In the last two days I read two posts equating clean energy products and industry to the early PC industry:

• Four Reasons LEDs are the New PCs (Michael Kanellos, greentechenterprise)
• Why the Next Steve Jobs Will be in Energy, not Computers (Christopher Mims, MIT Tech Review)

• E Ink.  The most-visible star of the system.  Now Taiwanese-owned (note the acquirer changed their identity to E Ink!).  Proved that persistence can pay off, especially if you enable some critical functionality– in their case, high contrast, low power for e-books.
• Kopin. Also an established (Nasdaq:KOPN) player, supplies miniature LCD displays based on a unique crystalline Silicon lift-off process.
• QD Vision. With its latest announcement, QDV is returning to its “roots”– seeking to build displays based on wavelength-tuned emission from quantum dots.  Note they have demonstrated/discussed other display applications including better LED backlights, and better color filters as well.
• Pixtronix.  Founded by ex MIT prof. Nesbitt Hagood, Pixtronix has been relatively quiet.  So I was pleasantly surprised to find videos of a display they built with Hitachi (Japanese, sorry) — based on MEMS shutters at every pixel! [update: raised another $4M in June 2011]
• Laser Light Engines. A spin-off from contract research firm Physical Sciences Corp,  Salem NH-based LLE is developing ultra-high brightness laser engines to power cinema projectors.  They recently closed a $13 million B-round with IMAX as one of the investors.
• Luminus Devices. Though not a display company directly, Luminus (another MIT spin-off) supplies high-brightness LEDs for projectors.

My response:

On the contrary– I love components!  However, they don’t always make good early-stage investments [have been meaning to start a rather sparse list of novel component startups that were successful early-stage investments].  Or rather, the way these investments are done often causes them to be bad investments for the first guys in (including the founding team).  I see the same pattern repeated over and over:

• Interesting core technology, multiple potential markets.
• For sake of raising VC, focus on the biggest, fastest-growing market.
• Because you need to move fast, you hire a complete team from chip to systems to sales to several VPs.
• Burn a ton of money very quickly.
• Core component/materials take 5x longer than the initial optimistic estimate.
• Any more than the 2-3 engineers working on this core piece won’t speed it up.
• Cut your team down.  If you’re lucky, raise a Series B at a crushing down valuation.
• Refocus on a less ambitious first market, just to ship something.
• If lucky and stingy — and the team is still motivated– live to see another day.

Here is my modest proposal: let’s use NFC to make attaching stuff to WiFi easier.  Plugging devices into USB, configuring them, etc. is a huge hassle and impediment.

Grandma should be able to wave her new digital pictureframe over her WiFi basestation to connect it.  I should be able to wave my iPhone over someone’s laptop and give them guest access to corporate WiFi for 24 hours.

The Wi-Fi Protected Setup standard supports NFC already.  IMO the missing element is the ability to use a “magic wand” to connect devices.  This could be a wireless device associated with a base station, or preferably a smartphone/tablet that has secure access to the base station.

That kind of easy setup is what is needed to get widespread use of Internet-connected stuff!

As an entrepreneur you probably know exactly what you are building.  You have very few cycles to spare.  The last thing you are looking for is hours on end hearing from an “expert” why this or that is impossible, has been tried before, etc.

But to show VCs that you have tapped the experts in the technology, market, etc. you need a couple of advisor names.  You network to a few, meet for coffee and a chat, even send a slide deck.  You ask them to be an advisor, with some vague talk about equity.  They say “sure,” and you put them on your slide, and get on with your many other tasks.

I have learned this is a mistake.

For many entrepreneurs the threshold to agreeing to be an “Advisor” is pretty low.  I enjoy helping other entrepreneurs.  I don’t do it based on whether I believe its a $1B opportunity.  Helping someone build something new and interesting, and learning the ropes– that’s good enough for me and many others.

The problem comes when the advisor gets a reference call from a VC.  The truth is anything short of “I love the team, I love the business, I want to invest and/or work with them” on that call is bad for the company.  Even having a big name say “they seem like smart guys, not sure exactly what their current approach is” doesn’t do much for you.

I remember getting an echo of so-so feedback (through a VC) from an Advisor in my first company.  I was pissed.  But in truth I had spent little time actually talking through the business, getting advice and making him feel “heard.”

Some advice for entrepreneurs:

• Clearly separate “advisor” from “Advisor.”  It’s great to have lots of advisors.  But list only capital-A Advisors in your slide deck/website.
• Make the threshold for official Advisors high:
  • A certain number of hours per month; per week leading up to fundraising.
  • Make them a shareholder.
    • Preferably with cash out of pocket so they have skin in the game… and you have tested their commitment to your vision.
• Prep Advisors well before you pitch VCs: walk through the pitch, in person, and answer questions/objections.  Either walk away agreeing it’s good, or take them off your slide.

Some advice for potential advisors:

• Keep an open door for entrepreneurs seeking advice.  It’s good for the community.
• Draw a clear distinction between informal advice and being an Advisor.  Before agreeing to the latter answer: would I be comfortable sitting with the team at a VC pitch?
  • If not, tell the team.  Don’t take stock.  Give them occasional advice if you have time.
  • If so, get a stake in the company.  Work with the team to really understand the business.  And get ready to take reference calls as if they were a continuation of the pitch.

The idea is that many applications need only pointing indicators, not full-frame video projection.  So, start with a steerable laser pointer.  The theory was that you could use very cheap, low-power mechanics and a control electronics if you used them in conjunction with a low-cost camera module, and used video feedback control.

The first iteration is messy and bulky, but seems to validate the concept.

There are a couple of emerging needs that I have been tracking that require this functionality.  I’ve filed a provisional on one complete solution (great way of forcing a brain dump!) and have a decent parts list to get the total size down to that of a webcam.  It would eventually need some serious iterations on image processing / control algorithms too (and not just in Java-lite!).

Project Ingredients

• Adafruit ARDX – nice Arduino starter kit with breadboard, etc.
• An extra mini servo motor (one comes with the kit)
• A $10 pen+laser pointer from Staples that can be “rewired” a bit
• An ancient crappy USB webcam
• A bunch of LEGOs to hold everything together (topped off with hot glue)
• Arduino’s software cousin, Processing (now includes video library to capture webcam frames)

An Update: “Terminator” App
I used the platform functionality above as the basis for a pointer that finds a face in the field of the camera, and aims the laser at the base of it (chin or neck).  Used subset of OpenCV library that has been brought over to Java.  The control parameters for the video-based laser guidance (good old PID) still need some tuning.

You’ll have to excuse the q&d video editing with speedup and generic iMovie soundtrack!

The current production of FPDs is about 70 million square meters per year. That is the equivalent of 150 million 42″ TVs– some of it of course going into iPhones and the like. For some perspective, let’s show what production output that looks like in my neighborhood (Cambridge), tiled into a giant screen:

Annual Flat Panel TV Production... and Likely Content!

It turns out the total square area of solar cells produced annually is about the same (70 square kilometers). [Side note: shows power of consumer demand pull vs. government regulatory push-- cells are now $150/m^2 vs TVs at $1000/m^2]

So what is the “energy balance” between the two (annual TV area vs solar cell area being added)? The solar cells produce an average of 30W/m^2 (1000W/m^2 sun * 15% efficiency * 20% peak-base factor). The flat panel TVs suck an average of 360W/m^2 (pulled from this CNET survey).

So, if owners of new flat panel TVs can restrict their viewing to 2 hours per day, the new solar panels can power them.

That actually gives me some hope.

One example is communications capacity.  We are often told “this link could transmit the equivalent of the Library of Congress in __seconds.”  Have you been to the LoC?  Do you have any idea how big it is?  Me neither.  Even if you knew there were 32 million books in the library, it doesn’t get you closer.

So I was thinking about a different way to explain the capacity of the latest fiber-optic transmission systems.  Long-haul systems (with reach of 1000′s of km) are getting to the point where they can shove 10 Terabits/second down the core of an optical fiber:

Light-carrying core of a long-haul optical fiber.

A side remark on optical fiber: if you shone a flashlight through a 10km thick slab of glass, how much light do you think would make it out the other side?  Modern optical fiber transmits 67% of (infrared) light over that distance!

A lot of very cool engineering goes into making this work.  The standard is DWDM DP-QPSK = dense wavelength-division multiplexing, (coherent) dual-polarization quadrature phase-shift keying.  You can get your tech jollies reading a pretty good overview written by the Optical Internetworking Forum.  The result– if you factor in all-optical amplification– is that you can transmit data for thousands of kilometers entirely optically.

What is 10 Terabits per Second?
I was thinking about ways to visualize this without resorting to the Library of Congress.  One thing we understand pretty well is video.  And in fact, much of the need to light up fibers with ever more capacity is driven by video. You can transmit a 1080p HD video stream with about 5Mbit/sec capacity.  That means a single fiber can push 2,000,000 HD video streams.

What do 2 Million Video Streams Look Like?
Again, 2 million is a number that is too high for humans to visualize.  I thought about what it would look like if you stack up that many streams.  For that exercise, let’s use 42″ flat panel TVs… sort of the “standard” flat TV size these days.  Each (generally LCD) panel measures 0.93m x 0.5m, with 52dpi pixel resolution.

I wondered what it would look like if you stacked (without bevel) that much display capacity– how much live, HD video a single fiber could carry.  For comparison with the fiber, let’s keep it in a circular format.  Here is what I get:

HD teradisplay driven by single optical fiber.

So a 9-micron diameter fiber could feed a very high-resolution 1110m-diameter display… a factor of 1.5E16 larger area (OK, not possible to comprehend… just picture a piece of glass the diameter of a red blood cell perched on top of the Burj Khalifa there).  And if you need help understanding how tall that building is, here’s a video.

4 Terapixels– now that has some serious potential!  My favorite use would be to make large sections of park, city, university into telepresence walls (video, sound, maybe 3D) to a sister city on the other side of the world.

By the way, the fact that you can feed 4 Terapixels with 10 Terabits (2.5bits/pixel/frame) for high-quality video is a testament to the efficiency of H.264 compression.  The ability to run H.264 on even handheld devices is a direct result of Moore’s Law.  Without such good compression, the cost of transporting video would be unsustainable (though I’m sure optical component suppliers wish it were a little less efficient).

Are There Enough TVs for That?
Easily.  The world already buys 180 million LCD TVs per year.   A single plant (Sharp’s Sakai City/Osaka site) has a capacity of 7.8 million square meters of LCD per year– and it is being eclipsed by new plants in China.  The visual comparison of that display area I’ll leave for another day…

Have a Series A startup that makes a new kind of device for a hot market?  Photovoltaics, displays, 2D or 3D image sensors, intertial sensors, batteries, solid-state lighting, FLASH memory replacement?  Is “• lower cost” a bullet point on Slide 1 of your pitch?  That’s probably a mistake– unless you have a comfortable 10x cost advantage on the competition.

As I was reviewing my venture experiences & observations, it dawned on me that this low-cost promise to customers and investors is the root of many, if not most problems with venture-backed device startups.  It is such a tempting promise to make, however.  Who doesn’t like the concept of “plug-compatible, half the price?”  You should have some enthusiastic customers.  Hiring a sales team won’t be much of an effort.  So, VCs love it too– and let’s just admit it: they are the primary customer of an early-stage device venture (they buy a lot of stock!).

The problem with the promise is that it sets you up for a race you can almost certainly not win.  The rare case that “wins” is where a big sucker buys the company in a competitive frenzy.  The more likely case is that you run out of money somewhere on this trajectory:

The Timeline

• Discovery – “it works!” in the lab and it looks simple to manufacture.  Claim big cost/price advantage over last-generation incumbent.
• First hiccup – choose from hiccup sources below.  Adds 25% to cost to fix it, and 1 year to development.
• Second hiccup – same deal, over again.
• Finally ready to go!
• Low volume production start at high cost… catch up with incumbent with volume, experience.

Each time a hiccup hits, you’ll observe with increasing dread the falling prices of the incumbent technology.  In a hot market, you better reckon with 20%/year price reductions.  So if your original 3-year commercialization plan turns into 5 (optimistic), the incumbent has dropped prices by 67%.  You’ve added 56% to your anticipated costs.  That has eaten up a 5x initial cost advantage.  Add a 2x margin, and you see where my 10x rule of thumb comes from!

Hiccups
For device startups, there are three typical hiccups (besides the technology turning out not to work).  If you’re lucky, you only experience one.  More likely, you’ll deal with two or three.  My entirely redundant illustration:

• Operating condition failure.  Doesn’t work properly at temperature, voltage, vibration, etc.
• Reliability failure.  Doesn’t survive accelerated testing.
• Yield failure.  Doesn’t yield well off the production line.

Manufacturing Scale
By the time you are ready, the minimum manufacturing scale has grown significantly.  This means a bigger manufacturing investment, and even higher early costs.  The resulting cumulative losses in the early production years are often unsustainable.  Any reaction by incumbents can make this gap significantly more painful.

In the Obama era the strategy to fill this gap (for solar or batteries, at least) seems to be to insist the taxpayer should fund it.  That’s not something a new venture can count on.

Related/Resulting Venture Problems
There are a couple of potentially fatal issues that result from the “race for cost advantage.”  They can be the basis for future posts here.  Briefly, they are:

• Premature bulk-up / spending.  Have you seen the ventures with only 5 possible industrial customers for their device, no beta units to ship, but featured in the New York Times and other “hot tech” outlets?  It’s a symptom of a team that has grown too quickly and in the wrong dimensions.
• Wobbly technology tower.  Running too fast causes you to assume too many things, and work on conjecture.  You fail to do properly designed experiments.  You fail to measure capabilities. You develop in parallel to mate up with high-risk paths at fantasy dates.  One result is that when there is a hiccup, you often end up doing enormous amounts of work over again instead of having a good foundation to build off of.

So – What?
My advice is to find an axis other than cost on which you can compete– even if in only a niche of the overall market you are targeting.  If your technology’s only advantage is lower cost, think twice about starting in a hot market (if it’s a stagnant market, and you can create a new segment, it’s a different story).  Ideally, you have a near-term “performance” story, and a long-term cost advantage story that can be realized as volume grows.

I suspect the first “machines” ever built, in version 2, were built to be maintained.  Breakage of critical components was a fact of life.  So you designed the machine to be easily disassembled and reassembled.

Machine Built for Reassembly

Let’s look at another even more successful machine: the human body.  Each piece (except the very tough layer of keratin we call skin, hair) is extremely fragile if it is exposed to the environment, or if it is separated from the support systems.  Why does it work so well?  (1) it is a sealed system, with very good filters; (2) it defends itself vigorously against intrusions; and (3) it regenerates– we are learning more about stem cells every day.

Another Even More Successful Machine

When we decided to start repairing the human body, we approached it like the machines we knew: open the lid, disassemble, fix, reassemble, close the lid.  Use tools that looked very much like everyday implements: knives, scissors, pliers.  Only the human body really wasn’t made like a machine.

Fixing It Like a Machine

Anyone following medicine knows we have rapidly moved to a different model for fixing the human body: leave the system sealed to the maximum extent, and target only the problem itself.  Often fix the problem in place with stents, lasers, ultrasound, RF energy, “glue,” or even new tissue.  Leaving the system sealed has tremendous benefits.  You reduce the potential for collateral damage, and minimize the introduction of contaminants.  You don’t forget a pair of scissors inside.  The first generation used some pretty simple tools:

A Common Endoscopic Procedure

The second generation has harnessed advances in robotics to produce something far more sophisticated and agile:

Next Generation: DaVinci Telerobotic Surgical System

So– any implications for machines?

I expect the design of machines (from servers to jet turbines, and everything in between) will shift over the coming years, from a model where you can disassemble/reassemble easily, to one where the system is built sealed, and diagnoses/repairs/upgrades are done using minimally-invasive tools.  The potential advantages include:

• Design systems for efficiency, cost, performance and better aesthetic value, not for traditional repair.  As an example, if you were to design a server rack for efficiency and performance, it’s unlikely you would make it based on plug-in cards/units.  In the extreme case you might want to have the whole thing immersed in cooling liquid.  An existing example is the MacBook Air– hardly built for modular upgrades and expansion– but for size, battery life, thermal performance.
• Reduce maintenance errors.  Just as with the human machine, equipment repairs and upgrades often result in collateral damage.  How many times have you taken something apart, put it together, and had leftover screws?  Or heard something rattling inside?  Or had to force the cover closed for a reason you didn’t want to investigate?  Minimally-invasive maintenance on a sealed system would target the source of the problem, and leave everything else alone.

The tools for minimally-invasive manual repair already exist.  The first generation is pretty simple and has been in use for complex machinery for decades.  It’s no coincidence that they resemble first-generation minimally-invasive surgery equipment (and they are in some cases produced by the same companies, like Olympus):

Optical Fiber Borescopes

What I am interested in is what the next generation looks like– where robotic and imaging technology are brought to bear on this field.  Already there are some really interesting technologies being demonstrated.  For example, companies like OC Robotics are using “snake robot” technology an applying it to inspection:

Locally, Energid has developed a platform enabling real-time control for complex, “kinematically redundant” robotic limbs that can avoid even moving obstructions and inspect, repair.  They have also integrated vision-based guidance so a robot limb could in theory navigate through a machine based on a CAD file.

Much of this work is starting to be applied in environments where human hands are not an option: nuclear power reactors, outer space, deep sea.

Now comes the exciting part: taking next-gen minimally invasive machine inspection and surgery (or even assembly) to commercial applications.  And changing the way equipment is designed to take advantage of it.  This will require new extensions to CAD packages as well, to optimize design for repair, and potentially to co-design the “surgical tools” to do it.  That’s an opportunity we never had for the human body!