Gross margins are essentially a company's revenue from products and services minus the costs to deliver those products and services to customers, and it's one of the most important financial metrics a startup can track. And yet, figuring out what goes into the "cost" for delivering products and services is not as simple as it may sound, particularly for high-growth software businesses that might use emerging business models or be leveraging new technology. Why do gross margins matter? When do they matter during a company's growth? And how do you use them to plan for the future? In this episode, a16z general partners Martin Casado, who invests in early stage enterprise startups and  David George, who leads our growth fund, and Sarah Wang  on the growth investing team share their perspectives on how to think about gross margins in both earlier and later stages at a startup. The conversation ranges from the nuances of and strategy for calculating margins with things like cloud costs, freemium users, or implementation costs to the impact margins can have on valuations. 

In this episode of the a16z bio Journal Club, bio deal team partner Judy Savitskaya and Lauren Richardson discuss research that aims to enhance the efficiency of photosynthesis and carbon fixation. These two processes are used by plants and other phototrophs (like algae) to convert light energy and carbon dioxide from the air into organic matter. The pathways took millions of years to evolve, but can scientists use advances in biochemistry and synthetic biology to increase their efficiency?  The two discussed were both published in the journal Science and are both from the lab of Tobias Erb at the Max Planck Institute for Terrestrial Microbiology. The first article, published in 2016 develops a synthetic pathway for the fixation of carbon dioxide in vitro. The second article, which was published in May, combines this synthetic carbon fixation pathway with the natural photosynthetic pathway isolated from spinach to create an artificial chloroplast. This combination of natural and synthetic components to improve the efficiency of these pathways has a number of potential applications, including in engineering our crops to grow faster. We discuss these exciting applications, how evolution has restricted the efficiency of carbon fixation and how these engineered solutions get around that problem, and the use of microfluidics for vastly improved experimental design.  "A synthetic pathway for the fixation of carbon dioxide in vitro" in Science (November 2016), by Thomas Schwander, Lennart Schada von Borzyskowski, Simon Burgener, Niña Socorro Cortina, Tobias J. Erb "Light-powered CO2 fixation in a chloroplast mimic with natural and synthetic parts" in Science (May 2020), by Tarryn E. Miller, Thomas Beneyton, Thomas Schwander, Christoph Diehl, Mathias Girault, Richard McLean, Tanguy Chotel, Peter Claus, Niña Socorro Cortina, Jean-Christophe Baret, Tobias J. Erb a16z Journal Club (part of the a16z Podcast), curates and covers recent advances from the scientific literature -- what papers we’re reading, and why they matter from our perspective at the intersection of biology & technology (for bio journal club). You can find all these episodes at a16z.com/journalclub.