Ten days later Detroit prevailed upon SCI to sign a standstill agreement--but only after it agreed to give SCI the opportunity for equal partnership in any joint venture.
The Detroit deal provoked a half sigh of relief. "It's been a bunch of years and people have heard a lot of talk," said Johnson in early March. "If Harold's needs are met, this makes all the sense in the world. Otherwise, it will be a long negotiation." Detroit's interest seems promising. After all, it's a major player in the industry.
But Johnson also cautions, "This is a takeover, not a joint venture--and that's a significant cultural issue for Solar Cells. The cultural memory here is only one of control. No one here can remember not running the company. This idea is only beginning to sink in."
McMaster admitted as much. "These large companies want to be in control of the technology." But he is realistic, it seems, about SCI's chances without a white knight. "Given the kind of money we need," McMaster concedes, "we can't bootstrap our way any longer."
At press time no deal had been finalized, but McMaster was hopeful. Perhaps Detroit would affirm his hyperleap, and he could prove his doubters wrong.
Coda
In a rational world, every solar company would have long since been banished to Missouri. Few industries have generated so much hype, consumed so much money, and ended up with so little to show for it. Investors, bloodied for so long, are now eager to get even. "In the next five years there will be a lot of turmoil in this market," cautions NREL's Zweibel. The breakthroughs will be matched in scope only by the write-offs.
Zweibel worries that SCI is a beautiful orphan abandoned in a hard, bottom-line-driven world. "I hope whoever buys them has their head screwed on right."
In the meantime, though, Zweibel, who has worked in thin-film solar technology for nearly 20 years, keeps telling himself, "SCI will make it because they have to make it." He imagines a can't-miss powerhouse combination made up of SCI, Detroit Edison, and BP Solar together bringing all the elements of technology, capital, and distribution to the market. He imagines the cornerstone of a major industry of the next century about to be laid. That's the ideal, which for now clashes with the company's current fix, exemplified by Harold McMaster's stubborn genius. Says one observer of the company: "If everybody bought into his vision there would be no near-term research on a small scale in this industry. He's trying to hit the ball out of the stadium when he's already hit a 450-foot home run."
Both Johnson and Zweibel believe that if SCI had commercialized the technology five years ago, it would have three or four suitors today, not one. "Even if they had just one or two megawatts of production out there, they would have absolutely taken the PV world by storm," says Zweibel. But that is not the case. As SCI, for all its continued promise, faces the prospect of an arranged marriage, time is running out for its founder and his prized company.
"Right now they're not in control," says Zweibel. "Their destiny is not in their hands."
Edward O. Welles is a senior writer at Inc.
The R&D Trap
Many small companies get seduced by their technology. They lavish time and money on research--at the expense of pushing forward to market their goods and make a profit. It seems that Solar Cells Inc. has fallen into that trap. To date, the company has spent 12 years and $35 million and has yet to make a dime of profit. The company, guided by a founder-cum-inventor who owns a majority of the shares, has opted to push the envelope on its technology to exploit markets that are potentially huge--but have yet to mature. For founders who hear the siren song of R&D, here are a few things to bear in mind:
Give up to get back. Small companies tend to zealously guard their research; they are leery of dealing with big companies, which typically seek exclusive rights to their technology. But they overlook a big, seemingly voracious company's know-how and muscle to help move an idea quickly from research to market. Ken Zweibel, manager of the Thin Film PV Partnership at the National Renewable Energy Laboratory, in Golden, Colo., says, "Small companies with good backing do the best." To him, choosing a good partner and not husbanding your research make the difference.
If a small company's technology is good enough, the company need not bankrupt itself to prove it. A company can usually get someone else to bankroll its research. SatCon Technology Inc., a developer of advanced electromechanical equipment based in Cambridge, Mass., has forged a number of alliances with large companies based on their willingness to pay. To date, SatCon, which was founded in 1985, has spent $1 on research for every $15 kicked in by potential partners. SatCon chairman Dave Eisenhaure says many small companies see partnering with much larger ones as "a penalty they have to pay. We see it as an opportunity."
Less is often more. Early-stage companies have a tendency to throw a lot of resources at a research project. But added resources often result in delay and loss of focus. Computer Associates International Inc., one of the largest software companies in the world, is well known for systematically extracting good value from its R&D. It does so by taking a lean and counterintuitive approach. Chairman and CEO Charles B. Wang typically assigns fewer programmers to a project than competitors would. If the project runs late, Wang starts subtracting programmers from it, not adding them. "It's my belief that writing programs is an art form. It's not science or engineering," he says. Wang says a late project usually means that "an artistic person is so bogged down with administering and managing the project that he or she is not doing creative work." Taking people off the project allows them to refocus on their tasks.
