"The struggle of nanotechnology companies to create value"

Nanowerk has an interesting analysis of nanotech public stock performance, accompanied by a fascinating graph and some close looks at some recent players. As they note,

If you have been an investor in nanotechnology companies and been lured by the promised riches, the picture doesn't look very pretty right now... and the performance gap between the Dow Jones and the nanotechnology index funds has widened significantly... Of course, individual nanotechnology stocks have done better, but then, some have done much worse. That brings us to the question: What will it take for nanotechnology, taken as a set of enabling technologies, to realize its disruptive potential and create value for nanotechnology companies? An interesting answer can be found in an analysis of the recent Unidym and Carbon Nanotechnologies merger. Growth in the sector through consolidation may enable the creation of companies with the critical mass necessary to finally get public investors really excited about nanotechnology.
Just a brief recap on the performance of the nanotechnology indices. The three major exchange-quoted indexes are the ISE-CCM Nanotechnology Index (launched in late 2005; symbol $TNY), the Lux Nanotechnology Index (launched in late 2005; symbol $LUXNI), and the Merrill Lynch Nanotech Index (launched in early 2005; symbol $NNZ). We took November 2005 as the starting point (that's when TNY and LUXNI were launched) and mapped against the Dow Jones Industrial Index.

The graph isn't pretty. But, it's instructive to look back at the first days of earlier tech booms. The PC and software boom of the mid-to-late '80s, for example, certainly ran in similar tracks of consolidation, the search for critical mass, high fliers who crashed (Eagle, Kaypro, Osborne, Ashton-Tate...) and huge rewards for investors who bet on the right horses (Apple, Microsoft...). And the first list is much longer than the second. Why should this revolution be any different?

Another point: is it really advisable for investors to "[take nanotechnology] as a set of enabling technologies"? As Andrew Hargadon has deduced (see my earlier Carpe Nano post), most big advancements are recombinant in nature rather than stand-alone lightning-strikes, and even the lightning-strikes of legend were more often the result of cross-pollination than dramatic new synthesis. The lesson there is for investors to seek catalytic, market-focused opportunities rather than niche-y, technology-specific wanna-be game-changers.

Nanowerk continues:

On April 23, 2007, Carbon Nanotechnologies, Inc. (CNI), a Texas-based manufacturer of carbon nanotubes and Unidym, a developer of nanotube-based electronics in Silicon Valley, announced the merger of the two companies. The combined company, called Unidym, will be operated as a majority-owned subsidiary of Arrowhead Research.

"This transaction should be viewed as an important sign of the growing maturity of the nanotechnology business community" Ruben Serrato tells Nanowerk. "The pooling of investment capital, alignment of strategy and integration of materials and device production reflect a move away from early technology arrogance towards the beginning of a more sober market approach necessary for the commercialization of nanomaterials."...

If Nanowerk is correct, then capitalism is doing its job, and that's a good thing.

DNA Replication, up close and personal

This animation illuminates how the molecular basis of life is understood through today's research, with profound implications for medicine. Blogger "Xantox" explains of this video from The Walter & Eliza Hall Institute in Australia,

Using computer animation based on molecular research it is possible to see how DNA is actually copied in living cells. This animation shows the “assembly line” of biochemical machines which pull apart the DNA double helix and output a copy of each strand. The DNA to be copied enters the whirling blue molecular machine, called helicase, which spins it as fast as a jet engine as it unwinds the double helix into two strands. One strand is copied continuously, and can be seen spooling off on the other side. Things are not so simple for the other strand, because it must be copied backwards, so it is drawn out repeatedly in loops and copied one section at a time. The end result is two new DNA molecules.

What you see here is occurring countless billions of times in your body right now. It gets even more wondrous: research by Steven Block and his students and post-docs at Stanford University show that processes like this essentially edit their own work. The discovery mechanism for all this is the astonishing nanotech tool of optical tweezers. See my article on that from Biophotonics International here.

They get it.

Today, no commentary on a fast-birthing technical field like nanotechnology a can be complete without understanding how the ecosystem National Instruments has built on its LabVIEW platform impacts each enterprise's development, validation, production, and the process of innovation.

More than two decades after its introduction, LabVIEW's consequences for tech enterprises range from the stark (for example, ambitions of selling hardware to a technical or systems-integration community today often hinge on its LabVIEW-compatibility) to the vaguely-acknowledged (LabVIEW's global community as a crucible for innovation; LabVIEW's development speed as a competitive edge; LabVIEW's role in reducing the great unfunded liability of support; LabVIEW's libraries as facilitators for technological cross-pollination; etc., etc.).

NI's trademark is "The Software is The Instrument," and while they've certainly delivered with a comprehensive family of products and libraries, there's more to it than that, just as there's more to a university than its buildings and curriculum, more to a city than its neighborhoods and nightclubs, more to a country than its borders and monuments. Within each of these lies a certain abstraction, a culture, a churn and an energy which makes things happen.

As a LabVIEW user since its earliest version and the holder of several LabVIEW-based patents, I've been highly honored to join the Industry Experts discussion panel at the NI Week conference in Austin in early August. The topic is Breakthrough Innovation, and the panelists will discuss how innovation takes place.

When my interest was solicited, I replied:

Looking back, NI has a track record for providing tools for folks like me to devise, develop and deploy our own wild ideas. NI has made it accessible for non-specialists to interface with and coordinate instruments, construct virtual instrumentation, and now construct their own intelligent instrumentation including custom silicon logic that runs processes synchronously and truly in parallel. Each of these represents an enabler for innovation in its own right. And I'm struck that all have been brought together under the LabVIEW framework. Maybe "The Architecture Is The Innovation"? Enabling folks to cross disciplinary boundaries and mash solutions together into groundbreaking new hybrids is one of its key benefits-- and that speaks to the "networking" aspect that is foundational to NI Week.
So: Can innovation be made to happen, and what role does the LabVIEW architecture play in that? (Or is innovation always like lightning striking, with LabVIEW playing no more of a role than a screwdriver?) Also, given that organizational, interpersonal and managerial practices can strangle innovation in its crib, what are the business-model enablers for innovation? In particular, how can cross-pollination across diverse fields happen, and how can such mash-ups be nurtured in a way that swiftly benefits customers and the bottom line?

Well. Turns out the other panelists are:

• Andrew Hargadon, author of How Breakthroughs Happen
• Suchit Jain, Vice President of Strategy, SolidWorks Corporation
• Patty Seybold, author of Outside Innovation
• Dr. James Truchard, National Instruments CEO and Co-Founder

What a rockin' group! Dr. T, of course, I first met more than twenty years ago; no finer businessman walks this earth. Jain has been very visible in the area of design and analysis software and should have much to say on how to facilitate innovation, based on his efforts to drive new tools for innovation into communities of engineers used to doing things the tried-and-true way.

But though I'd heard of Hargadon and Seybold, they were unfamiliar to me. So I've been reading up.
Frankly (and in vivid contrast to the turgid, disconnected case-analyses too typical of scholars of management) some of what they've written has made me pause and exclaim "Whoa! These folks have been reading my mind!" My own proudest work has occurred when my group somehow stumbled backwards into living examples of their customer-partnered (Seybold), combinatorial and networked (Hargadon) methodologies: when we chanced to put the customer in the driver's seat for strategy and design, when innovation followed from mashing stuff together, and when we relied on a team approach which crossed organizational, technical and social boundaries. Often we'd missed the memo that something was impossible. And that's key, too.

Hargadon and Seybold's contribution is to illuminate and illustrate the process of innovation with examples and cogent distillation. Consider the following from the foreword to Hargadon's book, in which Stanford's Kathleen Eisenhardt, coauthor of Competing on the Edge, succinctly summarizes some of its key points:

"...From my vantage point two observations are crucial. The first is that innovation is the result of synthesizing, or 'bridging,' ideas from different domains... In short, extraordinary innovations are often the result of recombinant invention.

"The concept of bridging reveals a couple of counterintuitive points. First, whereas it may be appealing to focus on the future, breakthrough innovation depends on exploiting the past... A second counterintuitive point is that organizing structure can dominate individual creativity. ...Successful innovators are not really more gifted or creative than the rest of us. Rather, they simply better exploit the networked structure of ideas within unique organizational frameworks.

"The other crucial observation is that breakthrough innovations depend on 'building' communities..."

Exactly right.

Both Hargadon and Seybold maintain insightful and energetic blogs. See the links in my "Recommended Reading" list.

NI Week is August 7-9 in Austin and is stuffed with technical sessions and strategic discussions. The Breakthrough Innovation panel is Wednesday afternoon; check the website a week or so in advance for schedule details. It should be a blast. Hope you can join us.

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UPDATE: 30 August 2007: The Industry Experts panel is now available as an online video: http://www.ni.com/niweek/keynote_videos.htm ...click on the "Industry Experts" button.

Nanotubes' amazing little brother

Think of graphene as a carbon nanotube slit lengthwise and laid flat, like a ribbon. First synthesized just three years ago, my sense from research reports to-date is that it may be more tractable as an interconnect material than nanotubes, and more readily manufacturable. As with carbon nanotubes, its electrical properties are remarkable, and it would not surprise me to see this material in microchips within a decade. If the process and manufacturing challenges can be licked--and they will be if the promise is what it seems to be--then the payback in terms of circuit speed and energy savings will be substantial. When you meet those gloom-and-doomers who beset every conversation with predictions of woe, just point them at this stuff, which looks likely to let us do more with less. Way more, with way less.

Researchers in both industry and academia are looking for alternative materials to replace copper as interconnects. Graphene could be a possible successor to copper, Nayak said, because of metallic graphene’s excellent conductivity. Even at room temperature, electrons pass effortlessly, near the speed of light and with little resistance, through metallic graphene. This would almost ensure a graphene interconnect would stay much cooler than a copper interconnect of the same size.

Nano forecast, hold the hype

The folks at Nanowerk have compiled a readable, sober overview of "Forecasting Nanotechnology." Worth a read, and they make laudable use of hyperlinks to some interesting publications, analysis and commentary.

Old Spice smells like... a cure

Curcumin is worth googling about. It may well be the next wonder drug. Its nanotech connection is in some research being performed at Johns Hopkins:

Anirban Maitra, a professor of pathology and oncology at Johns Hopkins, and his collaborators in Delhi--including his father, Amarnath Maitra, a professor of chemistry--used special polymers to synthesize tiny nanoparticles about 50 nanometers in diameter. The particles have hydrophobic interiors and hydrophilic exteriors. The hydrophobic component holds the curcumin, while the hydrophilic exteriors make the particles soluble. This way, they can pass easily from the gut to the bloodstream. Once in the blood, the curcumin leaks out as the polymers slowly degrade.

This is a fine example of how nanomaterial technologies can provide new properties and facilitate new promise, even for something as venerable as curry spice.

Good-bye to the Diffraction Limit?

I love the sound of laws of physics wailing in the morning. Check this out:

The laws of physics dictate that the lenses used to direct light beams cannot focus them onto a spot whose diameter is less than half the light's wavelength... Now Harvard University electrical engineers led by Kenneth Crozier and Federico Capasso have discovered a simple process that could bring the benefits of tightly focused light beams to commercial applications. By adding nanoscale "optical antennas" to a commercially available laser, Crozier­ and Capasso have focused infrared light onto a spot just 40 nanometers wide--one-­twentieth the light's wavelength.

Remarkable. There's just gobs of applications this could enable.

I say it all the time but it bears repeating: we ain't seen nothin' yet, folks. Nano is big.

"Nanotech Disappoints in Europe"

For starters, this recent article in Business Week goes to the heart of some fundamental confusion about this thing we call nanotechnology: what in blazes is it?

Key quote:

...despite massive injections of government money, analysts say Europe is actually doing a worse job of commercializing nanotech than other regions. According to Tim Harper, a nanotechnology specialist at London consultancy Cientifica, while European firms have emphasized research into materials such as nanotubes and nanopowders, U.S. startups have focused more on real-world applications for the technology.

In layman's terms, that has translated into a handful of U.S. products that frankly seem almost trivial, such as stain-resistant trousers and more durable tennis balls. But the U.S. also is laying the groundwork for success in years to come by wringing out about twice as many nanotech patents as Europe has from roughly similar levels of public research funding, says Spinverse, a Finnish consultancy that advises governments and startups on nanotechnology.

Early on, author Jennifer Schenker's definition of "nanotechnology" makes good sense: "the cutting-edge science of manipulating materials and microscopic devices at the atomic level." Yet she seems to forget that definition after it appears in the first paragraph. From then on, her focus is on the development of novel materials, period, and how disappointing that has been for European businesses.

But what of European powerhouses such as semiconductor toolmakers ASML or Zeiss? Are we to regard their relentless pursuit of feature sizes of a few dozen nanometers as something other than "nanotech"? What of the groundbreaking video-rate atomic force microscopes from the UK's Infinitesima, or the nanoscale metrology breakthroughs from Renishaw or Heidenhain? What about Germany's Physik Instrumente (full disclosure: my employer), by far the world's dominant nanopositioning manufacturer for industry and research? Or Germany's Ormecon, whose new solderable trace material--90% organic nanometal--offers immense energy savings for circuit-board usage? There are dozens and dozens of examples.

The issue isn't that these success stories don't involve "nano." Clearly they do. Instead, it relates to two problems:

First is the press' penchant for nay-saying. There's little risk in ridiculing a mighty endeavor as failed (especially one that is highly touted or--let's face it--over-hyped), and readers eat it up whether or not such negativity is unwarranted or premature. After all, most readers don't attempt mighty endeavors, else they'd be in the stories rather than reading them. I'd remind the author, "It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly; who errs and comes short again and again; because there is not effort without error and shortcomings; but who does actually strive to do the deed; who knows the great enthusiasm, the great devotion, who spends himself in a worthy cause, who at the best knows in the end the triumph of high achievement and who at the worst, if he fails, at least he fails while daring greatly. So that his place shall never be with those cold and timid souls who know neither victory nor defeat." [T. Roosevelt] Such appreciation is too rare in journalism today; writers seem to find it mawkish and sentimental, rather than essential to human progress.

The second problem lies in the hidden premise in Schenker's fifth paragraph, already quoted above. Take another look: "Yet despite massive injections of government money, analysts say Europe is actually doing a worse job of commercializing nanotech than other regions." [Emphasis is mine.] The blunt fact is, governments are lousy at investing because it's not their money. Inherent in governmental investing is a perversion of the risk/reward equation. It also percolates a top-down approach to the marketplace which can disconnect managers from customers. Changing Schenker's "Yet despite" to "Because of" illuminates a different premise that just might hold some merit.

Happily, towards the end of the article, Schenker gets it right:

"Europe's weaker entrepreneurial culture also hurts startup activity. When nanotech companies are formed in Europe they often lack clear business models and exit strategies, and their teams tend to be short on commercial experience. That's one reason Europe gets a proportionally smaller share of global nanotechnology venture capital investment, according to Spinverse. And though public funding makes up some of the difference, it doesn't offer venture capital's other benefits, including strong industry knowledge and networking."

Even more happily, there is good reason to expect that Europe's "weaker entrepreneurial culture" is strengthening steadily. I look forward to the day when Business Week salutes European entrepreneurs' triumph of high achievement while exalting those who failed while daring greatly.
Meanwhile, if you want to see someone succeeding at mighty endeavors in the nano-materials arena that Business Week seems to think is the whole extent of nanotechnology, read about David Soane. I met him and his charming wife Zoya last Fall at the 4th International Symposium on Nanomanufacturing, where he gave the concluding keynote address, and could not have been more impressed, nor more confident of his ventures' success.

The macroeconomic situation -- Exchange rates

The U.S. is in its fifth year of a competitive-ness turnaround thanks to the "weak" dollar, which has benefited exporters (and penalized importers). What's often missing from the discussion is historical context. Today's "weak" dollar (and I do detest that loaded adjective) represents something of a return to historic norms. This graph, from the National Association for Business Economics, provides some perspective. They note it is "from the latest NABE Outlook, from November, 2006, and shows the panel's forecast for the US dollar". The graph is entitled, "US Dollar Exchange Rate: Trade-weighted broad currency index." The NABE concludes, "The panel continues to see some modest softening in the dollar, which may help to improve the trade picture. The dollar is expected to fall on a trade-weighted basis from 97.0 in 2006 to 95.3 in 2007, and drop from an average of $1.26 per Euro in 2006 to $1.28 next year." As we see now, that prediction was conservative, with the euro at $1.38 today. (Of course, countries whose currencies are tied to the U.S. dollar have seen their global competitiveness improved, too-- notably China.)

For nanotech ventures, this is a welcome trend for their export ambitions.