by Steve LeVine
The prospects looked good for NMC 2.0—the United States was well positioned in the battery war—but Chamberlain knew that ultimately that was not good enough. It left electric cars as an iffy proposition—car buyers visiting a showroom would still not assess an electric car agnostically, not without a fairly large government subsidy. And even then, the electric car was likely to remain a “social purchase”—a product for the niche market of buyers wishing association with the green movement. The battery guys had further to go.
13
What Andy Grove Said
In October 2009, Andrew Grove, the former chairman of Intel and a father of Silicon Valley, asked Chamberlain to bring his Argonne team to his house in California. When they were before him, Grove surveyed the battery race and said that when he looked at lithium-ion, he saw silicon chips. The American chip industry blossomed in the 1950s when the first integrated circuits were made on microchips. By the 1980s, though, Japan had swallowed up much of what by then had evolved into a commodity business, along with its jobs. Grove managed to salvage Intel and give it a renaissance by rejiggering the equation—he transformed it into a microprocessor company, producing computers on a chip, and not just the chips themselves. With batteries, he said, there was also a brutal, dual competition under way—for who would finally make them more powerful, last longer, and be safer, and who would manufacture the discovery once it was made.
But Grove thought that the stakes were far higher than when the Japanese were capturing the chip market. He saw a “clear and present danger” that if the United States could not account for its own energy requirements, it would later be at the political and economic mercy of those who could. The United States had to create a battery-driven fleet of private vehicles to replace much of the current gasoline-powered ones. As passionate as he had ever been about anything, he had telephoned his successors at Intel and urged them to take on this new fight—to get into the advanced battery business. They more or less brushed him off—for one thing, unlike the fixed physics of silicon, batteries were based on electrochemistry, which changed constantly. Batteries were too complicated. Which is what led Grove to Chamberlain.
The Argonne scientists arrived with a three-phase plan to test on Grove, who perhaps could do for them what he had accomplished for Silicon Valley. To make it easy to digest, they compressed it into bullet points on a single page: Current lithium-ion—the NMC and what was going into the first new electric cars—was phase one. Phase two was the next three to five years, in which they would push out “advanced lithium-ion,” meaning NMC 2.0, a bridging technology that would possess twice to three times the longevity of current lithium-ion batteries. That would be sufficient to carry hybrid and electric cars for a decade or two, a space of time in which to develop phase three—“the brass ring,” as Chamberlain called it. This final phase involved a technology named lithium-air. It was ultimately where Argonne would go.
Chamberlain imagined that Wan Gang and his team were strategizing similarly. Walking the Argonne men to the door, Grove urged them to remember one thing: “Winning a manufacturing game is nine rounds. It’s a boxing match. You will lose the first round, and probably the first two rounds. But always remember—the game is nine rounds.”
14
How to Navigate Great Minds
Thackeray and Amine could work anywhere. They could leave Argonne and strike out on their own, for instance. If they did so, one advantage would be leaving behind the requirement to vet their project ideas through Department of Energy bureaucrats, who could demand many pages of documentation solely to explain whether a new experiment would be safe. Yet they wouldn’t necessarily earn more money working in the private sector—government rules established in 1980 allowed recipients of federal grants, such as government scientists and university professors, to retain total or partial rights to their patents. Both scientists were reaping the rewards of their NMC work.
There were other pluses to working in a national lab, factors of which Chamberlain kept Thackeray and Amine aware as part of his job to manage sensitive souls with enormous egos. First and foremost was that, if you wanted to publish in respected journals and have your patents noticed, Argonne was a good home. The battery scientists were competitive—everyone knew they were in one of the hottest fields in science or technology and all wanted to make the next advance first and have it quickly adopted commercially. Argonne was on the leading edge of this particular science. The battery guys were sheepish about saying so explicitly, but they felt they fielded the strongest collective team in the country and perhaps the world, retaining their stars and attracting smart, fresh minds as postdoctoral assistants. If someone on the outside suddenly edged ahead, Chamberlain’s team became agitated.
It aggravated Thackeray to learn that Envia, the California start-up, managed to make batteries work 50 percent longer than his own team could. Thackeray’s wholly predictable reaction allowed Chamberlain to do what he did best, what he called “managing from the backseat.” Even though Envia was effectively an appendage of Argonne—it was improving on the lab’s own patent—Thackeray regarded it as competition. He began to push his team harder.
The battery guys would tell you that Chamberlain was hard to get in to see—he was so busy with his double job—but that when you did sit down with him, he tried to understand your ambitions and to create the opportunity for them to be realized. They cherished him for that quality. But they also knew that Chamberlain was a calculating boss with fixed aims, and the most fixed of all was the race. In practice, one meaning was that, even though Argonne was a government lab, technically owned by the public, they could not publish everything they learned for the very reason that a race was under way. It was an iterative game. You wanted everyone to publish so that the field as a whole moved forward—and the scientists earned the peer respect accorded to prolific writing. But you also hoped to protect your own inventions—as soon as you published, you enabled your competition to use your inventions against you. Thackeray and Amine—everyone—understood that calculus. It was part of Chamberlain’s war-within-a-war.
• • •
Chamberlain drove eighteen miles from home to Argonne every day along 75th Street through the suburbs that had grown up in the decades since the lab first plopped down in Tulgey Wood. He turned on Cass Avenue South, which eventually became a wide, picturesque road flanked by forest. Before long, he turned sharply right at a big, black sign containing Argonne’s logo—a triangle whose flanks were painted the primary colors. A mile-long drive followed through the forest planted at the beginning and ended at a guard shack where Chamberlain would show the badge hanging around his neck. Then he turned right into a sea of mostly red brick buildings, spread over the hundreds of acres. Within minutes, he would see it—Building 205, on a smaller black sign, also embossed with the logo. After fifty or so footsteps, he would be in the building.
Today, Chamberlain made a left toward the “dry room.” It was a state-of-the-art, moisture-proof setting customized for fiddling with advanced lithium-ion batteries. An air lock separated the dry room from the outside world. Inside, a slurry of carbon and NMC was coated onto rolls of aluminum, creating new battery cathodes. “It’s a nineteenth-century technology,” Chamberlain said, deserving of no place in such a lab. In labs he had seen in other countries, Chamberlain added in a whisper, scientists actually stood by and dipped a finger into the slurry in order to pass judgment on its quality. When Wan Gang was at Argonne, he was only Chamberlain’s latest Chinese visitor. A few months previous, the Americans raised the subject of lithium-air with a Chinese delegation and offered to help them develop the technology. But the visitors wanted to discuss only one subject—lithium-ion. The theme was: how do we get what you invented? Meaning the NMC. Chamberlain and his team were extremely cautious, silent. Argonne could build robots that automatically created a perfect slurry. It could invent the NMC. But China could not. “That’s where we will catch up,” Chambe
rlain said.
Perhaps Chamberlain was right. Thackeray and Amine could be the ones to make it happen.
PART II
FOREIGNERS IN THE LAB
15
The Start-up
In June 2007, Sujeet Kumar and Mike Sinkula took up office at the public library in downtown Palo Alto. Kumar, a battery scientist born in India, and Sinkula, a San Francisco native, were using a public conference room there to talk on cell phones, print and fax papers, and organize meetings. For four months, they worked to raise $3.2 million in order to license and validate the idea that Argonne’s NMC 2.0, the advanced cathode that resulted from jolting NMC with a little more than 4.5 volts of electricity, could double the capacity and halve the cost of automotive batteries. They would spend the money to form a team of ten or so scientists who would build such an ultrapowerful battery. That would allow them to raise more cash and aim to manufacture it.
At the time, it appeared that, in the automotive world, only Kumar and Sinkula were aware of Argonne’s NMC formulation. They alone seemed to conclude that, if you were thinking of profit-making applications, NMC 2.0 was the most promising battery material available. Kumar had identified its properties at the Silicon Valley start-up company where he and Sinkula previously worked. The start-up, NanoeXa, sought to develop batteries for power tools, and Kumar, its chief engineer, had stumbled on the NMC after a months-long hunt for an edge over incumbent companies. He had examined hundreds of patents and academic papers on lithium-ion. The NMC and its second-generation improvement were superior to anything else he found. In 2006, he surprised Thackeray with a call about the invention. Until then, Thackeray had detected no industry interest in it at all, but NanoeXa’s CEO proceeded to license it for $150,000.
Just a few months later, Kumar and Sinkula both left NanoeXa, explaining that they wanted to work “in another company.”1 To reassure their surprised CEO, they said it would not be associated with the NMC market. Within a few weeks, though, Argonne received another call from Kumar—he and Sinkula had launched their own start-up company. It would center around the NMC and be marketed to carmakers. In the coming years, the move on their own would be the subject of a considerable dispute with Michael Pak, NanoeXa’s CEO. But for now, fortune was with them. As Jeff Chamberlain had found in his own start-up stage, energy was the rage in Silicon Valley. Venture capital firms were competing fiercely for the most promising ideas. They had decided that renewable energy was the next big boom. But their eagerness seemed different from the past manias. It wasn’t just about money. The fever aligned with the Valley’s strain of politics, which generally vilified oil, embraced its technological rivals, and fretted about climate change. Here was a way for the venture capitalists to do well and do good.
Nationally and globally, a similar sentiment took hold about global warming. Barack Obama, at the time an American senator initiating a campaign for president, vowed to promote non–fossil fuel technology and reduce emissions of heat-trapping gases. But it was generally believed that whoever was elected, Democrat or Republican, would push through laws and federal spending to buoy solar, wind, biofuel—and battery companies. Silicon Valley’s venture capital community was prepared for these new policies and the commerce that would follow.
So Kumar sensed an almost physical reaction when, sitting before VCs, he launched his PowerPoint slide deck and said that the NMC, although more advanced than anything on the market, had thus far gone unnoticed. In Boston, a Harvard Business School graduate at a firm called RockPort Capital Partners “got very excited,” Kumar said. He asked to see Thackeray or Amine for himself. If what Kumar and Sinkula said was true, they would have their $3.2 million.
A couple of weeks later, Kumar, Sinkula, and two RockPort men flew to Chicago. Hearing out Amine, the investors returned to Boston and e-mailed a “term sheet,” an official commitment to fund them in exchange for half of their as-yet-unnamed company, to Kumar and Sinkula.
This was fast for Kumar. Despite his experience in start-ups, he now realized that he did not actually understand how funding worked. Back home in Fremont, California, he telephoned a college classmate of his wife’s.
Atul Kapadia was a principal at Bay Partners, one of the Valley’s oldest venture capital firms.
“RockPort is funding me, but I don’t understand the term sheet,” Kumar said. “Can you help?”
Mumbai-born Kapadia had an MBA from Stanford and a bachelor’s in biomedical engineering from the University of Bombay. He had gone to work at Sun Microsystems straight out of school, assigned to a design team that produced the Spitfire, a chip that later would be called the fastest in the world.
Kapadia had questions, starting with why Kumar was seeking money on the East Coast when the biggest VC firms were in the Valley. He suggested that Kumar and Sinkula drop by his Palo Alto office with their slide deck.
Two hours later, after hearing out the pair, Kapadia rang Kumar’s cell: I will fund the idea, he said.
Kapadia offered essentially the same terms as the Boston group—$3.2 million for half the start-up, a standard offer in Silicon Valley venture capital. But as a demonstration of goodwill, he was prepared to cut Kumar a check immediately for half a million dollars so he could start working right away. Kumar could consider it a loan until the details of the equity investment were arranged.
Looking back later, Kumar had the feeling that he could have raised much more—$5 million or even $6 million—for the same equity share. His idea clearly was solid—after just a few calls, he and Sinkula already had two bites. But that was hindsight. Now he had to create a company. He accepted Kapadia’s rival offer.
He and Sinkula called their company “Envia Systems” and opened their lab in a small, new industrial park in an East Bay suburb called Newark, tucked amid a hive of tech start-ups. The company name was Sinkula’s idea, combining “en” from the word “energy” and “via,” from the Spanish for “way”—the way to energy.
Kumar called Chamberlain. “I’m ready to license again.”
Kumar’s agility surprised Chamberlain. He had orchestrated the deal based almost solely on an idea: he had no prototype in hand. As for intellectual property, he had only a written offer from Chamberlain for a nonexclusive license. “How did he pull it off when these VC guys are so cutthroat?” Chamberlain wondered. One lesson again was the timing—Kumar and Sinkula had struck precisely when the market demanded someone like them. But there was more to it. Venture capitalists did not say so explicitly, but technology, while important, was not their primary concern. They looked closely at a venture’s management. Their key question was, “Have they done this before?” Meaning, had the entrepreneurs involved carried out a prior venture deal that resulted in a big return? If they had, the investors would be exceptionally courteous and forthcoming with their cash. Chamberlain acted out the repartee in such a case:
You have already made my fund hundreds of millions of dollars. You are here to ask permission to do it again for me? Yes, please. How much money do you need?
Kumar had not earned anyone hundreds of millions of dollars, but he had “done it”—he had helped to lead three previous start-ups, which again was the core credential. It was what made the difference. He could approach VCs and say, “Look, here is a new opportunity. I don’t have the license deal yet, but you have to act fast. Here are the terms we’ve agreed on with Argonne.” “And, bang,” Chamberlain said, “you have three million dollars. He got it immediately.”
By comparison, Chamberlain had crawled Sand Hill Road just a couple of years before. When asked about his prior experience, Chamberlain replied that he “absolutely” had built a business from scratch—at Cabot. But venture capitalists felt differently about achievements within a big corporate setting. It wasn’t the same as success on a tight budget with a small staff and the risk on your own shoulders. Their reaction was “No, you haven’t done it.”
At Argonne, C
hamberlain stood out because of his industry credentials and the lucrative deals he had negotiated. But a start-up was different. Kumar showed how a star played the venture capital game.
16
Out of India (and China and Africa)
Kumar greeted you in a high, halting lilt, his black hair flopped flat to the side. He wore plain, long-sleeve dress shirts and conservative slacks and evaluated you through rectangular specs. The picture was dated, rumpled, and bumpkinesque. This might have been a problem given a Silicon Valley CEO’s need to impress a variety of sophisticated outsiders. But then he would talk batteries and unpretentious authenticity would surface. Meeting him face to face at a Fort Lauderdale battery conference, Chamberlain sensed “a man of his word. He would do what he said.” Sinkula—with his stylishly cut hair, slacks, and jacket—was clearly the businessman of the two. Sizing them up, Chamberlain saw “two young, aggressive entrepreneurs.”
The eastern Indian city of Patna, where Kumar grew up, is situated along the south bank of the Ganges River. After school, Kumar and his friends played cricket and football in vacant lots that dotted their neighborhood. At dusk, the electric grid would be overwhelmed for three or four hours, sending the homes into darkness, and he would study by kerosene lamp before scurrying back outside for more play in the dark. He was the excessively pampered youngest of six children, and his father finally decided that this circumstance was hampering his education. At ten, Kumar was packed off to board at a military school. “I cried a lot—every time I had to leave, I cried,” Kumar said. But by the time he arrived at school in Hazaribagh, a forested, mountainous area five hours south of Patna, he would tumble into play with the rest of the ten-year-olds, the sorrow forgotten.