Tuesday, February 13, 2024

David Rubenstein Show: Early Season 8 Not Aging Well

Season 8 of the David Rubenstein show started with 23andMe CEO Anne Wojcicki and episode 3 starred Sam Bankman-Fried.  SBF currently sits in jail.  Wojcicki is scrambling to hold onto 23andMe's NASDAQ listing while trying to rescue her company from a monster data breach and a burgeoning financial crisis.  Yes, she was at the helm the whole time.

David Rubenstein asked Wojcicki about going public via an SPAC with Sir Richard Branson.  Her reply included: 

I'm very much of a CEO,,,I like to operate and I like to be in the weeds, like how are we executing.

3 and Me's stock imploded from a high of just over $17 to 74 cents today.  The stock has been as low as 54 cents recently.  Salon reported last week:

The company’s DNA database contained the most sensitive medical information of at least 14 million people — and 6.9 million of them had their genetic data stolen and put up for sale. Each person’s file contained account IDs, full names, sex, date of birth, full DNA profiles and location. Of that total, more than a million Ashkenazi Jewish profiles have also now been curated into a list by attackers. 

The cyberattack went unaddressed from April 29 to Sept. 27, and the company finally asked people to change their passwords in October. By December, it notified customers of the breach, according to TechCrunch. And, by Jan. 11, calls began for Congress to investigate.

Hands on Anne Wojcicki oversaw the company's response which blamed customers:

...users negligently recycled and failed to update their passwords following these past security incidents, which are unrelated to 23andMe.  Therefore, the incident was not a result of 23andMe’s alleged failure to maintain reasonable security measures.
There may be feces in those weeds.  Rubenstein closed the interview with Anne Wojcicki:

Would you be upset if they (your kids) went into something important like private equity?

Private equity may be in 23andMe's future.  Both love new drug discovery.  Declaration Partners has affiliate Synthegro, which does gene editing to cure diseases. 

Synthegro:  CRISPR-based genome engineering company delivering industrial scale-tools, consumables, and services

Mr. Rubenstein's interview with SBF was notable for many reasons.  At the top of my list is the pair's failure to disclose their respective ownership stakes in Paxos.  CoinDesk reported:

After Bankman-Fried's arrest Paxos was ordered by federal officials to "freeze $19 million worth of crypto tied to the bankrupt FTX exchange."  

SBF hit Rubenstein's family office up for a big investment in FTX.  Barron's reported that Declaration Partners turned down FTX.  When asked if he invested in FTX Rubenstein said:

I didn't.  My family office team looked at FTX at the $30bn valuation [earlier this year]. It didn’t move forward, and the memo never reached me, but the other day they showed me what they had prepared. The memo pointed out all the concerns about conflicts of interest. There wasn’t a lot of transparency. 

Rubenstein had research on FTX at his disposal prior to his show's softball SBF interview and did not use it.  "Conflicts of interest" and "lack of transparency" are standard features of private equity.

SBF's vaunted "risk management" was nonexistent.  Anne Wojcicki's security measures sacrificed half of her customers confidential information.

CNBC reported:

During 23andMe’s quarterly call with investors, co-founder and CEO Anne Wojcicki said the company is considering splitting up its consumer and therapeutics businesses to help expand its investor base.
Will Carlyle of Rubenstein's Declaration Partners offer Wojcicki pennies on the dollar for 23andMe assets?  Will a PEU debtholder take over the company through a debt cramdown, the way Carlyle took over Brinton's?  

Let's hope Rubenstein's other interviews age better.  These particular "peers" rose and fell.  Billionaires no more.