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Evolving ourselves

Juan Enriquez

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Enriquez, one of the world’s leading authorities on genomic research’s uses and benefits, discusses the immense domino effect of innovation and change, whether in terms of the success of Uber or work with cloning and non-random mutation. The impact, he says, is that we are all controlling evolution. Presented at the 2017 Annual Meeting.

I’m going to start with a pop quiz. What I’d like you to do is, in 20 seconds, name as many large US companies as you can that didn’t exist a couple of decades ago. And, then, in 20 seconds, I’d like you to try large European companies.

I’m going to talk a little bit about the difference between Europe and the United States as systems, because in Europe, if you’re the treasurer, if you’re the CFO, if you’re the manager of a business, often you’re managing a business that’s been around for a while. So there are great European brands. There’s Louis Vuitton; there’s Chanel; there’s Ferrari. There’s a whole series of companies that are extraordinary companies, but the United States has a different system, and that’s a system where companies and industries are blown up time and again.

So it’s very rare in the United States to have a 5th, 10th, or 15th generation running a business. And you can see that when you look at how volatile tech stocks are. If you take tech stocks, the most valuable tech stocks in the United States in the year 2000, you have everybody working for the next 13 years. What you’re going to see is that three of those companies do better 13 years later after all the hard work and overtime. And the other top tech companies in the S&P 500 are either worth less or have completely disappeared.

The reason why that happens is because start-ups, many of the companies that you thought of, tend to displace not only existing companies, but entire industries. And, in the process, they’re the creators of jobs. So what traditionally happens in an economy is that the big companies, the Fortune 500, will merge and then they’ll rationalize. They’ll streamline the costs, and they’ll eliminate double areas in marketing or in accounting or in something else, whereas the start-ups are growing 30 percent, 40 percent, 50 percent a year and generating most of the employment. And the difference between a 40 percent unemployment rate among youth in Spain and an almost full employment rate in the United States is this ability to innovate, to create new companies.

It’s a very uncomfortable thing, but it’s a very effective thing, because it’s about 0.2 percent of the United States. GP has been invested through venture capital. And that’s about 21 percent of the United States’ economic output. So the companies that you thought of, companies you could name, have become global, enormous companies and were started with relatively small initial investments. The mistake that businesses often make is that they focus on the quarterly earnings; they focus on their competitors; and they focus on the people who are in their same line of business. They ignore these waves of technology, and it’s these waves of technology that often overwhelm existing systems. That’s why even the Fortune 500, over the course of 13 years, can be decimated or even disappear.

Let me give you an example with Uber. A lot of people think about Uber as an application that’s on your phone, and it brings a car. There’s a debate with the taxicab company and there’s a debate with the municipality and there’s a debate with the company. But Uber is actually something that’s very different from that.

For one, in its last valuation—and I don’t know if this is a sustainable valuation—the company was worth about $68 billion. Every person in Uruguay gets up every morning—every doctor, every lawyer, every bureaucrat, every businessperson, every salesman, every cook—and they work their 10 or 12 hours a day. They work their extra hours. They work their weekends. And they still don’t generate as much wealth as Uber does as a single company in terms of its value.

The second thing that’s happening with Uber is, if you drive fewer than 10,000 miles, it’s cheaper to use an Uber. Cars turn out to be giant paperweights. Think of a car spending most of its time sitting outside the school, sitting outside the mall, sitting outside the movie theater, sitting outside your house, and sitting outside your office. It’s really expensive to own a car. It’s the second largest capital expenditure for most people. You also have to insure it; you have to repair it; you have to park it; and you have to do a whole series of things with cars that suck money. So, if they’re driving fewer than 10,000 miles a year, most people find it’s cheaper simply to use an Uber unless they live way outside an urban area.

That means that about 22 percent of Uber users today are not buying automobiles. And that has real consequences, because it means that you’re disrupting enormous systems of manufacturing. It’s not just the manufacturing and the car purchases and the car lots that you’re disrupting; there are also parallel technologies like these self-driving cars from Google that allow cars increasingly to drive without a driver. And that’s the largest, single variable cost in an Uber. So having these autonomous vehicles means that you can drop the cost of an Uber by a further 50 percent and still make a profit.

The consequence of that is, not only are you displacing an enormous number of workers, but you’re also completely changing how many people are buying automobiles. Because, at this point, unless you really live far out or unless if you really drive a lot, it really doesn’t make sense to own a car at these costs.

Your global supply lines begin to change. Where you assemble cars begins to change, and how many cars you sell. Used car lots begin to change. Steel manufacturing begins to change. You get really big disruptions, because you have this tiny, little black button on your phone. You could see car sales drop by up to 90 percent as you’re thinking about systems like this. Because cars begin to operate like airplanes. Airplanes are never still as opposed to cars, which are on average still for about 22 hours per day.

A secondary effect of having Ubers and autonomous vehicles is that these jerks who double-park begin to go away. When you do something like this, you’re blocking a quarter, a third, sometimes half the street just because you’re going to pick up your laundry or you’re going to pick up a pizza. With autonomous cars, you don’t have cars doubled-parked. And, by the way, you don’t have cars parked next to the sidewalk. So it’s not just double-parking, but it’s the parking itself that begins to go away, because these automobiles are now in constant circulation.

You begin to redesign your urban environment. So, all of a sudden, malls start to look very different. These parking lots can become either additional stores or green areas or entertainment areas. The way you build buildings changes, the architecture of buildings changes, and the cost of a building begins to come down because you no longer need to build all those parking spaces into it.

Your infrastructure built-in costs begin to come way down. So you no longer need to build as many lanes on highways. You no longer consume as much cement. You no longer consume as much steel. And I know this is going to bother many of you, but even lawyers start to have less work. So all those billboards where they’re talking about lawyers who will help you if you’ve had an accident begin to go away, and, by the way, the insurance industry begins to restructure. A big chunk of the insurance industry is insuring against automobile accidents. It’s the leading cause of death for people 16 to 65. That begins to come way down. You don’t need insurance, even with today’s automobile standards, to the point where people producing today’s autonomous vehicles are willing to insure you for free if you use their vehicles.

A second disruptive technology that I want you to focus on is the ability of 3-D print. Most of you probably still do not have a 3-D printer in your house unless you’re serious hobbyists. But the ability to 3-D print means that you have a fax machine that is a 3-D fax machine sitting next to your phone in your house. If you’re missing a chess piece because your cousin lost it, you simply reprint it. If you want to redesign a chess piece or a chess set, you download it and you reprint it. If you’re missing a screw for your glasses, you reprint it. And, again, this begins to change supply lines. It begins to change where you make stuff, how you make stuff. And this is happening very quickly.

With the first Tesla, one of the things that happened was that, after waiting for two years for his Tesla, one of the first purchasers went to Starbucks, bought his coffee, came back, and couldn’t find a place to stick the cup of coffee. He looked around and figured out that there wasn’t a coffee cup holder in the center console or one in the door. He thought that was very strange. And, for a traditional car company, what would have happened is that the purchaser would have gone back to the seller, to the dealership, and would have said, “Where’s my coffee cup holder?” The dealer would have said, “What do you mean?” At which point, they would have looked at the car together, then they would have looked at the options catalog. Then they would have called the factory and said, “Do you make these with coffee cup holders?” The factory would have said, “No but that’s a good idea; let’s study it.” So they would have asked the R & D department why they didn’t put a coffee cup holder. The R & D department would have studied it. They would have asked for a budget to see if it’s useful to have a coffee cup holder. They would have designed a coffee cup holder. They would have taken it to the Detroit Auto Show. They would ask the people at the Detroit Auto Show, “Do you like this?” They would have said yes. So then they would retool the factories after they got the budget. And, three years later, out would come a model with a coffee cup holder.

The Tesla owner did something very different. What the Tesla owner did was to go home. He used his computer to design not only a coffee cup holder but something that would hold his telephone and would hold his pencils and would hold his tapes or anything else that he had. And then he just 3-D printed it and put it in his car.

But that’s not where the story ends. That’s not why this is so interesting. What he did next was to put it up into the cloud. And so, as of that afternoon, everybody who owned a Tesla who found the same problem—“I need a coffee cup holder”—had the plans to be able to print, at home, a coffee cup holder or redesign a coffee cup holder. And, of course, it’s not just that you could redesign a coffee cup holder, but you could also redesign the mirrors on this car. Or you could redesign the wheel rims. Or you could redesign the bumper. And so what’s starting to happen is that the consumer is becoming the person who redesigns the product itself. And instead of having a single, centralized R & D place, you’re beginning to have consumers who are printing and sharing.

Think about a system that looks like that—it has a whole series of consequences. There are companies that are going to be scared of this, and they’re going to say, “Hey, I don’t want you to touch this, and it will void the warranty.” Those are not very smart companies.

The other companies are going to communicate with their consumers constantly. They’re going to get feedback from the consumers, and they’re getting it redesigned from the consumers, and they’re going to make their product iterate quickly in a whole series of product turns. And the speed with which this is happening is pretty extraordinary. So this motorcycle, it’s a working motorcycle, was printed at Autodesk in about four hours. [visual] Again, how you make things, where you make things, is going to change in an absolutely fundamental way.

Let me transmit two simple ideas.

Why are we on this trend? How did we get to this trend? Well, the first idea is how you generate wealth. It turns out that you generate wealth in code. And the second thing I want to transmit and leave you with is that our code is changing to life code.

So let me just make a very quick overview of the last 10,000 years of the economy. What does it mean that wealth derives from code? Well, it means basically that when we started drawing on cave walls, we began to transmit a whole series of notions: This is how you have a baby. This is how many of us there are. This is how we dress. These are our musical instruments. This is the fish we eat. You just learned a whole lot about what was going on in Argentina 2,000 years ago. No other animal on Earth transmits code, transmits data, across thousands of years. And as we get better at transmitting code, we can put it on papyrus; we can put it on clay tablets; and we can put it on paper. So you no longer have to physically go to the cave wall; you can take the code and transmit it across vast distances. And as you standardize the code, then everybody can read this. This happens to say, “Red Sox rule,” just to pick a random sentence. [visual]

What’s happened over the past hundreds of years is that we’ve simplified all this code into a whole series of alphabets. So, in English, you’ve got 26 letters; in Spanish, you’ve got 29; and, in Chinese, you’ve got thousands of letters. But, basically, you can write really large books and transmit the data as to how you do sales, how you do accounting, how you do spreadsheets, and how you do XYZ that you’ve learned over the past thousands of years, hundreds of years, decades, and last week.

Over the last 40 years, we changed the code again. And the greatest single creation of wealth in the history of the human species has been this change in code, because we quit using just ABCs, and we started using ones and zeros. So if I send you an email or something that has the first line of code on one of these things, you’re going to get a note that says, “I love you,” because that’s what the first line says.

If I send you the second line, then you get a digital message that says, “I hate you.” And there’s going to be a great, big difference depending on whether you get green or purple. The reason why this code is so important is because you’ve taken a language that was 26 letters, and you’ve put it into two digits. But you’ve done the same in Spanish, in Cyrillic, and Aramaic. So every language in the world, every alphabet, can now be transmitted in digital code, in two digits. And so can every photograph and so can every bit of music and so can every film. In fact, 99 percent of the information in the world today is transmitted in a language that almost nobody was speaking 40 years ago.

I’ll put this in terms of Dustin Hoffman. You remember that there’s an old movie called The Graduate. There are two iconic scenes in The Graduate. There’s the seduction scene, which I’m not going to touch today. And there’s a second scene, where a geezer like myself takes the young college graduate out by the pool and says just one word. And, of course, you all know what that one word is. That word is plastics. Unfortunately, it was completely wrong. The word really should have been silicone because these basic patents led to the greatest wealth creation in human history. Silicon Valley and the whole computer digital revolution had already been filed by the time the movie was released in 1967. Fairchild was selling semiconductors. The year after the movie’s release, Intel was founded, one of the largest and most powerful companies in the world.

So had the graduate heard the right one word, maybe he would have ended up on stage with these two characters. [visual] But instead, because he heard the wrong word, the poor man ended up being a Tupperware salesman. It’s a very sad story.

As you think about this, we’re changing code again. And that’s the really big idea I want to leave you with. We’re moving from digital code to life code. So what is life code? Well, in 1953, Watson and Crick discovered that all life forms on this planet—all plants, all animals, all human beings, all politicians—are made of DNA. This DNA is basically a four-letter sequence: adenine, guanine, cytosine, and thymine. So if you take any living creature, and you put the genes of that living creature into a gene sequencer, then you can write unbelievably boring books. In fact, we produced about 7 quintillion of these letters. And all these letters allow the orange in my hand to be understood as code, because as I drop this orange onto the ground, and you hear kerplunk, what’s really happening is that the orange begins to execute code. And “C-A-A-T-A-C-C” means to make a little root. “G-C-C-A-A-C” means to make a little stem. “G-A-C-C” means to make some leaves. “A-G-C” means to make some flowers. “G-C-A” means to make another orange.

Now, remember those little ones and zeros: 01111—“I love you”; 0111—“I hate you.” The same thing happens with life code. If I change a couple of letters in here, and I say “G-C-A” instead of “G-A-A,” then maybe this orange becomes a lemon. And if I say “T-G-A-A,” maybe this becomes a tangerine or a grapefruit.

And if I change 1 out of every 1,000 letters in a human being, then you become the person sitting next to you today. So look at the person next to you. If you change 1 of a 1,000 letters, you become that person.

That takes me to Argentina. So these two friends of mine are scientists in Argentina, and they bred a very friendly cow. This cow comes, waits to be petted, and as you’re waiting for this animal, these two show up. [visual] As these two show up, you say to yourself, Wow, they look really similar. In fact, they look really similar to this animal over here. So as you’re thinking and looking at this animal, you know that every bit of this animal contains its genetic code, and every cell in this animal contains the entire cow genome. In the same way, every human cell contains the entire human genome.

What you can do is, you can take that genetic code from the right ear of this cow, put it into a fertilized cow, and give birth to two clones. This is what cloning looks like. This is a veterinarian. [visual] His left hand is way up the back of the cow. He’s holding an ultrasound in his right hand, and he placed dozens of cloned embryos the morning I was there, which is why there are a lot of cows that look really similar in Argentina . . . today.

This means that not only can you read genetic code, but you can copy genetic code, and, then, six months later, you can give birth to something like this. [visual] This is not a copy; it’s an edited copy. So this animal will produce a medicine used to treat cancer, erythropoietin (EPO), in its milk. Every time you clone this animal, it will become a factory to make a medicine that’s used to treat cancer, which means that 20 of those animals substitute for a factory that looks like this. [visual] Again, how we make things, where we make things, is going to change in a pretty fundamental way.

That means that life is code. That means that we can read life. That means that we can copy life. That means that we can edit life. And, in 2017, what should be the one word? Well, one argument is it should be life code. This truly is a superpower, because what it does is to flip evolution on its head. You have to ask yourself the question, Would Darwin even write the same books? Because, according to him and Wallace, all life on this planet evolves according to natural selection and random mutation. That is no longer the only case. There is certainly natural selection that takes place out in the woods. Wolves are certainly naturally selected. But pugs and chihuahuas are not. They are examples of unnatural selection. So that little yappy thing that sits inside your purse on Fifth Avenue and walks along with you on the shopping sprees is not a natural life form. It is a life form that has been bred by human beings. And, if you want to watch natural selection happen, take one of those little yapping trolls, put it in the middle of the African plain on the savannah, and you will watch natural selection happen very quickly. We’ve been doing this not just with dogs, not just with cows, not just with turkeys, and not just with chickens and pigs.

We’ve been doing this with plants. So take the humble mustard weed. If you suppress the flowers of the mustard weed, then you get broccoli. And if you get bigger leaves, then you get kale. And if you sterilize the mustard flowers, then you get cauliflower. These are all human-made engineering creations done through breeding. We have chosen what lives and dies. We’ve chosen how we want that thing to look, that thing to act. And that makes a cornfield the least natural place on Earth. You would never see a single plant growing in orderly rows and nothing else growing there in nature. You will never see this in a forest. You’ll never see this on a savannah. This plant doesn’t even reproduce if humans don’t intervene.

The second part of this adventure is, we’ve also been practicing nonrandom mutations. We’ve been inserting genes not at random but in very specific targets. Eight of the top 10 bestselling medicines are not made by chemicals; they’re made in cells that were engineered to make things like Humira, which is used against arthritis.

That leads me to a company that we founded a few years ago—we being the man who sequenced the human genome, a Nobel Prize winner, one of the lead IP-ers in the United States, and myself. And what we did with synthetic genomics is that we decided we would program cells. So, about four years and $40 million later, we were able to take this picture. [visual] And this picture is important, because it takes the genetic code out of a cell, inserts new genetic code, and turns it into a different living organism, a different species, which some people thought was a reasonably big deal. In fact, it was the science discovery of the year. It was on the cover of 4,800 papers and magazines.

What this allows us to do is to make this little green soup. But the really interesting thing about green soup is, this software makes its own hardware. Let me unpack that. It means that no matter how you program your cell phone, you’re not going to have 1,000 cell phones in the morning. But, if I program green soup, then I get more green soup, and then I can stick it into my greenhouse in La Jolla, stick it into these tubes, leave it for a few days, and when I come back a few days later, there’s a lot of green soup. And then we can buy a little piece of the Imperial Valley and make a lot of green soup on an industrial scale.

At which point you may be asking: What in the world are you making in that green soup? And the answer is: Whatever you want us to make. These are programmable life forms. So what we’ve been doing is going out and finding a whole series of partners to make programmable life forms to make almost anything that you wish.

Exxon Mobil, for instance, has partnered with us to make fuels out of algae, which is why you saw all of these ads during the Olympics talking about algae-powered cars. That’s our company. We’ve now been able to build a machine that allows you to program life forms, not just read them. And that means that we can output a whole series of things for a whole series of companies. We can engineer pig organs such that they’re transplantable into humans. We can make a year’s worth of flu vaccine in a week. We can develop new types of vaccines. We can make fuels. We can make chemicals. We can make plants grow faster. We can make a whole series of oils or proteins for animal or human food.

This all means that we’re increasingly controlling evolution. And that is a true superpower. It is not a superpower to be able to leap over tall buildings in a single bound. It is not a superpower to light stuff on fire at a distance. It is a superpower to redesign life and decide what lives and dies on Earth. And we really have to ask ourselves, What are we going to do with this superpower? Because as we have the power to redesign stuff, what do you want our grandchildren to find in 100 years? In 1,000 years? In 10,000 years?

This really is the greatest single adventure that humans have ever been on. It’s going to change every one of your businesses. It’s going to change every one of your lives. It’s going to change a lot of life on Earth. And the really important thing is, not only should you be aware of this, but you should be a part of this debate. This isn’t something you should be scared of. This is a truly extraordinary adventure. It may allow us to get off this planet. It may allow us to double our life span. It will certainly allow us to build some of the largest companies we’ve ever seen.

But we also have to think about the ethics and the risks, and to do that, you have to keep educated in life code. And you have to be part of this debate.

Juan Enriquez is the co-founder of Synthetic Genomics Inc. and managing director of Excel Venture Management. An active investor in early-stage private companies in the life sciences sector, he is one of the world’s leading authorities on the uses and benefits of genomic research.

 

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