How Things Begin: LightSail Energy

LightSail Energy is a Berkeley company that makes compressed-air energy storage devices. It was started in 2008 by Danielle Fong and Steve Crane. A year later, they got significant funding. When I think of energy storage, I think of batteries or flywheels or pumping water uphill. Use of a quite different technology intrigued me. Compressed-air energy storage is sometimes disparaged (“a lousy way of storing energy“).

Fong went to college (Dalhousie) when she was 12. She studied physics, computer science, math, economics, and philosophy. When it came time to apply to graduate school, she decided she wanted to work on something important. Energy was important. She had read and admired The Limits to Growth (1972). We are running out of convenient fossil fuels, she thought. We are running out of other things, too, such as arable land and aquifers, but solving these problems would require energy. 

She decided to go to Princeton and study plasma physics, hoping to improve fusion technology. It was not what she expected. Her professors were brilliant, working on exciting things, such as compact magnetic confinement devices. In the background, however, “everyone’s jumping through hoops,” she says. Her professors were constantly writing grants. Their grant proposals were hard to understand. They went to “dark and foreboding” federal organizations, where they were misunderstood. Funding was cut “randomly and mercilessly” by forces outside the professors’ control. Among the graduate students, she found “a cadre” of interesting people but most of them, she thought, were overly concerned with finding something that had not been done before that meshed with a professor’s interest, in contrast to doing something important that they themselves found interesting. She also thought the other graduate students were not concerned enough with foundational questions. There were “too many good soldiers.”

Why rely on political whims I can’t control when I can create my own fortune and fund whatever research I want, she thought. If you were a mediocre physicist at any top graduate school, you could go to Wall Street and become a quant or go to Silicon Valley and build stuff. In 2007, she talked to Wall Street quants. “I was studying their derivative and option pricing theories,” says Danielle. “They assumed that price was given by an infinite series of small independent factors.” The independence assumption struck her as unlikely because much of the market relied on the same pricing theory. “This foundational assumption was poorly founded,” she says. It works, the quants said. The market collapsed three months later. Before it did, she decided to leave Princeton (after two years) and go to Silicon Valley.

She moved to the Bay Area and started couch surfing. During her first year there, she worked on several different projects with different cofounders and consulted for a variety of startups. Her “theory” was that she would learn how things work and find the right thing to do. She met Paul Graham and consulted for Y Combinator companies. She realized her “limiting factor” – what she needed the most – was a good co-founder. “Innovation is social,” she says. David McIntosh, a co-founder of Redux Games, “read [her] blog” and put her in touch with Max Crane. Max Crane is Steve Crane’s son. Steve was helping someone else start a video game company in Petaluma that needed a part-time programmer. Danielle was living in San Francisco at the time. Steve offered her the job and offered to drive her to Petaluma. “Every time we would drive up we would talk about different ideas,” said Danielle. “I had 50 different ideas for startups.” The one she kept coming back to, kept thinking about, was making a compressed-air-powered vehicle.

A friend, Nick Pilon, had asked her, “How far can you drive with the [solar] energy you could collect on a garage roof in a day? Is it enough to handle the average American commute?” To answer this, she had to provide a solution to the problem of making a practical, efficient vehicle. Batteries were a serious problem. They are expensive, heavy, and degrade relatively fast. Better energy storage would make a solar-powered vehicle more plausible. Several years earlier, her dad had sent her a link about a car that ran on compressed air. In that case, the CEO had been arrested for fraud. The car didn’t exist. However, MDI International in France had made some progress. (Well before Peugeot.) She suggested this possibility to Steve. It could be very inexpensive and fast to refill. They could make a scooter. Steve got really excited. “I’d love to help you get this funded,” he told Danielle. Eventually he put in $100,000 and joined Danielle as a co-founder. He left his other jobs to work with her.

The thermodynamics of air compression were discouraging. (So much so that in 2009 Berkeley researchers published a paper arguing that a compressed-air vehicle would not be viable any time soon. “The BEV [battery electric vehicle] outperforms the compressed-air car [CAC] in every category. Uncertainty in technology specifications is considerably higher for CACs than for BEVs, adding a risk premium.”) When air is compressed, it gets hot — and heat may leak away. When air expands, it cools — and cold air provides little pressure. Danielle realized that you could solve both problems by adding heat capacity to the air. This could be done by adding water (mist) during compression to absorb heat and using the stored heat to warm the air during expansion. If you could continuously supply the expanding air with heat, efficiency would increase from the low 20s to 70-85%. Such an engine – driven by compressed air – would be cheaper, lighter, and more powerful.

They spoke to Ed Berlin (whom Steve called “the most brilliant inventor I know”). Coincidentally, Ed had been working on a compressed-air hybrid vehicle. They joined forces. Ed introduced them to Keith McCurdy, who advised them about financing. At a party, Keith told Vinod Kholsa, the venture capitalist, about the idea. This led to a meeting with Ford Tamer, one of Kholsa’s partners, who specialized in two-wheeled vehicles. He was more excited about what they could do for the power grid (by storing excess power during times of low demand). They had a whole PowerPoint presentation about vehicles. They scrapped it and made another one.

Steve and Ed built the first prototype. Danielle measured its performance. “Ed had a machine shop in his garage and knew how to use it,” says Danielle.

An especially important early hire (Employee Number 6) was Kevin Walter, who became Vice President of Development (developing the engine that compresses the air). He had previously worked for one of the top racing car teams in the world and had developed many race-car engines. “We knew how to build engines in theory,” says Danielle, “but he had actually built them.” He knew, for example, where to drill holes so that oil would get to the right places. He also contributed a great deal of (psychic) energy, focus, and perseverance.

Being located in the Bay Area really helped. The Bay Area has many people (in the “low thousands”) who are good at making things. One LightSail employee (Liam McNamara) made a steam-powered automobile from scratch for Burning Man and won Junkyard Wars. Another (Keith Johnson) built electric cupcake cars and an electric pumpkin carriage. The Bay Area has “an atmosphere of possibility,” says Danielle. “The idea that when you have a great idea that is doable, you should do it. No one else is going to do it. Burning Man is a condensation of this. After people come, they feel they really can do something. And once they start, the deadline helps make sure they get it done.”

2 Responses to “How Things Begin: LightSail Energy”

  1. Vic Says:

    I’d be wary of any new energy company funded by khosla – his track record in the area is full of grandiose boasting followed by underperformance and bankruptcy.

  2. Adam Says:

    People who go on to do great things often have a track record of failures. You can’t predict the future by looking at the past.