Cabbages and kings

In Lewis Carroll’s Alice in Wonderland, Tweedledum and Tweedledee recite Alice a poem called “The Walrus and the Carpenter”.

The version in the book differs from the version in the Disney adaption. Today, I’m just talking about the Disney version. If you have six minutes to spare, you can watch the scene here.

The poem is about a workshy and well-to-do walrus and a resourceful carpenter.

The duo come across a clutch of baby oysters and convince them, despite the warning from their mother, to come on a walk with them. We, the audience, know full well what will happen when they do.

The Carpenter then quickly builds a shack. The pair sit down for dinner with the oysters and get ready to eat. The oysters are unaware of what is coming.

The Walrus then suggests the Carpenter prepare a sauce for the meal. While he is away in the back, slaving away, the Walrus devours all the baby oysters to himself.

The hungry Carpenter then sees what’s happened and chases the Walrus down the beach with a hammer.

So, are we the oysters, the Walrus or the Carpenter?

It’s a trick question. We are actually both the oysters and the Carpenter, but never the Walrus.

And by the time you’ve finished reading today’s essay, I think you’ll probably agree.

Who is the Walrus?

The Walrus is any of the “web 2.0” businesses that have popped up in the last couple of decades.

Facebook, Instagram, Myspace, Flickr, YouTube, Twitter, Pinterest, etc.

In our relationship with these businesses, we are the Carpenter.

We produce the content they need to exist. Without users to make videos, there is no YouTube. Without friends there is no Facebook. Without tweets… you get the idea.

We produce the content, they make the money. But at least we get to use their service.

So in this sense, we’re more like Carroll’s original imagining of the poem, where the Carpenter gets to eat some of the oysters, too.

The one thing these web 2.0 Walrus businesses have going for them though is that their service is at least free.

We can complain all we want about how our data is used – and complain we do. But, at the end of the day, I’m happy to still use these services. The value they give is worth it for me.

I would imagine many, if not most, people agree. That’s how these businesses continue to survive.

But what if you paid a decent amount of money to use the service, and then you found out the company was making money directly off your data, without giving you a cut?

And even worse, what if it was using your data to build medicines you, or someone you care about, would one day need to survive?

And that if you ever needed to use these medicines you’d have to pay massive fees – even though they were developed from your data? From your DNA, in fact.

How would you feel about it then?

This is when you become both the Carpenter, and the oysters. And 23andMe becomes the Walrus.

Selling our own fat back to us

In the film Fight Club, one of the main characters, Tyler Durden, makes soap.

To make soap you need fat. And, he says, the best fat to use is human. So they get their fat supply by breaking into dumpsters outside liposuction clinics.

As the narrator says:

Tyler sold his soap to department stores at $20 a bar. Lord knows what they charged. It was beautiful. We were selling rich women their own fat asses back to them.

The idea is one of the most memorable from the film (and I imagine the book, but I haven’t read it, so I can’t say for sure if it’s in it).

The idea these people were paying to have their fat removed and then paying again to get it back is powerful and ironic.

And that is essentially what’s happening right now with 23andMe.

Last week, 23andMe announced a new partnership with GlaxoSmithKline (GSK) – to the tune of $300 million.

The deal gives GSK access to 23andMe’s database which includes the genomes of 5 million people.

From Vice:

The agreement was pioneered by the two companies’ chief scientists, Hal Barron and Richard Scheller, who previously worked together at another drug company called Genentech. Indeed, the partnership is a sweet deal for both companies. 23andMe sold GSK a $300-million stake for the four-year agreement and GSK gets exclusive access to one of the world’s largest private genetic databases. Ostensibly, the genetic information is going to be used for “research and development of innovative new medicines and potential cures.”

You see, 23andMe never intended to make its money selling DNA kits that let people trace their ancestry and see what diseases they may be susceptible to.

“The long game here is not to make money selling kits, although the kits are essential to get the base level data,” Patrick Chung, a 23andMe board member, told Fast Company in 2013. “Once you have the data, [the company] does actually become the Google of personalized health care.”

The thing is, Google is free to use. 23andMe is not.

In this scenario, its users are both the Carpenter and the oysters. Their data and DNA is being used to develop new treatments and drugs, which they will then be forced to pay for if they ever need to use them.

The Vice article gets it spot on:

There’s nothing wrong with using DNA to develop medicines, of course, but problems start to arise when this medicine is then sold back to the public at exorbitant rates. As the infamous pharma bro Martin Shkreli demonstrated, pharmaceutical companies can and will make life-saving drugs prohibitively expensive to juice their bottom line.

This means that 23andMe customers will, in effect, be charged twice for any potential “innovative new medicines” their DNA helps produce. The first time they paid for the DNA sequencing service; the second time they pay for the medicine that it helps create. A more equitable solution, according to Peter Pitts, the president of the Center for Medicine in the Public Interest, would be to pay 23andMe customers for their genetic data when it is used in research.

It’s clear that genome sequencing could open up a whole new world of treatments and medicines.

As its founder Anne Wojcicki said back in 2013:

“I want 25 million people. Once you get 25 million people, there’s just a huge power of what types of discoveries you can make. Big data is going to make us all healthier.

“What kind of diet should certain people be on? Are there things people are doing that make them really high-risk for cancer? There’s a whole group of people who are 100-plus and have no disease. Why?”

But it’s a shame her company is aiming to “make us all healthier” in such a parasitical way.

Perhaps over the next few years 23andMe will adapt the same business model of the internet Walruses.

Surely a much better business model would be to offer free genome sequencing and ancestry information, if you allow them to then use your data in medical research.

This would lead to a massive increase of signups – people love free – and vastly increase the size of its DNA database.

Because of this, the deals it could then make with medical companies would be far more lucrative.

I’d go along with that.

Advance medicine, find something out about yourself and your ancestry, and not get ripped off. Everyone’s a winner.

Surely that’s the way this one is going to go in the end.


Although, if they then started selling that data to life insurance companies…

Until next time,

Harry Hamburg
Editor, Exponential Investor

PS the “Cabbages and kings” headline is from a line the Walrus keeps repeating in his song. “The time has come,” the Walrus said, “to talk of other things. Of shoes and ships and sealing wax, and cabbages and kings.”

Category: Genetics and Biotechnology

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