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The MacGyver of Silicon Valley

Jason Hartlove
Jason Hartlove
How Jason Hartlove plans to rescue Nanosys and satisfy his investors

Jason Hartlove has a name and a rakish mug worthy of a soap-opera star, a resume that any Silicon Valley engineer would envy, and a bit of swagger as a turnaround CEO. He co-invented the optical mouse at Hewlett-Packard, ran a 3,000-employee manufacturing operation for HP spinoff Agilent in Malaysia, and set South Korea’s struggling MagnaChip Semiconductor on its current path to an IPO. “One of my investors said this—so I won’t claim it for myself—but I am a technology MacGyver,” Hartlove says. “If you give me some piece of technology, I can really figure out what to do with it.”

But at Palo Alto-based Nanosys, where he took over as CEO in October 2008, Hartlove may be facing his biggest challenge yet. With an impressive portfolio of patents based on work at MIT, Harvard, UC Berkeley, and other institutions, the nine-year-old company has repeatedly been described as one of the most promising in a batch of nanotechnology startups that emerged around the turn of the millennium. In its early years, it investigated areas like solar cells and display electronics where it was thought that nano-engineered materials could lead to higher power output or greater efficiencies. But real commercial applications for nanotechnology insights have been slow to emerge, and Nanosys has yet to bring a single product all the way to the market (the first is set to appear in the fourth quarter of this year, if all goes according to plan).

“The clock is ticking for Nanosys … since its financial backers are counting on a return on investment in another three to five years,” wrote Technology Review magazine. That was in 2004—just a few months before Nanosys called off a planned initial public offering that still hasn’t happened.

After the pulling the plug on the IPO, “the company sort of struggled a little between 2005 and 2007 about what exactly its mission was,” Hartlove told me earlier this week. “It continued to do some directed research but didn’t really have an eye toward commercialization.” The shakeup year was 2008: CEO Calvin Chow was let go, former Symyx Technologies CEO and Venrock partner Steve Goldby became the company’s interim leader (he’s still chairman today), and the board recruited Hartlove to find Nanosys some real products.

It wouldn’t be a stretch to call Hartlove’s tactics since 2008 MacGyveresque, and so far, he hasn’t even used a Swiss Army knife. He has focused the company on the two research programs that seemed most likely to produce marketable products in the near future. And he has pushed forward one of them, a “QuantumRail” component that increases the brightness and efficiency of LED backlights for mobile device displays, to the point that the company is earning “real revenue from real paying customers,” in Hartlove’s words. The first customer is LG Innotek, which plans to use the QuantumRail in 5 million phone-sized displays by the end of 2010; its purchases recently contributed to Nanosys’ first break-even month.

Demand for the nanocrystals that go into the QuantumRail, as well as the high-capacity anode material that Nanosys is developing for the lithium-ion battery industry, is growing fast enough that the company will soon need to find larger quarters outside Palo Alto, Hartlove says. And within 18 months, he says, the company hopes to be in a position to restart the IPO process. “We’ll have display products on the market, battery products on the market, a track record of revenue and profitability,” he says. “Those are the milestones.”

At least one Nanosys investor, Lux Capital, seems to buy into Hartlove’s optimism. “Things have really accelerated and they’re on a rapid path to success,” says Josh Wolfe, a managing partner at the New York-based firm, which contributed to a $40 million venture round for Nanosys in 2005. “Jason is quickly commercializing Nanosys’ deep nanotech expertise and attracting great partners in big markets, some of whom will be disclosed soon. I can say he has zeroed in on some really critical high-growth markets including batteries and lighting with urgent pain points that Nanosys is uniquely or exclusively positioned to solve.”

But finding the right pain points to treat has been a long process for Nanosys. The company was set up in 2001 by Larry Bock, a serial biotech entrepreneur (now a special limited partner at Lux Capital, and a San Diego Xconomist), along with founding CEO Calvin Chow and founding business development director Stephen Empedocles. As scientific cofounders, Bock signed up stars of the academic chemistry world, like UC Berkeley’s Paul Alivisatos, Harvard’s Charles Lieber, and MIT’s Moungi Bawendi. The company secured the rights to fundamental patents in areas like nanowires, Lieber’s specialty.

“Larry Bock had a great concept, which was to go out and see what kind of nanotechnology he could gather up from leading research institutions and bring into the company,” says Hartlove today. “He hypothesized that this technology would be very useful, but no one knew what for, at that point in time. It was like real estate. If you see a beautiful piece of land near the ocean, you can hypothesize that people are eventually going to want that, that roads will get built, and all these other things will happen.”

But the road-building in the nanotech field was a lot slower than anyone expected. Government research funds and venture investments, including a $1.7 million Series A round in 2001 and a $38 million Series B round in 2003, allowed the company to pursue what Hartlove calls “directed research” on a wide variety of applications. These included silicon nanowires for more efficient thin-film transistors for liquid crystal displays (LCDs) and semiconductor “nanorods” that, the company’s researchers hoped, would convert sunlight into electricity more efficiently than traditional silicon photovoltaic panels. But despite partnerships with companies like Sharp, Matsushita, Intel and Micron Technology, the startup wasn’t able to produce materials that had a significant cost or efficiency advantage over existing products.

When the board brought in Hartlove in 2008, “They asked me to have a look at what the company had been doing, where we were at the moment, and give a recommendation on, really, what there was here to do anything with,” the CEO says. “Several different options existed. We could easily have closed the company and tried to find a way to sell the IP rights off to various people and give the cash, which we still had a substantial amount of at the time, back to the investors. We could have scaled the company way down or split it up into a lot of different pieces. What I recommended was that there were several technology areas that we had within the company that were very close to being production-ready.”

Based on his knowledge of the semiconductor and device industries, Hartlove felt that there were two areas in particular in which Nanosys had done advanced lab work that could be commercialized quickly. One was quantum dot phosphors, which became the basis of the QuantumRail. The other was silicon nanostructures for battery anodes, which have the potential to double the capacity of lithium-ion batteries within the next few years.

“Having a whole lot of patents and IP is useless if nobody at the company is using the technology,” Hartlove says. “You have to get the technology into the market, and I first and foremost tried to focus on areas where I felt we could do that.” That’s where some of Hartlove’s Silicon Valley experiences, and his improvisational skill, came in handy.

The story of the optical mouse is illustrative. If you have a computer mouse with an optical tracking device on the underside—as virtually all mice do these days—you’re using technology Hartlove helped to pioneer at HP back in 1997. Before that time, most computer mice contained rubber balls. A change in a mouse’s position was detected by rollers that measured the ball’s rotation on the X and Y axes. The technology worked—but if you owned a desktop PC back in the early 1990s, you probably remember how the mouse balls attracted dirt, hair, and other detritus.

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