A new Berkeley-Haas case study delves into the decision-making process of a clean energy startup as it makes a “life-or-death” decision: which market to enter first.
The case, “Alphabet Energy: Thermoelectrics and Market Energy,” appears in the fall 2012 edition of California Management Review, the Haas School’s quarterly peer-reviewed journal. Beverly Alexander, co-director of the Haas School's Cleantech to Market Program, co-wrote the case with five MBA students: Adam Boscoe, Mason Cabot, Philip Dawsey, Luc Emmanuel Barreau, and Russell Griffith, all MBA 12.
The case is the latest in the new Berkeley-Haas Case Series, written by Haas faculty to promote the school’s teaching mission. Abbreviated versions of some cases also appear in the Financial Times.
The case begins as Alphabet Energy founder and CEO Matt Scullin, who earned his doctorate in materials science and physics at Berkeley, ponders the next step for his prototype of a thermoelectric device that can turn wasted heat into electricity on the cheap. The market is potentially huge: 60 percent of the energy generated in the U.S. is wasted as unutilized heat. Harvesting even a small fraction of it means lower costs and big efficiency gains.
Scullin had licensed a solid-state, silicon-based device developed by Lawrence Berkeley National Laboratory that can be produced at about one-tenth the cost of current thermoelectric devices, making widespread adoption attractive for the first time. His research had shown that customers would demand a quick payback to take the plunge.
Scullin narrowed the application to four potential industries: automotive, aerospace and defense, power generation, and manufacturing. All have large upsides but involve significant hurdles. Scullin was not sure whether Alphabet had the resources to pursue more than one, and the decision could make or break the young company.
The case includes a step-by-step analysis of each industry, taking into account market size, development time and engineering costs, gross margins, and even company culture—such as whether an association with cars and motorcycles was more positive for employees than weapons components.
The fall 2012 edition of California Management Review also includes articles on whether “flattened firms” have delivered on their promises, how large food companies communicate amid the public debate on health and obesity, and the overuse of sustainability in corporate messaging.