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Parallels Between the SynBio and PC Industries
Horizontal Platforms Based On Software Tend to Win
As I continue to get deeper into $AMRS, I am beginning to glimpse parallels between the computer industry and the nascent synthetic biology industry. Yet again, Andy Grove´s “Only the Paranoid Survive” comes to mind, in which he describes how the personal computer industry gradually verticalized. I find that even though the industry did indeed verticalize, some very big winners emerged by positioning themselves as what in hindsight may have looked like prominent vertical components, but have in fact have turned out to be horizontal platforms, mainly through the use of software. Microsoft and Apple initially facilitated the operating systems that ran on on a range of aggregated components. Today, both business are relatively independent from advancements in the different enabling vertical components. The vertical components evolve, but both Microsoft and Apple are somewhat immune to disruptions in this sense. Their moat sits above the chaos that unfolds in the different sustaining verticals and it quite hard to displace today.
The end goal of synthetic biology is to synthesize organisms, but today what we can do with it is synthesize molecules. This is beginning to change our production model, starting with the chemicals industry, which in 2019 produced 3.94tr $ in revenue worldwide. Today, we (or should I say, $AMRS, $DNA, $ZY - in decreasing order of scale and commercial achievements) can synthesize molecules that are cheaper and more sustainable to produce than similarly functioning molecules produced via traditional chemical methods. These companies can do it by leveraging a whole range of vertical components, such as genomic sequencing and editing tools, AI, mass spetrometry, automation and others. $AMRS, $DNA, $ZY operate above the vertical components that enable them, that in turn will be subject to much disruption over the coming decades as the technology continues to evolve. This podcast talks about how CRSPR gene editing (the pinnacle of gene editing until recently) is getting disrupted by base editing, illustrating the volatility and unpredictability of a key vertical component.
Talking about $AMRS (and by extension about $DNA and $ZY) its moat consists in outputting a growing number of useful molecules at industrial scale at a decreasing cost and at increasing levels of sustainability. This is facilitated by the mentioned stack of vertical components, which other companies are in charge of evolving and by:
Using software (mostly) to develop an ever growing map of metabollic pathways, in order to figure out what is the best way to produce a given molecule, in terms of cost, scalability and sustainability.
Developing industrial expertise to scale up commercially attractive molecule synthesis from lab conditions to actual mass scale output.
The above two points are way harder than they seem and the market is currently giving it credit for and produce a flywheel. The better you get at scaling up, the more resources you have to get better at #1 and so forth.
Going forward, I believe this mental model will prevail. If you haven´t already, check out my latest post on $AMRS in which I go over what seems to be a relatively undervaluation with respect to $DNA.
Until next time!
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