Bridging Science and Business in Deep Tech

[00:00:00] Today, join host Richard Conway as he interviews Phil Morle, [00:00:05] Partner at Main Sequence Ventures and Chair of deep tech startups, including Samsara Eco, V2 Food, Nourish Ingredients, and Eden Brew about science in the boardroom.

[00:00:18] Richard Conway: Welcome to Minutes by boardcycle.

[00:00:20] Richard Conway: I'm your host, Richard Conway, and today on the podcast I'm pleased to be interviewing Phil Morle.

[00:00:25] Richard Conway: Phil is a partner at Main Sequence Ventures, a venture capital firm, founded by the CSIRO and which is focused on deep tech. Phil's also the chair of a number of deep tech companies, including v2food, Samsara Eco, Nourish Ingredients, and Eden Brew.  

[00:00:40] Richard Conway: Today I'm gonna be talking to Phil about science in the boardroom. So, welcome aboard Phil.

[00:00:45] Phil Morle: Thank you for having me, Richard.

[00:00:47] Richard Conway: So Phil, as I said, you chair companies like Samsara, which has developed the world's first enzymatic plastic recycling technology, and V2 Foods which has plant-based protein innovations.

[00:01:00] Richard Conway: So, I wanted to ask you, when you are on the board of a company that's built on a scientific breakthrough like that, I'm imagining that even a technically minded director might struggle to really grasp the science behind what's going on. And how can a board really provide meaningful oversight, and strategy guidance in that context?

[00:01:21] Phil Morle: Yeah, I mean, I think the art here is to understand which of the science we need to understand as directors, and why that's important, how that connects to the rest of the business.

[00:01:32] Phil Morle: We can't be experts in the same way that the science team are experts. And we need to get to a point where we trust them to deliver on the scientific impact that the company needs to deliver. And that we have a relationship with them so that we understand what those things are.

[00:01:48] Phil Morle: But we can't be on a board that's second-guessing, every board meeting, the impact of what the science team is delivering. So we need to sort of figure out in the board process how we're going to do that.

[00:01:58] Phil Morle: I think that the most important thing is to understand the kind of "so what", if you like, around the science. I mean, which parts of the science is it important for us as a board to understand? And why is that important to the rest of the business? Because different science choices could have huge downstream impacts on the timing or the amount of capital that we need to bring into the business, or who the customers are, or how big the business might be over time. And these are generally very different decisions to the decisions that a science team would be making in their work in a lab.

[00:02:36] Phil Morle: If I'm in a university, or if I'm in CSIRO, there's a big part of me that's trying to deliver a contribution to knowledge to the [00:02:45] world. I'm trying to understand something in science or nature. And that I'm trying to share information about that so that humanity could actually do something with it in the future. And there's a tendency there to go broad, to try and show all the different aspects of this world of discovery that we've recovered.

[00:03:02] Phil Morle: But in a company where we have a commercial direction, it's really important that we get to a commercial outcome as soon as possible. And so, that would be an example of the kind of conversation I have a lot on boards with science teams.

[00:03:17] Phil Morle: It's about, well, what does this mean for our direction? If we're doing these two things side by side, I understand it's creating a more dimension, richer, more valuable opportunity over time. But does it mean it takes three times longer for us to get to our first commercial proof point, from which capital will flow, customers will flow, we can hire more people, we can start going faster?

[00:03:41] Phil Morle: There becomes a different conversation about how we run the business because of the science. And they're important things to think about.

[00:03:49] Phil Morle: There will be metrics which the board and the science team need to align on the metrics that matter, if you like, for the business. And as an example, many of my companies, they build things from nature using biology. And there's a metric called titer, which is basically just looking for how much stuff your process actually makes. And that goes to how much you ultimately need to sell that product for. So it obviously has huge impact for the business in the future.

[00:04:22] Phil Morle: As an example, Eden Brew, that I chair, they make dairy proteins without the cow. They make nature-equivalent dairy proteins without the cow. But we know how much milk costs. If we go to the supermarket and milk is $250 per carton, we're probably not gonna buy it. And so, if your titer is too low and you are not actually making sufficient proteins out of your process, then you are not gonna have a business there at all.

[00:04:52] Phil Morle: So the kind of heartbeat of business is like Eden Brew is: what's the titer? Are we on target? Are we getting to where we need to be? How can we help you put the right resources in to get there faster or more on schedule?

[00:05:05] Phil Morle: Does that make sense?

[00:05:06] Richard Conway: Yeah, absolutely.

[00:05:07] Richard Conway: And I was going to ask you a question about what kind of metrics you put in place when traditional financial metrics don't really work for an organisation like this. So you've talked about titer. So, what other ways do you measure success in those, or monitor success at a board level, and put KPIs that are relevant in place when you're in a company like that?

[00:05:30] Phil Morle: If I just expand upon the titer question, you know, in many of our board papers, you'll see a slide which kind of tracks a titer, just like a revenue forecast. And it shows, titer going up, it shows cost of production going down, and then it shows milestones that are therefore possible as you hit each of those points.

[00:05:52] Phil Morle: So at this point, so it's very common in these companies that early on, your first product is for a market where it's okay for it to be expensive per kilo, if you're selling something per kilo. And you'll see that that market is unlocked when we hit this certain titer. And then we just go through all these different commercial unlocks.

[00:06:13] Phil Morle: And then that's how, I just think that's an important metric because it connects the science with the business. It's a point at which a certain scientific milestone unlocks the rest of the business could go to go and do everything that it needs to do, to make the sales, to run the customer pilots to raise more money if that's what the company needs to do.

[00:06:34] Phil Morle: It's gonna be different for different businesses, but I would say to directors listening to this podcast: it's about, it's back to that "so what" question.

[00:06:42] Phil Morle: So which bits of the science that we can make different decisions for the rest of the business? And let's really focus on those and make sure we're measuring them.

[00:06:50] Richard Conway: I guess, Phil, the follow-on from that is: do you have any techniques that you use across your companies to identify which bits of the science to really care about?

[00:07:00] Phil Morle: It's curiosity, you know is the important characteristic to have as a director. And just ask why a lot. "Why is that important?", "Okay, well, what will we be able to do if that number is lower or higher?", "If we put twice as many resources on this, will it go twice as fast? Or is it just gonna take the same amount of time?"

[00:07:19] Phil Morle: So we kind of need to know, as a director, which are the levers. It's one of the important things: and if I do something with that thing, what will happen?

[00:07:27] Phil Morle: And I think my advice to other directors would be: never allow yourself to feel dumb. Or celebrate being the dumbest person in the room in your mind.

[00:07:37] Phil Morle: I sort of feel I have to do that a lot. Because sometimes you can feel like not asking the question why, because everyone else seems to know why already. And you don't wanna come across as being uneducated. But it's asking these questions, why, that really matter.

[00:07:53] Phil Morle: Another thing I would say is, to facilitate that, make sure that the science head is actually a participant in board meetings.

[00:08:02] Phil Morle: It might not be the whole board meeting, it might just be a part of the board meeting. But I find myself constantly at board meetings where we either don't bring the science lead in, and it makes a weaker board meeting. Or we run outta time talking about other things, and the science update is rammed in at the end.

[00:08:19] Phil Morle: These days, I'm trying to spend a lot more time making sure it has its space in the board meeting. That it's a special place. It should not be deprioritised, because it is our core product in all of these businesses that I'm operating. And that's what gives directors the forum to ask why.

[00:08:35] Phil Morle: Because again, unless you have that forum, you find you end up with this kind of Chinese whispers-type behavior, where you ask "why" to the wrong person, who knows, but not totally. And then you've got an incomplete understanding of something. And that's what the whole conversation is around.

[00:08:51] Phil Morle: So it's important to create that forum, to protect it. To create an environment where directors are encouraged to be curious. And in fact the Chief Technology Officer, or chief scientist, or head of science, for them to be curious about the business. And for that conversation to be happening. So, you are creating an environment where the science and the business are dealing with each other during the conversation.

[00:09:16] Phil Morle: And the scientist is learning what they need to do to be commercially more valuable. And the board is understanding what is commercially possible with the science, and how they can manage the risk, how they could properly resource, how they could steer the rest of the business around the science.

[00:09:33] Richard Conway: So Phil, it occurs to me as you were speaking there that, fundamentally, what you were saying is that directors don't need to be technical experts on some of these things. They just need to be curious. And that seems to me to be a feature of boards in almost any business. Almost all businesses have some technical aspect.

[00:09:52] Richard Conway: If we took for technology business, for example, directors are not or it's relatively rare for them to be software developers, for example. So do you see it as being fundamentally different to that in kind of the deep tech space? Or is it really a similar kind of thing that directors can't be experts on everything, and they just need to be curious and generally smart and able to learn?

[00:10:15] Phil Morle: I think it's generally the case that it's just like any other business. You need to know how to ask the right questions about whatever the core product is that the company's making.

[00:10:26] Phil Morle: I think in deep tech, as we call science in our world, does cover a point where it can be useful to have a more technically equipped director on the board.

[00:10:38] Phil Morle: So as an example, Samsara uses enzymes to infinitely recycle polymers which might be in clothes that you are wearing or packaging that you buy.

[00:10:49] Phil Morle: We're in a point in the business now where we're needing to make very significant engineering decisions about how we're going to scale the business. And this is a point where the risk level goes up, because each decision now might be a $100 billion decision not a $1 billion decision.

[00:11:08] Phil Morle: It's still not about being the smartest person in the room for that director that actually knows all this stuff. But they've experienced either as a senior leader in that space, how these things are done, or as a director indeed in that space as well. So, you know, you are less in the debate of the on nodes in the board meeting, and you've got someone that's knowledgeable enough to ask the next level of questions.

[00:11:33] Phil Morle: But I think you're right, it's still fundamentally the same. The scientists should be in the lab doing the science, and the board needs to be doing board things.

[00:11:40] Phil Morle: This just makes me think of another board job, which I think is important. And that is the different cultures in a company.

[00:11:48] Phil Morle: We've talked a lot about science, and what the science does, and how scientists think in the lab. And how they make decisions when they're not in a company or whether they're in a lab.

[00:11:58] Phil Morle: There's another breed of people who are the commercial people. And they think differently. And there's a kind of gulf between them.

[00:12:05] Phil Morle: What we need to do as a board is make sure the company has a culture which is joining those two worlds together. And indeed, as we get to scaling companies, as I was just giving the example for Samsara, we have the engineering team who are in the middle, because they're the people that are tasked with making it big enough and repeatable enough that the commercial team can sell it and build the business from it.

[00:12:29] Phil Morle: And all of these people think differently. They're quite often siloed in companies. Quite often in different parts of the country or the world, let alone different buildings. And I think there's a job to do for boards to bring all that together and ask: so it's not just about "What are we doing?", "What is the science?", "What are the metrics of the science?" But it's also "How are we working together?"

[00:12:53] Phil Morle: Like, how are we working smartly so that there's rapid decision making with by the right people in the right order.

[00:12:59] Richard Conway: Yeah, Phil, I wanted to dig in a bit deeper on that in around the scientific team in particular.

[00:13:06] Richard Conway: Do you see particular challenges with bringing a commercial mindset to a scientific team whose background may have been at a university or may even still be partnering or working in a university as they're doing this work?

[00:13:19] Phil Morle: Yeah it's a mindset shift, which needs to happen. And I do find it's worth, in the early days of a board, very quickly diagnosing whether or not there is a job to be done there. To kind of augment the thinking with the commercial lens as well as the scientific lens.

[00:13:37] Phil Morle: One of the CEOs in our portfolio, Michelle from Cauldron, she says, "It doesn't count unless there's a forklift truck involved." And that's a sort of shorthand way of saying: scientists will often declare something as a fact, but it's actually only a fact if it's in a tiny little test tube. And it's no longer true once you've got tons of the stuff coming out of a enormous factory and needing to be stacked in pallets.

[00:14:03] Phil Morle: So, there's a huge benefit from having a science team, especially science leadership, who very quickly in their mind say: "okay, how's this going to work bigger? Like, "How do I make this work bigger, or faster, or more predictably? How do I make it work?"

[00:14:23] Phil Morle: Quite often, things that are developed in a lab are created in hyper-specialist, very, very expensive German instruments, that make it perfect every time. But when you kind of move into industry, you are faced with either: "How do I make a really big version of that very expensive thing?" Which is probably impossible, or just impossibly expensive.

[00:14:45] Phil Morle: Or:

[00:14:46] Phil Morle: "How do we map this to use really cheap alternatives that work at scale? Like, how do we adapt the process?"

[00:14:53] Phil Morle: And that's an example of one of those things where it passes through the science team, through an engineering team, to a commercial team. And so, the conversation that needs to happen between all these different groups to get there is an important way of getting a scientist to think about the "forklift truck" version of what they're making.