Frost & Sullivan’s Technical Insights Movers and Shakers

Interview with Zyvex’s President and Chief Operating Officer by Leo O’Connor, Frost and Sullivan’s Global Director of Research & Technical Insights

Date Published: November 11, 2003
Reprinted courtesy of Frost & Sullivan

What is your role and what are your responsibilities at Zyvex?

I’m the Chief Operating Officer at Zyvex. I’m responsible for the P&L, growth of the company, our five-year strategic business and marketing plans, and ensuring that we develop nanotechnology-based products as quickly as possible in order to meet unsatisfied needs in the marketplace.

Tell us how you became interested in technology, and what brought you into this field.

That’s a good question. As a young person I found most school subjects, quite frankly, boring and relatively simple. However, I found physics (particularly laser physics) to be both challenging and interesting. I have always loved a challenge, and studying advanced quantum mechanics, laser physics, and physical chemistry was very exciting to me. Even as a young person, I always felt that technology ultimately makes a real difference in the world. I noticed how technology transformed the quality of life even then. And I knew that I wanted to make a difference in the world and figured that technology was the most efficient path. But after I became a laser spectroscopist, I went back to school and obtained an MBA because I realized that money would also be an important factor in achieving those goals.

What was your first venture into technology?

My first experience in technology was with the Shell Chemical Company (a division of Shell Oil) right after getting my Ph.D. from the University of Pennsylvania. Shell Chemical was a terrific experience. I proved to myself that I could solve real-world problems with technology. I worked in the analytical department at Shell Chemical, where we solved real world problems with spectroscopic tools.

How did you become involved with Zyvex?

I was attracted to Zyvex because of its founder, Jim Von Ehr. Jim, in many ways, is a modern-day Henry Ford. Just as Henry Ford had developed the automotive industry and a number of ancillary industries (such as the tire industry), Jim is one of the true pioneers and ambassadors of nanotechnology. And I really wanted to get the chance to work with him. This is because he’s completely vested in revolutionizing manufacturing. Jim put together a ten-year program that culminates in the development of a molecular assembler. While on the path to achieving that molecular assembler, we’ve developed a number of capabilities. These development efforts enable us, in the short term, to meet some unsatisfied needs today in the market. For example, in order to develop a molecular assembler, we needed to manipulate materials and structures at the nanoscale. This effort led to the development of a product line called our Nanomanipulator Systems. We now offer nanomanipulation products for use with scanning electron microscopes, optical microscopes, and focused ion beams. Soon we’ll be releasing products for transmission electron microscopes. Our product development really arose out of our internal need to become proficient at nanomanipulation.

What makes Zyvex a very unique company is that Jim has led the company with a perfect blend of strategic vision and disciplined tactical implementation. Zyvex is rather unique in the marketplace because we focus solely on the commercialization of nanotechnology. Many companies are wrapping the word "nanotechnology" around themselves. Most nanotech companies are involved solely in the research arena. In contrast, Zyvex is very focused on the commercialization of nanotechnology for both the short and long terms.
We’ve read a lot of papers about nanotechnology. We’ve heard a lot about products in research and development, over the years. We look toward the day when money can be made from nanotechnology. You say Zyvex is about commercializing nanotechnology.

Where can you make money in nanotechnology today?

That’s a very good question, with the keyword being ‘today.’ While you’ll read reports that the estimated potential available market for nanotechnology is over one trillion dollars in the year 2015, from my perspective as a businessman that is a pretty nebulous statement because that number is just too big to deal with.

What are we doing ‘today’ at Zyvex? We actually possess three forms of revenue generated from the products and services we offer to the marketplace. We also generate revenue from licensing, government grants and contracts.
In terms of products, we categorize them in "three buckets", Materials, Tools, and Structures. We’re generating revenue in two of those areas—Tools and Materials. In the Tools area, we have launched a large product line of Nanomanipulator Systems to test, measurement, and characterization of materials and structures used in research and development applications. For example, our model S100 Nanomanipulator lets you test, measure, and characterize materials and structures in scanning electron microscopes. We’ve also just released a nanomanipulator system called the F100 which is used in focused ion beam instruments for industrial applications.

In the area of Materials, Zyvex is generating revenue from carbon nanotube solutions (sold under the Zyvex Dried Film label—also known as ZDF). Frankly, carbon nanotubes are already becoming like commodities. We’ve identified at least 50 entities that claim that they can produce single-wall and multi-wall carbon nanotubes and we are not involved in the production of carbon nanotubes; we are involved in the processing of carbon nanotubes. That is we are involved in what we can do with these carbon nanotubes.

Some examples of the biggest applications that we are involved in today, with Fortune 20 companies, are the creation of carbon-nanotube composites—materials that are at least 100-times stronger than steel at a fraction of the weight. The real trick today is the functionalization or solubilization of carbon nanotubes in everyday organic solvents to make them manufacturable in terms of spinning fibers. For example, making fabric that could be used in body armor for the aerospace and defense industry or in protective textiles for military security personnel.

I predict that the next set of products introduced in the marketplace will deal with Structures. The reason we don’t see a lot in the structures area today is that we need to develop real competencies in Tools and Materials before we can create the structures. We anticipate introducing our own Structures in the next few years. It is important to note that while a lot of money is going into nanostructures such as sensors, the reality is that we will not see everyday, affordable nanostructures for at least a few years.

We’re also generating revenue from the licensing of some of our technologies. One good example would be a recent announcement we made concerning a license of our 3D MEMS Software (Memulator) to Coventor. There are several other licensing agreements being worked on as we speak. Finally, we are generating revenue from grants and contracts. While we do not intend to become a "grant house," we can not turn down opportunities to develop products and capabilities with governmental agencies.

When can we expect to see carbon nanotubes in, for example, displays or nanoelectronic circuits, relays, and transistors? What’s your opinion on that?

Of course I don’t have a crystal ball, but what I can say is that if you talk to some of the leaders in the semiconductor industry who will be the customers and producers of nanoelectronics, they look at nanotechnology today as a nice idea on blackboard. They don’t foresee the real widespread use of nanoelectronics for at least eight to ten years. Many people will talk about the semiconductor technology lifecycle, and nanotechnology hasn’t ever gone into what is called the ‘trough’ stage of the lifecycle. There’s a lot of enthusiasm and excitement about nanotechnology, but there are not a lot of real-world killer applications developed at this time. Most people in the semiconductor industry also predict that it will not occur for eight to ten years.

What are some specific examples of promising nanomaterial and nanostructure applications today?

One example that I’ve already mentioned is using nanocomposites for body armor applications. In the real world, if you were to go to Iraq today and look at a typical tank used by the United States Army, it would weigh approximately 72 tons. The army has mandated that within the next five years, the weight of that tank has to be less than 22 tons. Going from 72 tons to less than 22 tons is a formidable challenge. The reason for the Army’s mandate is simple: It’s not a trivial task to move a tank around a battlefield. Nanocomposites show the promise of being able to have strength that is at least 100 times that of steel at a fraction of the weight.

One can think of a scenario where body armor is used to replace the current materials used for a tank. The same could be said for aircraft. Another example of carbon nanotube composites will be its use in fabricating protective textiles for military and security personnel. People envision a world where our military security personnel could wear a suit fabricated from carbon nanotube composites that have both the thermal and electrical conductivity properties to allow sensors to be embedded in the suits to enable warning of biological and chemical threats to the soldier or safety personnel.

Also, nanotechnology is being used to develop structures that greatly reduce of the weight of batteries used today. What most people don’t realize is that the average soldier wears, in many cases, over 100-pounds of gear while working in the field, and most of that weight is battery weight. So this is another application where nanotechnology could save the day.

How about more mainstream industrial applications. Do you envision nanostructures in any of those soon?

The thing that I and many others find so intriguing about nanotechnology is that it allows one to envision a world in which Jim Von Ehr’s vision of a molecular assembler (a tool or system that could make atom by atom, molecule by molecule, fully customizable and without waste) is a reality. Think of the ergonomics involved in being able to customize what you want, very efficiently. Nanotechnology can give you the best of both worlds. Michael Porter said, in "The Competitive Advantage of Nations", to be successful in business you either have to be the low-cost producer or the high-differentiable player. In the case of nanotechnology, if you are able to manufacture things with atomic precision, you’ll be a low-cost producer because there will be no waste and, at the same time, you’ll have the ability to be highly differentiable. This is a very intriguing prospect from a businessman’s perspective. I am very intrigued by nanotechnology because you’ll be able to do both.

This is also something that has grabbed the attention of worldwide governments. Today, virtually every civilized worldwide government is pouring money into nanotechnology. It should be noted that this is one of the rare instances where the United States is being outspent by Japan, Europe in total, and China. The fact is whoever can grasp the full potential of nanotechnology will hold the “technological marbles” with which to protect, defend, and advance their nation through revolutionizing manufacturing. One of the interesting aspects of nanotechnology is that it has the potential to be so pervasive across so many industries that people are very, very interested in it. I would again caution that this is not something that’s going to happen next week, or even next year, but will take time. However, it genuinely has the potential to change the way we do things across a multitude of industries.

Let’s talk about Zyvex, the company. Investors, number of employees, sales revenue, etc.

Zyvex is the first molecular nanotechnology company. Jim Von Ehr founded the company in 1997 and has been the lead investor, but we have taken outside investments as well. The company currently has 53 employees and we’re continuing to grow. We estimate that we’ll have approximately 60 employees by the end of the year. The company has three forms of revenues: product sales, the licensing of our technology, and from grants and contracts. For example, we have already received a $25 million grant from the National Institute of Standards and Technology’s Advanced Technology Program. We also have received a $600,000 Phase II grant from NASA for carbon-nanotube composites, and there are several additional grants that we anticipate receiving. We currently have four product lines at the company, and we are developing more. We are the largest revenue-producing, pure nanotechnology company that we’re aware of. Sales are estimated at more than $5 million for 2003.

What size is the facility and what kind of equipment does it have?

We’re a very unique early-stage company. The company has its own 44,000 sq. ft. facility in Richardson, Texas (a northern suburb of Dallas) and a deep and wide infrastructure to support our growth. We have more analytical equipment than most corporate R&D centers working on nanotechnology. We have several scanning electron microscopes, transmission electron microscopes, atomic force microscopes, a complete Raman spectroscopy laboratory, and analytical equipment such as a FTIR. I dare say that most university professors or corporate R&D managers would be quite jealous if they saw the amount of equipment and facilities that we have here at the company.
Who are you working with right now? Who are some of your customers?
Hewlett Packard, Intel, IBM, Honeywell, Sandia, and Boston Scientific are among a long list of customers that we can provide.

How important are strategic partnerships?

Strategic partnerships are a critical element in the implementation of our strategic plan. Our goal is to profitably grow the business. We do not suffer at Zyvex from NIH, or “Not-Invented-Here” syndrome. As a result, we also know that we can’t be all things to all people. We focus on certain, high-payoff applications. We recognize our core competencies, as well as our deficiencies, and we partner with companies that we feel are the leaders in their particular area. We execute win-win relationships where both partners aggressively go after the market together to allow potential customers to get the combined effort or synergy from our product offerings. For example, we have a strategic partnership with Coventor, Inc. They are a leading supplier of 3D MEMS software. We license our MEMulator™ software to them. Instead of becoming yet another player in the MEMS software arena, we went with a leader and licensed our software.

As we continue to update our own detailed strategic marketing plan, we now feel that there are many more sets of eyes and ears that can help us uncover some of the new and emerging applications in this embryonic and evolving field. We are proud of our strategic partnership with Frost & Sullivan, a leader in the generation of useful and practical information on worldwide applications of nanotechnology.

back to top

Zyvex Home Page
Zyvex News
Zyvex Products
About Zyvex
Contact Zyvex