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Entrepreneur: Santa Ana Company Grows by Thinking Small – Very Small
OC Metro, September 29
By: Stan Brin

Nanospheres. The word conjures up images of artificial creatures eating their way through the characters of a Michael Crichton story. Or perhaps the atmosphere of an atom-sized planet.

Kevin Maloney, president of QuantumSphere, Inc. of Santa Ana (www.qsinano.com), knows better. A surfer dude with a Pepperdine MBA and a fascination with science, Maloney actually makes and sells nanospheres. Real ones. Zillions of them, each roughly one hundred thousand times smaller than the width of a human hair. And they aren’t about to eat Chicago.

Nanospheres are tiny balls of metal, so tiny that they can’t be seen with ordinary microscopes, so small that they behave in very strange ways, like nothing that has ever existed before. And they may just change the way you live not by invading your nasal passages with microscopic hair cutters, but by making fuel cells and other handy things a lot cheaper and a lot handier.

QuantumSphere’s chief scientist Doug Carpenter (left) with Kevin Maloney, president and CEO

That’s because when plain old nickel is packed into balls as little as two nanometers across, it acts like $34,000-a-pound platinum. It is platinum that makes hydrogen-powered fuel cells work, not to mention petrochemical plants and the catalytic converter in your car.

UC Irvine engineering professor and director of the National Fuel Cell Research Center, Dr. Scott Samuelsen, says that fuel cells being considered for automobiles require catalysts. “One of the major challenges is the cost and availability of the catalytic materials. It is one of the pinch points for the success of fuel cells in the future. If they are to be competitive, the price has to come down.”

“We plan to alleviate the need for 90% of platinum consumption,” Maloney says. “We feed into our reactor metal wire costing $15 a pound and out come nanospheres worth $3,500 a pound.” That’s less than 1/20th the price of the platinum the nanospheres replace.

Maloney and his chief scientist, Dr. Doug Carpenter, came up with the technology by tinkering for a year in a garage at a cost of less than $100,000.

Passion for science

Maloney grew up in Pasadena, surrounded by Cal Tech’s intense culture of pure science. “Both of my parents worked at Cal Tech, and I used to take summer school classes there. I was interested in science, but I was always driven by the business side, too, so I went for an MBA in finance.”

But after a decade balancing corporate accounts, Maloney decided that finance was not for him.

“I was working for a local company doing legal compliance they were nice people, but I just didn’t have a passion for the fixed income and equity markets.”

Then, in 2001, Maloney met Dr. Doug Carpenter, a former rocket scientist at Hercules, who was enthusiastic about nanoparticles and is the inventor of the QuantumSphere manufacturing process. “I was looking to find a way to use nanoparticles to increase the burn rate of rocket fuel.”

But Carpenter’s passion, and Maloney’s, was always fuel cells and renewable energy. “So we raised $100,000 from a couple of Cal Tech Ph.D’s and decided to build the smallest balls of metal in existence,” Maloney says. “We built a lab in my brother’s garage and a year later, we had them and we still had money left over.”

The magic of surface area

The secret to nanospheres is the nature of surface area: The smaller the particle, the greater the surface.

Think of a Rubik’s Cube 27 1-inch blocks with 54 square inches of surface area. Now separate the blocks. You still have 27 blocks, but suddenly you have 162 square inches of surface area. Reduce the blocks down to nano size and a tablespoon of them can cover an area the size of a football field. At that size, when as many as half of the atoms are on the surface, particles of ordinary metal become highly conductive, catalytic, magnetic and even anti-microbial.

At its basis, the QuantumSphere process is extremely simple: Metal wire is heated and evaporated in a pressurized metal chamber containing helium, a “noble gas” that won’t react with other elements. Droplets of molten metal are allowed to condense at specific temperatures and pressures to produce microscopic particles of uniform size.

The secret is in the details, which the company has protected by numerous patents.

The QuantumSphere manufacturing process not only allows the size of the particle to be controlled, but also allows engineers to encase the particle in a thin layer of oxide (oxygen) which keeps the particles from sticking together and bursting into flame.

“Without that thin, uniform, oxide layer, metal particles of that size are pyrophoric,” Dr. Carpenter says. “They will burn if hot, and some will even ignite on contact with air.”

While many of the uses of nano-nickel take advantage of its lower cost, it may also prove to be more effective than platinum in certain uses. Industry expert Peter Mitchell, writing in the February issue of Chemistry and Industry magazine, says, “The key point is that nano-nickel can be tailored; particles can be made in different sizes, up to 100 nanometers across. Using particles of 50-60 nanometers alters their surface energies,” allowing them to be more effective in chemical processing than platinum, “which cannot be customized this way.”

Mitchell estimates the potential market for nickel nanospheres alone QuantumSphere currently manufactures them out of five separate elements to be between $500 million and $1 billion in five years.

$10 billion future

Three years after Maloney and Carpenter announced their process, they have hired nine more Ph.D’s the telephone at QuantumSphere is often answered by a Ph.D from UC Berkeley or USC and are scaling up the technology to produce hundreds of pounds of nanoparticles per day, in a wide variety of elements and alloys, including an exciting new nickel-cobalt alloy for battery and fuel cell electrodes.

“Nickel-cobalt is a big breakthrough for fuel cells,” Maloney says, “and opens up a $10 to $12 billion annual market.”

The result has been an unusual phenomenon: A high-tech startup that is privately held, producing product and generating income and isn’t thinking about an IPO.

“Our competition is a finite supply of a scarce precious metal,” Maloney says. “Platinum can’t lower its price or suddenly become more plentiful. As a result, our margins are huge. But our key value are our patents. Because we have the basic patents on the materials and the reactors, every time we build capacity, we make money.”

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