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uBiome convinced Silicon Valley that testing poop was worth $600 million. Then the FBI came knocking. Here’s the inside story.

When the three founders of the “microbial-genomics” startup uBiome began collecting human poop, they kept it in an erstwhile storage closet, inside secondhand freezers from a discount-lab-supply website. It was a far cry from a state-of-the-art facility. But the setup matched uBiome’s image at the time as a crowdfunded citizen science initiative that sought to…

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uBiome convinced Silicon Valley that testing poop was worth $600 million. Then the FBI came knocking. Here’s the inside story.

Erin Brodwin

When the three founders of the “microbial-genomics” startup uBiome began collecting human poop, they kept it in an erstwhile storage closet, inside secondhand freezers from a discount-lab-supply website. It was a far cry from a state-of-the-art facility.

But the setup matched uBiome’s image at the time as a crowdfunded citizen science initiative that sought to seize knowledge about our bowels from lab scientists and place it in the hands of regular people.

It wasn’t until roughly three years later, at the end of 2014, that the company established a lab space professional enough to be certified by government regulators. That certification was part of uBiome’s attempt to transform itself from a fun, collaborative science project to a bona fide medical-testing outfit — one that could justify investments from high-powered venture-capital firms like Andreessen Horowitz and 8VC and ultimately garner a $600 million valuation.

That transformation hasn’t gone very well: At the end of April, FBI agents busted through the door of uBiome’s San Francisco headquarters and executed a search warrant, collecting information from employees’ computers and hauling away cardboard boxes full of evidence, CNBC reported. CNBC said the warrant was part of an investigation into the company’s billing practices.

But the problems at uBiome extended far beyond billing issues, according to interviews with 11 former employees across its billing, operations, marketing, and science departments, as well as with customers, lawyers, and medical experts.

An increasingly frantic effort to show growth

uBiome, these sources said, presented conjectural science about gut microbes as medically sound in an increasingly frantic effort to convince health insurers to pay for it. When not enough new customers were signing up for uBiome’s services, the former employees said, the company tried to bill insurers for conducting updated tests of stored samples that were in some cases years-old.

When the insurance companies required assurances from doctors that the tests were medically necessary, the sources said, uBiome hired doctors to remotely sign off on tests using tactics that appear to violate the regulations of some states’ governing of telemedicine.

Read more: Silicon Valley startup uBiome raised $105 million on the promise of exploring a ‘forgotten organ.’ After an FBI raid, ex-employees say it cut corners in its quest for growth.

These actions were guided by two cofounders who were described by former employees as secretive and intimidating and whose romantic relationship was unknown to investors and coworkers. One of them led reporters to believe she was younger than she actually was, Business Insider previously reported.

Those cofounders, Jessica Richman and Zachary Apte, were placed on leave after the FBI raid. (uBiome’s third cofounder, Will Ludington, left the company in 2013 and declined a Business Insider request for an interview.) uBiome said it was conducting its own independent investigation into how it billed customers for its tests, and John Rakow, the company’s general counsel, has been named interim CEO.

In a statement provided to Business Insider, a spokesman for Richman and Apte described complaints from former employees as “misinformed speculation, gossip, and innuendo,” adding that “without knowing who is making these unsubstantiated claims, one can only speculate as to their agendas, motivations, actual knowledge of uBiome’s business, seniority, or length of tenure with the Company.”

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