Episode 65: Gene Berdichevsky, Sila Nanotechnologies
Today’s guest is Gene Berdichevsky, Co-Founder & CEO of Sila Nanotechnologies.
Prior to co-founding Sila, Gene was the seventh employee at Tesla Motors where he served as Principal Engineer on the Roadster battery, leading the development of the world’s first, safe, mass-produced, automotive lithium-ion battery system.
Gene holds two degrees from Stanford University; an MS in Engineering with a focus on energy and materials, and a BS in Mechanical Engineering. He has co-authored 42 patents and 4 academic publications. Gene has been named to the Forbes 30 under 30 list, the MIT Technology Review 35 Under 35, and was a recipient of the Paul and Daisy Soros Fellowship for New Americans.
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You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast) or @mcjcollective (company). You can reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
In today's episode, we cover:
Overview of Sila Nanotechnologies
Battery industry overview, and the role of batteries in the climate fight
Where EVs are in their adoption curve, and how they will connect to the grid in the future
Gene’s path to becoming a battery entrepreneur, including joining Tesla as employee #7
Gene’s great story about how he got hired at Tesla!
Origin story of Sila Nanotechnologies, including how it formed while he was an EIR at Sutter Hill Ventures
The importance of starting in high value markets in tough tech
Gene’s views on the best ways for tough tech companies to get funded
The importance of focusing on the process, not the result
Sila’s progress to-date, and how the company has been capitalized along the way
The potential impact it can have, if successful
What’s coming next, and what barriers and hurdles they face to adoption
The most impactful things that could change in order to accelerate their path
What Gene would do with a big pot of money to maximize its impact in the climate fight
His advice for others looking to find their lane
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Jason Jacobs: Hello everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change. And, try to figure out how people like you and I can help.
Jason Jacobs: Today's guest Gene Berdichevsky, co founder and CEO of Sila Nanotechnologies. Sila's developed a Silicon based anode to replace graphite and lithium ion batteries. The company claims its materials can improve the energy density of batteries by 20%, which would be a big deal.
Jason Jacobs: Prior to co-founding Sila, Gene was employee seven at Tesla where he served as principal engineer on the Roadster battery, and led the development of the world's first safe mass produced automotive lithium ion battery system. We cover a lot in this episode, including the Sila origin story. Their long vision, where they are on that trajectory today, what's coming next, some of the headwinds and some of the changes that could be made that could help accelerate adoption. And we also talk about the impact that Sila can have if they're successful in their efforts.
Jason Jacobs: And finally, we talk about this type of deep tech innovation in general. How to make 1,000 flowers bloom in terms of how to not only have more of these types of companies pop up, but to help them reach their full potential as it relates to widespread adoption. We talk about how this type of innovation fits in to the broader climate flight, and how Gene thinks about the climate change problem. It's a great episode and I hope you enjoy it. Gene Berdichevsky, welcome to the show.
Gene Berdichevsky: Thank you for having me.
Jason Jacobs: Excited to be here, and thank you as well for the wonderful tour I just got of your facility. It's quite an impressive operation.
Gene Berdichevsky: Thank you. Yeah, we have some big equipment here.
Jason Jacobs: Yeah. And I was telling you before we hit record, I come from the consumer app world and very different from this kind of hard tech innovation. But because I have, the way I'm assessing things that are interesting to me are the things that can have the biggest impact on climate change. An important piece of that is more of this hard tech innovation. So it's been causing me increasingly to spend time down this path. But yours is the one with the biggest scale that I've seen so far. So it was fascinating just to walk around this facility and to talk to you a bit about the magnitude of what you're doing and your ambition because yours is maybe more of like a teenager heading off to college. Where I've been spending more of my time in grade school.
Gene Berdichevsky: Yeah, we've had about eight years to get this far, but it's still early days from the scale that we need to grow to. The production increase that you saw as we walked around is about 5,000x from the R&D scale. But we have tens of thousands x more to go to cover the world with our technology, for it to be in every electric car, for it to be frankly in every car sold. And then also on the grid.
Jason Jacobs: Well, as you know this is my climate journey. So each episode it's about learning and trying to get myself up to speed on gaps in my knowledge. And there's a number of areas that are interesting about what you're doing for me. But maybe for starters, let's just take it from the top. What's Sila Nanotechnologies?
Gene Berdichevsky: Yeah, so we're a battery technology company. And very distinctly, we're actually not a battery company. So we make a new kind of chemistry, which is really a material that goes into an existing battery. That material increases the amount of energy every battery can store. And by increasing the amount of energy every battery can store, we can reduces the cost on a dollar per kilowatt hour basis. Which means you can have electric vehicles that are lower cost upfront or have longer range. Our technology also works in consumer devices. So we can actually just make your iPhone last longer or your wireless earbuds have additional features.
Gene Berdichevsky: So we shipped this material that we manufacturer, that we've invented, that we manufacturer today, to battery makers who then will put it into a lithium ion cells that they make that go into every application where lithium ion is today.
Jason Jacobs: And batteries are a confusing one for me. Because on the one hand, I hear that for example, EV penetration is essential and it's going to produce so much extra capacity that is then going to fundamentally make solar and wind more possible and is going to eliminate the need for baseload, and on and on. Right? But then I also hear about material shortages, and waste, and compressed life cycles. And how's it going to scale, and intermittency. I guess that's just on the energy side. And of course there's applications as you described, and consumer devices and all these other things. But if I'm thinking with a climate hat on, how should I think about batteries?
Gene Berdichevsky: They're absolutely essential to solving the climate problem, both in vehicles and on the grid. So we can cover those two things. Like I said, the tech works in consumer, but really our mission longer term is to get into cars and then eventually into grid. And it will be in two stages. Cars first, because the value of improving the technology in cars is much higher than on the grid. But on the grid, you need it to get past a certain amount of solar and wind penetration.
Gene Berdichevsky: So let's start with maybe, with cars. There's shortages of materials, but really only at different scale. So today we have about 2 million plugin cars that were sold last year worldwide. And this year it looks like we'll probably have about 3 million. So about 50% growth. And we've had that year over year growth for about a decade actually. And it's not about to slow down anytime soon. So in the next seven or eight years, we'll get to something like 20 or 30 million plugin cars sold worldwide. The amount of battery capacity produced today is only keeping up with that, but new factories are going in every single year right now. So there's no shortage of being able to make the batteries.
Gene Berdichevsky: But then you go one step deeper, which is what are the materials that are going into those batteries. And on the anode side it's graphite, which we're replacing with our Silicon technology over time. On the cathode side, it's metal oxide. And really there's a couple of shortages there of cobalt in the long run. But we see a path where that can be replaced. It can be replaced with nickel in the short term, it can be replaced with copper and iron in the long run. So we don't think there's a longterm problem there. And on the graphite side, we can be replaced with Silicon technology, which again comes from sand and energy. So there really isn't a longterm shortage there either. So there are no limits on how much battery production you can get for for EVs.
Gene Berdichevsky: And then the way EVs will connect to the grid is that they will drive down the cost of batteries by just the sheer scale. And, by the innovation like ours and others that are going to be deployed in automotive. And what'll start to happen is batteries will get so good for EVs, where today maybe the best battery, it's a little expensive, but might get you half a million miles of use. Over time, that'll become million mile battery, a 3 million mile battery, a 5 million mile battery. And what that really means is becoming a 30 year battery that can be used on the grid. And coupled with solar and wind in a way where you do have essentially baseload where you can use lithium ion to shift the energy around every couple of days as needed for 30 years. And an upfront cost that'll be about half of what it is today. And that's a complete game changer. So you can get to a place where solar wind, which are already there from a cost perspective. Coupled with batteries that'll ride the back of EV innovation, solve most of the challenges you have.
Jason Jacobs: What is the path that led you to becoming a battery entrepreneur?
Gene Berdichevsky: So I can now say this, I've worked on lithium ion batteries for half my life. I actually started as a freshman at Stanford building solar cars. I'm wearing one of my vintage solar car shirts here. And sort of playing with lithium ion batteries back then. And then ended up dropping out of school to join Tesla as the seventh employee and led the battery development for the Tesla Roadster pack. And then I got really interested in-
Jason Jacobs: I want to pause here for one second because I listened to your episode with Emily on what it takes. And I know this is supposed to be a climate change podcast, but your story of how you landed that job at Tesla is amazing. So if you don't mind, can we take a quick detour to hear it?
Gene Berdichevsky: Sure, yeah.
Jason Jacobs: I think it will inspire many throngs of new college graduates, or even current college students. Or high school. I just, I don't know. It struck me.
Gene Berdichevsky: Sure. Happy to tell it. I fell in love with two things in college. One was energy, building solar cars. We built something that could go 55 miles an hour on 1,500 Watts, power of a toaster. And the other thing I fell in love with was sort of the venture model. I learned about how Silicon Valley builds these amazing companies. So I actually wrote a business plan for selling electric sports cars in the U.S. market. And then sort of six months later learned a couple of entrepreneurs who are working on this. And I was like, "They stole my idea."
Gene Berdichevsky: So one of the folks working there was JB Straubel, who just recently left as the CTO of Tesla. And he was a solar car alum. So I called him up and I went to his house, and I basically made him tell me about this. And I said, "Listen, I'll drop out. I'll join you guys, I'll sweep the floors, I'll do whatever you need me to." And he said, "Let me talk with some folks." So I said, okay. So he said, "Go away."
Gene Berdichevsky: I get a call maybe three, four days later from one of the co-founders. And he says, "Listen, we're going to England for two weeks. When we get back, we'll interview you." I said, "Well, I think you're here now, right?" He's like yeah. "When do you leave?" "In three days?" "Well, can I meet you before?" "No, we're really busy." "Okay, well what airport are you leaving from?" He said, "SFO." "What time?" "6:00." "How about I meet you there two hours before and you interview me right there?" And I think he was a little shocked and he just said, "Sure, why not?"
Gene Berdichevsky: So yeah, I drove up to SFO, interviewed with Martin Eberhard there when he was on his way to Lotus to negotiate the contract for the Roadster. Lotus was a partner. So for the Roadster, they were negotiating a contract how they would partner. And he hired me on the spot. I called my parents, I said, "I'm quitting school." And they had a little freak out for a few minutes, but then it turned out okay.
Jason Jacobs: The reason I think that story matters so much is that we can get into details of the science and the research, and why now's the right time, and the investors, and the market, and the problem it's solving, and all that. All those things matter. But without that story that you just told, these companies don't make it. Right? And that speaks volumes to the stuff that doesn't show up in a slide deck.
Gene Berdichevsky: Yeah. I think you need people who really want to make an impact and don't care about all the other stuff. And then you got to give them a way to do that. Right? And I think the venture model is actually a good one. And I think that gives people with a huge amount of passion, a huge amount of drive, a way to make a huge impact on stuff that really matters. And maybe even connecting it to some of the other topics you talk about is I'm a big believer that if you make a great product that just happens to be green, that people want to buy. That's the best way to massively accelerate adoption of clean technologies. So I think that was the insight at the founding of Tesla was we're just going to, an electric car was going to cost $100,000 no matter what you built. So Martin asked the question of well if it's going to cost $100,000, what do people buy for $100,000? And it turns out it's a sports car. And it turns out you could make it go zero to 60 in four seconds, and it could be an amazing car. So half the people who bought that Roadster were just sports car fanatics. It just happened to be green.
Jason Jacobs: Yeah. Pat Brown from Impossible Foods who came on the show a while back, said the exact same thing. They don't even target the vegetarians. They don't target people that eat veggie burgers, they target meat lovers.
Gene Berdichevsky: It's got to taste better, right? You look at other successes, look at the Nest, right? It's just a beautiful product, you want to buy it. It costs more than a regular thermostat, but then it helps you save energy, right? All of these things, the things that really make an impact are just better products. And even solar and wind. Most of the money going into solar and wind today isn't there to do good. It's there to make a higher return than what they can do in a coal plant or something like that. So the key is how do you create these products? How do you create these technologies where you can deploy hundreds of billions of dollars, $1 trillion, because the ROI is higher than on something that's going to muck up the environment?
Jason Jacobs: So you were just starting to go down the path of telling me the story of how you got to be a battery entrepreneur. And then I made you tell that a Tesla story, but detour over. So you got to Tesla, employee seven.
Gene Berdichevsky: So I got to Tesla. I spent four years there doing the Tesla Roadster. We launched that. That was sort of my baby, and then I got interested in the science of the battery. And what's interesting is Tesla rode this cost reduction in lithium ion that started from 1991 to about 2004. And by the time I left in 2008, the cost reduction had largely stopped and the performance improvements had largely stopped. Some of the narrative that's out there today, that batteries are coming down in the last few years by an order of magnitude is just not accurate. I was buying really, really inexpensive batteries in 2005. So what I saw is this was stalling, and the question was why?
Gene Berdichevsky: And it turns out that what happened was we were starting to reach the theoretical limits of the chemistry. So I wanted to go study that. So I left and went back to Stanford, and spent a couple of years. And I had ultimately gotten my undergrad after dropping out, and got a master's degree in material science, and sort of energy resources, and a bunch of different topics that were just near and dear to my heart.
Gene Berdichevsky: And then I had gotten to meet some venture capitalists throughout my time. And one of them who's our lead investor, Mike Speiser from Sutter Hill said, "Why don't you come here and be an entrepreneur in residence, and try to start a company? And if we like it, we'll invest."
Jason Jacobs: And when you went back to school at that time, or even when you're at Tesla for that matter, did you always have ambition to ultimately be an entrepreneur?
Gene Berdichevsky: 100%. I think I was plotting how I'm going to build my company from the day I walked into Tesla. Because again, I had this feeling that hey, I had this idea too. Why am I not the one building this? And ultimately I sort of learned a ton of how you build a great company from that. Got a bunch of good things out of the experience. But I was already thinking, how am I going to do this one day myself? Yeah.
Jason Jacobs: And I forgot to ask you, what was it about this category that led you to, why anchor here when it came to writing business plans and things like that? What was the pole?
Gene Berdichevsky: It was just cool. And again, it was sort of built on that solar car experience from my freshman and sophomore years where two horsepower, you could go 55 miles an hour. So why does my car have 200 horsepower? What's the inefficiency problem? I mean, energy is really, really cool. And we were doing it with solar and we were doing it with lithium ion batteries. So it's just really cool. There's no better reason than that to start. But then as I kind of got into it, as I learned more about kind of the global energy industry and markets, and sort of the opportunities, it's not just cool. It's fundamentally underpins our entire society, what our energy infrastructure is and our way of living. And as countries develop, there's a tremendous amount more of this to be built. And there's a huge amount of innovation available. It's not true that we're done with innovating on energy.
Jason Jacobs: So what was the game plan when you went to Sutter Hill?
Gene Berdichevsky: So the idea was for me, Sutter Hill is one of the oldest firms in Silicon Valley. It's one of the most successful firms you've never heard of. And they like it that way. So what I wanted to understand, I had just come from Tesla, which was successful. But I had just watched almost everything else in clean tech come to a crater, right? So bunch of companies had billions of dollars of investment, some billion a piece for some of the solar players that ultimately went bankrupt. So I had a question in my mind, which was what did they do wrong? What did Tesla do right? And how do you build venture backable energy companies that can succeed?
Jason Jacobs: And that was not part of your studies, but you came out thinking about that question.
Gene Berdichevsky: Yeah. And even while I was at Tesla, again, I'm looking at these companies. I'm interested in do I want to build a solar company one day? Do I want to do something in wind? But I ultimately want to be successful. So how do I actually make it a good business? So that was a big part of it is even while I was at Stanford, I was thinking about this. But certainly in the opportunity to spend a year with some of the best investors in the Valley, understanding how they look at businesses and applying that to the field of energy where I know a lot, where I'm a domain expert was really my impetus for going there and sort of accepting that.
Gene Berdichevsky: And I sort of did just that. I learned how to see the world through their lens, which is a lens of will this ultimately make a lot of money? And apply that to stuff that I was really excited about. So the key insight I think that I got out of that was you need to build products that create value, not just reduce cost. So a lot of the reasons solar failed in the clean tech boom was they're all trying to get a little bit cheaper than the next guy and a little bit cheaper than the grid. And that's a really hard proposition because there's no margin for error. And what a startup needs is margin for error, because nothing goes as planned, and it always takes longer, and it always costs more. So if your business plan pencils out only just, you might as well not start that startup. It has to pencil out with some margin so that when things go wrong, you can still be successful.
Gene Berdichevsky: So in our case, in the case of batteries, one of the most important things that there's this incredibly high value market, which is the battery that's in your pocket. So there's about 2 cents of graphite in your pocket that when we replace with our technology, your phone with no changes will last 20, 25, 40% longer. 2 cents. So there's $1,000 device that's being limited by some 30 year old technology that we can replace. And we can charge more than 2 cents for it. So that gives us an opportunity to start with a value priced product that allows us to get the economics. The production line you saw here might be big and impressive, but it's not at a scale that's going to make the product cheap enough for millions of cars. That's going to be at the next scale. But this is at a scale where we can get into consumer devices, wireless earbuds, smartwatches.
Gene Berdichevsky: And if you really think about it, it's the same model as what Tesla took, right? Where the Roadster was this very high value product that people who valued it bought. And it was a great deal for them. Faster than the Lamborghini that you could buy for twice the price. So it's fantastic economics. And that allowed the Model S. The Model S was again, better than a seven series. And then that allowed for the Model Three, and that ultimately will allow for an even lower cost car. So we're going to follow that path in many ways. And I think that's something that's really important to building a business is finding high value markets early.
Jason Jacobs: I think you're hitting on a really key point. Because this whole clean tech wave and all this money went in. And it was so ugly, and people are still have a hangover about it, right? And now there's new money starting to come in, but it's like timid. Because even though it's coming in, people are terrified that the same thing's going to happen again. So many companies start out and when nowhere. Yet there's these crowning examples of companies that are really breaking through. Tesla is certainly the crowning example. But we're starting to see in other categories too, I would put the Impossible Foods and Beyond Meats to the world in that category too. And they do, they have something in common. And I think you articulated it well where it's not cost, right? It's value. And it makes sense without an impact hat on, but just happens to have a big impact as well.
Jason Jacobs: I haven't really pulled out exactly what the criteria are in a refined way so that I could then go and take that thesis and go make 1,000 other flowers bloom. But the thing that I'm coming around to is that if you want to have an impact on climate, or at least if I do, right? Because I'm such a capitalist at heart at the end of the day, right? If I'm honest. So it's not to go raise an impact fund or start a nonprofit. Not that there's anything wrong with any of those tasks. Right? But like this. So I'm excited to hear the rest of the story. That was my long winded way of saying I'm excited to hear the rest of the story, because I think that you saw it at Tesla, right? And now, you're doing it again. So that it's like you are in a real unique perch to have a perspective on how to make 1,000 flowers bloom.
Gene Berdichevsky: Yeah. And when I talk to entrepreneurs that are starting out, I'm always pushing this piece of it, which is find those really high value markets. Even think about solar. So solar was around for a good 30 years before it became as big as it is. And where did it go? It went into space, right? So you had the Spectral Labs making triple junction, gallium arsenide cells that are going to go on satellites. And those cost a crazy amount. And then you had sun power quietly innovating, right? For people who had money, wanted to live off grid, wanted a beautiful thing, there's value to being green too. There's people who want to do it because that's just what they want to do. But those were expensive. And then as that matured, it could go to all these other markets. So I think you've got to figure out what that high value market is.
Gene Berdichevsky: So when I was at Sutter Hill, I looked at dozens and dozens of different technologies. A lot of not batteries as well. But ultimately I met a professor at Georgia Tech, one of my co-founders and Sila's CTO, Gleb Yushin. And he was working on a new set of new methods to make new kinds of materials for batteries. So I looked at some of the work he was doing. And what I saw was really good ideas. But not just really good ideas. Also somebody who really wanted to build a business and have a huge impact. Not just do academic research. And most interestingly from a product perspective, we could productize the material and all the technology, and not have to build our own battery factories.
Gene Berdichevsky: So even though we raised a lot of money and even though it's cost a lot to develop this, it's cost us about 10 times less than if we were to go build a battery company. So we're also not taking on, the other piece of our approach is we're not taking on the capital to do the part that the world's already really good at. So the world's already really good at making lithium ion batteries. Incredibly efficient. There's about 200 gigawatt hours out there today of annual production capacity. There'll be about two terawatt hours in seven or eight years. So 10x increase. Samsung, LG, Panasonic, all these companies make amazing batteries today. So we saw the opportunity to make a material that drops in and just makes that factory more valuable. Every battery that comes out more valuable. So that was also the other piece is can you isolate the innovation? Can you isolate the technology and productize it so that all the venture capital dollars are spent doing really high value work?
Jason Jacobs: So with my company, Runkeeper that I built for almost a decade. I now have the benefit of hindsight because I've had some time away. But it fits really nicely into three distinct phases. And I know you're still right in the thick of it, so you don't have that time away to reflect. But if you look backwards, you start in 2011, this is 2019. You're just getting started on your journey. You have $100 million into the business, you raised a big round recently to really start to scale. So I mean obviously, it's working or some very smart institutional investors and strategics believe enough that it's working to write big checks into this. Right? So I guess looking backwards, rather than going through the whole story detail by detail. I mean, I guess we could do that. But are there distinct phases if you look backwards of well, when we started it was this?
Gene Berdichevsky: Yeah, for sure. So there are maybe three phases. I mean first of all, the most important was getting the business model right. What we do today, and what I describe was the exact initial pitch. It was spot on. We've never had to pivot, we've never had to change. And it's made the journey a lot easier in many ways. And it's gotten easier as we've gotten further along, which is a really good sign, right? That we're doing something right. It's getting easier to get further and further along rather than getting harder. It was really hard in the beginning.
Gene Berdichevsky: So phase one was really just science risk. And where we started, we started the company in an incubator at Georgia tech. So I and my other co-founder Alex moved to Atlanta.
Jason Jacobs: And were you still at Sutter Hill at this time?
Gene Berdichevsky: So yeah, I was at Sutter Hill. I met Gleb. He was at Georgia Tech. We decided that for the company to have the best chance of success, we would build it in Atlanta right near Gleb's lab so that he could walk between the company and the lab every single day. And he did. And he committed himself fully to building this business. So we moved out there and we recruited a handful of Silicon Valley engineers, actually from the solar industry. Some refugees from the solar industry to come work with us and build the equipment in the processes. And we got to about maybe 15 people within a year. And we kind of stayed there for three years or so, 15 folks. And all we did was iterate, and iterate, and iterate on the science. Just trying to make this product work. Because we had some patents and we had some technologies, but we really didn't have a product.
Jason Jacobs: How were capitalized at that time?
Gene Berdichevsky: We were very fortunate. So because I had the Tesla experience, because Gleb had a tremendous amount of credibility, because I'd spent a year with Sutter Hill. They funded us with a series A of $5 million from day one. They split that financing with Matrix Partners who was also an investor from day one. So we had great, just top tier VCs with vision and patients from the beginning.
Gene Berdichevsky: And then we were also able to bring in some RPE funding. So we got a three ish million dollar grant, which was incredibly helpful at the time. And yeah, that was primarily it for that first phase.
Jason Jacobs: And is that a common thing, having traditional Silicon Valley type VCs coming in early like that for this type of science-based company where RPE is also involved on the grant side? I mean, is that a common recipe?
Gene Berdichevsky: I don't think so. I think that's pretty rare. They knew the risk they were taking, but I think it was done in part based on again, that business model that we identified of a high leverage product. And the credibility of the initial team.
Gene Berdichevsky: So I think it's pretty rare. I think if you're just getting started out of a, let's say a PhD with some technology. You're going to have to prove yourself a little further. And that's why I love seeing things like Cyclotron Road and that that model which helps get a little more technology risk retired before you're going out and raising series A financings. But we were fortunate to be able to go straight to a series A.
Jason Jacobs: Well Cyclotron Road is interesting because Cyclotron Road, it takes you coming out from your studies, right? Had one side of that equation. And then you post Tesla had the other side of that equation because you had the pattern recognition of being inside an actual business that was going through rapid scale of commercializing this type of hard science innovation. So therefore from the founding team, there's both sides of the equation. I think Cyclotron Road is phenomenal, [inaudible 00:26:47] activate right now that they're starting to expand. Because they bring that first side of the equation. And it's interesting to think about how to better marry that other side of the equation and bringing industry in earlier that isn't just big strategics from a sponsorship standpoint. But actually is real entrepreneurs that know how to build ambitious, [inaudible 00:27:07] scaling types of real businesses.
Gene Berdichevsky: That's right. And I think the other piece is is knowing how to be cautious enough to retire technical risk early. So that was something we spent, we spent probably the first five years of this company retiring technical risk before really pouring it on and scaling. So sometimes again, another thing that I think went a little bit wrong in clean tech 1.0 if you will, was people started scaling before the technical risk was retired. And you can do that in software because you can update the product in the field for free. You cannot do that in hardware. You absolutely cannot do that with hard science. Because once you build that piece of equipment that takes you two years to build, you're not changing it that quickly. So you really have to take a much more patient company building approach too. It's a slower at first and then kind of pour it on so to speak.
Jason Jacobs: It's a weird comparison. But I think a similar reason why a bunch of environmentalists bristle when they hear that natural gas is "bridge fuel." Because it's like bridge but it requires all this pipelines and infrastructure, and things to get built out that then are there. And they will have high utility for however long, which means you're committing yourself to a very long period where we're going to continue to emit. So it's not an exact amount-
Gene Berdichevsky: You're committing yourself up until the moment that you have technology that's better, right? That lowers the cost. And I think it's more about really patiently retiring technical risk. So we were in that first phase, 15 people just iterating on the science. Then we raised a series B in 2014 about three years later. And we spent probably a couple more years really refining the product till probably about 2015 we started building the pilot line after our R&D line.
Jason Jacobs: Did new investors come in for that B?
Gene Berdichevsky: We added another venture firm. And then in the series C, we also added another venture firms. So all our, actually A through D were led by traditional venture firms.
Jason Jacobs: Given that that's been your experience thus far, if you want 1,000 more flowers to bloom with this kind of hard tech innovation that can also be impactful for the world. Is the traditional venture model the right model for that?
Gene Berdichevsky: I think you need particularly patient, traditional venture. So you can structurally maybe make that work a little better by creating funds that have longer lifetimes. Some of the funds we work with are evergreen funds, which means they sort of, it's not traditional fund structure. It's not a 10 year cash out. They can hold much longer and move the investment kind of down the line. And then some of the other ones that we work with are just, have been extraordinarily successful. So the funds that are extraordinarily successful and even the individual partners that are extraordinarily successful are able to make a different decision about the risk return profile. They would rather hold longer if you have an opportunity to build something that's $100 billion, rather than try to make a short term exit for a few bucks. So I think it's hard to say let's just bring in some successful investors to this field.
Gene Berdichevsky: But I think the thing you can do is create structures that are able to hold longer, and who's maybe economics for the investors are more back weighted, right? Let's say it's more back weighted to the tail end of the fund, or you get a slightly higher carry when the thing becomes really, really big. There's different ways, incentives drive behavior. So you think about how to structure incentives. But we were sort of fortunate, both the combination of the people that invested in us and the funds, that they were able to have this patience and they had a lot of capital. And actually, most of them didn't do much investing in this field.
Gene Berdichevsky: For example, the partners from Sutter Hill and Bessemer that are both on my board, they're traditionally enterprise software investors. Very successful enterprise software investors. Two of the most successful enterprise software investors. But they don't do energy tech normally. But what they could understand is the business model. They can understand the unique value proposition, how we defend, they can understand the market. And it's just a good business that happens to hopefully have a very high impact for climate change.
Jason Jacobs: And looking backwards through that formative period of A, B, and C, I mean I know you mentioned that there were some difficult times along the way. What infrastructure do you wish existed, if any, that would have made it easier for the company to navigate through those phases?
Gene Berdichevsky: So one part we were very lucky to have, which is very similar to what Cyclotron Road does. Because we were at Georgia Tech and we had our, this was a professor there. We were able to use some of the facilities. Georgia Tech had a fantastic incubator that we can flexibly run space in. We had access to million dollar electron microscopes at fairly low costs. So that scientific infrastructure, there's zero chance we could afford all that scientific tooling and equipment. We probably had access to, I don't know, $1 billion of scientific infrastructure. And I think that was essential for the early phase. And then as we started to mature, we bought a lot of our own equipment. We've spent millions of dollars on R&D instruments to just analyze our materials.
Gene Berdichevsky: As it kind of went later on, a couple of things that we had to do ourselves that I think could be scaled more efficiently through kind of a central firm. Whether it's, there's a couple of things like grant writing, navigating D.C. in general. So both policy and grants is probably one. The other stuff is just traditional company building stuff, whether it's recruiting or running payroll. Just having some support, which we generally had just through the entrepreneur network of kind of what are the best systems for doing that. But otherwise, it's heads down and just iterate, iterate, iterate.
Jason Jacobs: So we were at the point in the story where there were 15 of you and you were retiring technical risk for the highest risk things first. And then you got to a place where it made sense to start expanding. So maybe we can pick up the story there.
Gene Berdichevsky: And actually, maybe one more comment on the retiring technical risk. When we started, there was a good chance that just the science wasn't going to work right? The physics and chemistry were against us. So investors going in kind of had to know that and we had to know that. So a lot of how we built the company was to say, "Look, whether the science works or not, we want this to be a great experience and a great company." So we spent a lot of time developing a culture that focused on the process, because that's how you actually get science to work. Because you don't focus on making it work. You focus on doing it right. So we built a culture of focus on the process, not the result. And then the result comes, it's sort of the score takes care of itself type of stuff.
Gene Berdichevsky: So we got to the phase where, and it's interesting, we didn't actually get to a place where it was sort of obvious that scaling was ready, was ready to scale. Because scaling was going to take two years. So there was a bit of an intuitive bet that the founders had to make ultimately together to kind of look at each other and say look, there's enough here that we know we're on the right track and we're going to figure it out. But if we don't start scaling now, if we wait till we figure it out, it'll take us two years longer and we'll actually just probably run out of money and not be relevant.
Gene Berdichevsky: So we started scaling maybe a year before it was really ready because it was going to take two years to build the first pilot. And we made it work in that time. And then we sort of had the same moment again where you have to make these jumps where you see enough. And because we're deep, deep domain experts, we could tell it worked. Whereas the rest of the world couldn't necessarily tell it worked yet. So we sort of said, it's not that it didn't work, but we could see that it was working, but it's so technical and so nuanced that it's not like a slam dunk, easy to demonstrate. To especially an investor who doesn't have a PhD in physics. Right? So we had to kind of scale a little bit ahead of the curve and then the technology caught up.
Gene Berdichevsky: So maybe four years ago, we started scaling. We built out a pilot. For the last two years, we've been running that pilot 24/7. We've been shipping out material to sell partners and partners to start, and consumer device partners to start the qualification processes. Qualifying a new chemistry for a car takes five to seven years. So we started a couple of years ago. It'll be a few more years before we're really there. Now we're in this phase where we're about to go commercial. So you'll start to be able to buy consumer devices next year that have our technology inside. And that'll be the first time in roughly 30 years where you have a fundamentally new chemistry in your phone or fitness tracker, or wireless earbud or whatnot.
Gene Berdichevsky: There've been little tweaks in lithium ion chemistry over 30 years, but nothing that sort of completely removes one of the major components and completely replaces it with a different chemistry, which is what we're doing.
Jason Jacobs: So how's that going to feel?
Gene Berdichevsky: That'll be really cool. And I'm sure I'll be stressed out about how do we make that 1,000 times bigger by then.
Jason Jacobs: Well you have the disease, the entrepreneur disease.
Gene Berdichevsky: Yes. Never satisfied.
Jason Jacobs: One question that I have is, so if you look out in your wildest dreams, what does success look like for Sila Nanotechnologies? I mean, looking backwards when the ride is over, when it's a big ongoing, publicly traded entity. Or whatever end state is, what have you achieved?
Gene Berdichevsky: If you look at the 20th century, it was built at the ground floor of the pyramid, on the science of combustion. So if you go to kind of the turn of the century, we started putting cars out there. We started putting gas power plants out there, coal power plants out there. And that powered the entire century. And everything we built on top of that has come from the science of combustion.
Gene Berdichevsky: And what combustion really is, is taking hydrocarbon fuel, which you can think of as a single use battery that take hundreds of millions of years to recharge. And using that single use battery, that energy storage. The energy stored in those chemical bonds I think, it's all about the energy stored in those clinical bonds.
Gene Berdichevsky: When you go forward to the end of the 21st century and look backwards, I think what you'll find is that this century will have been built on the science of energy storage of batteries. Where all the chemical bonds of hydrocarbons will transform into the chemical bonds that are used thousands and tens of thousands of times in batteries. Powered by the electrons that'll come from solar and wind. So in my wildest ambitions is we are the fundamental chemistry that transforms the 21st century from a hydrocarbon based combustion science economy, to a battery based economy.
Gene Berdichevsky: If you look at chemistry, there's only been four in commercially relevant rechargeable chemistries in 150 years since they were first invented. And fundamentally, our mission is to bring the fifth one into the world. So there are decades of scaling ahead. And there's a lot to do and there's a lot to build. So at the end of it, I've talked a little bit about we want to build, what is essentially the Intel of the energy storage industry. We don't want to make all the batteries in the world. We want to make the most important technologies that help enable those batteries, help enable the products that then use those batteries like cars and grid, stationary storage. And that's where we want to be at, that technology layer for energy storage.
Gene Berdichevsky: I think the other thing you can look at is the biggest companies over the last 50 years have always been either tech companies or energy companies. And what we're trying to build is fundamentally the 21st century energy technology company. So we're pretty ambitious, but it's going to take a long time and it's all about the process. Not just some short term outcome.
Jason Jacobs: And I asked you the question about stages, looking backwards. I guess I'll ask you the same question looking forward. So if that's year goal at end state, then how do you think about phasing?
Gene Berdichevsky: So in the next five years or so, we want to be in our first car platform. I think five years after that, we want to be in most car platforms. And probably five years after that, our technology should be in the majority of grid storage.
Gene Berdichevsky: And grid storage will definitely come after cars. Again, the value of our technology is highest in phones or consumer devices broadly. Then it's next highest in cars and then it's next highest in the grid. So right now we're still in the first scale up phase of consumer devices, which is really this next five years. And getting to the first car. And then after that, it's really all about cars.
Jason Jacobs: And what's the biggest source of headwind? Or I guess said another way, if you could change one thing that would help accelerate your progress, what is it?
Gene Berdichevsky: Right now, our destiny is very much in our own hands. We did just do a very large financing. The $170 million we've announced. That gives us capital to scale. We need more engineers and scientists to want to do this. We need more great engineers and scientists that want to be building this. So recruiting. And of course at some level, we're still capital limited. Because even as we get this capital, we're very cautious about how we spend it. As you said, we're maybe the teenager compared to the preschool level technology companies in energy today. So we're the front runners. And some of the further capital stacks haven't been built out yet. Where do we go get the billion dollars, $2 billion that we're going to need to scale and build factories around the world. So we're trailblazing some of that. So we have to be a little more cautious, but ultimately for more downstream capital availability and talent. We've got the flywheel to then convert those two things into impact and innovation.
Jason Jacobs: And what role does government and policy play, if any?
Gene Berdichevsky: I think of it as two different work streams. And I'm clearly personally in our company, we're very much in build the technologies. Once you have technologies that can do things that prior technologies weren't able to do, it creates an opportunity for policymakers to say, "Well look, this is actually better. So we're going to not even mandate it, but create an easier way for it to reach the market. We're going to get rid of some of the barriers that existed before." Or, sometimes we might mandate it, right?
Gene Berdichevsky: Because take the fuel economy standards as an example for cars. The fuel economy standards, it's possible to raise them because the combustion technology exists to enable car makers to go and reach those. When California Air Resources Board put out the zero emissions mandate back in the late '90's, EVs were just not good enough. And GM built a pretty good EV, but then they had 80 miles of range. And not that many people wanted to buy it. So even though California was mandating zero emissions vehicles, the technology just wasn't ready yet. So I think of my job as to create the technology to be ready. I think of people, the policy side to understand what technologies are and aren't ready. And write policy that ultimately has the right un-ramps for new technologies and allows these markets to thrive. Right?
Gene Berdichevsky: But if you write policy that insists and mandates things that aren't technically possible, that's really bad. You get backlash, it doesn't work fundamentally. So our job is to create products and technologies that policymakers can then rely on when they're writing policy that says we're going to go 100% percent renewable.
Jason Jacobs: Is it a strategic use of company time and resources to be spending any time thinking about or putting any energy towards the policy side of the equation? Or is it just heads down and focused on making the technology work?
Gene Berdichevsky: Our job is to be aware of it and we are, and we sort of want to engage a bit and support others that are really engaged in it. We're certainly not going to run our own nonprofit lobbying arm or anything like that, especially with venture capital dollars. I think fundamentally, our job is to keep our heads down and build amazing things that have higher return on investment than technologies that have worse environmental impact. And then that'll drive the capital to us, and that'll enable those policymakers to do their job. We're happy to support them. But fundamentally, everyone's got a role to play in making this impact and solving this huge problem.
Jason Jacobs: One thing I haven't asked you so far that I probably should, given that this is a climate change podcast is just, I mean you mentioned some of the motivations that drew you into working in this area. It was a fascinating problem. I would characterize you as a very ambitious battery entrepreneur with the potential to fundamentally revolutionize the battery industry. And then of course, all the devices and vehicles and such that are powered by those kinds of batteries. Right? I mean it's a big ambitious vision. Where does climate change fit into all of this? And maybe this is less of a Sila Nanotechnologies question, more of a Gene question. HOw do you think about climate change and how concerned are you about it?
Gene Berdichevsky: I think of it again as I have a role to play. And I'm very focused on that piece of it which is I want to be, I'd like to be one of the best entrepreneurs in the world, making technologies that have a positive impact. So I care deeply about it, but I know that I want to make my impact through this technology innovation piece. So I focus almost my entire energy in that.
Gene Berdichevsky: I've done enough math to know that if we make what we're trying to make work, it's going to have a massive climate impact. And I'm not going to solve this problem myself. We're going to need hundreds of entrepreneurs, and we're going to need hundreds of brilliant policy and poli sci majors making an impact on that side. So I certainly care about it, but I also, I don't spend too much time thinking about it past the point where I know how big of an impact we can have. It's just all about how do we make this technology work as soon as possible.
Jason Jacobs: And for those that say we have x number of years to act, and the IPCC report, and the scientists that are essentially foaming at the mouth talking about how the future of the planet for not just future generations but for this generation is in jeopardy. And floods, and wildfires, and famines, and droughts, and forced migration, and things like that. I mean, is that overblown? Are they being paranoid, or are they right to be signing those alarms?
Gene Berdichevsky: I've studied the topic enough to certainly be concerned and think climate change is real, and this matters, and we got to act quickly. But I also think that past a certain point, you can get yourself to a frenzy where you're not actually being productive, you're being frantic. So I do worry that if we sort of stir the pot too much, then it can have counterproductive outcomes where if we're creating policy not around what technology can actually do, but what we wish it could do. We're going to drive costs sky high, we'll get blow back. So I think a measured approach, a measured urgent approach is kind of the way I think about it.
Gene Berdichevsky: And then at the end of the day, I sort of go back and say okay, well what am I going to do about it? I'm going to go into work every single day. I'm going to put in 12 to 16 hours. And I'm going to do whatever it takes to make this work. And I'm going to hope that others come along, and the best scientists and the best engineers want to come work here at Sila and help us make that happen. Because however long we have, we're not going to solve it with the technologies we have today. So we need this. And that's the sooner we can make this happen, the better.
Jason Jacobs: And obviously, you're working on a very hard problem and requires dedicated manic focus. And I certainly understand that. So if you don't have a perspective on the broader question that I'll ask, and that's okay. And it's not a judgment and I understand. But I'm just curious as you think about climate change, and you mentioned that it requires the measured focused approach and not panic, which I agree with. Any thoughts in terms of what types of things, so maybe even outside of the work that you're doing. But just where does the most impactful stuff come from? Is it innovation, is it policy, is it government innovation? Is it a market based approach? Is it a price on carbon? What is it?
Gene Berdichevsky: Again, there's two pieces. There's technology where I do think storage is probably one of the most impactful opportunities for innovation, where innovation can have an impact. And then I think on the policy side, it's how do we price externalities? So whether it's a carbon price or a cap and trade, or sort of understanding how to limit the emissions. I think that's probably the most impactful apart from the policy side. And again, I leave that to people that are much more expert in what can you actually get done? I think you can sit around and pontificate on what the best thing would be, but what can you actually get done? And what can you bring to an international policy scale as well? I think that's a really important piece. Because if you can't make it international, then we can take our carbon emissions to zero in the United States and it'll have no real impact on climate change or the duration we have to solve this problem.
Gene Berdichevsky: So you really need an international policy approach somehow. Other countries really do care. I mean, China's building a lot more EVs than we are, and they're growing a lot faster there. And then you need the innovation and the tools. And the beautiful thing about innovation is those products, those technologies, they are global. They're inherently global. They're not limited to one country or another. So you've got to do both of those things. But I personally think you've got to do it at a global scale. And that's a lot more daunting than just even changing D.C.
Jason Jacobs: And going back to what we talked about much earlier in the discussion where we were talking about EV adoption, and battery proliferation, and solar and wind becoming ubiquitous and things like that. Are we on a path where all we need now is time? And the market's going to take care of it, or are there things that are missing or that we could change to accelerate that path?
Gene Berdichevsky: I think there's still things we're missing. I think we're on a good path with EVs. I don't think the current battery chemistry, deep enough in it that the current battery chemistry isn't going to replace all combustion engines. So I do think it's essential, whether it's Sila or somebody else, figures out better chemistries that get to even lower costs for EVs. I think for wind and solar, I think is on a fantastic path.
Gene Berdichevsky: I think other things we could change, we could simplify some of the regulations to getting more wind and solar out there. Whether it's offshore wind or whether it's making it easier to install distributed solar. I think there's new business models for utilities and how they deal with renewables that are going to need to happen.
Gene Berdichevsky: So I think there's a combination of missing pieces both in regulation and policy, and in technologies. But I'm an entrepreneur, so I'm wired like an optimist. You can ask my investors about my timelines and budgets. I'm wired like an optimist. And I think we have a real shot at solving this with the things that are going on. We just need to keep pushing and keep putting more pressure on innovation. Bringing more capital to it. Continuing the conversation on enabling renewables to deploy faster, and creating policy that helps bring that to life.
Jason Jacobs: Okay. So if you step outside of yourself and you just look at the landscape and see that Tesla is a good thing, and that Sila Nanotechnologies is a good thing, and that innovation can be harnessed to be a good thing if it focuses on this value based approach that you've been describing. If you could wave your magic wand, what would you put in place that would give the best path to more of these types of companies reaching their full potential? So more of them and more of them that break out and go on to have the kind of impact that they could have if they get out of their own way.
Gene Berdichevsky: I think continuing to nurture this ecosystem. So we need more entrepreneurs, we need more capital on the innovation side. We also need more investors that get it. I think actually, one of the things that's missing is there's still very few funds where they're going to invest heavily into this. I think there's still billions of dollars more venture that could come into this space and incubate this.
Gene Berdichevsky: The best thing about Tesla isn't that they make electric cars. The best thing about Tesla is that they got every other auto maker in the world to completely transform their plans and their product roadmaps. Or not every other automaker, but a huge number of them. Into making these 10, 20, $50 billion commitments over the next decade to electrifying their fleets by necessity. And they showed governments that they can demand more electric vehicles. Right? That's what Tesla really did. It wasn't the car. It was sort of the impact of that.
Gene Berdichevsky: So we need more people to be inspired to do this and to fight the hard fight, because it's not easy. It takes a really long time. There's no guarantee of success. So we need more entrepreneurs. We need more investors that give them the tools to go into the arena.
Jason Jacobs: For anyone out there who's listening, who's maybe sitting in your shoes post Tesla and pre Sila Nanotechnologies where they're looking for that big thing to sink their teeth into and change the world. What advice do you have for them?
Gene Berdichevsky: Do it. Get out there. Get started. It's such a better ecosystem today than when we started. And it's such a better ecosystem than when Tesla started. There's a lot of support out there. Make the jump. It's easier than you think in some ways. And it's certainly harder in others. But you got to take the first step.
Jason Jacobs: Anything else I didn't ask that I should have? Or any parting words for listeners?
Gene Berdichevsky: Like I said, I'm an optimist. So let's do this. We got to solve this problem. And we need a community that supports each other. So I think this is great.
Jason Jacobs: Well Gene, this is great. I learned a lot. I think listeners will as well. And the other thing is that I think we've uncovered here both that what you're doing is important and impactful, and has criteria. I think that could be replicated at more scale. And that's one of the things that I'm starting to think through is how to make those 1,000 flowers bloom. So as that thinking gets further along, you may hear from me again,
Gene Berdichevsky: I hope so. Either join us in the arena or help support a bunch of other people who can.
Jason Jacobs: That's the fork in the road. Yeah, and time will tell. But it's one or the other. So Gene, thanks so much for coming on the show. Awesome. Thanks so much for having me.
Gene Berdichevsky: Hey everyone. Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note, that is .co not .com. Someday we'll get the .com, but right now .co. You can also find me on Twitter @jjacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.
