For every cup of Greek yogurt made, two cups of wastewater are produced. Companies have to dispose of this waste, called acid whey. The majority of it is handled either by trucking it to a wastewater treatment plant to process at a cost or by transporting it to farmers to use as fertilizer or in animal feed. The farmers accept the acid whey, but its use requires work. Until recently, dairy companies paid farmers to take it off their hands.
With the long-distance trucking of acid whey alone, the environmental impacts are considerable, in addition to being costly to dairy companies. What if that wastewater could be converted into something of greater value? With the help of a group of MBA students from the Samuel Curtis Johnson Graduate School of Management, Juan J. Guzman Jr., PhD ’17, Biological and Environmental Engineering, is working to commercialize a technology that converts acid whey and other wastewater streams into a carboxylic acid with oily properties, what Guzman calls a bio-oil.
This bio-oil, the same compound that's extracted from oil palm trees, is already used as a platform chemical in the flavoring and fragrance industries, for beauty products and as a commercial additive in animal feed. But the bio-oil extraction from oil palm trees is unsustainable in multiple ways, especially in the deforestation required for plantations, typically in Southeast Asia.
As one of the College of Engineering’s 2017 Commercialization Fellows, Guzman wants to offer a sustainable alternative. “From everything I’ve done so far, all the numbers keep adding up to what I think could be a company,” Guzman says.
The Cornell Bio-Oil
The technology was developed in the lab of Lars Angenent, Biological and Environmental Engineering, whose students and postdoctorates have been studying and scaling up the basic bioreactor platform for the last seven years. Specially honed batches of bacteria carry out the reactions that convert acid whey and other carbon-containing chemicals such as ethanol to the bio-oil.
“It’s a little different from the fermentation that happens in beer or wine, where you have one particular strain of yeast,” Guzman says. “We use a thing called open cultures or microbiomes, which somebody tossed in the reactor in 2009, and we just kept feeding it what we wanted the bacteria to grow with. So this mother culture is basically honed to the feedstock and rid of the bacteria we did not want.”
Guzman and others in Angenent’s lab have scaled the system up to five liters and have moved from testing synthetic to real-world waste streams. “With acid whey from Greek yogurt, the conversion was really good, and based on feedback from customers, we decided to go down this route and solve a problem for them,” Guzman says.
From Lab to Technology Commercialization, with Help from Cornell's Commercialization Fellowship Program and NSF's I-Corps
Guzman has had commercialization ambitions since before he started as a PhD student. “I’d worked in startups before coming to Cornell, and the last one I worked at is still alive and successful in the wastewater space,” he says. “I left because I thought I could do what the founders are doing—and get to bring another technology to market to solve a waste problem. I really came to Cornell because I wanted to try to find a technology to start.”
Guzman began working on the bio-oil project through a collaboration separate from his thesis work, in which he modeled and tested a different bioreactor to study difficult-to-grow microbes. While he initially saw a glimmer of hope for the bio-oil commercially, it wasn’t until he applied for and received the commercialization fellowship that he felt he had the resources to turn his ambition into a reality.
“Not until the commercialization fellowship did I have enough time to figure out all of the details,” Guzman says. “Without the fellowship, it becomes a side project, and you get busy and don’t have time to do the right homework.”
The fellowship afforded Guzman time outside the lab, covering his tuition, insurance, and stipend for half a year. It also offered training in entrepreneurship and how to engage with industry. In addition, Guzman was accepted into the National Science Foundation’s Innovation Corps (I-Corps) program, which also aims to give scientists the skills and resources they need to accelerate their technologies toward the marketplace. With the support of I-Corps; his fellowship; his technical mentor, Adjunct Professor Mark Hurwitz PhD ’96, Chemical and Biochemical Engineering; and industry mentor Brian Bauer ’85, Guzman was able to do extensive customer discovery. During the summer of 2017, the team met with over 100 potential customers and industry experts from all over the country.
“In the end, the goal of the commercialization fellowship is to teach PhDs how to be more than researchers, to learn how to transition to industry.”
With a sense of what the technology could do, how much it costs, and what customers needed, Guzman was ready for the next phase of the commercialization fellowship.
Partnering with MBA Students
One of the perks of being a commercialization fellow is access to a semester of intensive business consulting—collaborating with MBA students. Beginning in the fall of 2017, Guzman teamed up with a group of four MBA students—Robert Mueller ’19, Shane Counts ’19, Sarah Hale ’19, and William Hall’19—with expertise across the business spectrum.
“Juan’s got this incredible depth of understanding of this project, and what we bring is that breadth of knowledge,” says Mueller. “We have a lot of these toolsets to be able to figure out the customer segmentation, how we should position the product, the financial models, and so we basically tag team with the PhDs to help them take their technologies to market.”
The structure for the partnerships started because a number of MBA students were interested in building startups but didn’t have the technologies to work with. “In come the PhDs, who have these great technologies to be built out,” Mueller says.
“And they’re the first people who asked the detailed questions,” Guzman says of the MBA students. “They asked the questions that are important for investors.”
In order to participate, MBA students apply to a student-initiated program called the Big Red Tech Strategy (BRTS). Entrepreneurship faculty from the Johnson Graduate School of Management—Tom Schryver ’93, MBA ’02, Bradley N. Treat, MBA ’02, Kenneth S. Rother, and Steven S. Gal ’88—provide entrepreneurship instruction to the fellows as well as serve as advisers and instructors to BRTS. With BRTS student leaders, they match MBA groups to the commercialization fellows and their projects.
With Guzman, the MBA team has analyzed the economic viability of taking the acid whey from dairy companies and are now weighing business models. The team is also working to determine where the bio-oil product will fit into existing markets. The animal feed market is particularly complex, with additive distributors and then intermediary companies that bundle and sell the additives to farmers.
“We have to figure out where we need to market along that value chain,” Mueller says. “The farmers are the ones who see the benefit, but there’s a whole channel of distribution, so we’re trying to break out revenue and projection models and figure out a proper business plan. That’s where we’re trying to help Juan as much as possible.”
While the collaboration formally ends after a semester, Guzman plans to continue pursuing the project, taking the expertise of the MBA students with him. He is now working with Cornell’s Center for Technology Licensing to license the technology, which has already been patented. He is also applying for multiple grants that would help fund a pilot study with a local dairy processing plant. In addition, he is being advised about company formation by staff at the Kevin M. McGovern Family Center for Venture Development in the Life Sciences—where he hopes to apply for admission and find a home and stimulating startup environment.
“That support will basically help me do some scale-up studies and answer a couple research and development questions I would like to know in order to pitch a large-scale system,” Guzman says.
“In the end, the goal of the commercialization fellowship is to teach PhDs how to be more than researchers, to learn how to transition to industry,” Guzman continues. “So that’s the official goal—learning. Now I want to keep going.”