A contrarian view from Monday's WSJ:
Beware of Valley’s New Fad: Nanotechnology
BOOMTOWN
by Lee Gomes
The Silicon Valley hype machine is gearing up to sell you a second-hand trend. Be careful, it may prove to be a lemon.
What’s involved is something called “nanotechnology” (more on why it is second-hand in a minute). The field involves ultrasmall devices built molecule-by-molecule, for use in, say, health care or computing or manufacturing.
Physicists, chemists and others have been working in nanotech for years now, and they’ve come up with some interesting lab experiments, such as molecules that can act as very primitive computer transistors. Some of this work will no doubt become profitable and socially useful one day.
But that’s not good enough for nano-boosters; for them, nanotechnology is nothing less than the next great Industrial Revolution, right around the corner. Politicians, for example, have lately been rushing to fund nanotech, since the technology, at least as the boosters present it, is not only easy to understand, but also visionary and remarkably utilitarian. What politician, after all, could resist the idea of some “Fantastic Voyage” - style submarine cruising through his arteries, zapping the cholesterol deposits from all those lobbyist lunches?
In Silicon Valley, which is more hard up than usual for a new trend, nanotechnology is handily fitting the bill. While it’s not quite the Internet boom yet, just give it time.
“Nanotechnology” has been used in literally 10 times as many press releases this year as in the first half of 1999. A pitch letter for a just-launched newsletter called Nanotechnology Report warns of “a MAMMOTH technological shocker afoot” that is “about to make modern day manufacturing methods virtually obsolete.” New companies are putting “nano” in their names at the slightest provocation, and hardly a week goes by without a new nanotechnology conference being announced.
“Since January, I have been invited to give 50 talks,” sighs R. Stanley Williams, head of a nanotech research project at Hewlett-Packard Co.
This being Silicon Valley, venture capitalists are flocking in. The best known is Steve Jurvetson, of Draper, Fisher Jurvetson in Redwood City, Calif. Mr. Jurvetson, a fixture at nano conferences, called nanotech “the next great technology wave.”
Wait a minute. Weren’t VCs saying as much about the Internet and its offshoots? Especially the oft-quoted Mr. Jurvetson, who, as a columnist for Red Herring magazine, has in the past few years developed quite a record for celebrating trends - “b-to-b,” optical networking, online shopping “agents” - right before their bubble was about to burst. Investors could have lost a lot of money buying the companies that he mentioned.
Asked about the matter, Mr. Jurvetson says it’s too soon to say that the dot-com fads are indeed dead, because he often takes a five and ten year horizon in his trend-spotting. He adds that since in his writing he is only doing what VCs are supposed to do - talk up the companies they invest in -“people should look at what I write with a huge grain of salt.”
Another reason to keep the salt shaker handy is that while researchers are making steady and incremental progress in many areas, there have been no epochal nano-breakthroughs. In other words, nothing analogous to the 1974 discovery of gene splicing, which launched the biotech industry.
Indeed, to people with long memories, the current hype - as opposed to the real nanotechnology research - has a warmed-over feeling to it. In the early and mid ‘90’s, a field called MEMS, for microelectromechanical systems, went through its own boomlet, with instructive results.
MEMS, too, are tiny devices, and back then, MEMS were just starting to be used in the air bags of cars and inside computer disc drives. Those applications were seen as but the harbingers of a huge and revolutionary industry that would take MEMS everywhere. Governments poured in research money, VCs wrote check, companies were a-born.
It’s been nearly a decade. Today, air bags and disc drives are still MEMS’ greatest hits (though people are starting to look at them for medical devices, such as pacemakers). Roger H. Grace, a San Francisco analyst considered to be a leading MEMS expert, said today’s MEMS industry is characterized by commodity-like, niche products sold under intense price pressure by companies often struggling to make a profit.
Trend spotters always posit that every exciting new technology will inevitably create the next Microsoft or Amgen. Maybe. But the more likely outcome is that it will create five competing vendors of improved gas flow pressure regulators, if anything at all.
Mr. Grace is somewhat skeptical too, of the current nanotech spending binge by governments. “Everyone is afraid to let the other guy get ahead of them,” he said. It’s always hard to argue against more research money, but many people worry we might be chasing a techno-fad at the expense of basic science.
While you would think they might be enjoying the ride, no one is more wary of the current hype than serious nanotechnology researchers. One of the most worried is Dr. Williams of H-P, who helped prepare the U.S. National Nanotechnology Initiative in 2000.
“I am seeing thing that are very disturbing,” he says. “I get a lot of calls from VCs, though not the field’s well-known ones, who tell me, ‘You are a leader in this; why don’t we form a company and make a killing.’ It’s obvious that all they want to do is make a shell company, and then sell it and run before anyone figures out there’s nothing there.
“Whenever I speak at a nanotech conference, I feel like I am Godzilla, coming in and smashing all the hype,” Dr. Williams continued. “But I don’t want to see 20 years of my hard work go up in smoke because this gets overhyped, and then later on, people get angry when we don’t deliver on promises that I didn’t even make. I want to pop this bubble before it gets too big.” |
