An Open Innovation Safety Business Model

After a very frustrating 2017, my board and I at Dreamweaver made the difficult decision to turn Dreamweaver into a holding company, and restart under Soteria with an entirely new business model.? In the startup world, this is known as a pivot.?

When we did this and considered different strategies, we asked ourselves, “How many people are we willing to hurt in order to make more money?”? Then answer? “Not even one.”? The entire business model wraps around that concept and it’s contrapositive: everything we do is to help others use our safety technology—and any safety technology.?

The first thing we realized is that we can’t do this alone, or even just with help, a lot of money or other resources. ?If we tried, it would be slower, which would have the effect of helping fewer people. ?It had to be done mostly by others, who had the capability and resources in place already.? This is humbling, to place the success of our mission into the hands of market forces, the lithium-ion battery industry and literally hundreds of people with conflicting interests.? It’s something I never could have done without my faith, and is very parallel—the same way that I just try to do the right things and trust God with the outcomes. I now had to put the technology and it’s progress into the hands of other people, and trust that they would work both for the good of the industry and also the good of their companies. And then, the right things would move forward.? Our part is to provide knowledge and guidance and the promise of a low royalty rate.?

Early on, when I explained the business model to our advisory board, one of the members asked me, “Aren’t you leaving a lot of money on the table?”? Without thinking, I replied, “I hope so, because that’s the only way we’re actually going to get the industry to do what we need them to!”? We all chuckled nervously, understanding the tension.? After a couple years of studying the market and other businesses that have been successfully doing what we do (Qualcomm, Arm Holdings, RCA), we determined that a long-term royalty rate target of 1% of the cost of the battery would both reward our investors, and be very small compared to the value of a pool of effective safety technologies.

The first thing we did was build the Soteria BIG Consortium , now over 125 members.? The Consortium forms the context for everything else we do.? Said another way, every business activity we do is through a partnership of some kind or another, and it is both within and through the consortium that these partnerships are formed and flourish.?

But to get a technology to market that is embodied in a material that must be built inside the battery requires an awful lot of moving pieces to come together, and some of them must be sequenced.? First, the equipment to make the materials needs to be identified, and then the process refined to make the materials, which likely requires equipment modifications.? Next, the quality and quantity of materials must be high and substantial enough to motivate the battery builders to make batteries.? These must be built, tested, and dozens of different formats and chemistries tried to see which ones work the best. In which we will then learn how to optimize them for best performance, all the time trying to avoid false negatives in the testing.? Once the function is achieved, they then must be scaled and have hundreds and then thousands of cells made for specific applications.? Those cells then need to be built into the applications and tested, while each application likely has its own set of requirements that are different from the safety functionality that we are touting.? Most of the time, no other performance parameters can be compromised.

Just writing this is exhausting!

But, six years later and with the help of dozens and dozens of companies, this has all been done.? The first commercial-ready cells are being produced by the thousands, and next year tens of thousands will be delivered to potential customers for their qualification. After that, millions.? To accomplish this (like Qualcomm, Arm Holdings and RCA), we’ve had to build other parts of our business to deliver some hardware.?

As illustrated in the image below, the backdrop of everything we do is the consortium, within which the centerpiece is Soteria’s battery safety technology.? Other activities around the periphery are designed to facilitate and accelerate the broad implementation of the technology.? Unlike other companies, we take our measure of success as improving the safety of the industry with the expectation of monetizing this in various ways.? Let’s touch on the main ones each briefly.

Consortium

As stated, the consortium forms the background and context for everything else that we do.? Through the consortium and the 100+ projects that are going on at any given time, many come to fruition and move towards commercialization.? When they can go all the way without our help, we just facilitate and don’t interfere.? Other times we take a more hands-on approach.? Additionally, we've structured the consortium to be a safe place to talk about the issues and roadblocks, and the potential solutions around battery safety.?

Technology Licensing

Soteria’s technology includes our metallized film current collector and certain improvements on the Dreamweaver separator, plus several new developments which will be coming out soon. And others that we will acquire or develop over time.? Licensing this technology—teaching others how to use it and enabling them to have unfettered access for broad and swift implementation—is the core of our business and the primary reason for all the other things we are doing below.? In the end game, this will drive the most safety as it becomes an everyday part of other companies’ products.? But a lot of other work will have to be done along the way.

Materials Distribution

To implement the technology requires abundant and high-quality materials, and many battery companies may not want to either go vertical or source the materials themselves—they just want a supplier they can trust.? Other material suppliers may have good materials, but not have international sales reach. For this reason, Soteria has partnered with global suppliers of metallized films and the Dreamweaver separator and will act as a distributor of those materials to cell producers.? We will assist them by streamlining the supply chain with materials that have been qualified through our rigorous testing protocols, with the ability to be delivered in both large or small quantities globally. ?Customers of the distribution business will be licensees who can, at any time, take over their own supply while having access to Soteria’s full technology portfolio.?

Cells

Many end-user OEMs need proprietary formats, or cells designed for specific end users or for their exclusive consumption.? But many end users cannot command the volumes required to get a cell developed with a new technology.? For this reason, Soteria is partnering with cell producers to make select formats for target markets that will service multiple end-users.? Once again, Soteria will act as a non-exclusive distributor of these cells.? The first examples are 18650s from Nanotech Energy and CHAM, but others will be available in 2024.? These cell manufacturers are licensees who are permitted to sell directly to end-user OEMs, and in many cases, Soteria will only stick around to handle small orders and customers who need special treatment.

Packs

Most packs are custom designed for each application, even if they use generally available cells.? In December 2022, Soteria purchased Voltaplex, a small custom pack manufacturer, which will soon be offering packs made with the 18650 cells mentioned above.? Focusing on the underserved, we’ll help seed the market with these packs through working with smaller customers that need battery packs containing anywhere from a few cells to a thousand.

E-bike Batteries

We learned in 2022 of a growing number of e-bike battery fires in New York City and elsewhere.? To help understand the problems, we started a project in which we took apart new and used e-bike battery packs, interviewed and polled e-bike riders, and used technology to observe their riding patterns.? From this we’re producing a collection of best practices that will be made available to the industry, and used to design our own line of e-bike battery packs.? The business model for this is still being worked out, with the goal of providing everyone access to our safer e-bike battery pack solution.

Lithium-ion Battery Fire Alarm Systems

In studying e-bike fires and the stories around them, we became aware that current smoke alarms act only as late warning systems, but an opportunity existed to create an early warning system based on sensors that can detect a venting event.? Soteria has patented this alarm system , and is working with world-class partners to bring this to market quickly by working under the same broad-based licensing philosophy that permeates all of our activities.

Back to the Consortium

After reading about our lithium-ion battery fire alarm system, one investor emailed me, “The most brilliant part is the millions and millions of dollars of free advertising for your battery technology.”? This was alarming for me, as I had been called “brilliant” and had no idea why.? So I asked.? “The alarm system raises awareness of battery fires, making people want safer batteries.”? In hindsight, it was so clear.? And this, in turn, will make companies want to join the battery safety Consortium so they too can enter into the conversation and projects around battery safety. ?And so the cycle continues.? By creating a safe place to talk about battery safety, the problems and solutions are discussed. Resulting in business opportunities, sometimes for us, and often for our Consortium members.?

Running licensing, distribution, pack design, market research and consumer product businesses all at once can seem like a lot. But each piece contributes to the other, and all together they create an ecosystem which will make licensing of battery safety technology a core component of the industry. Which is our primary goal: to make battery safety technology broadly accessible at inexpensive rates, while supporting its implementation.? This will lead to the fulfillment of our vision, to have Inherently Safe Batteries Everywhere.