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Dr. K's avatar

This is a more brilliant piece of work than the credit you will receive. Superb analysis and likely to be mostly correct. The still unsolved part of the problem is the understanding engine for the phenomics. This has proven to be far harder than imagined (every patient is their own science experiment) and is the source of much feverish activity in the cognitive AI space. It is still the missing piece to pulling off your thesis. But as close as I have seen to future predicting in quite a while.

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Sol Hando's avatar

Looking at their balance sheet, 23andMe had a LOT of problems, including high cost of revenue, (exceeding their revenue when you include admin and marketing) and very high R&D expenses. It seems like they had a fundamentally good business model, selling super high margin DNA testing kits (these things should cost less than $10 not including shipping), but it's been mismanaged to hell as far as cost cutting.

Somehow administrative and general expenses were HIGHER than their cost of revenue, which signals absolutely terrible bloat.

I have no idea what they do with that R&D money, but an acquisition by a responsible corporation (especially one capable of doing its own R&D already and with its own admin team) should be able to bring them to profitability relatively quickly, and the cost of acquisition was not much more than the book value of the company.

I have no idea why they acquired lemonade Telehealth at a time when they were already burning money. Clearly tele-health is a profitable business model, and they have a beautiful lead funnel through their genome testing kits ("You're 20% more likely to have depression, want to talk to a therapist about it?"), but why spend more than the book value of your company to acquire Lemonaid Health? Telehealth is a capital light business model, and they could probably have built their own team in-house, scaling it to the demand that 23andMe was able to generate, without having to acquire a whole business at a premium.

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