Solazyme, Founded on ‘Delusional’ Idea of Algae Biofuel, Stakes Claim as Industry’s First Mover

Xconomy San Francisco — 

Two teenagers arrived at Emory University in Atlanta as freshmen in 1989, and within days, they hit upon a “delusional” idea: starting a biotech company. Two decades later, it’s become a lot less delusional, as Jonathan Wolfson and Harrison Dillon have built South San Francisco-based Solazyme into one of the nation’s leading contenders in the race to create renewable biofuels.

“The first day I met him, we’re sitting in a dorm room, I asked him what he wanted to do,” says Wolfson, Solazyme’s CEO. “He said, ‘I want to be a geneticist.’ I said, ‘I actually just wanted to know what you want to do tonight,’—maybe we’d go get some beers, find some impressionable women. I guess the die was cast right then.”

The two struck up an enduring friendship, then went their separate ways on career paths in business and science. They reunited in 2003 to start Solazyme, with what was then a truly outlandish-sounding vision of using fast-dividing, super-efficient algae to produce renewable fuels. Seven years later, they have developed a process that can convert cellulosic biomass like sugarcane, with the help of algae as a middleman, into renewable fuels like diesel and jet fuel. Wolfson and Dillon have turned their once-delusional vision into an organization with 90 full-time employees that has active partnerships with big oil and consumer product players like Chevron and Unilever. It has signed a couple of contracts to supply renewable diesel to the biggest customer on the planet—the U.S. Department of Defense.

And Solazyme is doing this all with a technology that’s fundamentally different to what’s being done by rivals, including a couple of well-known players from San Diego—Sapphire Energy and Synthetic Genomics. To hear the Solazyme CEO, his company has made larger quantities of renewable fuel than all its rivals combined.

Jonathan Wolfson

Jonathan Wolfson

Solazyme certainly has its critics who doubt it will ever become a real biofuel company. And much is still left to prove, in terms of how meaningful this could be for Solazyme’s investors, much less the environmental state of the planet. The company’s process is “really close” to reaching a crucial milestone of becoming competitive with conventional crude oil on price, in the $60 to $80 per barrel range, Wolfson says. The company has already shown it can produce “tens of thousands of gallons,” of renewable fuel that meets all the necessary engine specifications. By the end of this year, he wants Solazyme producing more than 100,000 gallons of commercial fuel, an important step on the way to reaching truly massive scale production in 2012 and 2013. If Solazyme can really deliver that much fuel, it could have an important first-mover advantage in a renewable alternative in a global fuel market that’s worth trillions of dollars.

“The potential for this company is tens of billions in annual revenue if not bigger,” Wolfson says. “We will make renewable oils that can go into all the things we use oil for today.”

The Solazyme story, as alluded to above, really does trace its origin to a couple of teenagers who became friends as freshmen in college. Biotech had gone through its big wave of company creation with Amgen and Genentech and others, but it hadn’t yet really found its sea legs as an industry with multi-billion dollar products. Amgen had just broken through with its genetically engineered erythropoietin, an important treatment for anemia, and Genentech had helped usher in the era of genetically engineered human insulin that would replace animal derived insulin for diabetics. It was heady stuff to an ambitious teen from New York, Wolfson, and his new friend from Atlanta, Dillon.

“The future was completely open with respect to what the tools of modern biotech would be able to accomplish,” Wolfson says. “We were both completely fascinated by it.”

They stayed in touch as each went to graduate school in different parts of the country. Wolfson got his business and law degrees at New York University, while Dillon went on to get his doctorate in genetics—just like he dreamed—at one of the top programs … Next Page »

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6 responses to “Solazyme, Founded on ‘Delusional’ Idea of Algae Biofuel, Stakes Claim as Industry’s First Mover”

  1. mike cahill says:

    sounds like a great idea.How will you harvest the groth material you need as biofuel/additives?

  2. Do you think that there’s still a chance for a pure solar-algae play in the biofuels industry? Solazyme abandoned the strategy several years ago, and currently it looks like cellulosic ethanol is going to be the winner. But, as Bruce Bigelow wrote here , there are new technologies being developed all the time that are still exploring algae as a fuel producer. How difficult will it be for algae-fuel producers to scale up quickly and challenge Solazyme’s first-mover advantage?

  3. Joe says:

    Hmmm…. so as an investor what advantage does this have over direct production from camalina and jatropha?? In terms of $$ my guess is not much. Maybe some tunability w-r-t fatty acid chain length but is that a meaningful enough distinction to become profitable??
    Very inchoate company at this point, but give Joule Inc a look.