Zymergen has produced a billion pounds of bio-based products, and theyre just getting started. CEO ... [+] and co-founder Josh Hoffman sat down with me to talk about the future of the bioeconomy.

In their 2019 book The Making of a Democratic Economy, Marjorie Kelly and Ted Howard pose a provocative question: Why not use the U.S. Federal Reserve System to buy up all the nations oil companies and close them down? The goal: to dramatically decelerate climate change and jump-start policy and investment in sustainable energy.

This may sound like an absurd idea with a hefty check (the top ten U.S. oil companies are valued at about $500 billion). However, the U.S. government has committed to spending over $6 trillion on the coronavirus crisis, and that number could go higher. What if we spent the same amount to prevent the climate crisis?

I sat down with Josh Hoffman, the CEO and co-founder of Zymergen, to ask him this and other questions to get his perspective on the emerging bioeconomy. If you havent heard of Zymergen before, it manufactures microbes for Fortune 500 companies. Utilizing a combination of biology, machine learning, and automation, its products range from materials (see my earlier article about the novel material Hyaline used in the electronics industry) to agricultural solutions, to personal care products.

Can we talk about the oil industry? What do you think of the bold idea to buy out the industry in California and pay them to simply leave the oil in the ground?

Its important to take a historical perspective. Human welfare has increased incredibly because of the ingenuity of cracking and using hydrocarbons. Modern materials, modern medicine - all these things are outgrowths of the petrochemical industry. I think its important to recognize that.

Its also important to recognize that these advances in human welfare have also come with a list of problems we now need to solve. For example, increased agricultural productivity means that we can feed the world, but it also means that many people are now morbidly obese, and the amount of people suffering from diabetes has increased to a point at which it never was before. And there has to be a fierce urgency to solve these problems now.

Our planet is on fire. Climate change is the biggest existential threat. And in a moment like this, with COVID-19, it is easy to forget all of these problems.

I love the poetry of keeping the oil in the groundit's a wonderful idea to think about. But it is wholly impractical. So many things we need and use today comes from oil and gas, and I think we need to figure out a transition. The way we think about transition at Zymergen is to give people better products.

Here is a real lesson from the first-generation biofuels companies: the market is not going to pay you for the sake of being green. But they will pay for something better. So our approach is, How do we make things that are better and disrupt the economics of petroleum?

HyalineZymergens new bioelectronic materialseems like a good example of this. Can you tell me why its better than its conventional counterparts?

First, lets compare petrochemistry to biology. If you crack a hydrocarbon, you will get around 15 intermediates, maybe a couple of hundred base monomers, and a limited number of polymers.

Biology gives you orders of magnitude more, and those chemicals look different.In manufacturing, think of petrochemistry like a black & white silent film, and biology like multichannel, live streaming, interactive entertainment. Its a complete step-change in not just the quantity but also the quality of products you can make. Biology lets you solve problems we couldn't even imagine solving with conventional chemistry.Its the most powerful manufacturing platform on the planet.

Now, lets look at Hyaline. Its a colorless film that is used to make electronics like smartphones, laptops, watches, and televisions. It is a fundamental product innovation in a $10 to $12 billion market that hasnt seen this kind of innovation in 50 years. Its a better product that allows a greater density of printed flexible circuits, better touchscreens, and more resilient products with superior properties, in one of the most demanding markets on the planet. By starting with biology, we are able to do things that were unimaginable before.

So Hyaline is a completely new molecule that you designed?

Hyaline is the film, and the film is based on a proprietary monomer. But again, if I show up at a cell phone manufacturer and tell them I have an amazing biology, theyll say they dont care. Even if I say I have an amazing monomer or polymer, they wont necessarily care. But if I have a film that solves a problem, then I am meeting the customer where they are. We have to solve their problems. For anyone to make money on a product, you have to sell them something that solves a problem. No one cares about the molecule itself, or whether its made with biology or not. They care about the problems it solves. Thats how biology will disrupt petroleum.

If you were on Gavin Newsom's task force looking for medium to long term policies to set California on the right path for the next 50 years, what policy recommendations would you make to him?

First, I would continue investment in the UC (University of California) system. The Bay Area has top universities that are truly world-class and you cannot underestimate the value of that. I think it is important that the state does not lose its distinctiveness that comes from having these top universities.Another might be a state-mandated purchasing of bio-based goods, like the USDA BioPreferred program. The goal of a BioPreferred Program is to create market incentives that encourage manufacturers to use sustainable goods in their supply chains, and also spur innovation by reducing market uncertainty. Imagine that the Department of Education needs to buy carpets. Where theres a bio-based carpet that performs as well or better than conventional carpet at a comparable price, the BioPreferred Program would mandate purchasing the bio-based product. This would be a simple, effective way to help establish the biomanufacturing industry. A California BioPreferred policy is something I would love to see, it sounds like a wonderful idea.Third is housing costs. It is very expensive to live in this area and hard to get people to come work here. I especially worry about young people being able to come and work here.

What do you think of Marc Andreessen's piece, It's Time to Build, and the role of the VC community in the bioeconomy specifically?

I think there is a tension between what Marc writes and reality. VCs look for a five-year path to liquidity. Five years to invest, five years of return, and one year of extensions, so eleven years at most. That timeline is tough for some of the markets that Marc is talking about. I think its an admirable spirit, but I d0nt know what you do with it.

If you want to build stuff, you need to know something about the real economy. You need to make sure you have time horizons that allow you to invest, and that youre not necessarily investing against previous patterns, like seeking the Uber of haircuts or the SAS of human resources. There is a wall of capital out there, and we need places to put the money. But we need to get away from the recursive problem of I need to see a path to exit in five years.

Take Salesforce as an example. Marc Benioff created the most successful enterprise software company of the decade. Do you know who the VCs were? Nobody, because Marc couldnt get anybody to write the check. It was an unlikely idea with a very different model. I believe the same is true for the bioeconomy: big disruptive platforms tend to be stuff that falls outside of what mainstream venture firms do. We are all comfortable doing what others have done, but its pretty lonely to be out there doing your own thing.

What advice would you give to somebody trying to raise capital in the bioeconomy?

What we did well at Zymergen was to find ways to generate revenue early. Validate your product or service early. Also, be sure to play the long game. This is a slow and steady race. Don't hype yourself up too much and raise money on unsustainable plans.

If software is eating the world, biology is going to rebuild it. Its going to take time rebuilding the world with biology, so dont go out there saying you can do magic.

To learn more about the growing bioeconomy, read my previous articles on McKinseys $4 trillion bioeconomy report and the five sectors set to be disrupted by synthetic biology.

Follow me on twitter at @johncumbers and @synbiobeta. Subscribe to my weekly newsletters on synthetic biology. Thank you to Stephanie Michelsen and Kevin Costa for additional research and reporting in this article. Im the founder of SynBioBeta, and some of the companies that I write aboutincluding Zymergenare sponsors of the SynBioBeta conference and weekly digest heres the full list of SynBioBeta sponsors.

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How California Can Lead The Global Bioeconomy: A Conversation With Zymergen CEO Josh Hoffman - Forbes