Today, Bloomberg announced that Blackstone Group has acquired a majority ownership stake in Ancestry.com for 4.7 billion dollars. Yes, billion, with a b. You can read the article, here. Blackstone, out of New York, will own 75% of Ancestry and GIC Pte, formerly known as Government of Singapore Investment Corporation will own 25%.
Ancestry sold in 2012 for 1.6 billion to Permira. In 2016 the company was valued at 2.6 billion when it was acquired by Silver Lake and GIC. Their value now has significantly grown, which is interesting since the 18 million DNA kits have already been sold and that market is slowing. That means that the revenue generators are subscriptions and their health research partnerships which provides Ancestry a second opportunity to obtain revenue from DNA kits.
According to Bloomberg:
Blackstone, the world’s largest alternative asset manager with $564 billion in assets, is also focused on growing its life sciences group. It has spent more than $1 billion this year investing in drugs that target high cholesterol, kidney disease in children and devices for diabetes patients.
Blackstone made a press release in July about their Life Sciences Fund.
Blackstone also acquired 21Vianet, a Chinese internet data center/service in June, 2020.
I had been suspecting that there would be an ownership change at Ancestry for some time, beginning with the layoff of 100 employees earlier this year, 6% of their workforce, before the pandemic set in. Additionally, it was reported in April 2019 that Ancestry was trying to prepare for an IPO.
Cost reduction, often at the expense of either quality or customers, is a hallmark of a company that is looking for a buyer. So is a slowing or stoppage of infrastructure investment which customers have seen recently in very slow system response and many glitches, not to mention the scheduled 6-8 cM purge. These corporate decisions are similar to how people evaluate what needs to be done to a house they want to put on the market. You’re only going to do things to increase the curb-appeal and keep it functioning until it can be sold. The next owners can figure out that they need more insulation in the attic.
Cost reduction makes the current and future bottom lines look enticing, while the past growth which utilized more assets (people) is initially attractive, putting your best corporate foot forward. Potential buyers view the past performance as the initial draw and the future as rosy because the costs, compared to the past level of performance, have been reduced meaning more profit, of course. Profit is the only reason for a company to exist, unless they are a nonprofit. Every company needs to be profitable.
Add the pandemic to this mix, and you’re seeing more people falling back on genealogy, because they have more time. Of course, there will be some customers that don’t renew, and new DNA testing itself is down, but that was already occurring pre-pandemic, likely due to market saturation and other factors.
Another tactic that companies who know they are about to do something that is either controversial or will create some level of backlash is to reach out to influencers in the community, hoping to secure at least some level of loyalty in order to do grass-roots damage control.
Some of the facts are interesting in the Bloomberg article. We already knew that Ancestry had sold 18 million DNA kits, but I didn’t know they had 3 million subscribers. Interestingly, that means that no more than 17% of the people who took DNA tests have subscriptions. It’s actually a lower percentage than that, because we know that not all subscribers have taken DNA tests. I know that Ancestry was hoping to convert many of their “ethnicity testers” into subscribers. As genealogists, we hoped so too.
What will happen at Ancestry as a result of the sale? That’s yet to be seen.
Sometimes the executive team remains in place when acquisitions occur, and other times, partially so or not at all.
The previous CEO, Tim Sullivan, who stepped down in 2017 but retained his position as Chairman of the Board was a genealogist, which I viewed as quite positive. He was “one of us,” and even though I didn’t agree with all of his decisions, I always felt he understood because he shared our addiction, er, I mean passion. When the leadership isn’t a consumer of their own product, their focus can’t be from a personal perspective.
Given Blackstone’s focus on Life Sciences, I suspect they will be leveraging Ancestry’s DNA testers who have opted in to medical research, with requests to “share” that information becoming more visible. You don’t have to have taken their Health test to opt in for DNA research.
Ancestry first announced their health initiative in 2015.
I’ve recently noticed an increased focus on health testing, both in terms of testing by encouraging DNA upgrades to health which is a direct revenue generator, and also in terms of “softball” questions designed to encourage opt-in participation to research, whether or not you’ve taken the actual health test itself.
Genealogists are, by nature, used to sharing. We like to meet our cousins who may have information that we don’t, so sharing sounds good to us.
Therefore, when we see things like “Share more about yourself,” we may be more tempted than other segments of the population. This reminds me of social media questions that get passed around from time to time, which are far riskier than they seem and you should never answer publicly BTW.
If you click on the little “i” for information, you’ll see that this information will be aggregated and you are requested to opt in for research which is called the Human Diversity Project which you can read more about, here.
New DNA kit purchasers are given the opportunity to opt-in when registering their kit and periodically, later.
Occasionally, when I sign in, I’m greeted with that opportunity, asking me if I’d like to share or that Ancestry has noticed that I’m not sharing in the research project.
If you’re considering sharing more than genealogy information with Ancestry, meaning allowing them to sell your DNA information to unnamed and unknown research companies, as always, be sure to read all of the fine print, including all links to other documents, before consenting. Understand who owns and manages the company with whom you’re about to trust not only your medical and health information, but are trusting to make decisions about who to share your information with, for what purposes, and where. And understand that any company can be sold in the future.
I was not comfortable participating in Ancestry’s Human Diversity Project before and I’m not comfortable now sharing my DNA through Ancestry, especially since it seems that their new owners aren’t terribly focused on genealogy, but on medical research and with strong ownership links to a foreign government(s).
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