It feels appropriate Web Summit, a conference for about 70,000 technology startups and investors, is being held the week we mark 50 years since delivery of the first message across what was the beginning of the internet, the ARPAnet.
That first message between US scientists in California has morphed into the internet enabling billions of people to access the sort of websites and near-frictionless communications of Whatsapp and other voice-over-internet-protocol services on mobile devices.
The ARPAnet came only a dozen years after the creation of Fairchild Semiconductor in Silicon Valley, California, a venture capital-backed company that entered the Computer History museum as the first trillion-dollar startup and spawned a generation of VCs, such as Arthur Rock and Eugene Kleiner, and entrepreneurs, including the later creation of Intel.
The two – startups and VCs – built on chips, software and communications have gone hand in hand ever since in partnership under the third important factor: a unique regulatory environment of so-called permissionless innovation.
Unlike medicine, which is meant to have a rigorous and scientifically-validated approach to testing and approving drugs, based on clinical trials and randomised controlled tests, or even the finance and insurance industries, where new entrants must comply with rules hopefully designed to protect the consumer, capital adequacy and anti-money laundering requirements, the tech industry has had no such framework, Azeem Azhar points out in his latest Exponential View newsletter.
Technology by contrast offers an open platform so entrepreneurs can try new things without getting permission from regulators or, indeed, anyone else.
Azhar notes this is why we got streaming audio in the mid-1990s, while the traditional broadcast industry remained heavily regulated, and why we have had a flourishing ecology of remarkably large products, such as Google, Facebook, Skype or Wikipedia in the west, alongside weird, wonderful niche products. (China’s history is more complicated in regulating and allowing Baidu, Alibaba, Tencent, Xiaomi and Bytedance but, broadly, one argument goes they grew too big, too quickly before the government could shut them down.)
Now, however, we are in a world where the technology has gone beyond its niche and software, as venture capitalist Marc Andreessen (who in an earlier iteration developed the Netscape internet browser) pointed out at the start of the decade, has eaten the world.
Andreessen Horowitz, Marc’s VC firm, this past week put out a new manifesto on how Biology is Eating the World.
It is a great primer and worth reading in full (their emphasis on words) but the essence is: “We are at the beginning of a new era, where biology has shifted from an empirical science to an engineering discipline. After a millennia of using man-made approaches for controlling or manipulating biology, we have finally begun using nature’s own machinery—through biological engineering—to design, scale, and transform biology….
“Increasingly, not all therapies will be molecules. Already, today you can download a therapeutic to manage complex chronic conditions like diabetes or behavioural disorders—potentially better than any existing medicines can. For these complex conditions, software may be our best way to impact biology. These digital health therapeutics have the potential to not only make you better, but themselves get better and better over time as they treat you. Now biology doesn’t just evolve, our therapeutics do, too.
“All of this is powered by the ability to generate data that we’ve never had before, plus sophisticated computational tools to make sense of them. Biology is incredibly complex —maybe even beyond the ability of the human mind to fully comprehend. AI-powered platforms have the potential to connect dots that have before looked like noise; to generate new discoveries; even to change the nature of discovery itself. This will drive both new therapies and next-generation diagnostics that give us the ability to detect diseases like cancer earlier and earlier, perhaps even stopping disease before it begins….
“Biology, of course, doesn’t just impact human health and disease. With its unparalleled ability to evolve, replicate, and create, biology is one of the most advanced manufacturing technologies on earth. We’ve already seen it transform food, agriculture, textiles, manufacturing, and—with DNA-based computers—even software itself. Bio today is where information technology was 50 years ago: on the precipice of touching all of our lives. Just like software—and because of it—biology will one day become part of every industry.
“This next generation of companies will be built by a new generation of founders who are multidisciplinary, with deep expertise in their domains. The bio companies of the future will take learnings from predecessors in other spaces: consumer, enterprise, fintech, and beyond. So, just like our founders, we believe investors in this space also need to have deep expertise and experience, and be multidisciplinary—to have the vision to support founders as these traditional sectors and industry lines are shifting. We are living in the century of biology, and biology is eating the world.”
Money has been flowing this way for decades – the hype of biotech in the 1980s is still being realised. Last month, for example, Molecular Assemblies, a US-based gene development and DNA-based data storage company, raised $12.2m in its series A round from a consortium including corporate investors Agilent Technologies and Alexandria Venture Investments.
The latest money will fund the company’s enzymatic DNA synthesis technology to power DNA-based products in synthetic biology. Enzymatic DNA synthesis can write long, pure DNA, which enables synthetic biology applications, such as personalized medicines (including Car-T cell therapies and Crispr gene editing), agricultural and industrial products and affects the information storage industry by enabling integrated systems that can write and read DNA data.
Others are even more ambitious. The falling cost of DNA sequencing opens a treasure trove of opportunities for biotech and medical tech startups, including the so-called ‘Book of Life’, the genetic sequences of all complex species on the planet and the relationships between them. So far, 0.28% has been decoded but the Earth BioGenome Project is setting out to change that, according to Juan Carlos Castilla Rubio.
But while the real world is being disrupted through bio, the move online of people’s lives is still continuing and computing is also being disrupted by the developments in quantum computing among other areas.
Economics reporters are exploring the lessons for global trade to be found in the massively popular online videogame Fortnite, published by Tencent-backed Epic Games. It finally launched in China last year after struggling for years to get permission to launch there because of government fears about internet addiction, and digital trade in Fortnite skins and battle packs between players around the world successfully bypasses any tariffs or trade war skirmishes. States are still backwards in regulating digital goods and the European Commission among other governmental agencies around the world is increasingly concerned about how to do so.
As Azhar notes: “The tech industry today is simply too big and has tremendous access to capital. Entrepreneurs know how to ‘blitzscale’, that is, grow their companies globally very quickly. Capital markets are willing to support them…. The biggest firms, Alphabet, Facebook, Amazon, Tencent and Baidu, are sovereign-state in scale. This actual or potential leviathanhood demands we ask them for more prudence.
“There are emergent effects from many of these innovations which, in a permissionless environment, are borne collectively by society or simply weigh on the vulnerable. For example, Uber and Lyft have increased congestion in cities while reducing driver wages. These firms’ founders and earliest investors make out like bandits.”
Back in 1982, Blade Runner film director Ridley Scott imagined the world in November 2019 as being in a state of urban decay, where the population has dwindled, and humans face a new threat from manufactured biological robots gone rogue. The worst aspects of this dystopia have yet to come to pass but the holy trinity of capital, entrepreneurs and lack of regulation seems at an inflection point for the first time in a generation as societies through their politicians question what sort of world people want to live in.
One answer emerging is the use of the United Nations’ sustainable development goals and impact investing to create the challenges people can tackle and form of capitalism that goes beyond measuring revenues and profits to explore the social and environmental consequences.
Web Summit’s unique gathering of stakeholders will be an important place to look at the world we want to live in.
This is a draft of an editorial being planned for our annual review to be published at the Global Corporate Venturing and Innovation Summit in Monterey, California, on 29-30 January – please contact me for insights and feedback.
