Nanovation CEO Interview

From: Gina Miller (
Date: Mon Mar 20 2000 - 01:54:26 MST

Here's an interview with Nanovations President/CEO from the Wall Street
Report, January 2000:

Real Time Quote
G. Robert Tatum, President and Chief Executive Officer, spoke with Wall
Street Reporter Magazine.

WSR: Your company is involved with cutting-edge technology in an area known
as photonics. Could you describe what photonics is and what the enormous
benefits can be from this technology?
GRT: I think the easiest way to describe photonics is to compare it to
something that we already know and understand, which in electronics is the
integrated circuit. An integrated circuit is comprised of thousands of
transistors. A transistor is a switch that turns a flow of electrons off and
on. When you combine these transistors together into a circuit in which all
of the transistors and connections between them are fabricated
simultaneously, thatís the genesis of an integrated circuit. The transistors
are connected together without any external connections between them. With
photonics, devices are powered by light instead of being powered by
electricity. Imagine a switch that controls the flow of photons much the
same way that a transistor controls the flow of electrons. The energy that
is actually going through the switch in some configuration provides some
type of processing logic function. There are many crucial advantages of
photons. They are faster than electrons; they move at the speed of light --
while electrons move at the speed of dark. Photons are smaller and do not
generate heat. Unlike electrons, they donít give off electromagnetic
radiation that interferes with other signals. Fabricating many photonic
switches onto a single circuit is the equivalent of an integrated circuit.
We call that integrated optics. The technology and focus of Nanovation is to
provid the tools and underlying processes to manufacture dense integrated
optical devices.

WSR: What will be the vehicle of transmission for photonics?
GRT: Today, we see widespread use of fiber optic cables linking together and
providing rings around cities so people can communicate with photons or
light waves traveling down glass pipes. All of the processing that takes
place at each end of the fiber optic cable today is primarily driven by
electronics. Therefore, you have this very high-speed signal traveling down
the fiber optic cable and in order to route it and access it, we have to
convert it back to electronics. This is a very expensive process.

WSR: But with your technology, that wouldnít be the case?
GRT: Thatís right.

WSR: What has stopped us from moving ahead with it currently?
GRT: Itís now a matter of developing the custom circuits to support
applications. Weíre starting to see many optical components out there --
splitters, couplers and other similar products. Itís now a matter of getting
the circuits designed and implemented by the major equipment manufacturers.
That process is underway as we speak.

WSR: When do you think this technology will actually become highly
GRT: I think that youíll see more photonic devices in the telecommunications
marketplace by the end of 2000. In the fourth quarter of this year youíll
see more applications out there that are entirely photonic. Certainly the
large telecom equipment manufacturers are all incorporating next-generation
photonics into their networks to meet demand for bandwidth-intensive

WSR: To the end user, what magnitude of speed enhancement will we see?
GRT: Thousands of times faster. Thousands.

WSR: That means that downloading files, etc. will just take a fraction of a
second versus however long it takes us now?
GRT: Iíll give you a real-world application. This evening if you want to
watch a movie on HBO or one of the other movie channels, the only people
that can afford to have the high-end equipment to access that type of high
video data would be a TCI or your local cable provider. Thatís why everybody
watches the same movie at the same time. Ultimately, an all-photonic network
will allow individual homes and businesses to access this
bandwidth-intensive technology. It will be possible to have whatever content
you want to have delivered to you, on demand.

WSR: How long has your company been in existence?
GRT: Since 1996.
WSR: And the funding for that?
GRT: Itís all been private equity through accredited high network
individuals up until the most recent round. We donít have any venture
capital in the company. During our last round with J.P. Morgan, we
introduced institutional investors for the first time.
WSR: Do you foresee a next round in the not too distant future?
GRT: Nanovation has not announced any additional offerings at this time.

WSR: The financing for the MIT project is rather substantial. Discuss it and
tell us what you expect MIT to accomplish for you?
GRT: Nanovationís agreement with MIT is a six-year, $60 million partnership
to build a world-class center dedicated to the research and prototyping of
light-based technologies. Nanovation will fund interdisciplinary MIT
research and the establishment and operation of a cutting-edge research
facility. Weíve already provided MIT with the first yearís operating budget
of $20 million. Itís estimated that weíll spend about another $70 million
over the succeeding five years.
WSR: At that point, or through that time, your company will be cash negative
in terms of funds generation?
GRT: Weíll be cash negative through the year 2000.
WSR: And then after that?
GRT: Weíre anticipating we should become cash flow positive in 2001.

WSR: What priorities have you set for your company over the next year?
Obviously, one of these is to continue technologically to develop the
circuitry. What other things are you concentrating on?
GRT: First off, we would have to understand that we view our technology as
an enabling technology that would be valid in lots of applications besides
just telecommunications. For example, you will ultimately see laptops that
can run for a month on a battery charge instead of three or four hours, like
they do today. Certainly automotive, medical and aerospace come to mind. We
donít intend to develop products in all of those applications. Weíre
developing the technology that other companies would use to build their
products and their applications. So, one of our goals would be to start to
expand the introduction of our technology into other industries.

WSR: Will you possibly make an acquisition down the road to help that or is
it your plan to do everything internally?
GRT: Certainly acquisitions are part of our strategy to move our technology
forward as quickly as possible. We have already made one acquisition last
October when we acquired Apollo Photonics of Toronto. They were the leading
designer and provider of software for photonic applications to simulate the
circuit and to predict its performance. Weíve had such great success as a
customer using that software, we decided to acquire the company to
distribute that product to all of our customers.

WSR: What do you think your biggest challenges are right now?
GRT: I think the biggest challenge is managing the stellar growth that is
ahead of us. The applications and their uses are so widespread that we have
to continually focus on the challenges that are immediately in front of us
and not become distracted because, believe me, everybody has an application
theyíd like us to develop for them right now.

WSR: To conclude our discussion, is there anything that you would like to
add or emphasize for our readers?
GRT: Stand back and watch whatís going to happen; itís going to be very
exciting. The technology is smaller, faster, less expensive and more
efficient. Itís going to touch virtually everyoneís life. There is scarcely
any technology out there that canít be enhanced with photonics if it has
electrical components.

Gina "Nanogirl" Miller
Nanotechnology Industries
"Nanotechnology: Solutions for the future."

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