In Silicon Valley, the old saw is that you need to be proud of your failure. Someone that’s been through failure can better navigate the potential potholes than can an individual who has only met with success.
The Churchill Club is aptly named after Winston Churchill, who enjoyed a resounding success (the Battle of Britain) sandwiched between a string of resounding boners (Gallipoli, resistance to Indian independence, lost elections before and after WWII, trying to limit the rights of the “lower orders,” etc.).
But rarely do you see failure trumpeted. John Doerr rarely gets introduced as The Godfather of the Segway. So let’s take a moment to celebrate those who lost opportunities in green tech or put too much faith in ones that didn’t fly. In no particular order:
1. ExxonMobil. The oil giant remains public enemy number one to many in the green technology world, who accuse the highly profitable oil giant of investing in clean R&D as a form of greenwashing.
In reality, Exxon has come up with great ideas in greentech. It just fumbled them. In 1977, R. Stanley Whittingham led a team at Exxon that built the world’s first lithium battery. The titanium sulfide battery was not a hit -- Sony actually had the first commercially successful lithium-ion battery when it came out with its lithium cobalt model in the early 1990s -- but Exxon had a decade lead in what became a multibillion-dollar market.
Exxon also developed a technique for turning coal into a somewhat cleaner version of jet fuel that may now get commercialized by a startup. It also had early research in zinc bromide flow batteries, which could become a mainstay for grid storage, according to Premium Power. Exxon could have become the world's biggest energy storage company.
It makes you wonder what the company will really ever get out of its investments in algae developer Synthetic Genomics.
2. Enron. Great ideas: applying more market dynamics to electricity pricing; water storage and water rights exchanges; thinking nationally about wind and biofuels. It’s too bad they were criminals, too.
In its demise, Enron also taught the world to watch out for slick, highly-compensated executives promising untenable returns through complex financial structures that promised to spread around risks. Guess we missed that one.
Perhaps the only good things that have come out of Enron are the entrails. General Electric bought Enron’s wind group, while Ashmore acquired gas and electricity divisions.
3. Hewlett-Packard. This was less due to lack of foresight and more an issue of a reasonable calculation gone awry. HP in the '90s was one of the leaders in light-emitting diodes. Technology invented inside the company allowed red LEDs to become mainstays in cars and street lights. Roland Haitz, the person who coined Haitz's Law, which has helped predict the growth opportunities in the industry, did so while at HP.
HP, however, didn’t think the opportunity for LEDs in general lighting would occur until 2020 or so. It just looked like an indicator light market. As a result, the company shoveled off its LED group into Agilent, and eventually Agilent shoveled them off to Philips. Lighting networking startup Daintree Networks came out of HP, too.
Because of decisions made years ago, HP is not the leader, and in fact doesn’t play much of a part, in the $100 billion opportunity in new lighting.
4. Amorphous Silicon. Start your carping now. Amorphous has such promise. It costs less than crystalline! It can be made on flexible substrates! Factories can be erected in a flash! Efficiencies are improving!!
But victory has proved chronically elusive, thanks to changes in the market and the declining cost of crystalline silicon. Stan Ovshinsky founded Energy Conversion Devices 50 years ago and it has regularly lost piles of money. The company is one of the leaders in amorphous panels. (Ovshinsky also invented Ovonic memory for computers: the energy-efficient components, touted in 1970, are only now creeping to market.)
Applied Materials bet big on amorphous with SunFab. High costs and other problems prompted Applied to pull the plug on SunFab earlier this year.
Consolation prize to HP here. Optisolar -- an amorphous siliconsolarpanel maker that raised over $350 million and landed contracts with Pacific Gas & Electric before swirling down the S-bend -- was actually based around a research paper penned by an HP scientist. Then CEO Carly Fiorina passed on it: it became one of the few boondoggles she missed.
Solar concentrators could be a runner-up in this category. Investors have plunked billions into concentrators. The concentrator industry, however, is still young compared to amorphous and the need for concentrators really only started recently.
5. AT&T. Calvin Fuller, Daryl Chapin and Gerald Pearson created the first silicon photovoltaic cell at Bell Labs in 1954. It was only 4 percent efficient, but Bell raised the figure to 11 percent soon after. AT&T does not dominate the market for solar today. Earlier this year, they got back into the market through a deal with PetraSolar.
6. Molycorp. Like HP and LEDs, this was a calculated decision that went the other way. When it acquired Unocal in 2005, Chevron became the owner of a rare earth elements mine in Mountain Pass, California that had lost money for ten years. It sold it to a group of investors who built it into Molycorp for $80 million in September 2008. The company raised $400 million in an IPO this July. Since then, the stock has risen from the $13 range to the $30-plus range after fears that China will crimp exports of rare earth ores. The market cap is nearly $3 billion. To put it another way, the value of the mine has risen nearly 40X in two years.
Is the stock propelled partly by dreamers? You bet -- Mountain Pass isn’t even operating yet. But demand for rare earth materials -- which go into magnets for electric motors and turbines -- is increasing and few new strikes have been found.
7. Hydrogen Over Hybrids. In 1991, the Department of Energy kicked off the $90 million U.S. Advanced Battery Consortium to develop nickel metal hybrid batteries for hybrid cars, a car design championed a century earlier by Ferdinand Porsche. The effort scared Japan so much that Honda and Toyota immediately began to develop hybrids. Before tangible results came in, the DOE shifted funding to hydrogen.
One could argue that pulling the EV1 was a bigger mistake, but let's be honest. The EV1 ran on its best days on nickel metal hydride batteries, which remain too heavy, too expensive and not powerful enough to power a full EV. They are great hybrid batteries, though. GM and Ford could have dominated here.
8. Ballard Power Systems. The amorphous silicon of fuel cells. It would have been easier just to burn money in a parking lot. Advocates like to point out that the company gave birth to other fuel cell companies. However, Angstrom Power, Tellex and Plug Power have eddied, too. A good idea stumped by circumstances.
9. Ronald Reagan. As a lifelong Democrat, I will admit that smiling Ron did achieve rack up some strong achievements in the international sphere. But tearing down of the solar panels on the White House and freezing CAFE standards helped put the U.S. renewable industry in the deep freeze.
10. George Deukmejian. An oft-forgotten California governor. In the '80s, California was erecting solar thermal plants in the Mojave, helped in part by a real estate tax exemption. The Senate and Assembly passed an extension of the credit in the early '90s, but then-Gov. George Deukmejian vetoed it on his last day in office. Construction halted. His successor, Pete Wilson, approved an extension, but only after Luz and other solar thermal companies had called it quits.
The solar thermal industry went into a coma for 15 years.
11. Non-Biological Biofuels. Crop-based biofuels have had a tough time. Imperium Renewables spent $200 million on a plant before dropping into a tailspin. Corn ethanol producers are selling facilities for pennies on the dollar, and Range Fuels down in Georgia keeps extending its due date.
As the wood chips clear, it is becoming apparent that the most economical way to make biofuels is to raise microbes and squeeze out their fluids (the method adopted by Solazyme, Sapphire, etc.) or exploit microbes to transform agricultural waste into fuel or chemicals (Zeachem, etc.)
Not all of the biological techniques will work. Most, in fact, will fail. But biology gives developers an advantage -- the magic of metabolism -- that the traditional fuel producers don’t have. At least it makes it a race.
12. Three Mile Island. Nuclear power has always looked good on paper. But in reality, proponents and contractors have had difficulty completing projects on time and on budget. The Pennsylvania incident -- saved in the last minute by Michael Douglas in a fake beard -- tipped the balance against it. Additionally, it made the insular culture of nuclear even more insular, a mood that still hampers the industry today.
13. Massachusetts. High science meets long runway. Greenfuel Technologies -- the MIT-Harvard club burned through $70 million plus before giving it up. E-Ink -- the child of MIT’s media labs raised over $150 million in several rounds over several years before selling out for $215 million to a Taiwanese display company. Minutes later, the e-book revolution exploded. Konarka -- $150 million and a decade and still in the early stages of commercialization. Remember One Laptop Per Child? Evergreen Solar?
Wait a minute. I work for a Massachusetts company. "The Bay State’s a hotbed of innovation," I type on my Wang computer.