The "nano sized" Elephant in the room

WARNING: This is purely an observational opinion piece.

Should I start with the expected "hey ya'll"? It has been quite some time since my last article. For those not familiar with my style, I tend to lean more towards a conversational structure. So, what prompted me to step out from the shadows? A well respected industry author recently published an article: "Why has Graphene not become a large Industry yet?", https://www.azom.com/article.aspx?ArticleID=18264. Liam's review of the industry is accurate and bold. The article generated stimulating discussion. While substance for intellectual aerobics, there is an urgent deeper need to stop tap dancing around the issues and face the Elephant in the room. How do we get there?

Understand, I am on the revenue generation side of the equation. With over thirty years in the specialty chemicals industry, my sole focus, away for the grant driven academics and politically driven industry associations, is very simple: how do we generate revenue and service clients?

In my opinion, there is not a single current commercially sustainable model in this industry. If that does not change, the industry will continue to face the same challenges as emerging technologies of the past. There are several items presenting challenge:

• Scale up and production.
• Production processes becoming outdated faster than the TV you purchased at WalMart today, completely old news in six months.
• Client education processes.
• Talent.
• Money.
• Structure: there are no current company structures that are sustainable. Companies 10-14 years in at greater than $50M debt and less than $3M revenues and no real commercial scale up, simply can not survive.
• Over-hype, exaggerated press releases, and all the items listed in Liam's article are highlighted as demand increases and expectation.
• Transition from academia to full commercialization.
• Overcoming the "one-size fits all" syndrome.
• General industry identity.
• Credibility.

Now, the Elephant in the room: CONSOLIDATION!

This past week, I spent time with six Graphene companies, three CNT companies and a pair of graphite suppliers. I shared with them, that the field reality dilemma of client interaction continues to be the proper match of technology to client projects. Frustration builds for clients that may have an array of various application requirements, across a diversity of application requirements. Currently these scenarios require the participation of multiple nano/2D material companies. How do clients navigate the rough seas of understanding? What about Graphene? One VERY expensive production process yields one form of Graphene, fit for limited application. What if?

What if multiple companies, with strengths in specific areas, shared the spotlight under one banner, allowing clients to engage in multiple areas of interest. What if a supplier could offer all potential client needs under one banner, a process that fits well with solvent, but not aqueous, or coatings versus composites and visa versa, etc?

Within the next 18-24 months I estimate a massive requirement for consolidation. This can be viewed as both survival and a pre-planned "success strategy". I will make a bold prediction that within the Graphene market alone, excluding Chinese suppliers, the industry will consolidate by 60%.

Given the premonitions of the technology, the history of previous pioneers and the data presented in multiple articles such as Liam's post; it would be wise to plan for shared growth and success.

There is no stopping the inevitable, we are entering the consolidation phase. The consolidation state is a phase in the industry or company life cycle where segments in the company or competitors in the industry start to merge. Companies often consolidate to gain a larger portion of overall market share and to take advantage of clearly identified synergies. Each of these items can increase their top line revenue and company valuation in order to juice their fundamentals and make their stock more attractive to investors.

While most industry consolidations and mergers usually occur late in the industry life cycle, I believe that the nano / 2D material world of transformation, disruptive and emerging technology, actually accelerates this process. The traditional phases of the industry life cycle are introduction, growth, maturity and decline. During introduction, a company or many companies may be working hard to introduce a new product or service into the mainstream. During the growth phase, the new product or service has caught on and companies involved in creating or delivering the product or service are experiencing large amounts of organic growth as demand for their product increases. This is where lots of new companies enter the industry. In the mature phase, there is usually a shake-out of successful from unsuccessful companies. In late maturity, companies may begin to consolidate as organic growth slows and they look for ways to increase their market share and juice their growth. Throw all of that away.

Do you see the issue? These phases are situationally altered by the attraction of who gets there first and the involvement of industry outsiders seeking the next big grant or breakthrough. This is a material version of the .com revolution, without the ability to enter quick and exit quicker. It's not who knows the oldest the best, but who knows the newest, quickest. Or, in this case study, the "perceived" newest expectation through hype.

Nano and Two dimensional materials will be the foundation from which all else is built: eventually. Once the Elephant in the room is addressed, substantial consolidations/partnerships/JVs (not referring to those paper-weighted collaboration agreements) occur, and the industry fights through the "fog of war" otherwise knows as noise, the industry will gain focus and purpose.

If not, the industry is headed for catastrophic derailment, and an otherwise revolutionary vision becomes a bolt on additive investment for the current industry giants.

TAG: You're it!