Turning Bits into Atoms

While the focus lately has been on Web 3.0 and the metaverse, there’s a simpler way to look at what is coming next in the digital era: turning bits into atoms.

Many winners in the first decades of the web had one thing in common: they used the process of digitisation to convert atoms into bits.

The Yellow Pages morphed into Google. CDs transformed into MP3s. As newspapers became websites and apps, their financial assets became eBay, Gumtree, Facebook Marketplace, REA and Carsales. The entire video store evaporated as streaming put every movie ever made on our TV, available to watch on demand.

In hindsight, this process was strategically simple for new firms to emerge and take down legacy media operators. Their cost of product delivery was close to zero and the barriers to entry had all but been removed.

To take the idea of dematerialisation further, just think about all the physical items that now live inside a smart phone. I’m talking about cameras, photos, magazines, maps, gaming consoles, money, nightclubs (what a dating app actually is), and photo filters (replacing alcohol to make people look more attractive than they actually are). I once delivered a keynote presentation, where I fit on a table measuring 12 x 3 metres the physical items that have been reborn as apps in a smart phone.

The process of turning the physical into digital has largely already been done and won, at least from an investor’s perspective. Now this process is about to go into reverse. The next few decades will become the era of the physical web. It may seem like fantasy, but we’ll start replicating nature via the process of Digital Fabrication.

This will go beyond the current crude processes of industrial manufacturing where we literally join found raw materials and, instead, build at the molecular level in a form of biomimicry. Understanding early on the process of how this can happen can be instructive for investors. During the era of digitisation, emerging technology firms had the advantage of gaining almost free customer access and distribution. In a world of digital fabrication, we have a similar modality, except this time complexity comes for free.

The best example is the 3D printer. Once we start truly manufacturing in a digital manner, we don’t need to change production lines — just lines of code. A 3D printer doesn’t care if it is manufacturing a block or something more intricate. Once we replace bricks and mortar with 3D-printed buildings, intricate finishes on building facades seen around Melbourne and Sydney will once again become commonplace.

This is much closer than we think. Australian startup SLIK Build has already commenced 3D printing buildings right here in Australia. While the main focus at this point is speed, sustainability and cost reduction versus bricks and sticks, the opportunity extends towards bespoke and beautiful designs. 3D construction has exited the phase of amazingly experimental, Instagram-worthy technology to viable economic model. The future of our country faces continued ravaging by fires and floods and a younger generation trapped in a rent cycle. The need for affordable housing construction is part of the equation our governments and our yet-to-be disrupted trade industry should consider.

3D printers can now use over 300 raw materials, which include electrical components, microchips and even diamonds. While they don’t shine, we should expect that they will very soon. The reason is that digital technologies not only improve incrementally but exponentially. This is why we are so surprised when the curve jump finally happens. It’s now more than a decade since the first cohort of affordable home 3D printers such as the Makerbot hit the market. At that point, it too was a hobbyist movement. While we weren’t looking the technology has continued to astound and will very soon take us towards molecular manufacturing.

California startup Cana plans to do just that with the world’s first commercially available molecular beverage printer. Cana promises that a single Cana One ingredient cartridge can create hundreds of different beverages by pulling recipes from its ‘universal ingredient set’ in a quasi-SodaStream meets 3D printer. The company's beverage page touts iced coffee, iced tea, sparkling tea, energy water, flavoured water, immunity water, sports drinks, soft drinks, hard seltzer, cocktails, and even wine. The results sound like they should be met with a little scepticism. However, we’ve been using nature identical flavourings at a molecular level in food manufacturing for decades, so this seems like a plausible trajectory.

If that isn’t convincing enough, then we can add 3D-printed meat to the equation. Early tests have successfully used molecules to cultivate meat in a lab and bio-print scaffold structure. This means it’s possible for 3D-printed meat to not only have the same nutritional qualities of the real deal, but it also has the potential to create the physical manifestation and mouthfeel of steak. At a more micro level, a study was published this week in the international journal Fertility and Sterility demonstrating the feasibility of bio-printing adult sperm cells.

Efficiency and positive environmental implications for turning bits into atoms are dramatic, impacting everything from production, packaging and distribution – all of which produce large carbon footprints.

When it comes to technology and its dominant industry players, we naturally see the next step to be a continuation of what we have now. We can see this today, with the focus rightly on artificial intelligence and the metaverse. What’s just as likely is that these become the ingredients for designing and informing the shift to convert bits into atoms. The elements required for a horizontal jump puts us on an entirely different economic trajectory, with new players emerging unconstrained by an existential business model or corporate infrastructure. Real innovation happens when and where no one is looking, often a decade or so after we first hear about the possibilities.