If there’s one Boston-area energy company atop everybody’s list to become the next great New England success story, it’s got to be A123 Systems. The six-year-old Watertown, MA, maker of high-power lithium-ion batteries for applications like GM’s planned Volt electric vehicles and Black & Decker power tools has quickly established itself as a real powerhouse. After accumulating some $132 million in venture funding, it now counts six manufacturing plants in China, 852 employees (at last tally), 120 patents and filing, and the largest lithium-ion R&D team in North America. More to the point, everybody representative of the company whom I’ve met, from the chairman—legendary New England entrepreneur Desh Deshpande—to investors and key execs repeats a mantra you don’t hear all too often in these days of entrepreneurial early exits: “We’re in it for the long haul, and we’re out to change the world.”
Which is why I decided to stop by MIT’s Stata Center last Thursday to hear what Bart Riley, one of A123’s three founders, had to say. His talk, part of MIT Energy Futures Week, was called “A123 Systems: from nanotech to reality.” Which implies, perhaps, that things didn’t start out in reality. And, as you’ll see, that kind of turns out to be the case. Riley is a die-hard engineer, with some 40 patents to his credit. But, reining in his obvious desire to talk technical turkey, he proceeded to unfold a fascinating drama that kept the audience, roughly 60 people who filled the small Stata classroom to capacity, riveted in their chairs. His account amounted to a firsthand case study of entrepreneurship—telling how a little startup that was smart about picking employees, investors, and partners got going around one idea that didn’t really work out, and how it responded to that challenge to become a potentially industry-changing success story.
Before diving into Riley’s talk, a bit more context on A123. As we described the firm back in October, it’s “like some sort of entrepreneurial Energizer bunny: it just keeps on marching through investment rounds and deals.” At the time, the firm had just announced it had closed a new $30 million financing round. That was on the heels of a $40 million round the company closed last January—the largest New England venture deal in the first half of 2007—and brought the total raised since its 2001 inception past the $130 million mark. A123 can also point to a Who’s Who of investors that include General Electric, MIT, North Bridge Venture Partners, Procter and Gamble, Motorola, Qualcomm, and Sequoia Capital, among others.
A123 is planning to use its new funds to scale up production capacity to meet the growing demand for its products and services; a chief goal is fulfilling a big contract with General Motors, announced in August, to co-develop the battery cell for the Chevrolet Volt line of electric cars and other vehicles. The company also plans to, among other things, grow its cordless power tool battery business and rev up its aerospace ambitions.
How it intends to do all that, and its other plans for the future (Riley hinted in the Stata’s pub after his talk that another big announcement is on the way), will have to wait for another time, though. Riley’s account was about how the company got going and persevered—and he says it’s the fullest picture the company has ever revealed of those early days.
The story starts not too far from Stata, in the lab of Yet-Ming Chiang, a professor in MIT’s Department of Materials Science and Engineering. Sometime in 2000 or early 2001, Chiang (who had long been researching lithium battery materials) hit on a potentially revolutionary way to fabricate batteries. More specifically, he discovered that as a result of what are called colloidal surface forces, he could coax a mixture of cathode and anode particles to self-assemble into a battery.
“It’s a big idea,” Riley told the Stata crowd, some of whom (unlike me) probably understood what he was talking about. If it could be pulled off, he explained, the revolutionary new battery architecture would double the energy density of batteries and cut the cost of making them in half. That part, I got.
Fast-forward to the spring of 2001. Riley, who has a PhD from Cornell, was working at Danvers, MA-based American Superconductor, where he was employee No. 27. And despite not having an MIT degree (for which the audience at Stata gave him some good-natured grief), he had known Chiang for quite a while. One night, Chiang came over for one of their periodic dinners and told him about the self-organizing battery idea. The two talked about forming a company around the concept, but didn’t really know how to proceed.
Enter Ric Fulop, who drew applause when he made a guest appearance in the back of the room
