them to change their behavior,

to eat more healthily or to stop smoking, for example. But we have found no evidence that this is the case. So we know behavior change is really hard. And I'm just curious, I guess, about holistically overall confidence that the information will actually be a net gain. I'd throw the Larry Page quote back at you. Like, if you're really that down on humanity, that you don't think people can change their behaviors and there's no way of getting them to change their behaviors, it's a really sad outlook. And I believe that there is a way to do that. And we just haven't figured out the right way. And I look at a lot of these cognitive behavior tools that are online that are working.

Honestly, you look at the diabetes prevention program that started in the early 2000s and that that was better than most drug therapies out there. So there are ways to get people to change their behavior. I'm really optimistic about the potential of the Internet. I think it's a sad state that the majority of the medical world has essentially resigned themselves that people are not willing to change. And I'm a believer in humanity that people given the right tools, I think people will step up. I am so optimistic about your optimism, and I'm generally very much an optimist as well. But the only thing I would say on this point in particular, in terms of especially personal health, is that we do have a lot of data in the modern era when the risk factors to personal health have been really pronounced in part by the abundance and cheapness of low-grade food and the ability to be really sedentary. And what we see is that even though we have known for quite a long time now what a good diet looks like, what good sleep looks like, the dangers of smoking, the benefits of exercise, et cetera, et cetera, et cetera, the vast majority of people are not able to commit themselves to that routine, even though the knowledge is there.

And it speaks, I think, to, you know, a lot of things intelligent, but also disciplined, maybe assume that the rest of us are as disciplined as you are and whether that's a sort of disconnect. I base more of this experience and even a lot of my customers, like customers all over the world that I end up meeting or people who, you know, are doing my hair for a talk and telling me about what they learned and how they've changed. I think the one thing to recognize, like, it's absolutely hard. It's much easier to say, here's a pill. You're high risk for type 2 diabetes or you're pre-diabetic. Here's metformin. Like, take a pill and be done. It's harder to change behavior. And that's 100%, but it doesn't mean it's impossible. And there's something about your DNA of getting something that's in black and white that's like, wow, we should potentially really take this seriously.

Coming up after a quick break, the clock is always ticking. For somebody with a fatal illness, that can be maddening. Like, I just gave you my data. Do something. Anne Wojcicki is CEO and a co-founder of the personal genetics testing company 23andMe. It provides for around $100 a wealth of information about your ancestry and for an additional fee, a report on your health

characteristics and risks. The company has about 10 million total customers, slightly more than half of whom buy the full Ancestry Plus health report. but those are one-time fees. Should that be enough to justify a valuation of several billion dollars? Here's another way to look at it. 23andMe charges people a couple hundred dollars to supply individual genetic information, which, when aggregated with millions of other people, creates a database that may have massive implications for the future of healthcare and for the financial future of 23andMe. In 2018, the British pharmaceutical firm GlaxoSmithKline made a $300 million investment in 23andMe in exchange for the rights to use their genetic data for drug discovery. In addition to GSK, 23andMe has partnered with or taken investments from Pfizer, Genentech, and Procter & Gamble, as well as

several non-industry partners, including universities and institutes. So let's start with just what you're trying to accomplish in these cases and how your data gets put to use? Or maybe I should say how our data collectively gets put to use. Yeah. One thing I always found interesting when I was on Wall Street is that people would consent to be part of research and then they'd find out that nothing had happened to their sample. What do you mean nothing had happened to their sample? Like they were disappointed that nothing happened? So cancer patients, for instance, consent to a study at Harvard, for instance, or Stanford, and then they find out that their sample is just sitting in a refrigerator.

And for somebody with a fatal illness, that can be maddening. Like, I just gave you my data. Do something. In the early days of 23andMe, Wojcicki says they recruited a community of sarcoma patients to share their genetic data with the hopes of advancing research. Sarcoma is one of those diseases that's very diverse. It's poorly understood. You know, it's hard for any one center to have enough patience to do big research projects. We had all these people come in and we talked about different ways we're going to do research and, you know, consent and we're getting their feedback. I remember the woman looking at me and she was like, Ann, I'm going to die in the next 12 months. Like, stop asking me. Like, do something meaningful that's either going to have an impact on me or is going

to have an impact on my children. And I think about that all the time. When I look at academia, there's a lot of fiefdoms. You know, like, it's hard for one center on the East Coast to share samples with another center on the West Coast. And it became almost insulting to me, like, I want to do more. And so 23andMe is a platform essentially for people to say, I want my data to be used broadly in research. And frankly, pharma companies are the companies that are discovering treatments for diseases. 23andMe has over 150 publications that we've done, and we've done hundreds of studies. Almost every disease has representation. So we have over 19,000 people with Parkinson's. We have over a million people

who are genetically high risk for Alzheimer's, 800,000 people with heart disease, over 10,000 people with colorectal cancer, 750,000 people with depression. So massive numbers. We're trying to allow individuals to have an impact on the research world and discoveries and improve, you know, the state of health care for all. Are these the largest such numbers in the world? Oh, by far. There should be more media outcry that I'm not doing enough, frankly. A cynic might have a different complaint. A cynic might say that Ann Wojcicki tells an origin story about 23andMe that's based on her disgust with how Wall Street monetized illness, but that the firm she built uses consumer data to partner with pharmaceutical companies in order to monetize

illness. When we asked listeners of our show what they most wanted to hear about when it comes to home DNA testing, a majority dealt with privacy. The privacy concern was one that we hear a lot, and another is, frankly, it's profit. So the idea is like, wait a minute, I'm paying 23andMe for a kit and the test and the results, 100 bucks for just Ancestry or 200 for Health and Ancestry. So I'm paying for the service. But then I read that 23andMe uses my genetic data to make commercial deals with pharmaceutical companies or so on. And then I start to think, well, OK, I opted in. I understand that.

And I really like the idea of advancing science. But shouldn't you be paying me for that instead of me paying you? Because my data is worth a lot more to you than maybe it is to me. So the most important thing I found from customers is that they want to see the results. They're not interested in like a $50 check. I think secondly, like we're not a profitable company. We are doing all kinds of research deals. We have our own drug discovery team. We are also investing a lot in researching prevention. So the theoretical funding of like, oh, all this money coming in is not there. That said, we're really committed. And I think this is something that we think about quite a bit in the long term when we do have a successful therapeutic on the market or I do have a successful way of preventing a condition, how do I give back to my customers? And that's 10 years out.

So at this stage, the most important thing I can do is give people a sense of pride of what they have done and say, here's the papers that you've been part of. Here's the contribution that you've had. And I think that as we develop therapeutics, when that theoretical cash flow can come, we'll have to think about what's that right way that our customers feel like they've benefited. Do you know what the first one or two therapeutics will be? I mean, the one thing I learned from biotech is that at this stage, you never know. We have 13, 14 compounds in research stage and in development. I'm hopeful that we will be in humans in the coming years. And it's diverse from, you know, cancer to asthma, heart disease. And, you know, we have this big partnership with GSK. And what was great there is that we needed a partner who could help us scale. If I know that I have a genetic discovery and I'm sitting on it, like my customers should be angry at me. I should do whatever I can to try to develop those sooner. And so that was the beauty. GSK really helps us scale. How does 23andMe protect a customer's privacy generally?

I mean, privacy is key to the company. So in terms of like internet security, we do everything we can, recognizing that there's always limits. We try to be very real with people. When you're online, there's always a risk, but we do everything we can to make sure from engineering infrastructure and data security, we're doing everything we can there. Has 23andMe ever been substantially hacked? No. I'm really proud of the team. You know, we had a lot of our core engineers from the early days came from banking.

And, you know, I love saying, like, look, your DNA is beautiful, but would I rather see your DNA or your bank account? So there's a lot to learn from the banking industry. The thing that we've really tried to pioneer is sharing options. So, for instance, right now in HIPAA, you know, it's really super restrictive. And I would say it's harmful. A lot of the ways HIPAA functions, it prevents any kind of beneficial sharing. And what 23andMe has tried to pioneer is saying, I'm giving you options. The thing people don't understand about privacy is what privacy means is choice, is that I want the choice of saying

I've opted in and I want the choice of opting out. Now, let's say I want to opt into all those things, but I'm also concerned that my data, non-aggregated, non-anonymized data, may somehow end up in the hands of one day a healthcare company or insurer or an employer, present or future, or a future partner or spouse. So we explicitly say we never share your individual level data without your explicit consent. So unless you have explicitly told us we can share your individual level data, we are never going to. When someone decides to take a home DNA test, whether for the health risk profile or just for ancestry purposes, there's one huge variable that is perhaps impossible to prepare for. How the information contained therein will affect you and the people you know and perhaps people you don't know.

Police say the 72-year-old appeared surprised when they swarmed his home Tuesday evening. A very public outcome like the capture of the Golden State Killer may be rare, at least for now. Much more common are the revelations that can reverberate within a given family. In 2010, when Ann Wojcicki was still married to Sergey Brin, one of the founders of Google, Brin took a 23andMe test and learned he had a genetic mutation associated with higher rates of Parkinson's disease. It's an interesting story because it was recommended to us that there was no reason to test because it was so unlikely that he would ever have it. And so right there, it's like kind of an example where the medical

community was like, don't bother getting the information. There's no reason to get it. And what would you do if you did have it? So, you know, the convenience of having a genetic testing company is like, well, don't mind me. We'll put that mutation on our chip. Like, I think your mom, like she has two copies of this and you have one copy. And like the surprise of like, holy cow, like you guys have this. And the advantage of finding out young is that it gives a lot of time to think about what are the actions you're doing and how do you want to try and prevent and how do you want to live your life? Did everyone in your family do a 23andMe DNA test? Yeah. For a while, we felt bad. We'd have relatives visiting and we'd present them with a spit kit. We're like, no, no, no. It's not an entry criteria to dinner.

You know, we just we're just really interested in building the family tree in this way. It's super interesting. Now, I understand you learned at least one surprising thing in the familial DNA testing. Yeah, my mom called me one day and she's like, you know, there's this guy on 23andMe and it looks like we're pretty closely related to him. And I joke because she has a brother who, you know, who never had children. But lo and behold, it turns out that, you know, he did have a child and was given up for adoption. And, you know, this person was raised as an only child and then suddenly logs into 23andMe and lo and behold, there's a lot of us on 23andMe. And so, you know, it's been really lovely. There's a lot of things I can see, you know, similarities with my uncle, similarities

with the family. So you've developed a relationship, it sounds like, yeah? Oh, yeah, for sure. No, we see him quite a bit. To me, one of the most exciting things that 23andMe is doing is redefining family, identifying people who were part of the family that for one reason or another have, you know, been disconnected. As a child of Jewish descent, lots of family left Russia and the Holocaust. And it's amazing to be able to reconnect people. I love it. I looked actually online the other day and I saw, wow, I have a couple other relatively close cousins I need to connect with. I'm sure you've heard a lot of happy stories. I'm guessing you've heard weird stories, too. And it seems that there's like a new literary genre being born right now, which is, you know, the memoir where someone discovers that their relatives aren't who actualities. But it's also, there are all these family secrets that are being kind of exploded by science. And I'm just curious, A, how you feel about that, and B, I'm also curious whether that was an unintended consequence of what you've done or whether you kind of anticipated that would be happening? So I recognize you have a range of stories. Often, you know, people are pretty excited about being united. And sometimes it's not easy on day one, but that it's a journey.

And I think what's so interesting about the time period we're in right now is that all kinds of things that were not disclosed are suddenly being, you know, unearthed. And so I think the most important thing we can do is make sure that our customers are aware of the potential. Is this, however, the end of, let's say, anonymous adoption, as we know it, and anonymous egg and sperm donation? I think that, you know, egg and sperm donors have to be aware that this is a technology that allows people to find each other. But a lot of people who've donated over the past, let's say, even 50 years who are now being discovered. I mean, you can imagine what a jarring moment that may be.

Yeah, and I empathize with those people. I can imagine the shock for some of them. The world is changing pretty rapidly. And I'm happy that one of the unintended consequences of 23andMe is connecting people. And, you know, my hope here is that people start to look as it kind of goes from the weird to the wonderful. People absorb and they can say, like, this is actually pretty common. I was just thinking how boring the world would have been if you had come along a few thousand years ago, because so many stories throughout history from the Bible and royal families, so many of them are about fertility secrets. Think of all the plays that couldn't have been

written. So I'm glad you waited until the 21st century to do it. Well, now there'll be a new generation of fertility-related stories. There's something about your genetics, which is potentially more powerful than looking in the mirror. There's a reveal that happens. Why do you think that is? It's so curious to me, because I've read,

do you know the book by Danny Shapiro, Inheritance, it's called? I have, I haven't read it. She came from an Orthodox Jewish family and she was always the blonde outlier. She was very, very, very, very proud of her family's Orthodox history and ancestry. And so for her, it was jarring because she had no idea that her father was not her biological father. Let me tell you what it's like to find out you were wrong, just plain wrong, about who you are and where you come from.

And literally, she wrote almost something like you just said, like stronger than looking in the mirror. To look in the mirror one day and see a stranger staring back at you. That's what happened to me. A family secret was kept from me for my entire life. And in the middle of the night, I sometimes ask myself this question. Who am I?

Who am I now that I know the truth? I'm curious why you think that is, because I didn't frame it that way in my mind. I think that, you know, who raises you and the environment you're in, you know, that is so much more powerful or meaningful than the biological determination. And yet it seems a lot of people say what you're saying. And I'm just curious if you have any, I guess, philosophical-ish thoughts about why that pull is so strong and deep. Well, I think a couple things. There's something about your roots. You're connected to these people. There's a story. And for some people, that story

is important. And for some people, it's just not and I think that we are in a moment in society where a lot of people don't feel grounded and there's something about looking at your DNA and finding a trace in the past and where it's been and those roots and the connections and understanding why why are you the way you are today? Why do I have these preferences? Why do I look a certain way? Why does my pee smell like asparagus? It's everyone's top question. Are you kidding?

No, I'm kidding. Yeah. I just say it's like people I think are looking for a question of like, why am I the way I am? And that's actually a beautiful question. There's spectacular human diversity on this planet. And we're all a little bit different. And you see mutations in certain areas have given rise to certain characteristics. And there's all kinds of reasons why those mutations have happened. Each mutation actually has a story. And those mutations connect you to other people into the past. One of the favorite things my children and their cousins love doing is looking at what DNA do they have in common with each other. And it's fun to look at,

like, okay, the I genes, like, who has them in common? Who got them from other grandparents? There's a different way of feeling like, oh, I'm connected to you. I have this bond. And I think that, like I said, people are looking for meaningful connections. Coming up after the break, how Ann Wojcicki's vision fell apart. I'm Stephen Dubner. This is Freakonomics Radio. At the beginning of this updated episode, we heard briefly from The Wall Street Journal reporter Rolf Winkler. He recently published an article that was headlined 23andMe's Fall from $6 billion to nearly $0. We spoke with Winkler the other day. I saw what had happened to the stock. And we thought, a few years ago, this company was

so popular. It was so huge. What happened? And it was just a jumping off point for a pretty large investigative project. What would you say were some of the most noteworthy developments in the life of this company? Like, what did this company do that made it worth a lot of money to some people, at least for some time? I think they had two things going for them early on. One thing was Ann Wojcicki was Silicon Valley royalty. The first check into this company was a loan from Sergey Brin, her then boyfriend. And they got support early on from Google Ventures, from Google, and she was a popular person in the Valley and people wanted to see her succeed. That is something that would help any startup founder get a little bit of a leg up. But it wasn't just that. There was also an

interesting thesis here, which is data. Early on, they thought about, well, if we're doing all these consumer tests and we're collecting this database, this could be really valuable. So what happened? I mean, it's not an And there's something interesting from your first interview with her, Stephen, where you said, you know what, Anne, you've successfully monetized wellness. And you guys talked about that a little bit. And the problem was she never had. She made some revenue from it, but she never was able to get in the black. She never made any profit from it. That was the key challenge, that there's never been a way to profit from the things she's tried to do. Maybe I'm just idiotic here, but a one-time use product, even if it costs $99, which is more than a Coca-Cola, but I can drink a lot more than 99 Coca-Colas in my lifetime, and they're losing money on that $99, I wouldn't think that would be a great model for a consumer good, because how many people need to take it more than once?

Well, certainly not. And that was the key challenge that we talked about in our story, is you'd only need to take this test once, and you aren't actually likely to get any life-altering health results. Most people won't get that. It's a fun one-time thing.

Yeah, sure. It turns out I'm 20% Ashkenazi Jewish. Had no idea. I've got some Irish. That's kind of fun. Or my pee smells like asparagus and yours doesn't. Sure, that's fun. These are kind of cool things that made this a great stocking stuffer.

But you did it one time. That's the stocking stuffer in 2017. And, you know, we got to move on to the next toy the following year. If the business model from the consumer end is flawed and that it's just, you know, once and done and you can't get any more money from the consumers, what other kind of revenue streams did they think about in that realm? Well, if you think back a few years ago to when all of the streaming channels were popping up, remember there's Plus Everything, Disney Plus, ESPN Plus, they thought, okay, what if we did a subscription? People are only paying us once for this, but what if we could figure out a product we could sell to them so they would want to pay us yearly? We'll basically sell you access to

new information as it comes out, because there could be new discoveries related to genetics that relate to your genome. And so we'll be able to give you new health reports. And maybe we can track your lifestyle and give you some health recommendations. They thought we're going to basically sell you the test, but then bill you another 70 bucks a year in perpetuity. And then we'll have maybe something closer to a money-making model. But I don't know, as I described that to you, did it sound like a compelling consumer product? It sounded compelling if it came along with Netflix and Hulu, perhaps.

Maybe. So that's the challenge. And when they did their mode of going public, they made a big promise that by around this time, they'd have north of a million people subscribing to this product. That was another thing you could do with SPACs that was important. You could make projections and you could project all these amazing things are going to happen in the out years. We're going to make all this money. And this was one of their big projections. We're going to make all this money from these subscriptions we're going to sell. That was one of the most revealing parts of my interviews with her for my story. I said to her, what about the subscription product? You fell really far short of the projections you made. And she said, we didn't make any projections. I said, you did. And I pulled out of my bag, the presentation that showed the projections

they're making. And she studies it for a minute. and she just says, you know, there's nothing else to say other than that we were wrong. Was she not aware of that component of the SPAC offering? You know, maybe she'd forgotten it in the moment, but that was the basis of her consumer business getting to profitability. It solved a problem for them and their business, but it didn't solve a problem for consumers. So the idea then of using this ever-growing database to fuel drug discovery or to license that data to firms that do drug discovery sounded really logical, still sounds logical to me. What happened there? Was the business model not good? Was the execution not good? Were there other issues having to do with consumers or competitors or regulators? Why

did that not happen? I think there's a bunch of reasons. One of them is time. Drug development takes a long time. You have to discover the drug candidate, right? This is this molecule, for instance, that we think is going to treat this disease. You discover it. You have to spend years developing it in order to then get to clinical trials. And then clinical trials are a crapshoot. And then that takes even more years. And so it takes time. And they're working on it.

They've got stuff in clinical trials now. They've got two. I'm rooting for them. Wouldn't it be great if those drugs work? I mean, yes, they treat cancer. So what's the state of play of 23andMe right now? Give me a sense of, first of all, what the firm is worth and what degree of leverage Ann Wojcicki herself has as, I guess, a primary shareholder. And I'm curious to know what options that leaves available to this company. It gives her lots of leverage. I think the state of play is, first off, right now the valuation is zero.

I should say the enterprise value. So the value of the equity is about equal to the value of the cash in the bank. So if you were able to magically buy all the stock and shut down the company and take the cash out of the bank, you wouldn't have actually lost any money is the way to think about that. So it's effectively worth $0. That doesn't sound very attractive to a potential investor or buyer, except if I think that this firm that has an enterprise value of zero, in fact, has a really significant enterprise value because of this data that hasn't been harnessed to great commercial success yet, but theoretically could be. So what kind of firms or investors would perhaps be

interested and why? Great question. Correct. If you thought that some of these drugs were going to work out in the long run, it's a great buy. But I think investors broadly are throwing a lot of biotech stocks out because they don't want to take risk with 6% interest rates out there. That puts Anne in an interesting position because Anne Wojcicki, after her breakup with her former husband, has quite a bit of capital of her own. We should say that breakup was many years ago, correct? Many years ago. And by the way, one thing you learn in the course of reporting on this company, that breakup was happening and her then-husband is being unfaithful with a junior employee at almost the exact same time as when the FDA warning letter came out.

She was dealing with that, and then the FDA shut down her company, effectively. And yet, she was able to deal with both. She's incredibly determined and is able to overcome a lot of obstacles. So given that, the current obstacle sounds perhaps overcomable, yes? So here's what happened. The stock falls so low, the valuation is below zero. She's got some capital. She also owns a big chunk of the company

and through super voting shares, controls 49.99% of the votes, which means she's in pole position. If she wanted to sell the company, she could do that. And she does want to sell the company to herself. In order to do what next? You see that stock out there at this tiny price and it's distracting, it's bad for employees, it's just dispiriting. I think she'd like to just take it out of the public market,

take it private, so they can just keep concentrating on the various missions that she has set out for it. When we spoke with Ann Wojcicki in 2019, she said that privacy was, quote, key to the company, and she stressed that they'd never been hacked. But then 23andMe was hacked in 2023. How serious was that hack and how damaging was it to the firm? I think pretty damaging from a consumer branding perspective. You just made the point, Stephen. We haven't been hacked. Your data is safe with us.

And then some people effectively break in and get a whole bunch of data. Now, there's some caveats here. They didn't get genetic data. Basically, what they got was 23andMe has a social network. If I opt into it, there's this thing called DNA relatives. I can find third and fourth and fifth cousins of mine and connect with them. And get 48 emails a day telling you you have a new sixth cousin living only 18 states away. So basically, the hackers got names of people and the fact that they were Ashkenazi Jewish from that side of the database without actually getting their genetic library. But it was a particular kind of hack that had, you could imagine, dark undertones to it. Oh, and this happened two days before the October 7th attack in Israel. Not two days before, but right before. It's just a black eye that right ahead of the holiday season makes things difficult for a company that relies on the holiday season for its product.

Do we know anything about the hackers and what was done with that data? I don't. The thing to worry about typically is banking information. Like somebody breaks into your financial accounts, identity theft. You know, if somebody finds out I'm Ashkenazi Jewish, I am Ashkenazi Jewish on my dad's side. I don't know, what are you going to do with that? You're going to say you like your haroset with apples and not with prunes, maybe. That's probably not that valuable. Chag Pesach Sameach, Stephen. You too, I appreciate it. So if you had to predict, which I realize is a fool's game to try to predict the future, but if I forced you to, what would you say 23andMe or the remnants thereof would look like in two or three years?

I think they would look something similar to what they do now, except under private ownership. The story of this company is a person and a team that really do want to change the world for the better. And unlike a lot of Silicon Valley, which is a lot of hype and no substance, they just want to make their buck and get out, that's not this company. They really do want to change and make healthcare better. I really do believe her that she's really sincere about that. It's just very hard. Thanks to Rolf Winkler from The Wall Street Journal for giving us some more of the 23andMe backstory and for sharing his take on Wojcicki herself. He seems to have more faith

or belief than most people might have after having just investigated a business failure like this. What do you think of Wojcicki and of 23andMe and the company's future? Let us know. Our email is radio at Freakonomics.com. Thanks for listening to this bonus episode of Freakonomics Radio. We will be back very soon with another new episode. Until then, take care of yourself and, if you can, someone else too. Freakonomics Radio is produced by Stitcher and Renbud Radio.

You can find our entire archive on any podcast app, also at Freakonomics.com, where we publish transcripts and show notes. This episode was produced by Alina Kullman and Rebecca Lee Douglas. Our staff also includes Augusta Chapman, Eleanor Osborne, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmine Klinger, Jeremy Johnston, Julie Kanfer, Lyric Bowditch, Morgan Levy, Neil Carruth, Sarah Lilly, and Our theme song is Mr. Fortune by The Hitchhikers. Our composer is Luis Guerra. My DNA is somewhere, and I guess I could lose sleep over it. But I don't know.

I got a three and a five-year-old at home. I'm losing sleep over it. But I don't know. I got a three and a five-year-old at home. I'm losing sleep over other things. The Freakonomics Radio Network. The hidden side of everything. Stitcher.