A Nanotechnology Entrepreneur’s Journey: A Conversation with Joe Sprengard

A Nanotechnology Entrepreneur’s Journey: A Conversation with Joe Sprengard


[LISA] Today on National Entrepreneurs Day, I am
pleased to announce the launch of the Nanoentrepreneurship Network. My name is Lisa Freidersdorf, and I’m the Director of the National Nanotechnology
Coordination Office. One of the four goals of the National Nanotechnology
Initiative is to foster the transfer of new technologies into products for
commercial and public benefit. This network will bring together both the
entrepreneurs and those from the ecosystem that support them to establish
and grow their companies. The activities of the network will largely be driven by
those that are engaged, but we anticipate will include podcasts like the one we
have today, webinars, town hall discussions, and workshops that enable us
to share best practices from entrepreneurs and the resources that are
available to support them. My guest today is Joe Sprengard, Founder and CEO of Veelo Technologies of Cincinnati, Ohio. Joe, thank you for joining us, can you tell us
a little bit about you and your company? [JOE] Sure, well thank you for having me. So
Veelo Technologies is an advanced materials company driven by the needs of
the aerospace and defense market. We are located in Cincinnati, Ohio. We recently
expanded the business. We’ve got 25 employees and we’re
principally focused in two segments of the aerospace composites industry. One is
in electrically conductive materials and the other are really driven by electrothermal heating systems, both of which we leverage nanomaterials in our product
line for our customers. [LISA] So you mentioned that your work is in the aerospace
sector and that you’re working in composites. I understand in that sector,
qualification of new materials can be quite a challenge. Can you share your
experience in that area? [JOE] There is no questions, there are lots of challenges. In fact, I sometimes like to tell people, if you really love somebody, don’t allow
them to start an advanced materials company in aerospace. And somewhat
kidding, but also somewhat serious because of exactly, Lisa, what you’re saying, that the timelines are long. However, core to the future of
aerospace capabilities is the need for the development of new advanced material capability. And while it’s difficult, great things aren’t built
because they’re easy. And so we’re inspired by the challenge. We’ve had to
appropriately structure the business and make sure we are built in such a fashion
that we can sustain those long cycles. We are literally celebrating our 10th
anniversary as a business next month and we just experienced our first expansion
as an enterprise. So it has taken us that long to go from an idea to what is now
it’s truly a manufacturing company because we are going through exactly
what you mentioned around a certification of certain material
systems for aerospace platforms. So certainly not quick. Some people like to
laugh, you know, you’re an overnight success. And of course that is not
the case. That has never though deflated our interest or passion towards the
purpose of why we exist in what we’re trying to accomplish. [LISA] Well congratulations, first of all, and going back 10 years, you know, was it a
technical idea or a market need that you saw? What inspiration led you to become
an entrepreneur in this area? [JOE] There’s really two aspects to my personal
interest in the entrepreneurship leap that I took. One was more personal. The
other was more technical. The personal part of it was really driven by my
family’s interest, my wife and me, around the pursuit of impact in generational
poverty. And that to us was why starting a company, the vision towards
creating great opportunities to build a capability that employed folks was
really just a personal passion. Because we’ve just been too close to
generational poverty in our life and it’s really frustrating to see. But in
terms of how that led to the technology, was somewhat
serendipitous. The University of Cincinnati, about that same time that I
was looking to make the leap into the Entrepreneurship community, had announced
a scientific breakthrough related to a nanomaterial. And that breakthrough allowed
for the growth of a carbon nanotube, literally the the continued growth of
a physical structure much beyond what had been accomplished before. I kind of
liken it to if we had a contest in our neighborhood, if we all live together in
the same neighborhood, and we were all planting grass seed in our front yard,
and the goal was who could grow the longest grass with a single seed. That’s
what the University of Cincinnati figured out. They came up with a
chemistry to grow a vertically aligned carbon nanotube that grew much longer
than everybody else’s. And so that caught the science community by surprise. The National Science Foundation published this accomplishment that led to the Air
Force, you know it’s it’s Air Force, specifically Wright-Patterson Air Force
Base and the Air Force Research Lab advanced materials and their materials and manufacturing directorates interest and they were looking for
someone to spin-off the technology from the University. And it just so happened
that I had a relationship with the inventor and his family. And that led to
a leap of faith. [LISA] You talked a little bit about the interest of NSF and folks there at Wright-Patt. And I know your company has been successful at winning
government SBIR awards. Can you comment on the value of receiving this type of
capital from the federal government? [JOE] You know, I don’t know the history of how the
SBIR program came to be, but I will say the impact that it’s had on us and what
we’ve been able to do in terms of the government’s return on investment. I
don’t know that we are the poster child for that system and how it operates, but
I’d like to think that we’ve really done a nice job of a great ROI for the
taxpayers. You know, we started out with $100,000 seed SBIR phase 1 and
you need million dollars in capital equipment
just to do the work. And so one of the things that we believe in our business
is money is always accessible if it’s justified. And, you know, entrepreneurs and
particularly researchers love nothing more but more time and more money. And
it’s easy and it’s oftentimes an excuse to say, oh I ran out of money. And so what the
SBIR system has allowed us to do is really really stay focused. Where we’ve
never been driven by the love of technology, we’ve been more driven by the
love of commercialization. And I like to think that the SBIR our relationship that
we’ve had which has been among a variety of agencies has really been something
that’s not just impacted us, but I think will prove to be a good return on
investment for those investments that our country makes. [LISA] In addition to SBIR
funding, you’ve been successful at raising venture capital. What is key to
selling a hi-tech idea to the financial community? [JOE] We raised some seed money
early on in our business, but didn’t really raise a more, what they would call,
institutional round, series a round, until we were six years into the business. And
that was because it took us that long to have a product that had enough customer
feedback where we could legitimately say to the capital markets through
validation that there was a, what we like to call, real there there and it wasn’t
for the sake of science it was for the sake of impacting a need. So what we’ve
communicated to our investors has been a very very very clear picture into the
need of the market and how our technology impacts that need, but really
having the voice of customer communicating part of that story is
really what we focused on. So they weren’t just hearing it from us they
were hearing it from our customers and why they cared and when we were able to
synchronize that story based on validation, raising capital became
something that was, again not that it’s easy, but it was very
justified and so we’ve been very fortunate to have strong you know
financial backing, but that’s all been based off the technical merit and the
customer need and the linkage of those really is what’s justified the financing. [LISA] So you discussed a little bit that you and your wife were ready for this type
of opportunity and one of the drivers was what you’d seen in generational
poverty. Can you discuss the importance of having that support system, family,
friends, mentors, collaborators, in place before you take the plunge of becoming
an entrepreneur? [JOE] Yeah I mean everybody’s got their own story, right, and how they
get to whatever career they’re in. You know, why they choose certain degrees that
they study or where they end up living. In our case, it
wasn’t a situation where this was some sort of foregone conclusion. It just
happened to be because I got to know my now wife and things we cared about it
was something that we were really committed to and we like to say, and I
say this jokingly, that she was cashflow and I was equity. I was very
fortunate to have a wife that has a great career and so when we looked at
our risk as a family to start the enterprise we were able to make sure we
were structured financially to take on that risk. But it was clearly a joint
commitment, it wasn’t a Joe being an entrepreneur with his hair on fire. It
was a hundred percent us together. You know and that’s a lot of fun. Nobody likes to be in the foxhole alone. And that support staff has extended
beyond just our internal family, but the mentors, folks that that have navigated
these waters before, we’ve leaned on from the very beginning. And it’s just it’s
been really enjoyable. No matter what the outcome is. I know for sure we’ll
never regret the pursuit that we’re taking. [LISA] So I’ve heard it said that
being an entrepreneur is like jumping off a cliff and inventing a parachute on
the way down. Does that resonate with you? [JOE] I think certain aspects of it do.
You certainly take the leap of faith, but a couple years ago the Boeing Company
asked me to speak to a group with our engineers I thought
what the heck do I have to offer you know at the time we were a five-person
company. They’ve got a hundred fifty thousand people, fifty thousand engineers
in that organization. And part of that discussion, I had said
statistically on average something like eighty percent of small businesses fail,
but I look at that and say well that means 20 percent have succeeded. And we just
refused to be the eighty percent. And so the parachute example that you’re using,
there’s a lot of people that jump out of parachutes every day and
have a heck of an experience. And so I think it’s about perspective. Sure, you
know, it’s not easy, but if it were easy then it would have been done. So yeah there’s
probably some truth to that analogy, but I like to look at that and say what an
exhilarating experience. Tremendous companies are built every day and even
though there it is a little bit like jumping off the cliff, I wouldn’t trade
it. It’s just something that we refuse to believe, that a great business can’t be
built. And I think we’re seeing the proof of that mentality now. [LISA] So one of the
things that we’re trying to do with this nanotechnology entrepreneurship network
is to share best practices and advice. What is some of the good advice that you
received when you were just founding your company? [JOE] You know one of the things
that comes to mind, there’s been a long-term mentor of mine, he actually has
zero background in technology or engineering or manufacturing or
aerospace. He actually led a very large publicly traded insurance company. And
early on in our business, I asked him and he graciously agreed to lead a strategic
planning session for us on a Saturday morning. And we were young in the
business and he said something then that is so true to this day. He said you know
you can’t have product number two until you have product number one. In other
words, what is the thing that is going to cement your business and put that stake
in the ground that says we have a thing at the market desires? What he’s really
saying is, focus. Really get to how long is it gonna take us to get to the thing
that the market says we are willing to buy. And not that we’re willing to buy it,
we are anxious to buy it because we need it. So that was really good advice. You
can’t have product number two until you have product number one. Lock-in and nail
the thing because things build from that. I’m gonna guess that Bill Boeing when he
started Boeing Company didn’t realize however many years later they’d be
building a Space Shuttle. But they built the first thing and that led to other
things over time because of capability, knowledge, culture, talent, infrastructure
systems, all these other things emerged. I’m sure Amazon today their business is
a lot different than maybe what they initially thought it might look like
over the course of time. I mean that goes on and on and on. And so I think that was
really good advice. [LISA] So we know that young companies have their ups and downs along
the technology development pathway. Can you share a strategy or decision that
you made that in hindsight you might have done differently? [JOE] So for the first
three years of the business, our DoD customers cared a lot about the ability
to convert the long nanotube material that we had into a high-strength fiber. A nd I would say this if I were talking to our SBIR funders. What I didn’t quite
know is that our customer on the other end of that really loved research and the
art of research. And if I could go back in time I would have insisted that we
have someone that was a little bit closer to the end product use as opposed
to the art of research. You know, they were intrigued by certain data on how
the nanotubes grew, some of the chemistries, but there was never a real
what is the thing that ultimately someone’s going to buy and why do we
care about this. And so one of my cautions to entrepreneurs, I guess, is and
this is one of the reasons that we’ve had such a great relationship I think
with Boeing, our business is not run by a technologist. I am not a technologist. I’m
not in love with the technology. I’m in love with ultimately addressing a
problem that the market wants and needs. So I would have insisted, I think, earlier
on in our early stage R&D that the end user
be at the table, not just the researcher that’s interested in the research on the
other end. Because otherwise you can really, what we call, chase a ghost. And we
did that for about three years. And it was a really painful lesson. So having
that end user. Now you might say, well sure the end user is there, the air
force is there, but not really. You know, at the end of the day, who is the customer
that’s making the decision. Well you know the customer is making a decision?
Typically the OEM. They’ve got the contract to build the vehicle or
whatever it is to meet the requirements that the customer defines. But we did not
have any OEM or anybody in the supply chain at the table. And so that was a
really really key thing that if I could go back in time, I would have not just
the researcher on the other end who was our customer, but really the end user,
which of course we’ve learned that lesson and we move beyond that, but
that’s a key thing that we have certainly learned in spades
at least early on in the business. [LISA] So from your perspective what are some of
the essential skills that are required to be an entrepreneur? [JOE] Well in my mind the
number one thing is the interface with the market. What are the needs? Why should
someone care about what we’re doing and our ability to take their interest and
guide our behaviors? So to share a quick story, the first three years in the
business was all around a fiber type format of the nanomaterial. And along the
way, when we started interfacing with the end-users, it became apparent that they
wanted our product, but in a broad good format, more of a roll stock or sheet
type material system. And I say that because I recall coming back, actually we
were at a nanomaterials meeting in Washington, D.C. that was based at NASA. It was a sort of a technology exchange. And I remember getting on the plane and coming
home and the next day walking into our engineering team and saying stop what
we’re doing on anything fiber, we’ve gotta make a broad good product, because this
is the material form that integrates well in aerospace composites and here’s,
you know, blah blah blah number of reasons why. And I bring that up because that to me was a real critical decision. The ability
to, what they call sometimes pivot in the entrepreneur case, we certainly did
that. We literally stopped on a dime what we
were doing because we felt like at the end of the day what we were building was
going to continue to be a great R&D project, but that was not what’s going to
keep the lights on. And so that to me is a real learning lesson and something
that we use in our story all the time is that pivot and the ability to
lock in again on the mentality of you can’t have product number two until you have product number one. [LISA] So Joe I just want to thank you again for taking the
time to to share your story and provide advice to those that are interested in
nanoentrepreneurship. Do you have any closing thoughts that you would like to
share with our listeners? [JOE] I know that the pursuit sometimes of a dream is hard.
It’s well worth it. The one advice that I would at least communicate is there’s
nothing more satisfying than when the end user on the other hand is really
really really really happy and they truly believe that if not for what
you’re delivering their outcome would not be as great. You know, there was a
time when probably if we went out of business, other than our employees and
other than our investors and our stakeholders, not too many people would
probably care. It would be a, nice job congratulations for trying. But I think
that’s different today. I think if Veelo Technologies shut down
tomorrow there would be a number of customers that would say, our systems are
going to be at some disadvantage because we can no longer address the
capabilities or requirements that now Veelo’s products can deliver. And I
would just encourage any entrepreneur to keep that in mind. That that’s really a
satisfying moment. Because that’s when growth happens and that’s when culture
really gets to another level is when our team sees how their innovation impacts
our customers. And that to me is something that I think
even in its darkest days as an entrepreneur when things can be
challenging pursuing that moment of that feedback that says, this is special, this
is going to get us to the next level of capability, it’s worth all the effort to
really achieve that moment in my opinion. Thank you for joining us for this
inaugural Nano Entrepreneurship Network podcast. If you’d like to get involved,
please email us at [email protected] or visit nano.gov/nanoentrepreneurshipnetwork and join the conversation. you

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