Batter Up
A funny thing happened on the way to the office. It turns out that this summer, the world has decided that it likes hydrogen again. That’s an understatement based on the 200-page report issues by the International Energy Agency (IEA). They say hydrogen is once again the darling it was a decade ago and a decade before that. Funny thing is that hydrogen is the most plentiful element in the universe, and it has been recognized and used as a source of energy for almost two hundred years. Despite its apparent abundance and since hydrogen tends to be in all the wrong places, hydrogen is also a major chemical in need of synthesis. At this time, 98% of hydrogen synthesis is done via a method which contributes enormously to greenhouse gases (GHG), and thus to global climate change. The other two percent of hydrogen production is green but has lots of limitations. It is a deep-seeded and growing need in search of a big solution or solutions. Without going into details, the IEA report identifies three methods of green hydrogen synthesis. The first has been around for a century. The second has been gaining traction over the past twenty years. And then there’s the third type, which is not yet commercialized, but is viewed as being on deck.
The reason that all seems “funny” to me is that our company has been working for five years (I’ve been there going on two years) on a ceramics-based electrochemical process to make ammonia. Ammonia is also a huge industrial chemical where synthesis is currently highly GHG polluting and yet as or more necessary for the maintenance of human life on this planet. To put it succinctly, ammonia feeds almost half the world’s population as a prime ingredient of agricultural fertilizer. What does that have to do with hydrogen? Well, ammonia is NH3. Is that clear enough? The first stage of making ammonia, the “dirty” stage using current hydrocarbon-based techniques, is about making hydrogen. Making green ammonia in one step is quite feasible but takes a lot of hard R&D work to advance. That’s what we worked on for most of the past five years. The rest of the world moved along towards a two-stage green process that started with a green hydrogen synthesis step. We were stubborn until this summer. We finally decided that discretion is the better part of valor, so we chose to pivot towards emphasizing what the world wants now rather than what it needs down the road. That’s a big step. It’s still baseball and all our five years of “training” are not at all wasted. We are just switch hitting from left-hand to right-hand.
I have written about the reasons one must be flexible enough to pivot and I continue to believe that. In this instance, pivoting has taken us from a lonely and long road with unknown bumps and lots of cost. It is a stark win or lose path with a heavy likelihood of dying on the path for lack of sustenance, perhaps with the goal right around the corner. The pivot has taken us into the mainstream of the industrial commercial world where many other players share the path. Most of those players are small and lack the scale or gravitas to be heard. What is worse, to be on a lonely path with lots of visibility or to be on a crowded path with lots of anonymity? Addressing the loneliness is accomplished by shouting about your progress. Addressing the anonymity is perhaps best addressed by gathering up a critical mass by one means or another to gain the heft needed to stand out. Does one limping man do better alone on the path or by gathering up a small group of limping men to help one another on the path? Hard to say.
What’s even “funnier” still is that I am being encouraged from several sides to take the wind at our back and the uniqueness of our approach and do more than just pursue this pivot strategy. The encouragement is to gather the left-leg limper to complement our right-leg limp and perhaps another few injured travelers. It is also helpful to bring some uninjured, stronger players to the journey with the full knowledge that they will likely try to take more than their due for their involvement.
The market interest in things hydrogen puts us suddenly in a unique and interesting position. In markets that wander towards a logical goal, but do not achieve greatness as hoped and expected, there is market and investor fatigue with tried and true approaches. New approaches (which we clearly represent) with the benefit of fresh perspectives and management, and perhaps new capital sources, can provide a reinvigoration that is both warranted and most available to new entrants rather than long-time players. It never seems logical to the old guard, but it happens. We find ourselves in the position of getting an at-bat that is as circumstantial as it is earned. The sine qua non is that there must be valuable and effective technology, but mostly there must be a vision and strategy and an executive team able to get that vision in front of those new and potentially interested money sources.
The pieces that make this happen are technology that looks promising and differentially beneficial, strategic partners that can validate that thesis, money to set up the play, money to withstand the journey and people with the drive and vision (both of which must transcend the immediate potential for gain) to be both credible and possessing gravitas.
I spent over forty years on Wall Street. Recently (the last ten years) I raised $200 million for an alternative’s platform, $1.5 billion for a defaulted loan Hedge Fund, $400 million for a near-foreclosed midtown historic office building and $600 million for a giant observation wheel. All were challenging missions, but all were achieved. The challenge of raising $125 million for a play in one of the hottest industrial sectors in the world is in no way easy, but it is certainly within the realm of the possible. It all starts by getting the right elements and team lined up. I think we may now have those. It then requires a structure and a plan of attack. That is in process. It will then require some buzz and lots of meetings to get this out into the right hands for evaluation. That will all happen. The results will hinge, as always, on the environment and the competition, but mostly on the quality of our effort.
We are heading into October and the analogy of the “boys of October” make this the perfect time to declare “Batter Up!”