Digest columnist examines Amyris Biotechnologies, “Position only for growth” PROFITS principle
By Biofuels Digest columnist Dr. Rosalie Lober
YOU DON’T HAVE TO BE LEFT BEHIND
We all can’t be first adopters. But…it is worthwhile to learn to think like one. What is it that propels some leaders to move beyond all others? How do they think? How do they choose the path to get there? How do they influence people?
Today we begin our exploration of Amyris Biotechnologies – a true first adopter. As we employ the PROFITS Principles as a guide for how operate and manage a business effectively, (from the newly released book, Run Your Business Like a Fortune 100: 7 Principles for Boosting PROFITS, by Rosalie Lober, Ph.D.). For the next few columns, we will learn how Amyris creates and makes the most of opportunities.
With a knowledge of world affairs and a clarity for what it can contribute, it is no surprise that Amyris has been able to raise over $120 million, accumulating venture money which includes funding by Kleiner Perkins, Bill and Melinda Gates, obtaining capital from other countries, particularly Brazil and inspiring mill owners to join with them to produce Amyris biofuel and other chemical products. This is no sleight of hand. Amyris knows what it is doing and its leaders have the confidence to find resources and to lead the way.
Position Only For Growth
Every idea is ripe with possibilities. The lessons of business are hard won treasures. The legacy is ours to carry forward or squander. You can always find opportunities, especially if you learn from others. Position Only For Growth is a reminder that anything, when fine-tuned, can be a potential opportunity – and, to keep your focus on growth and profitability, to wait and to act when the time is proper. Amyris Biotechnologies offers a great example for this.
Broaden your thinking
Though many company’s mission statements are abstract, others are too specific. The key is to have a mission statement that is broad enough, yet unambiguous.
Amyris’ mission states: ‘devoted to create a more sustainable world.’ Though focused now on making products that address the global energy and climate crises, Amyris started out as a non-profit initiative, applying their technology platform for a second source of the anti-malarial therapy, artemisinin. Artemisinin is a chemical found in the plant, sweet wormwood that grows in temperate parts of Africa and Asia.
Taking the time and learning the details of how Amyris traveled from malaria to biofuels is useful learning. The steps involved in their positioning for future growth though seemingly serendipitous at times, demonstrates the often zigzag path of developing a strategy (for the chemical in this case), scaling up production and getting it to the marketplace.
The importance of these steps is evident in how Amyris later used their malaria project as a prototype for moving into biofuels – by replicating partnerships with public and private sectors including governments, capital markets and global economies.
The four-year-old company was founded by UC-Berkeley chemical engineering professor Jay Keasling and several post-doctoral students. When Bill Gates spoke of ‘creative capitalism’ at the World Economic Forum in Davos, Switzerland, he led the way for big pharma’s Sanofi-Aventis, Amyris Biotechnology and the Institute for OneWorld Health to ‘take on malaria.’
The nonprofit project received funds from a five-year, $42.6 million grant awarded by the Bill & Melinda Gates Foundation with the goal of providing cheap drugs for poor people around the world who do not have access to healthcare. And so began Amyris’ foray into the ‘out-of-the-box’ collaboration with nonprofits, industry, government and philanthropists for long-term sustainability and success.
Though the road took various twists and turns, particularly in pricing, powerful players including the Global Fund in the public health community and various government funding from several countries, helped subsidize the project.
Neither Amyris, nor Sanofi-Aventis will make a profit from this project, but for Amyris Biotechnologies, it has provided revenue, technology and a launchpad for raising $120 million in venture capital.
Amyris had the idea that using the same anti-malarial drug technology platform could work for three biofuels: bio-gasoline, bio-diesel, and bio-jet, in the lab. This technology produced compounds in synthetic biology to engineer microbes to alter pathways of microorganisms such as yeasts, creating what they call ‘living factories’ that that actually reprogram DNA to produce new molecules and chemical structures.
Subsequently, Amyris leaders decided to develop a reliable fuel substitute that would help reduce our dependence on oil and cut greenhouse-gas emissions using plant feedstock – currently sugarcane, though they will experiment with other plants and grasses in the future. It took creative thinking and certainly real life opportunities to link an anti-malarial drug to biofuels. Some would say it was luck – yet how many business leaders are astute and clear enough to take an opportunity that incorporates world affairs, both the non-profit and profit sectors and also understand sustainability and profitability at the same time?
What are some interdisciplinary actions that you might build upon in your companies?
Think beyond mainstream
A first adopter will almost always be associated with their product. Think Xerox, Wii and even Polaroid. If the first adopter can stay in stealth mode during production, they will have the market advantage for many months before copy cats catch up to them.
John Melo, a technology, operations and marketing executive at BP became the CEO, leading the process for piloting and commercializing Amyris biofuels products. With much of the biofuels focus on corn, Amyris brought together the micro-world of strain (microprocessor manufacturing) engineering and the macro-world of chemical engineering with the additional leadership of Neil Renninger. Other leaders brought the biological analyses for proteins and bacteria. In the columns that follow, we will talk about how Amyris’ leaders navigated this process.
Resulting from their ‘out of the box’ positioning into biofuels, in April, 2009, the Environmental Protection Agency officially registered Amyris’ renewable diesel fuel. This is the first time a hydrocarbon-based fuel derived from plant resources was registered for commercial sale.
According to an EPA spokesperson, ‘Amyris renewable diesel is one of the most advanced renewable diesel fuels in production today, capable of significantly reducing greenhouse gases and tail pipe emissions relative to petroleum fuels.’
Unlike biodiesel and ethanol, Amyris renewable diesel is a hydrocarbon; the same component found in today’s petroleum fuels, enabling it to blend with petroleum diesel at much higher levels than typical biofuels without causing performance issues.
Follow the breadcrumbs
The breadcrumbs to follow vary from company to company and may change with time. Knowing what the breadcrumbs are, when to follow each trail and when to make a turn in the road is the difference between a company’s success and failure.
While Amyris developed their technology platform for malaria, profit was not an immediate motive. Contributing to disease control, developing their technology platform, researching drug therapy and collaborating with global foundations and governments was the success criteria.
When profitability became the motive, seeking out the best, brightest and most lucrative funding sources became Amyris’ goal. Amyris leaders currently study, court and follow the money trail.
They know that tariffs are high for imported sugar and recently created a partnership in Brazil – thus eliminating their potential tariff fees. They understand government policy and build inroads into new energy infrastructures as defined by the administration. Amyris leaders anticipate their ability to be one of the beacons for pulling the US economy out of recession.
Create the partnerships
A partnership provides the resources to complement what you do well in areas that are not your strongest suit.
Though we’ll discuss this in greater detail in subsequent columns, it’s important to note that Amyris’ business model for ‘a capital-light model to scale up fast’ is a well thought out plan to sell direct to consumers (without a middleman), to utilize their own marketing and distribution systems and to avoid unnecessary tariffs and other taxes. However, as one observer stated, “So far, Amyris’ strategy hasn’t been particularly ‘capital light.’
Summary
Amyris changes the game. Whether it is using hydrocarbons for biofuel, a new chemical structure for a chemical in the sweet wormwood therapy for malaria or using sugar for biofuel for jet engines, Amyris keeps many competitors in various industries on their radar.
In subsequent columns, we’ll explore more of Amyris leadership capabilities.
The complete Bioenergy PROFITS Principles columns are available here.
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