Latest / The CEO Diary with Fexingo: Leadership Lessons, Executive Decisions, and Corner Office Stories / How Anne Wojcicki Kept 23andMe Alive Through Regulatory Fire
Transcript
- Lucas: In November 2013, Anne Wojcicki walked into 23andMe's headquarters in Mountain View to a scene that looked like a fire drill. The FDA had just posted a warning letter online — a public document — telling the company to immediately stop selling its Personal Genome Service because the agency considered it an unapproved medical device. Luna: I remember reading that letter when it came out. It was brutal. The FDA basically said 23andMe was marketing a test that could lead to people making life or death medical decisions based on unvalidated results. Lucas: Exactly. And the tone was unusually sharp for a regulatory document. The agency wrote that 23andMe had not responded to their concerns for years, that the company was ignoring them. For a startup that had raised over $125 million and sold half a million kits, it was an existential moment. Luna: Other founders might have pivoted on the spot. Or sold the company. Or just shut it down. But Wojcicki did something different. Lucas: She did. And that's what this episode is really about — not the FDA letter itself, but the chain of decisions she made afterward that kept 23andMe alive through what looked like a death blow. Wojcicki had co-founded the company in 2006 with the mission to make genetic information accessible to everyone. By 2013, that mission was illegal. Luna: So what was her first move after the letter hit? Lucas: She didn't panic. At least not publicly. She called an all-hands meeting and told the team that they were going to comply fully with the FDA, but that this was a detour, not a dead end. Then she made the painful call to stop selling health reports immediately — which was the core of their revenue. 23andMe switched overnight to selling only ancestry reports, which weren't regulated as medical devices. Luna: That had to be a brutal revenue hit. I think ancestry was only a fraction of what people were paying for. Lucas: Ancestry was cheaper — $99 versus the old $299 health plus ancestry kit — and it was a much smaller market. Revenue basically collapsed. The company had to lay off about 20 percent of its staff in early 2014. But Wojcicki framed the layoffs not as a retreat, but as a reallocation toward the regulatory path. Luna: And what was that regulatory path? How do you get back in the FDA's good graces after they've publicly dressed you down? Lucas: She hired a new head of regulatory affairs, someone who had actually worked at the FDA. She stopped fighting the agency and started listening. 23andMe submitted a 510 premarket notification — basically a formal application to prove their tests were safe and accurate. And here's where Wojcicki's long-term thinking comes in. Instead of just trying to get one test approved, she invested in building a clinical-grade lab and a database that could support multiple tests over time. Luna: So she was playing the long game while the company was bleeding cash. Lucas: Exactly. And it took years. The FDA didn't approve the first 23andMe health report until April 2017 — almost three and a half years after the warning letter. That first approval was for a carrier status test for Bloom syndrome, a rare genetic disorder. It was a narrow win, but it proved the model. Luna: And once that door cracked open, they got more approvals. By 2018, 23andMe had FDA clearance for ten health reports, including things like genetic risk for Parkinson's and late-onset Alzheimer's. Lucas: Right. And Wojcicki had also been building something else during those wilderness years — a research platform. 23andMe had amassed the world's largest database of consented genetic data, with over 5 million customers by 2018, most of whom agreed to participate in research. That data became valuable to pharmaceutical companies. In 2018, GlaxoSmithKline invested $300 million in a four-year research partnership. Luna: That deal essentially validated the whole strategy. If you'd looked at 23andMe in 2014, you would have said it was a failed consumer product company. By 2018, it was a biotech platform with a pharma partner. Lucas: And that's the core lesson from Wojcicki's leadership. She refused to abandon the mission, but she was flexible on the vehicle. She didn't try to fight the FDA through PR or legal pressure. She complied, she invested in the science, and she found a second revenue stream — drug discovery — that could sustain the company while she rebuilt the consumer business. Luna: You know, this reminds me of something that I think about a lot when we talk about founders who survive crises. There's a difference between stubbornness and resilience. Wojcicki was stubborn about the vision, but resilient about the path. Lucas: That's a really good way to put it. And if these conversations have moved your work forward in some small way — maybe you're leading a team, maybe you're thinking about your own career — we'd love it if you'd consider supporting the show. It keeps us independent, no ads, just the conversations we want to have. You can do that at buy me a coffee dot com slash fexingo. Luna: Yeah, and it genuinely helps. Even a small contribution makes a difference for a show like this. Lucas: Alright. Back to 23andMe. So by 2021, the company had gone public through a SPAC merger at a valuation of $3.5 billion. Wojcicki owned about 15 percent of the company. It looked like the long bet had paid off. Luna: But the market didn't stay kind. The stock has fallen significantly since then, and the business model is still under pressure. Consumer genetics is a tough market — people take the test once, and then what? Lucas: That's the recurring tension. 23andMe's consumer revenue has been declining. In fiscal 2025, the company reported about $200 million in revenue, down from around $250 million a couple years before. The research side is growing, but it's not yet big enough to offset the consumer decline. Luna: So Wojcicki is facing another pivot moment. She took the company private again in 2024, buying out the public shareholders at a fraction of the SPAC price. That takes the quarterly pressure off, but it also puts all the risk back on her. Lucas: Right. And that's where her leadership is being tested again. She's betting that the future of 23andMe is in therapeutics — actually developing drugs based on the genetic insights from their database. That's a much longer, more capital-intensive game than selling kits. Luna: It's also the part of the business where the real value could be. 23andMe's database is genuinely unique. They have phenotypic data — health conditions, family history — linked to genotype for millions of people. That's hard to replicate. Lucas: Exactly. And Wojcicki has been clear that she's in this for decades, not quarters. She said in a 2024 interview that she thinks about 23andMe as a 50-year project. That kind of time horizon is rare in Silicon Valley, where most founders are thinking about the exit from day one. Luna: It also makes her harder to bet against. If you're a long-term investor — or a listener who cares about how companies are actually built — there's something compelling about a founder who's willing to endure a near-death experience and then keep going. Lucas: So what do we take from the 23andMe story? I think the first lesson is tactical: when a regulator tells you to stop, stop. Don't litigate in the press. Don't try to find a loophole. Comply, then rebuild the conversation from a position of good faith. Luna: That's harder than it sounds. A lot of founders would have tried to spin the FDA letter as a misunderstanding or an overreach. Wojcicki just said 'we heard you' and went dark for years. Lucas: The second lesson is structural: don't put all your bets on one revenue model. If 23andMe had only had the consumer business, it would have died in 2014. But Wojcicki had been building the research database from the beginning, almost as a side project. That side project became the lifeline. Luna: And the third lesson might be the hardest: know what you're willing to endure. Wojcicki was willing to see her net worth drop, to go through layoffs, to take the company private at a lower valuation, all because she believed the mission was worth it. That's not a calculation you can fake. Lucas: Yeah. And I think that's the through-line for this whole series. The CEOs we keep coming back to — Indra Nooyi, Satya Nadella, Anne Wojcicki — they all had moments where the easy choice was to abandon the thing they'd built. They didn't. Luna: Which makes you wonder: what's the next test for 23andMe? If the therapeutics bet pays off, it could be a $10 billion company. If it doesn't, it might not survive another decade. But Wojcicki has already survived what was supposed to be the end. Whatever comes next, I wouldn't count her out. Lucas: I think that's the right note to end on. Anne Wojcicki kept 23andMe alive through regulatory fire, rebuilt it with patience, and is now making the biggest bet of her career. Whether it works or not, the playbook she used to survive 2013 is one every leader should know.