127. Chain Reaction: Orchestrating BioInnovation Without Missing a Beat – with MessagingLab’s Erum & Karl

[00:00:00] Erum: if you really wanna win at this,you have the ecosystem orchestration in place before you raise money, because that way you just have. Funding to fuel the idea,

[00:00:12] Erum: Hey Carl, how's it going?

[00:00:14] Karl: things are going great. it's been a really busy week and, , you and I are both gearing up to the big conference that we're going to, next week. So as listeners, tune into this episode. We'll be three or four days away from being on the ground in San Jose at the Symbio Beta Conference. What's going on with you?

[00:00:32] Erum: Yeah, it's been busy trying to get all of our work done and then get in the mind frame of SynBioBeta. There's going to be so many people that we know, which is going to be fun to see them face to face. 'cause oftentimes they're just, On a Zoom call and that's great too, but to see people in person, it's gonna be a lot of fun.

[00:00:51] Erum: And what's new?

[00:00:52] Erum: what's going on with these, companies? A lot of organizations. What has been growing? I'm excited for new topics too. It's been, over a year since really we've been using chat g, pt, or has been longer than that. I don't even

[00:01:05] Erum: know.

[00:01:05] Erum: Time's an

[00:01:06] Karl: I think it's been longer. yeah, it is an illusion because I'm gonna step back for a second and say maybe two years ago we were at a conference where everyone was talking AI as if it was this brand new big thing. And we were like, we're not gonna talk about AI anymore

[00:01:21] Erum: Yeah.

[00:01:22] Karl: you shouldn't talk about being an AI company. And now Wow. How things have changed. Every company's an AI, AI company

[00:01:29] Erum: Yeah, but again, you don't have to say you're an AI company. You could just talk about what the hell you're doing. How's AI helping? yeah. So yeah, very busy. But what I'm really excited about is introducing people. It's something that you've been doing really well, I love doing as well. And it's been very valuable for us and also for the people that we bring together. it's not simply an introduction saying, Hey, person A, here's person B, but it's like, Hey, person A, person B does X, Y, and Z and they're so amazing and this is how it can help you do all the things you do. A. So that's a lot of fun and we call this value chain creation, value chain syndicates, orchestration. But what does that mean to you, Carl? What is orchestration?

[00:02:18] Karl: Yeah, anybody who's listened to the podcast before has heard me say orchestration in biotech is more important than the science right now. And believe me, the science is impressive and it's very, very important and it's gonna continue to advance, actually faster than it ever has.

[00:02:33] Karl: so what I mean when I say orchestration is I'm not talking about sales, I'm not talking about business development. If you wanna get more into how to attend a meeting and how to meet people at meetings, go back and listen to our episodes from last year and we'll put 'em in the show notes.

[00:02:48] Karl: But orchestration is really building scaffolding around a deal.

[00:02:52] Karl: it might look like marketing, but it's really amplifying the signal about your company inside of a closed ecosystem.

[00:02:59] Karl: What does that really mean? it means that you as a company you as an innovator aren't just dealing with a potential customer, but you're dealing with the ecosystem that's around them.

[00:03:09] Karl: So if that's a ingredient producer that they sell to you, you've got a relationship with them. If it's a big company, you maybe have a relationship or you have some visibility across the organization. Even if that's not gonna be where you end up in the long term, but you wanna be able to have the multiple people, the multiple stakeholders on your side as you go in to do the deal.

[00:03:32] Karl: And ecosystem marketing isn't lead gen. It's really like designing influence. Back when I worked, in public relations, we would talk about the circle of influence. if you've got a person that you're trying to target, that person is often very hard to reach. But it might be much easier for you to go to the five or 10 people that surround that person, like a board of directors that are advising a CEO.

[00:03:54] Karl: this is something that you and I do a lot of. we just don't really talk about it so formally, but you and I have helped founders meet new colleagues. we've helped them meet manufacturing partners, we've introduced people to investors, and in addition we've built category or industry maps. one for example is in the beauty space.

[00:04:14] Erum: Yeah, exactly. it's looking at the whole industry, So, yes, sales is one activity, and when you're describing the influencers and the decision makers, that is a part of sales too. that's within the company, but then you're talking about an entire industry. So who has relationships already with other companies in your ecosystem? So in the ecosystem, you talked about ingredients. So we can use, red dye for example, like who's producing that for what industry. And then who are all those people that will continue to take that initial ingredient and get it into the market. so are all those people? when you're thinking of that, you have to have empathy and consideration of their needs just as much as your own company's needs. because if your partners win, then you win, If they're selling your product that's integrated into theirs wonderful, kumbaya. We're all friends here.

[00:05:08] Erum: So, it's a great pull through, thinking of all the innovators, we know how to get to market. Yes. Some of them are direct to consumer. That's another conversation. But this is really about, scaling up and where to start. because, we meet a lot of founders. Me, a lot of these companies, some of them have been around for a while and they have trouble commercializing.

[00:05:25] Erum: Talk to us about that. Carl, you've seen this why do you think that some of the biotech companies beyond pharma have issues commercializing.

[00:05:32] Karl: there's a lot of challenges. you might have an innovation at your company it's hard to raise money, it's hard to get started, number one. But then to think about, an ingredient or a product that could have really big outsize impact, and can really transform an industry, you're probably gonna be looking at the really big players in your industry, and I. You could be thinking, oh, well we're gonna build this company and we're gonna displace them. That could be one approach. A very challenging approach. But the other approach is how do you partner with them and leverage them as you begin to scale productionFor end consumers.

[00:06:06] Karl: But biotech generally outside of biopharma, has struggled. I mean, we could look at what happened, in the early two thousands with the whole biofuels, issue. So much money poured into that and we use it now as examples of an industry being over invested in and then, traditional industry, not realizing that traditional industry already had trillions of dollars of infrastructure built and going up against that is gonna be very challenging. But biotech, typically has had long timelines, manufacturing regulatory hurdles you have to deal with.

[00:06:41] Karl: And this is something that is well known, The National Commission on Emerging Biotech just put out a report talking about the need for private industry to help with this. and we can use examples that we know very well of people who've been very good at not only, moving through this process very quickly, but also verticalizing their industry, meaning they control every step of the way. Andthat being very attractive to potential acquirers.

[00:07:54] Erum: Yeah, I mean the verticalizing is very interesting can you share an example? Was it verticalized from day one or did it become verticalized? Did they create a value chain with other partners just to get an MVP up? then started verticalizing Talk to us a little bit more about that.

[00:08:09] Karl:

[00:08:10] Karl: Yeah, I mean, the company that I'm thinking about that, , really controlled this process is K 18 Hare. And we've had Suveen Sahib the co-founder on the podcast, last year and we should have 'em on again to talk about how things have progressed. But K 18 stands out because they controlled everything and then over time, they controlled their distribution 'cause they went out direct to their customers, which is at first stylus. But then eventually they were showing up in places like Sephora and Ulta Beauty, which increased their distribution. But on the manufacturing side, to this day, they control everything. they've got a manufacturing plant that designs the molecules with them. They've got formulators. And like I said, we should have Suveen come back on to really talk about what advantage, verticalizing and controlling their ecosystem has really given them.

[00:09:00] Karl: k eighteen's orchestration really happened on the marketing side. The manufacturing side, they verticalized. But on the marketing side, it was an amazing orchestration of different stakeholders. K 18 brought together stylist salons, retail buyers, beauty influencers to have a very strong message about biotech and beauty. That's why we love them. Because they didn't hide the biotech. They put it front and center, but they really thought about who are all the players and how do we get them involved? How do we, show up where they are and how do we bring them all together to talk about biotech and beauty? yes, of course Kte went through, but they weren't just talking about. Their product. They were talking about hair science, which, we've helped them in the beginning, with the science communications.

[00:09:46] Erum: So it was, such a great example of marketing orchestration, but. We are very interested in manufacturing orchestration because see the challenges of the transition from depending on petrochemical use and producing goods and being able to use biology to produce goods. So what is. the challenge? Or what's missing? And what we're seeing what's missing is that there needs to be this concept of value chain syndication of commercial orchestration and we're using this word, I know orchestrations use a lot in AI as well to talk about some backend stuff. so if you're an AI person and you're like, why are they talking about orchestration? We are borrowing that word. To talk about orchestrating manufacturing, across different players starting from an innovator all the way to the big incumbents. whether that's CPG or pharma or whoever has the distribution to the end consumer. how do we think about that and how do founders think about that? How do other people think about that? And it's really taking a step back away from, the one company, the one thing you do every day, and looking at all the players. And I think for us it's been, easier to think about. I think because we work across various companies. We talk to so many different, amazing people, whether they're, investors or founders or scientists and across different stages. And we start seeing this and so we're like, okay, let us be your mirror to where you fall in a value chain.

[00:11:19] Karl: Yeah. And what's interesting is when you look at the people that we talk to holistically, it becomes very clear for certain innovators where They need the help. It could be on the Biomanufacturing side. It could be on the investment side. It could be developing the relationships with the stakeholders at a bigger company. Like you mentioned, red Dye being banned. so there is this scramble for all these big companies that use dyes to find alternatives. But we're very lucky in that we know a number of companies that are producing dyes, biological dyes. Alternatives to petrochemical dyes. And their challenges are all, different kinds of challenges.

[00:11:59] Karl: Again, it's like some are scaling, some need scaling help, some don't have manufacturing in place. Some just need get to get exposure to the bigger companies that are gonna end up buying their products. And along the way they have the opportunity to start, developing those relationships. A lot of times that's with a small deal.

[00:12:18] Karl: what does that deal look like when you're a small company and you did this when you did your startup, you have a small deal and actually it happens on the messaging lab side too. We'll work with a big company and they just wanna see, can we trust these people? They talk a good game will they produce for us? How does it work? and we've introduced a number of companies to big players. What does that small deal look like?

[00:12:38] Erum: Yeah. So, we call these seed deals. So it's not seed funding for you to use but these are seed deals. And I know some people might think, all right, are you talking about piloting, is that one way of it? Again, this is not about that, This is not about piloting, it's about thinking that, all right. the big shift that we need to do, We need to create tons of ingredients to go into multiple, tons of product. So talking about that, talking about the big picture, and say, this is how we will make the shift.

[00:13:06] Erum: then you scale it down to a seed deal, like, all right, let's create a strategic deal that fits within the budget and risk tolerance of a mid-level decision maker. let's just get started now, but we know we're going to be working towards this big deal. it's going to grow into something bigger. So this isn't just about revenue. This is about relationship architecture. So try before you buy what you're talking about. And it's relationship architecture across the value chain. So, you talked about, red Ds are one that we, come back to because we just see that, that there's this great opportunity. let's talk about red dye in food. So, there's multiple steps in the value chain. 'cause you have the innovator who's making it and we know a lot of great companies that are doing it. then you have the people that are making the product and sometimes that's not the people that are selling the product because when we're thinking about red D food,

[00:13:54] Erum: so Red Dye 40 is in Fruit Loops, and Fruit Loops is owned by Kellogg. what we don't know Kellogg very well, so we don't know what their infrastructure is. So we're just going to use a hypothetical situation based on other CPG big food companies that we know. and we don't put Kellogg under fire. They already are under fire,

[00:14:11] Karl: for the use of

[00:14:12] Erum: Yeah. Yeah. Yes, yes. So, sorry. but person that's producing this cereal is working with multiple vendors to source the sugar, to source the corn wheat or I don't know what the basis of fruit loops are anymore. I used to love that cereal girl. And then, manufacturers to make, the actual fruit loop, the point is there's multiple people. how do you as an innovator look at all those pieces and then go to Kellogg and say, Hey, look. I know that this is how it's manufactured I already talked to these people and I know they need to make the transition to use my product and my product-- my biological red dye can be plug and play and we can do the small deal. We can just do a limited edition and focus on the Brooklyn market first, please. And we're just gonna do a limited run. everyone signed up. So we've done the lift. All you have to do is say yes. So that's a full orchestration, but we're saying like, Hey look, we can do the change. Everyone's on board. We're gonna start small. It's within your budget and risk tolerance. 'cause we're saying a limited run. Let's do this. And if they say no, then there's another issue.

[00:15:27] Karl: Yeah. and what this does is, big companies tend to be very conservative. and they tend to be risk tolerant, and yet on the other hand, they wanna be innovative. So they're always looking for innovative solutions and doing the smaller deal, really de-risks the bigger commitment that they're gonna have to make down road.

[00:15:44] Karl: innovators need to put themselves in the shoes of the big company that is on the one hand risk intolerant, but then on the other hand, hungry for innovation. When you get the seed deal, you have to be able to execute flawlessly. to make sure that you deliver what you promised.

[00:16:01] Erum: but at the same time, you also need to do ecosystem marketing, which is you're surrounding the people that are involved in this deal, however many they are, with the air cover, that's gonna help you continue to sell this as you go up the value chain.

[00:16:15] Karl: so Carl, how does one actually architect an ecosystem?

[00:16:19] Karl: I mean,

[00:16:21] Karl: this is something we do every day. Erum, you and I talk about it. We live and breathe this. We spend time introducing founders to each other so that if a founder of a company needs help, for example, with Biomanufacturing, we can introduce them to people on the Biomanufacturing side. If they need help or strategy to develop products that are just gonna plug and play into existing ecosystems, we can help find that out.

[00:16:44] Karl: and we've also been very successful at getting startups in front of really big companies, not for pitches because no one really wants to be pitched, but to really co-design future supply chains. And that's where, these days today, being able to look at a supply chain, localize it, regionalize it, make it something that is much more robust.

[00:17:03] Karl: This came out of Covid where people realized how fragile supply chains are. but Erum, what do you think this feels like? this is different than normal business development. What does it feel like to you when we're putting these people together?

[00:17:16] Erum: Yeah, we're creep. a basketball team, you know, we have to have all these players that are working together to get a shot in the basket. I don't watch a lot of, basketball. So a shot through the hoop or I don't know, um,

[00:17:32] Karl: It

[00:17:32] Karl: is

[00:17:32] Erum: slam dunk, you know. You wanna get them?

[00:17:35] Erum: Yeah, there we go. That's better. One get can a basketball team so they have a slam dunk and replacing red 40, you know? who is gonna, okay, I'm gonna stop with the basketball references

[00:17:45] Erum:

[00:17:45] Karl: it. Keep it real.

[00:17:46] Erum: Yes. But you know, it's bringing people together, creating a team, a team of companies, a team of companies that excel in a part of this supply chain's one word. We also use supply networks. because, it makes it seem like okay, it's pretty linear, but there's, it's not, sometimes it's not, if you're creating a cereal, you're gonna have multiple ingredients coming from different places, and maybe an ingredient has to be processed a couple more times before it gets to you to actually And maybe if you're Kellogg, you're not gonna even see any of this, if. You have vendors that actually make it for you. so it's bringing all these people together and creating that team. So we're all working together. So how do you architect that team?

[00:18:28] Erum: That is what, were just talking about, and it's to be able to sketch it out, who do you need to talk to? And having that core mission of saying we're going to replace red 40. And here's everyone that is involved in producing processing, using, integrating, selling, testing, eating red dye 40.

[00:18:51] Erum: Then you start your ecosystem marketing. 'cause you have that message, that mission, and you have the thing, you have all the players. again, in our view, we know the players, so, to be able to say, this is the mission.

[00:19:05] Erum: Let's get everyone in the room and play and do this. This is what I think is the beauty of being able to. Talk about and share the concept of ecosystem architecture orchestration. We'll come up one word, but we're messaging lab. We have lots of messages to share.

[00:19:23] Karl: I, think it's also just worth pointing out that this really requires founders to think differently. I know that my habit is to think about things in terms of business development and, how do you move deal forward with one person? I'm trained as a traditional sales person.

[00:19:37] Karl: I had to learn how to sell. But this really is something that many founders. Are gonna have to learn as a new skillset. they have to become their own advocates and deal architects. They're not trained for it because they're usually laser are focused on their company. But they should understand that if you're selling B2B and you've got something that a bigger company is potentially gonna want, then you really do have to have this ecosystem built and you become the backbone or the center of this. and we recently had Veronica Breckenridge on the podcast. she's an example of this because they're bringing different people, different players to the table, to provide a vision and also resources. when it comes to scaling up biomanufacturing and putting innovators together with chemical engineers and biochemical engineers to make it easier to scale up. And I think it's gonna be really interesting to watch how, first bite and, bio well, do this level of orchestration because it's the same thing that we've been talking about and we're looking forward to doing it with them as well.

[00:20:39] Erum: Yeah, and I'll also mention, I mean. first Bight is a venture fund and BioWell is an accelerator. and they're very unique think they're doing what founders assume that VCs an accelerator do. But oftentimes they don't do this level of. Creating deals for the founders in their portfolio or helping to do this? at least, we know hundreds of investors, and only a handful of them that we know of actually, help founders create the deal, not just make an introduction. VCs for sure. For sure. Make. Lots of introductions, and that is hugely valuable. But then to sit at the table when a deal is being crafted, it would be great to see VCs do that more. But again, you VCs want speed. they're doing their own thing. They have their own mandates, and, maybe, if they have a big portfolio, they can't. Pick favorites and do these things, So, it'd be cool to know if there are VCs out there that have a business development, arm for their portfolio companies. And if you are that VC or know a fund that does that, please let us know. It'd be cool to talk to them and be like, okay. So how do you help your portfolio companies create deals across an ecosystem? Maybe niche ones do. I like, there's niche VCs, they're like, all right, we are focused on developing biochemicals. And that is what first Bight and BioWell do. So, you welcome first bite and bio. Well, we talk about you all the

[00:22:05] Karl: Yeah. '

[00:22:05] Erum: 'cause we love you guys. So,

[00:22:07] Karl: so why are we talking about orchestration right now, Karl why we felt compelled to create this special episode before we go to Ziba Beta, where we're going to meet all different types of players. but

[00:22:18] Karl:

[00:22:18] Erum: why this moment, what's going on in the world?

[00:22:20] Karl: So politically and economically we're moving towards a much more decentralized economy, which really allows biomanufacturing to shine. Biomanufacturing is seen as critical infrastructure. the Department of Defense sees it that way. This report that just came out from the National Commission on Emerging Biotech sees it that way. National security and supply chain resilience aren't just buzzwords. They are really becoming budget lines. It's something that people are talking about and we've got tailwinds for this. They're geopolitical. You've got the tariffs. They're economic, people want to be able to buy things that are not crazy expensive. And from a. climate point of view, we wanna stop shipping things around the world. and there's a continued increase in bio-based innovation. So the demand for bio-based innovation continues to increase, but it's not gonna translate to adoption unless there's a lot of things in place, including this idea of orchestrating, not just deals, but orchestrating ecosystems

[00:23:20] Karl: but Iam, we're talking about this and we see the downsides of it too. what are the risk? where do people fail at this and why?

[00:23:28] Erum: yeah, I mean the risk is it doesn't get done. The risk is the deal doesn't get done and everything falls apart and you're just not able to. I. Move your company forward and the innovation doesn't get into the hands of the people. So really, some of the challenges are going to be about messaging.

[00:23:47] Erum: Of course. we talked about, again, we're using this example of Red Dye 40. it's very clear. Problem. You're not saying, oh, I, do enzyme engineering. we, create novel molecules and we have this algorithm that does x, y, and Z.

[00:24:02] Erum: No, you're saying we're gonna use all those things to change to make a very specific change and we're gonna change fruit loops

[00:24:10] Karl: I think the other one is seeing legislation that comes down, from the EU where they're banning microplastics. that's a huge deal because there's all sorts of ingredients that clothe materials, sheds, plastics and micro beads, for example, are typically made of plastic. the EU is legislating that. You cannot longer use microplastic beads in your products. So there are companies that we know very well shout out to our friends at BioWeg who are developing, these bio-based alternatives tomicrobeads. so there's a lot of opportunity, but that, again, is gonna require this orchestration, not just among the end buyers, but even with users.

[00:24:49] Erum: another risk is that innovators have to move on relatively fast timelines. You have limited amount of money. you've gotta move as quickly as you can so you're looking for deals that are gonna allow you to stay in business longer and building these ecosystems isn't like a 12 month exercise. It could be a five to 10 year arc. That's a lot of time for a startup, especially when you've got investors breathing down your neck 'cause they want an exit.

[00:25:13] Erum: if you really wanna win at this, is that you have the ecosystem orchestration in place before you raise money, because that way you just have. Funding to fuel the idea, That would be the wonderful

[00:25:24] Erum: thing. That's a dream. but you also have to manage expectations and there's a whole nother conversation about is venture capital the right type of money to be used for the shift in the bioeconomy you talked about private capital that's needed or, if we're talking about large cereal companies and they need to change their food dies, they needed replace red 40, How long will it take? So you have to manage expectations across the board. And you talk about the five to 10 year arc and you say, Hey look, this isn't gonna happen in a year, so let's get started now.

[00:25:57] Erum: but the reward outweighs the risks here when it comes to ecosystem building, right? and there's just so much opportunity. We talked about red dye 40, we talked about microplastics, but there are so many ingredients that need to replace as we learn the effects that they're having on the human body, on the environment. there's a lot of orchestration that needs to happen. That's all I'm saying.

[00:26:20] Karl: Yeah. I mean, you're totally right, Erum, we hear people talking about, biopolymers, packaging. We've had a number of people come on and talk about packaging. we've talked about

[00:26:29] Karl: bio surfactants, biopolymers coatings for clothing, ingredients that most people never think about that need to be replaced because as you said, they're not healthy for humans. They're not healthy for the environment.

[00:26:41] Karl: oh, and Palm Wild. palm oil is a big one, and we had SheraTicku of C 16 on the podcast very early on, but we've had other people talk about palm oil replacements because it is such a ubiquitous ingredient. So there are so many opportunities for, innovators working on these ingredients to create these ecosystems and supply the big companies that are using these ingredients every day.

[00:27:04] Erum: Mm-hmm. Mm-hmm. Well said. Well said. So. As we wrap up this episode, a special episode talking about value chain syndication, orchestration, ecosystem building. what are some final reflections, Carl?

[00:27:17] Karl: like I said earlier, it's not about sales. It's bigger than sales. , sales is a part of this, and it's not about marketing. Marketing is a part of this. It's really about creating, you said, ecosystems, is about architecting these things.

[00:27:30] Karl: If you wanna lead a category, you can start doing this today by putting the people together. This is something that is needed.

[00:27:37] Karl: When we tell founders to do this every day, they should be putting people together, bringing different points of view together and building the ecosystem themselves. And if they don't do it, that's something that we can help with.

[00:27:48] Erum: Right. Yep. That's amazing. You gotta get the founders aligned with the incumbents, with the vendors, with investors, I mean, we definitely need to do, a whole episode on different types of financing ' cause investment is not the only way and there are other exciting ways. we have friends in finance that have been sharing some very interesting ways to, fund these types of activities, , to fund projects that are commercial in nature. So, we love talking about this. If you're thinking about how you can get your innovation into the hands of the people. Or if you're at a large company and you're looking at how do we bring innovation in? How do we get our vendors aligned. How do we get our supply chain networks together? Talk to us. I mean, another thing too is that it's easy for us because we're not a part of those companies. We know that it's easier said than done for a founder to do something like this because you have your company and your, singular focus on the company, but to be able to step out is challenging. you can do it. but talk to us. we have the. 30,000 foot view about what's going on in the bioeconomy, who's doing what, who needs what, what are different governments doing, what's coming around the corner? so let's talk, we enjoy talking about it clearly. We just did a whole episode. And yeah, we hope to see you at Sin ba Beta.

[00:29:16] Karl: Yeah. let's talk.

[00:29:18] Erum: Yeah, you know how to get to us. Everything is in the show notes. Just click on the episode and you're gonna see our contact information. you'd be surprised, people do reach out to us and we do reply and engage and we love you guys. So thank you for listening to the Grow Everything podcast.

[00:29:36] Karl: We will talk to you soon. That's the pod

[00:29:38] Karl: ​