Further thoughts on Energous

Yesterday's blog post on the Energous FCC Part 18 approval was written quite quickly, so I'll follow on with some additional thoughts here:

1) After the initial kick to stock price, it sat quietly for most of the day and then shot up in the afternoon, ending up 160% or so. This morning it's up a further 25% or so, and is approaching $30. At around $50 they become a billion dollar company. Looking at who is buying and what happens to the shorts once that data is available will be interesting. It reminds me again that this is a stock to stay away from, its volatility is what makes it attractive, and as the average guy that's where you get fleeced. Put your money in if you will, be aware it's a gamble. This is also the time where I preemptively point out that I do not hold any position on WATT stock, and make no money whether it goes up or down.

2) I used the Friis equation to calculate power to various distances - that's only truly valid in the far field, and with distances of 50 cm and wavelengths of 33 cm, that's not really the case. Unfortunately I don't have the details with which to do the near-field modeling, so this is the best approximation I have unless Energous want to give more information. I expect it's there to within a factor of two, but that the geometry of the transmitter strongly increases the gain at around the 50 cm mark at the expense of further out.

3) Powercast, who have had long distance wireless charging by RF available as a product for years, also got FCC approval for their product this week. (FCC approval details here) Unlike Energous, Powercast seem to be very open about their numbers and actually have products you can buy. Why aren't they taking off like Energous did if they already have such a product? Yeah, exactly... 

4) Lots of Energous fans are saying "it's only the beginning, it all takes off from here and they just improve". No, no they don't. There are fundamental laws of physics here that mean you don't just suddenly get to get 10x better. Semiconductor processes, shrinking feature sizes every few years, have conditioned people to think that is possible with everything - it simply isn't. Now if you could shrink the wavelength without changing any other characteristics of the wave or system then sure, you could do it. Or maybe if you reduce how much RF radiation gets absorbed by water. How about being able to get the benefit of focusing the power while broadcasting in all directions? Those would be awesome and make this RF method safe, efficient, and effective, so let's just do that. Except those are impossible - you may as well tell them to invent time-travel. 

Just. Not. Happening.

Where it could transmit more power is if the FCC literally raise the output limits, which has significant implications for safety as well as operation of other equipment. I do have strong concerns about the potential for inappropriate pressure from the FCC chair on the regular FCC employees to revisit output limits to favor Energous at the expense of our safety. Why? Well...

5) The FCC chairman tweeted his congratulations to Energous. We've got used to changing norms over the last year, but a government office promoting a private company is out-of-order. If they do for one, they do for all, so where's his mention of Powercast? Of all the things I see happening with Energous, this is the most disturbing, and yet I see no-one blinking anymore about such an abuse of office. 

6) I continue to be in awe of Energous' genius in playing this game. They have a pair of twos and just keep raking in the cash.

I wrote three more posts on Energous in the subsequent 4 days, you can find them here, here, and here.

Energous and FCC Approval for Mid Range Device - What Does It Mean?

Six months ago wireless power company Energous claimed they'd have FCC approval for their at-distance charging, and I was highly skeptical of the claim. Yesterday the FCC did approve their mid-range device under Part 18 - the company stock price doubles, doubters are proved wrong, and the sky is the limit for Energous. I was so wrong, I'm here to apologize and beg for everyone's forgiveness as to my stupidity.

Yeah, right, of course I'm not. I'll do a quick analysis below (next day thoughts were added here) as to what has happened but it's essentially this - Energous have done what they did with the Watt-up Mini, which is to have done the bare minimum to get an approval on a essentially pointless and impractical device that doesn't actually charge at a noticeable rate, but that turns the charge light on, and as it's such a technically complex issue very few people understand what it means, see "FCC Approval", and that's it.

Energous press release is here, the conference call is here. (Skip to 19 minutes for Q&A). You can read my many Energous posts here, but the one on FCC approval in particular is here. The key quote was:

So, basically, unless they either get the FCC to change the rules, in opposition to a vast entrenched business interest and wreck WiFi for everyone, or reduce their power output to the point where it is an utterly pointless product, then I just don't see FCC approval for their devices.

And this is what's happened as far as I can see - they've put out a useless device hobbled to meet FCC guidelines for part 18, and it seems most people are dumb enough to fall for this. Part 18 rules can be found here.

While I'm still reading through and analyzing the FCC reports, here's a summary of my opinion of this 'product':

• Fails to charge a phone with a measly 100 mW at best (about 10x lower than needed)
• Unsafe for humans or animals closer than 50cm
• Highly inefficient, around 99% loss
• Weak safety measures to limit unsafe exposure
• Incompatible with previous products as claimed earlier
• Obtrusive impractical transmitter
• Small useful area of operation
• Very limited ability to steer the beam
• Huge "pockets" of energy about 50cm in diameter

The product

Energous have two approvals for the devices in the FCC database, one at 913 MHz and the other at 2.4 GHz. I assume the 2.4GHz approval is because they use the 2.4GHz range for communication with the receiver, not for power transfer. The previous Watt-up Mini operated at 5.8GHz so unless another approval appears soon, there is no interoperability with their previous devices, as they had claimed.

The device itself is a curved bar, certainly not flat and unobtrusive. It would be very hard to place on the wall, or anywhere in a room without becoming an obstacle. Why curved? Well I'd guess it simplifies the beamforming so they can create as tight a focus as possible and maximize the power transfer at the expense of steering. As they have only 12 antenna in the bar, it would be unlikely that they would have fine control over beam steering anyway.

As the transmitter is a bar it's a pretty limited area that can be irradiated - about +/-45 degree up and down, and +/-30 degrees side to side. At the 90 cm mark that means a region about 2 meters up and down, and 1 meter side to side - a pretty small and inconvenient target area, and that's the biggest it gets. Previous claims of charging Internet of Things devices all around your room aren't supported by this arrangement.

Why 913 MHz? I assume the FCC just said no to them putting huge amounts of power out in the wifi range and stopping that from working, so given allowable bands it was that or 24 GHz.

While not stated explicitly, it appears that the system won't charge if there is any movement within 50cm, so it may be that there's a minimum distance over which it will charge. This needs clarification.

The 'pocket'
Energous have always talked of how they create 'pockets' of energy - which is marketing spin as the laws of physics prevent such pockets being arbitrarily small. The larger the transmitter and more elements it has the smaller the focus, down to a limit set by the wavelength of the energy. The power is to be transferred at 913 MHz, which is a 33 cm wavelength, and that's about as low as you would expect - a 'pocket' that is a sphere 30cm in diameter, about the size of your head. This is backed up by their FCC test data, you can see here that the half power points (-3dB) make it about 50cm across.

As you can see in the image below, depending on how the beam is 'steered' you don't get a "pocket" as much as a "smear" - have your phone on one side, but power is definitely going elsewhere. The image below from the FCC

The safety measures
To meet the FCC guidelines, Energous had to implement a number of safety features which prevent the system from working when anyone is in the field of operation. Basically, it appears the amount of power a person would absorb would be illegal and unsafe so there are motion detectors that switch the system off if movement is detected within 50cm of the transmitter - which is, to me, a shockingly weak safety system.

This is one of the frustrations of dealing with amateurs when it comes to safety. You don't build safety systems based solely on common use cases, you think of all the edge cases because customers are annoying that way and will do things you never imagined with your product. Things also change when you aim a product at millions of users - tests on even tens or hundreds of thousands of cases simply won't show up what happens in the field. If you have a product that can't cause harm then there's no issue other than annoyance, but with real health implications like transmitted RF power, there are serious consequences to failures. Quite how their sensing system deals with a sleeping person, pet, or child I'm not sure, I see it as a major flaw. These flaws are easy to see and it's an accident and a lawsuit waiting to happen - another reason I don't ever expect to see this as a real product.

The power
Here we get to the juicy part - how much power will it transmit? Well with around 12 antenna each at around 0.8 W, the total power it can send out is around 10 Watts. Fantastic, right? Well that's not what is received at the target - looking at those numbers and using the Friis equation, (and some estimation, not enough data to be 100% sure) we get around 100 mW at 0.5 meters, and around 30 mW at 0.9m. A phone will need somewhere between 500 mW and 1000 mW to really start charging and be useful, so the power sent is essentially enough to switch the charge light on, and not much more. To even match their rather wimpy Watt-up Mini they'd need to improve it by 10x.

That has to be wrong? It has to send more than that! Well, when asked in the conference call as to the power sent the CEO replied that the power is "not that significant" and dodged the question.

The efficiency
10 Watts transmitted, and 100 mW received gives around 1% efficiency. 99% of the energy is lost as heat, which granted isn't too much, but essentially you've created a very expensive method of mildly warming a small part of your room, and failing to actually charge your phone in the process. This is a generous estimate as well, it does not account for the loss from the wall socket to antenna emission, so that 1% efficiency is a ceiling and goes down from there.

The conference call
The conference call was as expected - very little actual data and dodging of the few limited questions that were asked. The CEO makes clear the power received is minimal and doesn't want to give that number it's so bad. They instead stress that this is an new door that is open and it's all up from here, and give vague comments of partners selling devices in the future. Talk of useful power is deliberately downplayed. Brilliant marketing and bamboozlement of a non-technical audience. Once again, Energous show their genius in extending this run - they'll no doubt be issuing stock or some other form of capital raise to keep paying those executives that ~$5 million a year.

Stock price
The stock price is up near 100% today, back to where it was in early summer - but surprisingly not higher. Shouldn't it be trading above that now it has FCC "approval"? Let's give it time to see.

Conclusions?
Any big name customers? Can we expect Apple to be buying them up? Well, IMHO, Apple isn't dumb, and neither are any other big guy. This is going to be the unsavvy public putting in money again and again on the hopes of a big win. I don't expect to change their mind, at this point it's near a religion to many, and all I'm doing is pointing out the obvious.

The roller coaster ride just keeps going...

I wrote four more posts on Energous in the subsequent 5 days, you can find them here, here, here, and here.

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?

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!

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 (new link here) 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

You've stated that if you detect people or animals in the beam path you shut it off. Does that imply it's not safe?

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?

Energous Challenge uBeam in the Ultrasound Wireless Power Space

Finally, I get to write an post containing two of my favorite wireless power transfer companies, uBeam (which I've written about here, here, and here), and Energous (which I've covered here, here, here, and here). Now I could make a joke about "Red Shirts vs Stormtroopers" here, but that analogy isn't correct, as despite what I believe about Energous' ability to deliver on the at-distance wireless power transfer they claim, as a company Energous has been run well and it seems they know how to 'play the game'. (I don't have to like what someone is doing to see how well they do it, for those about to criticize.)

As I occasionally look through the IP portfolio for various companies, discussing them with like-minded people, this weekend we noticed something interesting in Energous' applications for patents - while they are extremely prolific in their patents applications, it seems they are now generating IP in wireless transmission of power via sound, which is uBeam's stated goal. Energous are known for claiming an RF based power transmission method, but now it seems they are making sure they have a wider technology portfolio.

As the EEV Blog's uBeam FAQ clearly points out, the basis for ultrasound wireless power transfer is covered in Charych's 2003 patent for BC Systems - System and method for wireless electrical power transmission (US6798716) - but if uBeam has been stating publicly or to investors that uBeam owns the wireless power via sound IP portfolio entirely, thus locking out any potential competitors or rivals, that's no longer the case as Energous is applying for, and being granted, multiple patents covering wireless charging with sound. This puts them in direct competition with uBeam.

Granted:

Laptop computer as a transmitter for wireless sound charging US9537358 B2  May 2013

Wireless sound charging methods and systems for game controllers, based on pocket-forming   US9537357 B2   May 2013

Transducer sound arrangement for pocket-forming US9419443 B2  May 2013

Application:

Protocols for wireless power transmission US20140357309 A1  May 2013

Battery life of portable electronic devices charged by sound US20150349574 A1  June 2014

Wireless power distribution system for law enforcement equipment WO2015084912 A1  Dec 2013

Wireless sound charging of clothing and smart fabrics US20150333572 A1  May 2013

Wireless sound powered house US20150333528 A1  June 2013

This is likely not an exhaustive list and I'll update over time. The primary author, founder and CTO Michael Leabman has been a very prolific inventor here, and you can see a list of many of his patent applications and awards here. It seems most of these sound related ones were filed in 2013, over a year prior to uBeam's major Series A funding in 2014. These are now only beginning to be issued as patents, as it typically takes 3 to 4 years from filing to being granted, which implies that many of those currently listed as 'Application' may be on the verge of becoming 'Granted'. If so, it won't be long before Energous' IP portfolio in ultrasound rivals uBeam, with a further extensive range in the RF space.

Also interesting are some of Energous' patents that don't specifically state 'sound', but simply talk about focusing waves and energy - making it equally applicable to both RF and acoustic waves (the equations governing both are between similar and identical, the same basic physics applies to both). It seems they've been doing this since at least 2015, with patent applications such as:

Systems and methods for wireless power charging US20170077736 A1 

"Embodiments disclosed herein may generate and transmit power waves that, as result of their physical waveform characteristics (e.g., frequency, amplitude, phase, gain, direction), converge at a predetermined location in a transmission field to generate a pocket of energy. Receivers associated with an electronic device being powered by the wireless charging system, may extract energy from these pockets of energy and then convert that energy into usable electric power for the electronic device associated with a receiver. The pockets of energy may manifest as a three-dimensional field (e.g., transmission field) where energy may be harvested by a receiver positioned within or nearby the pocket of energy."

As you can see from this, Energous have been careful to ensure their patent applies to all forms of energy, not specifically RF - this wording could equally apply to acoustic energy as well. They have multiple other such applications such as:

Systems and methods of object detection in wireless power charging systems US20170077764 A1 which states video images will be captured and processed to ensure correct targeting of wireless power, Methodology for multiple pocket-forming  US20160241044 A1 covering charging multiple receivers from a single transmitter for any energy type, Systems and Methods for Real Time or Near Real Time Communications Between Electronic Devices which covers feedback between transmitter and receiver via any means, Systems and methods for nullifying energy levels for wireless power transmission waves that covers minimizing energy in the non-targeted areas for safety,  Systems and Methods for Identifying Sensitive Objects in a Wireless Charging Transmission Field for realising someone or something is in a wireless power field and dealing with that safely, and Systems and Methods for Generating and Transmitting Wireless Power Transmission Waves which basically covers everything in wireless power transfer.

I could go on about all the specific applications they are patenting, such as using TVs or other electronics to transmit, identify receivers, communications, charge healthcare products, identify valid receivers (hardware DRM) - basically covering absolutely everything in wireless power transfer including, it seems, ultrasound wireless power transfer. You can search in the link above and find a comprehensive list - it's quite impressive.

Does this mean Energous are going to be sending power via ultrasound? In my opinion, absolutely not - in fact I don't think they will be producing consumer devices in the multi-meter range, faster than a wire, multiple device, efficient, and cheap methods people might imagine - but they are cleverly expanding their portfolio to literally own the entire wireless power transfer space. This could be used both defensively, and offensively, and in the hands of a $300 million market cap company with resources, can be a terrifying thing for a smaller company looking to break in, and makes them a more attractive purchase or licensing deal recipient for a larger company. 

In the end, I wouldn't be surprised to see Energous make most of their money from licensing deals on individual patents, and never actually release a product like originally claimed. Smart strategy on their part, licensing money is pure profit, hardware is, well, hard.

What does this mean for uBeam? The first thing is to look at their public patent portfolio (both application and granted) - which you can see here. It's a much less extensive list, and something I was surprised/shocked to see is that the latest filings such as Performance adjustment for wireless power transfer devices are from my time at the company, and I left in 2015 - in fact I'm one of the inventors on many of the recent filings, and in some cases, such as the one listed above, every single one of the inventors has left the company. Now it could be that many are filed and simply not published for the public to see, or that the company is pursuing a trade secrets rather than patent approach (would be 'unusual' for a  hardware company in my opinion, but possible), but it's not nearly the in-depth and broad range of patents that you see with Energous. Further, the uBeam patents don't seem to cover Energous' applications and fields, while Energous cover uBeam's.

It would be interesting to know how a company plans to defend its patents, both in prosecution to the patent office and in court during litigation when they don't have the inventors on staff anymore, and in some cases there is clearly a poor relationship between the company and the former employee/inventor (looking at no-one in particular ;) ).

I would expect this to be quite troubling to uBeam, as a startup - especially one with no product, licensing deals, or third party evaluation/demo - is heavily reliant upon its IP portfolio for valuation purposes, and to have to defend patents, or work to nullify others, is an expensive legal proposition. 

What should also be considered is the effect on potential investors, as uBeam discloses to them during any fundraising that they do have competition in the IP space, from a company with apparently a similar or larger portfolio, that is larger and more significantly funded such as Energous. Since the last publicly stated fundraising round for uBeam was in July 2015, it's entirely possible that fundraising is going on right now.

Overall, it's a tremendously interesting development, and one I'm looking forward to seeing how uBeam respond to this aggressive encroachment by Energous.

Energous' Mid-Sized Watt Up Transmitter - Can It Get FCC Approval?

Reader Lord Stately-Wayne Manor asked me in comments on the last uBeam article:

Would you be willing to give your opinion on whether or not Energous will get FCC approval on their mid range soon? The CEO believes they have a clear path to approval and expects it to happen well before the end of this year. Any thoughts would be appreciated.

In brief - I don't think Energous mid/full range products as stated by the company will be able to be approved by the FCC in any manner, those that could be approved will emit such a low amount of power that they will not charge at any rate practical for consumer devices like phones. Any such approval would require a rewrite of existing regulations, and while I wouldn't put it past the current FCC to do stupid anti-consumer things, the fact that it would simply wreck any current WiFi signals and equipment means there is a massive, entrenched, business interest in making sure that does not happen.

As for the more detailed discussion, including some nerdy stuff since you literally can't analyze the situation without maths/physics/numbers/engineering:

I'll start by saying that the CEO of Energous has made a lot of claims over the years as to outcomes and timelines that are not met - the product promised is always some ways out, on the order of a year. Some call this the "Time to Carrot"(check Seeking Alpha for some good posts, and where I got the above image), which constantly moves forward and you never, ever get the carrot. Here in 2014 is him saying 2015 delivery. You may know of other companies that have promised deliveries of consumer product "by the end of the year" since, say, 2011, that have never materialized.

WATT started with a "full sized transmitter" which was the "~4m, multiple devices, multi-watt" version that no-one could explain with physics without cooking anyone around it. They claimed:

The strength of the charging drops off rapidly with distance; at the moment, 15 feet is the maximum range of the transmitter. At 5 feet, your gadget (actually, four of them at once) can receive a maximum of 4 watts. At 10 feet, it gets 2 watts; at 15 feet, 1 watt.

Which is a "holy crap 20W received we're going to get cooked" statement and had many eyebrows raised in "basic laws of physics" type ways. Quick question - what were uBeam's publicly stated specs before, and after, this announcement by Energous in early 2015?

Eventually Energous announced a 'mini' which at most emitted 300mW when in contact, so basically >10x worse charge rates and less useful than the already available Qi methods, along with a 'soon' medium and full sized which allowed time to carrot to remain at 18 months or so. Such a low charge rate and in-contact requirement, so it could be FCC approved, and allowed claims of "FCC Approval for Energous", but a pointless product.

Now Rizzone stated back in March 2017 he was confident over FCC approval. However - Energous' own filings with the FCC prove they can't get licensed under Part 18, read to the end where they literally say the rules have to change: 

Energous requests OET to interpret its ISM rules to enable WPT AAD conforming devices that satisfy the criteria specified in this Petition to qualify as Part 18 ISM... However, this can only happen if OET adopts a process that enables equipment manufacturers to secure equipment authorization.

How can the CEO argue it's coming when they admit that it can't be approved under current rules? Doesn't make sense to me, so let's dig more.

How about approval under Part 15 instead of Part 18? Part 15 is for "Low Power" so a problem there I think. In these FCC documents you will see that the FCC limit the 5.8GHz band that Energous use to 1W total if spread spectrum - take efficiency etc into account and you are looking at very long charge times (a couple of days to charge your phone if lucky?). If not spread spectrum then it's P=0.3e^2 where E is listed as 0.05 V/m so that's no more than 0.75mW, or to translate to practical implementation - it would take six months or more to charge your phone at 100% efficiency. I can't find the link but I believe Energous state their method is not spread spectrum, so that tells you how useful their method could be under Part 15.

So, basically, unless they either get the FCC to change the rules, in opposition to a vast entrenched business interest and wreck WiFi for everyone, or reduce their power output to the point where it is an utterly pointless product, then I just don't see FCC approval for their devices.

This doesn't even begin to cover the issues of safety or practicality of beamforming to a fine focus with your array is not much bigger than your wavelength. I go into lots of nerdy depth with it here.

One last piece of advice, and it comes from Warren Buffet - Don't invest in companies whose product you can't understand. If the engineers are arguing about the basics of the product working and laws of physics are being called into question, then just run...

Quick Updates: Theranos and Energous

Annoyingly busy and unable to post in detail until later, however two key stories in the press in the last 24 hours. First up, Theranos, where a current investor is now suing the company. Partner Fund Management LP (PFM), who invested $96 million in Theranos in Feb 2014 claim that:

“Through a series of lies, material misstatements, and omissions, the defendants engaged in securities fraud and other violations by fraudulently inducing PFM to invest and maintain its investment in the company,”

Further

Elizabeth Holmes and a former executive deceived the hedge fund by claiming it had developed “proprietary technologies that worked,” and was close to getting regulatory approvals.

Who could have imagined a startup where the founder claims working proprietary technology, and vastly exaggerate its capabilities, when they have no such thing? Theranos, of course, plan to vigorously defend against the lawsuit.

Finally it seems someone in the VC community is acting on the best interests of their Limited Partners and looking to get their money out. It seems PFM, like me, don't believe Theranos' recent redirection has a chance of producing results and that they have better odds of recovering their investment through a lawsuit. It's a damning indictment of Theranos' plans, as looked at in purely monetary terms, PFM view the value they could ever gain as significantly less than the initial investment - lawsuits cost money and there's a less than certain chance of recovery. Essentially, they've calculated the costs of suing and chance of proving fraud are sufficient that compared to the expected value of the company it's better to sue.

Of course there's a potential cost to not suing too - it could be that the LP's are questioning PFM and there's a chance they'll sue PFM itself for not doing their due diligence in selecting the companies in which to invest. Better to prove that they were defrauded than bamboozled perhaps?

I'm trying to think of when this has ever happened before in this manner, certainly I'll be looking to see if PFM is just the first to rush for the exit to beat the stampede.

I'm hoping this is the beginning of a change where VCs take more responsibility for the companies they invest in, and as I've written in the past, they act to end the incentive for startups to act in unethical and illegal ways. Perhaps Boards of Directors will begin to take notice too?

Secondly, Energous. An interesting article on Seeking Alpha, where the author has looked through SEC documents detailing the CTO's share sales and found some interesting activity that they claim shows he's divesting his stock as much as possible. I've only read through it briefly, but will give some more commentary later on this, very damning if they are what they're reported to be.