23andMe was best known for its direct-to-customer genetic testing service. They offered a DNA kit that promised to reveal everything about a person, from ancestry to predisposition to certain diseases. Despite initial success, its stock prices and overall market value recently declined. A company that was seen as a revolution in the sector is now declining demands looking into the causes.

23&Me’s work process was simple: analyzing a customer’s saliva sample to make detailed reports on ancestry, predisposition to certain health conditions, sensory traits, physical traits, etc. Initially, People were interested in learning about their ancestry, DNA relatives, and genetic health risks. The whole process took 3-4 weeks. We are talking about 2006, when things had just started for the company.

The first setback for 23&Me came in 2013 when the U.S. Food and Drug Administration (FDA) ordered the company to stop selling health-related genetic tests. The FDA questioned the accuracy of the tests and was concerned that people might misinterpret the results without proper medical guidance and make serious life decisions. Hence, the company was temporarily suspended, which cost them a lot. They ultimately gained FDA approval but never could regain their market reputation.

In the meantime, the company faced criticism about its privacy policy. People were worried about their sensitive private information being shared with third parties and started to move away. 23andMe kept saying that privacy was their priority and they never shared data with third parties without consent. However, the company partnered with companies like GlaxoSmithKline to use customer data for drug development, which made customers skeptical.

Also, 23andMe’s success encouraged a surge in companies offering similar services, such as Ancestry DNA, My Heritage, and many more. 23andMe started losing market share when other companies brought more specific and specialized results with lower prices. Soon, 23andMe began to lose its dominant position. Negative press coverage and consumer backlash added fuel to the fire.

If you look at the service, you will realize it is more of a one-time use. Customers do not feel the need to take a genetic test more than once, so there is no chance of recurring revenue for 23andMe. It made steady growth difficult. On top of that, the results of the tests are not anything life-changing. People mostly did it for fun. There is no hook to encourage them to repeat purchases.

The service provided by 23andMe was more of a luxury than a necessity. The economic climate faced uncertainties during the COVID-19 pandemic, so cutting down on genetic testing expenses was one of the first things people did. Consumer priorities shifted along with their spending patterns.
When the company declined, it tried switching to a subscription-based model under CEO Anne Wojcicki. However, it didn’t yield the expected result either. As of March 2023, there were only 640,000 subscribers, less than half the expectations.

A security breach destroyed the company’s reputation in May that year. The hackers stole nearly 7 million customers’ data. The main issue is not that there was a cyber attack but that the company discovered the breach after a long five months.

23andMe’s market value reduced by 95% from its peak, from $6 billion to around $345 million. The company’s revenue significantly dropped in the following six months, dropping to $111 million in November 2023. Along with the decreasing revenue, there were other operating losses.

With the advancement of technology, people’s expectations have increased. Initially, 23andMe offered cutting-edge insight into personal genetics, but like many other lost companies, it couldn’t keep up with industry dynamics and consumer demands. Over the years, 23andMe faced several public relations challenges, destroying its reputation.

The journey of 23andMe shows the complexities and challenges of maintaining growth and innovation. If we list the causes of its downfall, we’ll find regulatory challenges, privacy concerns, increased competition, economic factors, evolving consumer expectations, and difficulties in public relations. The future of 23andMe depends on its adaptive capability.

To sustain itself, it has to overcome the mentioned challenges and bring something innovative to regain its lost fame. A recent decision has been made to tackle the challenges: splitting the consumer and therapeutic businesses to attract a broader investor base. Whether this decision will bring good fortune or not, we are yet to see that.

Safrina Kabir studied Electrical and Electronic Engineering at the Islamic University of Technology. She is a tech enthusiast and a regular writer in this section for several national newspapers.
safrinakabir@iut-dhaka.edu