You buy a kit one time in your life. I'm more amazed that people thought it could be a profitable business once everyone that was going to had purchased their one kit per lifetime. And it wasn't even $200, it was more around $100 or even less if you didn't want ancestry + health. I wonder if I can still get the locked away health part haha?
What do you need though? One lab and software they already have?
They took on VC funding.
A normal "small business" doing this could run with 3 software gals, 2 genetics guys, and a CEO that handles finances and management responsibilities. A "small lifestyle business" like that could make an okay profit for all involved.
A startup, however, took $XXMM in VC funding, which included strong encouragement that "you have to hire this many people, we want at least 10x growth".
Once you hire a team of 30 people to manage your servers and a team of 180 software engineers to write your webpage, it's super hard to scale back down to a scrappy 3-5 person software team.
I assume they were doing the genotyping service at a loss. I had my entire genome genotyped for almost nothing and now I have the data forever. 23andme service was like a store having the milk in the back selling as a loss leader, but they have no other products to make up for it that you buy on the way out of the store. I see they have now added subscriptions, but who would pay for that crap when it's nonsense like if you will have a widow's peak or freckles and it isn't even right most of the time? I assume they thought they would sell all this data to someone like drug companies, but if they had buyers they wouldn't be going bankrupt.
Pay employees and their wages?