88 Proof Synth Bio Blog

If you ask most incumbents in the field of biology, they’ll likely say: “What exactly is synthetic biology?”

Maybe they should watch Drew Endy’s video on YouTube.

However, really, synthetic biology is the simple extension of modern biology.  Not too long ago, it wasn’t possible to “make” biology.  Now, it is possible (also known as: synthesis).  And the cost of synthesis keeps getting lower every year.  Some say the drop in the cost of synthesis looks curiously like the curves to Moore’s Law: doubling in technological capability every X months (where X is sometimes debated, usually quoted at 18 months, often misquoted as “every year”).

Synthetic biology is often compared to the computer industry, to leverage the historical perspective.

In the computer industry, there are three big pieces of the pie (usually seen as two; I want to purposely highlight as three).

• Hardware companies
• Software companies that sell source code (“source software companies” for the purposes of this article)
• Software companies that sell binaries (“binary software companies” for the purposes of this article)

In the early days of the personal computer revolution, some bright guys saw that the hardware companies had a great product.. but software could be a much, much more profitable product:  with software, the cost of manufacturing is ZERO.  With hardware, the cost of manufacturing weighs down profits, so the maximum margin might be 20% to 30% for very glamorous products, and maybe 5% to 10% for less glamorous products.  These bright guys immediately bluffed their ways into IBM’s business center and negotiated what turned out to be one of the most profitable deals (if not the most profitable deal!) in the history of the world (Microsoft’s model).  In parallel to this, some other bright guys decided that they could instantly boost their overall profits by both building hardware and including all the fundamental software: hence, the first “personal computer systems company” (hardware plus all necessary software) was created (Apple’s model).

It’s worth keeping in mind at all times that the computer revolution existed before the “personal” computer revolution.  At that time, there were only mainframes (IBM: “big blue”).  During that time, though I’m not totally sure, I believe the market likely segmented like this:

• Mainframe system companies (hardware + software)
• Mainframe service companies (people required to run & maintain the machines)

Mainframe system companies charged heafty prices because they could: the only purchasers were governments and incredibly large (deep pocket) companies.  Yet the mainframe hardware business was killed by the personal computer market, which offered enough technology to the mass market to undercut most of the need for mainframes.  Of course, a mainframe company would never want to make a personal computer — it would erode their own profit potential (eventually, IBM caved in and created the IBM PC, but it was originally unsuccessful and only the reverse-engineered clones from other companies were accepted by the market).

The innovation in computer technology occurred so rapidly that unhealthy monopolies were created as a result. (Microsoft, AT&T, IBM)  In the case of AT&T, they were forced to split into different operations and allow more market competition (both the short and long term benefits of this forced split are still debated).  Microsoft avoided being split through government ignorance, entrenchment, lawyers, and luck.

Biology is a different from the story above. Biology does have “soft” ware, of a sort — it’s DNA.  The software is sometimes distributed as “source” code, of a sort — it’s as genes, protocols, primers and vectors.  The software is sometimes distributed as “binary” code, of a sort, too — it’s the modified microbes that “just run” when placed in the right environment.  But after this, the analogy kind of breaks down; the cost of manufacturing is never near zero.  Additionally, the fundamental “source” code can’t be protected under copyright, because it’s DNA.  And, the goverment has a heavy hand in determining what “software binaries” you can get ahold of in order to run.

Of course, I’m still a rank amateur at biology, though, currently, this is what others seem to see in biology.  And of course, I’m predicting the future, so maybe no one can definitely claim I’m incorrect.

• Hardware companies, supplying machines and tools.
• “Software” companies: supplying digital DNA sequences, cellular models (like BioBricks), and bioinformatics programs which simulate & verify the cellular models for fabrication.  Additionally, much of the intellectual property here will be public domain or Share-Alike licensed.
• Fabrication companies: supplying physical biological material based on the digital sequences.  Most people will outsource fabrication to these companies and only the “large pharmas” will perform fabrication in-house.

Does this fit reality?  I say, no.  The fabrication companies will quickly starve, since the prices continue to fall — just like the DRAM computer companies closed with the falling prices of the transistor and transistor memory (Intel bailed out of manufacturing DRAM as Moore’s Law eroded their profits beyond repair).  The idealized “Software” companies can’t actually operate in the prescribed manner, because biology consists of chemicals, and such a company is not set up as a physical laboratory; the Share-Alike licensing will remove profit potential; and the company that sells the chemicals isn’t even on the map.

Here’s what seems to mirror the current market more closely.

• Hardware companies: supply machines and lots of glass hardware.  Presumably lower profit margin except for large equipment sold to big pharma.
• Wet Lab companies (biological engineers): supplying primers, enzymes, reagents, chemicals.  High profit margins, due to patent protection and high barrier to entry (requires highly specialized education and some number of years of experience).
• Dry Lab companies (bioinformatics engineers): Design and supply digital DNA and cellular models, via computational models, and design bioinformatics progams and wet lab protocols for use.  Funky profit margin, because, if design is made Share-Alike, then profits don’t exist; if design is kept secret, then standards may not evolve well; and, the DNA intellectual property is already mandated as public domain.
• Fabrication service companies: encompass limited rage of Wet Lab + Dry Lab, but don’t create their own protocols.  Margins vary, depending on level of the service.

The big winner right now seems to be the Wet Lab guys and the Hardware guys.  By leveraging patent protection, the Wet Lab competition is locked out of competing.  Although no one in the industry has anything nice to say about patents, everyone files them, and all investors demand them.  The Hardware guys currently have big profits, high prices, and little competition, as no one is forcing the prices down — sound familiar?  This should; it’s the same phenomenon that occurred in the mainframe days.

The shakeout seems to be that the Dry Lab guys, the Hardware guys, and the Fabrication guys will need to get together in some way.

Yet, there’s another interesting aspect of biology: organisms are different.  Each organism has it’s own unique pathways and in-compatibilities.  It is not possible, in general, to run “software” from one genetically engineered machine on another genetically engineered machine.  In fact, that’s why biologists usually argue against synthetic biology, claiming it will never work.

So rather than the universal “PC platform” that exists in the computer world (a derivative of both unhealthy monopolistic practices and the market requiring a common environment), the biological environments will number in the thousands.  Yeast grows differently than e. Coli, and both Hardware and Dry Lab are customized to individual species.  That could be the market segmentation: biological compatibility itself, creating multiple competitive hardware and “software” markets, with some market segments Share-Alike, and some not.

If someone has a crystal ball, let me borrow it for a second.