Our present moment in time is a turbulent one. The US government is cutting spending and is laying people off in many areas. I am familiar with the shock and challenges that come with such sudden changes faced by so many people across the US. Back in 2012, I was a graduate student at MIT working on a Department of Energy funded fusion research experiment called Alcator C-Mod. When the President’s budget request came out in February of that year it had zeroed-out the $24M funding for our lab for the next fiscal year. This was a devastating shock to everyone in the lab. It was also the start of Commonwealth Fusion Systems (CFS), a unicorn energy startup that probably would not exist today if it were not for that devastating budget cut.
I am often asked how CFS was started and how others could emulate it. While it was born out of extraordinary circumstances that I anticipate would be hard to directly replicate, I feel that there are good lessons that would be applicable to others. In the following, I will lay out how my fellow co-founders and I turned a funding crisis into an opportunity. I hope this helps others to be inspired to turn their funding crises into their own new opportunities.
The days and weeks following the funding cut announcement were emotional and chaotic. Getting the message of the funding cut was one of a small handful of earth-shattering events in my life that fundamentally challenged and changed the way I saw the world. I was going to graduate school to study the field of fusion energy and had the full intention of contributing to fusion for the rest of my life. Questions raced through my head: Why would the dominant funder of fusion cut our lab’s budget to nothing with no notice? Was there no value in what we were doing? Was there any future in the field of fusion energy? Should I find something else to do? But, I was not alone in this situation. I was part of a lab full of great people that had been working together as a team for many years. While the path was not certain, we worked together to support each other while we figured out what to do.
Lesson: You are not in this alone. There are others in your community that are going through the same thing you are. Find them. Get together with them. Support each other and lift each other up. It’s unlikely that someone outside of your community is going to come save you, so you have to work together with others in your situations to figure out what to do next.
From the chaos came clarity. It took nothing short of an existential crisis to cause us to think from first principles about what we were doing and why. Was fusion still worth doing? Yes. Energy is one of the fundamental tools humanity needs to build a better life. Fusion is unmatched in its potential to supply clean, limitless energy. Were improvements still needed in what we were doing to achieve fusion energy? Yes.
All endeavors comprise a balance of priorities between the executing party and the funding party. During the early 2010s, the US government prioritized funding fusion research that supported the international mega project ITER. Naturally, our lab focused much of our research to be in support of ITER in part to appease our funder. While a visionary fusion science project, ITER was not convincing anyone that it was a legitimate path to economic production of fusion energy. It was too big, too slow, and too expensive. Having our past devalue our work freed us to figure out what mattered to us: finding the biggest lever we could to accelerate fusion energy to commercial application.
Being the home to the former national magnet laboratory, MIT had a storied history in high-field magnet engineering and the application of high-field magnets to advance the field of fusion energy. We knew that a new generation of superconductors was ready to be engineered into a new class of high-field magnets that would accelerate fusion energy. However, these new magnets didn’t fit into the ITER-focused narrative, so the government would, at best, form committees to form 10-year research plans to austensibly guide the needed magnet R&D. But, no funding came from the US government to actually develop the magnet technology. The 2012 budget cut freed us from our focus on supporting ITER. This freedom allowed us to start on a new path – development of the next generation of high-field magnets for fusion – which to date has proven to be extremely fruitful.
Lesson: Being removed from your previous day-to-day focus can be a liberating and clarifying opportunity. Too often we can get stuck on a singular track and we do not realize how far down that path we have gone while other tracks with even better opportunity potential lay unexplored and underinvested. Reexamination of what you are doing can identify new opportunities that may not have been previously acknowledged or even do-able. Use these shocks and disruptions in your life as opportunities to deeply reflect and find something new and potentially more impactful than what you were previously doing.
The lab’s leadership was too busy working to keep the lab alive to seriously focus on what to do with the new magnet opportunity. Into that vacuum stepped the co-founders of CFS: two graduate students and two postdocs who had been working together for many years. We created the SPARC Underground in October of 2015. “SPARC” for the name of the fusion experiment we wanted to build. “Underground” inspired by the Pluto Underground group of technologists who worked to initiate the New Horizons mission to Pluto.
Our early days were spent finding our footing: What was actually technically possible with the new superconductors? How could we build a fusion experiment from them? What were the major technical challenges we needed to overcome to make it work? Who the heck would pay for it? What type of organization is best to build the fusion experiment?
We worked hard for the next 3 months and in January of 2016, we presented our thoughts to the wider lab, most of them seeing our ideas for the first time (our original presentation is still available online at SPARC: A small high field torus for changing climates). Some people immediately caught on to the idea. Some stormed out of the room, thinking our proposal was ridiculous; they would later come around but it took some time. We gained major allies in the lab director and deputy director, whose support and contributions brought them into the CFS co-founder team.
Lesson: The hard work to create something new will not start on its own and rarely happens without dedicated advocates. You will need to roll up your sleeves and team up with like-minded people to get started. Along the way, you will find both new allies as well as detractors. Team up with the allies and learn from the detractors.
Many people in the lab were reinvigorated by the vision and plan for SPARC, and contributed numerous hours in their free time to advance the science and technical bases. But, we had to find a way to get it capitalized. Our initial hypothesis was that fusion was too far off for venture capital to take seriously. The epoch of “Clean Tech 1.0” was still in recent memory for many venture capitalists who lost a lot of money to the new energy cause around 2006-2011. So our initial inspiration came from tech billionaires privately funding large-scale (> $100M) science projects. We thought that the most probable path to success would be to find the right philanthropist and get them excited about what we were doing.
Fortune, or perhaps fate, happened one night when our lab director was seated next to a stalwart of the deep-tech venture capital space. He had long been searching for a fusion energy opportunity that was light on the science risk and tolerable on the engineering risk. Our director sold him on our idea. But there was a catch. Like any good venture capitalist, he recognized a disruptive business opportunity. This was not philanthropy. We had to spin out a fusion energy company.
Lesson: Things will not go according to your original plan. But, the act of making a plan and being curious and going out and testing it in the world is critical to making progress. See Steve Blank’s "getting out of your building". Opportunities are not always where you first expect them to be.
Fusion needed a lot of money to make real progress and had a history of over-promising and under-delivering. To make progress with our new potential funders in the venture capital ecosystem we had to learn a new way of communicating. No longer were we in the world of government grant proposals and formal academic reviews. We had to create a vision – backed up with a deep and rigorous plan – on how fusion energy would be real some day, how our technology breakthrough would be differentiating in bringing fusion to reality, and how our team was the team to do it.
We did this first by pitching to friendly audiences. Many schools and larger cities have good networks of experienced entrepreneurs who help the next generation. They helped improve and refine the story to the language of our potential funders. From there it was a lot of conversations and iterations, learning who the right audience of potential funders were for what we wanted to do and what they valued in a company story.
Lesson: Communication is key. But, given that you are entering a world of new funders, your communication style and techniques will have to change and adapt to this new world. This can be hard and may not come naturally. But, for many, it can and will develop with practice. Start with people that are friendly and expand from there, learning and improving your communications through each interaction.
Building a business meant that we were no longer able to work solely within an academic research lab. We had to form a new entity. Would we start from scratch with an entirely new effort? Would we leave MIT and take everyone with us? Was there some way to leave the lab intact such that it could grow into something great for the future while still working with it? Our answer to this last question was yes, and we created a “Born at Scale” startup through a unique opportunity in collaborating with MIT.
We knew that it was better for MIT to keep the lab and the majority of its staff and research scientists. If the fusion ecosystem were to grow, the lab had an important role to play. Our hypothesis has since proven to be correct. Keeping the lab at MIT required that a new type of relationship had to be developed. MIT had to spin out a company and that company had to immediately “spin in” and sponsor research at MIT. This concept was notionally easy to implement as there was broad support from MIT’s leadership. However, in practice, it was a challenge to get this new structure approved through the university system because it did not conform to any relationship model to which the university administration was accustomed. Hard work, determination, a willing party in MIT, and a good lawyer got us through these negotiations and formed a fruitful collaboration.
The sponsored research agreement with MIT allowed CFS to then be “Born at Scale” and unlock the funding we needed from our investors to get work started. Three co-founders stayed at MIT to manage things there and three left MIT, myself included, to start the company. Work started at MIT the very minute the venture dollars we raised hit the CFS bank account. Our small startup – consisting of three initial employees – had an experienced team of dozens of scientists, engineers, and technicians at MIT hit the ground running on developing the new superconducting magnet technology that underpins SPARC and CFS’ pathway to fusion energy. Having this scaled development capability from day one has been a key differentiator to our rapid success.
Lesson: Major funding disruptions put new people and perhaps new facilities on the market. These may form one-in-a-lifetime opportunities for collaboration and your own potential “Born at Scale” startup. It is often said that the best person to onboard for a role is not actively searching. With the recent budget cuts, there are going to be a lot of great people and teams actively searching for something new and inspirational. This is an opportunity to find them and give them more than a paycheck, you can also give them a new purpose.
I hope that these lessons learned from growing CFS out of an existential funding crisis are helpful and inspirational to others in a similar situation today. While I am sure that the details which have made us successful will not be applicable across all situations, I am confident that the principles of the lessons are solid:
If any of this resonates with you or you find you need help navigating it, please reach out to info@futuretech.partners. I formed Future Tech Partners to help many others learn and benefit from what we did at CFS. And keep an eye out here, as I plan on writing in more detail about other lessons learned in founding and building CFS.
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