Luminus Devices Founder and Chief Technology Officer Alexei Erchak (Part 2)

SM: You spent your time at MIT doing the theory and physics. When did it start to become a commercial thought?

AE: In five years we really felt that we had an understanding of how these devices work and if there were a way to commercialize this technology or make it beneficial for the industry, we would be able to figure it out. We had the fundamental physics down by the time I left MIT.

We thought about the idea that we should start a company to figure out what the applications would be. At that point we talked to Ray Stata, who is the founder of Analog Devices. He is very well connected into MIT and had worked with Professor Joannopoulus on a couple of other startups. We told him we had this technology that we felt we were the leaders in the world on, we knew we understood it and we had demonstrated results, but we had no idea if it had commercial potential. We asked if he would give us seed money to figure it out. He said yes.

SM: When was this?

AE: August of 2002. That led to enough seed funding to set up an office and start some meetings, learn more about the LED industry, which is not what you care about when you are in R&D, and put together a business plan. What we did was look at lots of LED marketing reports and the breakdown of the industry. We looked at pie charts of the breakdown, and it appeared that LEDs in mobile applications, cell phones in particular, accounted for 70% of the industry. We figured if we could make their LEDs more efficient it would result in longer battery life in cell phones.

SM: That is a big problem with cell phones.

AE: It seemed like a good fit. We started talking to cell phone companies and they all thought it would be interesting. The problem was that we were making improvements to existing LEDs, and they were actually pretty good at illuminating cell phones. How much could we expect to get paid for bringing that improvement in efficiency? The manufacturer could get the same result by just using half the number of LEDs, and they only cost $0.10 a piece anyways. It is hard to imaging standing up an LED company devoted to making such a low-price product, especially in a space that has existing companies that can tolerate those kinds of margins.

We then had a choice. We could either license the technology to the big guys or let them figure it out, but that would have eliminated the company right there. I wanted to do a lot more. I wanted this to be a manufacturing company. This was in the spring of 2003. About a year later we were looking at shutting down the company, which was depressing when we ended up throwing out the LED marketing report and started to think about the lighting applications that are not satisfied by LEDs. Are there any lighting applications out there that we can enable using our technology rather than just improving on applications that are already satisfied by LEDs? We learned from the cell phone fiasco that it was going to be too hard to make a cost play in this industry.

This segment is part 2 in the series : Luminus Devices Founder and Chief Technology Officer Alexei Erchak
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