What cultured meat start-ups can learn from Tesla’s story

I’ve just read Tim Urban’s excellent post on How Tesla Will Change The World.

The story of this company makes me think a lot about what’s currently happening in the cultured meat industry, and what could happen next.

The simple reason is that Tesla’s lessons are not about car the industry. They’re about creating dramatic change in an industry. Are you ready ?

Tesla’s journey

Back in 1989, Musk, then 18, felt strongly about electric cars, but the topic was quite ignored by the rest of the world. So, why on earth was he interested by this technology ? Well, it seems he had sensed the contribution they could make.

Indeed, two decades later, it became clear that :

• Electric vehicles are more convenient than gas engines most of the time (you can plug your car as you charge your phone, the mechanics of the electric motor is quite simple, no dependence on oil, less need of maintenance, and so on).
• It costs a lot less to power an electric motor than a gas engine (gas prices and car fuel efficiency vary a lot, but generally this means it costs over $3,000/year more to drive on gas).
• The gas engine is one of the two major causes of the energy/climate crisis (transportation burning oil makes up a third of the world emissions, pollutes cities, and makes nations over-dependent on other nations. The electric motor emits nothing.)

That’s why Musk thought a lot about electric cars. The electric motor turned out to be the easier, cheaper, and more sensible long-term plan for powering cars.

But this had not always been the case, since for decades, significant technical obstacles had prevented electric vehicles from being considered as alternatives to gas cars. Three concerns about the viability of the electric car were particularly common : range (is it convenient for long drives ? how can I recharge my battery ? how much time will I have to wait when it is plugged ?), performance (will it do better than a golf cart ?), and price (battery costs were high).

This was why electric cars had been put aside for decades. Until 2003, when Musk crossed the threshold, and decided he would build such cars.

But there were some obstacles along the road :

• High barriers to entry in the industry
• Implemented actors could pollute as much as they wanted without this affecting their costs
• The gargantuan oil industry
• Technically solving the three challenges (range, performance, price)

So the situation seemed like a big conundrum.

Until the day when Musk visited the AC Propulsion office. For the first time, he saw an electric car that was (very) fast and equipped with a good (for autonomy) lithium-ion battery. He was stunned by that performance. It was now obvious : the three challenges could be solved, and he had to do it.

So was born Tesla Motors. But how could the company make cars ? They had some funds, but wondered whether people would really buy cars that were bound to be expensive, being a new technology. Finally, they came up with a plan :

Step 1 : Using their funds to build high-priced, low volume car for the super rich.

Step 2 : Using profits from step 1 to build mid-priced, mid-volume car for the pretty rich.

Step 3 : Using profits from step 2 to build low-priced, high-volume car for the masses.

Source image : WaitButWhy

As WaitButWhy puts it :

The overarching mission wasn’t to build the biggest car company in the world. It was to solve a bunch of long-standing EV (electric vehicles) shortcomings and build such an insanely great car that it could change everyone’s perception of what an EV could be and force the world’s big car companies to have to develop their own line of great EVs. Their end goal, and the company’s official mission, was to “accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” In other words, EVs are gonna happen, but we’re gonna make them happen a lot sooner. Sooner, in this case, is important, because it means carbon emissions decrease earlier and the long term effects of them are much less damaging.

For the company to realize this impossible mission, they had to build what they needed to build to change the limitations they were facing.

Especially, they had to make sure that :

• The car could take a road trip (range)
• Anyone could afford the car (price).

For solving the first issues, they increased the performance of batteries, and implemented Superchargers in the US, so that you can plug your car if ever you needed to recharge it. They also developed a feature (the battery swap) that allows Tesla drivers to replace their empty battery with a second full battery in 90 seconds.

In other words, the range problem was almost not an issue anymore. There was only one issue left : how to bring the price of the car down ?

If you take a look at the cost of EV production, you realize that the battery has a central place. So, how could Tesla reduce drastically the cost of battery production ?

Well, the answer was this :

Source image : WaitButWhy

The Gigafactory. A $5 billion lithium-ion battery factory, powered entirely by on-site solar, wind, and geothermal energy.

It’s main goal was to double the total lithium-ion batteries made each year globally, which had (and still has) some benefits :

• Enabling Tesla to produce cars at a large scale
• Making batteries a lot cheaper.

This has not left the market indifferent. In 2015, Tesla’s market cap was $31 billion. Which was quite annoying for established car companies… because :

• Before Tesla, their approach to electric cars was more or less “it doesn’t exist, stop talking about it”, now they had to admit their existence
• Dealerships make a huge amount of profit fixing gas-related issues, which wouldn’t exist with EVs.
• Car manufacturers knew less than Tesla on improving battery energy density and car performance, so building good EVs would be hard.
• If they sold EVs, they would have to explain the big advantage of this new category of products, e.g. that it pollutes less than gas cars. Oops. It’s like shooting itself in the foot.

All these concerns only existed because of Tesla.

So what could car companies do ? Ignoring what was going on. Or taking the turn.

Well, even a little before the building of the Gigafactory, they began to make EVs. In 2008 (when the first Tesla car was shipped), there was no big company EVS on the market. In 2015, Ford, Chevy, Nissan, BMW, Mercedes, Volkswagen, Fiat, Kia, Mitsubishi, and Smart all had an EV on the road. And some of them have made it clear that Tesla was at the origin of this decision. Of course, not all carmakers were enthusiastic. But they were building EVs anyway. And this could be seen in the figures :

Source : Centre for Solar Energy and Hydrogen Research

But was it the beginning of a radical change in the car industry ? Four years ago, there was still a problem : Tesla’s cars were still too expensive, while other EVs had a poor range. But over the past few years, Tesla has reduced its prices. And other carmakers have improved the range of electric their vehicles. Which means that… we’re now seeing high-quality, affordable EVs for sale that also have a high range. Which means that in the years to come… there could be no reason to buy a gas car again.

Car companies aren’t all happy about this, but they’re still in the game. However… the oil industry can’t jump on the EV bandwagon. Which means that EVs can seriously harm oil companies. So this latter fights EVs to survive, essentially by creating confusion, in order to delay as much as possible the development of clean cars. That’s not a new strategy, but it can be powerful. It has already crushed EVs once. But now, there’s Tesla (whose goal is to accelerate as much as possible the development of clean cars), and the others.

So, what’s the result ? Some myths. Like “EV battery disposal is dangerous”. Like “bulling a Tesla is dirtier than manufacturing a gas car”. Like “EVs consume an unbearable amount of energy”, and son on. They’re all wrong, as WaitButWhy has shown. The worst is probably the long tailpipe theory, which explains that electricity comes from coal, so EVs are worse emissions culprits than gas cars. This is argument is widely used, but deeply flawed, as 1) electricity production is mixed, 2) the part of coal in the mix is going down, 3) energy production is more efficient in a power plant than it is in a car engine. Each year, the grid is getting cleaner, which means that electric cars get cleaner as time goes by. In the meantime, gas cars cannot make progress on the issue. They’re dirty, that’s all.

As Tim Urban puts it : “ the battle going on isn’t about gas cars vs. electric cars. That one’s already decided. This is a war about time. Oil companies will try to slow things down, and they may succeed.” But EVs will succeed in the end. The question is rather when we make energy sustainably, which means : 1) Almost everything we use will run on electricity. 2) Almost all of our electricity will be produced from sustainable sources. If we talk about it, it’s because for now, the two problems are that 1) electricity production is mostly dirty 2) transportation is almost entirely dirty.

The good thing is that Musk, through SolarCity (producing solar panels) and Tesla, is leading the way in solving both challenges, in a very disruptive way. And since established actors couldn’t squash the disruptor, everyone now has to emulate it. Which could indeed change the world.

As Tim Urban puts it, “change doesn’t happen on a familiar landscape, change has to construct the landscape itself. That’s what Henry Ford did for cars. That’s what Elon Musk is now doing of electric cars. If scalability is held back by the high price of battery production, build a factory that brings the cost down. Just get it done. “

But keep in mind that Musk’s goal is to “accelerate the advent of sustainable transport”, which means that one great car company is just the beginning. Tesla’s mission is to build cars so great that it changes the public’s expectations of what a car should be, so that the whole industry has to adjust to that new expectation. In that way, Tesla can be a catalyst for a multi-order of magnitude shift of the entire industry towards electric.

Studying Tesla, that’s definitely studying change. And sometimes, you can use what you study to figure out what could happen, or what you should do.

Possible lessons for cultured meat start-ups

It’s been weeks that I’m fascinated by similarity between the electric cars (car industry) and cultured meat (meat industry). Both of them :

1. tackle greenhouse gas emissions made by their respective industry
2. are a better version of the problematic product, not a mere substitute
3. are cleaner if their production is powered by renewables
4. don’t ruin established manufacturers, just invite them to adopt a new product
5. are more likely to be rejected by actors who wouldn’t play a role in the new landscape (cars : oil industry, meat : farmers).

If you look at the advantages of EVs (convenience, costs less at large scale), they also have a similarity with cultured meat.

Of course, the latter hasn’t been industrialized for the moment, so I only base my reasoning on predictive studies and the knowledge accumulated so far. In other words, it will be more about hypothesis than about real-world data on something that doesn’t exist yet.

Still, there may be something. Cultured meat manufacturing plants would be far more convenient for meat manufacturers than the current process (raising animals, then slaughtering them, then processing meat). Indeed, everything could happen at the same place, from cell culture to meat packaging. Almost no waste would be involved. Cell wouldn’t resist before being processed into meat, so the variability of the process would be reduced.

As for the cost, there’s a possibility for cultured meat to be cheaper for consumers and producers. This is still hypothetical, but it could happen in the years to come. We’ll talk about it later, as it is fundamental.

For now, let’s see what were the major obstacles of cultured meat over the last few decades : scale (can we produce more than 1 cm of steak ? can we even produce cultured meat for more than 10 very wealthy people in the world ?), taste (will it do better than meat alternatives I know ? will it taste exactly like conventional meat ?), and price (producing the first burger was very expensive).

Until recently, all these obstacles seemed impossible to overcome, and this is why cultured meat wasn’t regarded as noteworthy. But after 2013, some actors entered the field, and decided that they would solve these issues.

Interestingly enough, like Tesla, cultured meat start-ups face other structural obstacles, beyond the “technical” ones just mentioned.

• High barriers to entry in the industry (you don’t produce (cultured) meat as you produce software. In addition to the highly specialized skills at the crossroads of food science and tissue engineering that are required, you need an authorization to market your product, for consumer safety reasons)
• Implemented actors pollute as much as they want without this affecting their costs. Today, there’s no tax on meat. Negative externalities generated by animal agriculture aren’t paid by meat producers. Which means that you’re not rewarded for bulding a non-polluting meat product. Thus, you’re disadvantaged.
• A lobby would have a lot to loose (but not so much). If cultured meat totally replaced meat, there wouldn’t be any place for farmers in the cultured meat landscape (as for oil producers with Tesla). I’ll probably talk about it later, but the parallel isn’t exactly relevant, as cultured meat mission is to disrupt factory farming, and probably not all animal agriculture. First because animal agriculture isn’t inherently bad for the environment (you may have other valuable reasons to replace it, but not environmental ones). Factory farming is the real threat to the environment, which means that event if cultured meat disrupted factory farming, farmers could practice “traditional” breeding and slaughter animals in a not-so-harmful-but-still-harmful way, thus making “traditional meat” a rare and luxury product. In this scenario, farmers would have a lot to win, given their current (indecent) situation. Indeed, with cultured meat becoming mainstream, they could market their product as “traditional” meat and be decently paid for what they produce. In other words, cultured meat would be an opportunity for farmers. There would be room for both cultured meat and meat, but not for factory farming. The challenge is that farmers can have a disproportionately large political power, so you should make sure they see this opportunity, otherwise they will be standing up against cultivated meat, and possibly crush it by legal means.

So, where’s the Elon Musk who will address the situation ?

I’m half joking. We need someone with tens of millions capable of pushing past the barriers mentioned above. Indeed, we need teams which have skills (with the almost 30 existing cultured meat companies, we must have that), funds (we probably could have more) and ambition (they probably do) come up with a plan like :

Step 1 : Using our funds to build high-priced, low volume cultured meat for the super rich (probably in B2B).

Step 2 : Using profits from step 1 to build mid-priced, mid-volume cultured meat for the pretty rich.

Step 3 : Using profits from step 2 to build low-priced (lower than conventional meat), high-volume cultured meat for the masses.

In that context, the first cultured meat start-up to take these steps wouldn’t necessarily have to become the biggest meat company in the world. It’s mission could be to solve long-standing cultured meat shortcomings and build such insanely great products that could change everyone’s perception of what cultured meat could be, and urge the world’s big meat companies to have to develop their own line of great cultured meat products. Their end goal, and the company’s official mission, would be to accelerate the advent of sustainable meat by bringing compelling mass market cultured meat product to market as soon as possible. By doing so, their impact would be : making happen sooner a change that would reduce GHG emissions.

For this cultured meat company to realize this almost impossible mission, they would have to build what they need to build to change the limitations they are facing.

Especially, they would have to make sure that :

• Cultured meat can be cultured at a large scale (scalability)
• Anyone could afford cultured meat in the end (price).
• Cultured meat production is environmentally cleaner than meat (sustainability)

These issues mainly share one solution. Before talking about it, I would like to explain that the cost of cultured meat mainly depends on three things :

1. the medium
2. microcarriers
3. bioreactor tanks.

I won’t dive too much into details, as my (cultured meat writer) colleague Isabella has done a very great job of explaining what’s at stake. What I would like to highlight is that (1) and (2) are quite independent from the solution I’ll present. Indeed, these costs have to be reduced in specific ways, like finding a plant-based medium or expanding cell culture life when it comes to the medium costs (1), and cultivating cells without microcarriers to avoid extra-costs (2). More details in this article. The main thing keep in mind is that these costs challenges are on the way to be resolved. People are working hard on it, and progress is regularly made for the moment.

In other words, the cost problem is almost not an issue anymore (but let’s admit that we don’t know enough things to have certitudes for the moment)… except for the facilities. Beyond raw materials needed to produce cultured meat, the production process would have an important cost.

So, to sum it up, the real question is : how do you produce cultured meat at a large scale, economically, in a sustainable way ?

Well, the answer could be this :

Source image : WaitButWhy

A cultured meat Gigafactory. Yes, the slaughterhouse of tomorrow may well look more like a battery factory than an industrial farm. I’m working on the topic, and it seems like the first cultured meat gigafactory could be built at the cost of $1 billion, even though this estimation is fraught with some uncertainty.

The cultured meat gigafactory could be powered entirely by a solar rooftop, in the end. Maybe it could rely on wind and geothermal energy, as Tesla’s gigfactory did in the beginning.

The main goal of this gigafactory would be to produce for the first time a massive amount of cultured beef burgers in bioreactors, which would have some benefits :

• Enabling the company to produce and sell cultured meat at a large scale
• Making cultured meat a lot cheaper

This could have some effect on the market. And accelerate some dynamics. Today, what are the forces at play ?

• Some long-term-thinking meat companies have invested in cultured meat, in the US and now in Europe. We don’t know much about companies who haven’t invested in this technology yet. It seems like they didn’t try to tarnish the image of these 2.0. steaks.
• Farmers depend on the existence of animal agriculture. As said before, the mission of cultured meat is to replace factory farming, not every form of farming. Given the poor living conditions of farmers (due to cut-throat competition), they could likely benefit from the arrival of cultured meat, making ‘traditional meat’ a luxury and decently-paid-for product. In the worst scenario (that is to say farmers are threatened — but today the threat is really hard competition, not cultured meat), maybe they can receive some funds to reconvert somewhat (plant-based farms, vertical farms, urban farms, and so on).
• Meat manufacturers know less than cultured meat start-ups on how to do cell culture and scaffolding, so building cultured meat steaks will be hard for them. Their option would be 1) buying cultured meat start-ups 2) or doing a lot of R&D 3) or doing nothing.
• If meat manufacturers sold cultured meat, they would have to explain the big advantage of this new category of products, e.g. that it pollutes less than meat (and meet very well animal welfare concerns). So, would they do it ? They could. As they don’t rely on the origin of meat to be profitable, they could do it, and participate themselves to the reduction of factory farming.

The same concerns have emerged in the car industry just because of Tesla. Maybe they already exist in the meat industry today, even without a giant cultured meat start-up.

But imagine there was a Mesla (don’t know if a company called Mesla already exists, let’s stay in our imaginary parallel world). A very ambitious cultured meat start-up that planned to build a cultured meat gigafactory.

What could meat companies do ? Yes, ignoring what’s going on. Or taking the turn (nice job if you found the answer).

Today, even without the gig’fac’, meat companies start repositioning themselves as protein producers. In 2013, before the first cultured meat burger, no meat company had taken a serious look at cultured meat. In 2019, Tyson, Cargill, Bell Food, PHW have all invested in at least one cultured meat start-up. Maybe they do it because they don’t want to be disrupted. Maybe they’re really enthusiastic. But they’re doing it anyway.

Source image : CB insights

Is it the beginning of a radical change in the meat industry ? Probably. But today, producing cultured meat is still expensive, and scale is a problem.

In the car industry, Tesla solved the problem by building a gigafactory. Then, they have reduced their prices. Which has urged car-makers to build better EVs. And EVs are now on the way.

So, maybe the first cultured meat gigafactory could have the same effect. It could be built by a self-made billionaire, or a cultured-meat start-up raising (a huge amount of) funds, possibly in partnership with a meat manufacturer, or a pharmaceutical actor (they know a lot about large-scale cell culture in 20,000L bioreactors). This could greatly foster the development of cultured meat. If such a factory was built, whe could see high-quality, affordable cultured meat with an excellent taste, produced at scale. Which would mean that… factory farming wouldn’t have any reason to exist anymore.

Meat manufactuers wouldn’t be all happy about this, but could stay in the game. And, as said before, if farmers could take this opportunity to replace their meat as a luxury product, they wouldn’t have so much rational reason to delay as much as possible the development of cultured meat. However, today, we already hear some myths about cultured meat. Or at least, some confusion and far-fetched skepticism (“it will never be better for the environment than meat” — yeah, this is a concern, but please lower your epistemic certainty level, “it will still harm animals” — promised, FBS won’t be used). They’re all factually incorrect. One of them is the long tailpipe cultured meat theory, wich explains that electricity comes from coal, so cultured meat is worse for the environment than meat (the Oxford study says that it’s essentially worse in the long-term, like 1000 years, as CO2 emissions (due to energy consumption) will replace methane emissions). As for electric vehicles, this argument is flawed : each year, the grid is getting cleaner, which means that cultured meat (produced in gifactories with solar rooftops) gets cleaner as time goes by. While factory farming can’t reduce its emissions. It’s dirty and can’t change.

At this stage, the parallel is very disturbing. Shall we deduce that the battle going on isn’t about factory farmed meat versus cultured meat ? And that’s it is just a war of time ? Shall we, in the first place, think that it will be a war ? Farming companies could indeed try to slow things down, and may succeed. Except if they see an opportunity in cultured meat. The possibility for them to replace their traditional meat as a luxury product. In this case, cultured meat is bound to reach the masses. As for Tesla, the remaing question would be : when do we make energy sustainably ?

Musks’s work could be very useful in this context. He showed us how to making electricity production cleaner. How to build gigafactories. How to change an industry.

So now, the challenge is likely to build a cultured meat gigafactory. If that was done, established actors couldn’t squash the disruptor. Everyone would have to emulate it. And it could revolutionize our food system.

If scalability is held back by the high cost of cultured meat production, build a factory that brings the cost down, and work on reducing all costs. Just get it done.

Our fictive Tesla-like cultured meat company could aim at “accelerating the advent of sustainable meat production”. Mesla would build cultured meat so great that it would change the public’s expectations of what meat should be, so that the whole industry would have to adjust to that new expectation. Mesla could be a catalyst for a multi-order of magnitude shift in the entire meat manufacturing industry towards cultured meat, without harming farmers, which would have a lot to win by selling a rare and high-end product.

So, one question is still pending : which Elon Musk will build this factory?

I’m very excited to figure out what will happen. If Tesla’s story could inspire a revolution in our food system, that would be extremely well.

Don’t hesitate to react on this parallel, whatever you think.

Personally, I’ve learned a lot by exploring this topic. Now, I’m working with some engineers (as a side project) to write the specifics of building a cultured meat gigafactory. I’ll probably publish a public white paper. If you’re interested in helping, please contact me at tristanroth(at)hotmail(dot)com.

Acknowledgements

WaitButWhy Elon Musk posts series have helped me a lot. I invite you to read them. That’s really great stuff.