After a long and painful struggle to remain solvent, DoubleTwist ceased operations on Friday, March 8.
DoubleTwist’s 60 remaining employees were told on March 7 that the company would be closing its doors and were given the opportunity to move their personal belongings from the company’s Oakland, Calif., headquarters the following day. At its peak just over a year ago, DoubleTwist employed over 200 people.
The company’s customers were also notified of DoubleTwist’s closure on March 8, with a brief “Dear Valued Customer” e-mail from CEO Rob Williamson. “We’ve tried diligently over the last year both to build and operate the business and to look for sources of funding,” wrote Williamson in the e-mail. “Unfortunately our financing efforts were not successful and we must close our doors.”
Williamson was unavailable for comment for this article, but DoubleTwist spokeswoman Nicole Litchfield told BioInform in January that the company had secured some additional funding from investors. Williamson said at the time that DoubleTwist was “on track to achieve cash positive operations this year.”
What’s Next for Customers?
At press time, it was still unclear what DoubleTwist’s demise would mean for its customers. Williamson’s e-mail assured customers that “DoubleTwist will assign its assets to a third party who intends to maintain the value of our products and services. They will be contacting you with information about your service.” However, former spokeswoman Litchfield told BioInform’s sister publication GenomeWeb.com that “the plan is to sell intellectual property assets and anything else that they can get value out of. [The company] is looking for buyers.”
According to several industry insiders, DoubleTwist had been looking for a buyer for the last year and a half, but was not satisfied with any offers. Most estimates pegged the company’s value before it closed in the single-digit millions. If the “third party” mentioned in Williamson’s note exists at all, it’s likely it picked up DoubleTwist’s remaining IP assets for a song.
Hitachi, which distributes DoubleTwist’s products in the Asia-Pacific market as part of its own integrated bioinformatics service business, said that the closure of DoubleTwist would have “minimal impact” on its overall operations. Megumu Kondo, VP of business development in the life science group at Hitachi, told BioInform that “services like DoubleTwist.com and GenomeZone, which are directly provided by DoubleTwist online, may cease operations.”
Noting that Hitachi “supports customers as long as existing subscriptions and licenses last,” Kondo said, “We do our best not to hamper the benefit of current customers.”
Reaction from customers who spoke to BioInform was mixed. “We were very happy with what DoubleTwist provided,” said Jim Krause, senior VP and director of biology at Neurogen, which subscribed to the company’s GenomeZone online service. “We actually got a lot of value out of their software packages. It comes as a little bit of a shock.”
However, Tim Jegla, chief scientist at Icagen, said the discontinuation of the company’s service would have very little impact on his work. “The reason we subscribed was it was the cheapest, best way to access Derwent information we bought and we’re no longer doing that, so for regular genome access information we never used them anyway.”
What’s Next for the Industry?
Coupled with the recent closure of bioinformatics portal provider Entigen [BioInform 03-04-02], many in the industry see DoubleTwist’s troubles as validation that the ASP model just doesn’t work for bioinformatics.
“I’m sorry to see it go, but I’m not surprised either. It just doesn’t seem like a way you could make money,” said Jegla.
Keith Elliston, CEO of Viaken Systems, which has moved away from its initial ASP-based business model in favor of a consulting and services strategy, wasn’t surprised either. “They pursued an ASP model that everyone saw as flawed,” he said.
Eli Mintz, co-founder of Compugen and chairman of the company''s US subsidiary, Compugen Inc., agreed. “The Internet is a great marketing tool, but it''s a horrible sales tool,” he said. While Compugen''s own LabOnWeb portal has served as a good way to introduce prospective customers to the company''s tools, Mintz said the service has few paid subscribers. “For us, it’s not a major aspect of our business.”
But the broader impact of DoubleTwist’s rise and fall on the bioinformatics sector remains to be seen. As a high-profile poster child for the “new” VC-bankrolled economy, the dot-com boom, and the nascent bioinformatics field, DoubleTwist rapidly raised a reported $76 million and burned through it just as quickly, leaving many to wonder how bioinformatics firms with less funding will fare in the newer, less optimistic economy.
Mintz noted that DoubleTwist mistakenly followed the “Microsoft model” and pursued a mass market for bioinformatics tools that simply didn''t exist. By overhyping the promise of bioinformatics and raising expectations of investors and customers, Mintz said DoubleTwist “hurt the credibility of the whole industry.”
However, Mintz and others remain confident that a solid business plan and focus will see them through the tougher times ahead.
“They raised $76 million and were unable to build a business,” said Elliston, who noted that although Viaken has raised only a fraction of that amount, “they shut the doors and we’re going strong.”