Episode #26: Chevron and the Startup Space, Bridge Gene Editing Breakthrough, AI Arms Race

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  Sam:
  My name is Sam, the footnote writer for the show. Today you’re going to hear about how to unzip DNA. This is the Tech Optimist.

  Mike Collins:
  This has huge implications on multiple dimensions and in ways that I don’t pretend to fully anticipate.

  Matt Caspari:
  The implications in medicine are vast. There are a lot of really complex genetic disorders that you can’t get at with just CRISPR.

  Mike Collins:
  But just give somebody a chunk of money based on their talent and let them go. When that is done, good things happen.

  Sam:
  In a world captivated by criticism, it’s easy to overlook the groundbreaking technologies shaping our future. Let’s shine a light on innovators who are propelling us forward. As the most active venture capital firm in the U.S., we have an exceptional view of tech’s real-world impact. Join us as we explore, celebrate, and contribute to the stories of those creating tomorrow. Welcome to the Tech Optimist.

  As a reminder, the Tech Optimist podcast is for informational purposes only. It is not personalized advice, and it is not an offer to buy or sell securities. For additional important details, please see the text description accompanying this episode.

  Mike Collins:
  Great.

  Matt Caspari:
  Yeah.

  Mike Collins:
  Are you ready?

  Matt Caspari:
  Let’s do it. I’m ready.

  Mike Collins:
  Let’s do it, okay. Welcome to this episode of the Tech Optimist podcast, our three breakthrough shows where we talk about what we think are three notable breakthroughs from the last week or two. I’m Mike Collins. I’m the founder and CEO of Alumni Ventures. I’m joined by Matt Caspari, one of our managing partners from our West Coast. Hi Matt.

  Matt Caspari:
  Yeah, good to see you, Mike. Yeah.

  Mike Collins:
  All right, so I think I’m going first today, and this is a little bit of a build on one from about a month ago, where I identified this trend that has been happening, which I’m calling kind of the electric fence—going up on regulation and bureaucracy coming from our court system. This was before maybe the most monumental of these, which is the Chevron ruling. The Chevron preference basically gave our executive branch institutions—FTC, SEC, IRS—a deference when it came to interpreting the law. The idea was that the legislative branch would have the big picture, the broad framework, and then it would be up to “the experts” within the regulatory space to make the rules.

  I think this is significant. We’re venture capitalists, and we obviously deal with these institutions in industry after industry. Our portfolio companies do. I think this has huge implications on multiple dimensions and in ways that I don’t pretend to fully anticipate. It is seismic in its implications for particular companies and industries—from healthcare and FDA approvals to the venture capital space itself.

  I founded our company on the heels of the JOBS Act in 2012.

  Matt Caspari:
  Yeah.

  Mike Collins:
  That was interpreted, in my opinion, very narrowly by the SEC. Whole parts of the JOBS Act became impractical. The legislative intent was very different from the way the SEC interpreted it. I think we’re going to see similar patterns across industries. In the venture capital space, how things get done and regulated is going to change. Like a lot of change, there are huge opportunities for entrepreneurial companies to do things differently. This is seismic in its implications.

  Sam:
  What do these changes mean, and when will we see them? That answer right after this.

  Matt Caspari:
  Hey everyone, just taking a quick break so I can tell you about the Deep Tech Fund from Alumni Ventures. AV is one of the only VC firms focused on making venture capital accessible to individual investors like you. In fact, AV is one of the most active and best-performing VCs in the U.S. We co-invest alongside renowned lead investors.

  With our Deep Tech Fund, you’ll have the opportunity to invest in innovative solutions to major technical and scientific challenges—companies that can have a hugely positive effect on society, redefine industries, create a more sustainable future, and deliver significant financial returns.

  If you’re interested, visit us at av.vc/funds/deeptech. Now, back to the show. Any thoughts on how fast we’re going to start feeling these changes?

  Mike Collins:
  I think you’re going to see them fast. Many of these agencies will become more flexible in how they view regulations. There will be lawsuits and threats of lawsuits. There will also be preemptive actions by these regulatory agencies now that they’re constrained.

  I think you’ll see changes and lawsuits within weeks and months. For example, I think we’ll see lawsuits in energy, in healthcare, and across multiple industries.

  Again, I’m not making a legal judgment. I’m not saying that, as a citizen, I necessarily like all of this. I’m literally saying change is coming—and in a big way—affecting how things are going to get done.

  Matt Caspari:
  So generally, from what we know, this is positive for those looking for innovations to get out of the lab and into the marketplace.

  Mike Collins:
  I think so.

  Matt Caspari:
  Yeah, yeah.

  Mike Collins:
  I think I’m trying to… I’ll give you a very specific example that I can speak to personally, which is in the venture capital space, it is very restrictive. Being able to invest in venture-backed companies is restricted to a group of people called accredited investors.

  Matt Caspari:
  Yep.

  Mike Collins:
  That, in our country, is defined by one’s personal wealth and balance sheet. I think that definition—and the notion that we need to protect people—somehow means that an American’s ability to spend and invest their own money is expanded only if you’re rich. I don’t think that’s going to play very well with a judge or a jury. I think that’s just one example of where I believe change is coming, and it’s going to come pretty quickly.

  Matt Caspari:
  Great.

  Mike Collins:
  What do you got, Matt?

  Matt Caspari:
  Okay, yeah. The one I have is a new gene-editing technology called bridge editing. Two papers came out in Nature last week talking about this discovery. It was done by researchers at the Arc Institute, which is a nonprofit research institute in Palo Alto that’s pretty interesting. They’ve got collaborations with Stanford, Berkeley, UCSF, and they have a novel model for collaborative research.

  They bring on these core research scientists and give them multi-year, no-strings-attached funding. The idea is that researchers won’t have to spend so much time fundraising and will have more flexibility and freedom to pursue research they’re passionate about while being able to take risks on projects that could fail.

  This research institute launched in late 2021 with $650 million in funding. The founders of Stripe played a key role in getting it off the ground. It’s really interesting to see breakthrough research coming out of this institute.

  To understand the potential significance of bridge editing, we should start with CRISPR. Many people have heard of CRISPR—this major breakthrough in gene editing allowed scientists to make precise edits to DNA. The scientists behind it won the Nobel Prize in Chemistry in 2020. It has transformed genetic research over the last decade and enabled treatment for specific genetic disorders, as one example.

  People often describe CRISPR as “genetic scissors.” You can cut DNA and rely on the cell’s repair mechanism to insert new DNA. Bridge editing, however, doesn’t cut the DNA. It unzips a small section, inserts new DNA, and then zips it back up. This is a totally different method that’s more precise and has fewer errors.

  The promise here is the ability to insert any piece of DNA into any location in the genome. Instead of just cutting DNA, this method can directly write into the genome.

  The name “bridge editing” comes from the fact that it physically bridges two pieces of DNA. This could open up entirely new ways of dealing with biology and biotechnology. We’ve talked about some of these applications in the past—improving crops and agriculture with disease or drought resistance, and the vast implications in medicine for treating complex genetic disorders that CRISPR can’t handle.

  This methodology could also advance synthetic biology, enabling the creation of novel organisms for things like alternative fuels. It’s very exciting research, though still early—it’s only been tested in E. coli so far. It hasn’t been applied to humans yet. But this feels like one of those discoveries that, looking back a few years from now, could be seen as a massive step forward for biotechnology. Definitely an exciting one to watch.

  Sam:
  Regarding this insanely fascinating breakthrough that Matt shared, the Arc Institute released a video showing how bridge recombination works. You can watch it on YouTube in the video version of this podcast. But there’s also an audio version with a really cool voiceover. Here’s the Arc Institute video explaining this breakthrough Matt just mentioned. Enjoy.

  Speaker 4:
  What if we had the capability to recombine, insert, excise, or invert any two pieces of DNA? A team led by scientists at the Arc Institute has discovered that jumping genes from the IS110 family produce a new kind of non-coding RNA guide that enables fully programmable DNA rearrangements.

  Uniquely, this bridge RNA contains two loops: one guides the recombinase enzyme to the genomic target site, and the second recognizes the donor DNA. Once bound to both DNA substrates, the recombinase forms composite active sites to swap the top strands between the two DNA molecules.

  Following strand exchange, the DNA forms a holiday junction-like intermediate. Finally, the bottom strands are exchanged to fully recombine the two DNA molecules without creating unwanted DNA breaks.

  Bridge RNA loops can be independently reprogrammed to insert, excise, or invert any two DNA sites of interest, allowing flexible genome manipulations beyond what’s possible with CRISPR.

  Now, for the first time, the bridge recombination system gives us precise control over large-scale DNA rearrangements, enabling a new generation of genome editing and design.

  Mike Collins:
  Yeah, and again, alternatives in that space are good as well. I know there have been patent dispute issues related to CRISPR.

  Matt Caspari:
  Yeah.

  Mike Collins:
  If there are other ways to achieve innovation and experimentation, that’s nothing but good. And your bigger point, too: people think of VCs as only caring about practical, short-term implications. But there’s such an important role in our society for basic research—letting people explore intellectually from curiosity without having to spend two-thirds of their time raising money or applying for grants.

  Just give somebody funding based on their talent and let them go.

  Matt Caspari:
  Yeah.

  Mike Collins:
  I think we’ve found that when that is done, good things happen. It’s a societal role for super-successful people to pay it forward with these kinds of open-ended grants. We’ve seen this in the nonprofit space with Melinda Gates and others who simply write checks instead of micromanaging. If you’ve got a great researcher, just fund them and let them do their thing.

  Matt Caspari:
  We get developments like this. Yeah, it’s super exciting to see a new approach to basic research yielding strong results so quickly. Again, they only launched this institute a few years ago, so this is pretty cool.

  Mike Collins:
  Then life sciences—there’s just so much exciting stuff going on. Yeah, my third one is, again, just a bit on the same theme: the recent AI releases coming out of Claude and Perplexity. When ChatGPT came out with 3.5 and then 4.0, people thought it might dominate completely. But now, mid-year 2024, with releases from Google, Meta, Apple, and new chip companies coming online like Rock, plus seeing great things from Perplexity and Anthropic, I just think this is becoming a full suite of options.

  I was playing around with Anthropic’s latest release, and it’s really powerful, with its own take on things. We now have a suite of tools for bringing AI into workflows, businesses, and personal life. Each tool has its own strengths and weaknesses, and ideally, you’d want access to them all.

  Combine that with AI being built into tools people already use—like Canva—and you see the pace of AI releases and developments coming fast. I’ve hit a tipping point where it feels like the early App Store days. We’re going to have a variety of tools to do things well, and now there’s an entirely new class of AI tools to help get things done.

  Matt Caspari:
  What do you think about the agents coming? Do you think agents will tap into different models depending on cost or use case? It feels like it might be hard for individuals to figure out the right or optimal model for a given situation.

  Mike Collins:
  Yeah, I think we’re right on the cusp of agents, but not quite there yet. I don’t think people fully trust these systems commercially to run autonomously.

  Matt Caspari:
  Yep.

  Mike Collins:
  They’re still a bit like middle schoolers or teenagers, frankly.

  Matt Caspari:
  You have to check in on them.

  Mike Collins:
  Exactly. You need strong oversight. But companies and individuals are starting to develop workflows with checkpoints to double-check output. A workflow might be broken into three or four parts with multiple intervention points, and one final review before deployment.

  Matt Caspari:
  Yep.

  Mike Collins:
  But those chains are getting longer, and confidence is growing. We’ve seen similar evolution in self-driving tech. At first, it was just cruise control plus, used cautiously on highways. Now, people are using it routinely—not fully hands-off—but the range of situations where it feels safe grows quarter over quarter.

  We’re gradually giving these systems more responsibility. The Anthropic release is a big deal. I think there will be many winners in this space, each finding its niche over time.

  Matt Caspari:
  Yeah, super exciting.

  Mike Collins:
  Excellent. Another good week.

  Matt Caspari:
  Okay. Yeah, great to see you.

  Mike Collins:
  Thank you.

  Matt Caspari:
  Take care.

  Mike Collins:
  Have a good one, Matt. See you.

  Matt Caspari:
  You too.

  Mike Collins:
  Bye.

  Sam:
  You know me—being the guide for this show, I’ve heard a lot of interviews and listened to CEOs, entrepreneurs, and startup founders talk about AI and the tools they use daily. Like Mike mentioned, they’re using AI tools within their workflows.

  After listening to Mike and all the guests he brings on, I’ve changed my own workflow for researching, editing, and organizing podcast files. I wanted to share a few tools I use that I discovered from this show:

  Perplexity was one Mike and Matt mentioned today—I use it every day. It’s always open in my Chrome browser for any question I have. It’s great at summarizing and pulling research from multiple sources to give comprehensive answers.

  After hearing Mike’s third breakthrough, I also started using Claude. Like ChatGPT, it has its own specialties, and I now use both depending on the task. Mike’s right—they each excel in different areas and have really improved my workflow.

  For fun and creative tasks, I use Midjourney, an AI image-generation tool you can access directly through Discord.

  These are just some of the AI tools I’ve adopted thanks to this podcast and my own research.

  We’re going to round out this episode with one more short break. Thanks so much for listening to the Tech Optimist. See ya.

  Speaker 5:
  Do you have a venture capital portfolio of cutting-edge startups? Without one, you could be missing out on enormous value creation and a more diversified personal portfolio.

  Alumni Ventures, ranked a top 20 VC firm by CB Insights, is the leading VC firm for individual investors. Believe in investing in innovation? Visit av.vc/foundation to get started.

  Sam:
  Thanks again for tuning into the Tech Optimist. If you enjoyed this episode, we’d really appreciate it if you’d give us a rating on whichever podcast app you’re using. And remember to subscribe to keep up with each episode.

  The Tech Optimist welcomes any questions, comments, or segment suggestions. Please email us at [email protected], and be sure to visit our website at av.vc.

  As always, keep building.