Yet-Ming Chiang has founded six companies, including three battery startups. Two of the companies (one was involved in batteries and the other 3D printing) have gone on to become “unicorns,” with valuations over $1 billion. That in and of itself would be a rare feat for any entrepreneur, but Chiang has done it while keeping his day job as a material-sciences professor at the Massachusetts Institute of Technology (MIT) in Cambridge, Massachusetts.
Chiang is an “MIT lifer” as he puts it, showing me his MIT class ring. He studied there and then became a professor there. He met his wife at MIT, some of his best friends work at MIT, and he started a few of his companies with MIT colleagues.
In the battery space, Chiang founded A123 in 2001 with the goal of making lithium-ion batteries for electric cars. Then in 2010, he founded 24M, which aimed to redevelop the manufacturing process of lithium-ion batteries and make it cheaper. In 2017, he founded Form Energy with the goal of building technologies, including batteries, that could store energy for weeks and months.
Last year, I met with Chiang in Cambridge, and we discussed his entrepreneurial streak, what excites him working outside academia, and how he sees the battery landscape evolving.
The interview has been edited and condensed for clarity.
Quartz: The first battery company you founded was A123. It had a successful public offering, but then it ended up filing for bankruptcy. What happened?
Chiang: There was a recall that cost the company $55 million. It was a conservative move. In the aftermath, we found that the failure rate of the batteries was nowhere near high enough to justify recall. But the company felt like it had to do it at the time. That caused a cash-flow problem that led to filing for bankruptcy.
The bigger failure was the fact that A123’s Michigan plant’s capacity was 430 MWh per year. All the Fisker cars [about 2,500 plug-in hybrids] ever built added up to 49 MWh of batteries. The market was not there.
We did not get the Chevy Volt contract. We were competing against LG. But I think even if we had gotten that contract, there wouldn’t have been enough demand for batteries to make full use of A123’s large manufacturing capacity.
But I don’t regard it as a failure. After Wanxiang [a Chinese auto parts maker] bought A123 [post-bankruptcy], it sold A123’s grid business to NEC for $110 million. Then a couple of years later, it sold the chemical powder business to Johnson Matthey. It also sold the batteries-for-military-vehicles business to Navitas. Wanxiang kept the automotive business that has been growing since.
You’ve founded six different companies, while being a professor. How do you pull it off?
I can honestly tell you that none of these were ever intended. When graduate students tell me, “Hey, I know you’ve started a number of companies, I’m interested in working with you because I want to start a company,” what I always tell them is that it’s six companies, but that’s one out of 10 scientific projects that graduate students work on in my lab. The motivation and driving force is not starting companies, but to work on interesting scientific and technology challenges.
The moment to start a company is when we can make an irresistible case to do so. Then I need a business entrepreneur. All the investors I know are VCs. When I say, “Hey, I’ve got this idea, which I think might be interesting enough to spend money on.” They always ask, “Who’s your entrepreneur?” And I say, “Well, I’m looking for one, you know?” I’ve never tried to do it alone. I like to have partners.
Most researchers are more conservative than most entrepreneurs. They need a little bit of a pull to get things out when they don’t yet think it’s ready to go out. But the entrepreneur says, “No, now’s the time. Let’s go.” That’s what I needed in the case of A123 and Rick Fulop [who went on to become A123’s CEO] provided it.
One of the criticisms of new-energy technology companies is that they don’t invest money in research. Why is that?
Follow the margins. In batteries and solar photovoltaics, the margins are very small. In pharmaceuticals, the margins are high. Companies like Google have the ability to fund all kinds of research. As a percentage of profit, the battery and solar industry can’t support as much research.
This lack of research has been blamed for stalling innovation in the solar industry. Do you think batteries might suffer the same fate?
I think the roadmap for lithium ion is still very robust. Every time we think we’re going to top out on energy density, something new comes along. The bandwidth of applications in electric vehicles goes from hybrids to fully electric. That’s going to get more interesting because of electric planes. For the grid, right now almost everything that is deployed is lithium ion. We’re going to start seeing new chemistries.
That’s one reason we founded Form Energy. Its purpose was to solve a problem to provide long-duration storage at low costs—which covers everything from days to weeks to months. It’s unrealistic to think any single technology could satisfy that need.
What’s the future of lithium-ion batteries?
At a recent meeting organized by the [US] Department of Energy, there was a presentation that considered seven chemistries as the potential successor to today’s batteries. Six out of the seven have lithium metal as the negative electrode. There is a lot of emphasis in trying to make lithium metal work. That may require solid electrolytes or additives for liquid electrolytes.
We’re continuing to iterate like crazy. The number of really smart researchers working on batteries today is probably three times as many as 10-15 years ago.
Batteries don’t fail because they have nine out of 10 great attributes. They fail because they cannot meet the 10th. It’s always been true. This is partly why new battery ideas are prone to hype cycles. It’s because it’s easy to talk about all the great things. Then there’s the one that gets you.
Dan Steingart, a battery expert at Princeton University, talks about the “battery foundry” model. New battery ideas are developed here in the US and then scaled up in China. It happened with your company A123 and with Aquion founded by Jay Whitacre at Carnegie Mellon University. Is it time to embrace the reality?
We in the US are able to start companies. We’re able to bring it along to a certain point. But when it comes time to scale, there’s nobody in the US to do it. If we have to build a lithium-ion battery factory in the US, we’ll have to import the equipment needed to run it.
Right now, the US is a great shopping center for startups. The unfortunate thing is that we wait until the startup runs into trouble and then sell the startups cheap. It would be a much better ecosystem if we’re able to help startups scale up.
That said, car companies tell me that if there are enough customers for electric cars in the US, then the battery factory will have to be in the US. So if the sales of electric cars keep going up in the US, then battery factories will end up in the US.
Editor’s note: Mitigating the fire risks of transporting batteries adds to the expense of moving them large distances.
Wanxiang’s purchase of A123 and China Titans’ purchase of Aquion show that the Chinese companies aren’t simply stealing IP, despite the way critics describe them. They are happy spending money on things that the country sees as strategic wins. Is it a sign that China is starting to value IP?
If you want to know all the trade secrets of a technology, it is more cost effective and faster to acquire it. If you try to copy parts of it and piece the rest of it together, it’ll actually take you a lot longer. At a restaurant, the assistant chef never makes it quite as good as the head chef. Why’s that? It’s trade secrets.