Searching For Spice
The next industrial revolution will depend on unlocking new resources or making the ones we have now more useful.
The modern world has been building on crude oil since the early 1900s as I tried to describe in exhaustive detail. I usually point towards the development of crude oil and the cracking processes that enabled gasoline and olefins to be created that led to the modern chemical industry and the foundation of our modern world.
In reality this was all predicated on the discovery and extraction of a new raw material back in 1859 by Edwin Drake:
Crude oil — which seeps to the surface in this part of Pennsylvania — was often collected and used medicinally to treat rheumatism and sprains. Later, refined oil began to be burned in lanterns. The demand for oil grew, setting off a search for a way to recover the large quantities of oil thought to exist below the surface. Drake, with the assistance of William Smith, known as “Uncle Billy,” found oil at a depth of 69 ½ feet, prompting the first American oil boom. As a result, western Pennsylvania became the undisputed center of the early oil industry.
The oil boom is dramatized in Giant, the last movie that James Dean made prior to his death in 1955, this scene shows how Dean’s character Jett Rink finally strikes oil.
Jett Rink didn’t start out wealthy. He pulled himself up by his bootstraps, took some risks, and embodied the “true American dream.” I really recommend watching the movie (warning, it’s long and weirder than you initially think) if you have the time. During the time depicted in the movie and when the movie was made the extraction of crude oil, it’s refinement, and the things we used it for seemed like they would never ever end.
Our material world was limited by what we could do with organic and organometallic chemistry. Advances in what we could build from refined petroluem led to the modern materials revolution that promised more performance for a fraction of the cost. We could synthesize rubber for car tires without needing to grow giant rubber tree plantations. We could start to fasten things together using adhesives that were stronger than the materials they held together. We had materials that allowed us to fit more and more transistors on a silicon chip. Our houses could become airtight and sip on a bit of energy to keep us cool in the summer and warm in the winter. Instead of making tools by hand from wood and paint we could use injection and blow molding to mass produce toys for a fraction of the price. We became “master builders.”
The year of writing this is 2025 and things feel less awesome than they used to according to some people. Things are less awesome. That 1956 feeling of being a wildcat oil driller and striking your fortune in black gold was there for a hot minute with crypto, but for the most part we live quiet lives of desperation that we mask through entertainment from the internet.
Unobtainium
In the book and movie Dune, the entire galactic empire is based on harvesting a raw material from the planet Arrakis that allows for ships to navigate space and time in way that ensures a person can get across the galaxy in a reasonable amount of time for a novel or a movie. We don’t really know how Spice works in the movie Dune, but we know it’s important and it’s the key to keeping the empire running. The same situation happens in Avatar where both movies are just about humans trying to get Unobtainium because I guess it solves some sort of energy crisis and therefore is super valuable. $20 million a kilo!
Dune and Avatar function on the same narrative of humans needing to extract a specialized natural resource to enable more productivity either in the form of cheaper energy or traveling distances that we can’t really comprehend in a time that makes a good movie. For the most part crude oil has filled this role for us since the 1900s and we appear to be getting near some sort of situation where oil, even though there is in theory a finite amount of it, doesn’t really fit our needs right now.
Sure, we need it. We use it. We complain about it. No one really wants grow up and be an oilman right now. The smart money wants to find the next Edwin Drake and JD Rockefeller and exploit whatever that next industry is going to be. For the last 20-30 years this has been the internet.
Is it artificial intelligence? Maybe.
Is it cryptocurrency? Eh, probably not (I should have bought bitcoin in 2009 when I read about it in the New Yorker and kept it on a flash drive).
Is it clean energy? Since we need crude oil to make the materials we need for wind power, solar power, and nuclear fission I think it’s a nice piece to the story, but nah.
Is it biotech? We’ve been down this road before and failed twice already.
Biotech 1.0. Companies like Solazyme who wanted to make biofuels a reality all failed in spectacular fashion as oil prices came down significantly in the early 2010s. The last holdout Amyris finally went kaput. Maybe the OG of biotech is Genetech, who fermented insulin for way less money that it took to get it from pigs.
Biotech 2.0 or Synbio. These companies might be in various stages of trouble or breaking down. All of the lab grown meat start-ups seem to have been put up for sale. Zymergen imploded. The whole intersection of biology and computer science sounded great when raising money, but I haven’t really seen it play out yet. Solugen, who I had high hopes for, appears to be struggling. I’m hoping we see a few winners out of this cohort of companies. Sustainable aviation fuel might be the way for right now. Danimer Scientific just went bankrupt.
Biotech 3.0. I think is when Artificial Intelligence and Biology get together and have some kids we will have the biotech 3.0 companies and they are getting funded right now.
Industrial Biotech is just food, chemicals, and materials.
The lessons we can learn from Edwin Drake and JD Rockefeller is that crude oil and its refined products enabled more productivity, or cheaper goods and services, when petroleum products were used. Nylon stockings were a lot cheaper than silk stockings and met the same needs as the silk version and therefore everyone who wanted to buy nylon stockings could do it—the people rioted for nylon.
If we really want biotech 3.0 to work out for us and unlock the same promises as Spice and Unobtainium we need to remember that Industrial Biotech 3.0 needs to see more productivity gains than whatever it seeks to replace right now. When we can get that we a bright future of industrial innovation. We would get to ride that material productivity wave all the way to the land of more affordable stuff that we use on a day-to-day basis.
If I knew how to do it, I’d be doing it instead of writing this newsletter and wondering if I’m going to survive the next HHS RIF at the FDA.
My Industrial Biotech 3.0 founders that might be here reading this. I believe in your missions. I want you to succeed. Please know that selling chemicals and materials for more than their exact petroleum-based counterparts is a losing strategy. You might be able to match the properties exactly, but if yours cost 10% more you are doomed to repeat history and fail.
Your success might come from unexpected places and talking to people. Propylene was worthless until some chemists developed a catalyst to polymerize it. Know where all the traps and pitfalls are so that you can get further down the path. This cost parity trap is a big one. Please avoid it.
Excellent!