People

Keith Blakely, CEO and Co-Founder of NanoDynamics, Inc.™

Keith Blakely is a highly regarded entrepreneur who founded the technology based company ART, Inc. in 1981 and, over the next twenty years, created an enterprise that was regarded as one of the leading innovators in advanced materials. He currently manages NanoDynamics’ technology commercialization process from idea generation through laboratory demonstration and process development, and into the commercial marketplace. NanoDynamics utilizes proprietary and protected technologies to commercially manufacture high-quality nanomaterials to enable advancements in industries including electronics, semiconductors, consumer products, fuel cells, transportation, energy, and biotechnology.

Nanotech Briefs: How is NanoDynamics succeeding in creating a commercial nanomaterial business?

Keith Blakely: NanoDynamics was formed in 2002 with a somewhat different approach to the business than many other nanotechnology companies that were started during that same time frame. For one, the founders came together with a specific vision; namely to focus on the commercial application of nanosized and nano-enabled materials and products. Rather than approaching the business of nanotech from the direction of technology, patents, government contracts, or scientific leadership, NanoDynamics emphasized the end products and markets that were likely to be most impacted by this new field of science and the materials it was making possible. Some might describe this as the "market pull" approach versus "technology push". Knowing that new materials generally take 10 - 15 years from invention to first broad commercial use, NanoDynamics focused on the materials and applications that had become of keen interest during the mid- to late-1990's and were already five to ten years along in the commercial maturation process. These included materials such as sub-micron and nano-sized copper, silver, and nickel powders (which were being increasingly used to displace precious metals in electronic components, catalysts, and semiconductor applications), carbon nanotubes (discovered nearly 15 years ago but not available in economically-viable commercial quantities), and nano-sized ceramic particles (of interest to numerous companies).
The founders’ prior experience in advanced materials also taught us that some vertical integration – from material into finished product – was helpful in developing a new materials business. This is true for a variety of reasons. First, by developing a value-added processing capability, a materials supplier is able to better understand the challenges associated with manufacturing a product using the new materials. For example, are there special handling or environmental control steps that must be taken? Shelf life issues that have to be considered? Dispersion/agglomeration challenges? And so on.

Rather than trying to meet scalability issues via outsourcing, we are able to control the entire production process from beginning to end, ensuring nanomaterial quality and quantity for materials end-users. Second, by manufacturing a finished product, we are able to create an "internal market" for our own nanomaterials. The result is a shortened timeline for creating material demand, with the simultaneous creation of some financial justification and return on the production line investment. Third, the finished products will exhibit unique or novel properties as a result of the new materials, showcasing the value of incorporating your nanomaterials into new products.

The timelines associated with (a) developing new process technologies, (b) demonstrating the usefulness of a new process approach to making a novel material, (c) establishing commercially relevant production capability for the new material, (d) matching market needs to the product characteristics (including cost and performance), (e) getting customers interested in qualifying the products, (f) successfully completing qualification programs and tailoring the product characteristics to meet specific customer needs, and then (g) actually receiving true commercial purchase orders are not short! They are measured in years, not quarters or months. As a result, it is important to have a management team that understands this and plans for it financially. The average 25+ years of experience that each of the NanoDynamics' executives have in the advanced materials business has been a major advantage in both recognizing the difficulties and planning for success in this field.


NB: What are the functions of NanoDynamics’ three Strategic Business Units (SBUs) and how do they assist with the overall goal of nanomaterials commercialization?

Blakely: The three SBUs are all designed to ensure strong market pull-through for our technologies, materials, and products: ND Innovations, ND Materials, and ND Products ND Life, focused on the biomedical and life science applications of nanomaterials and nanotechnology.

ND Innovations is responsible for overseeing the technology-based investments, partnerships, and subsidiaries. Specifically, ND Innovations oversees MetaMateria Partners (a subsidiary), ND Life Sciences (a subsidiary), and First Wave Technologies (an investment). MetaMateria Partners (MMP) was established in 2002 as a 50/50 joint venture with NanoDynamics to explore early stage materials technology, pursue government R&D contracts, such as the SBIR program, and identify interesting technologies within academic institutions that could be licensed and transitioned into commercially relevant processes and products. In late 2003, based upon the great success that they were having, NanoDynamics acquired the remaining 50% of MMP. MMP now employs over 20 scientists, engineers, and researchers in Columbus, OH, and operates as something of a "skunk works" for NanoDynamics.

The team at MMP is able to focus on innovating without the immediate concerns of commercialization, and NanoDynamics then has its pick of solid new technologies to develop commercially for specific market needs. The unit has been highly successful in obtaining R&D grant and contract funds to pursue new approaches to nanomaterials synthesis, particularly as these materials relate to energy applications.

Currently, the MMP unit has development programs focused on thermoelectrics, fuel cells, lithium batteries, photovoltaics, high-temperature superconductors, heat management materials, and some confidential military and commercial products.

ND Life Sciences was established last year to focus on the convergence of nanomaterials and nanotechnology on the life sciences, biomedical, and health-care markets. We have a small team of researchers in an incubator facility in Pittsburgh, PA, working on anti-microbial products, medical imaging materials, drug delivery systems, and many other areas where the use of nanomaterials offers the potential for break-through products.
First Wave Technologies was a regionally focused investment that we made to identify and qualify very early stage technologies as possible future licensing opportunities. It focuses on university research that still requires some amount of scientific development and validation before being ready for either spinout or licensing from the university. NanoDynamics is one of three technology companies that have invested in First Wave to encourage the development of these very early stage concepts.

NB: How can early-stage companies commercialize cutting-edge laboratory technology?

Blakely: Commercialization is a complex undertaking with lots of sub-questions really that impact the answer to this. For example, do you really want to commercialize the technology or are you better off licensing or selling it to another firm that can commercialize it better, faster, and cheaper? Many companies that start life thinking they want to commercialize technology and manufacture products soon come to realize that they lack the skills, the capital, or the infrastructure necessary to do this and by the time they can put those resources in place, someone or something has passed them by!
Another question that needs to be answered is – will the market care if I do commercialize a technology. What problem is it addressing and is the economic value of this new solution of interest to the market? In other words, use The Martha Stewart Model: Know your customer. Any attempt to commercialize (potentially) high-value, cutting-edge technologies should include an early, and exhaustive, analysis of the markets, market players, product roadmaps, and pain points of potential customers. Introducing products into the marketplace that do not meet clear and specific market need is a sure fire way for a company to waste valuable resources and put the organization’s future at risk.

NB: What are some of the things that you’ve seen go wrong when companies try to transition from lab to the commercial marketplace?

Blakely: A major issue in the transition from lab to manufacturing floor is the assumption that a technology that works in a beaker or on the bench will easily translate into a reliable, repeatable, economic process. Attempting to scale up to the levels required by industry is often done with inadequate attention to good engineering practice – limiting the scale increases to reasonable steps and fully understanding the process at each scale-up level before moving on to the next. Attempts to short-cut this process are nearly always problematic

New processes or products often require highly specialized equipment that may be both expensive and difficult to operate in a production mode. Vacuum and plasma systems, for example, can be very useful in scientific and very high value processes, but are generally problematic and costly when scaling to high volume throughput. Considering the equipment demands of a new process or product – at commercial scale – is very important early on. I have no doubt that there are lots of “white elephants” inside nanotech start-ups – big investments in capital equipment that didn’t pan out as hoped in production.

But perhaps one of the most serious problems is companies assuming that, because their product is superior in some way over an incumbent technology, end users and consumers will come running and be willing to pay a premium. Too often, young companies don’t take the time and effort to deeply assess the commercial viability of a technology before introducing it to the market. What customers really want is a better product at a lower price – no PhD required to reach that conclusion. To sell a product at a premium price generally requires an exceptional improvement in performance (perhaps leading to increased market share), an overall reduction in system cost (and therefore improved profitability), or it enables the user to create a new product altogether.

NB: Are there differences between selling to industrial and military customers compared to selling to the consumer marketplace?

Blakely: Industrial and military customers are all about verified and certified performance—a product doesn’t have to be pretty, but it must perform with exceedingly high levels of reliability and robustness and you must have the data to back it up. In addition, the supplier generally must demonstrate an understanding and ability to deliver quality goods and services at a highly competitive price. Despite stories about $200 hammers, the Dept. of Defense operates a highly competitive procurement system that insists on suppliers meeting all requirements, including, in general, being the low-cost supplier. The consumer markets, of course, are sensitive to price as well, but in a different way. The consumer markets will pay for differentiation – a golf ball that goes straighter, for example, can command a premium price. Stain free pants, scratchproof sunglasses, transparent sunscreens, lighter and stronger sports equipment – all of these products can support a premium price, for some period of time. And consumers are naturally influenced by the marketing, branding, and packaging associated with a product; they may not have any data supporting a decision to buy an iPod over another MP3 player, for example, but they believe, based upon marketing and advertising, that the iPod is a better product and will pay a premium to acquire it as a result. Very few industrial or military customers operate that way.

NB: There are some disparities between what manufacturers/suppliers of nanomaterials are offering to sell to the commercial market compared to what the market needs. What is the solution to this problem?

Blakely: I see the issue a little differently. When new materials are first introduced, there is an understandable gap between what those materials may be able to do and what the market thinks it needs them to do. Over time, as suppliers and customers interact more, the products are improved or optimized for a specific application and, as a result, the market is able to integrate the new materials into an increasing range of products. This is a process that takes time and it is the underlying reason, I believe, that most new materials innovations take, on average, 15 years from invention to full commercial acceptance.

NB: In your opinion, what should the Government's role be in supporting nanotechnology research & commercialization? Are they meeting expectations?

Blakely: I am a free market advocate. I think that the government has a legitimate role in creating an economic and regulatory environment that encourages risk taking, innovation, experimentation, and education where new, potentially disruptive technologies are concerned but not in attempting to pick market winners or losers. One of our country’s strengths, historically, has been our system of higher education and the tremendous amount of knowledge and understanding that it creates. The Government has an important role in supporting and encouraging basic research, both at universities and through the National Laboratory system, as well as in developing a fundamental understanding of health and environmental risks associated with a new material or technology.

We need to do a better job in creating a favorable economic and regulatory environment that encourages innovation and commercialization by fostering a strong science educational platform, finding ways to incentivize US citizens to enter the scientific and mathematical disciplines, encouraging foreign science students to stay in the US, and creating level playing fields in the global marketplace by aggressively engaging the protectionist policies of other countries and insisting on appropriate intellectual property protection by our trading partners.

Perhaps most importantly, our government has not, in my opinion, created the types of economic or tax incentives that would encourage the application of new technologies, such as nanotechnology, to address one of the most pressing issues of our time – energy. The concept of an “Apollo” type program to achieve energy independence has been floated by others. I think a more successful approach would be to provide significant tax credits and funding incentives to the companies (and their shareholders) for investing in technologies that offer our country the prospect of energy independence in the next twenty years. It is an area that NanoDynamics is focused heavily on – from fuel cells to thermoelectrics, photovoltaics, advanced batteries, and superconductors.

NB: What is your advice to those early-stage companies trying to bring their technologies out of the lab?

Blakely: Begin by knowing what the industrial or business problem it is that you are providing a solution for. Too many early-stage companies are so enamored of their technology that they fail to consider how, when, and if industry is capable of incorporating that technology. For all the talk of “disruptive technology,” no matter how exciting a technology might be, it is not going to disrupt the product roadmaps of the industrial incumbents like GE, Boeing or P&G. Early-stage companies must therefore engage with their potential partners/customers early the product development cycle in order to understand where that disruptive technology intersects with the end-user’s product roadmap. Too many promising technologies die on the vine because of hubris unsupported by market intelligence.
My advice to other entrepreneurs is:
 Be flexible – the market may take you in unexpected directions and that is often a good thing
 Be patient – things will always take longer and cost more than you are likely to imagine, and
 Be persistent – if you are confident in yourself, your technology, and your understanding of the opportunity, and then never, never, never give up. Success is often the result of simply outlasting those who were less committed to a goal.

If you have questions for Keith Blakely, please contact him at kblakely@nanodynamics.com. For more information, visit www.nanodynamics.com.