Recently in Technology Category
Biodesic has assembled several alpha test units of the next LavaAmp hardware revision. We've replaced the original thin film heaters (which I screen printed by hand -- not fun solvents) with a new design. Here is a photo, with my battered iPhone for scale. Next up is switching from the aluminum case to something injection molded, and sorting out the sample loop design and manufacturing.
This morning's biosecurity update from the Partnership for Global Security carried a mess of links I hadn't seen, including a story at the BBC entitled "Tech Know: Life hacking with 3D printing and DIY DNA kits". The embedded video has an interesting clip on a printed stainless steel Mobius strip with freely moving rings that can run around the perimeter -- interlinked complex shapes. Neat. (Not a new thing in plastics, but I hadn't seen it in metal before.)
Cambridge's James Brown gets the honor of introducing the Beeb's audience to synthetic biology, biobricks, and engineering methods for biological systems. The 3D-printed DremelFuge gets a photo and a significant mention. I explicitly pointed to this sort of application of 3D printing in my book, though it is happening even faster than I had imagined. Shapeways is now printing all sorts of interesting materials, though the resolution of most 3D printers and processes still doesn't make them useful for the sorts of objects I want to print. That said, there is clear improvement over time.
It will be interesting to see how long it takes before you can print mixed media functional objects, say something like a zero-dead volume, positive displacement membrane pump. Or better yet an entire pump block. (Which is usually milled from a piece of stainless steel -- see where this is going?) That gets you the most annoying bit of kit needed for a DNA synthesizer. At which point you can forget any regulations limiting access to DNA of any sequence.
Cambridge's James Brown gets the honor of introducing the Beeb's audience to synthetic biology, biobricks, and engineering methods for biological systems. The 3D-printed DremelFuge gets a photo and a significant mention. I explicitly pointed to this sort of application of 3D printing in my book, though it is happening even faster than I had imagined. Shapeways is now printing all sorts of interesting materials, though the resolution of most 3D printers and processes still doesn't make them useful for the sorts of objects I want to print. That said, there is clear improvement over time.
It will be interesting to see how long it takes before you can print mixed media functional objects, say something like a zero-dead volume, positive displacement membrane pump. Or better yet an entire pump block. (Which is usually milled from a piece of stainless steel -- see where this is going?) That gets you the most annoying bit of kit needed for a DNA synthesizer. At which point you can forget any regulations limiting access to DNA of any sequence.
I recently had cause to re-read the National Strategy for Counter Biological Threats (Full PDF), released last fall by the National Security Council and signed by the President. I think there is a lot to like, and it demonstrates a welcome change in the mindset I encounter in Washington DC. (Update: Fixed the broken link to the PDF. Sorry about that.)
When the document came out, there was just a little bit of coverage in the press. Notably, Wired's Threat Level, which usually does a commendable job on security issues, gave the document a haphazard swipe, asserting that "Obama's Biodefense Strategy is a Lot Like Bush's". As described in that post, various commentators were unhappy with the language that Under Secretary of State Ellen Tauscher used when announcing the Strategy at a BWC meeting in Geneva. According to Threat Level, "Sources tell this reporter that the National Security Council had some Bush administration holdovers in charge of editing the National Strategy and preparing Ms. Tauscher's script, and these individuals basically bulldozed the final draft through Defense and State officials with very little interagency input and with a very short suspense." Threat Level also asserts that "Most are disappointed in the language, which doesn't appear to be significantly different than the previous administration." It is unclear who "Most" are.
In contrast to all of this, in my view the Strategy is a clear departure from the muddled thinking that dominated earlier discussions. By muddled, I mean security discussions and policy that, paraphrasing just a little, went like this: "Biology Bad! Hacking Bad! Must Contain!"
The new National Strategy document, however takes a very different line. Sources tell this reporter, if you will, that the document resulted from a careful review that involved multiple agencies, over many months, with an aim to develop the future biosecurity strategy of the United States in a realistic context of rapidly spreading infectious diseases and international technological proliferation driven by economic and technical needs. To wit, here are the first two paragraphs from the first page (emphasis added, of course):
And now to drive home the point: the new Strategy for Countering Biological Threats explicitly points to garage biotech innovation and open access as crucial components of our physical and economic security. I will note that this is a definite change in perspective, and one that has not fully permeated all levels of the Federal bureaucracy and contractor-aucracy. Recently, during a conversation about locked doors, buddy systems, security cameras, and armed guards, I found myself reminding a room full of biosecurity professionals of the phrase emphasized above. I also found myself reminding them -- with sincere apologies to all who might take offense -- that not all the brains, not all the money, and not all the ideas in the United States are found within Beltway. Fortunately, the assembled great minds took this as intended and some laughter ensued, because they realized this was the point of including garage labs in the National Strategy, even if not everyone is comfortable with it. And there are definitely very influential people who are not comfortable with it. But, hey, the President signed it (forgive me, did I mention that part already?), so everyone is on board, right?
Anyway, I think the new National Strategy is a big step forward in that it also acknowledges that improving public health infrastructure and countering infectious diseases are explicitly part of countering artificial threats. Additionally, the Strategy is clear on the need to establish networks that both promulgate behavioral norms and that help disseminate information. And the new document clearly recognizes that these are international challenges (p.3):
Implementation is, of course, another matter entirely. The Strategy leaves much up to federal, state, and local agencies, not all of whom have the funding, expertise, or inclination to follow along. I don't have much to say about that part of the Strategy, for now. But I am definitely not disappointed with the rest of it. It is, you might say, the least bad thing I have read out of DC in a long time.
When the document came out, there was just a little bit of coverage in the press. Notably, Wired's Threat Level, which usually does a commendable job on security issues, gave the document a haphazard swipe, asserting that "Obama's Biodefense Strategy is a Lot Like Bush's". As described in that post, various commentators were unhappy with the language that Under Secretary of State Ellen Tauscher used when announcing the Strategy at a BWC meeting in Geneva. According to Threat Level, "Sources tell this reporter that the National Security Council had some Bush administration holdovers in charge of editing the National Strategy and preparing Ms. Tauscher's script, and these individuals basically bulldozed the final draft through Defense and State officials with very little interagency input and with a very short suspense." Threat Level also asserts that "Most are disappointed in the language, which doesn't appear to be significantly different than the previous administration." It is unclear who "Most" are.
In contrast to all of this, in my view the Strategy is a clear departure from the muddled thinking that dominated earlier discussions. By muddled, I mean security discussions and policy that, paraphrasing just a little, went like this: "Biology Bad! Hacking Bad! Must Contain!"
The new National Strategy document, however takes a very different line. Sources tell this reporter, if you will, that the document resulted from a careful review that involved multiple agencies, over many months, with an aim to develop the future biosecurity strategy of the United States in a realistic context of rapidly spreading infectious diseases and international technological proliferation driven by economic and technical needs. To wit, here are the first two paragraphs from the first page (emphasis added, of course):
We are experiencing an unparalleled period of advancement and innovation in the life sciences globally that continues to transform our way of life. Whether augmenting our ability to provide health care and protect the environment, or expanding our capacity for energy and agricultural production towards global sustainability, continued research and development in the life sciences is essential to a brighter future for all people.Recall that this document carries the signature of the President of the United States. I'll pause to let that sink in for a moment.
The beneficial nature of life science research is reflected in the widespread manner in which it occurs. From cutting-edge academic institutes, to industrial research centers, to private laboratories in basements and garages, progress is increasingly driven by innovation and open access to the insights and materials needed to advance individual initiatives.
And now to drive home the point: the new Strategy for Countering Biological Threats explicitly points to garage biotech innovation and open access as crucial components of our physical and economic security. I will note that this is a definite change in perspective, and one that has not fully permeated all levels of the Federal bureaucracy and contractor-aucracy. Recently, during a conversation about locked doors, buddy systems, security cameras, and armed guards, I found myself reminding a room full of biosecurity professionals of the phrase emphasized above. I also found myself reminding them -- with sincere apologies to all who might take offense -- that not all the brains, not all the money, and not all the ideas in the United States are found within Beltway. Fortunately, the assembled great minds took this as intended and some laughter ensued, because they realized this was the point of including garage labs in the National Strategy, even if not everyone is comfortable with it. And there are definitely very influential people who are not comfortable with it. But, hey, the President signed it (forgive me, did I mention that part already?), so everyone is on board, right?
Anyway, I think the new National Strategy is a big step forward in that it also acknowledges that improving public health infrastructure and countering infectious diseases are explicitly part of countering artificial threats. Additionally, the Strategy is clear on the need to establish networks that both promulgate behavioral norms and that help disseminate information. And the new document clearly recognizes that these are international challenges (p.3):
Our Strategy is targeted to reduce biological threats by: (1) improving global access to the life sciences to combat infectious disease regardless of its cause; (2) establishing and reinforcing norms against the misuse of the life sciences; and (3) instituting a suite of coordinated activities that collectively will help influence, identify, inhibit, and/or interdict those who seek to misuse the life sciences.Norms, open biology, better technology, better public health infrastructure, and better intelligence: all are themes I have been pushing for a decade now. So, 'nuff said on those points, I suppose.
...This Strategy reflects the fact that the challenges presented by biological threats cannot be addressed by the Federal Government alone, and that planning and participation must include the full range of domestic and international partners.
Implementation is, of course, another matter entirely. The Strategy leaves much up to federal, state, and local agencies, not all of whom have the funding, expertise, or inclination to follow along. I don't have much to say about that part of the Strategy, for now. But I am definitely not disappointed with the rest of it. It is, you might say, the least bad thing I have read out of DC in a long time.
Times Square, looking south from about 50th, 01:30 hours. Damn, but that is a lot of light bulbs.
The Automagic Pancake Printer in the Alaska Airlines Boardroom at SeaTac. Not quite as good as from a replicator, perhaps, but surprisingly yummy with blackberry jam.
Ah, beer. The necessary lubricant of science. Always the unacknowledged collaborator in the Nobel Prize. Whether critical to the formulation of quantum mechanics in the pubs of Copenhagen, smoothing the way to the discovery of the double-helix in Cambridge, or helping celebrate an iGEM victory in that other Cambridge (congratulations again, almost-Dr. Brown and team), beer is always there.
And now it is helping me think about the future of biological manufacturing. Not just by drinking it, though I can't say it hurts. Yet.
Anyway, the rise of craft brewing in the US is an interesting test case, and a proof of principle, of distributed biological manufacturing successfully emerging in a market dominated by large scale industrial production. To wit, Figure 1:
Figure 1. The number of US large and small breweries over the last century. The (official) count was forced to zero during Prohibition. (Click on image for full-size.)
A Short, Oversimplified History of Craft Brewing
Before Prohibition, the vast majority of beer produced in the US was brewed by relatively small operations and distributed locally. There was no refrigeration, nor were there highways and trucks, so beer had to drunk rather than produced and stored in large quantities (modulo some small amount of storage in basements, caves, etc.). Moreover, the official count of breweries went to zero during the years 1920-1933. After Prohibition, brewing was regulated and small scale producers were basically shut out of the market.
With the aid of refrigeration and transportation, large scale breweries took off. Consolidation took its toll -- beer is pretty close to a commodity, after all -- and the number of breweries in the US shrank until about 1980. In 1979, Jimmy Carter signed legislation reopening the market to small brewers. This is an interesting and crucial point, because as far as I can tell nothing else substantive changed about the market. (OK, so it was more complicated than this -- see updates below.) Deregulation reopened the market to craft brewers and the industry blossomed through organic growth and the preferences of consumers (more on this in the Update below). (Conclusion: Emerging small scale, distributed production can compete against an installed large scale infrastructure base.)
(Update 18 Aug 2010) There seems to be some upset out in blogland about the idea that Carter deregulated craft brewing. See the first comment to this post. I don't think it changes my story about biological manufacturing at all, but for the sake of clarity, here is this: On February 1, 1979, President Carter signed the Cranston Act, which allowed a single adult household to brew up to 100 gallons of beer per year. A household with two adults could brew up to 200 gallons per year. For more, see here, or this nice 2009 article from Reason Magazine by Greg Beato, "Draft Dodgers: For DIY brewers, Prohibition lasted until 1978. But once unleashed, they revolutionized the industry." From Beato's article: "After Prohibition ended, the Federal Alcohol Administration Act of 1935 laid out a new set of liquor laws. Home winemaking for family use was granted a tax exemption; home brewing was not. If you were making any amount of beer, you had to obtain a permit and comply with a long list of regulations." Prior to the Cranston Act, brewing beer at home, or in small volumes anywhere, was hard to do because of federal regulations. After the Cranston Act, people could concoct all kinds of interesting liquids at home. So it sounds to me like Carter deregulated craft brewing.
(re-Update 19 August, 2010: Tom Hilton, at If I Ran the Zoo, makes some nice points here. Namely, he observes that there were additional changes at the state level that legalized brewpubs. Note that not all craft brewers are brewpubs, and this distinction appears to be glossed over in much of the criticism of this post. Anyway, it is pretty clear that reality was more complicated than the summary I gave above. No surprise there, though, as the heading of the section contains the word "oversimplified"...)
Better yet as a reference is a peer-reviewed article by Victor Tremblay and colleagues entitled "The Dynamics of Industry Concentration for U.S. Micro and Macro Brewers." (Link. Review of Industrial Organization (2005) 26:307-324) Here is their description of what happened in 1979 (the original text contains an obvious typo that I have corrected in brackets):
(end Update)
The definition of a "craft" brewer varies a bit across the various interested organizations. According to the Brewers Association, "An American Craft Brewer is small, independent, and traditional." Small means less than 2 million barrels a year (at 26 Imperial gal or30.6 31 standard gal per barrel); independent means less than 25% owned by a non-craft brewer; traditional means either an all malt flagship beer or 50% of total volume in malt beer. There is a profusion of other requirements to qualify as a craft brewer, some of which depend on jurisdiction, and which are important for such practical concerns as calculating excise tax. Wikipedia puts the barrier for a craft brewer at less than 15,000 barrels a year. According to the Brewers Association, as of the middle of 2009 there are about 1500 craft brewers in the US, and about 20 large brewers, and about 20 "others", with brewpubs accounting for about 2/3 of the craft brewers.
Show Me the Hops. Or Wheat. Or Honey (if you must).
Brewpubs and microbreweries are so common that the majority of Americans live within 10 miles of a craft brewer, and it is a good bet that there is one quite close to where you live. The Beer Mapping Project can help you verify this fact. Please conduct your field research on foot.
Beer generates retail revenues of about $100 billion in the US (brewery revenues are probably less than half that), contributing combined direct and indirect jobs of about 1.9 million. But craft brewers account for only a small fraction of the total volume of beer brewed in the US. According to the Beer Institute's "Craft Brewers Conference Statistical Update - April 2007" (PPT), three brewers now supply 50% of the world's market and 80% of the US market. See Figure 2, below. The Brewer's Association clarifies that only 5% of the volume of beer brewed in the US is from craft brewers, who manage to pull down a disproportionate 9% of revenues. (Conclusion: Small scale producers can command a premium in a commodity marketplace.)
Figure 2. US beer market share. (Click on image for full-size.)
Here is an interesting question to which I do not have an answer: how much beer brewed by large producers is actually bottled and distributed locally? "Lot's of beer", where I don't have any real idea of what "lot's" means, is produced via contract brewing. It may be that "large scale production" is therefore not as centralized as it looks, but is rather the result of branding. This makes some sense if you think about the cost of transportation. As beer (regardless of its source) is mostly water, you are paying to ship something around that is usually plentiful at the destination. It makes a lot of sense to manufacture locally. But, as I say, I have yet to sort out the numbers.
Brewing as an Example of Distributed Biological Manufacturing
All of the above makes brewing an interesting test case for thinking about distributed biological production. Craft brewers buy feedstocks like everybody else, pay for bottles and probably for bottling services, and ship their product just like everybody else. They may be much smaller on average than Anheuser Busch, but they survive and by definition make enough money to keep their owners and employees happy. And they keep their customers happy. And their thirsts quenched.
Above, I identified two important conclusions about the craft brewing market relevant to this story: 1) Craft brewing emerged in the US amidst an already established large scale, industrial infrastructure for producing and distributing beer. 2) Small scale, distributed production can command a premium at the cash register.
As we look forward to future growth in the bioeconomy, more industrial production will be replaced by biofactories, or perhaps "industrial biorefineries", whatever those are supposed to be. Recall that the genetically modified domestic product (GMDP) now contributes about 2% of total US GDP, with the largest share for industrial products.
This story becomes particularly relevant for companies like Blue Marble, which is already producing high value, drop-in replacements for petrochemicals using biological systems. (Full disclosure: Blue Mable and Biodesic are collaborating on several projects.) As feedstocks, Blue Marble uses local waste agricultural products, macro- and micro-algae, sewage, and -- wait for it -- spent grains from the microbrewery next door. (How's that for closing the loop?) Products include various solvents, flavorings, and scents.
The craft brewing story tells us that consumers are quite willing to pay a premium for locally produced, high quality products, even before they learn -- in the case of Blue Marble -- that the product is organic and petroleum-free. It also tells us that small scale production can emerge even amidst an existing large industry.
Can Blue Mable and other companies compete against enormous, established chemical and petroleum companies? In my experience, the guys (and they are nearly universally guys) at the top of the oil industry don't even get this question. "It is all about steel in the ground", they say. In other words, they are competing based on the massive scale of their capital investments and the massive scale of their operations and they don't think anybody can touch them.
But here is the thing -- Blue Marble and similar companies are going to be producing at whatever scale makes sense. Buildings, neighborhoods, cities, whatever. Any technology that is based on cow digestion doesn't have to be any bigger than a cow. Need more production? Add more cows. This costs rather less than adding another supertanker or another refinery. Blue Marble just doesn't require massive infrastructure, in large part because they don't require petroleum as a feedstock and are not dependent on high temperatures for processing. Most of the time, Blue Marble can do their processing in plastic jugs sitting on the floor, and stainless steel only comes into the picture for food-grade production lines. This means capital costs are much, much lower. This is a point of departure for biomanufacturing when compared to brewing.
(Update: Perusing old posts, I discovered I did a decent job last year of putting this scale argument in the context of both computers and the oil industry, here.)
Beer is close to a commodity product, and it is the small scale producers who get a better price, even though their costs will be roughly the same as large scale producers. Blue Marble generally has substantially higher margins than petrochemical producers -- and by focusing on the high margin portion of the petroleum barrel they are going to be stealing the cream away from much larger companies -- but Blue Marble's costs are much lower. What is the financial situation of a large petrochemical company going to look like when they lose the market for esters, which can have margins of many hundreds of dollars per liter, and are left with margins on products closer to gas and diesel at dollars per liter? This is a different sort of play than you would see in brewing.
Now, I am not guaranteeing that distributed biological production will win in all cases. Large beer brewers clearly still dominate their market. It may be that biological manufacturing will look like the current beer industry; a few large players producing large volumes, and a large number of small players producing much less but at higher margins. But craft brewing is nonetheless an existence proof that small scale, distributed production can emerge and thrive even amidst established large scale competition. And biological manufacturing is sufficiently different from anything else we have experience with that the present market size of craft brewing may not be that relevant to other products.
And now it is helping me think about the future of biological manufacturing. Not just by drinking it, though I can't say it hurts. Yet.
Anyway, the rise of craft brewing in the US is an interesting test case, and a proof of principle, of distributed biological manufacturing successfully emerging in a market dominated by large scale industrial production. To wit, Figure 1:
Figure 1. The number of US large and small breweries over the last century. The (official) count was forced to zero during Prohibition. (Click on image for full-size.)
A Short, Oversimplified History of Craft Brewing
Before Prohibition, the vast majority of beer produced in the US was brewed by relatively small operations and distributed locally. There was no refrigeration, nor were there highways and trucks, so beer had to drunk rather than produced and stored in large quantities (modulo some small amount of storage in basements, caves, etc.). Moreover, the official count of breweries went to zero during the years 1920-1933. After Prohibition, brewing was regulated and small scale producers were basically shut out of the market.
With the aid of refrigeration and transportation, large scale breweries took off. Consolidation took its toll -- beer is pretty close to a commodity, after all -- and the number of breweries in the US shrank until about 1980. In 1979, Jimmy Carter signed legislation reopening the market to small brewers. This is an interesting and crucial point, because as far as I can tell nothing else substantive changed about the market. (OK, so it was more complicated than this -- see updates below.) Deregulation reopened the market to craft brewers and the industry blossomed through organic growth and the preferences of consumers (more on this in the Update below). (Conclusion: Emerging small scale, distributed production can compete against an installed large scale infrastructure base.)
(Update 18 Aug 2010) There seems to be some upset out in blogland about the idea that Carter deregulated craft brewing. See the first comment to this post. I don't think it changes my story about biological manufacturing at all, but for the sake of clarity, here is this: On February 1, 1979, President Carter signed the Cranston Act, which allowed a single adult household to brew up to 100 gallons of beer per year. A household with two adults could brew up to 200 gallons per year. For more, see here, or this nice 2009 article from Reason Magazine by Greg Beato, "Draft Dodgers: For DIY brewers, Prohibition lasted until 1978. But once unleashed, they revolutionized the industry." From Beato's article: "After Prohibition ended, the Federal Alcohol Administration Act of 1935 laid out a new set of liquor laws. Home winemaking for family use was granted a tax exemption; home brewing was not. If you were making any amount of beer, you had to obtain a permit and comply with a long list of regulations." Prior to the Cranston Act, brewing beer at home, or in small volumes anywhere, was hard to do because of federal regulations. After the Cranston Act, people could concoct all kinds of interesting liquids at home. So it sounds to me like Carter deregulated craft brewing.
(re-Update 19 August, 2010: Tom Hilton, at If I Ran the Zoo, makes some nice points here. Namely, he observes that there were additional changes at the state level that legalized brewpubs. Note that not all craft brewers are brewpubs, and this distinction appears to be glossed over in much of the criticism of this post. Anyway, it is pretty clear that reality was more complicated than the summary I gave above. No surprise there, though, as the heading of the section contains the word "oversimplified"...)
Better yet as a reference is a peer-reviewed article by Victor Tremblay and colleagues entitled "The Dynamics of Industry Concentration for U.S. Micro and Macro Brewers." (Link. Review of Industrial Organization (2005) 26:307-324) Here is their description of what happened in 1979 (the original text contains an obvious typo that I have corrected in brackets):
Changes in government policy also benefited micro brewers. First, the legalization of home brewing in February of [1979] stimulated entry, since most early micro brewers began as home brewers. Second, states began lifting prohibitions against brewpubs in the early 1980s. Brewpubs were legal in only six states in 1984; Mississippi was the last state to legalize brewpubs in 1999. Third, the government granted a tax break to smaller brewers in February 1977. According to the new law, brewers with annual sales of less than 2 million barrels paid a federal excise tax rate of $7.00 per barrel on the first 60,000 barrels sold and $9.00 per barrel on additional sales. Brewers with more than 2 million barrels in sales paid an excise tax rate of $9.00 on every barrel sold. In 1991, the tax rate rose to $18 per barrel, but brewers with annual sales of less than 2 million barrels continued to pay only $7.00 per barrel on the first 60,000 barrels sold annually. This benefited the specialty sector, as all micro breweries and brewpubs have annual sales of less than 60,000 barrels and all of the larger specialty brewers have annual sales of less than 2 million barrels.So a combination of changes to federal regulations and federal excise taxes enabled small players to enter a market they had previously been prohibited from. That home brewing had been almost non-existent prior to 1979 points to another interesting feature of the market, namely that the skill base for brewing was quite limited. Thus another effect of legalizing home brewing was that people could practice and build up their skills; they could try out new recipes and explore new business models. And then, wham, in just a few years many thousands of people were participating in a market that had previously been dominated by large corporate players.
(end Update)
The definition of a "craft" brewer varies a bit across the various interested organizations. According to the Brewers Association, "An American Craft Brewer is small, independent, and traditional." Small means less than 2 million barrels a year (at 26 Imperial gal or
Show Me the Hops. Or Wheat. Or Honey (if you must).
Brewpubs and microbreweries are so common that the majority of Americans live within 10 miles of a craft brewer, and it is a good bet that there is one quite close to where you live. The Beer Mapping Project can help you verify this fact. Please conduct your field research on foot.
Beer generates retail revenues of about $100 billion in the US (brewery revenues are probably less than half that), contributing combined direct and indirect jobs of about 1.9 million. But craft brewers account for only a small fraction of the total volume of beer brewed in the US. According to the Beer Institute's "Craft Brewers Conference Statistical Update - April 2007" (PPT), three brewers now supply 50% of the world's market and 80% of the US market. See Figure 2, below. The Brewer's Association clarifies that only 5% of the volume of beer brewed in the US is from craft brewers, who manage to pull down a disproportionate 9% of revenues. (Conclusion: Small scale producers can command a premium in a commodity marketplace.)
Figure 2. US beer market share. (Click on image for full-size.)
Here is an interesting question to which I do not have an answer: how much beer brewed by large producers is actually bottled and distributed locally? "Lot's of beer", where I don't have any real idea of what "lot's" means, is produced via contract brewing. It may be that "large scale production" is therefore not as centralized as it looks, but is rather the result of branding. This makes some sense if you think about the cost of transportation. As beer (regardless of its source) is mostly water, you are paying to ship something around that is usually plentiful at the destination. It makes a lot of sense to manufacture locally. But, as I say, I have yet to sort out the numbers.
Brewing as an Example of Distributed Biological Manufacturing
All of the above makes brewing an interesting test case for thinking about distributed biological production. Craft brewers buy feedstocks like everybody else, pay for bottles and probably for bottling services, and ship their product just like everybody else. They may be much smaller on average than Anheuser Busch, but they survive and by definition make enough money to keep their owners and employees happy. And they keep their customers happy. And their thirsts quenched.
Above, I identified two important conclusions about the craft brewing market relevant to this story: 1) Craft brewing emerged in the US amidst an already established large scale, industrial infrastructure for producing and distributing beer. 2) Small scale, distributed production can command a premium at the cash register.
As we look forward to future growth in the bioeconomy, more industrial production will be replaced by biofactories, or perhaps "industrial biorefineries", whatever those are supposed to be. Recall that the genetically modified domestic product (GMDP) now contributes about 2% of total US GDP, with the largest share for industrial products.
This story becomes particularly relevant for companies like Blue Marble, which is already producing high value, drop-in replacements for petrochemicals using biological systems. (Full disclosure: Blue Mable and Biodesic are collaborating on several projects.) As feedstocks, Blue Marble uses local waste agricultural products, macro- and micro-algae, sewage, and -- wait for it -- spent grains from the microbrewery next door. (How's that for closing the loop?) Products include various solvents, flavorings, and scents.
The craft brewing story tells us that consumers are quite willing to pay a premium for locally produced, high quality products, even before they learn -- in the case of Blue Marble -- that the product is organic and petroleum-free. It also tells us that small scale production can emerge even amidst an existing large industry.
Can Blue Mable and other companies compete against enormous, established chemical and petroleum companies? In my experience, the guys (and they are nearly universally guys) at the top of the oil industry don't even get this question. "It is all about steel in the ground", they say. In other words, they are competing based on the massive scale of their capital investments and the massive scale of their operations and they don't think anybody can touch them.
But here is the thing -- Blue Marble and similar companies are going to be producing at whatever scale makes sense. Buildings, neighborhoods, cities, whatever. Any technology that is based on cow digestion doesn't have to be any bigger than a cow. Need more production? Add more cows. This costs rather less than adding another supertanker or another refinery. Blue Marble just doesn't require massive infrastructure, in large part because they don't require petroleum as a feedstock and are not dependent on high temperatures for processing. Most of the time, Blue Marble can do their processing in plastic jugs sitting on the floor, and stainless steel only comes into the picture for food-grade production lines. This means capital costs are much, much lower. This is a point of departure for biomanufacturing when compared to brewing.
(Update: Perusing old posts, I discovered I did a decent job last year of putting this scale argument in the context of both computers and the oil industry, here.)
Beer is close to a commodity product, and it is the small scale producers who get a better price, even though their costs will be roughly the same as large scale producers. Blue Marble generally has substantially higher margins than petrochemical producers -- and by focusing on the high margin portion of the petroleum barrel they are going to be stealing the cream away from much larger companies -- but Blue Marble's costs are much lower. What is the financial situation of a large petrochemical company going to look like when they lose the market for esters, which can have margins of many hundreds of dollars per liter, and are left with margins on products closer to gas and diesel at dollars per liter? This is a different sort of play than you would see in brewing.
Now, I am not guaranteeing that distributed biological production will win in all cases. Large beer brewers clearly still dominate their market. It may be that biological manufacturing will look like the current beer industry; a few large players producing large volumes, and a large number of small players producing much less but at higher margins. But craft brewing is nonetheless an existence proof that small scale, distributed production can emerge and thrive even amidst established large scale competition. And biological manufacturing is sufficiently different from anything else we have experience with that the present market size of craft brewing may not be that relevant to other products.
Wired is carrying a short story about personal genome sequencing that has a description and photo of the LavaAmp.
The caption describes the LavaAmp as "an experimental DNA copying machine." I don't want to nitpick -- much -- but the instrument is certainly past being experimental. There is data published using a very similar machine, the founders of LavaAmp have produced data using the instrument shown in the photo, and we will be shipping the v0.2 model to several Beta testers (okay, Alpha testers) as soon as the new heaters come back from the fab. The project is moving pretty fast.
On the later point, the whole "Bits and Atoms" conversation really does deserve more attention. As discussed in my previous post on the subject, it may be that much of the outsourced fabrication capacity available via the web is only available because of the present economic downturn. But it is still available, and I have to say I have never had it easier in terms of shooting a design out the door and getting hardware (and plasticware) back according to my specs -- in just a few days, too. And at really reasonable prices.
Even if the economy picks up and larger manufacturers sop up some of the extra capacity, my guess is that we are seeing the demonstration of a new market for rapid prototypes and small lots. I doubt very much that people like me -- who are getting used to using the "send" button for emailed designs as a metaphorical "print" button for the atoms specified by those designs -- will want to give up this new capability. And if demand for this service is maintained, or more likely increases, as the economy revives then all the more cability will be supplied via my atom-printing button.
I am still lusting after a desktop CNC mill, though.
The caption describes the LavaAmp as "an experimental DNA copying machine." I don't want to nitpick -- much -- but the instrument is certainly past being experimental. There is data published using a very similar machine, the founders of LavaAmp have produced data using the instrument shown in the photo, and we will be shipping the v0.2 model to several Beta testers (okay, Alpha testers) as soon as the new heaters come back from the fab. The project is moving pretty fast.
On the later point, the whole "Bits and Atoms" conversation really does deserve more attention. As discussed in my previous post on the subject, it may be that much of the outsourced fabrication capacity available via the web is only available because of the present economic downturn. But it is still available, and I have to say I have never had it easier in terms of shooting a design out the door and getting hardware (and plasticware) back according to my specs -- in just a few days, too. And at really reasonable prices.
Even if the economy picks up and larger manufacturers sop up some of the extra capacity, my guess is that we are seeing the demonstration of a new market for rapid prototypes and small lots. I doubt very much that people like me -- who are getting used to using the "send" button for emailed designs as a metaphorical "print" button for the atoms specified by those designs -- will want to give up this new capability. And if demand for this service is maintained, or more likely increases, as the economy revives then all the more cability will be supplied via my atom-printing button.
I am still lusting after a desktop CNC mill, though.
Wired and GenomeWeb (subscription only) have a bit of reporting on arguments in a case that will probably substantially affect patents on genes. The case is Association of Molecular Pathology , et al. v. US Patent and Trademark Office, otherwise known as "the BRCA1 case", which seeks to overturn a patent held by Myriad Genetics on a genetic sequence correlated with breast cancer.
Here is a brief summary of what follows: I have never understood how naturally occurring genes can be patentable, but at present patents are the only way to stake out a property right on genes that are hacked or, dare I say it, "engineered". So until IP law is changed to allow some other form of protection on genes, patents are it.
The ACLU is requesting a summary judgment that the patent in question be overturned without a trial. Success in that endeavor would have immediate and enormous effect on the biotech industry as a whole, and I doubt the ACLU is going to get that in one go. (Here is the relevant recent ACLU press release.)
However, the lawsuit explicitly addresses the broader question of whether any patents should have been granted in the first place on human genes. This gets at the important question of whether isolating and purifying a bit of natural DNA counts as an invention. Myriad is arguing that moving DNA out of the human genome and into a plasmid vector counts as sufficient innovation. This has been at the core of arguments supporting patents on naturally occurring genes for decades, and it has never made sense to me for several reasons. First, changing the context of a naturally occurring substance does not constitute an invention -- purifying oxygen and putting it in a bottle would never be patentable. US case law is very clear on this matter. Second, moving the gene to a new context in a plasmid or putting into a cell line for expression and culturing doesn't change its function. In fact, the whole point of the exercise would be to maintain the function of the gene for study, which is sort of the opposite of invention. Nonetheless, Myriad wants to maintain its monopoly. But their arguments just aren't that strong.
GenomeWeb reports that defense attorney Brian Poissant, argued that "'women would not even know they had BRCA gene if it weren't discovered' under a system that incentivizes patents." This is, frankly, and with all due respect, a manifestly stupid argument. Mr. Poissant is suggesting that all of science and technology would stop without the incentive of patents. Given that most research doesn't result in a patent, and given that most patent application are rejected, Mr. Poissant's argument is on its face inconsistent with reality. He might have tried to argue more narrowly that developing a working diagnostic assays requires a guarantee on investment through the possession of the monopoly granted by a patent. But he didn't do that. To be sure, the assertion that the particular gene under debate in this case would have gone undiscovered without patents is an untestable hypothesis. But does Mr. Poissant really want the judge to believe that scientists around the world would have let investigation into that gene and disease lie fallow without the possibility of a patent? As I suggested above, it just isn't a strong argument. But we can grind it further into the dust.
Mr. Poissant also argued "that if a ruling were as broadly applied here as the ACLU would like then it could 'undermine the entire biotechnology sector.'" This is, at best, an aggressive over generalization. As I have described several times over the past couple of years (here and here, for starters), even drugs are only a small part of the revenues from genetically modified systems. Without digging into the undoubtedly messy details, a quick troll of Google suggests that molecular diagnostics as a whole generate only $3-4 billion a year, and at a guess DNA tests are probably a good deal less than half of this. But more importantly, of the nearly ~2% of US GDP (~$220-250 billion) presently derived from biological technologies, the vast majority are from drugs, plants, or bacteria that have been hacked with genes that themselves are hacked. That is, both the genes and the host organisms have been altered in a way that is demonstrably dependent on human ingenuity. What all this means is that only a relatively small fraction of "the entire biotechnology sector" is related to naturally occurring genes in the first place.
I perused some of the court filings (via the Wired article), and the defense needs to up its game. Perhaps they think the weight of precedent is on their side. I would not be as confident as they are.
But neither is the plaintiff putting its best foot forward. Even though I like the analysis made comparing DNA patents to attempts to patent fresh fruit, it is unclear to me that the ACLU is being sufficiently careful with both its logic and its verbiage. In the press release, ACLU attorey Chris Hansen is quoted as saying "Allowing patents on genetic material imposes real and severe limits on scientific research, learning and the free flow of information." GenomeWeb further quotes the ACLU's Hansen as saying "Patenting human genes is like patenting e=mc2, blood, or air."
As described above, I agree that patenting naturally occurring genes doesn't make a lot of sense. But we need some sort of property right as an incentive for innovators. Why should I invest in developing a new biological technology, relying on DNA sequences that have never occurred in nature, if anybody can make off with the sequence (and revenues)? As it happens, I am not a big fan of patents -- they cost too damn much. At present, the patent we are pursuing at Biodesic is costing about ten times as much as the capital cost of developing the actual product. Fees paid to lawyers account for 90% of that. If it were realistically possible to engage the patent office without a lawyer, then the filing fees would be about the same as the capital cost of development, which seems much more reasonable to me.
I go into these issues at length in the book. Unfortunately, without Congressional action, there doesn't seem to be much hope for improvement. And, of course, the direction of any Congressional action will be dominated by large corporations and lawyers. So much for the little guy.
Here is a brief summary of what follows: I have never understood how naturally occurring genes can be patentable, but at present patents are the only way to stake out a property right on genes that are hacked or, dare I say it, "engineered". So until IP law is changed to allow some other form of protection on genes, patents are it.
The ACLU is requesting a summary judgment that the patent in question be overturned without a trial. Success in that endeavor would have immediate and enormous effect on the biotech industry as a whole, and I doubt the ACLU is going to get that in one go. (Here is the relevant recent ACLU press release.)
However, the lawsuit explicitly addresses the broader question of whether any patents should have been granted in the first place on human genes. This gets at the important question of whether isolating and purifying a bit of natural DNA counts as an invention. Myriad is arguing that moving DNA out of the human genome and into a plasmid vector counts as sufficient innovation. This has been at the core of arguments supporting patents on naturally occurring genes for decades, and it has never made sense to me for several reasons. First, changing the context of a naturally occurring substance does not constitute an invention -- purifying oxygen and putting it in a bottle would never be patentable. US case law is very clear on this matter. Second, moving the gene to a new context in a plasmid or putting into a cell line for expression and culturing doesn't change its function. In fact, the whole point of the exercise would be to maintain the function of the gene for study, which is sort of the opposite of invention. Nonetheless, Myriad wants to maintain its monopoly. But their arguments just aren't that strong.
GenomeWeb reports that defense attorney Brian Poissant, argued that "'women would not even know they had BRCA gene if it weren't discovered' under a system that incentivizes patents." This is, frankly, and with all due respect, a manifestly stupid argument. Mr. Poissant is suggesting that all of science and technology would stop without the incentive of patents. Given that most research doesn't result in a patent, and given that most patent application are rejected, Mr. Poissant's argument is on its face inconsistent with reality. He might have tried to argue more narrowly that developing a working diagnostic assays requires a guarantee on investment through the possession of the monopoly granted by a patent. But he didn't do that. To be sure, the assertion that the particular gene under debate in this case would have gone undiscovered without patents is an untestable hypothesis. But does Mr. Poissant really want the judge to believe that scientists around the world would have let investigation into that gene and disease lie fallow without the possibility of a patent? As I suggested above, it just isn't a strong argument. But we can grind it further into the dust.
Mr. Poissant also argued "that if a ruling were as broadly applied here as the ACLU would like then it could 'undermine the entire biotechnology sector.'" This is, at best, an aggressive over generalization. As I have described several times over the past couple of years (here and here, for starters), even drugs are only a small part of the revenues from genetically modified systems. Without digging into the undoubtedly messy details, a quick troll of Google suggests that molecular diagnostics as a whole generate only $3-4 billion a year, and at a guess DNA tests are probably a good deal less than half of this. But more importantly, of the nearly ~2% of US GDP (~$220-250 billion) presently derived from biological technologies, the vast majority are from drugs, plants, or bacteria that have been hacked with genes that themselves are hacked. That is, both the genes and the host organisms have been altered in a way that is demonstrably dependent on human ingenuity. What all this means is that only a relatively small fraction of "the entire biotechnology sector" is related to naturally occurring genes in the first place.
I perused some of the court filings (via the Wired article), and the defense needs to up its game. Perhaps they think the weight of precedent is on their side. I would not be as confident as they are.
But neither is the plaintiff putting its best foot forward. Even though I like the analysis made comparing DNA patents to attempts to patent fresh fruit, it is unclear to me that the ACLU is being sufficiently careful with both its logic and its verbiage. In the press release, ACLU attorey Chris Hansen is quoted as saying "Allowing patents on genetic material imposes real and severe limits on scientific research, learning and the free flow of information." GenomeWeb further quotes the ACLU's Hansen as saying "Patenting human genes is like patenting e=mc2, blood, or air."
As described above, I agree that patenting naturally occurring genes doesn't make a lot of sense. But we need some sort of property right as an incentive for innovators. Why should I invest in developing a new biological technology, relying on DNA sequences that have never occurred in nature, if anybody can make off with the sequence (and revenues)? As it happens, I am not a big fan of patents -- they cost too damn much. At present, the patent we are pursuing at Biodesic is costing about ten times as much as the capital cost of developing the actual product. Fees paid to lawyers account for 90% of that. If it were realistically possible to engage the patent office without a lawyer, then the filing fees would be about the same as the capital cost of development, which seems much more reasonable to me.
I go into these issues at length in the book. Unfortunately, without Congressional action, there doesn't seem to be much hope for improvement. And, of course, the direction of any Congressional action will be dominated by large corporations and lawyers. So much for the little guy.
(Updated 9 Feb 2010 with new estimates of value captured by Chinese manufacturers.)
(Updated 12 Feb 2010 with cost estimates for the iPad.)
Wired's cover story this month proclaims that "In the Next Industrial Revolution, Atoms Are the New Bits". As I address this "revolution" in the last chapter of my book, and as we are thinking hard about manufacturing issues as the LavaAmp moves forward, I have a few observations about the topic.
Chris Anderson, the Editor of Wired and author of the piece, asserts as the core of his story that
In a full snark-on mode response at Gizmodo is Joel Johnson, with a blog post entitled "Atoms Are Not Bits; Wired Is Not A Business Magazine". The snark distracts from some otherwise interesting analysis, which you can read and which I will get to below. The comments on the post are unusually perceptive and many were made by people who are clearly plugged in at a professional level to the atoms-and-bits manufacturing story.
The summary of Johnson's argument is that small production runs equal small money, prototyping is not manufacturing, labor is cheap in China -- so what?, and some/all of the small production available now may be the result of oversupply due to the recession. Many of these points are probably cogent.
But even when it comes to demonstrably successful examples of bootstrapping from rapid prototyping to international sales, Johnson is skeptical. Wired's Anderson points to Aliph, makers of the Jawbone line of headsets, as an example of a virtualized business (ie heavy on creativity and IP, but with minimal capital infrastructure) that supports his case. Johnson shoots back with this:
When it comes to manufacturing labor and cost, there are a few other observations that are worth pulling into this discussion.
Around the office, we have been pondering many of these issues as they relate to biological technologies and the LavaAmp in particular.
We continue to refine the hardware design of the LavaAmp, and it looks like we have the production hardware down to 5 or 6 components, 4 of which are injection molded plastic. The labor will only be in assembly of the final box, as all sub-assemblies should all come off automated fab lines of one kind or another. All the real cost is in the design and tooling -- once we get up and running the per unit costs should be quite reasonable.
The reason that this is worth a larger discussion is that Biodesic is exploiting all of the trends and resources that Anderson writes about, however we are building not a consumer electronics widget but rather a tool that will facilitate the manipulation of biological systems. As the boundary between bits and atoms blurs in one area (consumer electronics), the resulting improvements in design and manufacturing capabilities create opportunities for further blurring the boundary between bits and atoms in biology. The LavaAmp should enable many more people to query DNA in their environment, and possibly even to play with PCR assembly of genes and genetic circuits, which is an experiment I am keen to try. Trends like this will continue to put technologies into the hands of an ever wider range of people around the planet.
If you work with this sort of technology on a daily basis, what I wrote above comes as no surprise. But that describes a very small minority of hardware and wetware hackers. Many more people will come to realize it soon. New manufacturing realities and the resulting new tools are about to contribute substantial change to our economy.
(Updated 12 Feb 2010 with cost estimates for the iPad.)
Wired's cover story this month proclaims that "In the Next Industrial Revolution, Atoms Are the New Bits". As I address this "revolution" in the last chapter of my book, and as we are thinking hard about manufacturing issues as the LavaAmp moves forward, I have a few observations about the topic.
Chris Anderson, the Editor of Wired and author of the piece, asserts as the core of his story that
The tools of factory production, from electronics assembly to 3-D printing, are now available to individuals, in batches as small as a single unit. Anybody with an idea and a little expertise can set assembly lines in China into motion with nothing more than some keystrokes on their laptop. A few days later, a prototype will be at their door, and once it all checks out, they can push a few more buttons and be in full production, making hundreds, thousands, or more. They can become a virtual micro-factory, able to design and sell goods without any infrastructure or even inventory; products can be assembled and drop-shipped by contractors who serve hundreds of such customers simultaneously.To summarize (and oversimplify) Anderson's article, the future is about innovators -- individuals, really -- having access to manufacturing for small runs that can be scaled up as needed. Design will be digital, and as the appropriate machinery continues to increase in capability and fall in price, manufacturing will increasingly be digital too.
In a full snark-on mode response at Gizmodo is Joel Johnson, with a blog post entitled "Atoms Are Not Bits; Wired Is Not A Business Magazine". The snark distracts from some otherwise interesting analysis, which you can read and which I will get to below. The comments on the post are unusually perceptive and many were made by people who are clearly plugged in at a professional level to the atoms-and-bits manufacturing story.
The summary of Johnson's argument is that small production runs equal small money, prototyping is not manufacturing, labor is cheap in China -- so what?, and some/all of the small production available now may be the result of oversupply due to the recession. Many of these points are probably cogent.
But even when it comes to demonstrably successful examples of bootstrapping from rapid prototyping to international sales, Johnson is skeptical. Wired's Anderson points to Aliph, makers of the Jawbone line of headsets, as an example of a virtualized business (ie heavy on creativity and IP, but with minimal capital infrastructure) that supports his case. Johnson shoots back with this:
It's great that hobbyists can make ever more complex items, sell them on the internet, and have a small business. But the same process used by Aliph to manufacturer Bluetooth headsets (and bear in mind it takes 80 people just to coordinate this!) is exactly the same outsourcing process used by Apple to make iPhones.Here Johnson makes a very interesting point, but is so full of kvetch that he trips over it and misses the significance of his observation. Of the 80 or so people working at Aliph, only 8-10 will be actually working directly on engineering or manufacturing. At least half the full count will be in sales, marketing, and customer service, with the rest distributed in IT, administration, and support, and finally with a few (probably 5-8) executives atop the whole thing. The interesting bit is that those 8-10 people are able to coordinate the same sort of production infrastructure used by Apple and its many hundreds (thousands?) of staff in engineering and manufacturing.
When it comes to manufacturing labor and cost, there are a few other observations that are worth pulling into this discussion.
- First up is an article from The Economist last week about the results of recent teardowns on smartphones. The numbers from iSuppli are interesting: of the four leading phones they took apart, the cost of components falls in a very narrow range of $170-180.
- Next is a blog post from Slashdot a couple of months ago pointing to stories about the value breakdown on the retail sale price for consumer electronics. The post refers to some analysis by Edmund Conway at The Telegraph suggesting the value added for an iPod assembled in China is only "a couple of dollars". On a ~$200 widget that, let's call that $2, or 1%. That number should hold for anything resembling a smartphone, which means assembly labor plus overhead (and local profit) adds only about $2 to the phone, too. (Update 2: iSuppli evidently already has done a teardown on the iPad, and "manufacturing costs" are about 5% of the total component costs.)
- Minimum wages in China range from ~$.4 to ~$.7 per hour, so that $2 in labor would pay for several hours total time. This has to be an overestimate, by a long way. I'll bet the assembly doesn't require more than a few minutes of labor per unit, with the rest going to overhead and profit. Another issue is that Apple is probably paying Foxconn and its employees above minimum wage in order to retain trained labor, keep IP inside the company, and keep down the "fair day's wage" complaints from shareholders and critics in the US. But that is just a guess, of course. (Update 1: In a February 8th column at the NYT, Roger Cohen reports that a watch manufacturer in Dongguan is pulling down 5-8% of the retail price of various brands. Wages are running $150-200 per month in that part of China. I don't think this changes the numbers I've used above and below.)
- With so little labor involved in the assembly, what other options are available to manufacturers today? At the US minimum wage, spending that same few minutes assembling a doodad in the States would add a few more dollars to the cost -- not so much. I'd pay that difference to know something was made here in the States. The overhead on the factory is another matter, though. It could be that paying for the real estate and the rest of the capital equipment makes assembly in the US uncompetitive. (Though it would be the construction of the factor and the initial installation of the equipment that made the difference in cost -- the material cost of the building and the equipment would be roughly the same in China.)
- That said, there is plenty of industrial land in Detroit laying fallow at the moment. Tax breaks to build assembly plants in depressed US cities could probably bring a lot of those jobs home. Yes, they would be minimum wage, but there are a lot of people here waiting for any job.
Around the office, we have been pondering many of these issues as they relate to biological technologies and the LavaAmp in particular.
We continue to refine the hardware design of the LavaAmp, and it looks like we have the production hardware down to 5 or 6 components, 4 of which are injection molded plastic. The labor will only be in assembly of the final box, as all sub-assemblies should all come off automated fab lines of one kind or another. All the real cost is in the design and tooling -- once we get up and running the per unit costs should be quite reasonable.
The reason that this is worth a larger discussion is that Biodesic is exploiting all of the trends and resources that Anderson writes about, however we are building not a consumer electronics widget but rather a tool that will facilitate the manipulation of biological systems. As the boundary between bits and atoms blurs in one area (consumer electronics), the resulting improvements in design and manufacturing capabilities create opportunities for further blurring the boundary between bits and atoms in biology. The LavaAmp should enable many more people to query DNA in their environment, and possibly even to play with PCR assembly of genes and genetic circuits, which is an experiment I am keen to try. Trends like this will continue to put technologies into the hands of an ever wider range of people around the planet.
If you work with this sort of technology on a daily basis, what I wrote above comes as no surprise. But that describes a very small minority of hardware and wetware hackers. Many more people will come to realize it soon. New manufacturing realities and the resulting new tools are about to contribute substantial change to our economy.
