Latest / The CEO Diary with Fexingo: Leadership Lessons, Executive Decisions, and Corner Office Stories / How Anne Wojcicki Built 23andMe Through Regulatory Chaos
Transcript
- Lucas: When Anne Wojcicki launched 23andMe back in 2006, she had a pretty radical idea: that people should be able to spit in a tube, mail it off, and get back a report on their genetic predispositions for everything from cystic fibrosis to whether they'd go bald. Luna: At the time, most genetic testing happened in a doctor's office, cost thousands of dollars, and took weeks. She wanted to sell it for ninety-nine bucks and have results in your inbox. Lucas: Right. And for a while, it seemed like she'd pulled it off. By 2013, they'd sold nearly half a million kits. People were finding out they were carriers for Tay-Sachs, they were learning about their Neanderthal DNA. The buzz was enormous. Luna: And then the FDA showed up. Lucas: Exactly. In November 2013, the FDA sent a stern warning letter telling 23andMe to stop marketing its health reports immediately. The agency said the tests were unapproved medical devices and that the company had failed to prove they worked. It was essentially a shutdown order. Luna: I remember the stock market reaction — or rather, there was no stock market because they were private. But the press was brutal. Headlines called it a 'death knell' for the company. Lucas: And yet, Wojcicki didn't fold. She made a series of very deliberate strategic choices that I think offer a playbook for any founder facing a regulatory crisis. First, she didn't fight the FDA in court. She complied — begrudgingly, but fully. Luna: That must have been a bitter pill. She'd spent years arguing that the tests were informational, not diagnostic. That the First Amendment protected her right to give people their own data. Lucas: She genuinely believed that. But she realized that litigating against the FDA would take years and millions of dollars with no guarantee of winning. So she pulled the health reports from the market and started the long process of seeking FDA approval for each individual claim. Luna: That's a huge pivot. The company had to reinvent its entire relationship with regulators. Lucas: And it nearly bankrupted them. In 2014, they laid off about 20 percent of their staff, around 100 people. They lost their partnership with the drug giant Pfizer. Revenue from health reports dried up almost overnight. What kept them alive was the ancestry business. Luna: So the ancestry reports — where your grandparents came from, your haplogroup — those didn't require FDA approval. They were considered 'general wellness' products. Lucas: Exactly. Wojcicki leaned hard into ancestry. They introduced the Relative Finder tool, expanded reference populations, and started offering a subscription service that gave users ongoing updates as new research came out. By 2015, they'd sold over a million kits, mostly ancestry. It gave them the cash flow to fund the regulatory work. Luna: But that's a narrow bridge. Ancestry margins are thin, and competition from Ancestry.com and MyHeritage was fierce. Lucas: It was. And Wojcicki knew the real value — both for consumers and for the company — was in health. So she kept a small team working on the FDA submissions, while the rest of the company focused on growing the user base. She also made a controversial decision: she started selling de-identified aggregate data to pharmaceutical companies. Luna: That's the side of 23andMe that people either love or hate. They've partnered with GlaxoSmithKline, with Pfizer. Users opt in, but critics say it's a privacy risk. Lucas: Wojcicki's argument is that users explicitly consent, and that the revenue lets them keep the consumer price low. In 2018, they signed a three-hundred-million-dollar deal with GlaxoSmithKline, with GSK taking a four-percent equity stake. That was a lifeline. But the real breakthrough came in April 2017, when the FDA granted 23andMe authorization to market a direct to consumer genetic test for ten health conditions, including Parkinson's and late-onset Alzheimer's. Luna: That was huge. It was the first time the FDA had ever allowed a consumer genetic test for disease risk without a doctor's prescription. Lucas: And it paved the way for more approvals. By 2018, they had authorization for over thirty health reports. The company had gone from being shut down to being the first mover in a regulated market. That's a remarkable turn. Luna: What's interesting is the strategic patience. Wojcicki never wavered on the core mission — she just took the long route to get there. Lucas: She said in interviews that she viewed the FDA process as 'a partnership' — even though it didn't feel that way at the time. She hired former FDA officials to lead regulatory affairs, she invested in clinical validation studies, she basically professionalized the company's relationship with Washington. It took four years, but she got there. Luna: There's a leadership lesson in that for any founder. When the regulator is your gatekeeper, you can't treat them as an enemy. You have to understand their framework and work within it. Lucas: Absolutely. And Wojcicki's willingness to pivot — to keep the company alive with ancestry while fighting the health battle — that's a case study in resource allocation under pressure. She didn't double down on a losing hand. She played the cards she had. Luna: And those cards included her own network. Her sister Susan is a top exec at YouTube, her other sister Janet is a professor, her ex-husband Sergey Brin co-founded Google. But she didn't lean on that. She raised money from VCs and kept the company independent. Lucas: Right. And that independence paid off when they went public in 2021 via a SPAC merger, valuing the company at around three and a half billion dollars. Not bad for a company that had been written off eight years earlier. Luna: Of course, since then the stock has been volatile. They're still not profitable. But the regulatory moat they built is real. Any competitor now has to go through the same FDA process, which takes years. Lucas: That moat is the legacy of Wojcicki's regulatory strategy. She turned a near-death experience into a durable competitive advantage. It's something I think about a lot when I look at companies that survive regulatory crackdowns. Luna: You mean instead of just complaining about the regulator, they figure out how to use the regulation to their benefit. Lucas: Exactly. And it's not just about genetic testing. Think about how Uber fought regulators for years and is now navigating a much more complex landscape. Wojcicki's approach — compliance as a path to legitimacy — is probably a better long-term bet for most companies. Luna: Speaking of which, I know our listeners are often founders and executives who deal with their own regulatory headaches. And the conversations on this show, I think, help sharpen our thinking on these issues. If you've found value in episodes like this one, there's a simple way to keep them coming ad-free. Lucas: Yeah, it's a small gesture that makes a real difference. You can support the show by visiting buy me a coffee dot com slash fexingo. No pressure, just a way to say this content matters to you. Luna: Exactly. And now, back to Wojcicki. One of the most telling moments came in 2020, when 23andMe launched a study on the genetics of COVID-19 severity, enrolling over 600,000 participants. It showed that the company could pivot its platform to address a global crisis — because the regulatory infrastructure was already in place. Lucas: That's the payoff. Wojcicki spent years building a regulatory-validated platform that could then be applied to new questions. And it all started with the decision to say 'yes' to the FDA, even when every instinct told her to fight. Luna: So what's the one takeaway you'd want a founder to remember from this story? Lucas: That regulatory compliance is not the enemy of innovation. In Wojcicki's case, it became the moat that protected her innovation from copycats. She didn't win by being louder — she won by being more patient and more precise. Luna: And by having an ancestry business to fall back on. Lucas: Well, yes. But also by having a leader who could see the long game even when the short game looked like a disaster.