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On a cloudy Wednesday morning in San Francisco, the moment expected by UBiome employees for months has finally arrived.
The besotted dung testing start-up company has started firing about half of its staff, as the company looks for a way to go after an FBI raid and the departure of its founders.
At the corporate headquarters in San Francisco's Soma neighborhood, people who had just been released began to walk out of a greyish warehouse around 9:30 am.
Some carried potted plants. One of them has sounded Phil Collins' anthem, "You'll be in my heart" with iPhone speakers.
"It was a Monday show, it's a show today," it was said at his departure, to no one in particular.
A troubled stretch for uBiome
In total, uBiome has eliminated 114 of the current 229 employees, according to a person familiar with the situation, 42 of the US operations and 72 in Latin America. uBiome plans to keep its labs open, said the person.
The layoffs are the latest episode of a turbulent period for uBiome, whose tests are based on samples of human poo. The company's problems were first seen by the public at the end of April when the FBI had raided the startup, apparently as part of an investigation into the UBiome's billing practices.
At the end of June, Zachary Apte and Jessica Richman, co-founders and co-CEOs, resigned, along with John Rakow, UBiome's General Counsel and Acting Executive Director. Rakow took the lead after the administrative leave of Apte and Richman following the FBI raid.
To lead the company, the Board of Directors of UBiome has appointed three new leaders of the Goldin Associates consulting firm. Five insiders told Business Insider that they had been waiting for layoffs since the FBI raid.
"While we are working on implementing a follow-up plan for uBiome, we are making changes to the company's organizational structure that impact on certain teams and positions," said Curtis Solsvig, CEO. Acting CEO of uBiome and a director at Goldin, in a press release to Internal Business.
"It was a difficult decision to make, but we are determined to position uBiome for sustainable growth," said Solsvig.
"An operational disaster"
Composed by the pain of layoffs, uBiome accidentally informed some of its workers that they were fired Monday in a payroll error, according to four current employees and former UBiome employees. After the accidental notification, Solsvig called an emergency meeting on Tuesday, the population announced.
Check stubs that appeared to reveal that the job cuts had been accidentally emailed to some employees, mainly in executive roles, according to five insiders. The paycheck stubs, dated July 1-8, would have been accurate if Monday had been the last day of the employees, officials said.
A few minutes after receiving the stubs, the employees were informed that they had been canceled. Then Solsvig called the meeting urgently, said the insiders.
"I would call it an operational disaster," an insider told Business Insider on Wednesday. "So unprofessional."
Employees were officially informed of their fate at two meetings on Wednesday.
From the citizen science project to the FBI raid
Problems at uBiome have been preparing for years, according to Business Insider.
Read more: uBiome convinced Silicon Valley that shit tests were worth $ 600 million. Then the FBI came to knock on the door. Here is the story inside.
Founded in 2012 with support from the University of California at San Francisco and donations from a Kickstarter fundraiser, uBiome has sold tests providing information about the bacteria present in your body, called microbiome. Most tests worked by asking clients to use a swab to take a sample of their poop in used toilet paper.
According to Business Insider, the problems started soon after.
According to former employees, uBiome stored dung samples in freezer cabinets with no temperature monitors and no government-certified lab space until almost three years later. said government officials. Staff regularly hid from a founder that an ex-employee described as "violent," according to insiders. And uBiome had an undisclosed partnership with the Nurx birth control start-up, at the center of a recent New York Times survey.
In 2017, uBiome began to attract the attention of Silicon Valley investors. The company raised $ 105 million from donors, including 8VC, OS Fund, Andreessen Horowitz and Y Combinator, for $ 600 million.
Then, in April, the FBI raided the offices of uBiome, apparently as part of an investigation into how the company was billing medical exams to patients and insurers. The US District Attorney's Office for California's Northern District and "several other US and California government agencies" have also been involved in FBI research, Rakow said in a letter to investors.
The following month, Apte and Richman were put on leave while UBiome 's board of directors had launched an independent investigation led by former federal prosecutor George Canellos, a partner in the firm. Milbank lawyers. uBiome also suspended sales of its medical tests.
Customers have reported problems for more than a year
According to a review of documents submitted to the Federal Trade Commission and obtained by Business Insider, UBiome's customers complained of billing issues for at least a year prior to the FBI raid. The complaints describe cases of surprise bills of up to $ 3,000 and invoices sent to insurers for tests that have not been delivered.
The complaints involve two tests: one called SmartGut, which examines the bacteria in the intestine, and the other, SmartJane, which examines the bacteria in the bad.
uBiome overestimated the medical value of these tests and favored growth over patient care, Business Insider said earlier this month from interviews with 11 former UBiome employees, as well as lawyers, external experts and government officials.
"Some of my results from ubiome remind me of astrology," said a former employee.
With the departure of Richman and Apte from UBiome's board, 8VC partner Kimmy Scotti is currently the only remaining member of the board.
This story was originally published on July 10 and has been updated.
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