“The storage battery is, in my opinion, a catch-penny, a sensation, a mechanism for swindling by stocking companies,” Thomas Edison, 1883.
That quote from perhaps the greatest American inventor is not one you might expect T.J. Rodgers to cite. Especially not right now.
This week, a special purpose acquisition company, or SPAC, formed by the longtime Silicon Valley investor and entrepreneur is set to merge with and take public Enovix Corp. Enovix is — you guessed it — a battery developer.
But the 73-year-old Rodgers, who founded San Jose's Cypress Semiconductor Corp. and ran it for 34 years, wanted to make a point in an interview with the Business Journal last week about why he is generally skeptical about claims about battery breakthroughs. Enovix is one of seven startups focusing on battery technology that either have gone public via recent mergers with blank check companies or plan to.
"Everybody's got a great idea for a battery," Rodgers said. "We’ll see in 10 years — and $500 million later — if it worked out or not."
Rodgers is convinced Enovix is different from its rivals. Lithium ion batteries — the standard power source for everything from laptops to electric vehicles — typically have a winding, jellyroll design. By contrast, the Fremont company's batteries have a 3D-stacking architecture and use silicon anodes. That design makes its batteries more powerful, according to the company. It also means they are ready for use now in mobile devices and will be ready for automobiles in the future, the company says.
"Enovix is the next-generation battery," Rodgers said. "It can actually be manufactured."
Rodgers has a potential conflict
Rodgers has been involved with Enovix since 2007. That's when the company was founded and when Cypress, which Rodgers still headed at the time, backed its first round of funding. He has been on Enovix's board since 2012 and owns an 11% stake in the company.
The Securities and Exchange Commission has raised concerns about just such situations in which a founder of a blank-check company proposes to merge it with a startup the person has backed. The responsibility such persons owe to their SPAC investors and their own self interest in the fortunes of the startup pose a potential conflict of interest, the SEC said in a memo in December offering disclosure guidance to blank-check company sponsors.
Rodgers' SPAC — Rodgers Silicon Valley Acquisition Corp. — signaled early it might do exactly what the SEC warned about. In its initial public offering paperwork last year, the Woodside entity said it might merge with a company its executive team had invested in.
In an apparent effort to address conflict-of-interest concerns, Rodgers recused himself from discussions by the board about the merger, according to the paperwork Rodgers Silicon Valley filed detailing the deal. Rodgers also didn’t take part in the board's otherwise unanimous vote to go forward with the merger.
That may not address all the concerns, though. Rodgers Silicon Valley's directors include Emannuel Hernandez, the former chief financial officer of Cypress Semiconductor and SunPower; Lisan Hung, the general counsel at Enphase
Energy Inc ; former Cypress sales chief John McCranie; and Joseph Malchow, the founder of Menlo Park firm Hanover Technology Investment Management and a board member and Enphase. In other words, all of the SPAC's directors has ties to Rodgers, either having worked with him at Cypress or being involved with Enphase, a company he's invested in.
Rodgers pointed out that Rodgers Silicon Valley wasn't solely focused on Enovix. It looked at other potential merger candidates, he said.
Regardless, he's unconcerned about the issue of his SPAC merging with a company he backed.
"If you're concerned about conflict of interest with this, don't invest. It's that simple," Rodgers said when asked about it."I don't see any problem with it at all."
Enovix is slated to announce Monday the results of a shareholder vote on the deal. Assuming they approve it, the combined company is scheduled to begin trading Wednesday on the Nasdaq under the symbol ENVX. It is expected to have an initial valuation of about $1.1 billion.
Rodgers Silicon Valley Acquisition Corp.’s stock (Nasdaq:RSVA) hit a peak closing price of $24.66 earlier this month, more than double the $10 price it went public at in early January. It closed at $22.55 on Friday.
Rodgers loves Silicon Valley — just not its politics
There was never any question about whether the SPAC would merge with a company from Silicon Valley — the region was intentionally incorporated into its name, after all.
"Silicon Valley is who I am," Rodgers said. "I’m originally from Wisconsin and if I was doing something there it would probably be vacation homes, or cows or cheese. Maybe generators."
Rodgers has lived and worked in Silicon Valley since the 1970s and likes the technological innovation with which it is synonymous. But he is also quick to say that he's not a fan of the region's politics and government.
"I don't like the way that works here at all," he said. "As a matter of fact, in order to stay sane, I pretty much ignore that s--- and focus on what I like."
Enovix could be considered a green energy company, given the potential application of its technology in cars. In addition to it, Rodgers has also been involved with several companies in the solar sector, including Enphase and Solaria Corp., both of Fremont; Sunpower Corp. of San Jose; and FTC Solar Inc., which is based in Austin, Texas.
Despite his involvement with such companies, Rodgers rejects the idea that he has some kind of "religion" about green energy.
"I reject green religion but I am quite willing to sell you something, if you're green and religious," he said. "If you want to buy solar cells, the companies I’m involved with make good ones. I acknowledge your right to have your beliefs and buy what I make. I work my ass off to make it as cheaply as I can and have zero defects in it, so you can get a good product at a fair price."
Rodgers said he was working on a second SPAC but has put that on the shelf for now amid a flood of them from others. By the end of just the first quarter, more SPACs had raised more money in IPOs this year than in all previous years combined.
Despite putting his next SPAC on hold, Rodgers has no interest in ever steering another operating company through a traditional IPO.
"I don't like the IPO process," he said. "I think banks use it to take advantage of both the companies they take public and of the public at large. I think they use it for a money dump into their favorite suppliers, their favorite customers."
He still likes this stuff
When he took Cypress public in 1986, he was lucky to have two of the best people in Silicon Valley involved in the offering, he said. Cypress' banker was Frank Quattrone, a top dealmaker in the business at the time. Its lawyer was Larry Sonsini, co-founder of Wilson Sonsini Goodrich & Rosati, the premier Silicon Valley law firm.
"I didn't realize how lucky I was," he said. "It wasn't until I got to dealing with other members of those two classes of professionals that I realized I had the right guy in both cases."
In addition to his investment interests and board seats, Rodgers owns a Woodside winery, Clos de la Tech, that makes a highly rated pinot noir.
Asked why he remains so involved in technology and innovation at his age, Rodgers has a simple answer.
"I'm a Silicon Valley guy," he said. "I like this s---."
Indeed, on a recent morning, he told his wife, Valeta, a former chip design manager, he was going to read a paper about magnesium storage while sitting in the hot tub.
"She smiled at me, said, ‘Have fun, dear,'" Rodgers said. "I think this stuff is cool. What else am I going to do? Watch soap operas? This is way, way better and way more exciting to do than anything else I can think of."
