The power of mRNA technology to truly transform society in the coming years can be a bit hard to understand.
We can already see the importance of mRNA tech / vaccines in our daily lives because of how central it is for combating COVID-19, but understanding its potential beyond COVID-19 likely takes a bit of a leap of faith for the average person.
Like most people, I’m a generalist. I’m not a biology or pharmaceutical specialist, and it took some time to better understand how (I think!) mRNA works and its potential far beyond COVID-19.
One of the best ways to learn about something new is to repackage the concepts into something that we already understand and leverage the knowledge we already have.
To that end, I’m going to attempt to repackage the concepts that are helpful for understanding mRNA into a realm that we all have experience with in our daily lives – E-commerce.
And hopefully the question / analogy I’ve chosen is more than interesting enough in its own right…namely how 3D printing has the potential to disrupt and threaten Amazon retail in the very long run.
I’m not sure it’s that original of a question or idea and how imminent the threat is, but I think it’s an interesting question to ponder!
The amateurs discuss strategies. Dilettantes discuss tactics. The professionals discuss logistics.Napoleon
My logisticians are a humorless lot…they know if my campaign fails, they are the first ones I will slay.Alexander the Great
Amazon, The Logistics Company
For most people, Amazon is a retailer.
It’s the place where you go to buy (almost) anything you want and get it fast.
The “get it fast” part is really important.
Wide selection, convenience, and low prices were once the primary factors for choosing Amazon, but today fast shipping (same or next day) is arguably the most important differentiator separating Amazon and everyone else.
The key required to enable that is a vast network of warehouses and logistics assets that is quickly becoming unmatched anywhere in the world, even by the dedicated logistics companies like FedEx and UPS. This includes Amazon-branded last mile delivery vans and even long-haul commercial airplanes.
It’s really hard to overstate just how unprecedented Amazon’s logistics buildout has been.
Logistics consultant MWPVL does an excellent job illustrating this:
For almost half a century, Walmart was the world’s largest and most efficient retailer. Part of that efficiency stemmed from an unparalleled network of distribution centers and immense scale.
It took Walmart 50 years to build.
Yet Amazon has completely dwarfed the entirety of Walmart’s system. Not only has Amazon built a larger system, Amazon did it in a much shorter period of time and continues to expand at breakneck speed.
Based on MWPVL’s analysis, Amazon is expected to add an additional 90 million square feet in the US (115 million square feet globally) to its distribution network in the next 18 months, which is almost as much as Walmart’s entire network built up over the last 50 years.
While most people (consumers and investors, alike) have come to appreciate the importance of Amazon Logistics, I think most people under appreciate just how important it is for enabling the whole flywheel.
Amazon Logistic isn’t just one (very important) piece of the strategy.
Arguably it is THE strategy because without efficient logistics, there would be no low prices, no wide selection, and no convenience value propositions.
At a very high level, retailing is a very simple equation: Some people want things, and some people know how to make them.
Every retailer (including Amazon) is the pipe in the middle that connects the people that make things with the people that want them.
But logistics is key.
With a small logistics network, a retailer can only realistically offer products that are made close to the consumer. This was how retailing worked from the beginning of time until nation-scale and global-scale logistics became more commonplace including global shipping and continental railroads.
As logistics networks get more and more sophisticated, retailers can offer more and more products from more and more places. This is why so many products you buy in the US is manufactured in China, India, Vietnam, Indonesia, Mexico, etc.
Before global shipping and continental railroads, it would take multiple months to get an item from any of these places. That amount of wait-time makes it unfeasible for meeting consumer demand. With global shipping and continental railroads, you can get it in a few weeks (or a few days if you put it on a plane).
Before global shipping and continental railroads, the only products that people would buy from afar were necessarily luxury products (like tea, silk, and spices in Antiquity) that were worth waiting a long time for.
As logistics networks got more and more sophisticated, the improvement in scale and economics allowed people to buy non-luxury things from far away places as well.
So if you condense all of that, you can see why all of Amazon’s value propositions (wide selection, low prices, convenience, and fast shipping) all actually just come down mostly to a single factor – Logistics.
If you have a large and efficient logistics network, you certainly will have very fast shipping.
BUT you also need a large and efficient logistics network in order to enable the other 3 parts of the value proposition as well.
With a wider logistics network, Amazon can bring manufacturing supply from more places around the world. This ensures that they can always have a wider selection than anyone else because they can go to places where other retailers cannot.
With a wider logistics network, Amazon can bring manufacturing supply from cheaper places around the world. The world is a funny place – The poorest places also are very hard to get to because no one has put in the infrastructure to go there. The poorest places likely have the lowest labor costs (and hence likely the lowest manufacturing costs), but you really need to figure out how to get there to access that supply.
And with a wider logistics network, Amazon can offer the most convenient service possible. Whereas other retailers need you to go to a physical place to pick up items that are centrally stored (in a big box store)…with a wide, efficient logistics network, Amazon can bring the store to the customer.
All of that is to say that logistics is very important.
Retailing is about connecting people that want things with the people that make things.
And logistics is the pipe in the middle that does that.
The Threat from 3D Printing
Although I think most people tend to overlook the nuance of how logistics is basically THE strategy with everything else (wide selection, low prices, and convenience) just a side effect of this strategy, almost everyone at least seems to agree in principle that logistics is probably the most important leg of the stool.
To that end, most people are probably hyper-focused on trying to understand how competitors can catch up when it comes to logistics.
For example, Walmart and Target have improved their logistics quite impressively. Both Walmart and Target are increasingly offering very fast delivery as well by leveraging their store networks.
The competition set can also be broadened to include the gig networks like Uber and Doordash, which are both increasingly leveraging their networks to deliver general goods.
But if you’re up for an adventure, the most wild question to ask yourself is what would happen if logistics becomes entirely unnecessary?
Now that’s a dangerous place I want to go!
How would that happen?
At a high level, retailing is about connecting people that want things with people that know how to make them.
If you want to shorten or remove the distance between them, you can either take your customers and relocate them to your producers, or you can take your producers and relocate them to your consumers.
In our physical world, this has been very hard to do!
For example, the US has been trying to promote “Made in America” for the last two decades, but it’s honestly easier said than done…And often times, the prices that are available to consumers is, interestingly, inverse to the distance the product needs to travel.
But this makes sense and jives with reality – The poorest people have the cheapest labor costs…they tend to be very far away from consumers that shop on e-commerce platforms (the emerging markets is a slightly different story, but that’s a story for another day). Relocating your cheap producers to where your consumers are probably would lead to higher prices because rents and cost of living is probably higher, too…
But somewhere in the future, there could be a new way of doing things – 3D printing (or additive manufacturing).
What does this mean?
It means somewhere in the future, we may one day have generalized “printers” in our homes that can make products for us.
Instead of printing with ink like the printers of today, it can print with a combination of metal, plastics, paper, and other basic materials.
Right now, the “printers” usually exist in factories somewhere far away. These “printers” are still mostly humans (+ machines), but maybe in the future they can be just machines.
And if it can be just a machine, it might one day be possible to have one in your house instead of in a factory some place far away.
In such a world, there would be no need for logistics.
The process of buying an item could be as simple as ordering a digital blueprint for an item you want, downloading it to your printer, and having the product produced right in your house.
In such a logistics-less world, what would Amazon’s value-add be?
The nuance I mentioned above about logistics being THE strategy is important here…If Amazon no longer has an advantage in logistics because it has become unnecessary, Amazon’s other 3 advantages – price, convenience, selection – may begin to erode as well.
In such a logistics-less world, you can have any item you’d like produced right in your home. And the items you buy could be straight from your brand of choice.
Amazon could still be a marketplace for digital blueprints, but arguably without the overwhelming advantage of logistics, Amazon Digital Blueprint Marketplace would probably be much less impressive than it is today.
What I’m saying is not all fantasy.
3D printing is already being employed in certain areas.
For example, Adidas manufactures some shoes using 3D printing:
Perhaps, one day you can buy your favorite Adidas shoes and have it made right in your house. And all you have to do is pay Adidas for the blueprint for the shoe.
Companies like 3D Systems already sell machines that are used to print parts in the metals, plastics, dental, and jewelry industries.
And there are hobby-scale machines that people are already using at home to print toys. These are toys that people would likely be buying on Amazon otherwise!
There are even 3D printers being employed to print houses!
Of course, the challenge at the moment is that each of these machines can only operate with a single material. Most of the things we want require a lot of different materials put together.
And there just aren’t that many single-material items that we want in our lives for this to be a realistic appliance to have in the house.
But I am an optimist.
I believe in the power of human creativity and ingenuity. Problem today, solution tomorrow!
What Can This Teach Us About mRNA?
In many ways, the traditional pharma / biotech industry operates very similarly to Amazon.
Our bodies need certain things (e.g. missing molecule of some sort), and pharma companies know how to make these molecules or know where to get them…and deliver it into our bodies.
Pharma companies are really focused on solving two problems:
1/ Whenever there is a problem in our bodies, they need to do research to figure out what is abnormal. What is missing? Or what is present that shouldn’t be?
This is similar to e-commerce companies trying to figure out what you want and need!
2/ Once the problem is identified, they need to do research to figure out how to either get you what is missing or remove what shouldn’t be there.
This is similar to e-commerce companies trying to figure out how to find suppliers that can make what you want!
Having only one side of the equation alone is not enough. You need to be able to do both (or at least partner with someone that can help you complete the equation).
Usually pharma companies will spend many years doing research (mostly through trial and error). Sometimes they will find something that works. They will manufacture it in a factory, and then they will deliver it to your body in the form of a pill or an injection.
However, this is a “logistics-like” strategy.
Similar to how 3D printing could dramatically change how e-commerce works, mRNA has similar potential to transform how disease treatment is carried out.
The way mRNA works is that instead of producing proteins or antibodies in a factory / lab that directly targets whatever you want to target, mRNA itself is code that instructs your cells to produce what is necessary to do what you want to do.
For example, when it comes to COVID-19, the mRNA vaccines provide code that instructs your cells to produce antibodies that neutralize COVID-19 viruses if the real thing shows up.
Prior to the invention of mRNA vaccines, the way you protect yourself from viruses is by producing weakened versions of the virus and injecting that into your body.
Your body detects the weakened virus and learns to produce the necessary antibodies to fight the weakened virus. This way when the non-weakened version of the virus shows up, your body either already has antibodies present or will know how to produce the antibodies quickly.
However, this is challenging and complicated. It is challenging to produce a lot of weakened viruses in a factory and can potentially be dangerous.
The magic of mRNA comes from recognizing that all life comes from the same lineage. All cells and all life are built on the same machinery.
Your cells are already factories in and of themselves.
That’s how your cells produce YOU.
Instead of having to manufacture things and deliver things to your body, we can turn the cells into factories themselves.
All of this requires mastery and command of the code that governs our cells.
And that is what mRNA has the potential to do.
Even more powerful than the 3D printing systems we described above, (almost) every cell in our body is (almost) capable of doing anything. The only thing preventing it from doing anything we want is the instructions that command it at any given time.
Find a way to control those instructions, then you can command cells to do things that it wouldn’t otherwise do…like become mini COVID-19 antibody factories so that you don’t have to produce them in a lab and figure out how to get them into the body. (Although this sounds similar to CRISPR, CRISPR is like changing the operating system – DNA – of your cells…mRNA doesn’t change your DNA. It only changes what instructions are carried out for a short period of time.)
There is a beautiful elegance to this.
In the past, pharma companies needed to deliver different things to the body depending on what the problem is.
With mRNA, there is increasing potential to deliver one thing only. That one thing is mRNA instructions wrapped in a lipid particle. And those instructions can be easily adjusted depending on what we want to do.
When COVID-19 broke out in early 2020, Moderna was able to whip up the COVID-19 vaccine in just a few days.
This is unheard of. This has never been done before in history.
This is because historically we need to make things.
But with mRNA tech, we don’t need to make things. We just need to be able to write code to command things.
We just need “blueprints”.
Making things is hard. And making a lot of different things for a lot of different diseases is hard.
mRNA won’t solve everything, but the future already looks brighter.
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