- An entrepreneur in Chile says uBiome owes him nearly $600,000.
- Matias Gutierrez started a business to manufacture kits for uBiome but says the startup stopped paying him.
- uBiome was founded in 2012 on the promise of helping ordinary people understand the bacteria living in and on them, known as their microbiome.
- The company eventually raised $105 million from investors and reached a valuation of $600 million.
- In late April, the FBI searched uBiome’s office as part of an investigation.
- By the end of June, the company’s top leadership and many of its board members had departed.
- Click here for more BI Prime stories.
A Chilean entrepreneur named Matias Gutierrez built a factory and hired 45 people to make packaging for the Silicon Valley poop-testing startup uBiome.
For eight months, uBiome paid Gutierrez regularly for the kits. But starting in May 2018, the payments started falling behind.
Now, Gutierrez says he hasn’t been paid in full for nearly a year, and uBiome owes him close to $600,000, according to documents he provided to Business Insider. The documents include a series of emails, a copy of the original contract between uBiome and his company, a video of his staff assembling the kits, and photos of the stock he says he had to dispose of.
The yearlong payment delay is a fresh sign of the trouble mounting for uBiome, which raised $105 million from investors on the promise of helping people understand how the bacteria in their body affects their health.
In an emailed response to Business Insider on Monday afternoon, a uBiome representative provided the following statement:
“The interim management team is carefully reviewing and ensuring the accuracy of all outstanding and past expenses. In this instance, we’re working directly with the vendor.”
As of Tuesday afternoon, Gutierrez said he still had not heard from uBiome.
It has been a tumultuous time for the once buzzy uBiome. In April, the FBI raided the company’s San Francisco headquarters, reportedly as part of an investigation into the company’s billing practices. By the end of June, the company’s top leadership and many of its board members departed.
Read more: uBiome convinced Silicon Valley that testing poop was worth $600 million. Then the FBI came knocking. Here’s the inside story.
Gutierrez said he continued trying to make contact with uBiome after news of the investigation became public.
In an email he sent to John Rakow, then uBiome’s interim CEO, dated May 14, Gutierrez attached a formal collection letter. The letter detailed seven unpaid invoices in amounts ranging from tens of thousands to hundreds of thousands of dollars. Gutierrez also said his company, GenoSur, had to legally dispose of $130,000 worth of uBiome packaging — a long, bureaucratic process that in Chile requires the presence of a notary public.
“It’s been very frustrating,” Gutierrez said. “I’m not used to dealing with companies like this.”
Rakow, who resigned from uBiome at the end of June, declined to comment for this story.
A spokesman for Zac Apte and Jessica Richman, uBiome’s founders and former co-CEOs, didn’t respond to a request for comment.
Mixed messages and disappearing employees
About six years ago, Gutierrez met Richman and Apte in Santiago, Chile. The pair were co-CEOs of what was then a brand-new startup.
Things have taken a turn for the worse since then: Apte and Richman were suspended from their roles in May on the heels of the FBI raid. Last week, both Apte and Richman resigned from the company’s board of directors, and Rakow, uBiome’s general counsel who had been interim CEO since May 1, also departed.
At the time of their meeting, however, Gutierrez believed things were looking up. A science entrepreneur himself, Gutierrez was excited about uBiome’s potential to help raise awareness of the role the microbiome plays in human health.
So in the fall of 2017, when Richman and Apte called Gutierrez to ask whether he’d be interested in helping to make the packaging that would encase uBiome’s tests, he said yes. On September 20, 2017, Apte and Gutierrez signed a contract for the arrangement, which Gutierrez shared with Business Insider.
The document stipulated that uBiome would send Gutierrez a quarterly estimate of the number of kits it planned to request over the next three months and said that at the end of each month uBiome would indicate how many new kits it wanted Gutierrez to make by means of an emailed order form. If the order was accepted, the contract said, uBiome “may not be excused from complying with it.”
Never miss out on healthcare news. Subscribe to Dispensed, our weekly newsletter on pharma, biotech, and healthcare.
The new setup would require a lot, Gutierrez knew. So he got to work immediately.
First, he hired 45 new people, doubling the size of his startup, a science-education outfit called BioQuimica. Then, he had a crew of workers build him a new facility, complete with the certifications required to create medical-grade equipment. Eventually, he created a whole new company, called GenoSur, to represent the fresh operation.
For the first eight months, the arrangement between Gutierrez and uBiome went smoothly, he said. He supervised his new employees creating hundreds of thousands of kits. At one point, he filmed their work and published it on YouTube. At its peak, Gutierrez’s staff was shipping tens of thousands of kits to uBiome every month, he said.
But starting last summer, nearly a year after Gutierrez had signed the original contract and several months after uBiome had placed four new orders, something changed. uBiome’s payments slowed. Sometimes, uBiome wouldn’t pay him until a month after a deadline, he said.
Communication between Gutierrez and the company also became more difficult. At first, he had one contact at uBiome. Then, that person would disappear and be replaced by someone new, he said.
Gutierrez said his first uBiome contact was someone in the company’s graphic-design department. Then he was shunted to someone in engineering, he said. Finally, someone who worked in uBiome’s operations department emailed him. Each time, Gutierrez said, after only a few days or weeks of working together, the uBiome employee would vanish.
“I could sense that the company was growing so fast that it was hard for a lot of people to make decisions,” Gutierrez told Business Insider.
Rumors, and then continued silence
In the summer, Gutierrez said, he began hearing rumors that uBiome — which has a research-and-development operation in the same city as Gutierrez’s company, was working with a different manufacturer for its kits. The company would no longer need Gutierrez, he heard.
This past March, he got an email from uBiome that said the company had decided to use a different manufacturer, Gutierrez said. The person said the company was reviewing the seven invoices that uBiome had yet to pay, he said.
“It was very sudden,” Gutierrez said. “There had been hints, but we didn’t know what was going on.”
So Gutierrez said he kept trying to get in touch.
Last fall, things became even more difficult. In November, Gutierrez’s emails to uBiome started bouncing. He tried contacting four uBiome executives, including a controller, a CFO, a senior supply-chain manager, and a director of strategic operations, he said. But Gutierrez said he would rarely hear back. When he did, all he’d hear was that his invoices were “being reviewed,” according to emails he shared with Business Insider.
“We never got formal confirmation of anything,” Gutierrez said.
To date, he still has not heard directly from uBiome about the money he’s owed.
Want to tell us about your experience with uBiome? Email the reporter on this story at firstname.lastname@example.org.
SEE ALSO: uBiome convinced Silicon Valley that testing poop was worth $600 million. Then the FBI came knocking. Here’s the inside story.
DON’T MISS: All of uBiome’s top execs are out at the embattled poop-testing startup that’s at the center of an FBI investigation
Join the conversation about this story »
NOW WATCH: Watch a diver swim right next to a 12-foot giant squid in Japan