06 Feb 2015
The Serial Entrepreneur: From E-Readers to Nuclear Fission

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Brian Kenny: Today on “The Business,” Russ Wilcox, co-founder of E Ink and Transatomic Power.

Russ is a 1995 graduate of Harvard Business School, but he’s been back with us for the past three years as an entrepreneur-in-residence at Harvard Business School’s Rock Center for Entrepreneurship. Russ, thanks for joining us.

Russ Wilcox: My pleasure.

BK: So, the word entrepreneur keeps coming up when I looked into your background. That word was everywhere and that sounds like a good theme for the conversation today. Does that work for you?

RW: Okay.

BK: I’ll start with an easy one – or, maybe it’s not an easy one. Did you always, when you were in grade school, say “hey, I’m going to be an entrepreneur?” When did that pop into your head?

RW: It wasn’t [always there]. I was fairly oblivious to business until college and I began to do a lot of extracurriculars, and the thing I liked was launching new organizations and bringing people together. I started a political simulation to teach high school students all about Congress and I did Model United Nations and things like that. And I love the organizational part of that-- that’s how I realized I would be fit for a career in business and find it endlessly creative, which is what really appeals to me about business.

BK: I want to talk about E Ink, but I‘d like you to maybe start by reminding people what E Ink is, because it really turned out to be this revolutionary thing and, you guys started in it in the very early stages.

RW: So, E Ink is a technology for making paper-like computer displays. The idea was to give you the look and feel of the piece of paper that you see when you read a book. To do that we do something a lot like a copy machine or a Xerox machine, but instead of having the image be fixed on the page ours can stay changeable and we can update the type that you see on the page using electronics, so it gives you a paper-like book display. And we used that first for our Sony E-reader and now on the Amazon Kindle and the Barnes & Noble Nook. The black and white screens that you see are all using the E Ink technology.

BK: What was the impetus for that technology? Where did the idea come from?

RW: The idea came from its inventor, Dr. Joe Jacobson, a professor at MIT. At the time he was a post-doc, he’s on the beach and he finishes a book and he realized he had no other books. Someone else might have gotten up and gone for a swim, but what Joe did was – he turned over the book and he pulled out his pen and he started to invent. What if I had a book that never ran dry and I could just have any book on the beach? It would have to be sunlight-readable. It would have to be incredibly inexpensive and incredibly good to give you a book-like feeling, with flexibility and many pages. That led him to the idea of something he could make with a printing press that would itself be a changeable page and that’s what E Ink is all about.

BK: How early on did you get involved after that idea came up?

RW: He wanted to start a company and that’s about when I met him. Actually, it was through an HBS professor I had had here, Jeff Rayport.

BK: Sure.

RW: I called Jeff and said “I want to do something big, Jeff.” Now this was the mid-90’s, so he said, “Oh, Furniture.com,” and I said, “No, no, no! I want to do something ‘change the world big,’ not just Internet,” sort of completely misjudging the importance of the Internet (laughter). And he said, “Well, I know a guy who wants to change the world, he wants to change all of publishing.” And I’d always loved books. And this seemed perfect and we really liked each other at the very first meeting and said, “Yeah, let’s do this, let’s try to make a company out of this.” But at the time all there was just one blinking pixel.

BK: Wow. So that takes a leap of faith, and you were working at the time, right?

RW: I had originally done a first start-up. This is always a question for MBAs. They get out of the Business School and they’re interested in entrepreneurship-- should you go for a big company or start your own company or try to work for someone else’s start-up? And I did that middle path, and I had done that for about two years and realized that I had the interest to start my own company. So I was looking for a technology at that time and working part-time for a consulting firm I had worked for earlier. They were willing to bring me back and give me some space to go look for the next thing.

BK: Did E Ink meet your goal of changing the world? Was it as powerful an idea as you hoped it would be?

RW: It’s been intensely satisfying, actually. So far, we have shipped 70 million e-readers. The downstream system revenues – we take not just our ink and the displays but the devices and all the books that have been sold through those devices – just the E Ink devices are worth $10 billion, which all came out of Joe’s head. So, that’s been intensely satisfying.

BK: What are some of the biggest challenges you encountered that you didn’t expect?

RW: Well, I think Joe was visionary in anticipating that technology could be about a thousand times better than it was when we started the company. It was a really shabby looking dark gray/light gray, and he was right about that; he predicted that it would take about two years and it did. Within two years we had a much better looking pixel, but then it took another two years to make the technology robust enough that it could survive sunlight, high temperatures, low temperatures, humidity. And then it took another two years to be able to manufacture repeatedly with the quality level that a company like a Sony would accept. So, instead of being 18 months or 24 months to revenue, it was six years. Then, when the revenue started, we were shipping e-readers to everybody who wanted to do e-reading, which was a market of almost zero. And so we had a chicken and egg situation of waiting for the market to develop. But each year, from the moment we started shipping, each year we had about 100% growth, but it was just from a very low base. But, if you grow 100% seven years in a row, it’s a good situation.

BK: But, you don’t know that’s going to happen, so was there a moment in time at which you said, “Oh, my gosh, I’ve made a mistake?”

RW: Yah, about the mid-point, year six or seven, we’d spent 100 million dollars, we hadn’t shipped anything. So, six years, 100 million dollars, nothing shipped, some upset people, some of our team started to kind of give up and leave. It was a tough moment and I began to wonder, “gee, was this the right bet? Maybe I should have done something else.”

BK: And?

RW: Ahem (laughter). Well, I think a lot of entrepreneurs have this sort of problem. You know, it’s one thing to take the leap of faith to get into entrepreneurship and that takes a lot of courage and belief. But after a while you begin to confront the reality of how hard it is to start the business and all the problems you didn’t anticipate come out of the woodwork. I really think it is years two through five that entrepreneurs can face a deep soul searching moment. For me, I just kept looking at the technology and the product, basically, and saying, “this will be so amazing for people when it comes out. Even though I’ve spent 100 million dollars I’ll probably never earn a dime on my stock, I’ve just gotta keep at this because it’s the best thing I can bring to the world.” You know, it’s an important advance in its own right and millions of people will be thrilled with this. And so, I decided to stay with it because of my faith. Interestingly, the moment I made that decision, actually, the stock started to accumulate a lot of value. But it really was a switch from putting stock value… a lot of people might say MBAs believe that your sole goal should be to maximize the value of the stock. But after I started to put the value we could create for the people, for the customers, first (you have to think about stock value, then everything switched and the company started to fly. That’s probably coincidental, but maybe not.

BK: But, it’s a powerful lesson. That’s a really powerful lesson to learn and there’s a quote that you have referenced in the past that John Doerr said. Do you recall that?

RW: Yes. “First make meaning, then make money.”

BK: Right.

RW: That’s absolutely right.

BK: That’s a very powerful lesson. So, let’s fast forward. We know E Ink turned into a huge success. You did change the world. You changed the way people consume published information. My mother is the ultimate litmus test on this. She’s a voracious reader. She doesn’t buy hard cover books anymore. She’s reading everything on Kindle, so that’s one success that you can look at. And now you’ve taken on a completely different kind of a challenge. You’re trying to effect another change in the world. Can you tell us about Transatomic Power?

RW: Yes. After the ride with E Ink, I took some time off and my family and I traveled around the world and sort of took a look at what was out there and what needed to be done next. One of the main things that we came back with was about sustainability and observing a lot of pollution, a lot of overcrowding, a lot of overburdening of the earth’s resources. And so I began to look for ways that were leveraged. You know, what could one person do, one group do, that would really affect the course of mankind and try to head off what I thought would be a growing problem over time.

BK: Were there things that happened to you on that trip that sort of confirmed for you that Transatomic was the next thing that you wanted to take on?

RW: I vividly remember traveling in Jordan and driving through the desert and watching plastic bags. It should be a pristine, empty desert. No one lived anywhere around for tens of hundreds of miles. Plastic bags just rolling through the desert. Jordan is a country which has accepted over a million refugees and they really have a hard time putting them up and the people I was speaking with explained to me that they’re now drilling into the very last fresh water aquifer that remains in Jordan. And at the rate they’re going, they’re going to have drunk all that – that’s a large capital – they’ll have drunk all that water in 20 to 30 years, and it took hundreds of millions of years to collect that water. So, we’re down to the last decade or two before something is needed to come along. In this case, you could use nuclear energy to transform a lot of ocean water into fresh water for these millions of people to be able to drink.

A second moment came for me when I was in Tokyo when the Fukushima earthquake happened. We were at Sealand, Disney Tokyo, so we were having a great time, up until about two in the afternoon.

BK: Were you underground when that happened?

RW: Yes. So, at the center of the theme park there is this giant ride that looks like a big volcano. What you do is you go under the volcano and it’s “Journey to the Center of the Earth,” and so you wait in line. It’s like a 90-minute wait to get in line and then you get to do this cool ride, I guess. I never got to go on the ride. Then, all of a sudden everything started to shake and rumble. I’m like “Wow, this is great!”

BK: What an awesome ride!

RW: Yeah, “You’re going to have this fun time. Hey, this is excellent!” And then it kept going and I saw hundreds of Japanese people – and there had been tremors earlier in the week that they just laughed off that were like six, but this one hit and continued. You could see the blood draining from their faces and people starting to cry, and it was – they’re all very brave and very well organized. No one ran for the exits. Everybody just shelters, everybody just crouches down and waits. But that made me feel afraid because they had seemed so cavalier about the earlier earthquakes. I really experienced firsthand the terror of being with your family and children in a city, in a strange place, where you weren’t sure you were going to be able to leave. You know, 30 million people all go to the airport at the same time. I really felt that fear of, not just fear of death, but fear of letting my children down by putting them in a harmful circumstance. And I deeply understood the need for a nuclear technology that would give you the clean energy without the risk.

So, one way to think about this problem is: how do we get clean energy in copious amounts for a low cost? Because if we have enough clean energy, we can sort of fix the problems of the past as well as prevent the pollution of the future. I ran into a group at MIT that had invented a technology for taking nuclear waste and converting it into energy. And this is a complete revolution for nuclear energy because nuclear energy has always been scary and created all these problems for society. But their technology solved those issues.

BK: Is there a way to explain what they’re doing that laymen – explain it so that I can understand it?

RW: Yeah, the way to explain that is that in a normal power plant you have solid bars of uranium and pellets. As the uranium is fissioning it’s releasing all sorts of byproducts which cause it to not work as well. So within just two, three, four years, you’ve got to take that rod out and throw it on the trash heap. It’s a little bit like if you had a birthday candle and you sing happy birthday and you blew out the candle, and then you yanked it out of the cake and never used it again. Okay? Well, imagine 50 years of these candles, which have been supplying 20 percent of all the energy in the United States. You’d have a colossal amount of fuel potential that was just never used. In their version, instead of having a solid rod, you dissolve it into salt, a special kind of salt, which stays molten only at very high temperature. So when you’re using it, it’s like a soup – it’s as if you melted the wax with the candle and sort of burned a liquid candle wax.

BK: Sure, I get that.

RW: At the end, you get very little residue and so they’re eliminating all the waste and they’re taking away the waste from the old stuff and are able to use that. The other nice thing about this is that if the system is unable to get enough cooling, then the wax solidifies and you’re in a situation where the system can shut itself down without any human intervention.

BK: So the fear of radioactivity is greatly reduced through this approach.

RW: Right. A common misperception about nuclear power is that if the hero doesn’t save the day, then it will explode like a nuclear weapon or something. This is absolutely wrong. The fuel used in nuclear power plants can never form a bomb and fission and explode like that because it’s just absolutely impure. It’s mostly impurities and only a little bit of uranium, so there’s nothing about a nuclear power plant that can ever explode like that. But what can happen if it overheats is that it creates a leak and some radioactive steam comes out and then you’ve got radioactive particles spreading out. And that’s not good. That causes people to have to evacuate.

BK: This is a drastically different type of enterprise than E Ink. Now you’re dealing with fear on the one hand, but also government policy and an entrenched energy industry that likes its fossil fuels. This is a different kind of a challenge. How much of what you learned at E Ink applies on your day to day work with Transatomic?

RW: The part about E Ink in which I learned to persevere is entirely relevant, and also where I learned to work with scientists and hard technologies, and I discovered I loved that. That’s very much at the fore of Transatomic because you’re working with incredibly intelligent people. The part about public policy was new to me and that’s been interesting. We have a larger crisis in the United States right now where we have stopped funding basic research as heavily as we did, and this is going to hurt our economic futures five, ten, twenty years from now because of the decisions we’re making today. So, really I should make a plug in there. The country should be funding more basic science than it does and Transatomic is an example of how funding science can be far more economical than trying to clean up huge global problems like global warming.

BK: Let’s talk a little bit about what it means to be an Entrepreneur- in-Residence. That doesn’t roll off the tongue very easily, but you’re back here at HBS after having been away. Are the students that you’re seeing day to day in the Rock Center – are they like the students you went to school with in 1995?

RW: I think they’re similar in the sense that they’re really smart and highly accomplished people. They seem to me to be maybe a bit older and a bit more, not jaded, but veteran, more experienced, perhaps because in this day and age you can readily see information about everything all the time. So the MBA students are incredibly impressive and the ones I see have thought seriously about start-ups and entrepreneurship and it seems to me that maybe 15 or 20 percent of the class wants to do a start-up very strongly, whereas when I went to HBS it might have been 5 percent. Maybe some day 10 percent. We’ve at least doubled the number of people strongly interested in entrepreneurship.

BK: Why do you think that is? What do you think drives that?

RW: I think that’s a conscious decision on the part of HBS that the growth comes from big ideas, that the soul of the business profession cannot just be about making money but has to be about changing the world for the better. And I think a notion that has really become prevalent at Harvard Business School is that your start-up is not just a way to make money. It’s a way to transform the world for the better. I hear that a lot. I see people honestly searching for that and trying to make meaning out of their careers in this way, and I think it’s great.

BK: What would you say to a student out there who’s listening to this who’s thinking about entrepreneurship, but really has always pictured themselves in an established firm, a consultancy or whatever, doing more traditional stuff that an MBA has done in the past?

RW: They should stay with an established firm, pretty much. I think that people tend to become entrepreneurs, I mean at the very early stage, because they just don’t fit well in a big corporation. And I say that with full knowledge that it’s both a compliment and a bit of a criticism of a lot of entrepreneurs that they just wouldn’t be happy in a large organization. If you can see yourself being happy at a large organization you might as well go and do that and be happy. You take less risk and less stress and in a big company you really can accomplish a lot. If you’re leveraged by an organization of thousands, you can make a huge impact on the world and I think careers in big companies can be very satisfying as well. I have no predisposition that start-ups are the only way to do something positive.

When you should start your company is when you’re gripped with an idea and you can’t think about anything else and you’re waking up in the middle of the night and you think the world is going to end if you don’t do this.

BK: You need that passion.

RW: You can’t even imagine that anything other than this will happen, and then you’ve just got to do it. And so when you’re seized in this way, it’s time.

BK: Can you give us a glimpse into what is about to grip you next?

RW: I don’t know yet. I’m talking to different people about some really incredible ideas, so hold that space.

BK: Tantalizing!

RW: Yes, I feel tantalized.

BK: We’re going to have to have you back for another episode.

RW: Well, let’s talk next year.

BK: Russ, thanks for joining us.

RW: My pleasure!

BK: “The Business” is the official podcast of Harvard Business School. We publish twice monthly at hbs.edu/thebusiness. You can find all of our interviews there. If you’ve got a topic you’d like us to address, tell us about it. Again, you can post your comments and questions at #TheBusiness. And subscribe to The Business on iTunesU or follow us on Harvard SoundCloud.

Thanks for joining us.


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