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DNA testing company 23andMe just laid off 100 people, or roughly 14 percent of its workforce, reports CNBC. The downsizing comes at a time of declining sales and lack of enthusiasm for at-home DNA test kits.
CEO Anne Wojcicki says she was “surprised” to see the market turn and isn’t sure about the cause of this lull. Could it be privacy fears? Maybe it’s concern over an impending recession? “This has been slow and painful for us,” she told CNBC.
The data indicates this problem isn’t unique to 23andMe. It’s systemic. Sales have been down across the board for consumer-focused DNA tests. Since Fortune has given me this platform to share my opinion, allow me to offer my two cents. It ain’t about the economy — it’s about privacy. (Wojcicki has acknowledged that “privacy is top of mind” for 23andMe leadership.)
We assume a lot of things in life, and we tend to also be pretty trusting. Even I — a person who writes about privacy and data breaches all the time — would’ve happily jumped on the at-home DNA test bandwagon if it wasn’t for my mom begging me not to volunteer my genetic information to a random company. (My argument that I need to get my DNA tested to better understand if I’m predisposed to liking vanilla or chocolate ice cream better was somehow not convincing enough.)
Here’s the thing: During the at-home DNA test boom, many people who wanted to learn more about their family tree didn’t realize that their data could be shared for other purposes. Consumer DNA testing companies can share users’ data with law enforcement, drug makers, and even app developers. (For six years, 23andMe allowed customers to share their data with third-party app developers until finally cutting off access in 2018.)
More than 26 million people have willingly shared their DNA with one of the four leading ancestry and health databases. But now, an increasing number of people are aware of the dangers of giving up your data. The implications of privacy around genetic information came into full view when police used a genealogy website to track down a suspect in the decades-old case of the Golden State Killer. Last year, FamilyTreeDNA, an early pioneer of the rapidly growing market, granted the FBI access to its database of nearly 2 million genetic profiles.
Margo Georgiadis, president and CEO of Ancestry, has said that her company does not cooperate with law enforcement unless compelled by a court order. (23andMe has a similar policy in place.) In 2018, Georgiadis said, the company had 10 requests from law enforcement. But those inquiries were related to credit card fraud, not genetics.
“There’s no question that in the industry as a whole, other actors have chosen to go down a different path and not meet the highest standards,” Georgiadis said at Fortune’s 2019 Brainstorm Tech conference in Aspen, Colo. “Consumers need to understand they do have a choice, and that there are real differences between companies.”
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Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com
VENTURE DEALS
- Kneron, a San Diego-based on-device edge artificial intelligence, raised $40 million in funding. Horizons Ventures led the round.
- Clubhouse, a New York-based developer of collaborative tools for software teams, raised $25 million in Series B funding. Greylock Partners led the round, and was joined by investors including Battery Ventures and Lerer Hippeau.
- Beacon Platform, a New York-based vendor of cloud-based enterprise technology and capital markets software solutions, raised $20 million in Series B funding. Centana Growth Partners led the round, and was joined by investors including PIMCO and Global Atlantic.
- CloudKnox Security, a Sunnyvale, Calif.-based developer of cloud security software, raised $12 million in funding. Sorenson Ventures led the round, and was joined by investors including ClearSky Security, Dell Technologies Capital and Foundation Capital.
- Moov, a San Francisco, Calif.-based data-fueled marketplace for used manufacturing equipment, raised $2.4 million in seed funding. NFX led the round, and was joined by investors including Decent Capital, Darco Capital, and Great Oaks Venture Capital.
EXITS
- TPG Growth agreed to acquire Denali Water Solutions, a Russellville, Ark.-based organic residuals management company, from The Firmament Group. Financial terms weren't disclosed.
- Novacap agreed to sell Intelerad Medical Systems, a Canada-based provider of medical imaging software and enterprise workflow solutions, to Hg. Financial terms weren't disclosed.
FIRMS + FUNDS
- Allos Ventures, an Indianapolis-based venture capital firm, raised $52 million for its latest fund, Allos III.
PEOPLE
- Clay Fisher joined Spark Capital as an investor.
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