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Interview with Zyvex’s President and Chief
Operating Officer by Leo O’Connor, Frost and Sullivan’s
Global Director of Research & Technical Insights
Date Published: November 11, 2003
Reprinted courtesy of Frost
& Sullivan
I’m the Chief Operating Officer at Zyvex.
I’m responsible for the P&L, growth of the company,
our five-year strategic business and marketing plans, and
ensuring that we develop nanotechnology-based products as
quickly as possible in order to meet unsatisfied needs in
the marketplace.
That’s a good question. As a young person
I found most school subjects, quite frankly, boring and relatively
simple. However, I found physics (particularly laser physics)
to be both challenging and interesting. I have always loved
a challenge, and studying advanced quantum mechanics, laser
physics, and physical chemistry was very exciting to me. Even
as a young person, I always felt that technology ultimately
makes a real difference in the world. I noticed how technology
transformed the quality of life even then. And I knew that
I wanted to make a difference in the world and figured that
technology was the most efficient path. But after I became
a laser spectroscopist, I went back to school and obtained
an MBA because I realized that money would also be an important
factor in achieving those goals.
My first experience in technology was with the
Shell Chemical Company (a division of Shell Oil) right after
getting my Ph.D. from the University of Pennsylvania. Shell
Chemical was a terrific experience. I proved to myself that
I could solve real-world problems with technology. I worked
in the analytical department at Shell Chemical, where we solved
real world problems with spectroscopic tools.
I was attracted to Zyvex because of its founder,
Jim Von Ehr. Jim, in many ways, is a modern-day Henry Ford.
Just as Henry Ford had developed the automotive industry and
a number of ancillary industries (such as the tire industry),
Jim is one of the true pioneers and ambassadors of nanotechnology.
And I really wanted to get the chance to work with him. This
is because he’s completely vested in revolutionizing
manufacturing. Jim put together a ten-year program that culminates
in the development of a molecular assembler. While on the
path to achieving that molecular assembler, we’ve developed
a number of capabilities. These development efforts enable
us, in the short term, to meet some unsatisfied needs today
in the market. For example, in order to develop a molecular
assembler, we needed to manipulate materials and structures
at the nanoscale. This effort led to the development of a
product line called our Nanomanipulator Systems. We now offer
nanomanipulation products for use with scanning electron microscopes,
optical microscopes, and focused ion beams. Soon we’ll
be releasing products for transmission electron microscopes.
Our product development really arose out of our internal need
to become proficient at nanomanipulation.
What makes Zyvex a very unique company is that
Jim has led the company with a perfect blend of strategic
vision and disciplined tactical implementation. Zyvex is rather
unique in the marketplace because we focus solely on the commercialization
of nanotechnology. Many companies are wrapping the word "nanotechnology"
around themselves. Most nanotech companies are involved solely
in the research arena. In contrast, Zyvex is very focused
on the commercialization of nanotechnology for both the short
and long terms.
We’ve read a lot of papers about nanotechnology. We’ve
heard a lot about products in research and development, over
the years. We look toward the day when money can be made from
nanotechnology. You say Zyvex is about commercializing nanotechnology.
That’s a very good question, with the
keyword being ‘today.’ While you’ll read
reports that the estimated potential available market for
nanotechnology is over one trillion dollars in the year 2015,
from my perspective as a businessman that is a pretty nebulous
statement because that number is just too big to deal with.
What are we doing ‘today’ at Zyvex?
We actually possess three forms of revenue generated from
the products and services we offer to the marketplace. We
also generate revenue from licensing, government grants and
contracts.
In terms of products, we categorize them in "three buckets",
Materials, Tools, and Structures. We’re generating revenue
in two of those areas—Tools and Materials. In the Tools
area, we have launched a large product line of Nanomanipulator
Systems to test, measurement, and characterization of materials
and structures used in research and development applications.
For example, our model S100 Nanomanipulator lets you test,
measure, and characterize materials and structures in scanning
electron microscopes. We’ve also just released a nanomanipulator
system called the F100 which is used in focused ion beam instruments
for industrial applications.
In the area of Materials, Zyvex is generating
revenue from carbon nanotube solutions (sold under the Zyvex
Dried Film label—also known as ZDF). Frankly, carbon
nanotubes are already becoming like commodities. We’ve
identified at least 50 entities that claim that they can produce
single-wall and multi-wall carbon nanotubes and we are not
involved in the production of carbon nanotubes; we are involved
in the processing of carbon nanotubes. That is we are involved
in what we can do with these carbon nanotubes.
Some examples of the biggest applications that
we are involved in today, with Fortune 20 companies, are the
creation of carbon-nanotube composites—materials that
are at least 100-times stronger than steel at a fraction of
the weight. The real trick today is the functionalization
or solubilization of carbon nanotubes in everyday organic
solvents to make them manufacturable in terms of spinning
fibers. For example, making fabric that could be used in body
armor for the aerospace and defense industry or in protective
textiles for military security personnel.
I predict that the next set of products introduced
in the marketplace will deal with Structures. The reason we
don’t see a lot in the structures area today is that
we need to develop real competencies in Tools and Materials
before we can create the structures. We anticipate introducing
our own Structures in the next few years. It is important
to note that while a lot of money is going into nanostructures
such as sensors, the reality is that we will not see everyday,
affordable nanostructures for at least a few years.
We’re also generating revenue from the
licensing of some of our technologies. One good example would
be a recent announcement we made concerning a license of our
3D MEMS Software (Memulator) to Coventor. There are several
other licensing agreements being worked on as we speak. Finally,
we are generating revenue from grants and contracts. While
we do not intend to become a "grant house," we can
not turn down opportunities to develop products and capabilities
with governmental agencies.
Of course I don’t have a crystal ball,
but what I can say is that if you talk to some of the leaders
in the semiconductor industry who will be the customers and
producers of nanoelectronics, they look at nanotechnology
today as a nice idea on blackboard. They don’t foresee
the real widespread use of nanoelectronics for at least eight
to ten years. Many people will talk about the semiconductor
technology lifecycle, and nanotechnology hasn’t ever
gone into what is called the ‘trough’ stage of
the lifecycle. There’s a lot of enthusiasm and excitement
about nanotechnology, but there are not a lot of real-world
killer applications developed at this time. Most people in
the semiconductor industry also predict that it will not occur
for eight to ten years.
One example that I’ve already mentioned
is using nanocomposites for body armor applications. In the
real world, if you were to go to Iraq today and look at a
typical tank used by the United States Army, it would weigh
approximately 72 tons. The army has mandated that within the
next five years, the weight of that tank has to be less than
22 tons. Going from 72 tons to less than 22 tons is a formidable
challenge. The reason for the Army’s mandate is simple:
It’s not a trivial task to move a tank around a battlefield.
Nanocomposites show the promise of being able to have strength
that is at least 100 times that of steel at a fraction of
the weight.
One can think of a scenario where body armor
is used to replace the current materials used for a tank.
The same could be said for aircraft. Another example of carbon
nanotube composites will be its use in fabricating protective
textiles for military and security personnel. People envision
a world where our military security personnel could wear a
suit fabricated from carbon nanotube composites that have
both the thermal and electrical conductivity properties to
allow sensors to be embedded in the suits to enable warning
of biological and chemical threats to the soldier or safety
personnel.
Also, nanotechnology is being used to develop
structures that greatly reduce of the weight of batteries
used today. What most people don’t realize is that the
average soldier wears, in many cases, over 100-pounds of gear
while working in the field, and most of that weight is battery
weight. So this is another application where nanotechnology
could save the day.
The thing that I and many others find so intriguing
about nanotechnology is that it allows one to envision a world
in which Jim Von Ehr’s vision of a molecular assembler
(a tool or system that could make atom by atom, molecule by
molecule, fully customizable and without waste) is a reality.
Think of the ergonomics involved in being able to customize
what you want, very efficiently. Nanotechnology can give you
the best of both worlds. Michael Porter said, in "The
Competitive Advantage of Nations", to be successful in
business you either have to be the low-cost producer or the
high-differentiable player. In the case of nanotechnology,
if you are able to manufacture things with atomic precision,
you’ll be a low-cost producer because there will be
no waste and, at the same time, you’ll have the ability
to be highly differentiable. This is a very intriguing prospect
from a businessman’s perspective. I am very intrigued
by nanotechnology because you’ll be able to do both.
This is also something that has grabbed the
attention of worldwide governments. Today, virtually every
civilized worldwide government is pouring money into nanotechnology.
It should be noted that this is one of the rare instances
where the United States is being outspent by Japan, Europe
in total, and China. The fact is whoever can grasp the full
potential of nanotechnology will hold the “technological
marbles” with which to protect, defend, and advance
their nation through revolutionizing manufacturing. One of
the interesting aspects of nanotechnology is that it has the
potential to be so pervasive across so many industries that
people are very, very interested in it. I would again caution
that this is not something that’s going to happen next
week, or even next year, but will take time. However, it genuinely
has the potential to change the way we do things across a
multitude of industries.
Zyvex is the first molecular nanotechnology
company. Jim Von Ehr founded the company in 1997 and has been
the lead investor, but we have taken outside investments as
well. The company currently has 53 employees and we’re
continuing to grow. We estimate that we’ll have approximately
60 employees by the end of the year. The company has three
forms of revenues: product sales, the licensing of our technology,
and from grants and contracts. For example, we have already
received a $25 million grant from the National Institute of
Standards and Technology’s Advanced Technology Program.
We also have received a $600,000 Phase II grant from NASA
for carbon-nanotube composites, and there are several additional
grants that we anticipate receiving. We currently have four
product lines at the company, and we are developing more.
We are the largest revenue-producing, pure nanotechnology
company that we’re aware of. Sales are estimated at
more than $5 million for 2003.
We’re a very unique early-stage company.
The company has its own 44,000 sq. ft. facility in Richardson,
Texas (a northern suburb of Dallas) and a deep and wide infrastructure
to support our growth. We have more analytical equipment than
most corporate R&D centers working on nanotechnology.
We have several scanning electron microscopes, transmission
electron microscopes, atomic force microscopes, a complete
Raman spectroscopy laboratory, and analytical equipment such
as a FTIR. I dare say that most university professors or corporate
R&D managers would be quite jealous if they saw the amount
of equipment and facilities that we have here at the company.
Who are you working with right now? Who are some of your customers?
Hewlett Packard, Intel, IBM, Honeywell, Sandia, and Boston
Scientific are among a long list of customers that we can
provide.
Strategic partnerships are a critical element
in the implementation of our strategic plan. Our goal is to
profitably grow the business. We do not suffer at Zyvex from
NIH, or “Not-Invented-Here” syndrome. As a result,
we also know that we can’t be all things to all people.
We focus on certain, high-payoff applications. We recognize
our core competencies, as well as our deficiencies, and we
partner with companies that we feel are the leaders in their
particular area. We execute win-win relationships where both
partners aggressively go after the market together to allow
potential customers to get the combined effort or synergy
from our product offerings. For example, we have a strategic
partnership with Coventor, Inc. They are a leading supplier
of 3D MEMS software. We license our MEMulator™ software
to them. Instead of becoming yet another player in the MEMS
software arena, we went with a leader and licensed our software.
As we continue to update our own detailed strategic
marketing plan, we now feel that there are many more sets
of eyes and ears that can help us uncover some of the new
and emerging applications in this embryonic and evolving field.
We are proud of our strategic partnership with Frost &
Sullivan, a leader in the generation of useful and practical
information on worldwide applications of nanotechnology.
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