That's the sense I got from Bridgelux CEO Bill Watkins, who reinvented his career by moving from the semiconductor industry to the burgeoning greentech one.
Watkins, who once led computer storage company Seagate Technology, says he's hell-bent on making his new Livermore, Calif.-based company successful -- and he plans on doing so by disrupting the $100 billion worldwide general lighting market with his company's LED bulbs.
SmartPlanet: You used to lead a hard drive company. How did you end up at Bridgelux?
BW: After I left Seagate and got fired, I took some time off to think about what I wanted to do. I'm on a bunch of boards, so I did some board work. I took nine months off and during that time, I ran into [VantagePoint Venture Partners CEO] Alan Salzman, who was doing major investments in tech.
When I first came out here in the late 1970s, there was this real sense that you were doing things out here in the Valley to make a difference in the world. Yeah, we're out here to make money, but there was a real sense that we were doing something bigger than ourselves.
My job became more about making money: mergers and balance sheets and private equity deals. Companies who were doing startups stopped doing major capital startups and did software. The whole Valley, in my mind, became about making money.
As I started talking to Alan, and [DCM-Doll Capital manager] Peter Moran, and so forth -- it reminded me of back in the '70s again. We have VCs investing major capital dollars -- making high-risk bets -- into clean and green tech. Obviously they want to make money, but they're doing this to change the world. I haven't felt that in a long, long time.
I started hanging around with VantagePoint. VCs are VCs, but this is as good as it gets for them. They're doing what a lot of people are just talking about. To me, this is capitalism at its best.
SmartPlanet: Cleantech spans many industries. Why LEDs?
BW: To me, they really met the criteria. Twenty percent of the world's electricity is used for lighting. If we replaced them all [with LEDs], that would drop to four percent. We can make a major change in how energy is used. Only in the past couple of years did that promise start to equate.
Bridgelux had great patents and were prepared to go to market with a product.
General lighting is a $100 billion market. The people who lead it are under attack. I look at it as a great opportunity for disruptive technology. The incumbents don't have a solution. All they're doing is stealing revenue from the bulb business. It's just like Kodak.
All of these things came together, and government legislation propelled it.
Storage was a $33 billion market. This is a $100 billion market that's about to go through a major, major technology revolution. How we build lights, the business model -- all that's going to change.
When you start putting lights into chips -- smart light, digital light, that you can program and have respond to you and sense the room.
SmartPlanet: Sounds great. How do you convince consumers to part with their hard-earned cash?
BW: Whether it's an iPhone or a DVR or an eight-track or whatever it is, all disruptive technology creates a capability. The economics usually don't make sense right away, but it allows the person to make a philosophical statement: "I'm cool." As the economics come down, it allows more and more people to adopt the technology.
All of us want an iPhone, or a backlit HDTV.
The clean world -- clean tech, energy-efficient tech -- has a very strong philosophical base. A lot of people don't have to [justify the expense].
When commercial lighting has a two-year payback, everybody wants to convert. The consumer industry is about one-year. The challenge for us is getting the bulb cost down versus the energy savings.
Our job is to keep working on economics. That's critical because it impacts when the applications come out.
SmartPlanet: You mentioned Internet-connected LED light bulbs. What can they do?
BW: You can turn street lights off with a mobile phone. In a small town in Germany, everyone can turn on a streetlight for 15 minutes using a PIN code.
The key for us is: don't put too much functionality in 'em.
The first thing is: I want to get my light bulb in your socket. Once I get them in there, I'm willing to give you more and more smart intelligence on that platform. When you want a new one, we'll create a program that can move your old bulbs to Asia and Africa.
We're going to change how light bulbs are sold. It's just like the cell phone industry. We're going to change why you buy light and how you sell it.
I don't even think the traditional lighting guys realize how much it's going to change. I'm coming out of the semiconductor business. We're going to make light smart and we're going to attack this with a whole different business model. This will be the most exciting place in technology everywhere there is.
People don't realize how big this market is. This isn't LEDs -- this is general lighting. It's $100 billion.
SmartPlanet: The main criticism of LED lights is that they're too expensive. How do you beat the big guys?
BW: Our focus is putting these LEDs into a chip and selling you a light engine in an array.
With Helieon, we came out with a product that allows you to take out the light, disconnect the fixture and replace the LED. It took us about three months to develop the product.
Why does it take a little company like us when GE and Philips and Osram Sylvania [are there]? They're all talking about modular products now. They had to respond to us. The big guys do not want to lead the market, they want to manage it. They want to have $50 and $60 bulbs, not $10 bulbs. They don't want you to move to LEDs fast.
Say you're sitting at GE. You make a bulb for 4 cents. You're probably doing about $3 billion [in] product [sales]. You haven't been investing at all. No R&D. Milking it all. The most innovative thing you've done with the light bulb in 20 years is mercury, which has lousy lighting.
[If I'm at GE] I can't go to the new technology and show revenue growth. All I can show is increased costs and less profit. Why would I want to sell an LED? I won't make as much money? That's why you have a $50 bulb -- you've got to show enough but still milk it.
Think about Fujifilm, Kodak, Polaroid -- in the 1990s, they knew digital film was coming.
Look at Encyclopaedia Britannica. I met with them in the 1980s, and I had an argument with them about making a website. They said no, we're not an information company, we're a book company. And they died. They had, for about a nanosecond, an ability to embrace the web. But they had to destroy their book business.
SmartPlanet: Sounds like this is really about startup companies versus established brands. Given its interests, is an established brand even capable of maneuvering like a startup?
BW: No one has successfully navigated it. The only way is to create a second company.
There's no business model for the big guy. They've got so much to lose with the inherent technology.
For me, every dollar that I invest grows my revenue. I've got nothing to lose.
That's why I love being in this position. I look at the Seagate guys who are on the offensive by the Flash guys....I tried to buy a Flash company. I got fired.
Unless you've got the balls to say, "I'm going to reduce my revenue and profits in lighting for three years"...people don't have the appetite to take those losses.
You're going to watch The Innovator's Dilemma play out on the big stage. You think about it, [tech] we lost the consumer business to the Koreans and the Japanese way back in the 1970s. Apple and [BlackBerry maker] RIM and -- they're all becoming consumer companies again, because they're able to jump back into new technologies.
Apple almost died until....Intel basically killed the DRAM business. They threw it all away and said they'd fight on the microprocessor.
What we're trying to do, we want to be a microprocessor company. We don't want to sell die -- the [integrated circuit] stuff in backlit TVs and PC screens. We want to deliver a solution.
SmartPlanet: Back to those Internet-connected LED light bulbs from earlier. What else can they do?
Functionality such as dim, on/off, add colors, remote control, smoke detectors, playing music through it, running the Internet through it...but a lot of those features are too costly. Anything you can do in a chip you can do in a light. Anything in a phone can be done in a light.
I'm more interested in Wi-Fi and WiMax. I want to put a platform in your home that I can sell functionality on. I've got to own your socket with an energy-efficient, clean solution.
If we don't do it, the Chinese will.
SmartPlanet: How do you compete with overseas manufacturing, then, in the U.S.?
BW: Our solution allows us to keep packaging at very low cost. We have our own manufacturing facilities here. I won't make the cheapest LEDs in the world -- Samsung will do that eventually. I'm going to make a package. I'm going to innovate, innovate, innovate. I'm opening up the first new fab in Silicon Valley in 25 years.
It's not just the technology. It's how we sell it.
China has 50 LED companies. Every city went to somebody and said if you put a factory here, I'll give you all my business and I'll pay for 80 percent of your capital.
Cleveland tried to do the same thing. If someone can come here and give us jobs and put in factories, we'll give them our business. A Chinese company, Sunpu-Opto, did that...but GE is headquartered there. They woke up -- talk about total embarrassment. They raised all sorts of hell, there was big political fallback...it's a classic example of what's going on.
SmartPlanet: We recently talked with Milwaukee's city planner. His city wants to reinvent itself with manufacturing.
BW: If Milwaukee said look, if you come put a factory here and make 500 jobs, I'll give you all my LED business....they can't do that. All the bureaucrats say "No, you can't do that. Go bid."
And then all of a sudden you can't manufacture in the U.S. at a cost versus someone manufacturing in China and shipping the lights. So the low-cost guy wins.
So what I do is, I'll go after those cities and say I'll ship [the LED lights] from China.
That's why I put a fab here. Americans are the most cost-sensitive people in the world. People think the Chinese are cheap? Not at all. We can't see past whatever the PO cost is.
I'm going to try to create ways to subsidize the bulb cost. I'm going to try to solve the problem here, but if I don't, I'll solve it from China.
At the end of the day, I'm going to make Bridgelux successful.