For a company with deep support from Google, 23andMe seems awfully beset by problems: Two layoff rounds in five months and the departure of a co-founder. So when we hear the company is "hemorrhaging cash," we're inclined to believe it.
The genetics-testing startup, co-founded by Anne Wojcicki, the wife of a Google co-founder, recently confirmed a fresh layoff round to TechCrunch. A source close to the company tells us close to 18 staff were let go in that round. "They're hemorrhaging cash with no real business plan," said the tipster.
A cash bleed would help explain some other recent developments: co-founder Linda Avery left in September, saying she wanted to focus on Alzheimer's research, according to emails first published by Kara Swisher at All Thing D. And in June, 23andMe laid off close to 10 employees, according to both our current and prior tipsters. Layoff rounds of about 10 and 18 workers are quite significant for a startup that once had an estimated mere 30 on staff.
In another, way, though, the layoffs seem odd: Google just put $2.6 million into the company this past June as part of a $24 million financing round, and Wojcicki's husband Sergey Brin invested another $10 million prior to that. Wojcicki's company even started leasing space from Google. So why would the company be allowed to crater now?
We've been trying to get answers from 23andMe's publicists since last week and have yet to hear back. But we can guess at some possible reasons: To attract well-heeled customers for its $400 tests, the company has been shelling out to fly a zeppelin all over Silicon Valley, which can't be cheap (good thing for Google that the search giant may well own the zeppelin company, helping it recoup some of its investment). Come to think of it, genetic tests can't be cheap either, and the price must seem especially high when customers learn they are buying "recreational genomics" rather than proper medical tests.
Recreational though they may be, 23andMe's tests can at least give clues about a person's medical future. For corporations, they are useless. Perhaps someone can come up with a genetic test for founders that will help predict startup success. We can think of 28 or so recently-fired people who'd be keenly interested in signing up.