What Happened to 23andMe? Why Harris’ Plan to Tax Unrealized Gains Makes No Sense, and Time Really is Money

Scott speaks about the business of 23andMe, specifically how it illustrates what happens when growth companies don’t meet their growth expectations. He then discusses Kamala Harris’ plan to tax unrealized gains and why he doesn’t support it. He wraps up with a conversation on ways he spends his money to increase his productivity. Music: https://www.davidcuttermusic.com / @dcuttermusic Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 0:48Speaker 01

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• 1:19Speaker 02

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• 1:48Scott Galloway?

  Welcome to the Prof G Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. Hey, Prof G. Hey, Scott and team. Hey, Scott. Hi, Prof G. Hey, Prof G. Hey, Prof G.

• 2:00Speaker 03

  Hi, Professor G.

• 2:01Scott Galloway?

  If you'd like to submit a question, please email a voice recording to [email protected]. Again, that's [email protected]. So with that, first question.

• 2:11Speaker 04

  Hi Prof G, this is Mitch. I work in tech in the Bay Area and Silicon Valley. And I see a lot of different companies doing really great things in this area. And one of them, which I invested in a few years ago, is 23andMe when I was trading at $10 a share. I really believe in its promising technology and strong leadership. However, now it's now trading below 50 cents a share, which has been a tough pill to swallow. I was wondering how this could happen to a company with such potential and a growing industry and what it says about the future of personal genomics and similar tech-driven healthcare companies. I'd also love to hear your thoughts on whether this space still

• 2:52Speaker 04

  holds promise or if there are any underlying challenges that investors might be overlooking. Thanks for all your insights and books and fostering a thoughtful dialogue in so many important topics. We all appreciate it.

• 3:04Scott Galloway?

  Thanks Mitch. Thanks for the question and your transparency. So first off, the first lesson is first and foremost, forgive yourself. The second is think about diversification. Now, let's talk about the business itself. 23andMe was founded in 2006 and is primarily recognized as a genetic testing company that offers consumer insights into their ancestry and health risks and mailed in saliva samples. It also operates as a data company. The company has built a massive database of DNA from about 10 million people who agreed to share their genetic information for research. Beyond testing, 23andMe has ventured into the pharmaceutical industry, developing its own drugs based on findings from its genetic data. So it was

• 3:43Scott Galloway?

  obviously very promising, but it's struggling. It's gone from a $4.5 billion equity valuation down to 200 million. So its value has plummeted 98% from its peak and NASDAQ has said that the stock, which now trades below a dollar, could be delisted. Now, CEO Anne Wojcicki is trying to take 23andMe private at just 40 cents per share. The company's main revenue stream, consumer DNA testing, has fallen short, raking in only about 220 million last year, far below expectations. When you have a growth company that is investing at these kinds of levels to create sort of a 10x better product, especially I would imagine around research and genetics and healthcare and data, that is a capital hungry monster.

• 4:27Scott Galloway?

  And if the company is growing 50, 60, 70% a year, then eventually the revenues, the top line will take care of itself. And you'll get to a point, if you have, assuming you have positive gross margins, where you start to make a lot of money. The problem is, is that if you miss, typically what happens in a small business is you miss on the top line, but you never miss on the expenses. What do I mean by that? Even though maybe your revenues came up 40 or 50% off plan, you managed to spend what you planned to spend. And that's where growth companies get into huge trouble. And that is if they don't register the growth that the investment was expecting, or that justified the investment. So all roads lead to the same place here. They're probably going to take this thing private and they are probably going to lay off, I would imagine, 50, 70, 80% of the workforce and focus.

• 5:11Scott Galloway?

  I don't think this company ever had any business being in drug discovery. That is a decades-long business that requires billions of dollars. I think the average drug takes over a billion dollars to bring to market. And also, they just underestimated the demand for this. The hack didn't help. I'll give you a personal example. I would never do 23andMe because I was a sperm donor in college. I was getting back, called back three or four times a week for about a year, which was very exciting for me because that was a lot of money back in 1985 or whenever it was. I have somewhere between 1 and 7,000 children, or at least biological children. And with 23andMe, they can figure out it's you. You could also go to a website, submit your name, address. They send you a certified letter. If you send it back, an email goes out to your biological children with your contact information.

• 5:55Scott Galloway?

  I would do it if I had 10 or less, or I knew I had 10 or less. But that's the thing, you don't know because it was totally unregulated back then. My mom made me stop doing this after about a year because she said, "You realize your daughter could end up marrying her brother and not know it." And she forced me to stop. Anyways, that's my story and why I don't use 23andMe. But to bring this all back to 23andMe, this was a tech company that required a massive amount of investment and the growth basically petered out. And as a result, it just can't justify the current investment and they're going to have to totally recalibrate the company. This is, this happens a lot. The question now, when they take it private, is will they be able to cut costs? Will they be able to pare it down such that this company has some hope of creating positive cash flow?

• 6:40Scott Galloway?

  Or will they find another means or another adjacent business that offers some sort of growth? But at 50 cents, the assumption is they're going to go out of business. Just some quick tax planning here. If you were fortunate enough to have some other investments that worked out, you may want to think by the end of the year. Of selling down the stock and registering or taking the loss against any gains you might have. So the, the kind of the silver lining here is you have a tax loss, which has some value. If you invested 10,000 bucks and you've lost 95%, you have a $9,500 write off when you sell the shares. So if, wait till a year where you have some gains and then take the loss or sooner if you want to get your capital out such that you can take advantage or offset your capital gain. Thanks so much for the question. Again, let me finish where I started. Forgive yourself.

• 7:25Scott Galloway?

  Question number two.

• 7:27Speaker 03

  Hey, Prof G, this is Colin from lovely Marietta, Georgia. Appreciate you taking my question. I'm looking at some of the new policies laid out under the Harris Wall's campaign and the latest thing about taxing unrealized capital gains seems pretty insane to me. I know I'm a social liberal fiscal conservative. I like to think of myself as an independent voter, but to tax unrealized gains makes literally no sense to me. And the, the fact that it's people with 100 million or more seems to be the, the dividing line. Even that doesn't make sense to me. Why, if they're trying to stop the uber wealthy

• 8:11Speaker 03

  from leveraging their securities, why would they not look at something like fees for loans against securities as collateral as opposed to taxing something that hasn't happened and can realize result in losses? I would curious about your take on this and your thoughts on what levers they should really be trying to pull instead of this, or whether you agree with their stance. Appreciate your answer. Thanks. Bye.

• 8:44Scott Galloway?

  Thanks for this. Yeah, it's getting a lot of discussion. So according to our website, our campaign supports parts of President Biden's earlier budget proposal, which didn't get through Congress. Reality is this tax would probably only affect a tiny percent of America's wealthiest people, those with over 100 million in wealth. That's about one in. 10,000 people who aren't paying at least a 25% tax rate on their income. It mostly targets individuals with most of their wealth and tradable assets. The reasoning is that it's meant to fix a tax system where the super rich often pay lower rates. The middle class folks, according to NBC News, the top 1% has 40% of their wealth tied up in unrealized capital gains. Also, according to the Treasury Department, will raise about $500 billion in tax revenue over the next decade.

• 9:27Scott Galloway?

  But the bottom line is, this makes no fucking sense. And, okay, it's worth talking about conceptually. This is never gonna happen. There are both moderate Democrats and the entire Republican Party are just not gonna let this happen. There's real issues with this. One, if you're gonna tax unrealized capital gains, then you get into the, you get into the business of, all right, you're gonna have to value all these assets in the near year. You're gonna have to do a mark. Every year I spend the better part of a full day with the folks at Goldman who manage my money, trying to put a mark on my private investments. How do you value those things? It's like, I have investments that I could value at X or 5X, and I can make an argument for either of those things.

• 10:07Scott Galloway?

  So because the tax would be on a quote unquote "number of value", now obviously, the value of the stocks you hold can be easily marked or calibrated, which in my view would make private assets much more attractive. So all of a sudden, you would be creating asset classes that are much more attractive than other asset classes. And then what happens if those assets go down in price? Do you purposely mark them down? This just, it just makes no fucking sense. And the over $100 million thing is just populist bullshit, in my view. I just don't think there's any way this can work. And also, one of the real benefits, I think, of thinking long-term that I like, is you should buy assets and never trade them and hold on to them.

• 10:51Scott Galloway?

  And one of the greatest wealth creators in history, and it sounds stupid and easy, but it's true or simple, is just the tax-deferred structure of holding on to assets and not trading them. That, that is kind of the key to wealth building, is buying shit and forgetting about it. Like so many things that Democrats do, the intentions, the philosophy, the theory behind it are absolutely right. And that is, rich people are not paying their fair share. Let's go to the 25 wealthiest people in America. They pay somewhere between 4% and 8% tax rate because the loopholes in the tax code are extraordinary. Everyone's focused on tax rates because that's just a literally weapon of mass distraction. The key is the tax code, which has gone from 400 pages to 4,000 over the last several

• 11:35Scott Galloway?

  decades. And those 3,600 pages are there simply to fuck the middle class by creating all sorts of loopholes for corporations and wealthy individuals who are paying the lowest taxes since 1939, corporations, and the wealthiest individuals who have seen their taxes plummet through all kinds of crazy tax avoidance. And one of those pieces of tax avoidance you referenced, and that is, basically, the strategy is buy, borrow, and die. What do I mean by that? I own a bunch of Amazon and Apple stock. I don't sell it. It keeps going up, tax-deferred. Well, what happens? Maybe I need some money. I can borrow against it at very low rates. And then that money keeps compounding off the whole base because it doesn't get taxed. I don't have to send 23 to 40 cents of it

• 12:16Scott Galloway?

  to Uncle Sam. It keeps growing off a much bigger base. And then I put it into a trust, and then when I die, it transfers to my kids tax-free. That is how the wealthy get even wealthier and build dynasties, which is bad for America. So what is a way around that? An alternative minimum tax. And that is, at the end of the year, if you're a wealthy person, and I would lower it to say, anything over $10 million a year in income, you pay an alternative minimum tax of 40%, or maybe even 30. And that is, you say, look, we don't care what loopholes you've been able to figure out. You're going to pay at least 30%. You're making a shit-ton of money. And whatever things have been slipped in by lobbying groups or the Republican Party to give small business owners their first $10

• 13:00Scott Galloway?

  million tax-free, to create a donor advisor fund, we actually haven't given the money away yet, but you get to write it off. Yeah, we gotta get rid of that shit. Now, can you get rid of that shit? Probably not. So rather than trying to get rid of that shit, all right. Let's just have an AMT, and that is people who make over a certain amount have to pay at least X percentage. In addition, your idea is a good one, and that is if you borrow against your stocks, then effectively you're monetizing them. So what I would suggest, though, is that maybe there's a 2% tax on any money borrowed, or something like that, that says, all right, it still incentivizes people to borrow money, invest, buy shit, grow the economy, but instead of paying on a margin loan 4%, 6%, they're paying 6% or 8%, and it generates some tax revenue that way.

• 13:44Scott Galloway?

  We have an alternative minimum tax, but trying to tax unrealized gains? Good luck with that. Thanks for the question. We have one quick break before our final question. Stay with us.

• 14:00Scott Galloway?

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• 14:45Scott Galloway?

  No new tabs, no switching apps, no losing your place. This is AI that works with you, not on top of you, so that you have the time and brain space to solve the problems that matter. Check it out. Find out more at superhuman.com.

• 15:02Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The Regent Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

• 15:47Scott Galloway?

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• 16:09Scott Galloway?

  Support for the show comes from Vanta. As AI adoption grows, so does your company's security risks and requirements. New frameworks, audits, and vendors keep piling on, but your team isn't getting any bigger. Most compliance tools promise automation, but you're really stuck doing all the work by hand, chasing screenshots, validating controls, and playing catch-up when audit season comes around again. Vanta works differently. The Regent Trust platform is built to scale with you, not slow you down. With over 1,400 automated tests across 400-plus integrations, Vanta collects evidence and monitors your controls year-round, cutting your audit prep by 82%. Plus, you can access the Vanta agent everywhere you work, whether your team is in Vanta every day or living in tools including Claude or Cursor. Want proof?

• 16:54Scott Galloway?

  Over 16,000 fast-growing companies like Ramp, Ryder, and Harvey save time and resources while scaling fast with Vanta. Learn more at vanta.com/profg and get $1,000 off. That's spelled V-A-N-T-A dot com slash profg for $1,000 off.

• 17:17Scott Galloway?

  Welcome back. Question number three.

• 17:19Speaker 05

  Hi, Prof G. This is Brendan from Hood River, Oregon. I often think of wealth as the ability to spend your time doing the things you want to do. It's fairly common to hire someone to maintain your yard, do your taxes, manage your investments, or have a house cleaner come by once over a few weeks. But being in the high net worth space, I'm curious what services you use in your personal life to free up you or your family's time. Big thanks to you and Ed for providing great entertainment for all those listeners.

• 17:45Scott Galloway?

  Hey, Brendan. That's a great question. And their entire podcast sort of focused on productivity. I think my approach to life and spending probably is not that relevant to a lot of people. So I'll start with trying to look at this through a lens of when I was younger, what I did when I didn't have any money and what I think you should do. The first is I wouldn't invest in single stocks. I wouldn't try and talk yourself or delude yourself into thinking you're a better investor. I would focus on your career and exercise and relationships, and I would outsource all investing and buy low-cost index funds and just not worry about it. So that's one thing. Pre-cooked meals. If you love cooking, then do it. But if you don't, try and find a routine around food you like that's pre-cooked, pre-done, if you will, and that's healthy.

• 18:28Scott Galloway?

  I think it's a great idea to get an app around working out and set a road schedule. And I like doing intense 20 to 30-minute workouts. I used to go to the gym and then I would spend an hour and a half there. I'd probably only exercise for 20 minutes, just kind of wandering around, futzing around. By the time you get to the gym, change, all that shit. I like the idea of having an app that is very intense. I think the first kind of purchase I would make as a young person, in terms of paying somebody else, would be pay them to clean your apartment, unless you enjoy that kind of stuff. Some people do. But I think it's important to feel for your own mental health, like you live in a nice, clean space. I think people should live in a small space when they're young, that's inexpensive, that's near work, so they can just use it almost like a hotel or just a bed. I don't believe in hanging out at home. I got a lot of shit for saying

• 19:12Scott Galloway?

  this on TikTok. But I think your time at home is inversely correlated to your success professionally and personally. I don't think you want to be at home much. Under the age of 30, I think you want to be out of the house, kind of 15, 16 hours a day. And then as you get older, what I find is really helpful. I have an assistant who I pay very well, but there are assistants available in remote areas, Costa Rica, Mexico. There's a whole rising genre of outsourced PAs who can work two, four, you know, if you need it, eight hours a day. Essentially where I am in my life right now is that there are a small number of things only I can do, only I can do, only I can record this podcast right now. But I don't do the sound engineering. I don't do the special effects. I don't write the scripts. I don't contact the guests. I don't follow up with the guests.

• 19:57Scott Galloway?

  I do none of this. I don't bill Vox. I don't get the numbers. I don't get the analytics. What I am doing right now is the only thing I do for this podcast. And that's the way it should be because there is someone who is better than me at everything else, but I am the best at this. So what you want to do is take what you are best at and leverage it across as many things as possible while outsourcing everything else. But I love the way you're thinking. And again, I bet there are just a ton of sites that focus on this, but I appreciate the question and wish you a ton of prosperity and free time. And also, also, I think it's really important on a regular basis to do nothing, to literally do nothing. I have times on the weekend and I plan them out.

• 20:40Scott Galloway?

  My favorite thing is nothing. And that's fine. Doing nothing is fine as long as it's planned. Thanks for the question. That's all for this episode. If you'd like to submit a question, please email a voice recording to [email protected]. Again, that's [email protected].

• 21:08Scott Galloway?

  This episode was produced by Caroline Shager and Jennifer Sanchez is our associate producer and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our Prop G Markets Pod. That's right, the Prop G Markets Pod, wherever you get your pods for the new episodes, every Monday and Thursday.

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