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What's up with WATT, Pt I (or "What's Wrong with Tech Journalism?")

It's been a while since I covered Energous (whose ticker symbol is WATT . Other posts are here , here , here , here , here , here , and...

Wednesday, November 15, 2017

uBeam Funded? A Greater Fool Found?


After months of waiting, the day is finally here when uBeam are talking about their next round of funding - and if you want to get a piece of this action yourself, then you're in luck. Given it's such a phenomenal investment opportunity the Venture Capital community, renowned for their desire to see the little guy get a slice of the profits, is going to let you in on the deal. OurCrowd, a crowdfunding investment company who pool money from lots of individual smaller investors, is participating in this round and has sent out a solicitation for you to join in. The entire message is at the bottom of this post, but here are the introductory paragraphs:

OurCrowd is investing in uBeam, a US based company pioneering long-range wireless charging for electronic devices. In an era when consumers are attached to electronic devices, one of the most common pain points is poor battery life. uBeam has developed an innovative solution which enables untethered long-range wireless charging for battery-powered devices. 

We are joined in this round by Andreessen Horowitz (Facebook, Twitter, Airbnb, Skype), Upfront Ventures (Bill Me Later, Ring), Founders Fund (SpaceX, Palantir, Lyft), Ludlow Ventures (AngelList, Product Hunt) and Mark Cuban, owner of the NBA's Dallas Mavericks.

Very impressive. This would be the Series B for the company, a funding round often associated with a product that's about to scale and be really taken to market. uBeam appear to have been looking for this funding round since February this year when they gave a demo of their system, so over 9 months in the making. Given the hype surrounding the company, and the very favorable conditions for fundraising at the moment, I've been surprised it's taken so long for them to get here - surely all the big players will be desperate to put in money?

Some history
As a recap, Crunchbase lists the company as having raised a Seed Round in 2012/13 of around $1.7 million, a Series A in 2014 of around $10 million led by Upfront Ventures, and a Convertible Note round in 2015 of up to $15 million - a total of around $27 million. It's been two years since the last big fundraise, so it's near time for the company to be getting more. Some pointed out that a Convertible Note round was unusual, as normally crowdfunding is done prior to major institutional rounds, not after, and in this case uBeam did the Convertible Note after Series A. I cover some of this in a previous post, as does Garrett Reim of the LA Business Journal. It's worth remembering that this $15 million is from less sophisticated investors (though still accredited), and that the original Series A investors then are behind the convertible note holders in any liquidation until they convert to actual equity. Nearly $5 million of that $15 million came from OurCrowd. Remember that $15 million number, and that the bulk of uBeam's funding has come from smaller investors, not institutional VCs.

The current round
While it doesn't say clearly, I expect this round here has to be an Equity round (that is, investors get stock in the company), not a Convertible Note round (investors get debt that may become stock) - two consecutive Note rounds would be really messy, and at some point someone has to value the company - basically, a large institutional investor has to put a price on the company and convert that debt. Any investors here will be paying for actual common stock in the company.

The solicitation also indicates that major players such as Andreesen Horowitz (a16z) and Founders Fund are invested in this round - these are previous investors from the Seed and A rounds coming back in (or at least, that's what's being said here). These are serious players, who don't want a ton of tiny investments, or cap tables (who owns stock) that are large and varied - they want to put large sums in and get an Uber. If this were an impressive technology on the verge of 'take-off' they would be all over this round getting as large a slice as they could. So - are they?

Caveat
I'm going to put in a caveat here that I am working off only public information, and things may be different, and I do not have access to the information listed in this solicitation - I have avoided downloading it so I do not have to sign up to the Terms of Service that limit what I can do with it, nor will I watch the webinar - so what follows is my best guess, and opinion, based on info I have at this time, along with questions others should be asking.

Passing the risk
I've written for some time about another wireless power company, Energous, and that to me the genius of them is that rather than waiting until company sale or IPO (offer stock in the stockmarket) to realize profits, they bypassed that and went straight to IPO without a product or revenues. The money flows into the company (and the richly rewarded executives) while the risk is borne by the individual investor. The SEC regulates this and at least there are stringent rules, even if they can be gamed. Initial Coin Offerings (ICO) are relatively new and essentially use a 'cryptocurrency' (similar to BitCoin) to crowdfund a project. There are few protections on these and here the money flows to the company, and the risk to the investor - the SEC warns ICOs can be pump and dump scams. Kickstarter can get small amounts of money for projects, but again there are little in the way of protections for those putting money in (not even investors), and there are public cases of the company taking the money, and the "investor" left with nothing and no recourse.

The upshot of all this is - there are more and more ways for companies to take financing from less sophisticated investors, while pushing the risk onto them. An institutional VC can at least do due diligence, has a legal team, and full time staff to monitor the situation - they can even go to court to get money back from the company in extreme cases, such as what happened with Theranos and investor PFM. This is not to say there aren't legitimate and great uses of these fundraising avenues - there absolutely are. And it's not to say anything untoward is happening here. However there is clearly an increasing set of options for both small investors to get in, but also for the risk to be passed to them, the people least able to evaluate effectively. Crowdfunding groups are there to do some due diligence on their part, but is it enough?

Some, Most, or All?
So the question then becomes - who is taking the risk in this round? How much of this round is OurCrowd (and thus the individual investor) taking in % terms? Is it some, most, or all? How much are they putting in compared to Andreesen Horowitz, or Founders Fund? If it's a small amount, say 10 or 20% then that makes it look like the big guys are serious, and in a way the smaller guys get the "protection" of the heavyweights fighting on their behalf. If it's 50% you have to wonder why the institutional VC is letting such a sure thing out of their hands - and if it's over 75% then alarm bells have to be going off. If the Crowdfunding component of this round is the majority of the new money, then something is off. It means the institutional VC is running from this investment and there will be a reason for that - they view that the company will not sell for enough to warrant their investment. Typically, the rule of thumb is "sell for 10x money invested" so if the total the company would have raised after a round is $45 million, they have to view it will sell for $450 million or more to be worth their time.

So are the VCs leaving $100 bills on the floor for you to pick up?

New vs old money
One other thing to remember is how a round is 'sized'. If someone says "it's a $100 million round" do they mean the company valuation, or the money going into this round? Usually it's the latter, the amount of money going in. That can be a little more complex though - sometimes in the case of a priced round, a the total from a previous convertible note round gets "rolled in" with the new money to give a bigger total. So for example if there had been a $2 million convertible note, then a $5 million equity round, that can be classed as "$7 million". You need to know what's in there. So whatever this new round is, if it includes the previous note of $15 million, it sounds bigger than it is. I'd watch that number carefully. (Note, there are multiple methods of doing the calculation,such as a Pre-money conversion method that changes things. Looks like an actual $20m round. So likely what will happen is there will be a set value for the pre-money for the B round, the Convertible Note will trigger at a valuation that takes the "convertible note post-money" to this Series B pre-money, then the Series B dilution occurs. I'll do an example of this in a later post, it's not straightforward - but essentially it's a clean $20m round and the $15m is not included in that)

Questions, questions, questions
So if I were on the call, what would I want to know to answer the above? I'd want to know:
  1. Who is the lead investor and pricing the round?
  2. Are the named VCs like a16z, Founders Fund etc actually putting money in on this Series B round? How much each? Or are they just names of previous investors, or putting in token amounts?
  3. What are the pre- and post-money valuations of the company?
  4. How big is the Series B round in total? 
  5. Is the Convertible Note round included in that Series B total number?
Summary
So it's no surprise that uBeam are getting another round, but what is a surprise is that it's taken so long, and that it appears to be led by Crowdfunding and not institutional VC. If this is what's actually happening, it points to concerns on the part of VC and their willingness for small investors to take the risk. Are they following the path of Energous and others, looking to bypass the standard fundraising methods? If so, expect a continuation of uBeam walking back earlier claims of performance, attempts to diversify into other areas before solidifying their primary market, and moving to the "fabless" model of licensing rather than production. 

I'm eager to see what's happening here, and as I get more information I'll update. Whatever OurCrowd set as the target, I expect an oversubscription. At some point though, this will all have to be public through SEC filings, so we'll see what's actually going on eventually. 



From here on down it's just a copy of the solicitation, nothing new here.

The OurCrowd Solicitation

OurCrowd is investing in uBeam, a US based company pioneering long-range wireless charging for electronic devices. In an era when consumers are attached to electronic devices, one of the most common pain points is poor battery life. uBeam has developed an innovative solution which enables untethered long-range wireless charging for battery-powered devices. 

We are joined in this round by Andreessen Horowitz (Facebook, Twitter, Airbnb, Skype), Upfront Ventures (Bill Me Later, Ring), Founders Fund (SpaceX, Palantir, Lyft), Ludlow Ventures (AngelList, Product Hunt) and Mark Cuban, owner of the NBA's Dallas Mavericks.

We’re hosting a webinar/conference call (Wednesday, November 15th at 7:00PM Israel / 12:00PM New York / 9:00AM San Francisco) for investors to meet CEO Meredith Perry and learn more about uBeam.

Register

The Need for Untethered Wireless Charging

Everyone who owns a mobile phone or device has encountered the struggle of low battery life. To solve this, uBeam has developed an innovative solution which enables true wireless charging for battery-powered devices. uBeam works by harnessing the power from ultrasound. The system wirelessly transmits focused beams of ultrasonic energy to devices outfitted with their proprietary receiver. The ultrasonic receiver technology (which can be attached to or built into a range of devices) converts acoustic energy into electrical energy, which charges the device. The solution is expected to be capable of delivering energy to charge devices like smartphones, wearables, IOT devices and more in real-world scenarios such as coffee shops, office space, homes, gyms, airports, or anywhere a transmitter can be placed.

Unique Solution with Fully Functional Prototype

uBeam has already built and demonstrated several fully functional, prototype wireless power transfer systems, which can charge multiple smartphones in the air simultaneously, even while the phones are in use. uBeam’s solution has been deemed the wireless power “category winner” by some of the largest electronics companies worldwide as it can transmit the most power over the largest distance to the greatest number of devices simultaneously while staying safe, within regulatory limits, and without issues of interference. uBeam’s technological approach has a clear advantage over others as it is the only known wireless power technology that doesn’t use electromagnetic energy for power transmission. As ultrasound isn’t on the electromagnetic spectrum, uBeam is therefore not limited by the regulatory, safety, and interference hurdles of its competitors. uBeam’s technology does not interfere with other electromagnetic technologies that use RF and microwaves such as standard communication systems and devices (WiFi, radio, cell phones, etc.). The Company has a strong intellectual property portfolio with 92 domestic and international patent assets, and 17 granted patents. 

>>>View full diligence material on uBeam here

Market Opportunity 

According to Allied Market Research, the global wireless charging market is set to reach $37.2B by 2022, growing at a CAGR of 44.7% from 2016 to 2022. Research shows that increased sales in the portable electronics and wearables market, as well as in the electric vehicles market, have created demand for new forms of energy, further driving the growth of the wireless charging market. uBeam believes their technology has applications that extend well beyond power transmission - into haptics, autonomous vehicles, rear parking sensors, and more. The rear parking sensor market alone is a several billion dollar industry.

Skilled Management Team

uBeam is led by CEO Meredith Perry, who was selected for Forbes’ prestigious ‘30 Under 30: Energy’ list, and for Fast Company’s ‘100 Most Creative People In Business’ list. Meredith is joined by EVP & CTO, Larry Pendergrass, a physicist and former engineering executive at Tektronix/Keithley, Agilent, and HP, as well as COO Kostas Mallios, who recently sold his last two companies to major corporations in a span of 24 months. Kostas was a GM at Microsoft for 15 years and was also the Vice President of Intellectual Ventures.

I'm Interested
In the long term, the investment committee at OurCrowd believes that uBeam could become an infrastructure technology similar to Wi-Fi, providing seamless charging, data transfer, and seemingly infinite battery power. 

Looking forward to you joining us on the call,
OurCrowd Investments

Monday, November 13, 2017

What's up with WATT, Pt III (or "Is this thing still going?")

It's been nearly three months since I posted on Energous, the RF wireless power company that I've been quite skeptical of since the beginning of this blog. I wrote a two parter, the first covering the inadequate 'reporting' by the tech press on the company, and the second looking at the financials and share price of the company. As there hasn't been much in the way of press outreach by Energous lately, I wanted to do an update on the business side of the company as there have been some ups and downs.

If you look at the chart below, you can see Energous continues its highly volatile course, as it was around $16 a share in July, down at around $9 by the time of my articles, then a rapid rise and fall up to $13 and back down to $11 (see if you can tell the exact time the Apple announce the wireless charging in the iPhone was not Energous...), a slow rise to $14, then a fall to under $7, and so far a bounce back to about $9.40. If you timed your buys and sells well, you could have made quite some return on that stock.



Why the volatility in the stock price? Well, apart from the run up to Apple's WWDC when there was speculation the  iPhone wireless charging would be RF based (not rational speculation, it was obvious at the time it wasn't), and subsequent drop, there's no event or announcement that drives anything other than a drop in value of the company. The Apple September announcement removed any rational hope of the company getting into iPhones, which is really the only market that can give the company the 9+ figure valuation it needs, and should have sent the stock price even lower. Strangely, though, those who had been pumping the stock based on Apple being the "Tier One" customer that's repeatedly mentioned by Energous suddenly started saying that didn't matter, and it was all about FCC approval this year - basically everything rides on hopes, not facts. This is a *belief* stock. Think of it like a religion - if you show evidence the religion is valid belief in it goes up, and if you show evidence that it's a human-concocted fiction then belief in it also goes up. Take a look at Stocktwits on WATT and read the comments, and come and tell me that's not a bunch of true believers.

The downward slide continued until it hit $6.91, when the company released its 10-Q on quarterly results and had the public earnings call. In that call the company missed its earnings target, talked about a smart textile supplier as its big customer 'win', and said they'd sent some test results to the FCC - and so of course the share price leapt up over the next couple of days to $9.39. Wait, what?

Yes, the stock price went up despite no real positive or significant news, and an earnings miss. What happened? Well, take a look at this Stocktwits tweet.


Now read the conference call transcript, and point out to me where the CEO "promised FCC"? If you read it, he's very careful to give you a positive view but absolutely not ever commit even vaguely. There is always a caveat in his statements like: 

"Regarding FCC certification of the first power-at-a-distance transmitter... The FCC reviewed the certification document as a novel or new application of previous testing methods. Because the certification will set a precedent, the FCC is being very thorough in their review to ensure that not only this certification, but any future certifications, comply fully with all the current regulatory requirements. As a result, the agency requested some additional tests, explanations and clarifications..."

Even when he's a little more committed with statements like "Our test data, once again, shows that our device complies with current regulatory limits." there's no statement as to what the tests are, or what regulation they are checking against. Like the last "FCC Certified" MiniWattUp product, it may pass the tests, but be of no use to anyone the power is set so low.

And here's where you should remember the phrase "If you're sitting at the poker table and you don't know who the mark is, it's you."This investor read what he wanted to read, not what was actually said. And that forms the basis of this irrational belief and hope the stock will go higher. What happens in this type of situation? Well you can expect continuous 'bounces' in stock price as the marks are fleeced again and again, until even the greatest zealot surrenders (or runs out of cash) and it all collapses.

You can read into the professional's views of the company by looking at what the amount of shorted stock is - that is, how many people are betting that the stock will go down, not up. Taking a look here and here, it's around 30%, which is high and not showing a lot of confidence in the company.

But what about the company executives? They must have faith in the company! Of course they do, that's why in the last 6 months every single time there's been an inside trade by the top four executives involving actual money, it's been to sell. Nearly $1.4 million dollars of sold stock between them. Why would you be selling your stock when you knew the company was going to be worth billions more in the next few years? Taking some money off the table isn't a bad idea for executives, but overall this does not seem like a company where the executives are in it for the long haul. (The "purchase" points you see there appear to be options, not purchases, it looks like no money was paid).



So what happens next? Well, there seems to be no end of people willing to gamble against reality, as well as those willing to encourage their delusions to sell them something. I expect there will be a few more "bounces" of the stock price, and the FCC approval either never forthcoming or we then find that the device approved puts out next to no power and is practically useless (see their WattUp Mini as a reference), and eventually the stock price will collapse and they'll be valued at a small multiple of their revenue from consulting services and a few licensed patents.

That is assuming, however, they can keep going. With a lowered burn rate of around $12m a quarter, and around $21m cash liquid, they've got until about March 18 before bills get hard to pay. IOnterestingly, in their 10Q they say they expect to be good for another year, so they either will cut costs or need another cash influx from somewhere. Who is going to do that? Their distributor Dialog? They did it once before so perhaps again, but at some point the owners there have to watch what's happening and wonder.

So, the summary is the same as before. Reality continues to be deferred while various parties rake in the cash. Energous have no product sales, negligible revenue, vague statements about FCC approval, and their executives continue to be richly compensated. Perhaps my next summary will return a different answer?

Thursday, November 9, 2017

uBeam Office Space Woes?

A few weeks ago I wrote about possible impending office space issues for uBeam, and from the CEO's recent Facebook posts it seems that they may still be having them. Yesterday this appeared on the feed.


For those of you unfamiliar with the term, HAZMAT is HAZardous MATerials and basically means things that can harm people, so corrosive, poisonous, radioactive, flammable, explosive, etc. For example, if you're manufacturing physical items you may need chemicals to etch or clean components that you can't just flush into the sewer, and so you need to both store the chemical safely and dispose of it in a safe manner. The semiconductor industry, for example, uses all sorts of etching chemicals you don't want getting near you, and when it first started often incorrectly disposed of them (basically, pouring them out the back of the facility) and created very toxic areas, some of what are now called Superfund sites - areas that are so contaminated they need special consideration to clean up. 

There's a reason there are strict controls on what gets stored and and how it's disposed of, and cities have strong incentive to make sure they stay clean - and Santa Monica is pretty strict, the city do not want their pretty beaches turned toxic. Landlords are also usually careful about what gets into their buildings - no-one wants a spill that messes with other tenants, or precludes future tenants from moving in. You don't see many manufacturing facilities in city centers, as no-one wants to mix retail and restaurants with carcinogen storage.

There's sometimes no reason that many of these materials can't be stored safely, it just the buildings aren't setup to handle them, and neighbors just don't want it near them. It seems uBeam have not yet moved production away to some large scale factory, and need to be using hazardous material in their research. How much research? Well, 12,000 sqft is a lot - that's nearly 1/3 of an acre - and most estimates put space needs at 150 sqft per person. How many people does uBeam have, is it the 80 people that would indicate?


No it's way short. So assume they need 4,500 sqft for the staff, that's 7,500 sqft for the labs. That's an enormous amount of space. Do they need a wind tunnel or something? The listing for the building they are currently in states the space at 4,500sqft so what are they adding they need so much more? They used to have a San Jose facility at around 8,500 sqft but that was shuttered earlier this year.

So are they adding huge production lines? Doesn't make sense in a city area if you're moving to production. In that case you move to an industrial park and a much lower cost area, or offshore it. It's not something you do in Santa Monica.

Are they adding huge numbers of staff? If so, fair enough, but that implies a new large funding round, in which case they could afford some good locations - but the CEO is asking for 12,000 sqft at $40k/month, so $3.33 sqft/mnth. You're lucky to get anything decent in the SM area for less than $5/sqft per month. (Note that places like LA and SF list per month, lots of areas go per year, be careful in that metric.) Generally, if you've a lot of staff, office space starts to pale in cost - imagine you've 50 well paid engineers, that's several million a year right there. House them in a nice large building (let's say twice this cost) and it's still less than a million a year. That's not cheap, but labor costs are the largest slice of the budget pie - at least pre-production.


Interestingly the CEO's father piped in and seems to have trouble with basic maths of monthly leases. He's only an order of magnitude off. I wonder if he's doing the safety calculations? (Joking aside, see how easy it is to make the month/year mixup in rental costs?)

Other entrepreneurs are there to help though:


Which is bizarre as surely a well funded company like uBeam, on the verge of an enormous Series B and going to be worth billions, wouldn't be looking to share space with another startup? Also interesting is that they need it now. That's understandable - if you have equipment and labs you don't plan that move in a day, it takes weeks to do a good job of moving everything, and they need to be out January 1st. (How much is a few thousand square feet of storage in Santa Monica? Twenty or so 10' by 10' lockups should do it.)

So what do we see here? They are indeed moving out of their old place, as I blogged in September, but don't yet have anywhere new. They aren't looking to setup manufacturing facilities, and are apparently not adding staff (job ads also don't indicate that), but 'need' a monster 12,000 sqft (I honestly have no idea what on earth they need that much for). It also needs to be cheap, and $3.33 indicates they are either being exceptionally careful (that trait uBeam are well-known for), or simply can't afford more. Landlords also check prior to multi-year leases the credit worthiness of their prospective tenants - if they don't have clear revenues or money in the bank, they'll pass, as who wants a deadbeat tenant?

Now the company could be just signing the paperwork for their next funding round and waiting on the money coming in (I have said that despite my opinion, there's a ton of dumb money out there looking for a home, I think there's a >50% chance of another round for them), but this is a weird situation. If a round were completed we'd have heard of it, and they could afford something better. That they are failing for HAZMAT repeatedly and at the last moment has me wondering - are they really failing for HAZMAT, which can be determined in the first few minutes of an application? Are they failing for credit reasons, and the landlord just doesn't want to say that to the company for fear of offending their local VC investor who has many companies looking for space, or is this simply the public excuse given? Or are they really forgetting to tell the landlord about the HAZMAT until the last minute?

Who knows? None of this makes complete sense, it could be any of the above, or something ridiculous I just can't fathom. We don't have all the info, but it's just another interesting day in the history of uBeam. We'll see what the next chapter of that is soon enough.

Sunday, October 29, 2017

Brief uBeam Update

I've been busy with a combination of work and personal things, and it's hard to get the time to write good blogs, even with all the events going on with the likes of Juicero closing down. Just a brief update on uBeam - who apparently are still waiting to hear about their major funding round which has to be imminent. The climate for fundraising is ridiculously good right now, from what I hear, so surely it will be any day now?

The prospects for major funding are so good, in fact, that they seem to have had a project manager and lead mechanical engineer leave in the last month, both to "i.am+", the hardware company of will.i.am. I'm shocked - after all, don't they realize that uBeam is on the verge of being worth billions? Billions, I tell you!

It seems they have a new recruiter working for them as well - I can tell when that happens as a bunch of people I know start getting emails and calls. Usually this is the nth time they've been contacted, this time billed as "an amazing Mark Cuban backed startup, charging phones wirelessly with sound" (though no mention of a recent funding round). The poor recruiter doesn't know that uBeam is pretty well known in the acoustic community, and there's pretty much no-one that's not been contacted at least once. I imagine it has to be a bit of a demoralizing activity. The latest ones are being scouted to be the Principal Engineer for Acoustics, and while the ones contacted are talented and smart people, their skillsets are... not appropriate (in my opinion) for the needs of a company like uBeam. 

There was a bit of a charm offensive in the last month, with two uBeam board members tweeting how awesome and inspirational the CEO is, and someone from Linkin Park doing a full technical analysis of the uBeam technology and concluding it's also awesome. I'm glad to see the Tier 1 VCs are all signed up so they can concentrate on the music community now. The uBeam CEO pointed out on her Twitter feed that she was going to be spending plenty of time traveling around the country, which must make the SVP Engineering happy. Congrats to him on managing to arrange that, perhaps we'll see some tech advances now.

Most amusing, though, would be that I'm getting phone calls from people wanting to speak to the CEO about the job openings at uBeam. It's a testament to uBeam's confidence in the future of the company that they want potential new hires to speak to me and have given them my number. I do let them know it's been two years since I've been there, and they ask about my experience. I'm sure the incredible prospects at the company will outweigh anything they read online and they'll be taking the jobs immediately.

That's it, have a good week everyone.

Update Nov 3rd:

EEV Blog indicated that there may have been a new investment from Lumia Capital as the uBeam website investors page was updated. I think this is just a cleanup of the webpage by someone at uBeam - claiming to be a "Mark Cuban/Marissa Meyer backed startup" gets a little long in the tooth after 5 years and 2 intervening rounds of funding that those people skipped. From what I can see there along with comparison to SEC documents, I expect this is now just those who invested in the Series A (2014) and subsequent convertible note round (2015). This site lists Lumia as having invested in 2014 in the Series A

What does seem to have popped up is InFocus Capital Partners. This document is from January 2017 but the investment may have been in April 2016. Looks to be some opthamologists from Chicago who have an investment group that creates individual LLCs as investment vehicles for either crowdfunding or small angel groups. I think (but am not sure) to meet SEC rules this has to be part of the convertible note from 2015 but that's a messy area and I'm certain there won't be enough public info to be able to tell.

Avoiding, again, institutional money and taking instead what some may call "dumb money", i.e. those without the resources to do detailed due diligence and who buy on the 'sizzle'.

So, no, I still don't think there's public evidence they have received new institutional funding.

Nov 6th:

Those two ex-uBeam guys jumped at the right time. i.am+ raised $117 million. Wow.

Friday, September 22, 2017

uBeam Funded? Or on Fumes?

It's seems uBeam have been in fundraising mode these last few months - the newspaper articles, the demos, the apparent closure of the San Jose office, and that the last known round was in summer 2015, all point to an ongoing fundraising effort. It happens to all startups - you get profitable, you get another round, or you go out of business, no way past that. As far as I know there's no product, so uBeam need to fundraise. There's been no indication of how that's been going (publicly, I've spoken to plenty of people in the VC industry, it's interesting...) - until now.

It seems that the building that uBeam use as their headquarters is going to be available for rent from January 2018. Not just some of it, it seems to be the whole building. You can see the ad here on Loopnet, and there's a "For Lease" sign out front right now.


So what could this mean? A few things stand out as the strongest possibilities - uBeam has raised (or has nearly raised) their next round and are ready for their next expansion and are preparing to move to larger premises, or they're taking their time in negotiating a renewal and the landlord is being cautious to ensure no voids, or simply they don't have the money to commit to a long lease and the landlord is seeking the next tenant.

It could be any of these, or some other innocent explanation. If it's preparing to expand they must be about to hire a lot more people, however their usual job ads haven't changed. If you look here it's the same three key positions of Lead Acoustic Engineer, Lead Systems Engineer, and Lead Hardware/Software Engineer (seems kinda key to have those people...). Perhaps they're so busy signing the next round and counting the money they forgot to put the job ads up, and with my reminder they'll do so in the next few days. All production, sales, and marketing perhaps, since they have to be ramping up to consumer sales soon. Right?

Seriously, I do expect that they will get some funding, though the mix of cheque size, valuation, and % equity is something I've never been able to make work in my head with rational numbers. But I'm just a dumb engineer, what do I know? So it's most likely that they are in discussion trying to get a round signed, that can take some time if it's large. And that would be just as well for a few reasons. If there's no deal on the table from a VC yet, knowing that the company is on a timer to get funding can weaken the negotiating position, but even more importantly can you imagine coming to work as an employee and seeing that "For Lease" sign outside? You'd worry that your job was about to disappear, and begin to look for other work, and that can kill a company. So if they're working through that paperwork, management can tell the team:

Don't worry, we're just working out the details and the next round is imminent.

Of course, if you've been around startups long enough you know that even up to the day the money runs out the employees can be being told:

Don't worry, we're just working out the details and the next round is imminent.

I don't know which it is - Funded or Fumed - but it looks like we'll know by January 2018 at the latest.

Oh, and if you're looking for office space in the area, I'd suggest looking at the place - the office, the location, and the landlord are all awesome.

Update 28th Sept: There's a possibility they may be consolidating in the old uBeam offices in San Jose. These are offices that look to have been leased in Q1 2016, around 8500 sqft for 3 people, and then closed less than a year later (see here for details, last page). Loopnet lists the office as available since Feb this year, but still available. I had thought they had been subleased, but perhaps not. If that's the case, the company has been paying likely around $40k a month for an empty office, and if the lease in Santa Monica runs out, they may be in a position where there is no choice but to move to an office that they've had sitting empty for most of a year.

If true they'll have opened an office, closed it, and opened it again all in the space of less than 2 years, having paid near $500,000 for it to sit empty in the interim.

Monday, September 18, 2017

Wireless at-distance charging may be here - and not how you were expecting

There are a number of wireless power companies out there claiming all sorts of amazing specifications of their seemingly perpetually "soon to be released" systems - 15 feet range, faster than a wire charging, 10's of devices, cheap, safe, efficient - yet few can answer detailed questions as to the physics, or the release dates, or the safety, just vague future promises that all will be revealed. One exception was Disney who went into extensive detail about their "quasistatic cavity response" method which they demonstrated worked, but clearly was utterly impractical (hence the detailed reveal).

Well, things may have changed today, with the public announcement by Pi of their charging solution. If you want to watch the demo they gave today, you can watch it here, or read some of the other press release material here, and articles from Techcrunch or DigitalTrends on it.


Above is a picture from their website as to typical usage, and it's basically a cone shaped transmitter that looks a bit larger than an Amazon Echo or Google Home in height, and looks to charge devices within a short range of it, in any orientation. If you go to the "Tech" page there you can see a representative breakdown of what's in the box. It uses magnetic resonance, controlling magnetic fields to transfer power in the same manner that Qi does - you may have heard of that recently, as Apple announced last Tuesday that this form of wireless charging will be in the iPhone 8 and iPhone X (it's already in most Samsung high end phones).

The limitation to Qi has previously been that a charging pad is required, and the phone has to be within a centimeter or so of the pad, and well aligned. This makes the phone almost unusable during that charging time, and limits how many devices you can charge to the size of your pad. 


Pi's approach seems to get around most of those limitations by being able to 'beamform' the magnetic field, their claim is that the equations to do so have been simplified so that they can be done on the processors available in consumer goods. The device itself seems to have multiple coils, at least one of which is at 90 degrees to the others, and is likely needed to be able to direct the fields as required - it also is what likely sets the cone shape of the transmitter.

They claim about 20W total power output from this device, but that it can go higher with a larger transmitter. Qi calls for 5W in its early version and 15W in the latest. Pi state up to 4 devices can charge at full rate and then it starts to slow after, which would point to them using the 5W rate. Their website says 10W per device, so what rates are used are still a little unclear. Still, in theory 5W will charge your phone in an hour, although in practice it will be longer than that - but it's a reasonable amount of power.

The downside to this device? The working distance is about 30cm, so not the huge distances we've been promised by other companies, but in terms of making the base technology better, it's a 10x improvement so it's impressive work. It's unfortunate that they may receive criticism because expectations have been set so high by companies that I don't believe will ever deliver their initial claims.

It's a usually-safe, well known technology, and unlike uBeam or Energous, Pi have actually published some aspects of their approach, such as here, so you can actually begin to analyze what they've done. It's not complete work, absolute numbers are not included, and it's not peer-reviewed, but I can follow their approach and there are no huge red flags appearing.

Now I've been critical of uBeam and Energous for 'showing a charge light coming on' or claims of charge rates incompatible with FCC regulations, so why am I not so critical of Pi? Quite simply, it's because they're not claiming anything that isn't readily believable based on the physics of what they are doing, and they are explaining what they are doing. It builds on an already proven (though limited) technology, and uses some smart ideas to move it forward and make it more practical. 

Now, I do want to see more - I want to know the efficiency under various conditions, we may find it's hideously inefficient, though I expect it's well into double digit %. An efficiency at 10 to 20% is decent for at-distance wireless, but poor compared to wired and has societal implications at-scale. I want to test safety and what happens when you start to put metals in the path randomly. I'd love to have one and test it and take it apart, but at first glance I'm not seeing any claims that aren't realistic.

Release is slated for next year, and given the demo seen, they're closer to production equivalent devices than prototype, and unlike other companies who seem to think you can go from prototype to consumer sales in weeks, this is a more realistic timeline.

So let's summarize what we have:
  • Based on a proven power transfer technology
  • Legal and to my knowledge safe
  • Using a smart method to overcome existing limitations
  • Works with inbuilt receivers in modern phones (cases for older ones)
  • A transmitter priced for consumers (under $200)
  • Multi-device charging
  • Reasonable charge rates (5W and up)
  • Can use the device in any orientation while it charges
  • Works internationally
  • Modest distance, 30cm
  • Unknown efficiency ranges (estimated below)
  • Timing near perfect to match Apple's AirPower release

It's an easy, minimal effort for a user, they don't have to change their phone if it's new enough (no need to integrate with the phone manufacturer is a huge plus), cost isn't prohibitive, and they can piggy-back on Apple's AirPower marketing. It also leverages a massive prior investment in Qi by many other companies. If this is as good as it is presented, I'm going to say that in my opinion this is as good as at-distance wireless charging is going to get for some time. You can complain about it only being 30cm, I actually don't know if it's going to be enough, but I can see it working for some office desks, hotel, and home locations. They do mention larger ranges from bigger transmitters (don't expect 15 feet though).

Oh, and apparently they've done this on just $3.5 million of investment. Tip-of-the-hat to the Pi team, and I'm looking forward to seeing more detail on this. 

I think uBeam and Energous are going to have a harder time explaining their value proposition after today.

(Also, if you sign up early enough on their website, it's $50 off the transmitter when it comes out).

Update Sept 19th: Some people have been asking why there are no efficiency numbers given. First of all, they won't be great, as in "90%+", and second it's a complex thing to explain to a lay-audience when your efficiency and charge rate are dependent on distance and orientation as it's not a single number. The paper here gives some indication, as it shows charging time (not efficiency) vs distance and orientation. If input power remains constant, and the results here are correct, you have a 50% efficiency reduction from baseline at 30cm. The orientation data doesn't make it clear what the baseline they use is, but seems to be from about the same to up to a 66% loss (take this number with a pinch of salt, that graph isn't the best). This data shows Qi as around 60% efficient as the baseline, so that would indicate Pi goes anywhere from about 60% efficient down to 10%, I'm going to hand-wave estimate a 20 to 25% in most typical use cases. Great for at-distance wireless, not good compared to a wire. (Caution, these are very hand-wavy calculations)

To put into context, imagine they get 25% market penetration on 1 billion Qi enabled phones globally. At 250 million devices, if they all charge once a day and evenly spread and given a 120 minute charge time, that's ~21 million people charging at 5 Watts, but if 25% efficient using 20W, so it's around  0.5 GW of extra global generation capacity. At around $3,500 per kW to construct that's $1.5 billion in new power stations, and at 12c /kWh around $1 million a day burned as heat.

Update Sept 21st: Just a few thoughts. The term "beam forming" is a bit much I think for having two to three coils, and it's not really a beam, it's the magnetic field. Likely "field shaping" or "field biasing". I expect they've tried to balance the number of coils and the associated electronics with cost, efficiency etc and come out with this as what they think is the right mix (<$200 is pretty compelling as a price point).

Thursday, September 14, 2017

Scientists Prove You Can Charge Your Phone With Ultrasound - In Just 7 Weeks!

There's been very little out there regarding ultrasonic wireless power transfer that anyone interested in the numbers can really dig into, so anyone critical of the claims of some companies has very little to point to when discussing the topic. uBeam have been extremely tight lipped when criticized, often simply claiming that no-one understands the field, or their assumptions are wrong, but never actually correcting those assumptions or providing detailed alternative numbers. While I've shown some information, as has Dave Jones of EEV Blog (among others), as a "disgruntled former employee with an axe to grind" apparently I'm not to be trusted in my analysis. Things have just changed, however. A prestigious group of ultrasound researchers at Stanford has just published a paper on "Wireless Power Transfer to Millimeter-Sized Nodes Using Airborne Ultrasound" that goes into some depth on the topic. 

It's peer-reviewed, which means other scientists read it, critiqued, and have judged it meets a standard that it is a novel or major contribution to the field, and there are no significant mistakes they can find in the work. The publication is the IEEE Transactions on Ultrasonics, Ferroelectrics, and Frequency Control, which is the highest ranked journal related to ultrasound (by Impact Factor). This is going to be hard to dismiss as partisan, biased, incorrect, with false assumptions, or incorrect numbers.

Even better, the authors have made it "Open Access" which means that anyone can download it without being a journal subscriber or paying for it. Please, if you're at all inclined, download it from the above link or at the one below to make sure the authors get credit for their great work.


I'll highlight a few points here from the abstract as a taster for you:

We propose the use of airborne ultrasound for wireless power transfer to mm-sized nodes... We show through simulation that ultrasonic power transfer can deliver 50μW to a mm-sized node 0.88m away from a ~50 kHz, 25 cm2 transmitter array... We also argue that longrange wireless charging at the watt level is extremely challenging with existing technology and regulations... 

To translate for everyone that's 50 microWatts from a 25cm2 panel, out to around 1 meter. Scaled to my estimate of uBeam's 45 by 45 cm transmitter that's around 4 milliWatts. A typical phone battery is around 5Wh so you're looking at 1250 hours to charge the phone with this method, if it were switched off. 

So there you go, proof that uBeam can work and charge your (switched off) phone in no more than 7 weeks! (Are there ways to go faster, yes, but 1250 times faster? While I'm painting closer to the worst-case picture, if you look at some of my earlier posts you can find different numbers that change the outcome to a higher number, but is it safe, efficient, practical, legal? It's now really up to uBeam to show.)

It's a well written paper, please read it if you have any technical background. For those of you who don't, they make a pretty reasonable statement that for "Internet of Things" (small devices that need very low power charging very intermittently) it's a possible solution, but phone scale devices (or larger) are unlikely to be practical. Further, they point out this is contingent on the 145 dB safety levels that the USA used to allow, but appear to not allow any longer. At ~115dB, the level almost every other country has always given as a limit, things get 1000x worse than this.

This is not the first time recently that peer-reviewed papers have called into question the use of high power ultrasound. Last year, the Proceedings of the Royal Society published a study of the potential negative health effects of the increasing use of high power air coupled ultrasound in our environment.

Over to you uBeam, it will be very interesting to see your response to this...

Sunday, August 20, 2017

What's up with WATT, Pt II (or "What's making Energous' share price tumble?")

Yesterday I posted on the coverage Energous, the RF wireless power company, receive in the press and how tech journalism really is failing in its role to report on complex tech in a reasonable manner. Today, I'm going to be looking at another metric of performance that we rarely get to see with startups, and that's company valuation, so be warned this is lots of company financials coming up.

Normally a startup is valued by a large scale institutional investor and that determines how much stock the company gives up in return for the investment. It's a bit of black magic, and is related to the technology, IP, customers, team, engineering, but mostly whatever the investor thinks is right for the given cheque size they write and the percent they want. You, as a member of the public, have no idea what goes into this, it simply happens in the background and it's really not clear why they get the valuation they do. 

Things are different with Energous though - unlike almost any other startup they IPO'd early, before product or revenue, and so are a publicly traded company. That means their financials are, by law, available to the public, and as such their company valuation, or market cap, can be viewed at any time. If you assume that the market is rational then that share price, or market cap, is a clear indication of the value of the company. Now, the market can be irrational for long periods of time, particularly with companies with speculative products somewhere in the future, but in the end the rational world forces its way onto the share price, even if that takes years.

I've made it clear that I think that Energous is not as valuable as the market says - that is, I'm saying that in the short term, the market is irrational where Energous is concerned. I briefly wrote about this a few months ago, and I'll summarize here - some people benefit from wildly varying stock prices to buy low and sell high. If you can, legally, insinuate a large company like Apple will use theproducts, while never actually saying it, you can get people to buy the stock speculatively before each major Apple product announcement, then after the inevitable tumble when it's not announced it can be bought back cheap. Rinse, repeat. (Note it doesn't have to be the company itself, or insiders, doing this.)

Here's the stock price for Energous in June 2016. Notice the continual rise until late on the 13th June when it plummets? What could have caused that? Apple held their WWDC event that day, Tim Cook finished his talk at 2pm and there was no announcement of Energous in the iPhone. Dig into this yourself with the NASDAQ tool.

Energous Share Price June 2016

Zooming out to look at the stock price over the last year, it's been a pretty bumpy ride with +/- 30% swings pretty common.

Energous Stock Price over the last 12 months

What's really interesting though is the stock price for Energous over the last 2 months. It could be described as being in 'free fall'. You can see from the chart below that stock has fallen from around $16 to around $10, over a 35% drop. The volume indicators in the bottom show red bars - it's mostly selling.

Energous Share Price over the last 2 months

Most of that happened in the last 2 weeks - let's take a look at the last few days. You can see below that on the 16th the share price was held at exactly $11.00 for the full day, before giving up and it dropping further.

Energous Share Price for the last 5 days

Now, I'll make quite clear at this point that I am not a financial analyst, and I'm putting this out there more to raise questions than to provide answers - so if you know investing well, please jump in and make comment. I'm very interested to hear where I may be wrong on all this!

For the last 50 days the average number of shares sold has been near 300,000, but in the last few days it's been nearer 900,000. This is unlikely to be your average employee selling their stock, these are pretty sizeable share amounts as the total number of outstanding shares is around 22,000,000 - so around 4% of the company every day changing hands. Maybe a vesting period for a large number of employees has hit and they are also allowed to sell, and they're taking their winnings - though not a good sign for the company when the insiders sell as much as they can!

I'm interested in what happened on the 16th, and what held the price at $11.00 for the day. Energous is a very heavily shorted stock - that is, many people betting that the price will go down, not up. Someone perhaps covering their position and making sure they don't get bitten heavily on the downside? Whatever is happening, it's not a 'natural' stock market event.

What's causing this sell-off? I'm actually not sure, as there have been no major events that I am aware of in Energous' world that would drive this. They announced in their earnings call that they'd got more investment from Dialog, that this meant they had $28 million on hand at the start of July, and were trying to drop their burn rate from $15m a quarter to closer to $10m, indicating they can make it to very early next year without further investment. They still claim to have many products in the pipeline with FCC approval underway, of which I remain highly skeptical, however there's nothing here that's different than before.

All I can see having happened is that a few leaks have indicated that the iPhone 8 will not be using Energous, but rather Apple have developed their own version of Qi wireless charging. Should Apple announce this at their WWDC next month, it pretty much puts the last nail in the coffin of anyone thinking Energous will be built into Apple products. Unlike last year, there's not the ability to stoke speculation that 'this will be it' with the next iPhone release. Are people selling off ahead of a potential share-price cliff edge? If anyone has any thoughts, or a better explanation, please do share!

What does this mean for the market cap of the company? A month ago Energous was valued (market cap) at $350m, today it's $225m, over a 35% drop. That's pretty horrendous, and any regular company would have shareholders screaming. Maybe this is just another dip that some will view as a buying opportunity and the Energous roller coaster will carry on, or maybe it's the last dive before iPhone 8 crushes the possibility of Apple revenue and the FCC kills the idea of approval of the large scale transmitters. We'll see.

For the staff, this can be a morale-killer - you see not only the prospect for the product you've been working on diminish, but the $100,000 you thought your stock options would get you is now $65,000. Maybe you'll be getting a Honda not a Tesla? Competition for talented staff is high, and it makes it all the easier for other companies to grab your best employees, or raises your salary/equity costs in keeping them.

This might have implications for other wireless power companies too. uBeam are in the midst of a fundraising round, and from rumors I have heard have been pushing for a monster valuation. Given the iPhone 8 likely making it clear that neither uBeam nor Energous will ever be in an Apple product, and that the market cap of a company that's positioned itself as well as Energous is at $225m and falling like a rock, could uBeam's desired valuation during fundraising be taking another hit?

Update: Monday 21st 2017
The day after I wrote this post was another major down day for Energous, dropping nearly 13% in one day to $8.95, putting the market cap at around $197 million. Volume was increased, around 1,300,000 shares traded, around 6% of shares issued.

Energous Share Price on August 21st 2017
Who is selling this stock? It has to be large scale insiders or institutions, unfortunately it seems the Nasdaq tool only updates institutional positions every quarter, so unless someone can point me to where you can find that information on a daily basis, we'll have to wait and see who is doing the trading here.

SeekingAlpha published another article on Energous, this time claiming that the company may have $4 billion a year revenue within 2 years, based on statements from the CEO Steve Rizzone. This is quite fantastical, with no new evidence presented and assumptions made that are 'generous' to say the least. The article ends with a quote from the CEO:

An opportunity to engage with a company that has tremendous upside at a very very reasonable market cap. If you think about it: if we have no real competition, if our total market opportunity is measured in the billions of devices, if we’re on the cusp of getting regulatory approval - a hurdle which many said would be impossible to get - if we’ve got our first orders for silicon and we’ve got multiple strategic partners that are firmly behind the company, what’s a company like that worth that really starts to execute?

There are five explicit "if"s in that passage and at least a couple more implicit, yet ends with asking the reader to imagine a huge upside, and appealing to their greed. A marvelously constructed paragraph that promises nothing yet leaves the reader with the impression that huge success is imminent. This guy is a great salesman!

The comments to the article are amusing - one commenter, Keubiko, lists nine such statements by Rizzone over the last couple of years, each of the claims of which have failed to materialize. For example:

"we anticipate revenues in the low seven digits in calendar 2015 increasing in 2016 to the mid-seven digit million and reaching monthly cash flow breakeven in the third quarter of 2017." - Rizzone, August 10, 2015

We're now entering the last month of third quarter 2017, breakeven is stated to be (as early as) Q4 2018 here, so over a year away and maintaining Time to Carrot. It's amazing how major product release and breakeven is always just far enough out you don't have to prove product is ready, but not so far that people can't be persuaded to invest because it's just so close...

If you believe I'm wrong about Energous, now is your chance to buy in at a low price, and make me look like a fool. In the short term you may even be right, it's a stock that's had wild swings before - but at some point it won't come back up again. This smells to me like we might be there. Let's keep watching over the next few days.



Further Update on 21st August
This section below was a question I asked about financials that was answered in the comments. Turns out that the automatic importation of numbers from the SEC went wrong, leading to weirdness in the financing tables. I'm leaving it below just as a reminder to myself to always use primary data sources whenever possible.

Finally, and this is definitively a question, I've been trying to work out what this little nugget in Energous' financials is. If you go to Seeking Alpha, and look a the quarterly cash flows, you see this:

Energous Financial Data from Seeking Alpha

The "Miscellaneous Funds" line is interesting as it jumps from $6.1 billion in the red to $1.33 billion in the black in a quarter. What on earth is this? Typo or mishandled data in Seeking Alpha? Or some odd accounting? These numbers are multiple of the company's highest market cap, not chage you find down the back of the sofa. Anyone with information or thoughts, please let me know!

Update: A commentator points out these numbers are due to an issue in automatically reading in the data from the source, which is the SEC and can be found here. Basically, those numbers should be zero, so nothing to see here. He makes a point I should have known - always use primary sources for your data where possible!

A Unicorn I Can Believe In

I've spent a fair amount of this blog trying to pull back the curtain on startups and VC funding, and have covered a few wannabe unicorns in that time. In startup-speak, a unicorn is a company that has a valuation of greater than $1 billion, such as Uber, AirBnB, or Pinterest. I've always found this an amusing name, as I'm originally from Scotland and in the same way that the bald eagle is the national animal of the USA, the unicorn is the national animal of my home country. Yes, you read that correctly, a mythical creature is the national animal of Scotland. (It beat out Haggis McHaggisface in an online poll, what can you do?)

I was back home last month, and in both Glasgow (where I did my under- and post-graduate degrees) and Dundee (where I grew up) took the chance to photograph the statues of unicorns in the city centers.

Glasgow Unicorn

Close-Up, Glasgow Unicorn
Dundee Unicorn, St. Mary's Church
As a little bit of history on how this came to be - it was originally added to the Scottish coat of arms in the 12th century by William I, as a symbol of strength and power as well as healing. Following the union of crowns of Scotland and England, King James swapped one of the unicorns for a lion, the national animal of England. Eventually this became the coat of arms for the United Kingdom - with it usually shown as the one on the left, but if shown in Scotland as the one on the right (in the same way the national US flag is always on the left or higher when flown with a state flag). It's such a cool coat of arms, those smart Canadians use it too.

United Kingdom Coat of Arms
Try and take a look at these if you're ever in those cities. And in Glasgow, don't miss the statue of Wellington in front of the Museum of Modern Art. You can't miss it, he's always got a traffic cone on his head. Yes, seriously, no matter how often it gets taken down, it goes right back up again in hours. And it's not too easy, I tried it, and they've stuck tar on the plinth so you're going to be pretty obvious as the culprit!

Wellington in Glasgow

Wellington in Glasgow, MOMA in the Background
Many other statues and fantastic buildings and monuments in both cities, and Edinburgh is in a league of its own. Thanks to Brexit exchange rate is awesome right now. Go visit. :)

Saturday, August 19, 2017

What's up with WATT, Pt I (or "What's Wrong with Tech Journalism?")

It's been a while since I covered Energous (whose ticker symbol is WATT. Other posts are here, here, here, here, here, here, and here). They're one of the RF based wireless charging companies, and probably the most famous for their bold claims - first claiming 12 devices at up to 10 Watts, then up to 1 Watt at 4.5 meters, while remaining safe. These numbers were so high as to raise many questions as to practicality, both with respect to physics and regulatory aspects. Still, the company stood by its claims, held an IPO, and was floated on the stock exchange. Since then it has raised millions more, and has been burning through cash at the rate of around $15 million per quarter, while repeatedly delaying products and releases in what some call a 'time to carrot' manner.

To me, it was yet another example of the inability of the tech press to truly and effectively evaluate an advanced technology, and repeatedly fail to ask even the most simple and obvious questions such as "What's the efficiency?". David Pogue was one such reporter - in 2015 he sat down with the company CEO and was shown a demo of a charge light activating on a phone, while the CEO told him of how amazing it was and the reported gushed about how it was the most amazing demo ever. No, it's not the uBeam demo from a few months ago despite the similarities - two years on and still the press can't learn. Pogue finishes his 2015 article with this statement:

But I’ve seen it first-hand, and I’m convinced: This technology is real.

Wow, that's awesome, a tech journalist has fully evaluated a piece of complex technology without even cracking the case, speaking to the engineers, or the benefit of a decade or two of experience in the field. I want to believe so let's pour millions more dollars in!

Yes, that's all funny. Except millions of dollars more were poured in, thanks in part to glowing coverage like Pogue's. Fortunately, Pogue at least thought to go back a couple of years later and take a look at Energous, and published an article last month where he talks to Energous again with a slightly more skeptical eye. I say slightly more skeptical because he still allows himself to be bamboozled by the company and still fails to ask the basic questions he should - it's frustrating as 5 minutes with a decent engineer would give him exactly what he needs to ask. Let's take a few of these failings in turn:

Consumer Product Logistics
First of all he asks why they haven't shipped the product when it's near a year after the original claim. Or wait, spend 10 minutes searching and find that in 2014 the delivery date was 2015, so it's now two years behind and the delivery is constantly moving out, around 18 months ahead. The excuse is they have gone from one to three products (near, mid, far range) and that has shifted the timeframe, but that products will be for sale late Q3/early Q4 this year. That means about three months from when that interview was given, and they're not certain when a consumer device will be in the shops.

Let me be clear about this - consumer devices that are going to be for sale are ready many, many, months prior to launch. The supply chain issues to get them out mean that, unless you are selling tiny quantities, you're ready >6 months prior. Basically - if you don't know exactly how many of your devices will be on the shelves, on exactly what dates, in exactly what location, you're likely at least 6 months out, more likely a year. A few simple questions like "How many devices will be on the shelves?", "Who are the major retailers committed to stocking them?". "What is your MSRP?", "What are your projected sales volumes?", and "Can I see the retail packaging?" and it should become really clear, really quickly that the company actually has something, or is just selling vaporware.

These questions are so simple, so generic, yet an experienced journalist doesn't know to ask them.

Regulatory
Next they discuss the FCC and regulation, and Energous make it clear that they've been working to create a new testing protocol with the FCC. Awesome. So: 

Who were you working with at the FCC? Can I call them? 

or

The FCC is a public agency and they're only working with one vendor to create a standard that will apply to an entire industry? Is that normal? Let's ask the FCC that too.

Were the FCC called? Anyone there prepared to make comment? What about someone expert in getting FCC regulatory compliance for consumer products to evaluate that statement? (uBeam also made a statement about being universal standard, then withdrew it after scrutiny)

Then the company claims that they can do this with the FCC since the spot size they focus to is 'tiny', localized just as it would be on a charging pad. Fantastic. So:

What's the spot size, in centimeters? What is 'tiny'?

or

You're working at 5.8GHz and so are looking at a multi-centimeter wavelength and an array of emitters only a few elements in size. Even under ideal conditions it's hard to focus, how do you make it "tiny"?

or even


As you can guess, there was no follow up, the tech journalist once again simply accepted the statements of the company at face value and failed to question them. Ridiculously simple questions too. My first post on Energous covers the spot size question and explains it in detail - maybe ask them why those numbers or physics are wrong? It's like the recent coverage of uBeam when the company said they'd have safety evaluated by third party experts and no-one asked "Who would that be? Can we talk to them?"

How hard are any of these questions? And if they don't answer, or dodge, you know something is up. But that would be uncomfortable, and would put access as a tame journalist at-risk, so best not to.

The Charging Pad
Next, they look at the Watt-Up Mini, the charging pad that Energous claim is their first product that has FCC approval - I've pointed out before, it has FCC approval because it puts out so little power it's of no practical use at all. Energous are at pains to point out advantages such as charging the devices at any angle, or compatibility with future long range Energous products, but once again there's no follow up with questions like:

Who are your major competitors to this charging pad? How does the Mini compare to them in charge rate, efficiency, and cost?

If it's a major revenue possibility for them, and they diverted from their core mission because it was so compelling, they should have a clear business justification. It's a simple question. How can you not ask this?!?!?

The Big Devices
Then we get to the full scale medium and large transmitters, and here's where the really interesting part happens. Remember the claims of 15 feet and multiple Watts? Gone, replaced by a 'very, very small amount of power', '15 feet from the transmitter, that’d be hard for us to increase the battery. We’d just keep it from going down.' and  'It’s not charging super fast, like you would be plugged in the wall, but a small amount of energy, trickle charging it.' Just like uBeam in their recent demo, they've suddenly gone from claiming huge charge rates like 'faster than a wire' down to 'trickle charge'.

Let me put this into an analogy the non-technical people can understand. Ever met some guy who boasts he can bench-press 1100 lbs and run the 100 meters in 9.5 seconds, and you know he's full-of-shit because those numbers are just beyond the world-records (1075 lbs and 9.58 seconds) and it would be amazing if he could do one of them? And then when you finally, finally, get him to the gym and track and find he can maybe do 150lbs and then falls over wheezing at 50 meters then staggers over the line in 30 seconds? That's what's happening here - yet everyone claps their hands in the tech example about their amazing progress rather than calling him out for being a blowhard. For anyone with a vague understanding of the situation, or physics, we're sitting wondering if we're the ones taking crazy pills.

Back to the article - it's as if these wireless power companies are all reading from the same playbook - and why not, it's not like tech journalists are going to call them on it. Here's a stunning line:

During my return visit, Energous never demonstrated its transmitters charging a phone — only low-power gadgets.

Let me be clear - a company that raised tens of millions of dollars on claims of huge range, charge rates, and short delivery times, is admitting that their original claims were greatly exaggerated and people need to scale back their expectations. More importantly, they don't show a phone being charged, about the only market that's actually worth addressing for a company with a billion dollar valuation requirement. Of course this led the journalist to ask "How this will impact the share price?", "How they could have got it so wrong?", "How are forward looking financial plans are clearly heavily impacted by the drastic reduction in sales this must imply?". Ha - no, looks like there was just a nod of the head as they took down what was told to them.

The Journalism
There was journalism in this piece though - good investigation, skepticism, and a revelation - sadly it didn't involve Energous itself, but on an internet commentator. The piece starts with the claim that a single person in the whole world was bothered by the original 2015 article - which is bizarre as there were many who questioned Energous, but that would ruin a good story. Todor Mitev appears to be a short seller - a person making money from a stock that goes down, rather than up - and has been following and commenting on Energous for some time. While the short selling does give someone an incentive to drive a price down, did the journalist even pause for a moment and say "Maybe he saw that the stock was overpriced due to the hype from journalists, is just highlighting the reality, and in this capitalistic world making some money from it too?" Apparently, a person like Todor with a financial incentive from short selling can't be trusted, but the three top execs of Energous who take home nearly $5 million a year between them from a company with no product or sizeable revenue are motivated by the angels. Yep, great job there.

There's some suspicion that Todor writes under pseudonyms on forums such as Seeking Alpha, and has been accused there of being the poster Richard X Roe. I've followed Roe's posts, which contain a lot of detailed and accurate physics, and I have had a few short exchanges with him. If his physics was wrong, then it could easily be called out, but in a similar way to how my articles on uBeam are criticized but never attacked for the maths or physics, it's his character that is questioned. Nicely done in re-iterating that line.

An important question to the author - if you asked the questions I've outlined above to Energous, would that impact your access in future, and put at risk your potential earnings as a journalist?

We're all motivated by money. All of us, it's just sometimes it's more obvious than others - but it doesn't necessarily impact the validity of what's being said. To be clear here, I have zero financial interest, long or short, in the fortunes of Energous. I don't even make money from this blog. Looks like I'm the only one with clean-hands - does this mean I get listened to more than any other player?

The Close-Up and Cop-Out
The article ends with some quite frustrating quotes. First, the CEO makes this statement:

We’re on the cusp here. We think that this will all be in the rearview mirror in the next six months or so.

So by the end of 2017 it's all going to be awesome? That's an easy one to follow up on. I'm sure we'll have a year end article doing exactly that. <cough> But it's one of the close-out lines that irritated me most of all. Our intrepid journalist writes:

I never did manage to find out exactly how realistic through-the-air charging is, how close it is to appearing in our phones and watches. I’m not sure anybody really knows.

Of course you didn't find out if it's possible, you failed to ask any serious questions, or even the easy questions. You didn't even try. The closest he gets is a quote from an MIT prof which was:

“I don’t like saying ‘never’ or ‘can’t work,'” he replied, “but I would be skeptical. My guess is that this sort of system, with phased-array antennae, might work, but it is probably not very efficient.”

which if you understand engineering speak is saying "Nope. Not going to work in any vaguely efficient or practical manner." Let me translate again to the bench-press/100 meter analogy "Yes, it's just maybe possible someone can lift that much, or run the 100 meters in that time, even one would be incredible, but two together even more unlikely. I'm just not saying "No" since maybe sometime in the next 100 years one person in a few tens of billions may be able to." 

But then he says "I'm not sure anybody really knows."

To David Pogue, the writer of this article I can say this - Really? THEN WHAT WAS THE POINT OF YOUR ARTICLE? 

You. Failed.

More than that, you failed when there are many people out there who show the ways in which what they claim can be disproved - how many did you speak to? This blog has several posts that are examples of this and refute many of the points made by Energous not with opinion but easily verifiable maths and physics.

David - I know you think you were being skeptical yet fair to Energous, but really, you just acted as a mouthpiece for them to do their PR again. This time instead of pumping up the stock early on, it's part of the slow letdown. You've been suckered. Again.

Two years ago you told us all it was real. Now you don't know. Why should we listen to you on this, other than you were chosen by Energous?

Last month on Seeking Alpha, I gave my opinion on the viability of Energous, and discussed it with an individual investor. He admitted he had no business, investing, or technical skills by which to judge the company, but it was clear he had been motivated by the publicity the company had generated, which your articles have been a small part of. Understand that your articles actually affect the finances of individuals. Your words have real consequences.

What you meant to say by "I'm not sure anybody really knows." is "It's beyond my capability to understand but rather than admitting so, I wrote the article anyway while thinking to be 'even handed'"

Tech journalism is actually important, and you turned an article about the vast overstatement of capability of a (then) $350 million market cap company, into a PR piece for them. Rather than do the hard job of asking a few basic questions that would highlight the reality of the situation, but endanger your future access, you did a 'gotcha' on an individual who uses a pseudonym and might make some cash when pointing out the realities of the technology. Easy path every time.

I get it, this stuff is actually really complex and hard to understand, beyond most people's capability - but there are some great tech journalists out there, that match skepticism with fair questioning and coverage, and manage to get the complexities explained to a lay audience. To every tech journalist out there, please, pretty please, with sugar on top - be part of the solution, not part of the problem.

Next in Part II - what's going on with Energous' share price?