Joshua Lachter: “in 2050, over 50% of the petrochemicals we use in everyday life will be replaced with bioproducts”

If you’ve been reading 2050 for a while, you might remember my interview with Jacob Nathan , back in April. His startup, Epoch Biodesign , is engineering enzymes to break down plastic waste into “low-carbon, circular chemicals.”

Think of this interview as the sequel.

Jacob and I chatted about the benefits of making products with biology. We also touched on a serious issue often faced by bio-manufacturers today: an inability to scale their products, caused by a lack of available infrastructure, namely production facilities.?

So, I was excited to chat with Joshua Lachter recently. Joshua is the co-founder and Chief Business Officer of Synonym , a U.S. startup working to:

• Finance and build commercial-scale biomanufacturing facilities?
• Provide manufacturers (from startups to Fortune 500 companies) with flexible production space
• Give infrastructure investors access to a new asset class, in the process?

Launched last year, Synonym is already backed by the likes of Andreessen Horowitz , Giant Ventures , Blue Horizon , and Thia Ventures .

Joshua and I had a great conversation about his prediction for 2050, why it’s important we achieve it, and the work he’s doing to close the “scaling gap.”?

I hope you enjoy it as much as I did.

This interview has been edited for length and clarity. A big thank you to Ivy Chiou for making it happen.

Joshua, you predict that “in 2050, over 50% of the petrochemicals we use in everyday life will be replaced with bioproducts.” I’d love to start by talking about petrochemicals themselves. Just how prevalent are they in our daily lives today?

If you go back to anytime before the year 1800, none of the products we used in our daily lives – not a single one – was petrochemical derived. Everything we used was either harvested, mined or killed. But people still ate. People still traveled to places and they still did things.?

The first chemical products arguably entered our daily lives about 100 years ago. Today, there’s no part of our physical world that isn’t dominated by petrochemicals (byproducts of petroleum).?

Just take one set of them: plastics. They only began mainstream usage in the 1950s and 60s but they pervade everything we touch. They’re in our computers. Our food packaging. When you wear your athleisure, you’re wearing a petroleum product in part.??

It’s almost impossible to escape plastic itself.?

Why is that an issue?

Humans lived for a very long time without plastics and seemed to be okay. I don’t think anyone wants to go back to a world without them: they offer functional superiority over other materials. But they’re useful only for their functional properties and those functional properties don't need to be derived from petroleum.?

Think about how straws are produced for a second. A plant that grew millions of years ago died and then desiccated. It got packed and packed and packed, and became petroleum which sat in the earth for tens or hundreds of millions of years. We exert huge amounts of energy to mine that petroleum and bring it up to the surface. We turn it into a petrochemical and then into a straw, which is used for ten minutes before being discarded.??

It doesn’t sound like a very efficient process…

It’s really not. So why don’t we use the thing that created the straw initially – life – to create it instead? That’s the essence of biomanufacturing.

We can use it to produce a whole bunch of things at varying levels of sophistication.?

You may have seen the headlines around UPSIDE Foods producing whole cuts of meat. Other companies are trying to produce leather. Some are building organs-on-a-chip for bomb detection and bones for implantation. Creating so-called cultivated tissue is really hard and extraordinarily complex.???

I understand whole tissues aren’t the only thing we can produce with biology though. What sort of bioproducts are you interested in at Synonym?

At Synonym, we’re interested in companies using fermentation: getting single-celled organisms to create stuff.?

There are different kinds. You can use solid state fermentation, for instance, to create next generation building materials with fungi and mycelia. We’re very interested in liquid carbohydrate fermentation: using cellular organisms that eat a liquid carbohydrate (most often something like sugar).?

Why are you keen on fermentation?

There are two big reasons.

The breadth of stuff that single-celled organisms can create is pretty staggering. At the most elemental level, you can train those organisms to eat almost anything and create almost anything.

As humans, we’ve been doing fermentation for thousands of years – just think about kimchi and kombucha and beer. Precision fermentation – the ability to very directly engineer life to create products that are useful to us – is the result of much more recent science. But it’s already used very successfully in pharmaceuticals. Aspirin and so many chemotherapeutics are all derived from nature.?

So we know it can work…

We do. It’s part of the reason I believe fermentation-derived products, and bioproducts in general, will become an increasing part of our lives.

They should. Petrochemical products are certainly not great in an ecological sense. We all know that. I have a daughter and the idea that there’s most likely microplastics in her bloodstream is horrifying.

It really is. So what progress has been made so far to create fermented alternatives?

Right now, there are hundreds and hundreds of companies in the synthetic biology space. In order to produce their products – from egg protein to the surfactants that go in soaps – they’ve mostly spent the past decade or so working on a few things:

• Finding the most productive strains of organisms possible
• Perfecting those strains and the bioprocess around fermenting them – getting yields as high as possible
• Figuring out how to turn the gross products from fermentation into actual usable products

Companies are, by and large, nascent and haven’t brought products to market just yet. But, we’re expecting many products to reach maturity in the near future. As they do, there’s a commercialization chasm they’ll need to confront.

Ultimately, the only thing that matters is getting their products on the market. Otherwise, it’s just a science experiment. The key question for companies isn’t “can they do this in a lab?”; it’s “can they get this on a store shelf?”

Tell me about this commercialisation chasm. How can we help to commercialise products and bring them to market?

Bioproducts require a huge amount of R&D. Life is stubborn, in all its forms. It’s really hard to get single-celled organisms to do what you want them to do: to coax things from them that they otherwise wouldn’t be doing. There’s no organism today that naturally spits out bioplastics…You have to engineer them. That takes time and complexity and lots of testing.

And, presumably, lots of money…

Yes. For a lot of products, the cost piece – in terms of both R&D and manufacturing cost – is a huge part of it.

The synthetic biology industry is at a really important inflection point, right now.?

It’s very hard for companies to generate demand for their products without them showing cost parity with petrochemical products.?

To achieve cost parity, they need scale. They need to gradually increase the size of the bioreactors they use in production.?

We launched an online tool called Scaler, a few months ago, which has produced over 2,000 techno-analysis reports for companies, so far. It helps them to understand their products’ unit economics, commercial readiness, and the key parameters driving profitability.?

The data we’ve collected from it shows that for every 2x increase in scale (bioreactor capacity), there’s a 1.4x decrease in cost of goods sold. That’s due to things like lower capital intensity, improved process efficiencies and lower labor needs.

The problem is: companies can only scale, and increase their bioreactor capacity, if they have sufficient demand. If people want what they’re producing… It’s a constant, vicious circle.

…which, I imagine, we need to find a way to break…

For certain products, yes. They need huge volume.?

Take something like dairy products: there’s almost a trillion dollar global market for milk alone. Today, cow dairy (produced by cows) is really the only product on the market. But, as more and more companies release precision fermented dairy products, price is going to be key. Think about how cheap milk is today: it’s subsidized. To take just 5% of the dairy market, they'll need to produce at an extraordinary scale and at very low prices. For companies to be profitable, they’ll need to really reduce costs.

But, that won’t be the case for every company.?

Pharmaceutical companies have huge R&D costs: they spend millions doing clinical trials. Yet, with a pharmaceutical, you generally don’t need to produce very much, and you can sell what you do produce for a ton of money.?

There’s also a company called Arcaea , which is a Ginkgo Bioworks, Inc. spin out. They’ve synthesized the scent of certain extinct flowers via fermentation. It’d be literally impossible for humans to smell those smells otherwise but they have the flowers’ DNA. Again, for things like that, you might be able to charge a lot more and produce way less.

It makes total sense. So how can we bring down the production cost of those high volume fermented products?

Broadly speaking, there just isn’t enough high-quality fermentation capacity to make commercialization possible.?

In addition to Scaler, we have another tool called Capacitor. It’s a global database of microbial fermentation capacity and includes over 250 facilities and counting. For true commercial operations, you need to use tanks greater than 100,000L. Over 73% of the facilities in our database have a total capacity in the 1L to 50,000L range…?

If you’re producing today, you’re probably producing at a CMO, a so-called contract manufacturing organization. They own the facility, they operate it for you and they don’t produce very much.?

Our insight – we’re a very young company and we’re still proving it out – is that, if bioproducts are going to be a thing, companies will need to be in facilities that aren’t necessarily operated by someone else.?

Problem is: it costs hundreds of millions of dollars to build a facility – not so different from oil refineries and other core infrastructure for the petrochemical industry. Our bet is that our industry will evolve like other industries. It won’t make sense for manufacturers to bear the pain and expense of building their own, very CapEx heavy facilities.?

We want to create facilities that can be built at the lowest cost possible, be run at the lowest cost possible and require zero CapEx from the companies using them.

We want to own those facilities and lease them out. Our bet is that doing that will help to drive down production costs for the industry. If that translates to lower prices, we’ll see more demand for bioproducts, which will lead to more demand for bio-facilities, and then more need to build facilities.

So, you’re hoping to create a flywheel that breaks companies out of the “vicious cycle” you mentioned earlier.

We are. But there’s also something else to consider.??

If bioproducts are going to become a thing, there’s going to need to be tens of billions invested in building facilities…in the actual steel on the ground. Just like there was for solar and wind.?

That will have to come from lots of diverse investors and we can’t have this become an industry if those facilities don’t become an asset class. It was a similar story with e-commerce: its rise needed a parallel rise in new asset classes, like third-party logistics warehouses.??

How can we de-risk facilities to make them more attractive to potential investors?

Anytime you run a real estate asset – whether it’s an office building or residential or a manufacturing site – the only thing you really care about is whether your tenant can pay the rent. Then, downstream of that: “is there demand for the tenant’s product?” If there isn’t, it’s a real problem. The whole thing breaks.?

Of course, people can only ‘demand’ products if they’re on store shelves and they’re legally able to buy them. What are things looking like on the regulatory front?

For some – but not all – new bioproducts, there’s regulatory risk. There’s (quite justifiably) regulatory scrutiny and government oversight that manufacturers have to satisfy.?

In the United States, the EU and England, we already have a very mature bureaucratic and regulatory apparatus to ensure the quality and integrity of the products consumers buy. That apparatus will ultimately need to apply to bioproducts but I think that will just come over time.??

What we’re not always clear on just yet is how to label these products. How will they be referred to? What disclosures will be needed on their packaging?

When you buy a sweater and it says “100% virgin wool,” everyone knows what that means.

If I held up two bananas in front of you and said “this is a conventional banana. This is an organic banana. They sort of look the same,” I imagine you’d be more likely to pick the organic banana without asking any further questions. Just because I used that single word, “organic”, as the descriptor.

But when we call things ‘bioproducts’, do people know what that actually means? Do they know what the term connotes?

I think this industry needs to run similar consumer awareness campaigns.?

It’s true. If I walked into a supermarket today, I’d have no idea how something marked ‘bioproduct’ was produced. I might not buy it, for that reason. So we need clear, standardised labels and to educate people about what those labels mean. Quick, final question from me, on that note: is there anything else we could standardise?

There is. When we look at the data from Scaler, 45% of the models run share common downstream processing needs. The commonalities there would allow for a single facility design.

…which I imagine would reduce design costs, the time it takes to secure building permits and various other things…All great for investor confidence!

Joshua, it’s been a pleasure to chat. Thanks for your time.