I've watched the story of Kickstarter darling Pebble with great interest. Last year, their humble $100,000 goal to build a "Dick Tracy-style" smart-watch exploded into a ten million dollar campaign almost overnight. With the increased demand (~70,000 backers) came headaches - suddenly, Pebble had to have engineers, infrastructure, supply chains, and every other concern of a physical, bricks-and-mortar company.
A Bloomberg article from this morning, "Pebble Learns Why Most Startups Make Software," neatly summed up the situation: "Hardware is Hard." It's a similar sentiment to that expressed by many small biotechs: You need molecules made to test your theories and cure your target disease, but you don't want the staff, shipping, or facility overhead sitting on your cost sheet.
Thus, Pebble mimics a 'Virtual' Pharma company, where you get most everything done by off-site CROs. The model works great when you can control demand, whether shipping watches or drugs, but you have less control over how fast either gets done since you aren't personally building them!
Result: Customers get angry, or clinical trials get delayed.
I need to do more digging to paint a full picture, but the situation also mirrors Big Pharma. Over the past few decades, as mergers occur, labs are closed, equipment sold off, and long-time staff let go, pharma has found itself in a similar predicament: Who makes the molecules? For now, the outsourcing boom continues unabated, but one wonders if tech cautionary tales like Pebble's will inspire the next generation of pharma start-ups to move back to a model with (gasp!) actual chemists, hoods, and reagents.
Here's to incubators and shared synthesis spaces.
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