In for a Penny, In for a Pound: The Advanced Bioeconomy and all the pivots

December 28, 2017 |

It’s been such a busy cycle in the bioeconomy that we are well overdue for a shout-out to a pal of the Digest, Henry Threadgill, for winning a Pulitzer Prize for his landmark composition, In for a Penny, In for a Pound.

Threadgill’s masterpiece (which you can experience here) comes to mind as news arrives that Algae.Tec has (once again) shifted its business focus, and what was once a developer of algae bioreactors to make cost-competitive fuels is now in the business of “heirloom cannabis varietals”.

So, um, High Times at Algae.Tec.

And it’s high time to reflect on the shifting strategies at some companies in the advanced bioeconomy, and at what point a corporate evolution strays from the sublime into the ridiculous. A review of the principle of “In for a Penny, in for a Pound” is in order.

Threadgill, whether he was playing with his Sextet or any of the later groups, explores the space between formal composition and improvisation. Jazz evolves, shifts, sharply zigs when you expect a zag — great jazz knows when to state the theme, and when to improvise.

Extending the brand

It’s tough to bring an audience along when there’s all that zig and zag.  Companies like Algae.Tec are going to feel it. Solazyme felt it when it tried to become TerraVia, and a whole bunch of companies felt it when they thought it was a no-brainer to abandon biomass to make fuels and chemicals from natural gas instead (most of them went nowhere, and some of them directly into liquidation).

Something I think everyone admired about George Plimpton was his well-publicized ability to move from one incongruous feat to another and still always be just George, whether he was writing about his amateur adventure in the NFL in Paper Lion, pitching Pop Secret popcorn or that terrific cameo of his in Warren Beatty’s Reds. Bioeconomy companies struggle to make effective transitions and yet retain their essence. Amyris tries for it, but few others.

It’s a talent that Sir Richard Branson has — you can believe in almost any crazy venture he gets involved in, and Elon Musk lately has acquired that aura in the world of auto manufacturing and space exploration.

Going over Niagara Falls in a Barrel

The bioeconomy lacks that sense of derring-do, and few of the bioeconomy’s pioneers have a charismatic quality — earnest, intelligent, organized they all are, but not many bioeconomy founders or CEOs have a second career ahead in Hollywood. Algenol founder Paul Woods had l’audace, l’audace, toujours l’audace, all right, but he moved on. You hear a lot of bold claims in the bioeconomy, but it feels more like going over Niagara Falls in a barrel than the kind of charisma that can lock attention on an improbable thing until, finally and astonishingly, the improbability falls away, the critics recede, and the entire world steps in to take the credit and talk up the inevitability that it always had.

But then, no one ever accused Henry Threadgill of having the outsized personality of, say, Dexter Gordon or Charlie Mingus. No, he’s been a grinder, that’s been the Threadgill story and some others we know, Fulcrum BioEnergy and LanzaTech come to mind.

In for a Penny, in for a Pound is easy to say, hard to do. The economy zigs, catalysts struggle, investors tire, critics multiply — and the temptation to zag is powerful.

Fulcrum and LanzaTech: True to a vision

Man have those two companies, Fulcrum and LanzaTech, kept up the good fight. They’re still chasing the big markets of advanced, low-carbon biofuels. Advanced biofuels is about going for broke — and in the world of real venturing a lot of people end up broke, or broken. And it can look awfully dark before the dawn. Go ask Gevo.

“Go for Broke’ was the title of Arnold Palmer’s mid-career memoir, and the centerpiece of Palmer’s tale is his victory at Cherry Hills in the 1960 US Open. The opening par-four at Cherry Hills was short, back then, and Palmer kept trying to drive it.

It feels like he failed more times trying to drive that hole than George Mitchell failed trying to prove that fracking was a viable technology. But, both found the right combination in the end.

Palmer didn’t see himself as a risk-taker, exactly. He saw himself as an opportunity-realizer. One afternoon, as we rambled together on a course in the unlikely town of Mars, Pennsylvania, to the extent that you could ever get A.P. to yack about anything, he yakked about risk-minimization.

Palmer, the Great Risk Taker, a risk-minimizer? Yep, though everyone saw him grip and rip, that’s how he saw himself. Risks were there to be taken, but not wildly, not without consideration.  “A man ought to be able to drive that hole,” as he observed simply of the first at Cherry Hills.

To Palmer, driving the green and securing a killer birdie on the first hole, it changed the dynamics of the pressure on the other players, and reduced the risks that Palmer would have to take later in the round. Sure enough, Ben Hogan fatted an 8-iron into the water, Nicklaus made a rookie mistake, and Palmer won it. There’s pressure everywhere you look in a golf tournament, as in an economy or a bioeconomy — you just have to learn to deflect some of outward toward someone else.

The Risk Mininimizers

Picking your moment to “go for broke”’— isn’t that the secret for the bioeconomy, too? Seen from the outside, the successful ones look like risk-takers, but they are really risk-minimizers. Finding ways to null out a risk — feedstock, technology, market access — that kills ordinary leaders and ordinary ventures, that’s what marks out the very best, so far as we’ve seen it from the conning tower of The Digest.

You hear a lot of praise for CEOs and investors who come in to companies, and pivot, reposition, re-align, re-aim, re-load. Alignment, posture, aim? Bosh: Palmer used to get at me about the grip. The grip, the grip, the grip. Palmer said it a zillion times, to his fans, to friends, to me, to anyone. Get the right grip on the club, and keep it there.

They look super-flexible and Harvard smart, those guys that fiddle with their grip. Their contracts are always negotiable, their staffs are always changing, the location of the next plant is always up in the air, the molecular target is always up for grabs, even the underlying technology is for sale or certainly for discussion  The deals all make sense, and the pivots are smoothly explained to Wall Street.

But I don’t think Mark McCormack would have gone in for any of that.

What They Don’t Teach You at Harvard Business School

Next door to Palmer’s house in Isleworth, a tony development in Orlando, McCormack lived with his wife Betsy Nagelsen in this completely gigantic house, it must have been 40,000 square feet – a product of McCormack’s success with his sports management firm, IMG.

McCormack would go on to write a book called “What They Don’t Teach You at Harvard Business School”. Playing it as it lies, not as it models out. So to speak.

A company founded on a handshake, an sports management industry built up essentially out of thin air, endorsement deals that re-invented endorsement deals, pre-packaged television deals that re-invented televised sports.

None of it made sense at the time, and all of it makes perfect sense in hindsight. McCormack’s genius, though, wasn’t just dreaming this stuff up, and selling it in. It was his ability to persist with seemingly crazy ideas.

He went for zigs when zags were in fashion, he skated to where the market was going to be, like a business Gretzky. That is what going for broke is all about. Diversifying is different than repositioning, evolving is different than re-targeting.

Green Plains, REG, Novozymes, POET-DSM: diversification beats a pivot every time

The great ones in the bioeconomy, they diversify, but they rarely abandon the field. Green Plains has become a lot more than just renewable energy, and REG has become a lot more than just biodiesel, but they were serious about their first business and serious about getting good at managing the cycle, not hopping elsewhere at the first sign of trouble.  POET-DSM and Novozymes have been much the same — enter markets with purpose, then expand, rather than abandoning ship. They find that fertile ground between improvisation and a written score.

Maybe that’s why they are worth so much.

In for a Penny, in for a Pound. That’s what Threadgill says.  Enough with the pivoting, already, this is an industry not a dance hall, you don’t get extra points for twirling. And, three cheers for those around us who find a way to stick to the vision. That’s real leadership, and worth saluting and reflecting upon.

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