A flop? Or a fu­ture pay­off?

Aquion is leav­ing Pitts­burgh, but Aquion em­ploy­ees are stay­ing right here

Pittsburgh Post-Gazette - - Business & Region - By Anya Lit­vak

Aquion is mov­ing to China. The man­u­fac­tur­ing line at the bank­rupt com­pany’s Mt. Pleas­ant fac­tory is be­ing packed up and loaded onto trail­ers. On the other side of the world, it will be re­con­sti­tuted and used as a model for a big­ger pro­duc­tion fa­cil­ity.

An­other way of look­ing at it is that Aquion is stay­ing in Pitts­burgh.

Its core re­search and de­vel­op­ment team — 10 mem­bers of it, at least — con­tinue to work on the salt­wa­ter bat­tery tech­nol­ogy and will re­main in Lawrenceville for the fore­see­able fu­ture.

But the re­gion, which has in­vested a lot in the com­pany through in­cen­tives and sup­port, gets an­other con­so­la­tion prize — some pretty smart peo­ple who have tasted fail­ure and, pre­sum­ably, can now help re­fine the recipe.

When a decade of hype and prom­ise, $190 mil­lion in fund­ing, and some gen­uinely rave re­views from cus­tomers showed up on the bank­ruptcy docket in March, more than 100 peo­ple lost their jobs. Many have re­mained in Pitts­burgh, feed­ing into the grow­ing tal­ent pool of Google, Uber, (Ama­zon HQ2, maybe?) and pulling from it to start new ven­tures.

Matt Ma­roon has a vested in­ter­ested in you see­ing it this way be­cause as the CEO of a brand new com­pany, he’ll need to draw on some of the same peo­ple and or­ga­ni­za­tions that propped up Aquion.

The eco­nomic ar­gu­ment could be that, of the $190 mil­lion Aquion raised dur­ing its ex­is­tence, more than half was rein­vested into the lo­cal econ­omy, he said.

But it’s clear that Mr. Ma­roon’s real point is this: “The smart peo­ple that were hired now are liv­ing here.”

“I know peo­ple are su­per bit­ter that it didn’t work out,” he said. “I’m here. I in­tend on stay­ing here. We’re hope­fully go­ing to take ad­van­tage of the same com­mu­nity sup­port.”

Mr. Ma­roon had come to Pitts­burgh in 2014 to lead Aquion’s prod­uct man­age­ment ef­forts. He and his wife bought a fixer up­per in Lawrenceville. Their 10-year-old daugh­ter has just started a new school. On March 8, he lost his job. After spend­ing the evening spilling the com­mu­nal pity party from the back­yard of Aquion’s Lawrenceville lab to most of the bars on But­ler Street, Mr. Ma­roon woke up the next morn­ing and prob­a­bly (he was hung over so he can’t re­mem­ber ex­actly what hap­pened) headed back to Aquion’s of­fice as a con­sul­tant to help pre­pare the com­pany for a bank­ruptcy sale.

This wasn’t his first bank­ruptcy. It wasn’t even his first bat­tery com­pany bank­ruptcy.

He knew that when he be­gan to probe his net­work for job open­ings in late March, there would be a lot of post-mortems on Aquion — “Ev­ery­one wanted to be a coro­ner,” he said.

He also knew that more than half of the peo­ple who he called were ei­ther Aquion in­vestors or cred­i­tors, and that they weren’t likely to hold a grudge.

As ev­ery­one who has ei­ther been part of a startup — es­pe­cially a failed one — or funded one likes to say, in­vestors ex­pect to hit it big on only 10 per­cent of their in­vest­ments. Most of the time they ex­pect to lose.

“No one feels hood­winked,” Mr. Ma­roon said.

Busi­ness fail­ure vs. tech­ni­cal fail­ure

Cer­tainly not Jeff McDaniel, ex­ec­u­tive-in-res­i­dence at the state-spon­sored seed fun­der In­no­va­tion Works, which was an early backer of the bat­tery com­pany and is cur­rently back­ing Mr. Ma­roon’s new ven­ture called Watt-Learn.

It was Mr. McDaniel who in­tro­duced Mr. Ma­roon to the founder of Watt-Learn, an ar­ti­fi­cial in­tel­li­gence soft­ware firm for grid-con­nected bat­ter­ies. The com­pany now has an of­fice in Al­phaLab, a start-up ac­cel­er­a­tor in East Lib­erty.

Mr. McDaniel con­sid­ered Mr. Ma­roon to be a catch, not in spite of his Aquion ex­pe­ri­ence, but be­cause of it.

“We use the term se­rial en­trepreneurs as a com­pli­ment and

not as a crit­i­cism,” Mr. McDaniel said. “So if a ven­ture doesn’t work out and there are em­ploy­ees of that ven­ture who are now look­ing for their next op­por­tu­ni­ties, our hope is that they de­cide to make that op­por­tu­nity here.”

As for Aquion, “You have to be able to sep­a­rate busi­ness fail­ure from tech­ni­cal fail­ure,” he said.

Aquion’s tech­nol­ogy, while it is still be­ing im­proved to drive down costs and in­crease func­tion, was, by all ac­counts, sound. Yet the ap­petite for en­vi­ron­men­tally friendly bat­ter­ies at Aquion’s price point shifted over the past five years, as com­pet­ing lead acid and lithium ion bat­ter­ies dropped in price.

The young com­pany needed to raise more money to con­tinue to scale up so it could try to catch up with its com­peti­tors’ fall­ing prices, but it couldn’t find pock­ets deep enough to sur­vive.

Still, the peo­ple who worked on those bat­ter­ies in Pitts­burgh still have in­tel­lec­tual re­serve to spare. Mr. McDaniel hopes they spend it here.

Speak­ing as some­one older than he ac­tu­ally is, Mr. McDaniel re­called a time when fail­ing was easier, when large com­pa­nies had large re­search and de­vel­op­ment labs where peo­ple could try things and fail within the com­forts of boun­ti­ful re­sources and lit­tle out­side at­ten­tion.

Now, as more com­pa­nies shed those func­tions, re­searchers and en­trepreneurs or­ga­nize into small clus­ters and take on the risk of dis­cov­ery and ac­tu­al­iza­tion.

They still need room to fall on their face, Mr. McDaniel said.

“When I’m as­sess­ing their ca­pa­bil­i­ties and skills, the ones that have tried and failed but then tried again al­ways get an ex­tra mark,” he said. That’s the pre­vail­ing at­ti­tude in the tech world, he said.

Mov­ing into other busi­nesses

Aquion alumni have al­ready fanned out across Pitts­burgh’s en­ergy and tech scene. Sev­eral went to an­other Pitts­burgh startup Hyli­ion, which is work­ing on elec­tric trucks, fol­low­ing an­other Aquion en­gi­neer who paved the way in years past.

A few landed at Argo AI, a self-driv­ing ve­hi­cle com­pany founded late last year by high-level de­fec­tions from Uber, Google and Carnegie Mel­lon Univer­sity, and which is clam­or­ing to hire 200 peo­ple by the end of the year.

Even Don Smith, di­rec­tor of the Re­gional In­dus­trial De­vel­op­ment Corp. of South­west­ern Penn­syl­va­nia, which is owed, “Oh, a lot,” by its ten­ant in Mt. Pleas­ant isn’t bit­ter about Aquion’s bat­ter­ies headed to China.

“Dis­ap­pointed, ob­vi­ously,” he said. Strung along for months with lit­tle de­tail? Sure.

“On the other hand, we have a space that is now a re­ally nice man­u­fac­tur­ing space,” he said. “We still think very strongly that this was the right thing to do. That it was a good deal and a good in­vest­ment. It’s just a good in­vest­ment that went bad.”

Then there’s Mat Stone, a re­cent Aquion de­par­ture who, along with an­other Aquion col­league, Mike Du­das, has just started a heat­ing, ven­ti­la­tion and air con­di­tion­ing busi­ness called Home Mechanix.

The ven­ture is so lean it doesn’t yet have any em­ploy­ees ex­cept for the founders and so new that they “al­most have T-shirts — we’re just wait­ing for them to be printed.”

Mr. Stone came to Pitts­burgh be­cause of Aquion. Tech­ni­cally, he came here be­cause of Mr. Ma­roon.

The two worked to­gether at a pre­vi­ous bat­tery start up in Peo­ria, Ill., which ended up fil­ing for bank­ruptcy and be­ing taken over by a new owner from In­dia. Mr. Ma­roon left but Mr. Stone stayed in the re­con­sti­tuted ven­ture for sev­eral years. At some point, he didn’t like what it had be­come.

In 2014, a job opened up at Aquion and Mr. Ma­roon called Mr. Stone.

“Pitts­burgh? Isn’t that like Detroit?” he asked.

Aquion flew him out for the in­ter­view and Mr. Ma­roon took him to Grist House in Mil­l­vale, then to the Strip Dis­trict to clinch the deal.

Mr. Stone said he could see the writ­ing on the wall for Aquion at least a month be­fore the of­fi­cial bank­ruptcy fil­ing.

He was asked to stay on but he wor­ried about re­liv­ing the tra­jec­tory that drove him from Peo­ria. Plus, he’s al­ways wanted to run his own busi­ness. When Mr. Du­das, who was do­ing main­te­nance at Aquion, ap­proached him to start Home Mechanix, he fig­ured it would be his best shot.

Aquion’s rise and fall still looms large in his think­ing.

“I’ve come from two bank­ruptcy start-ups and Mike came from one now,” Mr. Stone said. “We’re not go­ing out and buy­ing new trucks. We’re not tak­ing out loans.”

Last week, Mr. Stone was back at his old stomp­ing grounds in Lawrenceville. He hopes to sign Aquion as an HVAC client soon.

Pam Pan­chak/Post-Gazette

Matt Ma­roon, CEO of Watt-Learn, a soft­ware com­pany fo­cused on bat­tery mak­ers, in his of­fice at Al­phaLab in East Lib­erty. “The smart peo­ple that were hired [by Aquion] now are liv­ing here.”

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