Speaker 1: Pushkin. I'm just listening to that's the walkie talkie again.
Speaker 2: Yeah, I'm in an operating chemical plant.
Speaker 1: Fair enough, Well, so is the is the bioforge? Is
Speaker 1: the factory? Like out the window behind you, you're in
Speaker 1: a trailer. Where's the factory from where you are?
Speaker 2: It's right right right in front of me.
Speaker 1: Could you walk outside and throw a rock and hit it?
Speaker 2: Yes? Yeah. So we're on the former site of an
Speaker 2: exploded polyethylene wax distillery.
Speaker 1: It exploded.
Speaker 2: Yeah, so so I just found in twenty sixteen. But
Speaker 2: the site that we're on exploded in two thousand and five.
Speaker 2: So it's what's called a.
Speaker 1: Did you get a deal? Did you get a deal
Speaker 1: because it had blown up?
Speaker 2: We got a deal? Yeah? Yeah.
Speaker 1: So, like your site is a metaphor. It is like
Speaker 1: some a petrochemical plant blew up and you built a
Speaker 1: factory on top of the remains exactly. Yeah.
Speaker 2: So that there's actually a Chemical Safety Board report written
Speaker 2: about it. But it blew out every window in like
Speaker 2: a five mile radius.
Speaker 1: Holy kah. I'm Jacob Goldstein and this is What's your Problem?
Speaker 1: The show where I talk to people who are trying
Speaker 1: to make technological progress. My guest today is Sean Hunt.
Speaker 1: He's the co founder and CTO of a chemical company
Speaker 1: called Solugen. Solugen sells around one hundred million dollars a
Speaker 1: year worth of industrial chemicals, but instead of making the
Speaker 1: chemicals from fossil fuels the way they're typically made, Sologen
Speaker 1: makes them from corn syrup. Sean's problem is this, how
Speaker 1: do you make the chemicals that go into everything around us,
Speaker 1: our food, our clothes, our cars without using fossil fuel.
Speaker 1: We've talked a lot on the show about the energy transition,
Speaker 1: the move away from fossil fuels as sources of energy.
Speaker 1: What Solugen is really working on is the chemical transition.
Speaker 1: Basically same idea, but for instead of energy. Solujen got
Speaker 1: its start at a poker table. Sean was getting his
Speaker 1: PhD studying catalysts, in particular the kinds of catalysts that
Speaker 1: are used to make industrial chemicals out of coal, oil,
Speaker 1: and gas. Sitting across the table from him was another
Speaker 1: grad student, another PhD student, a guy named Gorb Chakrabarti,
Speaker 1: who was studying biology in particular. He was studying enzymes
Speaker 1: in cancer cells, and enzymes, as it happens, are a
Speaker 1: kind of catalyst that thing Sean was studying in a
Speaker 1: very different context. So of course Jean and Gorub started
Speaker 1: talking about catalysts.
Speaker 2: Catalysts in general are used to make the physical world
Speaker 2: around you. Right, So the food that you eat, the
Speaker 2: clothes that you wear, the car that you drive, the
Speaker 2: house that you live in, all of those things were
Speaker 2: made using catalysts.
Speaker 1: Okay, and this is what you're studying in grad school.
Speaker 2: Yep.
Speaker 1: Meanwhile, the guy sitting across from you at the poker table, Gorab,
Speaker 1: what's he studying.
Speaker 2: So what he's studying is like catalysts gone wild. So
Speaker 2: in he's studying pangramic cancer. And so in a cancer
Speaker 2: cell is the catalysts that are in there, which are
Speaker 2: enzyme catalysts, these little folded up proteins. They evolve in
Speaker 2: a really strange, very unfortunate way. That is one of
Speaker 2: the reasons that cancer is so bad. But one of
Speaker 2: our conversations was, like, you know, he's describing these enzymes.
Speaker 2: I mean, like, how are they operating in this kind
Speaker 2: of crazy environment? Like enzyme shouldn't be able to do that?
Speaker 2: Like it like that's actually approaching an industrially relevant environment.
Speaker 2: It's unfortunate. It's happening inside a cancer cell. But it's like, hey,
Speaker 2: that's actually like that could actually have some uses.
Speaker 1: Huh. It's really bad when it happens inside your body,
Speaker 1: but if you could make it happen in a factory,
Speaker 1: it might be useful.
Speaker 2: It might be useful.
Speaker 1: Exactly your research and his research coming together. It's like
Speaker 1: the hyper nerd version of like the RECSS peanut butter cup,
Speaker 1: like chocolate and peanut butter, but for catalysts.
Speaker 2: Jacob, I have many friends. I have so many friends.
Speaker 1: So okay, but as you and Gora are talking about this,
Speaker 1: like really, why are these enzymes that he's studying, you know,
Speaker 1: potentially useful in an industrial setting?
Speaker 2: Yeah, so if you think about it, like what does
Speaker 2: what does the enzyme have to offer? Yeah, so what
Speaker 2: an enzyme can do is it could convert a raw
Speaker 2: material into a product at room temperature and water with
Speaker 2: perfect yield.
Speaker 1: Well that's the dream. That's like the cold fusion of
Speaker 1: your business.
Speaker 2: I mean, yeah, enzymes are they're pretty much like the
Speaker 2: cold fusion of catalysis, Like they can do everything that
Speaker 2: you want to do in a manufacturing process, like perfectly.
Speaker 1: But the problem's amazing, what's the catch.
Speaker 2: Well, the problem is they're delicate, right, So, so like historically,
Speaker 2: like they're hard to make, they're very expensive to make,
Speaker 2: and like you know, I'll give you an example, like
Speaker 2: like some of the early like enzymes that you find
Speaker 2: in nature that you want to put in a chemical plant.
Speaker 2: That enzyme might cost two thousand dollars a pound to make, right,
Speaker 2: Chemicals are sold for two dollars.
Speaker 1: A pound, right, Yeah, and so and you're making plastic,
Speaker 1: you're making commodity, you're making commodities, or you can't spend
Speaker 1: two thousand dollars a pound for your yeah, because catalyst.
Speaker 2: Because if you can only make like one pound of
Speaker 2: your product per pound of enzyme, you're done. I mean
Speaker 2: there's no business to be had there.
Speaker 1: You're a thousand times off.
Speaker 2: Yeah, Like you're way off right Now, What if you
Speaker 2: could evolve that enzyme in the lab. This is called
Speaker 2: directive evolution, and you can use machine learning AI. There's
Speaker 2: all sorts of cool stuff that like changes literally every
Speaker 2: year on how to do this. What if you could
Speaker 2: evolve that enzyme to make one hundred thousand pounds of
Speaker 2: product per pound of enzyme. Huh. Now, now you have
Speaker 2: a business here. You could actually incorporate that enzyme into
Speaker 2: a chemical plant because you're going to consume so little
Speaker 2: of it that even though that enzyme is expensive, it
Speaker 2: has perfect yield in water at room temperature. I mean,
Speaker 2: that's an incredible capability.
Speaker 1: And so this, I mean you mentioned like, so what
Speaker 1: if you could evolve meeting sort of direct the evolution
Speaker 1: of that enzyme? Right, this is a relatively new idea, right, Like, obviously,
Speaker 1: people have known about enzymes for a long time and
Speaker 1: they're essential to like everything that happens in our body.
Speaker 1: Not quite but kind of, right, So this is the
Speaker 1: key idea. Then it's like what if we everybody knows
Speaker 1: enzymes can do this, but they're not. They're too expensive
Speaker 1: slash not efficient enough. Right, the amount of enzyme you
Speaker 1: have to use is too expensive given the amount of
Speaker 1: product you get. And you guys realize that there is
Speaker 1: this relatively recent scientific research that suggests you can get
Speaker 1: enzymes to produce way more product per unit enzyme per
Speaker 1: enzyme exactly, So like, so what do you do?
Speaker 2: Kind Of as this was happening, you know, I was
Speaker 2: coming up, I was on my last year and about
Speaker 2: to graduate, and I'm kind of having you know, I
Speaker 2: don't know, maybe maybe a bit of a crisis on
Speaker 2: like that, Like I really like the in academia. I
Speaker 2: don't really want to go work for a big company
Speaker 2: like I've worked for big But he's in the past
Speaker 2: not a huge fan. And you know, it's like if
Speaker 2: there's a time in my life to try something, like,
Speaker 2: let's do it. And Gore was kind of having a
Speaker 2: similar thing, like he he really liked the PhD program,
Speaker 2: but then he did his final two years back in
Speaker 2: med school and like was just not love and medicine.
Speaker 2: And so we were like, well, what if we could
Speaker 2: make something work here, And so we entered the MIT
Speaker 2: hundred k entrepreneurship competition in twenty sixteen. We got ten
Speaker 2: thousand bucks, and I mean we were super jazzed. I
Speaker 2: mean we were like, oh my gosh, like we have
Speaker 2: some seed money. This is incredible. And sort of the
Speaker 2: rest of this is sort of again like this just
Speaker 2: like continual series of just kind of lucky breaks. I
Speaker 2: kind of joke, I think Gorb's like the luckiest person
Speaker 2: I've ever met. So the more I'm associated with Gore,
Speaker 2: the luckier the luckier.
Speaker 1: A great move teaming up with the lucky person.
Speaker 2: Yeah. Yeah, he's got incredible, incredible luck. So at this point, Fure,
Speaker 2: I've been long distance with my wife now right, We've
Speaker 2: been long this for seven years. She's like, you're moving
Speaker 2: to Dallas. I'm like, all right, well, Gorb's in Dallas.
Speaker 2: We're going to start this thing. Like let's go. So
Speaker 2: we rent some lab space right behind Dallas left Field Airport,
Speaker 2: like four hundred bucks a month. We go to home
Speaker 2: depot to build, like, let's build a proof of concept
Speaker 2: reactor and you know, let's let's do you know, a
Speaker 2: basic enzyme and try to make HydroD broxide.
Speaker 1: Okay.
Speaker 2: And what was really fortunate was our pitch video to
Speaker 2: thee hundred Coentrepreneurship competition got shared to a Facebook group
Speaker 2: of float spot owners a float spa, a float spot. Yeah.
Speaker 2: So these are saltwater hot tubs that are like isolation
Speaker 2: chambers and like it's.
Speaker 1: Like a sensory deprivation tank.
Speaker 2: Sensory deprivation tanks, and it was like a really like
Speaker 2: nascent industry pretty much created by Steph Curry.
Speaker 1: And because he's into it, he's into well, maybe I'll
Speaker 1: be able to drain threes all day if I go
Speaker 1: to a sensory deprivation.
Speaker 2: I think the one the one common thing when you
Speaker 2: talk to all the owners of these float spots are
Speaker 2: like Steph Curry did so much for this industry.
Speaker 1: Okay, so wait, why does your video get like what's
Speaker 1: the connection?
Speaker 2: So one of the float spot owners thought this was
Speaker 2: the coolest thing. They have like trouble buying peroxide. They
Speaker 2: have trouble handling it.
Speaker 1: They're also they need peroxide. I don't get the link.
Speaker 2: They use peroxide to clean the hot tubs in between
Speaker 2: people going in and out. So if you if you
Speaker 2: kind of think about it, it's a little bit like
Speaker 2: you're going in and out of hot tub over and
Speaker 2: over again.
Speaker 1: Yeah, nasty, super nasty.
Speaker 2: Yes, you got to clean it well.
Speaker 1: And I mean you can buy peroxide at Walgreens. You
Speaker 1: can buy peroxide at the drug store. What's the what's
Speaker 1: the why don't they just do that? What's going on?
Speaker 2: So you can, but they use a more concentrated peroxide okay.
Speaker 2: And so it's got some you know, shipping its ships haasmad,
Speaker 2: things like that. And so they're also environmentally conscious. So
Speaker 2: so I think they also found it fascinating that I
Speaker 2: was like, hey, these guys are going to make peroxide
Speaker 2: and they're doing it in a more sustainable way, and
Speaker 2: so we got like inbound. I'm like, hey, if you
Speaker 2: make this, we'll buy it.
Speaker 1: Okay, that's amazing.
Speaker 2: Yees, We're like this is really cool. So you know,
Speaker 2: built this little it was like seven thousand dollars all
Speaker 2: in like air compressor from a depot, a little PBC reactor.
Speaker 2: So we're feeding at sugar, We're feeding at air. There's
Speaker 2: this engineered enzyme that's like floating around inside of it, okay,
Speaker 2: and the sugar in the air react inside the tube,
Speaker 2: and then we have a membrane that keeps the enzyme
Speaker 2: inside okay. And then on the other side of the
Speaker 2: membrane we get hydrogen peroxide in an organic acid.
Speaker 1: Okay, and is regular hydrogen peroxide made from petrochemicals like
Speaker 1: everything else is this Like, how do you get regular
Speaker 1: hydrogen peroxide?
Speaker 2: It's it's it's fairly fairly epic. Yeah, I've been to
Speaker 2: a couple hydroproxide plants. It's it's a super cool process,
Speaker 2: but it's one of those ones that's nuts.
Speaker 1: So they create this, give me this short version. What's
Speaker 1: the input, Like, does it starts as a fossil fuel.
Speaker 2: Yes, yeah, yeah, yeah. So it's very hard to make
Speaker 2: because it's metastable. That's why it's so useful is that
Speaker 2: it wants to decompose, and when it decomposed it makes
Speaker 2: free radicals and that clean stuff, and so it makes
Speaker 2: it sort of difficult to make and you know somewhat
Speaker 2: you know, hazardous to make as well, right, and.
Speaker 1: So is this is the enzyme you start with in
Speaker 1: your process based on Goreb's grad school thing, based on
Speaker 1: the enzyme in cancer cells that's making hydrogen peroxide.
Speaker 2: Yes, we were essentially taking i'll call them motifs, so
Speaker 2: essentially common motifs from what you would find in this
Speaker 2: like really wonky pancreatic cancer enzyme and then translating it
Speaker 2: to more industrial relevant enzyme.
Speaker 1: Huh. So basically you're starting with the pancreatic cancer enzyme
Speaker 1: and saying, how can we kind of use the tools
Speaker 1: of this enzyme to make an enzyme that we can
Speaker 1: put in our tube and have it do what we
Speaker 1: want exactly?
Speaker 2: And what was pretty neat is like to me, the
Speaker 2: neatest part the relative scales here. So like on weekends
Speaker 2: we had like one gallon bottles of this peroxide organic
Speaker 2: acid mixture, and we would drive around Dallas and we'd
Speaker 2: pour it into people's hot tubs.
Speaker 1: Right, So we were literally you're you're like not just yeah,
Speaker 1: you're like you're like the pool boys.
Speaker 2: We were the pool We were the pool boys. Right.
Speaker 2: We had our three customers and they were super delighted.
Speaker 2: And uh and then we learned how to like do
Speaker 2: shipping online and we you know, started shipping to the
Speaker 2: other spots. But to make that one gallon bottle, we
Speaker 2: were only using like milligram quantities, like like little just
Speaker 2: like fine dust of enzyme.
Speaker 1: Well you're getting thousand x whatever for every unit of enzyme,
Speaker 1: you get a thousand or something units of exactly.
Speaker 2: So like it's like a we're like selling this like
Speaker 2: you know really just like i mean barely minimum viable product, right,
Speaker 2: but like we're selling that product with like effectively like
Speaker 2: lab scale manufacturing of the actual catalyst.
Speaker 1: So you're doing it in this janky, small ass way,
Speaker 1: but you're actually doing this thing. You're making hydrogen peroxide.
Speaker 2: Yeah.
Speaker 1: So okay, so so now we can fast forward a
Speaker 1: little bit. So right, so you you turn this you know,
Speaker 1: janky nights and weekend ideas into what is now a big,
Speaker 1: real company. Right, So so where are you now?
Speaker 2: Yes, so where we are now? So I think, like
Speaker 2: I'll kind of throw out a couple of numbers. So
Speaker 2: last year we shipp two hundred million pounds of material.
Speaker 2: It was about fifty thousand pounds, and so we.
Speaker 1: Have not driving around in your car anymore delivering it.
Speaker 2: No, No, we actually move like railcars around now. So
Speaker 2: we've got we've got railcars, we've got tanker trucks, and
Speaker 2: we do a couple of different things. So we we
Speaker 2: manufacture our chemicals and bioforge one, which is our first
Speaker 2: commercial plant in Houston, Texas. It's about a ten thousand
Speaker 2: ton prior plant.
Speaker 1: So what are what are you know, what are some
Speaker 1: of the things you sell and who do you sell
Speaker 1: it to? What are some of your big products?
Speaker 2: So the theme is still water. So this all started
Speaker 2: with you know, driving around pouring chemicals and people's hot tubs. Right.
Speaker 2: We still do water treatment today, so you can think
Speaker 2: of municipal water treatment like a wastewater treatment plant, cooling
Speaker 2: water towers that you see outside of like hospitals. In
Speaker 2: the energy sector, there's the stuff called produced water, which
Speaker 2: a lot of people don't really know about.
Speaker 1: Every barrel comes it's what you get out of fracking.
Speaker 1: Like when you send the water into frack, it comes
Speaker 1: back and you got to deal with it.
Speaker 2: Yeah. The kind of the inside joke for the upstream
Speaker 2: oil and gas guys is that they're actually water companies
Speaker 2: that make a little bit of oil. Yeah. So you
Speaker 2: get you get like eight to ten barrels of water
Speaker 2: per barrel of oil, and you got to figure out
Speaker 2: what to do with this stuff, and you.
Speaker 1: Gotta like it's nasty, you got to deal with it.
Speaker 2: Yeah.
Speaker 1: Yeah, So you're selling to people who need to treat water,
Speaker 1: what are you selling them?
Speaker 2: Yep? So we sell them HUDH from peroxide. Today we
Speaker 2: sell corrosion, can control, scale control biosides. It's sort of
Speaker 2: like a product portfolio, and our core chemistry that we
Speaker 2: make in Bioforge one is a component of all these
Speaker 2: stuff and is.
Speaker 1: It a lot of hydrogen peroxide in terms of what
Speaker 1: you're actually making, is still hydrogen proxide like a core product.
Speaker 2: So our core product now is actually organic acids. Okay, yep,
Speaker 2: So we still sell HydroD peroxide. We're one of the
Speaker 2: largest sellers of peroxide in Texas actually, but we essentially
Speaker 2: progress the technology further where we actually use the HydroD
Speaker 2: peroxide that we make in process to actually make other chemicals. Aha.
Speaker 1: And so you mentioned Bioforge one. I mean what you
Speaker 1: have is essentially a chemical factory, right, You've built a
Speaker 1: chemical factory, but it's a new kind of chemical factory.
Speaker 2: Yep.
Speaker 1: And so we talked about the like little lab scale
Speaker 1: version that you started with. Tell me about Bioforge one,
Speaker 1: about the chemical factory have? Now, just like I come
Speaker 1: up on the street, what do I see?
Speaker 2: You see a big tube in the air that's like
Speaker 2: two school by is stacked on top of each other.
Speaker 2: And then you see like kind of like.
Speaker 1: A metal like like a metal chimney.
Speaker 2: Or something, big big metal tube that's got all the
Speaker 2: enzymes inside. And then and then you see a pipe rack,
Speaker 2: like a big green pipe rack, and then a bunch.
Speaker 1: Of tanks and so and and what happens there? I mean, like,
Speaker 1: what's the You're not using oil or gas right as
Speaker 1: your input? What's your what's your input?
Speaker 2: We consume railcars of corn syrup. Okay, so railcars of
Speaker 2: corn syrup come in to go into these tanks, and
Speaker 2: then we oxidize the corn syrup in our enzyme ractor. Okay,
Speaker 2: then we make what it's called a metastable intermediate. We
Speaker 2: oxize that metastable intermedia in our metal oxidation ractor. So
Speaker 2: sort of first ractor's Goora, second ractor.
Speaker 1: Sean, And what comes out is like some set of
Speaker 1: potential chemicals depending on what people are buying, a hydrogen
Speaker 1: peroxide or organic acid or whatever, you can sort of
Speaker 1: direct it.
Speaker 2: We're able to tune the product mix. Right now, we're
Speaker 2: focused on the modef you'll call glucaric acid, okay, and
Speaker 2: then you know, we put it in tags and we
Speaker 2: sell to people.
Speaker 1: We'll be back in just a minute.
Speaker 2: Mhm h.
Speaker 1: And so is the is the sort of core ongoing
Speaker 1: work that you're doing, like optimizing enzymes to make different chemicals?
Speaker 1: I mean, is that the fundamental sort of technical thing
Speaker 1: you are endlessly working on and trying to develop?
Speaker 2: Yep. Yeah, So so it's actually just a handful of
Speaker 2: different enzymes and a handful of metal catalysts that you
Speaker 2: can then kind of like plug and play in the
Speaker 2: reactor to make all the different chemicals that you want.
Speaker 1: So do you feel like you're done on that side,
Speaker 1: like what do you what do you what are you
Speaker 1: trying to figure out in that in the sort of
Speaker 1: production side.
Speaker 2: So, so what you're trying to do for at different states, Right,
Speaker 2: So at the plant level, what you're trying to do
Speaker 2: is run the plant for months and months and months continuously.
Speaker 2: You're trying to reduce your costs over time.
Speaker 1: It's sort of classic industrial economics, like you want the
Speaker 1: plant to be producing all the time because you got
Speaker 1: to pay all this money for the plant and then
Speaker 1: it's not making a thing you can sell. That's bad.
Speaker 2: Yeah, And you're trying to show like you're trying to
Speaker 2: raise like project financings. So we just close the Department
Speaker 2: of Energies loan of.
Speaker 1: A lot of money, right, you just get loan for how.
Speaker 2: Much it was like a two hundred and fourteen million dollars. Yeah,
Speaker 2: and that's to build a second facility in Marshall, Minnesota.
Speaker 1: Okay.
Speaker 2: And so like for that type of later stage debt,
Speaker 2: what you need to show is not just like hey,
Speaker 2: I've got this stuff working in a lab, and not
Speaker 2: even that like hey I have this working at scale.
Speaker 2: It's that I'm making money at scale, right, that I'm
Speaker 2: running this thing for months and months and months years,
Speaker 2: and you know it's very reliable and the customers are satisfied.
Speaker 1: And so are you there on that one? Like like
Speaker 1: is the fact you built? I mean, I know, is
Speaker 1: it profitable is a complicated question based on different assumptions
Speaker 1: or whatever, but like is it profitable?
Speaker 2: Yeah? Yeah? So actually was? It was really funny because
Speaker 2: when the Independent Engineer came to view so our first
Speaker 2: commercial plant. It's first commercial for soal Egen. For other folks,
Speaker 2: they would probably call it a demo plant.
Speaker 1: Because it's small given the scale of the petrochemical industry.
Speaker 2: Yeah, it's only ten thousand tons per year, which is
Speaker 2: a pretty pretty small scale. Most most chemical plants are
Speaker 2: one hundred thousand tons per year, five hundred thousand. Some
Speaker 2: of them are like two million tons per year. They're crazy.
Speaker 2: And you know, the Independent year was like, yeah, I've
Speaker 2: been to like one hundred something demo plants. I've never
Speaker 2: been to one that's like cash flowing because typically people
Speaker 2: build these things, they run it for like the shortest
Speaker 2: amount of time to make the debt people happy, and
Speaker 2: then they turn the thing off because they lose money
Speaker 2: with every sale.
Speaker 1: And is there is there a Is there a technical
Speaker 1: reason why you can have a smaller plant be profitable?
Speaker 1: Do you sell your product for more? Is there like
Speaker 1: a green premium on it?
Speaker 2: No, it's two things. So the first one is we're
Speaker 2: starting with specialty chemicals, not commodity chemicals. So like I
Speaker 2: don't want to be selling a molecule to somebody, I
Speaker 2: want to be selling a solution to the problem.
Speaker 1: So the output the thing you're selling is has a
Speaker 1: higher markup built into it basically.
Speaker 2: Yeah, and it's like we're going to market direct, We're
Speaker 2: not trying to sell their distribution, Okay. And then the
Speaker 2: second is that we can build small plants faster, right,
Speaker 2: So like we only have three unit ops, we don't
Speaker 2: have fifteen unit oups. We have higher yields. So, like, imagine,
Speaker 2: if you just go for simple math, if I have
Speaker 2: to buy, you know, one hundred pounds of raw material
Speaker 2: to make a hundred pounds of product, but my competitor
Speaker 2: has to buy two hundred pounds of raw material to
Speaker 2: make one hundred pounds of product, their cost structure is
Speaker 2: two x mine exactly.
Speaker 1: Okay, So I think you were giving me reasons you
Speaker 1: can be profitable at smaller scale, Are there more or
Speaker 1: are are we done with that?
Speaker 2: Well, I would say there's a there's also like a
Speaker 2: nuance and a caveat in terms of like how the
Speaker 2: chemicals industry works that I just find this to be
Speaker 2: particularly fascinating. So you can have structurally differentiated margins from
Speaker 2: the standpoint of like you know, saogen, it's better yields.
Speaker 2: That's great, But then what you don't want to do
Speaker 2: is compete against someone else's depreciated cabbex.
Speaker 1: Right, meaning they built the factory thirty years ago, they
Speaker 1: don't have to pay for it anymore, so they can
Speaker 1: just essentially treat it as free, and then they will
Speaker 1: always be able to underprice you exactly.
Speaker 2: They've got a really diversified set of chemicals that they're making,
Speaker 2: and so like if you try to go head to
Speaker 2: head against them.
Speaker 1: A conglomerate like Dow or do Pont, like a giant
Speaker 1: chemical company that I have heard of, even though I
Speaker 1: don't know about this.
Speaker 2: Business exactly, right, So, like, if you start going in
Speaker 2: there and putting new chemicals on the market, right and
Speaker 2: lowering that price as a result, they can actually run
Speaker 2: at a loss for years forever forever.
Speaker 1: They don't they could the amount of revenue that you
Speaker 1: have is so trivial to them that they could just underprice.
Speaker 2: You forever exactly, and so like like it's one of
Speaker 2: the things I find the most fun about the chemicals
Speaker 2: industry is like the market tree strategy on Like, well
Speaker 2: what because I gets all, like we can we have
Speaker 2: all sorts of patterns on all these different chemicals. It's
Speaker 2: like what do you launch first? What do you launch second?
Speaker 2: Like why are you launching these chemicals next?
Speaker 1: And well, like it reminds me of the hydrogen peroxide
Speaker 1: for the float spot, right, It's like this weird little
Speaker 1: market that really cares and that you can sell at
Speaker 1: a premium to. I mean, have you essentially been able
Speaker 1: to keep doing that in kind of broader concentric circles,
Speaker 1: bigger markets.
Speaker 2: That that's precisely it, And so like our most immediate
Speaker 2: goal is like have a network of bioforges that are
Speaker 2: selling specialty chemicals that are paying for themselves, they're depreciating,
Speaker 2: they're profitable, and then we come back around and we
Speaker 2: start bolting on the capabilities to make more of the
Speaker 2: commodity chemicals in the future.
Speaker 1: So like right now, like why I get why the
Speaker 1: float spot people were willing to pay you more for
Speaker 1: hydrogen proxide. Why are people willing? Like, what is it
Speaker 1: that you're selling now that is like, you know, you're
Speaker 1: particularly able to sell at a profit at the scale
Speaker 1: you're at now.
Speaker 2: Yes, So let's talk about on the water treatment side. Yeah,
Speaker 2: So on the water treatment side, let's say you're a
Speaker 2: municipality and you're trying to clean up your water. If
Speaker 2: ultimately what you're measuring is like, here's my cost and
Speaker 2: I'm spending on chemicals to get my water clean And
Speaker 2: if we come in with a package that is cheaper
Speaker 2: than how much you're spending to get that same cleanliness,
Speaker 2: that's a valuebrole. That's price per performance. Sure. And then
Speaker 2: the second is security of supply. So a lot of
Speaker 2: these different chemicals are all made in China and they
Speaker 2: spend eight weeks on the water. And then I would
Speaker 2: say sustainability tends to be the third. But we're never
Speaker 2: essentially selling chemicals at a premium. We're trying to match
Speaker 2: or be better than price and performance.
Speaker 1: And can you can do as good or better on
Speaker 1: price because you're disintermediating essentially, because for other sellers it's
Speaker 1: sort of going through multiple middlemen who are all taking
Speaker 1: a cut, and you can make the final product. You
Speaker 1: can go from input to final product exactly.
Speaker 2: So like if we think about like a municipality can't
Speaker 2: take that supply chain risk. They can't wait eight weeks
Speaker 2: on the water for chemicals to come, so it has
Speaker 2: to go through distribution. And so a lot of the
Speaker 2: chemicals that we compete against today that are imported from China,
Speaker 2: they like we estimate they change hands on average about
Speaker 2: five times before they reach that end US customer.
Speaker 1: Okay, And as Bezo said, their margin is your opportunity. Sure,
Speaker 1: so let's talk about this sort of medium term right,
Speaker 1: So you're now, well, what's what more or less your
Speaker 1: revenue now?
Speaker 2: So magnitude so we're we're on the order of one
Speaker 2: hundred million a year.
Speaker 1: Okay, So, like definitely a real business. But the scale
Speaker 1: of the petrochemical industry is giant, what hundreds of billions
Speaker 1: a year, maybe trillions a year.
Speaker 2: Globally or globally it's in the trillions.
Speaker 1: Yeah. So I mean, is your dream that you will
Speaker 1: be the like Dow chemical of the new century, Like,
Speaker 1: is that is that the big dream?
Speaker 2: Yeah? I mean I would say, the big dream is
Speaker 2: decarbonization of chemicals, right, and sort of I don't think
Speaker 2: these that chemical plant should be this sort of like
Speaker 2: pariah where you don't want them around you or in
Speaker 2: your community. Like manufacturing is essential to supporting all of us,
Speaker 2: and so like what I see is sort of like
Speaker 2: this network of sustainable manufacturing plants that you know, people
Speaker 2: view as safe, maybe them as a good part of
Speaker 2: the community. They create clean, green jobs, They're making chemicals
Speaker 2: that support our families. Uh, and you know, they're not
Speaker 2: harming the planet. And I think the technology exists to
Speaker 2: do that today, and every year it's getting better and better.
Speaker 2: And so you know, what I view as the role
Speaker 2: of solugen is like how do we get those technologies
Speaker 2: to scale as fast as possible and get those products,
Speaker 2: you know, seeding the chemicals transition as quickly as possible.
Speaker 1: Anybody else doing what you're doing, Like it seems to
Speaker 1: make a lot of sense. I'm sold that it makes sense.
Speaker 1: Are there people trying to do what you're trying to do?
Speaker 2: Yeah, I mean so so, Like I think sustainable chemistry,
Speaker 2: green chemistry in general, there's all sorts of people that
Speaker 2: are in this space. Like I know you talked to
Speaker 2: C sixteen rights as an example, and so that's a
Speaker 2: fermentation approach to make oils, and.
Speaker 1: So yes, I mean that's a very niche. It seems
Speaker 1: like a different niche, but yeah, it's an interesting comparison.
Speaker 2: Yeah. Well, well it's just there's a lot of people
Speaker 2: in the space. I would say Solugen From a technology standpoint,
Speaker 2: I think at this point we're broadly what I would
Speaker 2: consider like an N of one company. We've captured a
Speaker 2: lot of the IP patent white space, We've gotten the
Speaker 2: scale very quickly, and you know our roadmap in front
Speaker 2: of us right now, I'm coining idea to tacker truck.
Speaker 2: So I want to I want to take an idea
Speaker 2: from a lab and I want to get it to
Speaker 2: a tacker truck scale in like eighteen months.
Speaker 1: And how long does it take you now?
Speaker 2: So for our first idea attacker truck, I guess was
Speaker 2: twenty sixteen to twenty twenty one.
Speaker 1: That's hydrogen peroxide. That was like home deep ot to tanker.
Speaker 2: Truck exactly right. And then I now, with all the
Speaker 2: capabilities we built in Houston, I think we can do
Speaker 2: it in eighteen months. If you look at sort of
Speaker 2: historical chemicals industry idea, A tanker truck is like a
Speaker 2: ten year process. So now we've got this whole white
Speaker 2: space that uses enzymes and metal catalysts to convert corn
Speaker 2: to chemicals.
Speaker 1: So it's the idea, not only can you make, you know,
Speaker 1: make from corn what people have been making from fossil fuels,
Speaker 1: but also maybe there's a whole new universe of things
Speaker 1: that you can make.
Speaker 2: There's a whole new universal molecules that we can make.
Speaker 2: So like, like one I'll throw out there is like,
Speaker 2: so when we make lucaric acid, we go through this
Speaker 2: metastable intermediate and it's a weird molecule. It's called gluco dialdos,
Speaker 2: very strange molecule. You can't even buy this on the
Speaker 2: internet and like gram quantities so weird.
Speaker 1: You cannot buy it on the internet.
Speaker 2: Cannot buy it on the internet, right, And that's I mean,
Speaker 2: if you can't buy it on the internet, it must
Speaker 2: be it does it even exist? Right? We we happen
Speaker 2: to accidentally make thousands of tons per year of this
Speaker 2: and it's like we're processing it forward to glucoric acid
Speaker 2: because we have all these customers for glucoric acid but
Speaker 2: like each molecule that we make goes through this really
Speaker 2: unique intermediate. There's a whole world of opportunity there in
Speaker 2: terms of all these different sort of under do.
Speaker 1: You think it might be good for? Like take a guess.
Speaker 2: Okay, so here's a fascinating one. It is so figure
Speaker 2: glucose is sugar, right, that's what you're making. I mean
Speaker 2: we all live off a glucose, right. Glucodados is glucose
Speaker 2: with two audehydes and it's actually biasidal, so it actually
Speaker 2: kills bacteria. And so like one of the molecules that
Speaker 2: is sort of a big market in some of the
Speaker 2: space we service called glutter aldehyde. It's it's got two
Speaker 2: autehydes and it's made from oil. Could you use glucodiados
Speaker 2: to replace gluter aldehyde? And now you have like a
Speaker 2: sugar that is some how toxic and can kill bugs
Speaker 2: and like clean and disinfect Like that's crazy, And so
Speaker 2: you know this is like if this to me is
Speaker 2: like a really key one on the chemical transition. Right.
Speaker 2: So it's just like the energy transition, the chemical transitions,
Speaker 2: like how do we get sustainable chemicals into all the
Speaker 2: products around us? All the things that we use every
Speaker 2: day right right now, they're all made from oil, coal,
Speaker 2: natural gas. How do we steadily introduce biomanufactured and recycled
Speaker 2: circular materials versions of those into them over time.
Speaker 1: So that we don't have to make them from fossil
Speaker 1: fuels anymore?
Speaker 2: Exactly? And you know, if I give you a concrete
Speaker 2: example is actually the Biden Bioeconomy Executive Order. This was
Speaker 2: from about two years ago. This one. It calls for
Speaker 2: thirty percent of all US chemicals to be biomanufactured in
Speaker 2: the next twenty years. So like that essentially sets a
Speaker 2: target for the chemicals transition. It says, hey, in twenty years,
Speaker 2: thirty percent of the products should have like thirty percent
Speaker 2: of them biomanufactured over that time frame. That's you we're trying.
Speaker 1: We'll be back in a minute with the lightning round.
Speaker 1: Let's do the lightning round. I understand earlier in your
Speaker 1: career you were a cocoa puff engineer at General Mills.
Speaker 2: That's true, yes, yes.
Speaker 1: What was the hardest cocoa puff problem you worked on?
Speaker 2: So? So coco puffs. What I love about it is
Speaker 2: it's a late stage capitalism, and so they've been around
Speaker 2: since nineteen fifties, and so what we were focused on
Speaker 2: was how do you make the cocoa puff glossy and
Speaker 2: frosty for different markets? So different geographies have a different
Speaker 2: visual appeal for like should it be frostier, should it
Speaker 2: be glossier?
Speaker 1: Meaning in different places people have different.
Speaker 2: Preferences, They have different preferences, and so so the the
Speaker 2: US is shiny and not particularly frosty, okay, but then
Speaker 2: Southeast Asia is actually more frosty than Matt huh yeah.
Speaker 1: And you have to sort of change the chemistry to
Speaker 1: deliver it to.
Speaker 2: Because you're you're crystallizing sugar on top of kick cereal.
Speaker 2: That's what cocoa puffs is, and so you have to
Speaker 2: tune the crystallization process to make it shiny or frostier.
Speaker 2: Mat And so I actually like coated cocoa puffs and
Speaker 2: gold and put them in scanning electron microscopes.
Speaker 1: Coated them with literal gold.
Speaker 2: With literal gold, and I have I have a whole
Speaker 2: lots of gold. Why not is the question?
Speaker 1: Will you still have gold cocoa puffs?
Speaker 2: Oh?
Speaker 1: Absolutely, that's amazing.
Speaker 2: Yeah, they're pretty cool.
Speaker 1: Hard to imagine you will ever do anything that meaningful again.
Speaker 2: But good luck it was. It was my most delicious
Speaker 2: time in my career.
Speaker 1: Did you eat a gold cocoa puff?
Speaker 2: Yeah? Yeah, they're totally harmless, so yeah, right, you can
Speaker 2: eat gold, any gold?
Speaker 1: Yeah, why not? I suppose as an engineer, what cereal
Speaker 1: do you admire the most other than cocoa puffs?
Speaker 2: So as a food product, I admire gushers the most.
Speaker 1: Gusher So they're like kind of a gooey candy and
Speaker 1: you bite into it in some liquid.
Speaker 2: Shot some liquid shots out. It's an exceptionally innovative, complex
Speaker 2: manufacturing process that was like specially built to make gushers.
Speaker 2: We're getting all the rain.
Speaker 1: Oh does that sound rain on the roof of the trailer.
Speaker 2: Yeah yeah, it's really coming down now.
Speaker 1: Okay, home depot or lows.
Speaker 2: So so home depot for wood, lows for plumbing parts.
Speaker 1: Huh. That is a that is a robust answer. That's
Speaker 1: a varsity answer. Just better prices, better selection.
Speaker 2: I think it's about selection for for both of them,
Speaker 2: because like if you're going to home deep or Lows,
Speaker 2: you're in a jam. Like that means I messed up
Speaker 2: on my parts ordering list and something didn't come in
Speaker 2: I see, and so I'm like quickly running out there.
Speaker 1: So you actually go to home depot or loads to
Speaker 1: like build your one hundred million dollars a year factory.
Speaker 1: Oh yeah, so you're going for real, I am just
Speaker 1: screwing around at home depot. You have high stakes when
Speaker 1: you go to home depot or low.
Speaker 2: Well, so typical. If I need apart from home depoer loads,
Speaker 2: it's because like I really messed up the design of
Speaker 2: some aspect, and it's like we're really going to do
Speaker 2: like a patchwork job to just try to get it going.
Speaker 1: Yes, what's the most underrated chemical?
Speaker 2: I mean, I don't think the public appreciates any of
Speaker 2: the chemicals that they use every day or really like
Speaker 2: how important they are and all the work and effort
Speaker 2: that goes into making them. Like what's astounding to me
Speaker 2: is if I look at a bottle of water on
Speaker 2: a store shelves, it blows my mind because the effort
Speaker 2: in making that plastic and the science is so complex
Speaker 2: and the costs are so astronomical, and yet you're buying
Speaker 2: it for the water.
Speaker 1: You're just saying, the bottle alone is an engineering miracle.
Speaker 2: The bottle loans an engineering miracle because it's an incredible
Speaker 2: material and it's so crystal and everything like like that
Speaker 2: plastic has a higher specification than pharmaceuticals in terms of purity,
Speaker 2: and yet we're just being like it's for water and
Speaker 2: the bottles free.
Speaker 1: It's garbage. It's basically garbage.
Speaker 2: It's mind blowing to be still, do you.
Speaker 1: Have a white whale? Is there one chemical you really
Speaker 1: want to be able to sell that you haven't figured
Speaker 1: out yet?
Speaker 2: So I think it's two, So nylon And like my dream,
Speaker 2: there is actually cardboard as the feedstock. So cardboard recycled
Speaker 2: cardboard is actually like just sugar polymers. It's the same
Speaker 2: thing as starts from corn. So it's actually a really
Speaker 2: great feedstock for us, just.
Speaker 1: Like a cardboard box that I break down.
Speaker 2: Yeah, because cardboard it gets recycled like twelve times from
Speaker 2: cradle to cradle, but the fibers get smaller and smaller
Speaker 2: and it eventually gets land filled or burned. Those really
Speaker 2: small fibers would be incredible feedstocks for our plant. And
Speaker 2: then we have a process technology for making nylon, and
Speaker 2: so to me, it's like it would just be like
Speaker 2: to me, that's like a total end state of like
Speaker 2: just victory. If we're doing cardboard to nylon.
Speaker 1: I feel like you should call Patagonia. I feel like
Speaker 1: they'll pay a premium for that.
Speaker 2: I know. Do you know the challenge that with all
Speaker 2: these clothing retailers is like that's where the sustainability impact is,
Speaker 2: but they buy just like a fractional percent of the
Speaker 2: volume in the market.
Speaker 1: So you need to figure out how to do it
Speaker 1: for real and not rely on the green premium and
Speaker 1: actually use garbage cardboard to make good nylon that you
Speaker 1: can sell at a commodity.
Speaker 2: Price and then figure like most nylon manufacturers in China,
Speaker 2: it's depreciated assets. Now you're gonna build this whole brand new,
Speaker 2: shiny thing to go do it, so you have you
Speaker 2: have all of those types of issues and everything.
Speaker 1: Hence the white whale.
Speaker 2: He's the white whale. But I think I think we
Speaker 2: can eventually get there. Like to me, that's like I've
Speaker 2: got forty years of work ahead of me, right, I
Speaker 2: think we can do that one coming out here.
Speaker 1: I like the long view. So your co founder says,
Speaker 1: and this is a quote, if I if I've got
Speaker 1: it right, you're terrible at poker.
Speaker 2: Yeah true, yeah, yeah, no, I'm I'm really there to
Speaker 2: crack jokes, to have a good time, to drink some beer,
Speaker 2: and to lose a predetermined amount of money.
Speaker 1: Oh you're great for everybody else, So everybody loves to
Speaker 1: see you walk up to the table.
Speaker 2: Yeah, yeah, no, I'm always invited. I have a fun
Speaker 2: one for you. You know. I'm a semi professional juggler.
Speaker 1: Like, what's the frontier of your Wait, what a semi
Speaker 1: professional mean? In the context of juggling, you get paid sometimes.
Speaker 2: I have been paid on occasion to juggle. At one point,
Speaker 2: I competed in a national combat juggling tournament. Combat combat juggling.
Speaker 1: Boxing crossed with juggling. You're juggling weapons.
Speaker 2: Twenty twenty people standing in a circle. They fight until
Speaker 2: the last person's juggling. Seriously, it's amazing. You can watch
Speaker 2: it on YouTube and please petition for it to be
Speaker 2: in the Olympics.
Speaker 1: It's like a juggling battle royale, and you're just trying
Speaker 1: to make the other dude mess up without messing up yourself.
Speaker 2: I have a whole strategies, like I run to the
Speaker 2: edge of the arena and I let all this collateral
Speaker 2: damage happen. Then there's a whole bunch of spare balls
Speaker 2: that are on the field. You only have to be
Speaker 2: juggling three balls, So I pick them up and I
Speaker 2: go into like four and five ball juggling, and then
Speaker 2: I stay at the edge of the arena and I
Speaker 2: snipe people with my extra balls.
Speaker 1: Wow. Is that a metaphor for running your company?
Speaker 2: Maybe? Maybe a kind of fluctuakes always feel like every
Speaker 2: day I'm getting punched in the face with by capitalism.
Speaker 2: But there's just just but there's just all these incredible tailwinds.
Speaker 1: And when you say you feel like you're getting punched
Speaker 1: in the face every day by capitalism, what do you mean?
Speaker 2: Well, I think I think the world exists to try
Speaker 2: to kill startups kind of from from every every direction, right,
Speaker 2: because you're trying to do something different. And I would
Speaker 2: say especially selling, like in B to B, there's a
Speaker 2: natural inclination to just do what you've always been doing
Speaker 2: right and try trying to overcome that is difficult.
Speaker 1: A natural inclination on the part of the buyers, like
Speaker 1: it's some somebody at like some municipal water plant, Like
Speaker 1: they don't want to hear from you. They're not going
Speaker 1: to get in trouble buying the same chemical that they've
Speaker 1: been buying at that plant for thirty.
Speaker 2: Years exactly, and so like, and I feel like everyone
Speaker 2: we talked to, they're all they can all say the
Speaker 2: same thing on like they're concern about the climate, they're
Speaker 2: concerned about these different things. But then I think people
Speaker 2: underestimate their own ability to effectuate that change, even just
Speaker 2: someone there being like, hey, I'm gonna switch to a
Speaker 2: different vendor, I'm gonna try this out like that that
Speaker 2: there is like if you did that for all these
Speaker 2: different startups that are working in sustainable chemicals. The part
Speaker 2: I get pessimistic about is rate of adoption. It's really
Speaker 2: just just that like the technology piece, like I we're
Speaker 2: going to get there. Humans are super ingenius. I think
Speaker 2: a lot of the technologies are actually already here. They're
Speaker 2: a bit nascent, they need to be deployed. But it's
Speaker 2: that it's that rate that's that's the part to me,
Speaker 2: and I think is the most important. The urgency, the
Speaker 2: urgency exactly.
Speaker 1: Sean Hutt is the co founder and CTO of solu Gin.
Speaker 1: Today's show was produced by Gabriel Hunter Cheng. It was
Speaker 1: edited by Egene Cott and engineered by Sarah Bruguier. You
Speaker 1: can email us at problem at Pushkin dot FM. I'm
Speaker 1: Jacob Goldstein, and we'll be back next week with another
Speaker 1: episode of What's Your Problem.