Rumors confirmed: Brian Harrison has joined Solyndra as President and CEO. Since 2008, Mr. Harrison has served as President and CEO of Numonyx, a flash memory company with issues of its own that recently got bought by Micron Technology. Chris Gronet, Solyndra’s founder and current CEO, will continue as Chairman of the Board of Directors.
The VC playbook is rather thin. Provide more money, stop providing money or replace the CEO are the primary actions VCs faced with flailing company performance tend to take. In this case, the chosen course of action is to replace the CEO.
The changes come amid a painful chapter in one of thesolarworld's more engrossing melodramas. The company, which has created a novel tubular solar panel, has raised more than $1 billion from investors and nabbed hundreds of millions in government loans. President Obama and Steve Chu have spoken at the factory. The company has even nabbed clients like Anheuser-Busch. Nonetheless, the tubular panels cost far more to produce than conventional solar panels, making the likelihood of long-term success a question mark in investors' minds. Solyndra's average sale price is around $3.24 a watt and the company has been selling panels at a loss. Crystalline silicon solar panels sell for $1.95 or less a watt and companies can sell them for a profit.
We reported that Gronet was out last night and that power in the company had shifted to Argonaut Private Equity, which owns a large portion of the company. Solyndra said Gronet worked at the company but that management changes were afoot. The formal announcement came today.
Interestingly, Numonyx has been in a situation similar to that faced by Solyndra (over and above the crazy fixation with using 'y' as a vowel). Funded by well-known companies like Intel, Numonyx's memory has shown great promise for improving computer performance and reducing power. However, the company has taken years to get its products to market. (In fact, the type of memory Numonyx makes was the next big thing according to Gordon Moore -- in the early '70s. It's as old as The Mary Tyler Moore Show.) The technology behind Numonyx was invented by Stan Ovshinsky, who came up with technology for amorphous silicon solar panels. (Read the link. It's interesting.)
Last month, Solyndra pulled its planned IPO, and it is our understanding that a complete and painful financial restructuring followed, which has strongly affected both employee shareholders and inside investors. (In the photo accompanying this post, Gronet is next to Governor Arnold.)
We recently reported that Solyndra Senior VP Dr. J. Kelly Truman had left the company he had helped to found and went to flow battery company Deeya Energy. He seemed to have left voluntarily. (There is apparently no truth to the rumors that Truman's first move as CEO is to redesign the planar membrane stack to a cylindrical design.)
The $175 million funding round from Argonaut Private Equity obtained by Solyndra when it withdrew its IPO came at a steep price. The firm was essentially recapitalized, revalued and earlier investors and employees saw the worth of their shares drastically shrink -- meaning that Truman's 0.5% of the firm suddenly became far less, say 0.05%, of the firm, and those dreams of "My options are going to make me rich!" went out the window.
Gronet, an Applied Materials alum, might have made some questionable leadership and strategy moves as the company grew larger and borrowed big money from the government. He also likely saw his once-substantial shares in the firm vanish into thin air (Gronet does have a base salary of $400,000). Certainly Gronet's decisions were not made in a vacuum, but with the approval of the board of directors.
An executive recruiter added that a flood of Solyndra resumes has been crossing her desk. Current Solyndra employees say they are waiting for the other shoe to drop in an unsurprisingly less-than-enthusiastic work environment. Other employees have said it's all systems go, regardless of management changes or withdrawn IPOs.