Gene Berdichevsky was one of the early team members at Tesla. Now he’s building his own unicorn startup, Sila Nanotechnologies, which is valued at over $1 billion. One which looks like it will fuel every way you travel from the road to being in the air.
Berdichevsky recently appeared as a guest on the Dealmakers Podcast. During his exclusive interview, he shared his journey, building his first solar car, and how he’s raised hundreds of millions of dollars for his own technology startup that is growing at an incredible pace.
Thousands of Miles & Designing Your Own Education
He was born on the Black Sea in Ukraine, spent time in St. Petersburg, Russia, and even lived north of the arctic circle for five years. All before landing with his family in Richmond, Virginia, and attending college in California.
Gene was fortunate to grow up in an entrepreneurial family, and see his father start his own small businesses. Both of his parents were software engineers and worked on nuclear submarines.
So, the one thing he says he knew was, “I definitely wasn’t going to be a software engineer.” He did enjoy math and science a lot. That led him to study mechanical engineering.
Within his first year at Stanford, he got involved in their solar car project. Students would compete to build a solar-powered car and race it across the country, 2,300 miles, from Chicago to Los Angeles.
Gene’s team built the car chassis from scratch, built a carbon fiber body, and powered it with a battery with about the same strength as the toaster in your kitchen.
That was it. He fell in love with energy, problem-solving and building, and was really energized by having really built something from the ground up.
Berdichevsky went on to get a Master’s in energy engineering from Stanford. There was really no such program in existence at the time. So, he put together his own curriculum. He dove into materials, semiconductor physics, quantum mechanics, and solar.
Many people are already struggling with the decision to go to university. So, why go, and even create your own studies, when you can piece everything you want to know together online these days?
As with many of the other highly successful startup founders I’ve interviewed who have come out of Stanford, Gene found the network you gain access to very valuable. Some of those people still work for him at Sila today. He also credits the value of learning from your peers there.
Tesla & Battery Issues
At the end of his junior year, Gene became the seventh Tesla employee as a tech lead for battery system architectural development.
It’s no secret that there were plenty of early challenges for Tesla. They started out literally supergluing laptop batteries together to make the battery pack.
Then with safety the main concern was avoiding random failures. They happen in batteries. Even being rare, when you are using 10,000 batteries to run a single vehicle you really have to expect this to happen and preempt that.
Tesla grew from around 10 people when Berdichevsky started there, to around 300 when he left. About 30x in just four years. Tesla now has over 45,000 employees with a market cap of $40 billion.
His big lesson from Tesla was that as a startup founder, you want to go after really big problems. Ironically, Gene says sometimes it is easier to solve a really big problem, than a smaller one. For a start, it enables you to attract incredible talent. It is also both incredibly rewarding and reduces your competition.
From Tesla, he saw that you need to be willing to do things the world doesn‘t think are possible. This requires a mindset and a culture that is self-reliance where you are willing to do a lot of things in house.
Entrepreneurship In The Making
From the day he walked into Tesla, Gene says his brain was already fixated on “How do I start my own company? How do I build something like this?” He had even previously written a business plan for making electric cars in the U.S. market in his junior year at Stanford.
He then did a stint at Sutter Hill Ventures where he understood the VC lens when identifying entrepreneurs that have the potential for success. The key ingredients and how the lens is used to identify patterns includes the following:
1) Great markets defined by a great distribution
2) A strong product that captures the value
3) Founding teams equipped to resolve complex technical problems
Gene was traveling the world meeting many founders. During his time with Sutter Hill Ventures, Gene met his future co-founder, Gleb Yushin. Shortly after, Gene’s former Tesla colleague Alex Jacobs joined them as Sila Nano’s third co-founder.
After multiple conversations and understanding the value that each one of them brought to the table, they got started with a 1,000 sq. ft. lab in a basement at Georgia Tech and Sila Nanotechnologies was born.
Financing The Next Big Thing
Right after forming the team they went out to raise financing. They had a big advantage and that was the intellectual property Gleb had amassed which included six patents and four years of technical data around the problem they wanted to resolve.
They knew the technology was fully compatible and had a clear understanding of the road ahead given the years of experience at Tesla from Gene and his co-founder Alex.
They went out and raised a Series A round with Sutter Hill and Matrix as co-leads. Both of whom have continued investing in every round.
Sila’s most recent round of financing was a $170 million round led by Daimler. So far they’ve raised around $295 million.
The business positioning was critical as a lot of people had lost money in battery companies. From day one they were very clear they were not a battery company, but a technology company that makes materials for batteries. Batteries are a low margin market but the materials have a very healthy market as the better the product the higher the sales.
They are valued now at over $1 billion where storytelling played a big role. This is being able to capture the essence of the business in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
During the early days, the cofounders were able to recruit a group of talented engineers to join them and from there started to build the business.
Their business model revolves around inventing, developing, manufacturing and selling their product.
In this regard, their product is a powder that replaces graphite powder in existing lithium-ion batteries. The more efficiently you can store lithium, the less material you need for the same amount of energy. Sila Nano’s material can store energy more densely, giving you more energy at similar volume and weight.
Sila can reduce battery weight by approximately 20 percent or increase energy stores by approximately 20 percent with it’s material. Meaning vehicles have the potential to go 20% further than anyone else’s.
Consider that every electric vehicle will need around 15 to 20 kilos of this material. Think forward to a few years from now when all vehicles are electric. You’re talking about a market of 100 million new vehicles per year. At 20 kilos per car, you’re talking about 2 billion kilos of this entirely new-to-the-world material that has to be produced, every year.
This material could also be used to fuel new air taxis, and change the way we travel, and the aerospace industry.
Sila has been growing by around 40-50% every year for the past five years, and there are no indications of that slowing down anytime soon.
Listen in to the full podcast episode to find out more, including:
- The essential ingredients for raising money
- Gene’s top piece of advice for his younger self and new founders
- How to grow as a leader when your team is growing at 92% in two years
- His approach to solving strategic problems