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“The Perspectives of aSkeptical Co‐founder”Stanford Energy SeminarHoward W. TurnerJanuary 28rd 20121
Key considerations in 2010 for “NewCo” .Personal experiences suggest-Pure “materials” plays are difficultPure “engineering” plays are irrelevant to meBut amazing things can be created when great chemists andengineers work closely together to “evolve” the materials, processesand productsParameters for next professional steps-Big target and impact (meets or exceeds Exxon/Symyx experiences)New chemistry and materials need to be invented (I have a role)Bringing a “real” product to market (self-reliant)Create and capture value in less than 7 years (son graduates fromhigh school in 2017 .)Proprietary2
The problem with “new materials” in existing marketsMy paradigm-Large markets are risk-adverse and price sensitiveLow cost requires high volume of productionHigh volume production requires huge capital infrastructure(financing risk)My initial instinct-There is no larger, more price sensitive, more risk adverse, morecapital intensive, slower moving, or worse fit than the “energy”market-Consider meeting “un-met” needs in a market that pays forperformance such as healthcareProprietary3
An example of a recent pure “energy” play XTO was founded in 1985 and had grown into the largest natural-gasproducer in the U.S. On Dec. 14, 2009, Exxon announced a 31 billion all-stockacquisition of XTO "Exxon made a bet on natural gas, and so far they areunderwater, because the price of gas in the U.S. has collapsed,"says Fadel Gheit, the longtime Oppenheimer energy analyst. "Thatdoesn't mean that they are wrong, because their investmenthorizon is not the same as Wall Street's.” "The strategic decision I made was, Okay, we're going to enter thiswholeheartedly, and we want a big position now," says ExxonMobilCEO Tillerson. "We can build it, and it will take several years for us toget to a material position. Or we can buy it.”Proprietary4
Electro-chromic dynamic windows offer substantial energysavings potentialSolar heat gain a primary causeof building energy consumptionBuildings consume 40% ofprimary energy in the US,substantial portion is cooling &heatingCurrent low-E coated windowsoffer some protectionLow E windows can reducesolar heat gain to about 27%ProprietaryDOE estimates 30% lower totalenergy consumption than low-EDynamic glass has attractedinterest from pvt and govt sources5
But in addition to energy savings: consumers love dynamicwindows for comfort and function Provide energy savings 30% valueHigher comfortCut down on glare/control tint Offer UV protectionProvide privacy 70% value toconsumers iscomfort relatedEliminate need for shade/blindsInterior design freedomProprietary6
First generation dynamic window performance gapsColor limited by materialsTransparent Conducting Layer (TCO)Current EC windows require 20minutes or longerAnodeto clear to darkIon-Conductor LayerCathodeTransparent Conducting Layer (TCO)State-of-art Dynamic WindowWindows require 20 minutesof longer to full switch fromclear to darkNon-uniformswitchingCommon Device structureSlow switching from“edge-to-middle” causedby voltage drops acrossthe TCO’sPropeitary7
Dynamic windows can become a very high volume consumerelectronics categoryDynamic windows can provide a compelling ‘user’experienceConsumers willing to pay significantpremium but New materials, processes,and device concepts need tobe invented to serve thismarket 70/ft2 45/ft2Very large market potential accessible through innovation and thecommercialization of high-value productsProprietary8
Kinestral Technologies History Founded in 2010 to develop new materials, processes, anddynamic window devices and products Initial experimental work carried out at the MolecularFoundry in early 2011 (Delia Milliron labs) Executive team includes Dr. SB Cha (CEO, PhD ChemE;MBA; display industry) and co-founder Dr. Sam Bergh(COO; ChemE/EE) Strong materials discovery engine and staff, strong processand device engineering expertise Bringing “display industry” practices and principles to the“window industry” Series A ( 16M; September 2012) led by 5AM and VersantVentureProprietary9
January 28th 2013A Graduate Student's Guide toWhy, How, and When to Start ACompanyCraig H. Peters & Brian E. HardinCo‐Founders, PLANT PVPLANT PV
Career art‐upPLANT PV
Start‐up demystifiedStart‐up: Group of people with a common vision trying solve a painin the marketplace .hopefully at a profit!BusinesstasksLabworkGoodDiversity work/lifeof tasks balanceFounders CoreTeam ExpansionTeamNeed to find a work/life balance that takesinto account your aspirations!PLANT PV
A day in the life of .Heavyafter thatHeavy in the early stage(until you raise and hire)Founders(24x7lifestyle)CoreTeam(12 hourdays)ExpansionTeam(9‐10 hourdays)ThevisionTechroadmapFundraisingBusDev& legalManagetech tasksLabworkBusinesssupportHiring &mgmtLabworkExecutetasksPLANT PV
It all starts with an ideaYour fieldThesisofresearch topicField withtransferableskillsHeliotropeTechnologiesPLANT PV
When & how to begin brainstormingGradschool/Postdoc4th5thYour Field of ResearchField w/ Transferable Skills Met once per month 6 teams of 4 students Educated ourselves on thedetails of the power gridand solar industry Met twice/month 6 8 people One person brought a problemand suggested a technologysolutionNewton’s 3rd Law of Graduation: PhD Comics“For every action towards graduation there is an equal andopposite distraction”PLANT PV
Other ways to prepare yourself for start‐ups while in graduate school Become an expert in your field (10,000 hour rule) and build lab skills Manage a research project from inception to completion Help your advisor write a grant proposalCommon mistakes PhD students make: Believe that they should be getting/need an MBA and neglect research Extracurricular activities take precedent over researchPLANT PV
Starting Up Ask questionsChoose an ideaExecuteMake a planObtain nirvanaBuild a‐teamRaise money tohit firstmilestonePLANT PV
Socratic staircase to map your businessThe planHow long to hit your first milestone?What resources are required to start?YouWhat skill sets are crucial for success?What are the major show stoppers?What need are you trying to satisfy?PLANT PV
Building A‐Team Find people that are exceptionallyskilled to tackle the hardest tasks. Stay lean only bring in peoplethat are crucial to hit your firstmilestones. Very little management In a high risk space; the a‐team ismore important than the idea.The perfect start‐up teamPLANT PV
Venture capital math 101Venture Capital Fun Facts:Market Size1998‐2004, 23Bn mkt cap @ IPO1) Want to own 30‐50% of start‐ups that can obtain valuationsof 500M in 3‐8 yearsMargins2) Great VCs break even on theirmost successful company inthe portfolio2004‐2012, 104Bn mkt cap @ IPOScale Up3) It is in their interest toaccelerate development in allaspects to achieve liquiditysoonerTime to return2010‐2012, 1Bn sale to FBPLANT PV
Venture capital models are challenged incleantechCleantech companies are different :Market Size1) Compete against commoditieswith lower margins than ITMargins1984‐2006, 1.8Bn mkt cap @ IPO2) Takes a lot of time and money toscale up physical products thatare expected to last 25 years3) VCs are not partying like it’s2007.Scale Up1985‐2005, 1.5Bn mkt cap @ IPOTime to return2006‐2012, 1Bn mkt cap @ IPOSee http://mnordan.com/ for more informationPLANT PV
Government Funding: Fire bullets not cannonballs*California Energy Commission: EnergyInnovations Small Grant Program (EISG)**DOE/NSF/USDA: Small BusinessInnovative Research grants (SBIR)**SunShot programs** 95K 150K‐ 1M 350K‐ 10MARPA‐E & DARPA programs* Quote from Great by Choice by Jim Clark 200K‐ 20M** PLANT PV has received these grantsPLANT PV
National labs can be ideal for early stagestart ups Figure it out quickly: National labshave experts and state‐of‐the‐artequipment to help determine if yourproject is feasible. Failure is OK: Can cycle throughpromising ideas at a minimal cost. Need to do cutting edge science:NOT a place to scale up or do basicengineering projectsMolecular Foundry is a Department ofEnergy User Facility at Lawrence BerkeleyNational LabsPLANT PV
Be proactiveIf you begin your email with the “I am a graduate student atStanford,” it is very easy to talk to:Venture CapitalistsProgram Managers at GovernmentAgenciesCEO/CTOs of major companiesLawyers & AccountantsOther start‐upsThis man is not Charlie GayIf you now Charlie‐ can you please have him contactme at bhardin@plantpv.comPLANT PV
Putting it together: PLANT PVCompany Goal: Perform basic materials science research andprototype PV materials to hit 1/W SunShot goal.SteveEdBrianCraigRandyElan ManagementPLANT PV
Conclusions / Questions It starts with asking the right questions Find your A‐Team Stay lean and flexible Raise what you need, not what you can Be careful with venture capitalists Be proactiveContact tpv.comWebsite: www.plantpv.comPLANT PV
An example of a recent pure "energy" play XTO was founded in 1985 and had grown into the largest natural-gas producer in the U.S. On Dec. 14, 2009, Exxon announced a 31 billion all-stock acquisition of XTO "Exxon made a bet on natural gas, and so far they are underwater, because the price of gas in the U.S. has collapsed,"
