AIM Interview: OriginOil’s Riggs Eckelberry Interview (Part 2)

We continue our conversation with OriginOil chief, Riggs Eckelberry…

Q: What brought you to get involved in this industry in the first place?
A: Pure madness! My brother and co-founder, Nicholas, really had a dream to get into environmental technologies in the early 90s, and it wasn’t ready to happen. I was in high tech and just got carried away by the dotcom revolution — and learned so much during that period. He continued to toil in the environmental vineyards and, in 2007, we had the opportunity to get financing for this idea of optimizing the algae production process, of industrializing algae production.

Q: Was this with biofuels in mind?
A: Absolutely. We love algae because it can make so many other things than fuels, and that will make it possible to have a really versatile industry that becomes profitable, as we’ve demonstrated in our production models. But ultimately it’s about fuel and our vision was that algae made petroleum long ago, and it can do it again. And it can actually overtake petroleum because of that incredibly distributed nature that’s possible. It’s not just a few oil fields in the world, it’s everybody making fuel, a totally different game, really. It’s the true democratization of energy coming down the pike. It’s an inevitable trend and I think the oil companies understand this. Every oil company has invested in algae. But back in ’07 it wasn’t so obvious, and I think at the time only Shell had a pilot plant going in Hawaii. We were able to launch with a group of pretty smart investors that are with us for the long term.

We now have over 500 highly loyal investors who really have a mission here, and what I’ve found is that alternative energy is very much the same as high tech. Same rules, same disruption, same constant bubbles, and the need to create all these various distribution channels. I’m at home in this environmental technology space, and specifically in algae.

Guests and staff listening to the CEO’s closing speech.

I think that algae is going to go through this incredible hypergrowth phase that will go for many years and lots of exciting blowups, companies crashing, the whole thing. And the idea is, how do you ride that wave? I think that’s the biggest thing I learned from the dotcom is to ride that wave. If you look at my resume, I really only started to have the bigger successes after 2000 when we had to then start building real companies and the internet was there and businesses like yellowpages.com became a big play because of that.

Q: What is it about algae, as opposed to other biofuel feedstocks, that seems to capture the imagination? There’s almost a rock and roll side to algae, something that sparks people’s creativity.
A: And that’s very cool that there is this phenomenon, and it’s very prominent in the States, it’s very much of a cottage industry. And this is where, strangely enough, America, and California especially, have huge advantages because of comparatively lax regulation.

When I went to Europe last March I was shown a book of regulations and the head of the Biodiesel Board, an Italian, said, “Algae is an unidentified flying object.” Algae was not in the book, and if algae was not in the book, you weren’t going to make algae in Europe. And I met algae companies in Europe that were making algae in Malaysia because it takes so long to get permitting.

The whole regulation game is a double-edged sword. You want to regulate something once it’s mature. If it’s not mature, and you regulate something unformed, it’s not going to be optimum. So, in a way, we’re back to the wild, wild, west here, and this is a good thing.

Companies like OriginOil, that currently think they’re being producers, will all end up being technology providers. Why? Because everybody’s going to produce, so why would there be one big producer/player? That’s not what it’s about. And I think the smart guys, I would say Exxon among them, have understood that it’s up at the strain and the platform end, and the whole technology game, versus trying to be a producer. Production is going to be highly democratized, so why would you become that?

Q: So when the idea of OriginOil crystallized for you, what was the business model?
A: Well, the business model at that point was to discover a business model, because we knew we had a technology, we knew there was an opportunity, and it took a few months as we started stretching our legs for it to become clear to us that it was a pure technology game. And the big lesson that we learned in high tech was, do not compete with your natural customer or partner. Don’t create conflicts.

OriginOil’s Lab Pilot System

We’ve had people come to us, despite being relatively mature, who are refiners and they say why don’t you go to the big guys. Well the big guys are going to refine. And I think the decision to be vertically integrated has some merit in a centralized energy environment. In a distributed energy environment, it’s all about serving those players with technology and letting them produce. I believe this is the epiphany that a lot of players are going to come up with.

There’s some exciting work being done by people like Solazyme, we’re doing this work as well, where you can tune algae to be specific, to optimize certain carbon chains. This is very smart because algae will respond to carbon chain tuning and then you’ve got your fuel, jet fuel, diesel, whatever. So more and more in-the-box refining is starting to happen in the production process. —A.I.M.