Energous in 2018: The Sudden Rise and the Long, Slow, Decline

With the end of the year looming, and a few days off on my hands, it's time for a "year in review" of my favorite companies like Theranos and uBeam, but let's start with Energous. To place where the company is right now, let's look at the stock price over the last year.

Energous share price over the last year

Energous share price from March 2014 (IPO) to date

It wasn't so long ago that Energous were on top of the world, and 2018 was going to be its year of proving the doubters wrong, but what a difference a year has made. A year ago tomorrow WATT closed at around $8.83 per share and then there was a sudden leap to $33.50 on Dec 28th (closing at $31.57), following announcement of FCC Part 18 approval of their 'mid range' wireless charging, which the media reported as almost a fait accomplis for the company. I covered this in multiple posts, and it was clear to me that this was an approval for a product that could and never would be released - impractical, no true application, ridiculously low charging rates, and in my opinion unsafe. Subsequent lack of announcements on this appear to have proven me right. 

Energous even got a congratulatory tweet from FCC Chair, Ajit Pai, despite his public office not being supposed to promote any company or product. The public and institutions bought and bought, at just the same time the insiders and large holders sold, to the tune of tens of millions of dollars. As you can see that was the peak and after a few bumps it was a long, slow decline for the company to its lowest price ever, of $4.80 per share (Now down over 85% from peak, it was initially offered at $6.00, was $9.50 on launch day, and had a previous all-time low of $4.91 in Jan 2016). 

At the end of October I was noting a $1.50 to $2.00 decline per month, and near 2 months later here we are $3.00 lower, so $1.50 a month continues. This long slow and steady decline seems to be continuing, and if anything seems remarkably steady. Any chance there's a co-ordinated selloff to not spook the rubes?

At this rate the stock will be at zero by the end of March 2019, which is an interesting date because given their ~$12.5m a quarter burn rate and near zero revenues they are essentially out of cash to operate by then. Without a raise or cash injection, Energous have three months left to live. While Energous have filed with the SEC to sell up to $75m of stock, that's now 60% of the market cap. With a continuously declining stock price and no products, who would buy? 

What are their options? Well I have been fully expecting some form of 'goosing' the stock price with a vapourware product launch or similar for CES (essentially, IMO, what they did at the beginning of 2018 following the FCC announcement), but that seems to no longer be an option for them. Take their announcement of the DA2223 chip, for example. It fizzled out with barely a ripple in the stock price. That was announced at the end of November, and is supposedly the receiver chip that will enable Energous on hearing aids and the other markets that will make them billions. Some are even back to saying this is what will get Apple on board, despite them literally putting components of another utterly incompatible wireless technology in their products and announcing that different method as the future (sneaky Apple, misdirecting us like that). These chips have no market availability, no price, no data sheet that any engineer would want - simply some marketing and 'product briefs'. To release it would show there is not a transmitter you can buy to work with it, and if there was you would see how awful the performance is. IMO it's vapourware and Energous will never want their products out in the wild for actual testing, it would show them for the farce they are.

A reader points out to me - it doesn't look like the FCC granted Energous the experimental license to demo their new toys yet, and then the government went on shutdown (turns out the FCC have funds to stay open until Jan 3). They might not get it before CES and have to rely on showing the same things as last year. This might work in their favour, no limited visibility of their next-gen useless crap!

That reader also reminded me there are other ways they attempt to boost the stock such as with 'accidentally' misleading deals and press releases. Earlier this year they announce a deal with IDT International. Most engineers did a double-take on that, as IDT Inc is a large $6bn market cap company that's pretty respected, but closer inspection revealed it's IDT International, a smaller Hong Kong electronics company with around 3% of the market cap of IDT Inc. In one of my earliest blog postings I commented on how companies, and Energous specifically, can use vague and misleading wording in announcements to allow readers to make leaps toward what they think the company said, while remaining perfectly legal and technically accurate. Seems they are still at it.

Other options? Cash injection from Dialog, who recently got a bit of a windfall from Apple? Seems like it would be a tough sell to its shareholders for a public company, but I've seen dumber things happen. They might market it as investing in a seriously undervalued company, and that there's huge upside. Given the management invested prior, it might be they have to keep going rather than admit they bought a lemon before and their judgement was poor. It wouldn't be the first time.

Last option I can think of is that the company still goes ahead with a stock sale under poor terms and raises just enough for a last hurrah for the executive team and bonuses all round. This has been a roller coaster of surprises with this company as to how long they can keep it going, so who knows.

As to what else happened in 2018 for Energous, it was pretty much a continuation of what has gone on before. Poor revenue at earnings calls, repeatedly delayed long range charging systems (time to carrot - a near constant 18 months), quiet downgrading of performance specs, multiple announced products then either cancellation or lack of availability, but really the highlights came with Aristides Capital presentation on Energous, and the earnings call in August where someone finally called bullshit on the CEO. If you haven't already, watch the Aristides Capital video and listen to the Q&A on the August earnings call.

So we're really in a wait and see what happens position. I've said before that I think Energous are geniuses, not in the technology sense but in how to extract millions of dollars, seemingly perfectly legally, while producing nothing that was ever promised. Most startups have to actually get bought to make money but all you seem to need is an early IPO, some marketing hype, and hopeful but gullible investors. They may have a new business model here and as unique as their ascent has been, I fully expect their decline and end to surprise us even more.

(Repeating the seemingly obligatory statement - I have no financial position, short or long, in Energous or any related company. Nor have I ever had any such positions.)

Edit: Someone on Stocktwits linked this post so I got a ton of hits from there. Apparently I'm a bitter long who lost money and just bashing. And before Christmas too, what a Scrooge. But not one rebuttal or serious argument regarding what I've said from them. Thank you to those few on there who point out that I'm sticking with the facts and that it's not financially motivated.

uBeam Glassdoor Review: "Not sure if uBeam even qualifies as a company."

Some of you may not be familiar with Glassdoor - an online site where you can anonymously post a review of your job, your company, or your interview experience. The collated information is made available if you sign up with an email, and for sizable companies there can be a good amount of information as to company culture and even salaries. Somehow they must make money from all this, I guess at some point you hit a paywall or large companies pay for anonymized/collated data, because in June of this year they were purchased for $1.2 billion. 

I've checked in to the uBeam section of Glassdoor every few months over the last couple of years, and there's only been a couple of reviews posted. They were mildly positive with statements such as such as "5 star. It feels like working in a lab in grad school..." tempered with "Sometimes there is uncertainty with any project and there may be a sunk cost mentality." to the slightly more negative "3 star. No technical leadership at high level". For whatever reason I checked in today, and saw a review had been posted yesterday with the title:

 "Not sure if uBeam even qualifies as a company."

So this got my attention, enough that I finally signed up for a Glassdoor account so I could read it in its entirety, and oh boy, was someone unhappy with their time at uBeam. Before you read this, I'll be clear - this was not me, nor is it anyone I know (that I'm aware of).

Just to repeat:

"Not sure if uBeam even qualifies as a company."

Former Employee - Anonymous Employee

Doesn't Recommend

Negative Outlook

Disapproves of CEO

I worked at uBeam full-time

Pros

Dog friendly office

Benefits paid for 100%

Cons

Like being paid to sit and witness the ramblings of the mentally ill. The female head of the company was beyond delusional, and while I felt sorry for her at times, her delusions gave a complete false sense of reality. This company is more about a small group of engineers getting paid to run experiments than anything else. There is no chance this company will survive or succeed. Not a good career move in any way. I regret ever starting this job.

Advice to Management

She should have never been allowed to run this company - not even for one day.

So that would have been an interesting exit interview...

But, on a serious note, when someone asks me why I started my blog, what you read above is one of the many reasons. When people take jobs, they move their families, change their direction in life, and make choices that have huge impacts which ripple down for years or a lifetime. New entrants to the workforce have no experience of what is normal, good, or bad, and they don't have that metric to tell them "something is wrong". They can learn bad habits or miss out on opportunities for mentoring by talented seniors, or building a career in a worthwhile company. More senior staff can spot the warning signs, but they can be subtle until you're on the inside, by which point you've swapped your kids schools and put your old house on the market, and the practicalities of life force you to stick with a frustrating job for a couple of years. 

uBeam were getting so much glowing and uncritical press coverage (though, hats off to the few journalists who did a solid job) that the public perception was not what I saw as the reality, having experienced it from garage prototype through Series A and the next round. At the very least potential staff had to have some possibility of seeing an alternative view before making a major commitment. In some ways it was the excerpt from Adam Grant's "Originals" about Perry, which in no way resembled the reality I had lived, that was the straw that broke the camel's back and made me write the first blog post. So well done Adam Grant, I can now say your books are not completely pointless.

Update Nov 6th: I just realized that the two 'Pros' in this review were things I had a strong hand in setting up. For the year I worked in the Santa Monica office from its opening, I would bring in my dog Jackie on a regular basis, and so set the precedent. On the 100% benefit coverage, this is something Marc Berte and I had implemented, and fought for when incoming CFOs tried to kill it. We believed that happy, stress free, healthy employees were worth more to the company than ones worried to go to the doctor or stressing about paying bills. The automatic reaction of the MBA class to that setup was horror and an immediate "We have to end that" and "That's far too expensive" even though as a % of well qualified engineer salary it was pretty low and waaaaay down the list of company expenses. Feeling quite pleased with myself this morning. :)

Dunkirk

Movie review: Dunkirk

Basically - go see it. Great movie. No - fantastic movie. I've found Chris Nolan to be hit or miss - always beautifully filmed, but there are often plot holes you can drive a bus through that most people seem to miss because it all looks so good, and so much is thrown at you that you're overloaded. Inception and The Prestige are the two worst examples of this (so bad I've watched them twice..) while Interstellar has ridiculously awful science it pretends to adhere to, until halfway through it shifts to a "love conquers all" mode and rapidly descends to a giant cauldron of liquid poo in which it revels. Memento gets it right, sticking with a single theme and follows it through, while the first two Batman films are just brilliant (followed by an entertaining but not-as-good third).

Nolan loves to play with time in his films - Inception with its layers and ticking clock, Interstellar with the time dilation due (and ticking clock), Memento and the forward/backward storyline. He does the same in Dunkirk, with three storylines of a week, a day, and an hour in the lives of several Dunkirk participants, all intersecting in parts as they grow closer and closer together - and all through it, a ticking clock (literally) as the soldiers desperately try to get home.

I don't often get drawn in to films, but I found myself tense throughout, and Nolan manages to bring in a lot of tension as you sit on edge waiting for the next thing to go wrong. It's an exhausting film. More though, it gets over the utter powerlessness of almost all the participants, that they're simply statistics and at some point people are going to die, no matter their skill or preparation. This isn't an Arnie action film where the hero saves the day, this is about the horrors of war and how small and insignificant each person is, but also the intense bravery of many of these men in ways that no-one ever would know.

There's a Marie-Claire contributor who has been talking about how it's just a film glorifying war for men. Yeah, this glorifies war like Trainspotting glorifies taking drugs. It's hideous from nearly 80 years away.

As we exited the film, my wife recounted some stories of her grandfather, who was at Dunkirk. She had interviewed him as part of a school project. He was a remarkable man, I met him when he was in his early 90's, and I would have guessed he was in his 60's. Born in 1912, grew up in a children's home, joined the army when 18, served until the end of WWII, started a welding business then sold it and retired at 65 - got bored and started another one at 67 and ran it until he was 89. He didn't talk about what he did in the war, he even gave all his medals to a local museum to the horror of his family, as he thought no-one would care.

As part of this interview, he described running through the streets towards the beaches at Dunkirk, with men feet away from him being shot dead, and waiting for the evacuation. He was told he was brave but he said he never felt brave, all he did was try to survive. And that, in the end, was much of the point of the film, that these men survived and then later went back to fight again, that these seemingly small acts of what they couldn't see as bravery, mattered.

It also made me think of my wife's great uncle. He was on board the Royal Oak, a British battleship sunk by the Germans at the onset of WWII. Of the ~1200 crew, 833 were killed when it was torpedoed in Scapa Flow at the naval base in Orkney - her uncle, Billy, was one of the men killed. He was 16. Like the Arizona at Pearl Harbor, this site is now a war grave, and we were allowed to scatter the ashes of Billy's sister there. She never got over the loss of her brother. Another young man who tried to do what he could and serve, yet died almost the moment it began. The film reminded me that great feats aren't required to be a hero, that simply volunteering for a role that puts you in harms way for a greater good does that.

All that, so well filmed, and perfectly acted by every one of them, especially Tom Hardy. Never overplayed, just done right.

I'm not sure I've seen a film that conveys the horror and randomness of war, along with the personal sacrifice and bravery of the men who served.

Go see it.

Who Doesn't Know That?

Someone sent me this image today, thinking it was really funny. It's kinda bizarre to me - Who doesn't know that Will Smith is from West Philly? It would be pretty embarrassing to meet him and say something like "I love all your shows. So tell me where are you from?". I bet he's got a really awesome expression for situations like that. Maybe something like one of these?

Yeah, I think those would be pretty close. Anyway, it reminded me that I saw Suicide Squad last week - it wasn't one I was rushing to see, following some negative reviews and that DC has really not been doing too good a job with its films lately. Batman vs Superman was not very good, very poor given the material they had to work with - you have Batman, Superman, and Wonder Woman, what else do you need? Marvel can get a great film with Ant-Man which I thought was insanity when I heard the announcement, but write a good script with good actors and you can get a fun film.

Well, Suicide Squad surprised me in a similar way to Ant-Man. I had low expectations but enjoyed it, and really wonder why it got the bad press it did. It's a slightly better than average summer action film plot, with solid performances from all the cast but definitely carried by Smith and Robbie in their respective roles as Deadshot and Harley Quinn. They really made you care about them despite their less than pleasant characters, and had a chemistry that worked. Amanda Waller is cold and calculating, in many ways is the villain of the film, as she should be. It had the right balance of action and comic relief, wasn't overly long, and left it open for a sequel, which I'd be want to see.

The Joker seemed almost an add-on, even though he is central to Harley Quinn's character. Other than to have the Joker in it, I'm not even sure why he was there. Leto does a decent performance with him, but I'm not sure that he had any material to really make him exude crazy - Heath Ledger still takes home the prize for most insane and scary Joker. 

Compared to the other summer films, better than both Jason Bourne (retread of the first three, nothing new) or Star Trek:Beyond (exceeds the low bar set by the last two ST films, but not great). Way better than Batman vs Superman, better than X-Men:Apocalypse, though not Deadpool level brilliant. Overall if you like this type of action/comedy film go see Suicide Squad and ignore the reviews. Apart from this one.

Disrupted: A Resonant Tale

History Does Not Repeat Itself, But It Rhymes

Mark Twain (maybe)

I finally managed to get some time off last week, and had a great time in Vancouver meeting up with an old friend, followed by taking a cruise back home. This was the first time I'd been on a cruise ship, and I can guarantee you it will also be my last. I have a hard enough time boarding an aircraft, with slow people who wander aimlessly, can't get out of the aisle, and are seemingly unable to follow even the simplest of instructions - however that's nothing compared to a cruise ship. 

Imagine 3000 people, from families to your local retirement home outing, trying to board one ship, all in the space of a couple of hours. While I have some sympathy for the cruise lines in trying to deal with all this, being herded like cattle from pen to pen is not what I consider a fun time. It didn't get much better once on the boat, but fortunately I had a couple of good books with me and I pretty much sat on the room balcony and read them through. The first was "Disrupted: My Misadventure in a Startup Bubble" by Dan Lyons.

"Disrupted" is a book that hit home for me, and I read it cover-to-cover in one sitting. Here was a person who had built his credentials through 'traditional' companies, a focus on high-tech, had looked on with incredulity through his career as the most ridiculous companies were funded then sold, and eventually jumped into that world only to learn that it's more ridiculous than you could have imagined, and that in the end you just can't stop being who you are. 

Lyons was a former tech journalist who had joined "HubSpot", a company producing software tools for "Inbound Marketing". This attempts to have the customer come to you, not the old fuddy-duddy approach of having farms of workers cold-calling from paper lists and reading scripts to grab a sale. HubSpot were "disrupting" the old way of doing business and receiving huge valuations based on that fanfare - yet behind the scenes were using those "boiler room" techniques to promote their own product, and appeared to be pushing the appearance of growth at any cost to ensure the money kept flowing.

HubSpot is also famous for its Culture Code, their set of rules for a workplace designed to attract and keep the best talent. When I first read it (along with the Netflix equivalent) I was really pleased to see the main themes (minus the touchy-feely bits) were what I had tried, as best I could within the confines of a larger company, to employ when I ran a small division selling high tech software. Sadly, it turns out they were more "aspirational" than "actual" and mostly geared to reducing company financial liabilities such as paid vacation. I'll be coming back to these Culture Codes in a future post.

Lyons' experience had both similarities and differences to mine. Being on the inside of a startup and watching the insanity is something I'd had to deal with myself, and there were plenty of parts where with a simple name change to the characters it could have been something that happened to me. On the other hand Lyons joined later in the company growth, where it was nearly $100 million raised with 500 people in the company, and watched more from the 'regular employee' viewpoint, whereas I had been there from pre-funding, developed large parts of the core technology, and was involved (at least as an observer) in most business decisions for a period, giving me some insight into the interactions with the investors. (I'll add this experience was at more than one company.)

One of the themes that's clear in Lyons' writing is that the ageism in HubSpot was rampant - the idea that "younger people are just smarter" and do better for the business, when in reality it simply means "too inexperienced to realise they're being taken advantage of" and both cheaper and disposable. Hardware engineering, compared to marketing, makes this business ploy almost impossible to pull off. Most hardware problems are so interdisciplinary, and require so much understanding of the technology, processes, planning, and the realities of development that it's really only achievable with experience and talent. They also require time to move through to completion, often four or more years, plenty for naive new hires to wise up. Generally, once they're put into a real world hardware development role, even the most capable and arrogant engineer quickly learns not just that experience matters, but the problems are so large that there's no way to solve it on your own - you have to work in a team, and know your role in it. That ageism, fortunately, isn't something I have really encountered.

Another aspect of his experience that doesn't match with mine was with the "Kool-Aid" drinking of his co-workers. At HubSpot, the young staff truly believed they were working on something world-changing, that they had a mission, and they were part of a glorious revolution, prophets of a new religion that it was their destiny to bring to the masses. It seems apparent from his writing however that the founders and leaders of the company knew exactly what they intended to do, and it was a cold calculated method to game the system and make the company look attractive for an IPO. 

If anything my previous experience has tended to the opposite, where the Board and "C" level are the Kool-Aid drinkers, the true-believers, who ignore technical reports that point to failures, issues, and problems, as they are just the work of "heretics", or incompetent/lazy engineers. The average engineer, however, is under no illusion as to the real status of the company and the work - if they are any good, then facts and evidence are paramount to an engineer. Measurements, numbers, statistics all matter more than perseverance and pig-headedness. Maths and physics don't lie or bend to management directives. 

If C-level directives fly in the face of sensible technical choices, it's noticed and questioned. Sometimes you accept a poor engineering choice due to business reality of cost or timing, but if it's purely fantasy and you're being told to accept an impossible/stupid engineering choice then it simply forms an "us and them" mentality. It creates an odd situation where the lunatics are running the asylum, one where the patients are all sane and know it.

Lyons on the other hand was the sole sane man in the asylum, constantly surrounded by the insane, with no-one to turn to and laugh with. You can tell from his writing that at some points he questioned his own sanity, and was it he himself that was wrong and out-of-touch? It chips away at his self-belief, which had already taken a hit due to his earlier layoff from Newsweek. The whole process is insidious, as by breaking their self-belief, the company culture prevents someone from the clarity of thought and confidence to simply walk out, leaving the person feeling trapped and powerless - which I've learned over the years is something a lot of bosses like to have in their employees. You want to scream "Just get out!" at him, and fortunately he does have some friends simply tell him that. 

The psychological turning point for him seems to have been landing the gig writing for the show "Silicon Valley", spending weeks talking and working with other sane, rational people and laughing at the insanity he was dealing in with his regular job. At that point, he regains his self-belief and it's just a matter of time before he leaves, but he does what always amazes me about abused staff and shows a remarkable professionalism even in the face of egregious behaviour by his management. He continues to work and deliver product until it all finally blows up, and resigns giving them plenty of notice, but unsurprisingly is "graduated" (fired) immediately (definitely familiar to me).

Where the book really meshes with my experience though is in the observations of the startup and funding ecosystem - the game whereby VC's and founders manipulate the metrics not to produce better product or to satisfy customers, but to garner the appearance of growth to inflate valuations, and sell on to a greater fool, be it another larger VC, or the general public in the form of an IPO. It's not about creating an effective product, or improving productivity, it's about manipulating the employees, the unquestioning tech press, and the investment analysts into keeping the charade going long enough that someone has put so much money into it that either it's not allowed to fail, or you've banked the gains before it collapses. To quote from Disrupted:

"The one thing people do not appreciate is that these companies are incredibly fragile. There is so much less than people believe... The whole thing is based on companies trying to achieve escape velocity before they blow themselves up."

The book resonated with me on two main levels - the first being that Lyons is our "everyman" in a bizarre world, and he reacts as a sane man should, though often questioning his sanity. He reminded me of the titular characters in "Life of Brian" and "Blackadder", simply trying to make his way through life and doing what he can in the weirdest of circumstances. 

The second, stronger, resonance for me is his tying of the experience to the startup ecosystem, pointing out that, like the financial crises of the past, these valuations and investments are based more on sizzle than the steak itself, and that it's impacting our society in significant ways. Chapters like "Glassholes", "Escape Velocity", and "The New Work: Employees as Widgets" are really where the meat of the story is - a small fraction of the book but highlight the insidious effect "The New Work" is having on all our lives. These chapters alone made it worth reading, and the humour of the rest keeps your attention - go buy it. 

I'll leave you with a final quote from the book that in a few sentences perfectly covers what I have been trying to put into words. I doubt I'll ever be able to phrase it better than this:

"I've been in the Valley a long time. As far as I can tell, nobody here ever feels guilty about anything they do. What I have observed from these guys is that they have a strong sense that they are moral actors. They believe very strongly that they operate with high integrity. They believe they are the most moral folks on the planet. But they are not."

These are the people who claim they are making the world a better place. And they are. For themselves.