23andMe has the most will to succeed, followed by Navigenics, followed by deCODEme. All three have sufficient potential funding, so will (and luck) will most decide who will survive The Chasm.

Yesterday, I mentioned a popular business graph called “The Chasm.” The Chasm is start-up business jargon for the difficultly businesses tend to experience growing from a market of early adopters to the general public. This is because customer motivation changes: early adopters buy because they like new technology, but most people buy because they want to solve problems with minimal effort.

Today, DTC (direct to consumer) genomics is still in its “innovators” market phase, though continued coverage in Wired and regulatory attention suggests that the market is approaching an “early adopter” transition. But which genomics start-ups will survive to cross The Chasm to reap the riches of a greater market?

Two factors keep start-ups alive during tough times:

1. Funding: No money, no payroll, no people. Start-ups, particularly venture-funded start-ups, are profitable until they are bigger, more mature companies.
2. Will: How much does a start-up want to succeed, and what do will its leaders lose if it doest? Does your company have the morale and reputation to recruit talent and investment to beat the competition, weather setbacks, and persist through regulatory struggles?

Consider the “big three” DTC start-ups: 23andMe, deCODEme, and Navigenics. Other competitors are possible, but identifying them is speculation. Further, the recent California “legal lab” crackdown seems to have scared away most other scrappier competitors for now.

I think that all three competitors have ample funding… if they have the will to spend it. I argue that 23andMe and Navigenics have that will, while deCODEme may or may not.

The leaders of 23andMe and Navigenics are most personally and publicly invested in the success of their ventures and thus are most likely to succeed. 23andMe wins the accountability metric because if it doesn’t succeed, it will forever be known as “that Google’s wife’s start-up toy with that disgruntled affy chick.” These women probably do not appreciate being known as such, and are powerful and determined enough to prove otherwise. That alone will keep 23andMe around indefinitely. The rest of the 23andMe team is also well featured on the about page. However, the iStockPhoto slideshow on the 23andMe team page needs replacing.

Navigenics team is also very well featured, even better than 23andMe’s team.

At deCODEme, Kári Stefánsson may publicly represent the business, but he’s the CEO of deCODE. Who is personally accountable for the success of deCODEme itself? On both the old and the new versions of the deCODEme website, nobody is named. The new About deCODEme page does feature a photo of the deCODEme team, but the only names are of deCODE researchers publishing papers, not deCODEme management. (they are pretty nice photos, though)

Further, both 23andMe and Navigenics feature recruitment on their websites and actively advertise positions with third parties (a quick Google search confirms this). deCODEme does not.

Finally, deCODEme’s parent company, deCODE, has not been doing well financially and has never reported a profit. It has recently eliminated many positions, is debt-leveraged, has sold-and-leased its American office, it’s stock price is at $1 and cents from about $28 in 2000, and its CEO has warned of ending operations. All of this is bad for morale, and if more cuts must be made, an unprofitable deCODEme is a likely candidate. I doubt deCODEme will ever be eliminated because it’s obviously Kári’s personal initiative, and as far as I can tell, deCODE is Kári. What’s most likely, if things get bad, is that deCODEme will process orders, but languish without growth or direction as 23andMe, Navigenics, and other competitors continue to hire, grow, and improve.

• 23andMe Investors (no investors page)
  • Google
  • Genentech
  • Mohr Davidow Ventures
  • New Enterprise Associates
• Navigenic Investors
  • Kleiner Perkins Caufield & Byers
  • MDV-Mohr Davidow Ventures
  • Sequoia Capital
    
• deCODE annual reports and DCGN @ NASDAQ