C3Nano is a material technology company developing and manufacturing transparent conductive films, the main component in all touch sensors used in phones, tablets, and more.
As founding CEO Cliff Morris explains, they’re seeking to disrupt the market and replace the current go-to with their own solution-coated material that can be used in flexible devices that are becoming more commonplace.
Based in Silicon Valley, they’re fully scaled in California but have operations in China and South Korea, giving Cliff an up-close perspective on offshore manufacturing, supply chain, and more.
He talks about the challenges and advantages involved with that, as well as…
- Why a leader needs to be a mentor… and be mentored
- The danger of silos – and how to avoid them
- Why outsourcing is so common for U.S. companies – and why the model needs to change
- The top trends impacting manufacturing in the next 3 to 5 years
- And more
Listen now…
Mentioned in this episode:
Transcript
Mike Rogers: Hi, everybody, and welcome to our very first episode of Manufacturing Success. Today I’m very excited to have on the show Cliff Morris of C3Nano. Welcome, Cliff.
Cliff Morris: Mike, how are you doing?
Mike: Great, great. Hope you’re doing good today. Let me give the audience a little background. Cliff is an international executive with thirty years of doing business on a global basis, including five years as an expat in Paris, France. Most recently, Cliff has developed C3Nano into an international leader in its industry with manufacturing locations in California, Korea, and China. In addition to being a board member at C3Nano, he is outside director at FLEx Lighting. So tell me, Cliff, why don’t you tell the listeners a little bit about what C3Nano does?
Cliff: Okay. Thanks, Mike. So C3Nano is a venture-backed technology company. We’re a spinout from Stanford. Now, we’re a little bit long in the tooth for a startup company. We’re ten years old. We just had our ten year anniversary. And we’re a material technology company. And one of the things that we learned along the way was that when you are trying to introduce a new material into the electronics industry today, it takes about ten years, but when I started, it was probably… My focus was probably… We would do this in two or three years. So I got that a little bit wrong.
Now, what we do is we make transparent conductive films. And a transparent conductive film is ubiquitous, it’s everywhere, except you just don’t see it because it’s transparent. And what it is, it’s the main component in all touch sensors. So if you’ve got a Samsung or an Apple phone or iPad or almost anything that you touch, it has a transparent conductive film.
It’s one of the key materials that allows light to go through the touch sensor that directs you where you’re going to touch. So you touch your touch sensor, and the IC, the integrated circuit, it picks up where you are to the touch sense. And it knows what you’re trying to do. And so that’s enabled by our type of material. Hope that’s clear enough.
Mike: Wow. Okay, so pretty much I’m touching your product all day long if I’m on my iPhone.
Cliff: Yes, you are, exactly. Well, not our product, actually. So that’s the interesting thing. So since we’re enabling new technology, the next-generation devices hopefully will be using our product. So the material you’re actually touching is the competing material. It’s called indium tin oxide. And it’s fundamentally produced differently than how ours is. So indium tin oxide, also called ITO, it’s sputtered in-vacuum. And that technology is thirty to forty years old, sputtering technology.
Now our material is a solution-coated material. It has the same functionality. It’s transparent, it’s conductive. The difference is that ours is very flexible. So you might be seeing some of the new gadgets, new phones, even notebooks are coming out that are having flexible screens. And so our product enables that. And so we’re the ideal material. If it’s made from a ceramic-based material it’ll crack when you fold it. Ours is a silver-based material that’s very, very pliable, and you can bend it and it won’t crack. So that’s the difference between our material and the competing technology.
Unprecedented Times
Mike: Cool. Cool. So you’re manufacturing this, you know, in Korea and China. How is the COVID virus affecting your production right now?
Cliff: Right, well, first of all, let me clarify that. Our primary manufacturing procedure now is in California.
Mike: Oh, okay.
Cliff: We do it in Hayward. And there we do all of our R&D, all of our pilot manufacturing and all our scaled-up manufacturing. So we’re fully scaled in California. And so that was a commitment that I made to, you know, our company, our employees that we were going to be fully scaled.
What we do in Korea and China is a little bit different. In Korea, it’s a very limited operation, where we take what… Let me just back up very briefly, our material that we produce here is in an ink form. It’s a liquid form. What we do is we ship that liquid, that conductive material in the liquid state, we ship that to Korea, where it’s coated, almost like a printing press coats a material, this coats it in an atmosphere–versus the vacuum that I had described as our competing material. So that’s done in Korea.
In China, we have a back end process. So typically our process has two parts, there’s a front end and a back end. The front end is where we make silver nanowires, we synthesize the chemical process. The back end is where we blend it into an ink. And so if you think about it, the analogy would be: in Florida, they grow oranges, they make the concentrates, then they send that concentrate to, say, Japan where it’s blended. So they don’t want to ship a lot of liquid by airplane because it’s expensive. So we will ship a concentrate to China and they’ll blend it at the back end of our process into the final ink form. That’s kind of how product flow works.
Mike: Ah, okay, so then, obviously, being in Northern California, you’re not deemed essential.
Cliff: It depends. It depends who’s asking.
Mike: It’s essential to you, right?
Cliff: It’s essential to us. Right. So I think what you’re asking is what are we doing right now? Right?
Mike: Yeah, exactly. And how are you coping with what’s going on?
Cliff: Yeah, well, I mean, like everybody else, we’re in hibernation mode, full containment. We have a couple of people that have been in the office. Our CFO is in the office. I was in the office all last week, doing lots of administrative things for employees who are all at home and waiting.
So originally when the governor put the order down, I think it was through April 8. And so now it’s through May 3. And so we have employees that are basically mostly working from home. We have some on furlough because there’s a lab or a chemical lab, so there’s virtually no work for them to do. So. There’s a little bit of [inaudible] now. Some employees are working from home so some employees are furloughed waiting for May 3 to come back to work.
Mike: Yeah, it’s unprecedented times that we’re going through and I’m seeing that with a lot of my customers as well. You know, especially in manufacturing, not a lot of those jobs you can do from home. So let’s move on to kind of a lighter note. Tell me about how you got started in manufacturing. I know you were, you know, you mentioned you were an expat in France.
Cliff: Right. Well, I’ll go back even further. So I’m from Detroit, you may not have known that. And so Motor City–
Mike: Not a lot of manufacturing there.
Cliff: That’s right. So I’ve got manufacturing, I’ve got manufacturing in my DNA. Both my grandfathers worked the line on the River Rouge plant in Detroit. My mother worked for Ford. The River Rouge plant was for Ford. Right then, straight out of college, I worked for Ford and, even while I was in college, I worked in one of the manufacturing facilities in the suburban Detroit area called the Woodhaven Stamping Plant.
And so I went in there as a… I had just graduated from high school. And so my job waiting for college was to go in and work in the stamping plant, which was really tough work. I worked in the second shift, and it was the Midwest summer so it was really hot and humid. And they have no HVAC inside a manufacturing plant. And so you’d walk in there and it was like a furnace. So just a blast furnace, horribly hot. Very typical work. And a very, very long summer.
So I’ve always been, you know, growing up in that environment and having actually worked in there. So that’s really my original roots from manufacturing. So that’s where I started answering that question specifically.
The Risks of Exporting Jobs
Mike: Wow. So you’ve been at this for a long time. Being in this business as long as you have, what kind of trends do you see that are impacting manufacturers, say over the next three to five years?
Cliff: Right. I think it’s gonna be an interesting time for manufacturing for the US. I think we’ve lost an incredible amount of manufacturing jobs and experience progress, everything that goes with it. I think so much of that we’ve exported out of the country. And it’s going to be interesting now because, for the first time, you’re actually seeing people talk about “What did we do? How are we going to sustain jobs or children? How are they going to sustain themselves in employment? Why do we keep exporting jobs?”
My personal experience is that we kind of stand alone as a country when it comes to thinking about what you do with work and what you do with products and technology, it seems that… My personal observation for years traveling around the world living abroad is that when jobs are created there, in foreign countries, usually the foreign countries try to keep them there. Companies don’t start looking quickly at “How do we export the job? How do we lower costs?”
Whereas in the US, you really have a completely different mindset. I find that there’s far more pressure on the CEO to look for opportunities to export jobs. Now, I’m not saying my board is that way, we’ve actually never had that discussion. But I have noticed that that’s more the way that things are done here.
And so now, on one hand, I think we’re ahead of the curve when it comes to managing strung out supply chains. Because we’ve had to adapt to that way. So for example, if you look at Apple, they have manufacturing people, but they don’t actually manufacture things. They get on airplanes, and they go into factories and Foxconn and other places and they check in on what’s going on. And they’ve got strict, you know, strict metrics that they’re working against.
Mike: Right.
Cliff: So on the other hand, over time, the question for me is how long can this country sustain that if we’re not actually making things here? We have to actually make things here because, for example, when you’re going to be an operating company and you’re trying to sell and trying to make things, you have to ask yourself, “Well, where are my suppliers? Where are my customers?”
Well, right now, there are so many manufacturing jobs that have gone abroad. All our suppliers are over there, all of our customers are now over there. So, therefore, you almost have to make a conclusion that “Well, I have got to be over there, too.” And so over time, this is the drain I think that the country has experienced and I really do think that we really need to rethink how this is all going on. Obviously today with COVID, this is another reason why it’s become another, you know, key factor in our thinking as a nation.
Mike: What about you know, the education of the workforce, and, you know, the type of education everybody’s going for. Do you think that’s going to change?
Cliff: Well, I have no issue with US universities. I think we’ve got the best universities in the world. Let me start with that. I also know even when I’m in, say, China, for example, and I’m talking to a leader there, I can tell immediately where they’ve been educated, if they were educated in the US or not. And many of the leaders there have been educated here. So I know we’re doing, you know, we attract really, really strong kids, whether they’re from within the country or outside.
Are our workers educated, you know, like, I mean, the people on the production lines and the frontline people, some are, some aren’t. We’ve had to train a lot of the people that we’ve hired. C3Nano has got a relatively young workforce, and in many cases, the people we’ve hired, it’s been their first job. These are mostly chemical engineers and chemists and, over the last few years, we’ve been hiring production line people, because as a company we pivoted from being 100% R&D, developing this product, we were in stealth mode. And then we were ready with our first product.
And then we started to shift, we started hiring different types of people, rather than a chemist or a chemical engineer. We’re hiring somebody with a manufacturing background or someone who may be a mechanical engineer or production-related, technical, technician type people.
Mike: Yeah, and I asked that because I’ve, you know, I’ve seen reports and read things where, you know, there are companies out there that are just desperate to hire people. But, you know, the skills that the workforce has are more blue-collar, you know, not trained in some of the technology that manufacturing plants have now and so there’s, there’s just a gap there.
Cliff: Yeah, I read about that as well. We have not experienced that. Largely because I would say if you look at the demographics of our workforce, we’ve probably got… Eighty percent are college-educated chemists, chemical engineers. Twenty percent… Say, just the remainder are technician-level people. And we haven’t had to hire that many. So we haven’t had too many problems hiring people.
Mike: You know, obviously, having supply chains in China, do you think it’s feasible to bring manufacturing back here or just maybe do more nearshoring where we’re going to Mexico or, you know, other places that might be a little bit closer, and we’re not so dependent on, you know, a thirty-day supply chain from China?
Cliff: Yeah, I think that it’s gonna be difficult. I know there’s a lot of talk of “Well, it’s time to bring those jobs back,” right?
Mike: Yeah.
Cliff: If you go to China, you realize that they’ve got critical mass there, we do not. When you drive down the freeways, you see row after row after row of factories. And that’s talking factories like the size of a Tesla factory, but larger, way larger. And not one story, but like two or three or four stories tall, huge, as far as I can see. You see factories there. And you don’t see that, even in Detroit, at its high point for manufacturing… Large facilities, but not on this scale.
It’s going to be difficult, I think. It’s going to take some time. And it’s going to take a coordinated effort, not just from industry, but I think the federal government has to really play a role, perhaps in how they guide their policies and investment in long term thinking.
The Future of Manufacturing
Mike: What worries you about the future of, say, US manufacturing?
Cliff: I think we’re… The biggest concern I would have is the longer that we go where we’re counting on contract manufacturing in foreign countries, the more the foreign countries become experts at or very good at what we do. We’re good at innovation, creativity, but we’re training other countries on those skills.
At a certain point, those other countries really don’t need us in our products, because they’re going to have their own products and their own people and their own innovation. And so the question we then have to answer is, what is our role? And how do we exert our leadership? And what is the next generation? How are we going to adapt to these changing times?
Mike: So on the flip side, then, what would make you optimistic about manufacturing here in the US?
Cliff: I think it’s a step-by-step thing. I think we need to see some of the large companies–the leadership, the Apples of the world, Googles of the world, companies that make things–have to start making things here. I think that it’s a mindset.
As I said earlier, often our leadership, the first thing we think about is “Well, how can we export this job? How can we improve our margins by ten or twenty percent?” What we find is that when we tried to export our product, you spend whatever you think you might save, you give up in transportation costs and tariff costs and things of that nature. So those things all have to kind of be figured out over time, I think.
Mike: Do you think we’re taking that long-term view on things?
Cliff: No, not yet. Yeah. I think, you know, you have to have some type of a tipping point. I mean, we’ve been working on this, this inertia, you know, with sending jobs to Mexico, to Asia, for a long time. You can’t just change that overnight.
I think, perhaps, the situation that we’re dealing with now, people have woken up and are saying, “Boy, oh, boy, we don’t have control of our supply chains.” We can’t just order ten million N95s. We find that those things aren’t here. You know, I don’t think people even realize that those things aren’t being produced here. Well, they probably do to a certain degree, but they haven’t really thought very much about it.
Mike: You know, either that or you know, if they’re trying to nearshore, you know, the workforce in Mexico is completely different. I mean, if you’re making auto parts or things like that, that’s probably great. But as far as technology goes, I think you’re gonna have a struggle with that.
Cliff: Yeah, I’d say so.
The Key to C3Nano’s Success
Mike: So what would you believe has made C3Nano successful while the other companies might be struggling out there?
Cliff: Good question. Well, first of all, we’ve got great employees. They honestly take ownership of the company, they really want the company to be successful, and they want to be a part of the success. So start with that.
I also think that from a management standpoint, I think we did a few things right. We tried to keep it as even of an organization as possible. I try to eliminate, not allow silos to be created. And part of that is you have to be very transparent. You have to be as open as you can with the employees, let them be part of the process.
And so we’ve done that. We got lucky a couple of times, we just hired some really great young leaders who grew up and are managers today. And so I think that’s, you know, it always starts with the employees, right?
Mike: Right.
Cliff: And management, sometimes you just have to do the right thing, lead from values, and be consistent. And those are some of the things. I’m sure there are other things I could think of, but I’d start with my employees.
Mike: Well, what kind of advice would you have for somebody that’s just getting started in a leadership role?
Cliff: That’s a great question, too. I think that you have to do a few things. One is just, you have to lead with values. And the reason I think that’s so important is because the times change, dynamics change, situations change, but the values never change. And so if you do that, you gain trust from the people around you, and you’re predictable. And then others adopt that same type of style. So I think that’s one thing.
If someone is starting up a company, like, you know, a venture-backed type of company, I think it’s very important to be as frugal as possible. Save your money, you’re going to need it.
I think that you need to have relationships. You have to. So you asked me about “what will the leader do?” Okay. I think leaders need to have mentors. And I think leaders need to be mentors. And so I think those also are important, I think you have to have relationships outside your company. I think you have to establish relationships with people around the world so that you can pick up the phone or send an email to somebody and say, “What do you think about this? I have this problem. Where can you help me with this?” I think those are the types of things that a good leader has to have, you know, in their arsenal of things to apply.
Mike: That’s great advice. It’s great advice. And I’m glad we had this relationship and you were able to join us on this initial episode of Manufacturing Success. Is there anything else you’d like to add before we call it a day?
Cliff: No, I just want to say that this was a very interesting experience. I did not know I was going to be your first. I guess I’m very pleased and proud to know that you reached out to me. I’m sure I’m the first one you actually reached out to, right?
Mike: I’ll never tell.
Cliff: There you go.
Mike: We can’t give away the trade secrets here.
Cliff: I understand.
Mike: Well, Cliff Morris, C3Nano, thank you very much, and I appreciate you being on the show. Have a great day.
Cliff: Thank you, Mike, it’s been my pleasure.
