Edward Shenderovich: That turned out to be completelyrevolutionary because they immediately showed how millions of proteins canfold. It has accelerated development in biology by decades.

Daniel Darling: Welcome to the 5 Year Frontier podcast, apreview of the future through the eyes of the innovators shaping our world.Through short, insight packed discussions, I seek to bring you a glimpse ofwhat a key industry could look like five years out. Im your host DanielDarling, a venture capitalist at Focal where I spend my days with founders. Atthe very start of their journey to transform an industry, the best have adistinct vision of whats to come, a guiding north star theyre building towards.And thats what Im here to share with you. Todays episode is about the future ofbio manufacturing. In it, we cover the emerging $4 trillion bioeconomy, naturesability to manufacture products, AI's acceleration of scientific discovery,Chinas quest for biological supremacy and rethinking sustainability. Our, guidewill be Edward Shenderovich CEO of Synonym,a company that develops, finances and helps build the infrastructure forbiological manufacturing. Backed by top vc firms such as Andreessen Horowitz and Giant, Synonymis a pioneering force in helping develop the capability to grow materials andcreate products using biology as opposed to existing production techniques. Afrontier area of materials science and production that promises to transformthe world economy and progress. Sustainability the World Economic Forum puts the value of theglobal bioeconomy to be over $4 trillion and over 50 nations have alreadypublished bioeconomic strategies. Before founding Synonym, Edward was both an investor and anentrepreneur, founding commercial real estate company Knotel, where he raised over 400 million andmanaged 200 locations across four continents. As an investor, he founded Kite Ventures as well as essentialcapital, which included Delivery Heroand Fiverr as their investments, bothreaching IPO. Uniquely, Edward is also an accomplished poet, having publishedmultiple books in his native Russian. Edward, nice to see you. Thanks forcoming on.

Edward Shenderovich: Thank you for having me. It's such apleasure.

Daniel Darling: Biomanufacturing, right? it isn't a termthat we hear often in technology. It's a relatively new one to most people. Canyou help us visualize what it means? And can you give a couple of examples ofsome products that are manufactured using biology?

Edward Shenderovich: Of course, biomanufacturing is apretty wide term, I guess just like manufacturing, it's production, of stuff.With biomanufacturing, it's, production of various substances using biology.Those substances can range from pharmaceutical products like insulin, which isa very widely used bio manufactured product, to new types of, biomanufacturedproducts like precision fermented egg proteins. We can also make various typesof bioplastics, plastics, and different, bioresins. We can replace lots ofdifferent specialty chemicals with various, bioproducts, surfactants, or thesesurface acting agents, which are used in paints and dyes, so that paints anddyes don't crack and they reduce surface tension. Or different emulsifiers,preservatives. All of these can be manufactured using biology. There are lotsof agricultural products, biofertilizers, products that, induce nitrogenfixation and, reduce the need for fertilizer, or different types ofbiopesticides, which ultimately would be better for nature and, better for usas consumers of these natural products.

Daniel Darling: So, really wide gamut across manydifferent sectors. And is there a common link around why someone would usebiology to manufacture versus the existing process? Is it aroundsustainability, performance costs?

Edward Shenderovich: Biology is a phenomenal tool ofcreation. Ultimately, we are products of biology with biomanufacturing. We'retrying to take the tools that nature has given us and turn them into powerfulinstruments for making stuff that we need. Over the last 150 years, we've usedchemistry in this way. Once, we started industrializing oil, we've built aphenomenally massive petrochemicals complex with oil extraction and refineriesand transportation. And we use it for energy and materials. In the same waythat there's an energy transition moving away from using oil in parallel to it,there's a materials transition. We're moving away from using various types of,petrochemical products and petroplastics. So we're sort of separating oil, inwhich the chemical industry has been built into an industry of energy, whichdeals with electrons, and an industry of, biology, or the bio economy, whichdeals with materials and substances. So the beauty of biomanufacturing versus,traditional manufacturing is that on the same infrastructure, you can usevarious types of inputs, process them within that infrastructure, and then pushout various different types of outputs. So it's an extremely versatileplatform, which, we're just starting to harness.

Daniel Darling: And all of this fits into what you callthe bio economy. And Synonym is reallyplaying the role of providing a lot of the infrastructure for this bioeconomy.So, where does that kind of start and stop when you start to frameinfrastructure and the bioeconomy?

Edward Shenderovich: Biomanufacturing has been used inpharmaceuticals for decades. It's a proven technology. There was a companycalled Genentech, which, discovered a way to make, insulin using, recombinantDNA. Over the last 40 years, we moved away from animal based production ofinsulin to precision fermented, what is called synthetic, but it's really verynatural. That's a huge industry. So we produce vaccines and ultimately Ozempic,our miracle weight loss drug, and all the other related pharma products. Pharmais a massive industry. It's also heavily regulated and has very long cycles.So, a Synonym. We decided to focus on the rest of the bioeconomy, on foodproducts and bioindustrials, which are not regulated, will require massiveamounts of infrastructure. And it's an industry that still needs to be built.So we started with this idea, which I think seems pretty simple and prettystraightforward. That if the bio economy is going to be a massive multitrillion dollar market, where it will have a multi trillion dollar impact onthe economy, on the GDP, then this economy will need massive amounts ofinfrastructure. There will be trillions of dollars funneled intoinfrastructure. That capital will only come from professional investors, frominfra funds and private equity and ultimately public markets. And this is whathappened in many other markets. It's what happened in data centers and then inrenewable energy. It's also to an extent happening in chip manufacturing whereyou have companies like Brookfield partnering with intel to build multibilliondollar facilities. It's the idea of separating real estate ownership fromusage. There are not many companies that buy their own offices. So why docompanies need to buy their own manufacturing facilities? In the past it wasthat these manufacturing facilities were specific for the products that these companiesare manufacturing. But if you have a limitless number of inputs and limitlessnumber of outputs on the same infrastructure, that infrastructure becomes anasset class. It's something that's tradable where investors can buy shares inthose facilities and sit on dividends. And we've seen many asset classesdevelop in this way. Let's think about biomanufacturing infrastructure as anemerging asset class. This is something that will happen in 20 years. Let'splay that back and see what needs to be done now to effectuate that within thenext decade. We started the company about two and a half years ago. We usedthat concept and also the idea of Amazon's cloud as an inspiration. What wouldthe biomanufacturing cloud look like? We started developing the digital layerfor accessing infrastructure and planning how to build that infrastructure atthe same time.

Daniel Darling: Very smart. Where are we in the US at themoment in terms of how much infrastructure is in place right now versus howmuch would need to be in place to be able to start to get some meaningful scaleand products on the market.

Edward Shenderovich: There's a lot of infrastructure thathas already been built over the last 40, 50 years. That stock is pretty old.It's not optimal for future production of biomaterials for a variety ofreasons. Also, there's not enough of it. In total, there's about 50, 60 millionliters of fermentation capacity in the world. In order for us to get to evenmove the needle in terms of sustainability in production of byproducts, we needthis to expand 100 fold, maybe over the next decade. That's a really dauntingtask. Who is going to build it? Where do we get the labor to do it? We're justtaking it step by step. Synonym will notbuild a hundred times more infrastructure than currently there, but maybe we'llbuild tens of millions, ultimately hundreds of millions of liters.

Daniel Darling: It sounds like it is a bit of a process ofgoing from a centralized type of industry into more distributed. And I saw yougot a Department of Defence contract recently that says you're building adistributed bio industrial manufacturing program. So maybe you can unpack thata little bit further and say why it's so critical to us. Supply chain.

Edward Shenderovich: The Department of Defense has athesis around biomanufacturing and they've really been at the forefront oftechnology usage, for decades. For them, it's important for a number ofbiomaterials that they want to use in their supply chains to be produced in theUS, and for these supply chains to be what they call uncompromised. And theirpriorities are fuel, fitness, fabrication, firepower and food. There are somevery interesting applications that the DoD has in mind. One in particular, it'sonline, you can google it. It's for production of, hagfish slime. It's an RFPthat the Navy put out for production of this, special material. So there's thisfish, hagfish, some pocket, within it. Within that pocket is the biologicalsubstance. And when it gets ripped and that substance is exposed to air orwater, that substance expands 10,000 times in a matter of milliseconds. Andthat creates this, slime that envelops the fish. The navy wants to use it as aballistics deterrent. Imagine you're underwater, someone is shooting at you, orshooting, or maybe sending a projectile towards a submarine. And the submarinefeels that, and that slime expands and creates a shield, and that projectilesticks in that shield, it will be more structured, maybe the material itself,will be more dense. The key thing is that we can't just milk hagfish, we can'tpull that, out of those, sacs. We will need massive amounts of it. And thatproduct can be produced in, large steel tanks called bioreactors. And that'sjust one application. There are lots of, lots of other potential applicationsof biology. Just taking inspiration from the real world, from various organismsthat nature, has given us, and various enzymes and proteins that are availablethat we're discovering all the time, and, applying them to solving problemsthat we have.

Daniel Darling: So elegant. And I bet there's endlessamount of, learnings from nature. Has there been a recent unlock, in terms ofthe technology that has come together or progressed to allow for this new biomanufacturing and bio economy to take place? Whether on the software side, onthe material science side, has there been some sort of convergence that pointsto this is the right time for this industry to start to, take shape?

Edward Shenderovich: AI and massive, like, big dataprocessing is helping us make sense of, biology, and, will be an amazing unlockfor the industry. One of the things that happened over the last, several yearshas been the solution to the protein folding problem. We didn't know, we knewthe structure of the proteins, but we didn't really know how they folded. Thiswas a problem that generally was the team from DeepMind, this UK, based,artificial intelligence, they created a platform called Alphafold to solve theprotein folding problem that turned out to be completely revolutionary. Theyimmediately showed how millions of proteins can fold. It has accelerateddevelopment in biology, maybe by decades. There will be other AI applicationsand, well, you can also ask GPT to write certain DNA. Those DNA strains can gointo those microorganisms and help, us, modify those life forms. It's super,exciting, super scary, but, it will happen. We will create foundational modelsthat will allow us to create new types of organisms or modify existing onesfaster.

Daniel Darling: And if you're talking about AI,increasingly helping with the design process, are we going to be increasinglymoving towards an AI led design process for the types of products and the typesof biological products that you're developing?

Edward Shenderovich: I think certainly AI assisted. Thereare some, people talking about autonomous science or automated science, whereAI will also determine what actually what scientific problems need to besolved? We're not there yet, but just like, we're thinking about AI writingtext and, I don't know, maybe routing traffic we will get, AI to help us writeDNA, and we'll get AI to help us, set problems that we want to solve. And itwill take some time, but, we're far in the way. We're doing even better than,Ray Kurzweil predicted in his, wildest predictions.

Daniel Darling: Fast forwarding five years. We're at thisinteresting trajectory. And I know five years isn't a long time in your world.You still have to build a lot of infrastructure, you still have to get a lot ofinvestment, etcetera. But as this starts to interlock together, what are thetypes of industries that you think will be to be transformed first from therethat will have the biggest impact on the world and really awaken everyone tothe promise of the bioeconomy and biomanufacturing.

Edward Shenderovich: I think there's a huge promise in,replacing some of the commodities or commodity like products that we now use.Whether it's, at making certain milk proteins, be precision fermented, or eggproteins, taking parts of, animal agriculture, ah, off the table, especiallythe parts that we don't see. For example, 36%, I think, of all eggs go intobaking or cosmetics immediately. We don't even see them as, consumers, don'tsee them as eggs. These industries will be transformed. There's a question ofprice parity, making sure that these products are sold at the same price. And Ithink there will be a step change. So we will first focus on products, whichhave higher margins, where we can build infrastructure, test these things outthere, maybe more of a margin for error. And then we'll ultimately move towardscommodity applications. And these products can be wellness for humans, but canalso be wellness, for agriculture, like biofertilizers and biopesticides,which, don't have, these bioproducts, which don't have chemical alternatives,could be certain products that are used for better types of, plasticsprocessing.

Daniel Darling: What's happening in the energy industry?What are some of the innovations that you're seeing with biomanufacturing andthe intersection of new forms of energy or energy production?

Edward Shenderovich: Well, there's a huge market ofsustainable aviation fuel, which is ultimately a byproduct. We startedproducing, ethanol at scale in, early two thousands. There's a large ethanolindustry that has been built, in the US, that's, processing, turning corn intoethanol. The next stage of that is, moving away from, oil based aviation fuelto sustainable aviation fuel, which is made, from byproducts that will be ahuge change. All the airline companies have made multi billion dollar commitmentsto moving to sustainable aviation fuel. There, are some companies that areworking on, bringing this, to the market. And once again, we still need to.

Daniel Darling: Build a lot of infrastructure aside fromthe consumer demand, the investment dollars into that.What are the other kindof things that would really unlock the progress and set you on a new trajectoryfor this industry?

Edward Shenderovich: It's consumer demand and alsocorporate demand. So large companies need to feel that, it's important for themto incorporate byproducts into their supply chains. There needs to be consumerpool to, do that, or some regulatory change to incentivize them to, adopt byproducts and incorporate them into their supply chains. So the large companies,will be the big unlock. There's also a need to, build infrastructure, and thatwill require infrastructure funds to lean in. And they will not do it untilthere's corporate demand. There's, definitely government support is needed andgovernments are now leaning in. And all of that is really secondary to factthat we need the right technologies. and AI is a big unlock. So we are at thisamazing moment in time when these things are coming together. There arecompanies making commitments to adopt byproducts. the government is leaning inwith this, with DoD and the DHPSI program. Doe, has just did one of their firstbiomanufacturing deals with, sologen, providing them with a $200 million loanguarantee. There are lots of technological advances. So I'm very excited aboutthis moment in time and, whatever the next five years will bring.

Daniel Darling: I was reading as part of the research thatthere's over 50 nations that have committed to some sort of, you know,biomanufacturing process. And it sounds to me that a lot of the actualbiomanufacturing is concentrated at the moment in Europe versus the UnitedStates. Are there nations or ecosystems around the world that are pointing whatit will be like when this starts to take shape and a little bit further aheadof the curve that we can look at?

Edward Shenderovich: You're right that, Europe hasterrific, bio manufacturing talent. Europeans so far have built moreinfrastructure. One of the best, really inspiring pilot demo facilities isoutside of Ghent. It's called BBEPP          . It's, really seen as the goldstandard of, what a small scale biomanufacturing facility should be like. But Ithink us is very quickly catching up. We also know that China has madebiomanufacturing. It's one of its, five year plan priorities and, they havealready built up a lot of infrastructure over the years. China has, taken anumber of us facilities offline just by undercutting them on price and onbioproducts. That is certainly a threat. Both us and Europe need to take thatvery seriously. At the same time, there's a lot that's happening in India onthe biomanufacturing side. It seems to me that just like China made itseconomy, or built its economy around traditional manufacturing, India is tryingto do the same thing with biomanufacturing, looking at building up capacity andleveraging its talent in that way. We also know that, other countries have,made biomanufacturing its priorities. Saudis have issued a biomanufacturingstrategy. There's one in UAE, there's a, very strong bio manufacturing strategyand, really inspirational in some way in Singapore. It's not something that'sisolated in the US or specific to Europe. It is happening everywhere in theworld. I think that many countries have an opportunity to win. Many regionshave an opportunity to win.

Daniel Darling: Well, speaking of winning, it sounds likea really big prize. It feels like a lot of the products that we could producein the world could be done using biology.

Edward Shenderovich: Yeah, I think that biology caninfluence the production of, everything. Just like, let's replace the wordplastics with byproducts. We can't imagine our lives without plastics. We'rewearing these headphones and you're speaking to microphone and our computer,and probably the chair that you sit on and the desk you have, they all haveplastic components. And everything that's, around you is ultimately in some waya product of chemistry. Well, imagine everything around you being a product ofbiology. It's not only more sustainable, but they're completely different, betterproducts. And in many cases, we don't know what these products will feel like.We can imagine some things like imagine, self healing paints or clothes thatyou, that don't wear out because they're made from spider silk. There's a lotof chemistry that we're pumping into the soil to make our trees bloom and,produce fruit. Imagine how much better these products would be if we're usingbiological products which are more suited to that environment. I think that thefuture of the bioeconomy and biomanufacturing is exceptionally bright. Andsomething that I overheard in Washington, recently is that the UK won theindustrial revolution, the US won the digital revolution, and China wants towin the biorevolution. Well, the US definitely doesn't want China to win thebiorevolution, and neither does Europe. We want to make sure that we continuepushing towards, this GPT, moment in biology and biomanufacturing and, makesure that it's not a sputnik like moment where we wake up and, those other guyshave launched something into space.

Daniel Darling: Yeah. You paint such a big picture and bigvision for the transition, and it feels really real. It feels like there's areally pivotal moment in time, that's converging at the moment and over thenext couple of years. So thanks so much for sharing that with us today and topaint the vision for us. Congrats on everything that you're doing at Synonym, and really excited to watch itunfold.

Edward Shenderovich: Thank you for having me. It's, been apleasure to chat, and I hope we can revisit this and do it again in five yearsand, see, what has actually happened.

Daniel Darling: Perfect. I love that. All right, thanks,Edward.

Edward Shenderovich: Thank you.

Daniel Darling: What a fun and fascinating topic todiscuss. An area of science, technology, and manufacturing that is moving fromthe world of pharmaceuticals into the wider economy. It's clear that we'll behearing a lot more about biological manufacturing, manufactured inputs,substitutes, and even entire products as the infrastructure begins to comeonline. Unlocks, like AI's ability to help scientists understand, design, andmanipulate organisms are accelerants of change, which, as Abel points out, areadvancing progress by the decades. To follow him, head over to his profile on x @eshender. I hope you enjoyedtodays episode and please subscribe to the podcast to listen to more comingdown the pipe. Until next time, thanks for listening. Have a great rest of yourday.

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