Latest / The Inspired Stories Podcast / The New Industrial Revolution: Veronica Breckenridge's Vision for Biology-Based Manufacturing

Transcript

The New Industrial Revolution: Veronica Breckenridge's Vision for Biology-Based Manufacturing · The Inspired Stories Podcast

• 0:04
  Welcome to another edition of the Inspired Stories podcast,
• 0:08
  where leaders share their experiences so we can learn from
• 0:11
  their successes and be inspired by how they've overcome
• 0:14
  adversity. My name is Anthony Codaspodi and
• 0:17
  today's guest is Veronica Breckenridge, Founder and
• 0:20
  Managing Partner at First Byte Ventures.
• 0:23
  They are a Houston based venture capital firm dedicated to
• 0:27
  advancing and commercializing industrial biotechnology.
• 0:31
  Their goal is to support early stage bio manufacturing
• 0:35
  companies that develop sustainable solutions for the
• 0:38
  world's pressing challenges. Under Veronica's leadership,
• 0:42
  First Bite Ventures has invested in multiple groundbreaking
• 0:46
  startups and secured $70 million in funding across seven
• 0:50
  companies from the US Department of Defense.
• 0:53
  Veronica brings over 30 years of institutional investing and
• 0:57
  operations experience, having played key roles at Tesla,
• 1:01
  Apple, and Home Capital. She believes in building a
• 1:04
  better future through technology and innovation, and her passion
• 1:08
  for sustainable practices is evident in every aspect of her
• 1:12
  work. She's also passionate about
• 1:14
  mentorship and ensuring the next generation of innovators can
• 1:18
  thrive. We're excited to explore her
• 1:20
  insights on the future of industrial biotech.
• 1:23
  Now, before we get into all that good stuff, today's episode is
• 1:26
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• 2:05
  All right, back to our guest today, the founder and managing
• 2:07
  partner of First Byte Ventures, Veronica Breckenridge.
• 2:10
  Thanks for making the time to Share your story today.
• 2:13
  Well, thank you very much, Anthony, for having me.
• 2:16
  So, Veronica, before we talk about the inspiration for
• 2:20
  starting First Bite, I want to hear about a couple of your more
• 2:23
  formidable stops along the way. I understand you played a key
• 2:28
  role in discovering Siri, the Voice Assistant that Apple
• 2:33
  iPhones use when it was just sitting on a shelf at Stanford.
• 2:38
  Can you walk us through how you identified this technology's
• 2:41
  potential, and especially at a time when others weren't seeing
• 2:45
  value in it? Yes, it's actually a really
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  interesting story almost I feel in the realm of when you think
• 2:54
  about Xerox, you know, really did the first graphical user
• 2:59
  interface and Apple ends up being in this case case is
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  similar kind of beneficiary be the first one who actually
• 3:06
  introduced it into market. And and it's a typical story of
• 3:11
  how potentially incumbents may not be well, despite all the
• 3:17
  resources they seem to have, may not be well sort of positioned
• 3:22
  in the adopting new technology. So when I was at Motorola, this
• 3:26
  was when I was at Motorola, I was part of a group that was
• 3:28
  called X product. This was 2005 and at that point,
• 3:33
  and if you are like me who are old enough to remember a razor
• 3:38
  was the hot thing that. Oh yeah, the small flip phone,
• 3:41
  super tiny, slipped right in your pocket.
• 3:43
  Yeah. And so Motorola was at the
• 3:48
  height of, I would say it's mobile device.
• 3:50
  I was, I was part of the mobile devices.
• 3:53
  However, we also recognize that moving forward, the phone will
• 3:59
  need to deliver more experiences.
• 4:01
  It's not going to be a voice only device.
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  So Motorola actually had the recognition that that was going
• 4:07
  to happen. And I was part of the group that
• 4:09
  was called X product and X stood for experience.
• 4:13
  So we knew in the future it's going to be experience centric.
• 4:16
  We didn't know what it was going to be, but there's going to be
• 4:19
  new experiences that has to be created to make that device
• 4:22
  richer. So I was a part of that group.
• 4:25
  I LED what we called sort of ecosystem.
• 4:27
  Basically my job, my team's job is to go out and look at new
• 4:31
  technologies that could deliver differentiated experience and
• 4:36
  then that potentially we can introduce to our our devices.
• 4:40
  So at Motorola, when I was looking at all, I was looking at
• 4:46
  a lot of different innovations. It was a lot of them are
• 4:49
  actually quite interesting and they are real now.
• 4:52
  I really felt like it had the crystal ball for 10 years into
• 4:55
  the future, what the world was going to look like.
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  And how were you accessing these or seeing these before they they
• 5:02
  came to light? You're just talking to sort of
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  the young startup companies that are coming up with the ideas.
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  Yeah, we were talking a lot of the startups.
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  I also had someone in Silicon Valley, so I was actually going
• 5:12
  to Silicon Valley. And yeah, there's a lot of
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  entrepreneurs and people who are bringing technology and had a
• 5:18
  team there that that was actually scouting also these in
• 5:22
  terms also talking to VCs, telling them what we wanted and
• 5:27
  they would surface interesting technologies to us as we look.
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  And one of the areas that we were looking at was we felt
• 5:35
  there needs to be a new user interface and the, and the new
• 5:39
  user interface could be a voice driven interface.
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  And, and that was an area that we were interested.
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  However, the solution at that point that most people have
• 5:49
  provided was a chip. The chip would be on the mobile
• 5:53
  devices. Excuse me, I'm going to turn off
• 5:56
  this. This is my fault.
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  So when? But the problem is at that
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  point, this is, you know, think about it 20 years ago, so, so
• 6:06
  the phone actually had very limited memory.
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  If you had two Meg of memory back then, that was a two $300
• 6:13
  phone, right? So very little memory, very
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  little processing power. So if you had a chip and and
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  because voice technology actually requires a lot of
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  processing, as you know, so you could never really deliver a
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  really nice experience. There's lots of people who try
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  to use the chip and compress the processing into so that you
• 6:32
  could be mobile, but it was never a great experience.
• 6:35
  So, so from that perspective, it was like, well, here's this
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  voice, you know, if, if the voice interfaces, we see a lot
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  of these, you know, science fiction movies, it would be
• 6:45
  nice. But the experience that the
• 6:49
  technology was able to do was just never gonna get there.
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  And then I was introduced to back then this it's called
• 6:58
  Stanford Research Institute Sri and I was introduced to to them
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  and I paid them a visit and they were basically obviously before
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  that we perhaps there's this is the objective we want to see
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  technologies that you have that might create differentiated
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  experience. And they showed us a number of
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  different technologies. One of the technology that
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  showed us was actually this what we call client server.
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  And if you understand the technical, understand it's a
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  client server technology. So it wasn't a chip.
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  It was essentially using assuming the bandwidth of the
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  network will actually grow and it was basically sending your
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  voice packet. It was just recording your voice
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  and sending the voice packet to the back end because server has
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  a limited processing capability and cheap.
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  So at the time, the phones, they weren't very powerful, you know,
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  they, they didn't have the, you know, a lot of memory, they
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  didn't have the processing power.
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  And so the idea was send this data over to, you know, across,
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  you know, across the, the, the cell phone tower waves to a
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  server on the other side that are super beefy, very powerful
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  do the processing there. And, and, and, and correct.
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  And the other thing, I think the paradigm or the disruption, if
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  you will, if that enable that inflection is you have to assume
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  that the network will become much broader, broader, Bob.
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  And because given that trend that was going 'cause if it was
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  the small narrow network, then the speed at which you're
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  sending that packet and coming back, that experience would not
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  be great 'cause there's be long delays, right?
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  But the assumption is as this technology matures, also the the
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  the infrastructure will get there.
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  So it'll be fast enough that it can come back really quickly.
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  You use the server to process and then you pump the response
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  back to your device. So now all you needed was the
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  network and the server, which both are cheap, way cheaper than
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  developing a chip, and also doesn't take any resources from
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  your device. So it's just a beautiful
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  architecture and when you think about scalability like this,
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  can't scale immensely. They their demo was very simple.
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  Their demo back then was actually based on a was, was
• 9:17
  actually searched for a song because iPod was a thing.
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  And and so it was really just, I tell them it could be any.
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  And the nice thing is that they also contexted it.
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  So what happens? It was limited to all songs.
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  So in the back end, you can have all songs right in your
• 9:33
  database. And then you can have maybe part
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  of a lyric or it's not even write lyric.
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  You could have part of the name of the artist or part of the
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  song. And you can go back and ask it
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  and it will come back. And it was 99 point it's.
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  Impressive. It was incredible.
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  Devils. So how is it that Motorola
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  didn't end up with this and Apple did?
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  So this is this is where I I mentioned this is a great story
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  of how incumbents don't have the capabilities to actually
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  incorporate new technology. So we love the technology.
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  I brought our our product team there.
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  We built the first commercial prototype of this technology and
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  the tech, the prototype was actually we back it integrated
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  with at that point OpenTable and we integrated with GPS on the
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  phone. So you could literally take that
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  device and ask it say Japanese restaurant within 5 miles of
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  where I am. It'll come back with a list and
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  you you can say book me a reservation at this restaurant
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  at this time. It'll go back to the open table,
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  you know, sort of server and then book your and then and come
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  back with. So it was actually a beautiful
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  demo too. Everybody loved it, right?
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  And at that point, what we realized, unfortunately, when we
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  said, you know, can we put it on our device, Motorola never had
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  an operating system, truly an operating system because
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  Motorola, remember the phone, Motorola invented the phone
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  because of the antenna technology.
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  So Motorola was really good. This is why Motorola had the
• 11:14
  Razor, incredible mechanical engineer, incredible antenna
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  engineer, not software engineer. So their device, the way we
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  brought our device to the world, every device is an individual
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  product. We never had a software
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  platform. Software was an afterthought
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  because when we started the phone, there was no software
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  technology. You just cobble together some
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  codes and make it work and it was simple.
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  It was just making the voice work and most of the software
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  capability was all what we call the stack software, which is the
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  communication network. You need to make sure the
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  communication worked with the network and and the voice
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  quality was extremely good back then.
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  A good phone definition of a good phone is draw call quality,
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  that you don't draw calls. So sorry for jumping in,
• 12:07
  Veronica, but just to kind of clarify the, the ultimate reason
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  that we didn't see this technology, sort of the Siri
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  voice technology on a Motorola phone is because they didn't
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  have the operating system. They didn't have sort of that
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  software or OS infrastructure in place to layer this on top, and
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  they thought it was too big of a lift to kind of go down that
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  road. Correct.
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  They thought integrating that feature would be incredibly
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  hard. The result was like we could put
• 12:40
  it on a Windows Mobile phone or we could have put it on a
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  Symbian phone, which is a Nokia operating system, but we didn't
• 12:48
  have an operating system to put it on.
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  So it was going to take way too long to incorporate that
• 12:54
  feature. And that end up, yeah, we end up
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  not doing it. And in fact, what's interesting
• 13:00
  is the product manager that actually worked on it, you know,
• 13:03
  as I left Motorola, he left and joined Sri as a EIR there and
• 13:10
  end up taking that technology, commercializing, raising money
• 13:13
  and then three years later, it's not bought by Apple.
• 13:17
  OK, so that's how it all unfolded.
• 13:18
  Interesting. OK, so let's Fast forward like
• 13:22
  you've had so many cool experiences.
• 13:23
  I think we could probably do an interview on, you know, each one
• 13:26
  of your sort of career stops. But I want to spend the bulk of
• 13:29
  our time really talking about what you're doing now.
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  How did you come up with the idea to start First Bite
• 13:35
  Ventures? What was the gap?
• 13:36
  What was the problem that you were trying to solve?
• 13:40
  Yeah, when you look at what one, one of the constant themes I I
• 13:43
  feel like my career has been is identifying what and when a
• 13:50
  disruption could happen. And there's a lot of to your,
• 13:54
  you know, as we use that sort of series story, if you will, you
• 14:00
  have to see a number. There has to be a number of, I
• 14:03
  call it sufficient conditions for a disruption to happen.
• 14:08
  And it doesn't just and one of which is the cost of the
• 14:13
  technology has to get to a reasonable point and you have to
• 14:17
  believe it will get there within a reasonable time frame.
• 14:21
  The second thing is the technology development curve has
• 14:28
  to get to some something that you could leverage other like in
• 14:31
  the case of Siri really we could leverage other sort of server
• 14:36
  based technology like OpenTable and other services that's
• 14:40
  already existing that you can connect to.
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  So you can provide more value than just the technology service
• 14:46
  technology is really a conduit to achieve more applications
• 14:51
  that can be available there. And then the final thing is when
• 14:58
  you look at disruption is often times there is you have to
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  believe there is a large enough market that's at a lower cost
• 15:09
  that couldn't that would benefit from it, that couldn't really
• 15:12
  benefit at the earlier stage because when it was really
• 15:15
  expensive. So as cost come down really
• 15:17
  unlocks a large market. You know, for instance, like the
• 15:20
  Internet, you think about it, the Internet started in the 50s
• 15:23
  by the government and then big enterprises were using it
• 15:27
  because computing was expensive and they were the only people
• 15:31
  who could afford it. However, as the Internet comes
• 15:35
  and become more adopted by consumers, really as a cause
• 15:40
  come down with personal computing, with the network
• 15:43
  being there. Finally, eventually the adoption
• 15:46
  of the Internet and what drove the growth of the Internet is
• 15:49
  really consumer and personal applications right before it now
• 15:53
  becomes SAS and it kind of comes back to the enterprise space to
• 15:57
  force them to change at the speed of consumer adoption.
• 16:00
  So those things have to those I think are the three critical
• 16:05
  elements you have to look at to say is a disruption going to
• 16:09
  happen at that time 'cause timing is really important
• 16:12
  'cause otherwise you started investing in Internet in the
• 16:15
  50s, probably not a great, you don't have to wait your whole
• 16:18
  lifetime. So and when I was looking at
• 16:24
  this is back in 2021, looking at the industry, there are three
• 16:30
  things that I noticed. One is as we think about
• 16:33
  computing, the cost has come down significantly, but the cost
• 16:38
  of biology has come down even more so because not only did the
• 16:43
  cost come down to in terms of understanding biology, but also
• 16:48
  the tools have been developing in terms of understanding
• 16:51
  biology for the last 20-30 years.
• 16:53
  So the cost of biology has dropped actually over 100,000
• 16:58
  times. Can you explain what that means?
• 17:01
  The cost of biology? Because I think of biology, I'm
• 17:04
  like, I'm biology like the plants are biology like I don't
• 17:07
  know cost the same amount to to grow a tree as it it always has.
• 17:12
  But I'm missing something. Yeah.
• 17:14
  What's the? Yeah, sorry.
• 17:16
  So sequencing A genome, let's use that.
• 17:18
  So, so bioengineering, so sequencing A genome costed over
• 17:23
  $100 million now it's maybe $1000.
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  Actually it's getting more hundreds of dollars now.
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  So, so it's actually dropped because of this exponential
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  curve. If you think about it, it's the
• 17:36
  cost of computing has come down and it's accelerated the
• 17:40
  discovery of new bio biology pathways and bioengineering.
• 17:45
  But the tools have also been developing because the pharma
• 17:47
  industry, you know, had a lot of money and have been pouring
• 17:52
  money in terms of discovering new bio pathways more in search
• 17:56
  of things like cancer, curing cancer and things like that,
• 17:59
  which are basically have no price elasticity, right?
• 18:04
  When you talk about life, there is no price elasticity.
• 18:06
  So they've been developing all these tools.
• 18:09
  So the tool development and the cause has been really now it was
• 18:14
  also way faster. It took us, you know, first
• 18:17
  genome. I think when we sequenced it
• 18:19
  took almost a year. Now it's like you're talking
• 18:23
  about minutes, right? So, so the speed at which has
• 18:29
  also accelerated and the cost has accelerated.
• 18:32
  So now we're talking about we're in a place where the as this
• 18:39
  technology continues to go down, we're going to start the
• 18:42
  discovery and the the cost is going to continue on that
• 18:47
  exponential curve. And this is one of the things
• 18:50
  that people always say, you know, we we overestimate the
• 18:54
  present and underestimate the long term.
• 18:57
  And this is because every technology is an exponential
• 19:01
  curve. We overestimate the short term
• 19:04
  because we only think linearly. We don't think exponentially.
• 19:09
  The way you hit that exponential part, it's going to accelerate
• 19:12
  at a much faster speed than any anybody can imagine.
• 19:15
  But in the short run, it just doesn't look like it's moving
• 19:18
  right. And this is where I feel.
• 19:22
  And are we at that inflection point now or or?
• 19:24
  Did we? Hit that a few years ago where
• 19:26
  it's now on the exponential. Curve with the cost and with the
• 19:30
  understanding that now that we have, we are finally at.
• 19:35
  It's my personal opinion, but I feel like we're about to hit
• 19:39
  that inflection point. We're about to.
• 19:41
  OK. And and that's the perfect
• 19:43
  timing for investment because you don't want to invest when
• 19:47
  it's the valuation already are up and because you're not going
• 19:50
  to make the actual it's right in front of that inflection point
• 19:53
  is the right time to enter the market.
• 19:55
  What are you seeing on the graph, Veronica, that suggests
• 19:59
  to you that we are about to hit that inflection point?
• 20:04
  Like I said, this is, it's a, it's a much more.
• 20:09
  Just you, you sort of have a holistic view of everything kind
• 20:11
  of going on in the space. These conditions, you know, So
• 20:15
  what that cost curve was one of the reason.
• 20:18
  The second is if you think about where just like the the example
• 20:22
  we use with Siri, you know, where broadband is going to be
• 20:25
  deployed like where the trend of technology is going, right?
• 20:29
  How is this going to happen? When I looked at it, you think,
• 20:33
  you think about, you know, with all the data centers that are
• 20:36
  being built with the increasing the drop in, in, in data storage
• 20:41
  cost, the drop in computing cost, that's going to continue
• 20:45
  to happen, right? And when you think about the
• 20:48
  data set in terms of the what's the biggest data set that we
• 20:52
  have that we have not been able to collect because it was too
• 20:56
  costly? Because a lot of the algorithms,
• 20:58
  I'll be honest, the people get very excited about AII, tell
• 21:01
  people this is nothing to be excited about.
• 21:03
  Because guess what, the algorithms we knew we just
• 21:06
  didn't have cost effective tools to do actually do any analytics
• 21:11
  on it because it was cost, but to do it.
• 21:14
  But now we can do it because it's cheaper now.
• 21:17
  Because the cost of computing is so much less expensive.
• 21:20
  OK. And.
• 21:21
  What's the biggest data set? Biology is the biggest data set
• 21:24
  one a person can create terabytes of data right on your
• 21:30
  your your a single person and if we think.
• 21:33
  About what do you mean by that, Veronica?
• 21:35
  You're talking about like my, my genome, my DNA, like that's
• 21:38
  terabytes of data or something else that I'm doing.
• 21:41
  Yeah, yeah. Just your basic code of you if
• 21:44
  they were to actually sequence everything, all the molecules
• 21:47
  and things like that. It's it's a huge amount of data
• 21:50
  that we don't, we used to not be able to store cheaply or analyze
• 21:56
  cheaply. And so as we, if you think
• 22:01
  about, we are still probably only at the first one or 2% of
• 22:05
  understanding of biology. We think we understand a lot,
• 22:08
  but we actually don't in term of human biology.
• 22:11
  Human biology is also probably the most complex of them.
• 22:16
  And so the unlock of biology is going to create huge value
• 22:22
  because we're basically think of it as we're at the early stage
• 22:25
  of the Internet. There's so much more that we can
• 22:28
  do around the world. So the value of unlock is going
• 22:32
  to be enormous. So that's the second thing I
• 22:36
  look at is how as technology trends, how is it going to
• 22:40
  fundamentally almost use the existing technology.
• 22:43
  But it's just because the cost and and the everything else
• 22:46
  around it going down, we're going to be able to unlock a lot
• 22:50
  more knowledge to give us value on that particular industry.
• 22:54
  So, so use your same crystal ball that you had before when
• 22:59
  you were looking at Siri and other technologies and kind of
• 23:01
  the mobile phone market and, and tell us what you think it looks
• 23:05
  like 10 years from now in the biotech space, what are the big
• 23:10
  unlocks that are likely to come? So I actually this is part of
• 23:15
  the reason I decided to go into industrial biotech instead of
• 23:19
  going to pharma. I do believe human, our human
• 23:24
  DNA and biology is very complex. It is an exponentially hard
• 23:29
  problem as well. So which I I commend the pharma
• 23:37
  industry and all of that trying to solve it, it's still going to
• 23:41
  take a long time. And even with the exponential
• 23:45
  development, it's, it's one of those things that it always
• 23:48
  looks everybody thinks it, it's almost there.
• 23:51
  It's still going to take a longer time.
• 23:54
  However, where I think it's interesting, and this is also we
• 23:58
  talked about the third thing was what's going to drive most
• 24:01
  application? How many people?
• 24:02
  I mean, everybody maybe eventually gets cancer, but it's
• 24:05
  takes a long time for them to get there.
• 24:07
  It's very specialized application.
• 24:10
  It is a very value creating because it's saving lives.
• 24:14
  But what's the most common things that we use that actually
• 24:18
  biology could solve that is every day.
• 24:22
  And that that's when I started to look at, well, that's
• 24:25
  everyday chemicals, everyday products.
• 24:27
  Think about we use these products.
• 24:30
  We whether it's the cosmetics that we use, whether it's the
• 24:35
  food we talked about food that we eat, ingredients, flailor,
• 24:39
  fragrance, there's, you know, clothing that we wear.
• 24:44
  Everything has chemicals in it. Our physical worlds are full of
• 24:47
  chemicals. And right now, most of that
• 24:50
  chemical is based on one single feedstock, which is petroleum.
• 24:54
  Petroleum. Yes.
• 24:56
  And that's why petrochemical is such a huge industry, right?
• 24:59
  90% of all these chemicals came from petroleum.
• 25:04
  And so if that to me and if we can change, think about every
• 25:10
  chemical plant, we can make them biological.
• 25:14
  That's a huge industrial revolution and it's something
• 25:17
  it's producing a product that everybody needs, everybody uses,
• 25:21
  and how do we do that? So we don't change how people
• 25:24
  uses them, but we change the process of which we make them to
• 25:28
  make it better for people. So you want rather than a lot of
• 25:33
  these chemicals being derived from oil that's sort of pumped
• 25:37
  out of the ground and processed through dirty kind of
• 25:41
  mechanisms, you want to use biology or process plants or
• 25:47
  plant waste to produce the same types of chemicals in a way
• 25:52
  that's more earth friendly. Is that a good summation?
• 25:55
  That's a very good summation. OK.
• 25:58
  Yeah. So that's the that's the
• 25:59
  industrial biology site where we start to see and the biggest
• 26:04
  challenge, we can leverage all these tools that pharma had
• 26:09
  developed, invested to help us to unlock that.
• 26:13
  The other thing that's makes it a little simpler than pharma is
• 26:18
  that these are microbes, bacteria as fungis or organisms
• 26:24
  that we can control. If we can manage, we know how to
• 26:28
  industrial like what I'll call it manufacturing, scale
• 26:33
  manufacturing, that process, if we can master that to produce
• 26:38
  millions of tons of this stuff, right?
• 26:40
  That's that's what we need. And pharma doesn't need that
• 26:43
  because pharma, as you know, the applications are milligrams.
• 26:47
  So pharma doesn't need that kind of scale.
• 26:49
  So pharma, the one problem pharma hasn't looked into is how
• 26:53
  do we industrialize that process so we can go in into scaled
• 26:59
  production. And that's an industrial
• 27:01
  problem, that's a manufacturing problem.
• 27:03
  So it's much less about the basic fundamental science
• 27:06
  because I I believe with tools we're going to continue to
• 27:09
  develop new organisms and discover more things, but
• 27:13
  industrializing that process is the fundamental bottleneck now.
• 27:19
  And if we can figure out how to actually manage that production
• 27:23
  and consistently produce these chemicals in a scaled
• 27:27
  production, that's now we can unlock a lot of because there's
• 27:32
  lots of bio waste that we can use to convert into in different
• 27:36
  organisms that we'll discover to convert into chemicals.
• 27:40
  Let me see if I'm hearing you correctly, Veronica, It sounds
• 27:43
  like you're saying some of the tech to do this exists now, we
• 27:50
  just don't know how to do it on a cost efficient large scale.
• 27:54
  Is that right? And the the hope is, as we
• 27:58
  continue to research and develop these technologies, we'll come
• 28:02
  up with new organisms or new biology that will make some of
• 28:07
  these processes even more efficient.
• 28:10
  It's a manufacturing problem, right?
• 28:11
  So it's like think about chemical industry essentially
• 28:15
  had over 100 years of development to get to where it
• 28:18
  is, you know, to set up the first plant, but then have
• 28:21
  transportation, have infrastructure, all of that
• 28:24
  needs to be feedstock and it resolved.
• 28:26
  But it's, it's a, it's a process, right.
• 28:28
  So it's not going to happen overnight, but I think the
• 28:33
  timing of which we're now at is we could unlock this huge
• 28:37
  market. And that's one of the reason
• 28:39
  also I picked Houston because to unlock that market, you actually
• 28:43
  don't just need biological sort of biology talent.
• 28:47
  You need chemical talent, chemical engineering, chemical
• 28:50
  process engineering, because a lot of the what challenger
• 28:54
  biology is it doesn't just produce 1 specificity of
• 28:58
  chemical, which is what the chemical industry actually need.
• 29:01
  They want specificity and they usually it's a broth that has
• 29:05
  lots of different chemicals or, you know, the ones that you're
• 29:08
  interested in will still need to be purified and taken out of
• 29:13
  that broth to, to, to get to industrial quality.
• 29:18
  And having that full process to be cost effective is really
• 29:21
  important, not just the biology part.
• 29:24
  So there is a lot of if you will, the we need cross
• 29:30
  disciplinary talent to make it happen.
• 29:34
  Second thing you hit right on the nail is cost effective.
• 29:37
  So we need cost effective workforce, cost effective land.
• 29:42
  We also need to build these plants, which means we need a
• 29:46
  business friendly environment where you can actually build
• 29:49
  these plants as quickly as you need to to test out these
• 29:54
  technologies. And this is one of the things I
• 29:56
  really feel Houston is very unique in its geographies
• 30:00
  because we have the world leading chemical engineers
• 30:04
  that's concentrated in this geography.
• 30:06
  And is that because of the oil production that's so native?
• 30:08
  OK, very. Much so.
• 30:09
  And it's a petrochemical hub for for for America.
• 30:14
  And then you also have biology because we actually happen to
• 30:18
  have the largest Medical Center in the world, Texas Medical
• 30:22
  Center that sees 10 million patients a year.
• 30:25
  You have MD Anderson, you have some of the top medical
• 30:31
  industry, sort of biological research institutions that are
• 30:35
  here and and you have a very cost effective land.
• 30:39
  You don't have as much regulatory if you were trying to
• 30:42
  build a plant, I think in California, it will take you
• 30:46
  five years to get the permit. And you know, I think order of
• 30:50
  magnitude more expensive. So when you think about we need
• 30:54
  proof of concept and we need pilot scale.
• 30:56
  We need a, you need a place where the natural talent exists
• 31:00
  because it's hard to attract talents when you're a start up.
• 31:03
  So you need a, if you're able, if you think about this, I think
• 31:06
  the secret recipe of of Silicon Valley is over time it has
• 31:12
  become the world best software engineers will go to Silicon
• 31:15
  Valley, right? They will choose to be in
• 31:17
  Silicon Valley. And I feel Houston, where the
• 31:20
  world best engineers already come here.
• 31:23
  We already have a great talent pool for biology, so you know,
• 31:28
  those are the talents we need to tap into.
• 31:30
  We don't need to attract anybody.
• 31:32
  We just need to get the local people to local talent to you
• 31:34
  don't. Have to get people to move,
• 31:36
  They're in your backyard. Exactly.
• 31:38
  And we have the cost effectiveness of the land.
• 31:42
  There's plenty of land in Texas, as you know.
• 31:45
  And so there's a lot of advantages to just build it here
• 31:48
  and you start with smaller scale to validate your technology and
• 31:55
  your in your manufacturing process and over time you can
• 31:57
  scale it to massive commercial scale.
• 32:00
  So when we talk about accessing biology, are we talking about
• 32:06
  growing plants specifically for the purpose of whatever this
• 32:10
  harvesting process looks like, or are we talking about using
• 32:15
  waste products from other existing manufacturing
• 32:20
  processes? It is both.
• 32:23
  So we could be using a crop of or like like I said, corn husk.
• 32:29
  So it's a waste of an existing agriculture product or it could
• 32:33
  be one thing I mentioned like food waste could be something
• 32:37
  that we are already producing that's an existing waste stream
• 32:40
  that we take as as as part of the feedstock.
• 32:44
  And one of the nice things about using biology is think of a
• 32:48
  brewery that is a bio manufacturing process.
• 32:52
  We're basically using a yeast or Organism.
• 32:55
  We're putting feedstock in there, we're letting the yeast
• 32:58
  work in a bioreactor. And as microbe engineering or
• 33:02
  bioengineering gets even more efficient, the idea is we can
• 33:05
  actually engineer these microbes that specifically just produce a
• 33:09
  certain type of chemicals, broth or certain type of reaction that
• 33:16
  is biological that produces this stream.
• 33:19
  And then we can purify that to specific chemicals that were of
• 33:23
  interest. And that's really, you know,
• 33:25
  think about the brewing or the winery.
• 33:27
  You're brewing it and then you're doing a distillation of
• 33:30
  it. I wonder if we're at a point yet
• 33:35
  where there's sort of a an example like a case study where
• 33:39
  the the technology has advanced enough to the point where it is
• 33:44
  now cost effective compared to cost competitive compared to
• 33:50
  other, you know, petrochemical alternatives and is producing at
• 33:56
  an industrial scale. Is are we at that stage with
• 33:59
  anything yet? Well, if you think about it, so
• 34:03
  in pharma we already have great example, insulin's a great
• 34:06
  example. Everybody uses that as a, you
• 34:08
  know, it used to cause like, I think it caused like a ton of
• 34:12
  pancreas for us, you know, whether it's cow, whatever that
• 34:16
  we used to squeeze out, we're talking about kilograms of
• 34:20
  insulin. But environment industry
• 34:25
  actually has been using precision fermentation.
• 34:28
  They created organisms that creates insulin, then they can
• 34:31
  distill it into insulin and made it a lot cheaper.
• 34:34
  And also we don't need so much pancreas from animals and that's
• 34:40
  a whole expensive process. It was really expensive and now
• 34:43
  it becomes much cheaper and insulin is still not cheap, but
• 34:45
  it's way cheaper than it used to be and it's obviously way
• 34:49
  faster. It's on demand production versus
• 34:53
  you have to wait for the cow to grow and have have actually a
• 34:56
  pancreas that you can take out and die, right.
• 34:58
  So, so there is that's a great example in pharma and there's
• 35:04
  already a sum in flavor and fragrances if there are players
• 35:09
  that are using bio based fermentation for some of this.
• 35:13
  So this is not new to. Replace like petrochemical
• 35:16
  alternatives or. Flavor for fragrance and things
• 35:19
  like that. So you, we already have examples
• 35:22
  where there's high value chemicals that are being
• 35:27
  produced through biology. So over we're we're just the
• 35:32
  challenge right now is really just to scale those and making
• 35:36
  it more cost efficient so that you can be competitive to
• 35:41
  petroleum alternative. But the benefit the other thing
• 35:44
  is, you know, one of the companies that I invested in
• 35:47
  actually has a proprietary technology to get to
• 35:51
  microplastic free isocyanate and polyurethane.
• 35:56
  So what that means is, you know, polyurethane is actually applied
• 36:00
  for, if you think about it, your furniture, seat cushion coating
• 36:05
  materials, your shoe, your tennis shoe, the shoe sole of
• 36:09
  your tennis shoe coating materials for many, many, many,
• 36:13
  for clothing, for backpack, for all kind of things.
• 36:19
  They all use polyurethane and there's a lot of microplastics
• 36:24
  that now at least and they can produce a microplastic free and
• 36:29
  that's also 100% biodegradable. So is.
• 36:32
  It still considered polyurethane or it's an alternative that has
• 36:36
  sort of the same properties that manufacturers need.
• 36:38
  It's still polyurethane, but it's it's obviously the
• 36:42
  molecular structure is slightly different.
• 36:44
  OK, but it's just from a performance base, it's just as
• 36:49
  durable as everything. The microbes are only breakdown
• 36:53
  when you kind of you have to bury it into, you know, landfill
• 36:57
  or something 'cause it has to have a concentration of certain,
• 37:00
  certain enzymes to break it down.
• 37:03
  But it can be broken down. And in fact, it was kind of
• 37:06
  interesting they there's a Business Insider video that they
• 37:11
  did a study on their product for two years in, in comparison to a
• 37:16
  number of other leading brands that claims to be biodegradable
• 37:20
  or bio based. They did a two year degradation
• 37:24
  study. And at the end of the two years,
• 37:28
  the, the shoes that this company produced obviously degraded
• 37:32
  mostly. And whereas a lot of the other
• 37:35
  brands, some of them you can't bare barely degrade it at all,
• 37:40
  right? So, and, and think about if we
• 37:44
  can use and this, this the other benefit and this require this
• 37:48
  means that we don't need to change people's behavior.
• 37:50
  You can use the same things. You don't have to sort your
• 37:54
  recycle things. You can just toss it back to the
• 37:56
  environment. And the first is the largest,
• 37:59
  cheapest recycling plant that we can use, right?
• 38:02
  And it's the most healthy. So in fact, they also did a
• 38:06
  study where because the way that they, the molecule they create
• 38:09
  has more hydrogen, no, sorry, nitrogen.
• 38:12
  So when it when it degrades into soil and they did study on the
• 38:17
  plant so that you can plant, it's actually healthier for the
• 38:20
  plant. The plant grows better because
• 38:22
  it has more nitrogen in it. So that's more nutrient for, for
• 38:26
  the plant. So it's a it was a very
• 38:29
  interesting study that they did. And this is the benefit of if we
• 38:33
  get, I mean, human engineerity is the, is the one thing that I
• 38:36
  would always think the biggest sort of value that we have and
• 38:40
  also the biggest, you know, we can make things way better for
• 38:46
  everybody if we continue this path.
• 38:49
  And then we can live in a world where we doesn't, we doesn't
• 38:52
  need to us to change how we consume things or how we we just
• 38:55
  need to change how we make things.
• 38:58
  And that's the other thing I fundamentally believe, right?
• 39:00
  You're trying to expect different outcomes when you're
• 39:03
  doing exactly the same thing. You know, just because we
• 39:06
  recycle some things changes. No, it doesn't.
• 39:08
  That's why we have not achieved all these goals, sustainability
• 39:12
  goals so-called, because we haven't changed fundamentally
• 39:16
  how we make them. How do you we expect that it's
• 39:18
  going to actually make a difference.
• 39:20
  If we really want to move the needle to change and for the
• 39:25
  environment for the better and and for survivability for human
• 39:28
  race, we need to change how we make things and so.
• 39:32
  This is this material that you're talking about, Veronica.
• 39:35
  The advantage of it, this biomaterial is that when it
• 39:39
  breaks down as compared to a traditional polyurethane, it's
• 39:43
  going to at some point breakdown completely.
• 39:45
  So you don't have the microplastics, it's easier to
• 39:49
  dispose of, you don't have the microplastic problem, you don't
• 39:53
  have the, you know, the long term landfill issue.
• 39:56
  So what is what needs to be overcome?
• 39:59
  How do we get from? We can make this and we know
• 40:03
  that it's a a suitable substitute for polyurethane to.
• 40:07
  Now we can get rid of polyurethane because we can
• 40:10
  produce this at scale and it's cost competitive.
• 40:14
  How do we how do we bridge that chasm?
• 40:16
  I know that that's what you're working on, but kind of paint a
• 40:19
  picture for us, like what's the big block in the middle?
• 40:24
  There are a few things that I would say probably three key
• 40:29
  things that we're looking at helping. 1 is we, a lot of what
• 40:35
  we do is to make sure, and this is how to make sure that they, a
• 40:41
  lot of these founders are scientific founders.
• 40:44
  They don't know how to run a company.
• 40:47
  So we need to either make them business managers or get them
• 40:52
  the right business talent to work with them so that they
• 40:55
  understand how to run a company to be successful if they
• 41:00
  continue to just focus on developing the science.
• 41:03
  And because a lot of them also are scientists, so they don't
• 41:05
  think commercialization or application is interesting
• 41:09
  science. But guess what, you're never
• 41:12
  going to commercialize something if you don't work on that.
• 41:14
  So, so part of it is making one of the disciplines that we put
• 41:19
  on is have a focus on commercialization.
• 41:23
  The second thing we actually spend a lot of time and it's
• 41:26
  becoming, I think this is the other reason we think is, is
• 41:30
  engaging corporate strategics because these are scientific
• 41:34
  founders. They've never built a plant.
• 41:36
  They don't know how to build a plant.
• 41:39
  And if any of them want to build a plant or, or, or think they
• 41:43
  can build a plant, they're wrong.
• 41:45
  I I I and then so working with strategics is really, really
• 41:50
  important. You want to work with people who
• 41:52
  actually build plants, who do this for a living, who deliver
• 41:56
  products to these chemicals to end user could be a Luria, our
• 42:00
  brand or things like they do this for a living.
• 42:04
  Those are the people and the talent and potential partner
• 42:07
  that you should partner with in DE Risking the technology for
• 42:11
  industrial scale. And so are these strategics the
• 42:14
  the same companies that this new tech might sort of replace?
• 42:20
  Some of them could be and some of them are looking for it like
• 42:23
  I said, because they are for instance, microplastic could be
• 42:26
  a huge, just like nicotine could be a huge litigation issue for a
• 42:30
  lot of these petrochemical companies.
• 42:32
  So to hedge, they need to think about alternatives.
• 42:35
  And like I said earlier, also regulatorily there is already in
• 42:39
  Europe, there's a lot of petrochemical based, like food
• 42:42
  dye or you know, petrochemical based materials is being banned,
• 42:48
  right? Gore tech is being banned,
• 42:50
  right? So you can't use it in materials
• 42:52
  anymore, literally. So what is an alternative?
• 42:55
  They need to find alternatives to those things because consumer
• 42:59
  is still going to want it. Now it's just a matter of how do
• 43:03
  you get something healthier so it's not toxic to consumer,
• 43:07
  right? And, and whoever solves that, if
• 43:10
  you can solve it cost effectively, you can make
• 43:13
  probably a, a pretty much more profitable business out of it.
• 43:17
  So there's definitely strategic interest.
• 43:20
  There's also other type of partners and, and certainly one
• 43:23
  of the things with the corporate, a lot of the
• 43:26
  corporate are starting to look for sustainable materials like
• 43:29
  Goodyear. We're just talking about
• 43:31
  Goodyear has made corporate commitment to 100% of their tire
• 43:35
  is going to be from sustainable materials.
• 43:37
  So they are very boosted in by 20-30 that was, you know, that's
• 43:42
  not very, very many years. That's right around the corner
• 43:46
  as we record this in mid 2025. Yeah.
• 43:49
  So, so that might get pushed out, but there there's a lot of
• 43:53
  corporates who's committed to use more sustainable materials
• 43:57
  or have better, better sources for their bio based.
• 44:01
  And increasingly, certainly in personal care, we're seeing
• 44:04
  whether it's food or it's personal care, anything that we
• 44:07
  put on our body, cosmetics or creams, that would be, there's
• 44:11
  increasingly more and more people asking for bio based
• 44:14
  ingredients, right? People are starting to, I
• 44:17
  definitely have a husband who doesn't use anything that has
• 44:20
  ingredients that he can't read or understand what they are,
• 44:25
  right. So, so from that perspective,
• 44:27
  we're, we're, we're seeing the industry is hitting sort of this
• 44:32
  point where it is looking for, for alternatives.
• 44:36
  So brands like L'Oreal, like P&G and all these companies are
• 44:41
  looking for alternative ingredients to their products so
• 44:46
  they can do the formulation, build products.
• 44:48
  So there is an industry, more of an industry I think support to
• 44:54
  fundamentally unlock this. The other thing that is very
• 44:58
  interesting that's happening right now in the US is I think
• 45:02
  just recently, in fact just last week in the US, we have formed a
• 45:06
  congressional caucus and on biotech because we're starting
• 45:12
  to realize three of my companies you mentioned actually a number
• 45:18
  of companies received DoD grants.
• 45:20
  Why did they did receive DoD grants?
• 45:22
  Because this is national security.
• 45:23
  Some of these critical chemicals are actually right now produced
• 45:27
  by China's, the biggest largest chemical manufacturing.
• 45:32
  They produce over 50% of the chemicals that we use.
• 45:36
  Most people may not know that. So a lot of these are strategic
• 45:40
  chemicals which from a national resilience or security
• 45:46
  perspective we need to have domestic manufacturing capacity
• 45:50
  here. And and certainly the current
• 45:51
  administration is looking for manufacturing, manufacturing
• 45:54
  jobs because that helps with economic development.
• 45:57
  It also helps us to protect our technology.
• 46:00
  You know we lost the semiconductor technology because
• 46:03
  we let the discovery and all the early technology advancement in
• 46:08
  semiconductor and now we don't, we have lost our leadership
• 46:12
  because we had given away manufacturing and technology and
• 46:17
  R&D goes away when you lose manufacturing.
• 46:20
  We learned that lesson. That's a hard lesson for us.
• 46:24
  For biotechnology, we're currently leading, but China's
• 46:27
  very close. There's a number of and if we
• 46:31
  are going to move our manufacturing offshore, which
• 46:34
  right now is the risk, we're at risk of losing our leadership in
• 46:38
  biotechnology as well. So we have a national security
• 46:42
  reason both for. So that's why the DoD has gotten
• 46:44
  involved. Yeah, having domestic capacity
• 46:47
  so that we are not beholden to people or or states that we
• 46:52
  might not be friendly with in terms of just basic materials
• 46:56
  that we need to produce ourselves for economic
• 46:59
  development reasons and for just our protecting our national
• 47:04
  leadership in technology, right, All of those reasons makes it
• 47:07
  very important. Plus, if we're going to bring
• 47:10
  manufacturing, we're not going to bring The Dirty chemical
• 47:13
  manufacturing back to the United States.
• 47:15
  Nobody's going to want that. The only way to bring true
• 47:20
  chemical manufacturing that is actually better for us, while it
• 47:23
  helps with the economic, the jobs and everything is actually
• 47:29
  bond manufacturing is a path to get there.
• 47:33
  So part of what you do at first bite is you're obviously
• 47:37
  investing funds into these start-ups, you're helping them
• 47:40
  get access to other funds, you know, for example, through the
• 47:43
  Department of Defense, you're partnering them up with
• 47:47
  strategics folks that can help them, you know, more established
• 47:50
  companies who have sort of the large scale manufacturing
• 47:53
  experience. When that takes place, are those
• 47:57
  strategics taking equity? Is it like what?
• 48:01
  What's sort of in it for them? So there there's multiple ways
• 48:06
  that they could engage. It's definitely part that's
• 48:09
  equity. There's also other potential
• 48:12
  partnerships you could look at because for even if it's not
• 48:16
  equity, they could engage in getting first rates or some kind
• 48:21
  of preferential rights to access technology that they can
• 48:24
  commercialize or incorporate into their future products.
• 48:28
  So it's very much based on production, on negotiation, and
• 48:31
  also how much effort they put. This is also where a lot of the
• 48:35
  startup need guidance on how do you structure a partnership that
• 48:41
  is mutually beneficial. So it helps you to do risk the
• 48:45
  commercialization of your technology.
• 48:47
  And this is where we need to have people, everybody
• 48:50
  understand 100% of a zero is still a 0.
• 48:54
  So that partnership is what's going to create value.
• 48:57
  Even though you have a smaller piece of the pie, it's really
• 48:59
  gonna help commercialize and make that.
• 49:01
  The pie becomes a lot bigger then.
• 49:03
  A real a real pie for people to actually share.
• 49:07
  So structuring those those partnerships is really
• 49:11
  important. And there's also off take from
• 49:14
  like a Goodyear. They don't manufacture chemicals
• 49:17
  anymore, but they could say I want this chemical for my
• 49:21
  material, right? So they could sign an off take
• 49:23
  agreement to say, I'm gonna commit to buying this material
• 49:27
  if you can produce it at this price.
• 49:29
  So there's multiple ways that strategic could get involved
• 49:33
  early on both in term of understanding and and they will
• 49:36
  be part of validating. OK.
• 49:38
  Are you, do you have the right specificity?
• 49:41
  Do you have the right purity so that we can incorporate this
• 49:43
  material into our industrial process, right.
• 49:47
  So there's a lot of technical work, early validation, they can
• 49:51
  get engaged. And that's one of the things we
• 49:54
  also tried to Foster and part of the reason we created this
• 49:58
  nonprofit accelerator, Biowell, which is specifically focused on
• 50:04
  helping to bring different parties to to the table to help
• 50:10
  startups and contribute relevant expertise to help guide these
• 50:14
  startups on their commercialization path.
• 50:17
  So this nonprofit Biowell that you're talking about, this is
• 50:20
  not necessarily you investing funds through this entity.
• 50:24
  It's more like a matchmaking service, but between folks who
• 50:27
  are developing the tech and the folks who probably have some of
• 50:30
  the expertise to either help them advance that or they can be
• 50:34
  customers of it down the road once it gets to a certain point.
• 50:38
  Correct. OK.
• 50:42
  I want to make sure that we paint the full picture of the
• 50:44
  value that First Bite is bringing to the start-ups that
• 50:48
  it invests in. Are there other services that
• 50:51
  you offer that we haven't already touched on, Veronica?
• 50:59
  I think one of the key things we really help them to do also is
• 51:03
  their commercial road map. One of the one of the failure
• 51:08
  points I believe that happened because by the way that's the
• 51:12
  other thing that we didn't mention.
• 51:14
  A lot of times right before the inflection there is a lot of
• 51:18
  over excitement and investments are made that probably made
• 51:23
  errors and so that they weren't able to be to succeed.
• 51:29
  But we have a lot of lessons learned though, right.
• 51:32
  So biofuel was a great example of an effort that tries to get
• 51:36
  there and and it was a heroic effort and and today, today, now
• 51:43
  it provides great lessons learned for us.
• 51:46
  It failed because I believe it tried to go to a commodity
• 51:55
  product, yeah, basically the cheapest you can make with
• 51:58
  petroleum and try to find substitute for that.
• 52:02
  And it's guess what a new technology is?
• 52:05
  It's very hard for any new technology to get there that
• 52:09
  quickly. You always start, you know,
• 52:12
  Tesla introduce the roaster and then introduce the Model S,
• 52:17
  which are all way more expensive than any any other car.
• 52:23
  And if you think about, you know, when Chrysler interest or
• 52:31
  GM interest is Bolt, Bolt was trying to get to a cheap car and
• 52:37
  that was never try it never really was a success, right.
• 52:40
  So you don't go for the cheapest product that you could make with
• 52:45
  your existing technology and try to use a new technology to it.
• 52:49
  It's almost. Impossible.
• 52:50
  You need to build in some higher margin in a more premium product
• 52:53
  because you're not going to be cost competitive right out of
• 52:56
  the gate. Exactly.
• 52:57
  And also scale. You're just not going to be able
• 53:00
  to get to that scale to enjoy the economy of scale, right.
• 53:04
  So identifying the right product of how you commercialize and to
• 53:08
  your point, the higher value items so that you can use that
• 53:11
  technology for and grow that scale over time.
• 53:14
  It also helps to de risk your commercialization.
• 53:17
  So a lot of what we do with these companies is to in our
• 53:24
  betting and also after we get engaged is to look at do they
• 53:29
  have the right product they're working on, do they have the
• 53:32
  right technology and have they thought about that whole, the
• 53:36
  second thing was the whole process, not just the biology,
• 53:40
  but the downstream, have they thought about the whole process?
• 53:43
  How feasible is that whole process?
• 53:44
  What is the economic viability of that whole process?
• 53:47
  Can you get to cost parity of to the product that you're trying
• 53:51
  to make? Is that aligned and the scale
• 53:55
  that is needed? So that way we really have a
• 53:57
  full understanding is do you have a chance of competing
• 54:02
  commercially viable even though you because you have very
• 54:06
  similar. That's the other thing we focus
• 54:08
  a lot what we call dropping chemicals.
• 54:10
  So there's similar molecules that we already know the market
• 54:14
  will take. So we're not taking product
• 54:16
  market risk and and we want to take them to molecules that's
• 54:21
  already people are wanting and there is clear commercial
• 54:24
  demand. We know the market size and have
• 54:28
  them produce that. But it's in a non-toxic way that
• 54:31
  your property is near non-toxic to human beings and maybe
• 54:34
  they're or they're being regulated out.
• 54:37
  So they need an alternative. Now you have a cost effective
• 54:40
  alternative to that and that's bio based.
• 54:43
  Now these are markets you can go start packling and go first so
• 54:48
  that we'll actually get to commercialization.
• 54:51
  This is interesting. I kind of want to explore this
• 54:53
  part of the conversation a little bit more.
• 54:55
  Obviously, you know, you're trying to help these start-ups
• 54:58
  get to the point of commercialization, of
• 55:02
  profitability. And so it makes a lot of sense
• 55:05
  what you're saying to focus on a more premium product to start
• 55:09
  with. There's more margin there,
• 55:11
  right? So you're going to be able to
• 55:13
  get to a point where you can compete and make some money
• 55:17
  quicker. But still to get there, they
• 55:20
  need a lot of the outside investment that you're bringing.
• 55:23
  They need like the DoD dollars. Is there space for or should
• 55:30
  there be space for even more government involvement to kind
• 55:34
  of help bridge these gaps? Or do you feel like this really
• 55:39
  needs to be sort of capitalism, private industry that is making
• 55:46
  this work? I think on the infrastructure
• 55:50
  side there is a need and U.S. government certainly is starting
• 55:54
  to recognize that because the CapEx, it is a CapEx heavy
• 55:58
  industry, which is one of the the other reason that why people
• 56:01
  are realizing it is very CapEx heavy.
• 56:05
  And a lot of the early equity capital that invested to fund a
• 56:09
  lot of the CapEx, they're realizing it doesn't produce the
• 56:12
  return because it's CapEx, right.
• 56:14
  CapEx is not going to produce the same equity returns.
• 56:18
  So there's less investor appetite right now.
• 56:22
  So one of the things we have been doing, this is one of the
• 56:24
  reasons why we've been accessing DoD money is how do you use that
• 56:29
  equity capital really well to de risk and leverage government
• 56:33
  dollars or other ways 'cause there's also other ways like
• 56:37
  project finance when you're building a plant and other ways
• 56:41
  that you could leverage non dilutive, if you will, at
• 56:45
  dollars to actually build plants.
• 56:47
  And think about these big chemical companies, they don't
• 56:49
  spend all their own cash to build these large plants, right?
• 56:54
  They borrow from the bank and and they, they have project
• 56:58
  finance and other type of capital that actually finances
• 57:01
  those, those large plants. We can't do that in biology yet
• 57:05
  because a lot of them are new technologies.
• 57:07
  So that means you're building a plant that's new.
• 57:09
  However, if you are partnering with a large company like one of
• 57:14
  our companies called Vasala, so they have a bio pathway to get
• 57:18
  to Isoplane and also solvent. So they're partnering with Zeon
• 57:23
  Chemical which is a Japanese chemical company and they're
• 57:27
  building a first of it's kind plant for a bio based isoprene
• 57:32
  in Southeast Asia. And this is where Zeon is going
• 57:37
  to build the plant. So Zeon is going to put in the
• 57:39
  money. So they're the large Australia.
• 57:42
  So they're going to put in the money to build the plant.
• 57:44
  They're going to do an off take on the monomer that these guys
• 57:48
  produce and they'll do build it. So now that becomes a lot more
• 57:53
  doable, right. You have first of all, we
• 57:55
  overcome that. We talked about you have someone
• 57:57
  who actually build plants, manufacture products, they're
• 58:00
  building that plant. There's a lot more and and
• 58:02
  Xeon's a much bigger company because what they're going to be
• 58:05
  able to find non dilute dollars and.
• 58:07
  They're going to bring so much credibility to the products
• 58:10
  right away. Correct.
• 58:11
  So, so there are ways to figure out how to develop these
• 58:16
  companies and the company will license our technology to Xeon.
• 58:19
  So ways to partner with large companies.
• 58:22
  So you could do risk and make that equity capital return much
• 58:26
  more efficiently. So there is no light capital
• 58:29
  model, but I think there is a light equity capital model that
• 58:34
  that's also part of differentiation.
• 58:35
  We do. We really help to make sure that
• 58:39
  the company's growing and using that equity capital smartly and
• 58:43
  efficiently and we're able to leverage other capitals to help
• 58:47
  you risk even though it's still it's going to be a cap X heavy
• 58:52
  sort of commercialization path. So this company that you just
• 58:56
  mentioned that has this isoprene tech that that comes from a
• 58:59
  biotech, is this probably the company in your portfolio that
• 59:04
  you would guess is probably closest to a cost competitive
• 59:10
  commercialization strategy? Yes, this would be this.
• 59:15
  And then microplastic free polyurethane, those two
• 59:18
  companies are currently having very solid, I would say
• 59:25
  commercial conversations with large corporates as well as
• 59:30
  decent scale that they have already demonstrated in terms of
• 59:34
  production that I think they are closest to commercialization.
• 59:40
  If you were to look into that magical crystal ball that you
• 59:43
  have, Veronica, are we looking at five years, 1015, before that
• 59:49
  actually materializes? I think we'll have products in
• 59:54
  the market in the next 5 years for sure.
• 59:56
  But to completely transform the industry, that's probably still
• 59:59
  going to take 20-30 years. But I I definitely believe in
• 1:00:02
  the next five years. If these companies and there's
• 1:00:06
  already also other companies who are seeing are innovating on the
• 1:00:09
  process, this is the thing, right?
• 1:00:11
  So when computing first started, everybody was on a network, but
• 1:00:15
  you're using your own. You have to build your own
• 1:00:18
  server back in and then data center it came up and then
• 1:00:21
  everybody now become variable costs instead of you know you
• 1:00:25
  put up all this capax cost. So so we are seeing players who
• 1:00:29
  are looking at investing in that infrastructure.
• 1:00:32
  So almost like a TSMC model like have the CDM OS in this industry
• 1:00:36
  is called contract development manufacturing organization.
• 1:00:41
  So they would actually be the, they would set up the
• 1:00:43
  infrastructure and if you have a new Organism, you can actually
• 1:00:47
  use their capacity, they'll do the manufacturing for you to be
• 1:00:50
  efficient. So they're just going to be
• 1:00:51
  really good at efficient file manufacturing position
• 1:00:55
  fermentation. There's a company called
• 1:00:56
  Liberation Industries that's already, they have a plant in
• 1:01:00
  Indiana right now and that's supposed to go into production
• 1:01:05
  this fall. It's a protein.
• 1:01:07
  They're they're going to be focused on protein production.
• 1:01:11
  There is also innovation on continuous fermentation because
• 1:01:15
  one of the traditional issues with fermentation is it's batch
• 1:01:19
  based. So which means you have to stop
• 1:01:22
  and you have to collect and you have to clean and you have to
• 1:01:24
  put in which when you think about equipment utilization, you
• 1:01:28
  want it to to be the more utilization that you get,
• 1:01:31
  obviously the better that you will have in terms of
• 1:01:34
  productivity and and lowers your cost.
• 1:01:37
  And there's a company from Australia that's also building,
• 1:01:41
  they're building a continuous fermentation process and they
• 1:01:44
  have also gotten DoD grants are looking at building plants in
• 1:01:49
  America to base on their continuous fermentation
• 1:01:52
  technology. And they can work with different
• 1:01:55
  organisms and the same thing that they can that that's
• 1:01:59
  innovating on the process itself to drive for cost efficiency,
• 1:02:03
  CapEx efficiency, all of that. So like I said, and the great
• 1:02:07
  thing about this time is we're seeing there's new bioreactors,
• 1:02:11
  one of the companies we invested that turn food waste into
• 1:02:14
  lubricants. They have a very modular
• 1:02:17
  infrastructure where it's a column, it's a you don't, it's
• 1:02:21
  lower CapEx, but it's also more modular.
• 1:02:24
  Same thing for the polyurethane company, it's much more modular.
• 1:02:27
  So instead of building these billion dollar plants, you can
• 1:02:30
  build a local plant that it's Co located with your waste source
• 1:02:36
  or your bio source and produce locally and then distribute
• 1:02:39
  locally, right, that chemical that you need.
• 1:02:42
  So there's lots of different ways at solving this problem to
• 1:02:45
  get to cost efficiency. I do feel like right now is kind
• 1:02:50
  of that time where you start to see this ecosystem developing
• 1:02:54
  and all of these are going to reinforce each other, right?
• 1:02:57
  As a process technology becomes more efficient, new novel
• 1:03:01
  reactors, hardware that becomes more efficient and the science
• 1:03:05
  continues to develop and the cost continues to come down in
• 1:03:08
  terms of bioengineering and and and manufacturing process, we
• 1:03:13
  are definitely going to get there.
• 1:03:15
  And but like I said, I think in five years we're hoping that
• 1:03:19
  we'll start to see success because right now one of the
• 1:03:23
  challenge we have in the industry is there were a lot of
• 1:03:27
  great science that was kind of hyped in terms of what it could
• 1:03:32
  do, but didn't get there in terms of actual product.
• 1:03:36
  And then, you know, they did get so.
• 1:03:38
  Some people have got a bit of a sour taste in their mouth
• 1:03:40
  because it didn't work out. Yeah.
• 1:03:42
  So it ends up being 10X more expensive, so nobody's going to
• 1:03:44
  use it, right. So, but but I think with a
• 1:03:49
  practical now the industry has learned a lot of hard lessons as
• 1:03:54
  well. So people have gotten smarter on
• 1:03:56
  how to get there. We're seeing more developed
• 1:03:59
  technology around addressing that cost issue because
• 1:04:03
  everybody recognized cost is the biggest issue.
• 1:04:05
  So how do we make it more cost effective in manufacturing this
• 1:04:09
  process and with some success, I think some of the success even
• 1:04:15
  like I said the portfolio companies we have built in the
• 1:04:17
  path we have been on. We we have a very unique path
• 1:04:20
  from any but anybody else in terms of how early we want the
• 1:04:24
  corporate to get engaged and how much we want the corporation
• 1:04:27
  partner with these companies that we think as we see success
• 1:04:32
  hopefully that will start that virtual virtuous cycle again.
• 1:04:36
  And and definitely I believe when we already have products,
• 1:04:38
  we have the the Poly, the microplastic polyurethane
• 1:04:42
  product is not 100% bio based yet.
• 1:04:45
  It's about between 70 to 80 right now that we have is on the
• 1:04:50
  market. Actually they're producing
• 1:04:52
  products, they have partnered with people.
• 1:04:53
  And so I think with the manufacturing where it's a real
• 1:04:59
  plant in the next two to three years, we'll definitely see in
• 1:05:02
  five to six years some products in the market and people start
• 1:05:07
  to hopefully change perception of yes, it's possible.
• 1:05:11
  Yeah, yes, we can get there and and then hopefully.
• 1:05:15
  Even more great stuff is coming. Yeah.
• 1:05:18
  Veronica, I've just got one more question for you.
• 1:05:20
  But before I ask you, I want to do 2 things.
• 1:05:22
  First, all listeners, take a second.
• 1:05:25
  Just pause. Hit the follow button on your
• 1:05:27
  favorite podcast app. Had a great conversation today
• 1:05:30
  with Veronica Breckenridge from First Bite Ventures.
• 1:05:33
  And I want you to continue to get more great content like
• 1:05:35
  this. Veronica.
• 1:05:37
  I also want to let people know the best way to get in touch
• 1:05:39
  with you or first buy or to follow your story.
• 1:05:42
  What would that be? Well, I'm, I have my e-mail, we
• 1:05:47
  have a website firstbuy.com, so they people can come and look at
• 1:05:51
  sort of what we do, our portfolio companies certainly
• 1:05:54
  and there's an e-mail investors at first buy.com.
• 1:05:58
  So we'd love to talk to more people and if you're just
• 1:06:01
  interested in learning more, we are planning to do some events
• 1:06:07
  and online seminars. We'll be sending that out so you
• 1:06:10
  can sign up to our newsletter on on our website and then we'll be
• 1:06:14
  sending out more information. We'll include those links in the
• 1:06:19
  show notes for everybody, but if you're listening, a byte is
• 1:06:22
  spelled BIGHT. So first bite BIGHT.
• 1:06:28
  So Veronica, last question for you.
• 1:06:29
  I'm curious to hear about a serious challenge, either
• 1:06:32
  personal or professional, that you've overcome.
• 1:06:36
  How did you get through it and what did you learn?
• 1:06:41
  I always go back to my first year at Mackenzie and this is,
• 1:06:50
  and maybe a little bit of context is that my I come from a
• 1:06:55
  academic family. So when I chose to leave
• 1:06:59
  academia, I was pretty much the black sheep of the family and my
• 1:07:04
  parents had no confidence that was going to be successful at
• 1:07:08
  all. I have to say I probably didn't
• 1:07:11
  either because I was doing something completely different
• 1:07:14
  from but I really just didn't like academia and I said I need
• 1:07:19
  to do something else. And six months into McKenzie, I
• 1:07:25
  had a McKenzie people know McKenzie.
• 1:07:29
  After each engagement, you sit down with your engagement
• 1:07:32
  manager and have a conversation. They give you your performance
• 1:07:35
  reading and my engagement manager basically.
• 1:07:41
  And at that point, McKenzie started the new program, which
• 1:07:44
  they called advanced degree because before this, because he
• 1:07:48
  only did MBAs. And so they started to expand
• 1:07:51
  into what they call advanced degree recruits, those early
• 1:07:54
  stage of that program as well. And he basically sit down with
• 1:07:59
  me and said, you know, with MBAs, we can pretty much tell
• 1:08:03
  because we're on this curve. We can tell very early on
• 1:08:06
  whether you're going to make it because it's an up or out
• 1:08:08
  culture, right? Whether you're going to make it
• 1:08:10
  to the next stage With pH DS, they're kind of in this curve
• 1:08:15
  and they inflect. And so, so early on you can't
• 1:08:20
  tell and, and you're pretty much like he.
• 1:08:25
  He basically said I can't tell. And it was the first.
• 1:08:33
  Time Nobody's boosting your confidence here so far in this
• 1:08:35
  story. It was the first time in my
• 1:08:37
  life, I'll be honest, because I was always very good with math
• 1:08:42
  and math just come natural to me.
• 1:08:44
  So I always did really well at school academically and my
• 1:08:47
  family come from academics and I was terrible in, in, in, in
• 1:08:52
  humanities, but was always good in engineering and math and, and
• 1:08:56
  it was it just came easy to me. I never needed to study really
• 1:08:59
  hard. I just got it.
• 1:09:02
  It was the first time someone tells me like you might not be
• 1:09:05
  good enough. And I was just devastated,
• 1:09:10
  devastated. And I literally thought about
• 1:09:14
  leaving. That was my first thought.
• 1:09:18
  And then there was, it was right before Christmas and I was
• 1:09:23
  sitting in my, I think cubicle. I was probably sulking.
• 1:09:26
  So one of the EM engagement manager, probably either he felt
• 1:09:32
  something or he just happened to like come and talk to me and we
• 1:09:37
  had this chat and he pretty quickly kind of realized that I
• 1:09:42
  was on this path. Like I was thinking about
• 1:09:45
  leaving, right? And he, he kind of said, here's
• 1:09:48
  the thing, you know, I know McKenzie is a hard place.
• 1:09:51
  First of all, get it right. McKenzie is a hard place.
• 1:09:54
  Lots of smart people. You're just in a different pool
• 1:09:56
  of people. Maybe that's one thing.
• 1:09:58
  And plus you're coming from academia, you have no business
• 1:10:01
  training. You didn't understand a lot of
• 1:10:02
  that. So give yourself a little more
• 1:10:05
  time. And, and he also, I mean, I, I
• 1:10:09
  think he lied to me, but it didn't make me feel better
• 1:10:11
  because he said, you know, every week there's someone coming to
• 1:10:14
  my office crying because Mackenzie just is very high
• 1:10:17
  pressure. So if you have a little time,
• 1:10:20
  don't worry about it. You know, a year and Mackenzie
• 1:10:24
  will not kill you. And at least you have another
• 1:10:28
  year to stay before we are able to tell and, and see how it
• 1:10:32
  goes. And I was like, OK, I guess
• 1:10:37
  that's that, that's true. Six months is not really enough
• 1:10:40
  time for me to give something that's not a real try.
• 1:10:44
  I should try it again and I should give it a year.
• 1:10:48
  And of course, the rest of his history.
• 1:10:50
  And so one of the things I always, I, I learn from that
• 1:10:55
  anytime and later on that I, I, and I always say, there's just
• 1:10:58
  probably more failures. The more successful people are,
• 1:11:02
  the more failures that they've actually experienced.
• 1:11:06
  But every time that I had challenging time, I look back at
• 1:11:11
  that experience and I go, OK, I'm just going to need a little
• 1:11:15
  more time. So let me push through this.
• 1:11:18
  And so far it's worked for me. Whenever I continue to go with
• 1:11:23
  my conviction and push through things, we've gotten there.
• 1:11:28
  I think that's such a great story for me to hear for our
• 1:11:32
  listeners. I think it's a a really powerful
• 1:11:34
  reminder that when you hit something hard, that's not the
• 1:11:38
  time to stop. You know, there can be lessons
• 1:11:42
  on the other side of that really hard obstacle that seems, you
• 1:11:47
  know, impassable in the moment. I think sometimes as human
• 1:11:51
  beings we think, oh, there have been times in my life where it's
• 1:11:54
  easy. There are times in my life when
• 1:11:56
  it's hard. If it's hard, it must be the
• 1:11:58
  universe or God or somebody trying to send me a signal that
• 1:12:01
  this is not what I'm supposed to be doing.
• 1:12:03
  And often times quite the contrary.
• 1:12:06
  When you get into hard spots like that, that's where I think
• 1:12:09
  the real growth is, is possible. That's exactly right.
• 1:12:12
  I think that's when you're growing and then you should be
• 1:12:15
  learning what you're. I think I always say you learn
• 1:12:18
  more from failures than you learn from success.
• 1:12:21
  So as long as you take that as a learning lessons and try to
• 1:12:24
  improve, in fact, human potential is unlimited.
• 1:12:29
  I love that Veronica Breckenridge First Bite
• 1:12:32
  ventures. I want to be the first to thank
• 1:12:34
  you for sharing both your time and your story with us today.
• 1:12:36
  I really appreciate it. Thank you very much, Anthony.
• 1:12:39
  It was a pleasure. Folks, that's a wrap on another
• 1:12:42
  episode of the Inspired Stories podcast.
• 1:12:44
  Thanks for learning with us today.