Interview: Nanotech needs more development

By SCOTT R. BURNELL, UPI Science News   |   May 24, 2002 at 4:08 PM
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WASHINGTON, May 24 (UPI) -- Rick Snyder comes across as someone who might be considered a bit too cautious to be in charge of what basically is a large venture capital portfolio, but what others call reticence, he calls pragmatism.

Snyder is chief executive office for Ardesta, a $100 million "industry accelerator," a blending of the traditional venture capital and technology incubator roles. The company focuses on microscopic technology slated to play a major role in future applications for industries as diverse as wireless communications and medicine.

The company's focus has to be broader than most, since some of its ventures deal with the emerging science of nanotechnology, manipulating matter on the atomic or molecular scale.

While he describes himself as the token liberal arts grad in a science-heavy management structure, Snyder is no stranger to technology or investment. For much of the 1990s, he was a top executive at computer maker Gateway, eventually serving as president and chief operating officer. Snyder then founded a tech-oriented venture capital company in 1997 before helping bring Ardesta to life.

He spoke to United Press International during the recent NanoBusiness Spring 2002 conference in New York City.

Q: The core focus of the conference is to bring together the scientific world, as it relates to nanotechnology, and the investor community interested in it. Discussions here split on how the market should approach nanotech. (Inventor) Ray Kurzweil was hopeful people will understand the long-term possibilities enough that we won't have a boom-and-bust cycle; Newt Gingrich said, "Sorry, that's the way of the market." Given that nanotech is just emerging onto the investor's radarscope, which of those viewpoints has a closer take on reality?

A: That's a good question, a tough question. Given the state of the world, it's probably closer to Newt's point of view. Our role is trying to be the moderate voice of reason, to be the pragmatist in the middle, to say the answer isn't at either extreme. I'm not saying (Kurzweil and Gingrich) are extreme, but it's to say there's a balance here. There are exciting things for the long-term; in the same context, what are some really tangible things we can do to build a bridge between science and technology and the macro world customer base? It's a different paradigm than what you were talking about, where it was researchers and investors. The universe we're in is to try to be the efficient bridge between the researchers and the macro-world customers. While we're explaining how great this can be, we're trying to come back and show we've got 10 companies, not just pie-in-the-sky companies, but when their products could be available.

Q: That's one of the interesting things about nanotech. Many people view it as being another investing fad. On the other hand there seems to be a high enough barrier to entry, in terms of the science and technology you need, so that if someone comes to you with a business opportunity, you can say, "It's not just hype." Are we at the stage where we can trust the barriers to weed out the sorts of things we saw in the dot-com bubble, or is the buzzword still just that, where you can walk up to an investor and say, "I've got a nanotech prospect!" and away you go?

A: I was very concerned about that over the past couple of years. (Ardesta is) into small tech; I don't even like the terms "nano" or "micro" because very few people use them correctly. It's gotten convoluted into a big mess. Going back to our analogy of the macro world, it's the customers we care about. They could care less whether (the tech is) micro, nano, pico or femto, it's irrelevant. They want smaller, faster, better, cheaper; that's why I say small tech, it brings those four elements to bear. I was concerned in particular about the nano piece. Most of our work as been in the micro side.

Q: (Microelectromechanical systems) and so on.

A: Yeah, because that's much more tangible in terms of being near-term commercializable. We have spent and will probably spend more time on micro than nano, if you push me into a definition on what we're commercializing. The nano stuff is getting great scientific traction, and it should. It's fabulous science, it belongs in Science and those other magazines. I think people are looking for new things strongly enough where the financial press started picking up on (nanotech) probably ahead of when it should have. It was gaining too much momentum in our view. We went out to many of these conferences and gave many talks about, "Let's be moderate, let's be prudent." I'm starting to feel a little more comfortable that the trend is moderating; it was on a trajectory that was too high. It's starting to notch back down, and there are a couple of reasons.

One is that investors have started to figure out this is not simple stuff, this isn't where you just write a check and walk away. It's daunting that you need to make a significant time investment if you're going to be a prudent investor. The other part that was interesting was that expectations got too high in terms of value. People thought they were worth a lot of money and they just had to hold themselves out and they were going to get a check. Those high values caused people to think twice about things. I'm hoping researchers become a little more pragmatic, that it's not just wait for a check in the mail and you're off to the races. At the same time, investors are willing to spend a little more time and partner with people that are experienced. These companies will take several years; it's not unusual for us to see two years pass from the time we meet with a professor before we actually start a company. That shouldn't scare people off, that just means you're probably working on a "good old-fashioned" business, that has a normal course and development curve. I don't think I'm being an extremist -- this worked for 80 or 100 years last century, why don't we go try it again?

Q: True, but I'm trying to balance those comments against the fact that Ardesta is the biggest sponsor of this event, which is pretty explicitly nano. There is some talk of MEMS (micro electrical mechanical systems), but the primary focus is on nanoscale science. Nanotech certainly isn't as developed as MEMS, but if it's at that stage of development, is now the correct time to bring investors into the mix to bridge the research world and the macro world?

A: That's a good question also. I'd rather have people start learning about it now. It's not like you turn a light switch on. Our experience in explaining small tech is that it takes three meetings; the first couple of meetings, they're getting more excited, but on the third meeting it's, "OK, now I understand this stuff, this is pretty cool!"

As to Ardesta being a platinum sponsor; to be blunt, we think that by being identified as a major participant and by speaking at these things, we can have some positive influence on having it be a rational discussion. I don't view us as being a sponsor as hyping it more, I view it as us taking a position and saying it's important to us. We're coming to the table and committing our resources to say, "We think we can help, and here's what we have to say." If our message is one of reason, hopefully that can help keep us in the relevant range.

Q: Along those same lines, when it comes to funding the development that has to happen, again we're in an unusual space. We're at the phase where building an understanding base, more than a knowledge base, is going to be necessary for carrying things forward. At least in the American model, that sort of funding falls much more in the public sector, the federal government. So the question becomes, are investors properly looking ahead when it comes to nanotech, or is there still a little bit of confusion in terms of where we are on the development curve?

A: There's going to continue to be confusion. What we're doing is getting more and more people to come look at what's happening in this field. People will become more aware until you get an installed base of knowledgeable people. While you're confused, you're going to look for people who have experience and have been successful. I don't think there are a whole lot of those people to look at today. I can't even show you companies where we have revenue-generating products -- I feel very good that we're on the path to do that, but in that world there aren't a whole lot of parties that have a tangible track record. I just view that as a matter of time, we're going to be one of the leaders, but there should be several other players, and that should help tremendously. The government doesn't help answer these questions with investors, you need the Ardestas out there playing that role.

Q: Governments around the world are starting to devote billions of dollars to the phase we're in now, the basic research phase. There are usually voices in society who tend to say, "Why fund sending a man to the Moon, that doesn't give us anything." There are technology spinoffs, however, from things such as the space program. Is that the proper analogy to apply to nanotech when it comes to funding this basic research?

A: No, because I don't think they're funding it through to that sort of end. The moon project and the Manhattan Project, a lot of these had specific end points. At the same time, they pushed products that could go into the real world much easier. I do have some concern about the government funding, and I think that's a good topic to discuss publicly.

The government money is going to where it's always gone, to basic research. It's a real challenge to say a percentage of those dollars should be reallocated to going more upstream, allowing facilities to be available to got those products commercialized.

Q: More tech transfer?

A: Yeah, much more tech transfer. Go to the universities, they go back to the Dole-Bayh Act in the late 1960s. They spent all their time in basic research and patents, and over the past 10 to 15 years, they've figured out researchers are going that work anyway. They say, "We need to start flipping resources over to actually commercializing things." If you talk to those people, they wish they could take it a step or two farther in the commercialization world there. If there's a half-billion dollars available for nano research, it's not just the dollars. Programs that could be developed for tech transfer or commercialization, taking some arbitrary percentage, perhaps 20 percent to 25 percent, and help things be deployed sooner rather than later to get products out to people.

It would be great if there were many more public-private facilities. When it comes to manufacturing equipment and test and measurement equipment, it's extremely expensive and absolutely essential before you do a commercial product. (University and national labs) have it; if it could be made available in some fashion so private organizations could come in and use it instead of having to buy their own equipment, that wouldn't be ripping off anyone. They would be getting products out that could be used by the military, by the commercial market. Under appropriate oversight, that would be incredibly valuable. People have missed the boat on that; it should be more explicitly said that we should start using this resource earlier. (The National Science Foundation) picked six nanotech science centers; would we be better off if they'd picked four for research and two for development centers? The "R" is getting tremendous attention, can we give a little more to the "D"?

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