What Went Wrong at uBiome, Part 1 – The Journal. – WSJ Podcasts

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This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.

Kate Linebaugh: Hey, it’s your host, Kate Linebaugh. We’re doing something a little different today. This is the first episode of a two-part story. It’s about a biotech company called uBiome. It had idealistic leaders, a promising idea, and a lot of venture capital funding. But eventually, the company had a spectacular downfall.
It’s quite a story. And to tell it, we brought in our colleague, Amy Dockser Marcus. She’s a Pulitzer Prize winning health reporter. And for the past few years, she and her colleagues have reported on the rise and the fall of uBiome. Amy will take it from here.

Amy Dockser Marcus: As a reporter, I spend a lot of my time thinking about why healthcare doesn’t work for so many people. Why cures still seem out of reach for so many. How medicine seems to focus more on treating disease rather than preventing it. So back in 2014, I had taken an interest in this company called uBiome. At the time, it was a small startup, but its founders, Jessica Richman and Zac Apte, had big ambitions. Their product was an at home test kit, kind of like 23andMe. But this kit would test the makeup of your microbiome, the trillions of microbes that live in and on all of us.
The bigger idea behind the company was all about something called citizen science, getting everyday people involved in data collection, understanding their own bodies, and taking control of their health. But one day a few years ago, this guy reached out to me. Someone I had never met before, and he had questions about uBiome’s business practices. He thought the company might be committing fraud. I started looking into it, and in April 2019 …

Speaker 3: A San Francisco based health startup got raided by the feds today. The FBI agents showed up at uBiome, they broke down the front door and asked employees to hand over their computers. The FBI’s investigation …

Amy Dockser Marcus: This March, uBiome’s two leaders were charged with defrauding investors and insurers in a multimillion dollar scheme. And the government says they’re fugitives.
Welcome to The Journal. Our show about money, business, and power. I’m Amy Dockser Marcus. It’s Friday, November 5th. Coming up on the show, what went wrong at uBiome, Part One.
The story starts as many Silicon Valley stories do. With a TED Talk.

Jessica Richman: Thank you so much for letting me speak here. This is really amazing.

Amy Dockser Marcus: That’s Jessica Richman. At the time, she was a newly minted Silicon Valley entrepreneur. Her company was uBiome. The startup was predicated on people sending in their poop.

Jessica Richman: Basically, you send us your poop. Yeah, your poop. We want all of your poop.

Amy Dockser Marcus: That’s because microorganisms in the intestine end up there. So a poop sample was a messy, but relatively simple way to get a read of the microbiome.

Jessica Richman: You may have heard about the human microbiome. The microbiome is an ecosystem of organisms that live on and inside of us. They’re kind of our microbial overlords.

Amy Dockser Marcus: And it was a good time to start a company that focused on the microbiome. Once largely unexplored, the microbiome was getting more attention from scientists. Some of the new research suggested those tiny microbes and cells might have major health implications. Jessica was capitalizing on that moment.

Jessica Richman: So we are using this data about the microbiome to ask and answer questions about health. And start to solve complex diseases like autism, which seems to have a connection to the microbiome. Chronic fatigue syndrome, irritable bowel, Crohn’s, ulcerative colitis. Autoimmune disorders depend on the microbiome.

Amy Dockser Marcus: Jessica gave this speech in 2013, the year before she had started uBiome with her co-founder Zac Apte. There was a third co-founder, but he left the company less than a year after it launched. We should say, we reached out to Jessica and Zac multiple times through their lawyers for interviews and for comment, but we never heard back. But through our reporting, based on documents and interviews, we’ve been able to put together a picture of who Jessica and Zac were.
Zac had a PhD in biophysics and cell biology from the University of California, San Francisco. And Jessica did at least part of a doctorate at the Business School at Oxford. Neither had a medical degree. They were charismatic and a bit nerdy. Generally speaking, Jessica was the public face of the company, and Zac worked more behind the scenes. And they spoke passionately about uBiome’s larger goals, bringing microbiome research to everyone who wanted it.
So they ran a crowdfunding campaign. It was an unusual move for a biotech company, but it ended up working. Jessica was even featured on an NPR segment about crowdfunding and science.

Speaker 5: UBiome is all about understanding the human microbiome, the collection of microbes in your body. Going in, Richman said she and her colleagues had no idea whether their pitch would be successful.

Jessica Richman: There’s a lot of uncertainty. You don’t know if you’re going to raise $10 or a million dollars. And you have to be prepared, or keep your mind open for any of those things to happen.

Speaker 5: Turns out they hit it big. One of the few to raise more than a quarter of a million bucks from their internet campaign. It seems likely they caught a recent wave of interest in what’s living in our guts. And people …

Amy Dockser Marcus: After this successful campaign, uBiome sent out kits to people who had contributed. The kit included a small cotton swab. If you wanted a test of your gut microbiome, you would swab it on some recently used toilet paper, stick it in a tube, and then mail it in. Jessica and Zac needed to hire someone to help turn around the results. Someone who could build up a new lab.

Gabe Foster: So I was in San Francisco looking for work.

Amy Dockser Marcus: That’s Gabe Foster. He had a background in biochemistry.

Gabe Foster: And my brother’s now ex-wife heard of a launch event for a startup company who just raised some money. He asked if I wanted to go along and I did, and it was uBiome’s launch party. And it was in a classroom at UCSF. There was pizza and soda and a few beers. And a few weeks later, I was bombing around the internet looking for work, and an ad on Craigslist sounded a lot like the people I had just talked to. And so I shot him a note saying, I know you guys, let’s talk.

Amy Dockser Marcus: Jessica and Zac ended up hiring Gabe.

Gabe Foster: My job at uBiome was to build the lab. We had promised several thousand samples to be returned to customers in a pretty tight timeframe, and somebody had to actually run them.

Amy Dockser Marcus: And so what was the work environment like?

Gabe Foster: So there was a common room with a couch in it, and there were several rooms with lab equipment and a couple of cheap robots that we bought on eBay to slap together. I mean, it really was just a bunch of young people hanging around. I mean, getting things done, but it was not formal at all.

Amy Dockser Marcus: So what were your early impressions of Zac and Jessica?

Gabe Foster: Zac, Zac is an interesting man. When you first meet Zac, he’s screams Berkeley. He is very informal. He likes to talk about feelings a lot. He hugs. He’s large and soft and smiles a lot, and tries really hard to engage with people. And that all makes it really easy to start working with Zac. But it becomes apparent, pretty quickly, that Zac walks into every single room assuming he can do everyone’s job in that room better than they can. He really has this sense of cleverness, where he thinks he’s just absolutely so clever, he can get away with anything.
Jessica wanted nothing more in this world than to be considered a successful entrepreneur. That’s what she wanted. She said as much. And uBiome was her most promising vehicle to be that.

Amy Dockser…

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