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Sustainable materials might be the biggest market opportunity no one is talking about. 7investing Lead Advisor Maxx Chatsko chats with Bolt Threads CEO Dan Widmaier about the opportunities and challenges.
September 14, 2021 – By Samantha Bailey
We’ve all experienced it. That favorite pair of sneakers or trusty yoga mat, both of which have soaked up who-knows-what over the years, eventually begs for retirement. You probably toss these items into the trash and never think about them again. The same is true for clothing, furniture, and thousands of other items that get us through everyday life, although some can be donated for a useful second life.
Maybe “never think about them again” is a little too harsh. Consumers, especially younger consumers, are increasingly aware of the environmental footprint of these end-of-life decisions for the “stuff” they own. The generational shift in consumer behavior can certainly be counted as progress, but it’s important to consider an item’s full lifecycle. After all, an estimated 75% of the environmental impact for the items we own comes from the selection of raw materials used to manufacture them. That’s all baked in well before they end up in a landfill.
Companies are conscious of consumer attitudes about sustainability and eager to discover solutions, but they face significant challenges in finding reliable, high-quality sources of sustainable materials. We’ve all seen headlines about shoes made out of recycled water bottles, or car panels molded from seaweed, but these types of headline-grabbing “solutions” are impossible to scale, inject uncertainty into supply chains, and face considerable economic headwinds.
Enter privately-held Bolt Threads. The sustainable materials company is using synthetic biology to create reliable supply streams of high-quality materials for some of the world’s leading brands. The three publicly-disclosed material brands each solve specific problems in the select markets:
Microsilk: Spider silk made with genetically-engineered microbes for improved cost and scale. These natural fibers can replace synthetic polymers in various fabric applications. Read more.
B-silk Protein: Stumbled upon during the development of Microsilk, this ingredient can be added to cosmetic or personal care products to replace keratin (derived from animals) and silicone (a synthetic polymer). Read more.
Mylo: A mycelium material used to replace animal leather without compromising on performance or luxury. Global companies launching Mylo products soon include adidas, lululemon, and Stella McCartney. Read more.
7investing Lead Advisor Maxx Chatsko sat down with Bolt Threads CEO and co-founder Dan Widmaier to discuss the opportunities and challenges in sustainable materials and the importance of making synthetic biology real for consumers with visible technology.
Publicly-traded companies mentioned in this podcast include adidas, Allbirds, Ginkgo Bioworks, Kering, lululemon, Warby Parker, and Unilever.
7investing Lead Advisors and Dan Widmaier may have positions in the companies that are mentioned. This interview was originally recorded on September 9th, 2021 and was first published on September 14th, 2021.
Maxx Chatsko 0:11
Hello, everyone, I’m 7investing lead advisor Maxx Chatsko. I cover biotech and renewable energy here at 7investing. And if you can’t tell by now I’m using all of my podcast slots to get into the wonders world of synthetic biology. And today I’m joined by Dan the man Widmaier the CEO and co founder of Bolt Threads. Dan, thanks for joining me today.
Dan Widmaier 0:33
Wonderful to be here, Maxx. And thanks for having me.
Maxx Chatsko 0:36
So Bolt Threads is a materials company. And it’s using synthetic biology to improve the sustainability of consumer products and fashion, apparel, cosmetics, personal care brands, and other such industries. And you guys have three different materials that you use Microsilk, B-Silk protein, and Mylo and I think just to set the stage for this conversation, it helps if I give a little introduction to each of these for listeners, and we’ll go from there.
So first Bolt Threads has microsilk, and this is a spider silk protein, but it’s made with genetically engineered yeast. You can grow it with spiders, but they’re territorial they fight to the death, it’s really hard to scale up, basically impossible. So that doesn’t really work out. I think there was another startup back in the day, I don’t know if they’re still around somewhere in Europe. And they were genetically engineered goats to make it through goat milk and they would put it on a big spool. Again, that isn’t really great for scaling that up either. But fermentation on paper, great for scaling up and reaching large economies of scale so that’s why the company went that direction.
And this is for materials applications, namely clothing and apparel and so forth. And actually years ago, this material debuted in Canada came outside of the lab. Bolt Threads offered and introduced 50 limited edition spider silk neckties. And I only bring this up because the late great Stanley got number one, and I the lowly Maxx Chatsko got number 27. So I think I’m just as important almost as Stanley just to bring that up.
Second, Bolt Threads has B-Silk protein. It’s kind of sprung out of the research from micro silk, but it’s a novel cosmetic ingredient so it’s using skin and haircare products, and this can be used to replace keratin which is derived from animal so this is much more vegan friendly. And it can also be used to replace silicone which is a synthetic polymer so it’s more sustainable.
And third, not last, not least, Mylo and this is quite different from the silk products. And this is a mycelium produced material and you can use it to replace leather. Bolt Threads uses the term un-leathering, which is a pretty great term. I like that. And this launched in 2018, I believe but it later had a group of companies, world renowned companies, that had a vested interest in sustainable materials. And all these companies are on board so Adidas recently launched a Stan Smith Mylo shoe for that application.
Lululemon just recently, I think in July, launched a Mylo yoga mat, and I believe in 2022 they’re gearing up to launch a yoga bag and a duffel bag with Mylo materials as well. So any listeners out there that need a gift for their significant other or themselves. Keep that on your calendar. And then the two luxury fashion brands, Stella McCartney and Caring also on board for Mylo. Mylo has actually already been on the runway with Stella McCartney. So that’s pretty interesting now so you have microsilk, B-silk protein and Mylo. Now Dan, a lot of parents say they don’t have a favorite child. And we all know that’s a lie. So which of these materials is your favorite from Bolt Threads?
Dan Widmaier 3:41
Well, the funny thing here is those are the three we put something in the hands of consumers at some scale with each of us. We’ve got like a dozen that we made prototype products from in our little product studio where we made like kilogram scale quantities of a biomaterial. And for one reason or another, they’re still on the shelf there, we can evaluate whether they’re good, bad or ugly
I have a hard time because there are some things that we haven’t even shown people yet that are pretty exciting as well, I’ll say is we started this business to solve what we saw as an imminent and long term crisis around sustainability on the planet. And that one of the core pain points is going to be around the selection and usage of materials fashion as an example. People can dispute the magnitude of this number, but the number we’ve got at Bolt is about 70-75% of the environmental impact of a fashion product comes in the selection of the raw materials.
And that’s a supply chain that’s built to deal with the materials they have not to use deep technology like synthetic biology to make them wildly better. And so when we look at the market We really want to be making a big dent in this space. And for that, you know, we’ve got our favorite we things we like, though the technology is is interesting or has cool science problems. But at the core, if you want to solve that problem as a commercial problem, we want to make sure that we’re making things that our customers, which we have this interesting relationship where our ultimate customers a consumer, right?
You, Maxx, decide to buy something for yourself for your friend or you tell somebody about it, a significant other, you’re going to buy a product, but the person who buys from Bolt is a brand. An Adidas, a Caring, a Stella McCartney, a Lululemon. And so in some ways, we have to make sure we’re serving both of those customers. Well, at the moment, the answer is might look like, we put a ton of time in the Mylo’s giant market, 35 billion square feet of leather and pleather used for a year on this planet.
You could you could generously round the total shift volume of alternatives to leather and pleather to zero. That would be a generous assumption. And so there’s a there’s a massive amount of work to be done to scale into that opportunity. And that’s where the big one of the major pain points is for brands out there. And so I’d say that each material we make, there’s something I like about it scientifically, that is unique to all of them commercially, it’s very clear that that Mylo is where the heat in the industry is right now.
Maxx Chatsko 6:28
And that’s interesting, too. I mean, one of the things that’s different about materials is it’s something that consumers can hold, they can interact with, if, if it’s an ingredient that gets put into a cosmetic product or food of some kind, and you kind of just gets like hidden away on the on the ingredients label next to all the other ingredients, and maybe the chemical name is listed, it doesn’t really mean anything doesn’t stand out to consumers.
There’s ways to do that with marketing and so forth. But you know, material, like you can get value out of a yoga mat or your new shoes or something like that.
Dan Widmaier 7:01
We use the term visible technology there? Right? It’s a visible thing. someone picks it up, like the example we’ve used in the past, like, the Riva, not the original, but the Nike Air when they had that air pocket for the pump, right? It’s a visible technology, like you see it and you experience it, and you don’t need to like trust someone’s story about it. Well, you kind of do a little bit. Yes, they have to believe it works. Right? But you can see it.
As opposed to something like an ingredient where you’re like, you know, a high potency sweet artificial sweetener. They’re like, Oh, it tastes sweet, I guess. Like, oh, seemed fine. You kind of just believe it. And hearing we actually straddle that boundary would be so it’d be such an ingredient that some books in and their storytelling around it. I think there’s an interesting story around the silk and how we stumbled into that. Where a bunch of smart people would constantly be picking up powder we give them – it just feels right.
And we’re like, what does that mean? Put some stupid numbers on it, tell us dummy scientists, like a KPI we refer like, it feels good. I mean, this is a great frustration and making materials for the consumer industry. Over time as a scientist is the critical determinant value is not numerical, oftentimes. But we’ve gotten smart we’ve been we’ve gotten smarter about that, as time has gone on.
But it’s very true, like making materials, part of what appeals to me into the patent view will come and work at Bolt is at the end of the day, you know, you can go home and point to something and be like see that Stan Smith says my logo on it. It’s got stuff in it, you can see it right there. Everybody understands that.
Maxx Chatsko 8:39
And does that present a different scale up challenges as well, when you’re working with materials compared to, you know, maybe more traditional fermentation? You need larger scales to make it economically viable? Or what what are some of the unique opportunities and challenges with that?
Dan Widmaier 8:54
Yeah, generally speaking, when it comes to biology, there’s a lot of nuances to making the economics work. And I think that’s been true. You, you’ve studied this field for probably as long as I have at this point. It has been a different challenge for every business out there, which in some cases is even a head scratcher on why the challenges are different. But it seems to be apparently true.
I would say with materials, it adds the potential that you have a serial challenge, in a way that I think this happens in other places, but it’s maybe less obvious, but so take microsilk or Mylo, we do a biology part we do a bunch of fancy biology and technology, you scale it up. And there’s often a processing step that is a critical determinant of value, whether it’s spinning fibers or finishing a sheet of Mylo into the spec that makes the product of the sheet good or the role of the fiber yarn that a customer wants to buy and work with.
And therein lies one of the great challenges of materials is you’re often solving two World Class challenges that have to be done in serial and that actually happens more than we like to give credit for across this industry, where there’s a biology seven finishings downstream processing step or a finishing step, and that, that you have to do A then B and C. And they’re each world class challenges whereas, you know, the canonical mantra of startups is pick one really hard risk and solve it. You backed yourself into taking too hard risks.
Maxx Chatsko 10:23
Yeah scale is definitely a challenge right now for the whole field. So that’s, that’s interesting that Mylo actually is a pretty interesting production process. Because it’s not really fermentation, is it? I mean, you’re growing mushrooms or?
Dan Widmaier 10:36
We might be stupid here. So I’m just gonna throw that out there out for listeners, right? Like we might, we may not know what we’re talking about, like that’s entirely a fair accusation here. But we think of it all as fermentation. Anytime you’re doing the grow step, we group fermentation the same engineers pot between the various things, whether it’s, you know, a large scale aerobic liquid fermentation, and a stirred tank reactor for micro silk, or B-silk, or any other products of make with that method.
Or if you’re doing you know, what we do for Mylo, we call it solid state fermentation. Internally, it’s still a lot of the same fundamental principles. heat removal, or heat management, exchange of gases, moisture management, like, not that different when you draw on a block flow diagram, I would argue it’s not that different in what you’re managing some of the specific technologies, pump versus conveyance, I think that’s a little different.
But they’re not at a fundamental level – if you think about it from a scale up engineering, the synthetic biology industry or synthetic biology, organism, engineer and scientist, it’s all pretty similar, in my opinion. Okay, maybe our eyes are on common belief about this. And why this is more this is a platform over time that does more and more things is there are commonalities we continue to find throughout that where you could use materials evolved from 4 billion years of life on Earth, to make many many things that serve our customers.
Maxx Chatsko 12:07
Okay, that’s interesting. So as you guys knock out some of these hurdles, you can probably scale that as with other materials, some of those other ones in your pipeline that you haven’t told anyone about?
Dan Widmaier 12:15
And I’ll share something that I don’t know if I’ve ever shared this publicly. But I probably have just rough timing, right. And there’s company building stuff that gets layered on top of this, the times they wouldn’t take this as scientific. This is Dan’s anecdotal story of synbio scaling. microsilk took us seven years from the first experiment, to the first tie going out the door, roughly. Let’s see what happened next. Mylo was next. Mylo took us three years from the first we should do something with leather to the first product going out the door to partners, or is it two years. B-silk was one year.
And so I would make this argument that we know there are commonalities, there are efficiencies of scale, as you continue to do more. There may be not as easy or as obvious as people would think when you try to pot in the examples from electrical engineering and other fields. It’s not lithography. But there are clearly things that you can use the time and again to be faster, cheaper, better each time around.
Maxx Chatsko 13:19
And then so you guys, you just said you’re talking about you know, a lot of the materials you guys make are really focused right now on the B2B supply. So your customers are other businesses, is that ever going to change? Are you ever looking at maybe also launching some wholly owned brands? Maybe in cosmetics, or apparel or anything?
Dan Widmaier 13:38
Yeah we do that we’ve done that over time we’ve had we’ve done in the past, I won’t be surprised if we dabble with that in the future. I think what we found is that what’s really hard to do is to run a focused direct to consumer brand with the right talent and the right. We’ll call it two feet in the fire, in it to win it motivation, to do both things at once DTC and B2B.
What we have learned is that there are places – there’s this this term, you’ve heard this a million times, you probably will cringe when I say it, across this industry ‘drop in replacements.’ And we’re all like ‘grrr,’ because everyone’s learning, there is no such thing, right? There is no such thing as a drop in replacement. There’s things that are close to what you use today. But everyone goes through a whole new qualification process even if you make something that’s chemically identical to a molecule someone’s using today.
We believe that there are lots of application spaces where humans aren’t creative enough to guess what the next hop is. So take Mylo we make something like leather. Can we do things that are a little different? that haven’t been seen before? Heck, yeah, the technology stack. There’s lots of cool stuff we’ve done. No customers asking for or can conceptualize what to ask for that’s not leather because that’s where their heads at today. Same is true in fibers, right?
The number one request we used to get in the beginning of microsilk was I would like merino wool but cheaper. That was like, you can have anything. That was the ask and you’re like, that’s not very creative. But I get it right like humans are good at incrementally innovating on something they know. There’s very few a little bit of striking out into whitespace and correctly guessing the future on a product.
Back to your DTC question. We think that at times, we stumble upon those things at bolt, and those are places we’re happy to go do experiments with direct to consumer brands to validate the least validated market space. And the example I’ll give here is when we gotten the beauty of personal care business. We didn’t really have a lot of traction of people wanting to use be selling their products, because it was new, and it was weird. And like, why would I want a vegan protein and it’s not a protein. I know I use collagen or keratin, you’ve got silk, I don’t know, spider silk at that, that must be different.
So we did a small brand called 18B for skincare, we ran it for about a year, 18 months, ship, thousands, tens of thousands, of units did the formulation, we can learn everything about that industry through doing it and and build that product market fit. At the core that business could appeal its brand and that brand will appeal to a consumer based on how you set up the product and brand marketing. And that will naturally limit your your reach.
As compared to now where we’re supplying great companies like Vegamour with an ingredient that helps them get rid of, reduce the silicones that they put in there as well as get rid of anything, I’m not using animal protein because they’re vegan brands can’t use animal proteins and put that product on the market. Haircare was not on the roadmap anywhere soon. And that allowed us to move into that space.
So we think that it’s a great way in the 21st century to go faster than ever to see if a consumer likes the value proposition of a product. It is a hard thing to scale without a lot of dedicated resources. So long winded answer. I think we will do lots of experiments, will we ever have a big, wholly owned brand? I don’t know. Maybe? Maybe not.
Maxx Chatsko 17:12
Well, that’s interesting, though, you know, brought up the drop in I guess that term probably goes back to like biofuels, like way back, you know, we’re gonna drop in fuels for aviation and whatever, right?
Dan Widmaier 17:21
And we’re not pushing this pipe to that pipe, right?
Maxx Chatsko 17:23
Yeah, so easy. And obviously, a lot of that didn’t really work out. And then we kind of saw that term also work its way into a lot of these other ingredients, applications. And you’re right, that’s probably not the best fit. But that’s interesting. So you can maybe scale in B2B and then selectively, you know, shoot your shots at some of the whitespace if you guys see that internally, if you guys want to go and scale something in that area.
Dan Widmaier 17:47
And you can validate, like what we’ve what we’re really sure you can do, if you do direct to consumer product is you can build it directly. The infrastructure is there. You and I could go build a direct to consumer brand faster than ever before in human history. Right? You want we could have a T-shirt shop, zero things we do on Shopify by the end of today, if we really want to, right? It’s hard to scale it, right? Like, it’s easy to start it hard to scale, but you can get representative valid consumer data on a product faster than ever.
And so if you have that that’s actually really changes the motivation and the sales pitch for why you go through the hellacious pain that is scale up in the synthetic biology industry. If you can validate the product works, right, I hopefully not maybe new talking to your listeners about this. But this is the drum I beat with every synbio entrepreneur I’ve ever mentored is like, you should go do something like if you’re doing something that’s gonna be a consumer product, doing a DTC thing to validate it will allow everyone around the table to look at your product, like, yes, we’re willing to put the time, the money, the blood, the sweat, the tears to scale this thing up, because people are going to love it when they have access to it.
Maxx Chatsko 19:02
Dan Widmaier 19:05
I get the most resonance with that in the food space, because they kind of get it.
Maxx Chatsko 19:09
Yeah, this was a great way to validate it. Now maybe, you know, one of the ways you guys tried to maybe navigate some of these challenges was a few years ago, you made the acquisition of Best Made and, Best Made was an apparel, clothing, outdoor clothing and apparel brand, had a couple stores, you know, sprinkled throughout cities in the US. You know, and then it just didn’t really work out. Well, maybe it wasn’t a good fit with Bolt. I don’t know what you can say about it. But I guess my read was, it seemed like maybe there was not a great cultural fit. I think like my read on Best Made was Yeah, and they were more like creative types.
And maybe not the best at selling things or that wasn’t really their, their cup of tea. And then you guys are also also a different brand in terms of your your more technology based on the process and the science involved. Yeah, so I know in 2021, we’re only allowed to talk about Like, stocks only go up and all the good things that happened.
But I think there’s a lot of interesting lessons maybe for any entrepreneurs or investors that are interested in this space from maybe some things that you guys learned. So what was the original vision when you guys acquired Best Made? And maybe what are some of the lessons you guys learned from that experience? And how is it really shaped your strategy going forward?
Dan Widmaier 20:20
Yeah, I think it really connects the same idea here, you could validate a market, right? And product market fit with product by having a channel to ship it through and talk to a consumer directly. And I think our thesis at the time, as I recall, was that Best Made would allow us to do that, right? We’re making fiber products, there’s lots of things with natural fibers in the product line, we can do innovation and try things.
And I believe if you look back at it, we launched at small scale, a half a dozen to a dozen things that had microsilk in it. I suspect two, three things were really a challenge we’re really heading into there. And I’ll leave the last one for the one that I think was the most important for thinking about this. And I’ve already mentioned it, but I’ll reiterate.
One, you know, I think we were early on in the scale of microsilk, we didn’t have the volume of microsilk, we were producing at the time, did not match with the needs of the brand to become a meaningful fraction of the product share. And so that’s a bit of a bit of a headwind there, we did lots of prototype products. And we think we found lots of places of how to use microsilk in different products that we would not have found any other way. That worked. That was good, I wish we had more microsilk to send us stuff we did a launch we did some some hats that were the first product, we launched them with some hats that were like they were 60%, or microsilk for 50%. microsilk 50% wool.
Well, it came with some cool tech for how we could use microsilk with the yarns to get some interesting features, the products sold out in like four hours online at some crazy high price. And the hope was we could do more of those, I think the reality was, it became a challenge to be able to supply as much fiber as they were going to need to do that.
I think the other part is that the brand was geographically separated from Bolt and grew to be bigger than we probably could manage while trying to grow a material supply business and go through the challenges of scale up as well. So it was taking kind of a split of management’s time to look at both businesses simultaneously. That therein lies one of the hardest challenges of of having a big, direct to consumer business within a synthetic biology business. Because, you know, you’re spending half your time thinking about for wall margin contribution, growth, the customer journey online, we’re also trying to then scale up a biomaterial.
And that was stuff that was just that would not let you focus on are you continuing to innovate on product market fit for for the underlying microsilk or or anything else we come up with over time? And then yeah, I think at the core, though, they’re really different businesses? Do you have the resources to invest in consumers? And consumers change quite a bit, to be in it to win it as a direct to consumer business? And I think you’re seeing this actually, what is it this week that Allbirds and Warby Parker last week, filed to go public.
There was a phase when those companies and a couple others like them Casper, and others, went through what we call the logarithmic growth phase of social media marketing, there was a period of time where you had an arbitrage that was roughly 10 to one on the price of ads online and the effectiveness of targeting them, you were getting, like 10 extra return per dollar compared to traditional channels. And it looked like direct consumer businesses online would just take over the world.
If you can basically blanket the marketing, vastly more effective rate, that arbitrage windows slammed shut, and it wasn’t just decimated. There were lots of businesses that got hit by that. Now, if you look at it today, the economics of DTC brands through the growth phase is not very good. Everything is pay to play right now in a way that is makes it hard to grow that grow those businesses. And that’s the kind of challenge that you take on you need if you’re going to do that you need to put a lot of resources in your whole team around solving that not also solving a scaling issue.
Maxx Chatsko 24:46
Yeah, that’s interesting. I mean, we’ve seen you know, Dollar Shave Club right, there was always online direct to consumer and then now we see them that you know, pharmacies and other retail stores so they kind of realize maybe you need both strategies or something and it’s probably not as great of margins all around anymore.
Dan Widmaier 25:04
Well, I think that’s part of why they sold. Didn’t they sell to Gillette?
Maxx Chatsko 25:09
Well, I think Unilever acquired them right?.
Dan Widmaier 25:12
Harry’s and Dollar Shave took one and Harry’s the one that got rejected by the FTC. But you’re right. Like, I think that like, hey, wait, there’s headwinds to growing this online, we need I mean, this was the the analysis of the the two recent IPO filings from Warby Albert’s was online is great, the future is retail for us. And that’s just it’s a different, it’s just a different commitment to grow that and serve your customer well.
Maxx Chatsko 25:37
So as a material supply business, you know, one thing I’ve always liked about bolt is you guys don’t really shy away from talking about the technology and the processes involved. And you know, maybe that sounds like a secondary thing to bring up in 2021. But, you know, back in the day, not that long ago, a few years ago, I mean, there’s still a lot of concern or questions about genetically modified organisms, GMOs, or you know, the term synthetic biology, you still have that like nails on a chalkboard connotation, I think in a lot of conversations.
And I think maybe we’re moving away from that a little bit more. But I’ve always liked how you guys don’t you don’t shy away from that there’s other companies in the space that, you know, they hid behind other terms like, well, plant based materials, don’t worry about it, you know, it’s all we do. So do you guys have any, you know, do you encounter that issue selling to other brands? or?
Dan Widmaier 26:25
Yeah, not anymore. We used to see it more. Our take is part of, but thank you for that, part of the reason we’ve been very straightforward was we did a quick analysis internally. Or it’s got to be seven, eight years ago now, where we looked at ourselves, and we’re like, okay, we’re not sure if synthetic biology, genetic modification, genetic engineering is going to be, you know, the next like, culture or topic, or if it’s gonna fade into oblivion, like a million other things that have come up. Okay. We don’t, we don’t control that. We have a part to play, but we don’t control it by any stretch of imagination.
But one thing is that in fact true, no one who digs deep on Bolt is going to look at us and believe that we’re not connected to synthetic biology, right? You’ve got like, two dudes who went work. And Chris Boyd’s lab is amongst the first dozen synthetic biologists in the world in name, who start this company, like, it just is right? Like, it’s going to be part of what we are. So we shouldn’t we shouldn’t try to obscure that we shouldn’t try to hide from it, we want to be transparent with it get filters through.
It’s why we are so you know, put so much effort to branding our material, but I’m wearing a Mylo shirt, right? Like, like we put all this work. That’s why our customers, right, right. Adidas calls it the Stan Smith Mylo, like they put the name of the material in the product name, right, because we want to be held accountable to the promises that we make about what our products represent in solving a sustainability crisis that continues to loom large over humanity. And that only works if you’re willing to be transparent.
We made a really early on decision, like, that’s just what we’re going to do. That might be bad for us, like good for us. We’ll try to do it the best we can. But we’re going to be transparent about things and we’re going to be clear, we try to not call out others on things that we think that that this gets in.
Maxx Chatsko 28:19
That’s my job, Dan.
Dan Widmaier 28:20
Yeah, you can do that. You can, you know, and you do a great job of it. And, you know, we we, but they were of the rising tide lifts all boats, we want to pull toward the sustainability crisis, you know, we will help everyone, you know, we will work with people who have practices in the past that are that, you know, we might not have done, we want everyone to change, and we believe everyone can change and will and should write when it comes to the material choices they make to solve the sustainability crisis that we call climate change. unless everyone gets on that boat, we’re all we all we all win, or we all lose together. And so we’ve been we try to be transparent, we try to be clear on a dose of reality on what is pure hype, in our opinion, and what is real, because we think that not everyone wants to hear it, but they appreciate hearing it.
Maxx Chatsko 29:13
Yeah, it’s interesting, too. I mean, you know, in the markets that you guys are targeting, it almost seems like, you know, there’s like ideological at different ends of the spectrum, right? People who like are maybe more vegan friendly, and go towards those types of products, maybe aren’t associated with, like, let’s use synthetic biology for these products as well. But objectively speaking, you know, just living technology, kind of the term I start using, but yeah, that’s like a better way to do it in the long run if we want sustainability and to deliver on all of the same values. So it’s interesting.
Dan Widmaier 29:49
I’ll give those guys a lot of credit, a lot of that crowd, the animal welfare vegan crowd. I think a lot of people who had come from this industry are beloved veterans, I hire really skeptical of that group. And you know what I was willing to talk to anybody in that group with open arms. And I got to give that group a lot of credit, that set part of the sector a lot of credit, for coming around to the realization that at the end of the day, that we were aimed at the same, like, we had the same outcomes that we were aiming for.
We like good outcomes. Good outcomes are good. I like that. Like, if we can, if we make the world more sustainable. Everybody, everybody is on that boat is on the boat with us. And, you know, maybe we have quibbles about, you know, a chemistry we choose to use here. They’re like little things, but like, fundamentally, if we’re pulling towards the same number one priority, that’s fantastic. And I give the that crowd in particular was one that that animal welfare and vegan crowd that I think, went from place of not getting it to really getting it in the last eight years.
Maxx Chatsko 30:56
Well it’s interesting. So like you said, your main focus is as material supply company. And so how much focus do you guys do on developing these things internally versus using other tools? Because you recently announced just a collaboration with Gingko bioworks. And that’s, I think, specifically for B-silk protein, not everything at Bolt Threads. So how much do you guys work? How do you make those decisions between your internal versus external, or?
Dan Widmaier 31:29
I’d like to say we have like a really clear, like, articulated, well defined process for it. I mean, it comes down to even very well funded startups have limitations on how many things they can do. Goes back to the Best Mades discussion, can you run two different businesses at once with one management team, you need a lot of resources to do it. Can you develop multiple materials at once? You know, you’d need a lot of resources to do it and very sophisticated processes and structure.
We have come to the the idea that at the end of the day, if you’re going to scale up is the hard part of this industry, I think we’ve all come to that’s, that’s the learning of last 15 years, money goes into scale up is where you waste a lot of money. And this either works or doesn’t work. And if you’re going to scale up, things have to work to a level of reproducibility and robustness that is vastly in excess of what even what any scientific founder and a lot of the founders in this area come out of the science side of things, your academia, or the research parts of these groups, they’re considered that conception, I’m one of them, that conception of what you need to be scalable is way off in terms of how how well defined the process, how maturing it has to be, how reproducible.
What we have found that by when you work with partners outside, it helps pull you forward in the ability to describe what you have to do to an outside party, get it up to speed, select technologies that are mature enough to be reproducible, orderable, hopefully off the shelf, often not, but engineer-able, installable, you can commission them, set them up and run them. So we skew there on most of those areas, we will invent things begrudgingly if we have to. We think of ourselves more as integrators, then pioneers in most of the areas we work in, if we can do it.
Now there are places where things are a critical determinant of quality for the product or the economics, and we all intend something there. But that’s where the invention should happen. And I would hearken this back to graduate school to a problem that is now will sound at any venue, your listeners are scientists, this will sound like it back in the olden days, when I walk eight miles up the hill both ways to school in the snow.
You used to spend as a student, but vast preponderance of your time on making the DNA be the sequence you wanted it to be to the point and then you would do your experiment, to the point where most of us who were trained back then would you actually were good at is making DNA to a specific sequence, which is like an archaic skill that doesn’t even matter anymore, because you can order it right? not actually doing the experiment you set out to do it you were making your plasmid or your your your integration cassette to go do.
And I think that with you, that’s what happens in the synthetic biology side and has been revolutionized. I think that’s all take that forward. Don’t spend all your time trying to make the DNA right. working with partners as a way to find others, you can plug in the reusable parts and go faster to solve the thing you actually want to solve. Not get caught up in some of the new show on the way there.
Maxx Chatsko 34:46
It’s interesting. Yeah, definitely, you know, scale up is a big hurdle. And yeah, I mean, we’re seeing this now there’s like a maturation I guess, across the field. But yeah, when you’re a new startup you mostly have Like a lab trick is what I call it. I think there’s a significant under appreciation of how difficult it is to actually put products in the market. And only do that, but do that sustainably and maybe even eventually generate, you know, profits cash flow is the whole point of a business.
Dan Widmaier 35:15
Do you know anybody? Anybody at all? In the synthetic biology marketplace today, at any reasonable scale who’s making margin?
Maxx Chatsko 35:25
Not like an operating margin? No. So it’s interesting.
Dan Widmaier 35:31
This field has got a long ways to go to be pound for pound competitive with anybody else out there.
Maxx Chatsko 35:37
Yes, I try to remind investors this all the time. And like, right now we’re in this weird period of the market where there’s a lot of momentum. And there’s a lot of excitement and optimism, and that’s great. And specifically, we see certain areas, like synthetic biology is one of them, where there’s a lot of excitement. But again, I think like, people almost have this FOMO, you know, you see the stock chart go up, or you hear about this large valuation or something, and you think you have to get in right now, because this is the future.
And I don’t think people understand how very, very, very early it is in all of this. And, you know, it’s very possible, I think, some of the best, you know, synthetic biology companies, the largest that we’re going to have, in our lifetimes probably haven’t even founded yet. Like, it kind of goes back to what you said, people are bad at going into whitespace, right, we make all these incremental gains, and there’s there’s still gonna be a lot of value to be made from existing companies.
But yeah, it certainly is. It’s, it’s, it’s an, it’s tough to communicate that to investors, you know, like in the.com, bubble, most of the largest companies today, and the net stocks, which was the term they weren’t even around, they weren’t even public, you know, the Google’s the Facebook’s, and you know, the Amazon hadn’t stumbled on his best product, Apple hadn’t stumble on those best products. So appreciate how early this is. And there’s still a lot of challenges to overcome.
Dan Widmaier 36:51
It’s a detail oriented space, right? Like, it’s one of those ones that, you know, we see this all the time, where people get excited by stock that promises they’re telling the great story, but the gap between – even a smart person who studied in the space in their understanding of what what has to happen for that company to become a generator of operating margin. Like people think, well, there’s a gap like this, and I don’t understand the gap is like from here to the center of the earth, from your understanding, like there is there’s a lot of stuff to know.
And there’s only a small handful of people who really have a good conception, in my opinion of putting all the parts together, that will change over time, the space has enormous potential, we’re going to see massive innovation in the space. It’s just going to be a lot more dead bodies than people expect.
Maxx Chatsko 37:38
Yeah, I’m optimistic about synthetic biology. I just think, you know, I can also Wait, maybe this some of these valuations don’t make sense, or there’s going to be even better companies in the future.
Dan Widmaier 37:48
I put it this way. I buy the basket. If you make an ETF that’s all synbio I want to know. I don’t know, Maxx, you can make the decisions on who qualifies or not but like, right buzzword, but I buy the basket? I don’t know how I buy any one company in this space
Maxx Chatsko 38:03
Interesting. Yeah, that’s interesting.
Dan Widmaier 38:05
So if I do one or the other, I got some companies I like in the space, of course, right, right, I’ve been an angel investor in some of these places, but like, but generally speaking, if you like, you can buy the basket, or you can buy only one, like basket, like the space is gonna be great. I just don’t know what’s gonna work and what’s not. Because of all, it’s so much going on under the hood.
Maxx Chatsko 38:25
So maybe to round it up. Maybe we’ve already touched on these, but maybe just to recap, you know, what are some of the best opportunities and challenges for bringing synthetic biology to consumers?
Dan Widmaier 38:38
So for consumers, the places I see – so food is clearly working. The economics in that space are still a question. I think it’s a hard one because it’s a commodity, a relatively commodity space, but it’s clearly like the story and the ability to reduce the practice in a way that people can say, hey, it’s kind of tastes like a chicken nugget, or this kind of tastes like the hamburger. Like, it works. And it’s clear, and you’re seeing me explosion and give her a stick without talking about like 15 synbio meats, food companies, and advise them every day.
So they can clearly works. It can work. I know everyone their brothers jumping in on the startup side, I think you’re seeing, you know, the incumbents, the large incumbents capitulate to some degree and say, we’re going to get on this, this this party too. That’s very clear. It’s a little earlier. I would argue that bolt is the leader in the materials space, both in terms of like, how long we’ve been at it, but also the maturity of our processes and how we go through everything and thinking about bringing it to market.
That space is clearly a step behind where food has taken off, too. I think you’ll see that start to catch up because, you know, take the area we occupy, there’s 100 billion units of apparel made per year on this planet. Like that’s, that’s a lot of real estate to go tell your story to people. It’s also a mindblowingly, bads inability challenge. But we’ll leave that for our next podcast discussion. I think that’s really interesting.
I think you’ll see it on the ingredient side as well, clearly, the cannabinoid space is a really good sector for synthetic biology to apply to, it’s like a really clear, really high value add molecule that’s not a pharmaceutical, like, I mean, those guys with them yell at me now on Twitter, but like, maybe they are pharmaceuticals, I don’t know, it could be whatever you want it to be just color it however you want. But like, clearly, there’s a high value proposition for making, you know, discrete molecules there with very clear downstream processing.
Maxx Chatsko 40:41
I had Kevin Chen from Hyasynth Bio on the podcast, sometime last year. So we talked about that. And I would agree with that assessment.
Dan Widmaier 40:49
And that’s one of those things that could show up very clearly with a story in the consumer space. But I think it comes down to where are the places that you touched on in the beginning, Maxx, like where are the places you can tell a story of visible technology, right? The marketing story and the experience of the product, and whatever the product is, and this is why food materials are particularly interesting, is that through one of your senses, you can say, yeah, that’s different. And it was made different. And I appreciate that, and I’m willing to ascribe value to it.
And I think that in my opinion, I’m massively biased on this opinion right. But that is one of the fundamental things that can drive synthetic biology forward, because it’s like an iceberg, right? The consumer stuff, in my opinion, is giant, We think of the part we play in is about 2% of global GDP. Right and for reference, like global advertising is 1.5% of GDP, like big numbers, right. But like, there’s a whole lot of opportunity that’s under the waterline there that’s less visible, but having some winds that are visible, will make it way more possible, do the invisible things that will create synthetic biology businesses that live in the marketplace out there.
And so my hope is that, these handful of sectors that can make visible technology, real will really prime the pump for the rest of the industry to power through the scale up process, the large dollars and not involve the blood, sweat and tears, there’s a lot of tears that come with the scale up. There is more blood than you would expect too. And I’d be able to push these over the finish line because the promise remains as big as ever, for biology.
Maxx Chatsko 42:33
I would agree. All right, well, Bolt Threads guys, sustainable materials with biology, synthetic biology, living technology, whatever we want to call it. They’ve always done a great job talking about technology. They were one of the first synthetic biology companies really understand the importance of going to the consumer with tech visible technology is the term we’re gonna start using now. So Dan, thanks a lot for joining me here today.
Dan Widmaier 42:59
Thanks for having me, Maxx. Great conversation with you.
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