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Feb 8, 2021

Genetic Genealogy Leader 23andMe is Going Public. What Will That Mean for You?

Anyone interested in the future of genealogy research by using DNA or anyone interested in how their already-submitted DNA information will be used by 23andMe will want to read a new article by Alistair MacDonald and Amy Dockser Marcus.

I wrote recently (at https://eogn.com/page-18080/10061027 and at https://eogn.com/page-18080/10063660) about 23andMe’s planned upcoming merger with Virgin Group’s VG Acquisition Corporation, along with an additional $250 million from new investors, British billionaire Richard Branson and 23andMe Chief Executive Anne Wojcicki. The new article now describes the future business plans.

NOTE: Richard Branson is best known as the founder and CEO of Virgin Airlines but he also owns several other corporations as well.)

In short, 23andMe has already seen a decline in revenue. (I know that several other companies in the DNA business have the same problem.) The basic problem is that testing a person’s DNA is usually a one-time event. Most customers take the test once, read the results, and then move on to other interests.

This is unlike the genealogy business and thousands of other businesses where customers interact with a company once, become interested, and then return again and again to conduct more business with that company. Think about MyHeritage, Ancestry.com, Findmypast, TheGenealogist, and several other genealogy businesses. Most of their customers try their service(s) once, become interested, and then return time and time again to look for more information. In the business world, this is often referred to “recurring revenue.”

In contrast, 23andMe’s PRIMARY business typically resulted in a one-time visit: sign up, take the test once, read the results, and never return again. That’s a business problem, especially once the potential customer base becomes saturated: most of the people who might be interested in taking a DNA heritage test probably have already done so. There is little repeat business. (Of course, there will always be a few newly-interested potential customers but the number of such new customers seems to be declining.)

As stated in the article, “The deal would help fund 23andMe’s transition away from the slowing consumer DNA-testing market toward the potentially more lucrative health market.

The new plan for 23andMe seems to be focusing on generating new business by encouraging on existing customers (plus obviously attracting as many new customers as possible) to answer research questions and identify people who might want to participate in clinical medical trials. Customers signing up for medical trials results in more revenue for 23andMe.

In short, I see this as a rather good business plan: providing additional (and optional) services for both new and existing customers.

Are you a diabetic? Do you have high cholesterol? Do you have some other inherited medical problem? If so, you may be VERY interested in 23andMe’s new business plans.

You can find the (rather short) article at http://bit.ly/2Z38LOB and read it at no charge. However, that first article then links to a much longer article in the Wall Street Journal that provides more details. The article in the Journal is available only to those who have a paid subscription to that publication.

Feb 8, 2021

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