>>> 25 Nov 1998 04:39:05
Subject: industry's driving forces
From:   Anatole Klyosov <aklyosov@WARREN.MED.HARVARD.EDU>

The current state of our "industry's" discussion reminds me a similar-in-kind nation-wide discussion that took place in the former Soviet Union in the 1960-s, which was quickly coined that time as "Physics vs. Lyrics".

Let's take a look at our discussion, aside from that on technical issues. Sides talk past each other. Money is declared man-made and artificial anyway (this surely helps a biotechnologist to create a competitive product and get it out to the market).  Since it became completely counterproductive to continue in that manner, let me step back and remind the initial question.

The initial question was - how to persuade a reluctant investor to put money into your product/process? Particularly, when the product/process is "better" (apparently, the whole point was that it was not specified - as usually - what "better" means, and who actually defines that the product/process is "better", and "better" compared to what?)

In the context of this forum, it seems important for the biotechnologist (biotechnologist - is a collective term here) to define clearly what means "better".  It might be a faster process compared to the conventional one.  It might be a purer product (or that of a higher quality) compared to the conventional one.  The process (scaled-up) can create less wastes compared to the conventional one.  It can use a principally different ("better") raw material. It can use biocatalysts instead of strong acids, or whatever. You name it.  The first point was - do not bother the investor with your interpretation why the process is better.  Generally, it is a wrong criterion.  "Better" can be at the same time cost-prohibitive. The investor won't listen, unless you tell him how profitable the process/product will be.  And you better be specific.  Now comes the second point - do not mix "profitable" product and "less expensive" product (compared with the conventional one).  This is a common trap for people in academia.  A "less expensive" product can require huge capital expenditures.  If it takes 20-50 million dollars (common figures) to build a plant to manufacture a product which is (potentially!) 2-cents-a-pound less expensive than the conventional one, you will have a hard time to find an investor.  Just try to figure out how many years (or decades) it will take for the investor to recover the initial investment. Just to keep money in a bank could be more profitable for him - and with less risk involved. In response, an argument was thrown into the discussion: money is not everything.  But who said the opposite?? Surely money is not everything.  I bet that the investor's wife and kids are more important for him than his money. Is it an argument in the discussion? Let's put it that way: if your product/process IS competitive, you have much better chance to succeed, compared with an opposite situation.

Now, a practical question: what if it is not competitive -yet? Or it is heaven for the environment compared with the current polluting conventional product, but is twice as expensive? Well, tough luck. Do not expect the investor to "put the environment before his profit". Slim chance. Use a different mechanism, that is in place - but takes TIME, a lot of it. Go to your congressman, or whoever is your link to the public money (still money - just the pocket is another one) and prove that your product is good for the society, though not financially beneficial - yet (overall it might be beneficial, but it depends on who counts). Good luck. It might work. Typically, though, it would take MUCH longer time to get the product through bureaucratic channels, to get the public money allocated, to get through heated political debates between proponents and opponents of your product, etc. etc. You might be even lucky to see your products out in the real world while you are still alive - provided you will live long enough.

With a really competitive product/process, it can be moved through a free market mechanism MUCH faster. Though, of course, there are exceptions. Some vested interests might be involved. Tough luck. Use a combination of public support along with the free market mechanism. There can be plenty of possible scenarios, but we better be aware of many of them. However, to declare that money is man-made and artificial is simple, but not very constructive. Not in biotechnology, anyway.

One more example of an apparently misleading "concept" can be given here. It was said in the discussion that driving forces in the "rural industries all over Europe and North America with over 600 farms based digesters" are different from those in "mega industries". While in the "rural areas they are about environment, in the urban areas they are about profit". It was even termed as "the rural slogan" and "the urban slogan". Rhetorics, rhetorics again. Either I did not get some deep thought (sorry, if so), or we try to compare apples and oranges here. I, like many people, also invest my personal money into maintaining good environment on my backyard and around, but I do not call it "the rural slogan". It fact, this would rather have been "the urban slogan", since I live in a city. Naturally, farms "all over Europe and North America" do care about their environment as well. These "slogans" sound like a game of words, no more.

It appears that we are kept diverting from principal issues of this forum: to share knowledge in the relevant technical areas outlined by the key papers, to exchange views on how to get the products out to the market (which is the ultimate aim of biotechnology - by definition), how to reduce pressure on the environment, how to minimize wastes from the processes that we are discussing here, how to improve efficiency of these processes, etc. Declarations on how important is the environmental protection in general and how immoral is to pollute the nature - are so obvious that it is a pity to waste our time on that. That surely is an easy subject to discuss, but why when nobody argues?

Anatole Klyosov