Hunter Fires Missive At 'toxic' Rivals
I left Cree for personal reasons. I had been there for 18 years and my role was in transition. I didn t think I was getting back in technology, but then Gerry Negley [former Cree employee] and Tony van de Ven [CEO of Lighthouse Technologies] approached me with an idea to try to push LEDs into the lighting industry.
All the lighting guys kept saying: "It s going to be 3–5 years, or 5–10 years before LEDs enter the lighting industry." We got tired of hearing that and thought that there was an opportunity for someone who knew the technology of the chips and those sorts of things. But we started out looking at a totally different application – not general illumination, but billboard lighting. However, through that process we discovered our core technology, which led us to very high efficacy, very high color rendering light.
I was not going to go back into a technology start-up without a very good team. Gerry and Tony are extremely brilliant inventors and scientists, and they have also been involved in start-up companies before, so it was an opportunity to get together with a really good core of people. And to add Mike Rogers, who was an executive vice-president at Cree, and Cynthia Merrell, who had been Cree s CFO, was incredible.
How difficult was it to get funding for this venture?
Very easy, because of our track record. We personally put some money in during our initial round with strategic partners, and we re right in the middle of what we call our "series b" round. We ve only conducted one or two days of work on that and it looks like it will be totally oversubscribed. The industry is very exciting to a lot of investors right now and we ve just got to make sure that they are excited for the right reasons.
We are an industry that gets very obsessed with what chips are used or whose product is in this, but we have to remember what the customer experiences. They don t care about chips, they care about the quality of light. They want to say that s warm light, I m used to that, and it doesn t look like an LED. In our minds they don t want to see an LED, they just want to see light. If they know that it is very efficient, that s going to make them feel better. And if they know that they don t have to change it for years and years, that s going to make them feel good too.
That s where people miss the boat – even I did when I was at Cree. I would always think about chips and the packages, but it s really about the experience. You re trying to translate all that technology into a lighting experience for the customer.
Did you ever think of starting a fixture division within Cree?
It definitely could be done, but we never considered going upstream. We tried that in the 1990s with Real Color Displays, but we got our fingers burnt a little because we were a little bit early in the technology cycle. The general feeling among the board, or anyone at Cree, would probably be that it would not be of interest to the shareholders to go that far up the food chain.
What is your vision for LLF?
To become the next big lighting player. That s what you have to do to be successful. You have to drive a finished product to the end market, because anything in-between is not going to work.
We ve got a lot of different products that we need to get into rapidly. We ve invented a lighting platform and we need to distribute that platform across many different product lines.
How would you describe progress so far?
We ve kick-started the entire industry. We ve demonstrated 80 lm/W out of a fixture and our initial product will be 60 lm/W. That s a huge boost to the industry. Other fixture and bulb companies thought that they were going to be able to sit on this for a while, but now they are going to have to step up.
On the tactical side, we ve got representation in 49 US states. That is something about which people said: "You can t do that, it will not be possible."
We have also had two of the of the largest fixtures houses in the US send letters to their entire field-sales force, telling them that if they carry our product line, then they are at risk of losing their license. That s flattery. We re a pre-revenue company and they have named us specifically. They are trying to – and this is typical old-style tactics – protect their turf by putting a wall up. That means that they are not innovating. But believe me, they are going to have to fill their line with an LED product at some point. We are creating movement across the industry.
Do you have many customers?
We have still not released our product finally, and I d put our customer list in the 20–50 range. Initially we thought we were developing our products for the residential market, but there are many, many opportunities on the commercial side.
We are in with Friendly Ice-Cream Corporation, a 500-store chain in the US. We re starting a demonstration there and if it goes well, we will roll-out. We re getting a lot of that type of retail customer coming to us for demonstrations, but we re also getting into commercial buildings in the Midwest.
How does pricing and profit look?
We ve got a defensible IP position on our core platform, so we think that that s going to provide for a good margin long-term. You ve got to go in realistically and not overprice your products. We re trying to deliver a product, at around $75 to the consumer, that has maybe twice the output and performance of the other competing products, which are generally priced higher. No-one is going to win in this business unless you get the prices where they need to be.
Do you only source LEDs from Cree?
We re sourcing from Cree, but we have sourced from other suppliers as well. However, right now we are using Cree XR-E technology.
We want higher efficiencies, higher brightness, lower cost, like any other customer. That s been the LED mantra for years. But we also want to see better power-conversion products.
What about reliability?
It s obviously extremely important. The reason we picked the Cree XR-E is because of reliability. We re looking for testing data that s consistent within the industry, where we can depend on the numbers that are put out there. Many guys throw around this 50,000 hour number. How do you know that? What are your testing criteria?
There is a lot of responsibility on behalf of the fixture manufacturer to make sure you are getting good devices. But the higher the efficacy, the easier it is to make a good, robust fixture, because you are not dealing with as much heat.
Our fixture runs at 650 lm at roughly 12 W so you re dealing with a lot less heat than traditional LED fixtures, but you ve still got to take care of it.
Do you see compact fluorescents (CFLs) as a threat to your future business?
Certainly. Everyone thinks that CFLs are going to go by the wayside. But even though they are more expensive, they put out a lot of light and for a lot of people they are okay. CFL adoptions are going up at alarming rates.
But that s good because it raises people s awareness for energy-efficient lighting. Our industry needs to make sure that we are not fighting with ourselves so much as trying to grow the industry. There is a tendency in the LED business to be hitting each other all the time and I think that gets some of the larger integrators less excited about going after some of these areas.
How is LLF different to other fixture companies working with LEDs?
We ve got a different platform. Tony and Gerry have laid down some color properties that are totally different from anyone else s.
We also have IP that doesn t just deal with our color space and the way we put light together, but also deals with basic chip technology. So we ve got knowledge all the way across the board.
Plus we have a team that s extremely experienced on all fronts, whether its finance or general management. Tony s run Lighthouse, Gerry s been involved in many start-ups, and Cindy s raised over $350 million in her career at Cree.
How can you compete with the big lighting manufacturers, such as Osram and Philips?
We ll have to see them on the battlefield I guess. The question is: how quickly do they want to cannibalize their fluorescent or incandescent businesses?
Right now you can also make one argument that they are knowingly putting devices that contain a toxin into the houses of all Americans and people worldwide with fluorescents. That s not a small issue, I think, with the legal system in the US. Eventually someone is going to figure that out.
We re going to be the non-toxic alternative. We already have a performance that s better than fluorescents, both in color quality and efficacy, and so I think that they are going to have to react to platforms like ours. We like our chances.