Why emerging technology founders should tackle the hardest problems first

For the last decade, battery chemistry company Sila has been working to replace the graphite anode in lithium-ion batteries with silicon, a material that’s easier to come by, more environmentally friendly and allows for a battery cell that’s denser and cheaper.

In September, the company shipped its first commercial product with Whoop wearables. Now, Sila aims to scale 100x so it can provide its battery chemistry to power electric vehicles by 2025.

Before Sila was founded, co-founder and CEO Gene Berdichevsky was the seventh employee at Tesla, where he spearheaded the production of the battery pack that was used in the Tesla Roadster, the world’s first highway-legal electric vehicle that ran on lithium-ion batteries.

Considering his background and experience with scale, we caught up with Berdichevsky to explore how founders who work on emerging tech should think about scaling, how they should approach funding and why they should go after the hardest problem first.

Scaling as a part of the innovation process

Billions of dollars have gone into producing different battery chemistries to make better, cheaper and more efficient batteries, but Berdichevsky says there’s a reason they haven’t hit the market yet. A startup could produce a stellar new technology, but if it can’t scale, no one will buy it.

“One of the things we did very early on is, we told our scientists and engineers they could only use global commodity inputs so that we know we can make enough for millions of cars,” Berdichevsky told TechCrunch. “You can’t use anything bespoke; you can’t say we’ll figure it out later.”

Supply chains are strained, particularly as COVID-19 drags on, so it is key to build technology that can scale quickly and cheaply. To do this, Sila also uses bulk manufacturing techniques and ensures its technology can seamlessly drop into any battery factory and existing cells.

To date, Sila has raised $925 million off the back of this strategy.

Funding is a means to an end

Berdichevsky says the company will be opportunistic about scaling. “If the funding environment’s good, we’ll accelerate,” he said. “If the environment falls, we’ll decelerate, but we’ve been working on plans to continue to accelerate because the funding environment right now is good.”

Sila has almost raised $1 billion in total to scale its battery technology, but it’s going up against the fossil fuel industry, which is worth trillions of dollars every year. Berdichevsky understands funding is crucial if we’re going to replace fossil fuels over the next couple of decades, but he doesn’t think that’s something to be celebrated. “Being the first company to ship the next-gen chemistry should matter a lot more to the industry, and I hope it starts to, rather than getting drowned out by funding news.”

Companies need to constantly remember their “why” as they seek funding.

Beware the hype

“There hasn’t been a lot of shipping to celebrate in the past; it’s been mostly hope and hype,” Berdichevsky said.

The VC world has been known to get excited about a new industry, throw a bunch of money at it prematurely (looking at you, shared e-scooters) and then panic when the unit economics don’t pan out. While we all love to see those zeroes tallying up behind the dollar sign, Biggie had it right when he said, “Mo’ money, mo’ problems.”

Raising too much money can be risky, especially if you haven’t shipped anything yet, because then what are you scaling? Berdichevsky says a huge proof point for Sila is to demonstrate progress in order to raise more capital to then keep scaling.

Another risk in getting swept up with the hype is that your company can grow too fast, too soon and affect your culture. But that’s more about spending money rather than raising it, Berdichevsky said.

“If you have the discipline to raise it and manage the spend efficiently, and your technology works, I think it’s more about executing and spending well.”

To go public or not to go public …

That’s really a question of company maturity, Berdichevsky said.

“I’m of the belief that companies that aren’t in closer to steady state operation should stay private, because there’s still a lot of learning going on,” he said. “But, I also think if you can get the capital you need privately, you can probably move faster, and if that’s the goal, you should get it privately. And if you can’t get the capital you need privately, you might be able to get it publicly.”

Berdichevsky advises founders to ask themselves what their goals are and how funding can help achieve those goals. An IPO or a VC fundraise serve similar functions when it comes to getting money. While going public has traditionally been more helpful with liquidity for employees, these days you can achieve that through private markets as well, he says.

Creating disruptive tech? Solve the hardest problem first

Many founders are solving a whole host of problems with their technology, but not all of them will be disruptive. If you’re shooting for the moon, Berdichevsky recommends you solve the hardest problem first and have a practical approach to solving it.

“When we started, we knew that this was a science experiment and there was a good chance the physics and chemistry were never going to work. So we went through headlong into the part that was scariest,” he said. “It wasn’t until we kind of cracked the code five years in that we knew we had something. It’s not that we solved everything, but because we solved the hardest problem, we had the confidence that we would solve all the remaining barriers to this point today.”

This strategy also means you have a lot less competition, because most people don’t tend to do the hard thing first. Berdichevsky says he notices founders often try to solve an easier problem, but they end up building something that doesn’t add a huge amount of value to the world.

“Don’t be afraid to just go for the teeth of the dragon, so to speak,” he said. “Because if you get knocked out, you can get back up and hopefully you still have the motivation to do it again. But if you just cut off the tail, the dragon will eat you later. That’s not gonna teach you anything.”

Choose your investors wisely

If you’re going after the most disruptive tech, you need to have patience and persistence to survive until you can thrive. Having good investors who don’t scare easily can really help with that. Sila’s investors, like Sutter Hill, Matrix and Bessemer, have backed the company’s purpose from the start, Berdichevsky said.

He said going after the hardest problem first can help you score prime, supportive investors. If the risk is high, the reward will be higher and that creates more willingness to invest.

“So I think if you want to swing big — it’s actually counterintuitive — but you want to swing bigger and then find the people who support you and stick with you,” he said.