Everyone is digging for gold, but I want to sell them shovels
Tuesday, June 17th, 2008Years back, when I was studying computer science, I took a course on virtual machine design by Lars Bak. At the time he had just returned to Denmark but was still working at SUN and he managed to get a VP from SUN to give one of his lectures for him (I forget who it was, as I said it was many years ago).
That particular lecture wasn’t about building object oriented virtual machines but about building successful software companies. (No snide remarks about someone from SUN talking about that, please).
This was during the .com bubble or just while it was bursting, and the advice he gave was: “when everyone is digging for gold, you get rich by selling shovels”.
If you build the basic infrastructure that everyone needs, it might not be as glamorous and if you are selling commodity products you won’t get rich over night, but if you are selling something that everyone needs, you won’t loose your market over night.
Personal genomics and medicine shovels, anyone?
I’m telling this story because I just read this post at Genetics Future. It concerns genetic testing and how it will soon change with complete re-sequencing which will be cost-effective Real Soon Now(tm).
The post ends:
There are ruthless economies of scale in the human disease genomics business, both in terms of sequencing infrastructure and the costs of assembling reliable knowledge bases for interpretation, so it will be increasingly difficult for smaller companies to stay competitive.
The personal genomics and genetic testing field is another gold rush (although one where small garage companies aren’t quite in on the game yet). Right now there’s plenty of testing labs, but with resequencing we’ll probably only get a few large companies, at least until the price for resequencing drops significantly.
I don’t want to compete here. I’m sure I’ll lose. I would absolutely love to be selling shovels to the gold diggers!
What will all these companies need?
Of course they will need IT infrastructure to manage their data and statistical methods to correlated genotypes with phenotypes.
The question is, of course, whether it will be possible to sell bioinformatics to such companies, or whether they will want to build all their informatics in house. Some, they want to, of course, as that will give them a competitive advantage, but surely there will be some commodity software they will want to buy somewhere else.
They won’t build their own OS or database system, but probably their own specialised statistical models. Somewhere in between, there is money to be made, if I can only figure out how…