KiOR: the inside true story of a company gone wrong, Part 2

May 18, 2016 | Jim Lane

Note. This is Part 2 of our series on the inside true story of KiOR.

In part 1 of our series, here, we explored: the formation of BIOeCON and KiOR, the problem of too much oxygen and coke, the entry of Khosla Ventures, and the loss of a CEO. Also, “a recipe for technical failure”, disastrous pilot scale results, culture clashes, catalyst development, reactor design trouble and the departure of a key scientist.

Two KiOR scientific wings emerge

No one was more emphatic about the pilot plant results than scientist Robert Bartek, who sent an email ‘More Math on BCC’ on December 7th, stating:

“We are in a period of denial. We must forget that our original conceptions of BCC are not right and must do something radically different to save the Project”.

By the end of 2008, it is clear from discussions with multiple KiOR sources that the KiOR scientific staff had divided into two groups. One group believed that the BCC Technology had been sufficiently tested, was not working, had no value to KiOR’s business and should be immediately stopped.

The other group, which was headed by O’Connor, focused on improving the BCC Technology, and on support of the three European Labs doing so. The controversy over the R&D Plan for 2009/2010 — to the extent that it exacerbated a growing rift between O’Connor and Ditsch — would have far-reaching consequences as 2009 unfolded.

Paul O’Connor confirmed that cultural problems were rife at KiOR at this point.

“Part of this was my problem because I wasn’t there full time in Houston,” O’Connor told The Digest. “Basically I was the CTO, and André [Ditsch] had no experience in FCC biomass or hydrotreating, but he had it in his head that he was second in command to Fred. When I was away he would push it in another direction. Because people considered him Samir’s boy [Samir Kaul, a partner in Khosla Ventures], and no one dared to criticize him much. I did, and that became a problems.

“Partly, that was the Houston culture. In The Netherlands as in places like San Francisco and New York, everyone tells you exactly what they think of you even in the management meeting, we fight like crazy but we resolve issues and make up. In Houston, people don’t often want to talk about the problem. It’s a case of everything is fine, everything is great, and Fred was very good at that.

“But there were problems to be solved, and there would be all these in-fights between myself and Ditsch, and with so many new people. Everyone wants to invent their own process and thinks they have the right ideas. Fred never really took a stand, he always stayed out of it.”

No team, no stable technology

“One problem that hurt KiOR,” O’Connor recalls, “was we just had too many people from Albemarle. Catalysis is important, but what we needed also were process engineers, and people with experience in hydrotreating and operations. The balance went wrong.

“And then there was this entirely different idea, coming I suppose from the Khosla approach to business, and André himself in some ways represented this approach, which was to go out and hire a whole bunch of MIT PhDs. But you need time to train them and they are not the ones who are going to scale up a process.

“And so it became a struggle to unite all these people into one team, and in that struggle I began to struggle with Fred, and it became a case of Fred and André on one side, and although I stayed around until the end of 2009 my influence was minimized.”

By all accounts, at the beginning of 2009, as one source familiar with the state of technology development described it, “KiOR had no Technology that was sustainable, competitive, cost-effective, and economically/technologically feasible, and the operating funds were practically depleted.”