Eight venture rounds—it’s got to be some kind of record. Yet that’s how many times 12-year-old E Ink went back to investors, raising some $150 million, before it finally arranged an exit scenario for its backers. The Cambridge, MA, company, which makes the e-paper displays used in the red-hot Amazon Kindle e-book reader, announced yesterday that it has agreed to be acquired by Prime View International (PVI), a public company in Hsinchu, Taiwan, that makes display electronics. The purchase price: $215 million.
“Everybody who has invested in E Ink in the last five years is going to do well” as a result of the acquisition, E Ink CEO Russ Wilcox told me in an interview Monday afternoon. I didn’t press him about the implication: that everybody who invested between 1997 and 2004 is going to do less well. But in the current economy, any kind of exit—especially for a company that has struggled so long and valiantly to bring its product to the mainstream consumer market as E Ink has—must feel like a triumph.
The length of E Ink’s odyssey was rooted partly in unexpected technical challenges, as Wilcox detailed to me in a long interview back in February. “We understood that it was probably going to take two years to make something that people wanted to buy,” he said then. “And in terms of making something that looked good, we did that. But what we didn’t see in the beginning, and learned over time, was that it would take another two years to go from something that looked good to something that would look good for many years under all operating conditions—in other words, to achieve stability and robustness. And then it would take another two years to get something that you could reproducibly manufacture, at an affordable cost point.”
But even that was just the beginning of the story. The market for e-paper devices also needed time to evolve. Sony brought out the first e-book reader based on E Ink’s electronic ink film, called Vizplex, in 2004. But it wasn’t really until this year—with Amazon’s extreme makeover of the Kindle, its subsequent success among critics and readers, and an increasing clamor within the floundering publishing industry for new distribution models—that e-paper advocates could convincingly argue that there’s a role for electronic paper in the future of the consumer electronics business.
With 127 employees on its way to 150, $18 million in revenues in the first quarter, and newfound resources in the form of its soon-to-be parent company, E Ink seems positioned to hold on to a major share of the market for text-driven device displays. It has competitors like Mountain View, CA-based Plastic Logic, which showed off its forthcoming tablet-sized e-reader at last week’s All Things D conference. But Wilcox is sanguine, saying the e-paper market is still in its early days and that there’s room for plenty of players. [Correction, 7:50 a.m. June 2, 2009: Wilcox wrote this morning to say that Plastic Logic is not a competitor: “Actually they are a customer and their CEO is a friend! All of the demos they have shown the world use E Ink Vizplex. The merger will not affect this and E Ink has a contractual supply agreement with Plastic Logic, and (as long as they still like us) we will supply them with film for years to come.”]
In our interview yesterday, Wilcox sounded noticeably relieved to have located a purchaser for the company, which means some kind of payday not just for E Ink’s investors but for its employee options-holders. He was also upbeat about becoming part of a company based in Taiwan, where the regulatory and accounting hurdles for public companies are much lower than those created by the Sarbanes-Oxley, or SarbOx, legislation here in the United States. Here’s a writeup of our whole talk.
Xconomy: Congratulations on being acquired, and thanks for making time to talk.
Russ Wilcox: Thanks. Our main themes are [that the acquisition means] more resources for E Ink; everything is going to stay in Boston and continue to expand in Boston; we have 20 open jobs; and this will help expand capacity and speed up product development and get us closer to customers all over the world.
X: Explain how you’ve worked with PVI in the past. They are the company that attaches your Vizplex film to the backplane electronics that actually drive the e-ink material, correct?
RW: Exactly. We provide the film to them, and they make the display. We also provide it to other companies that make e-paper displays, but PVI is the largest. In that sense, we are being acquired by our number-one customer. But there are others and we will continue to
