PALO ALTO — They burned through their $20,000 grant. The pitch rounds to show off their nifty, patented solar device were greeted with polite pity. And a lunch with a rival clued them in to just how far off target they were with their business plan.
So where did a couple of young guys — technically on leave from Stanford University in 2013 but dropouts in the eyes of some family members — turn?
A blank white board.
Darren Hau, Andrew Ponec and Daniel Maren opened their laptops, uncapped their markers and got to work trying to save their startup, Dragonfly Systems.
“It could have all come to an end,” Ponec said, “pretty quickly.”
The next two days of work propelled the former undergrads through a yearslong startup journey — filled with dead ends, accelerators, borrowed money from friends and family and, finally, a multimillion-dollar payoff.
Then two of the Dragonfly founders chose another disruptive path — they returned to their small dorms, overloaded on engineering classes and hit the library. They graduate from Stanford with honors Sunday.
“They have a real sense of purpose. They feel really strongly we have to save the planet,” said Bill Dally, chief scientist at Nvidia and mentor to the students. And, he added, “they have a knack for getting things done.”
Hau and Ponec took Dally’s Green Electronics course in 2011 as freshmen. Dally, former chairman of Stanford’s computer science department, said he built the course to inspire young engineers to tackle challenges in the energy sector.
Hau, 23, grew up in the Bay Area and went to Los Gatos High School. He liked physics and classical music, but when he got to Stanford he turned to engineering.
Ponec, 24, was the visionary, according to his co-founders. The son of a doctor and molecular biologist in Salem, Oregon, Ponec landed early admission to Stanford.
Hau, Ponec and a couple of other undergraduates worked on a team addressing a problem in solar energy systems — how to create new hardware to reduce power loss in large panel arrays. Linked in a series, a defect or malfunction in one panel can cut the efficiency of the entire system.
The plan developed quick enough for the founders to bring on Maren, an incoming freshman with an interest in the business side of renewable energy. Maren, 24, took a gap year developing education and renewable energy projects in Indonesia before starting as a computer science major at Stanford.
By the spring of Hau and Ponec’s sophomore year, the project had come far enough to enter the prestigious First Look West, or FLoW, competition, an event for student entrepreneurs and inventors sponsored by Caltech and backed by the U.S. Department of Energy.
Dragonfly took third place and a $20,000 grant. The founders had a decision to make. Two other students who worked on the project chose to stay in school. Ponec, Hau and Maren wanted to pursue the company.
They faced another hurdle — parents. Hau’s family offered their blessings and later, their home. Maren and Ponec had to overcome resistance.
Over dinner one night, Ponec told his parents he wanted to take advantage of Stanford’s liberal, two-year leave policy to pursue his startup. He argued he could make an immediate difference on climate change.
His dad, Robert, was stoic and skeptical. His mom, Lori, cried.
“Not tears of joy,” her son said.
Early business meetings were polite, but short. Professors, friends and alums offered advice and expertise. By September 2013, when their friends were headed back to classes in Palo Alto, Dragonfly struggled. They were down to savings and cash from family and friends.
Ponec, the CEO, met with a sympathetic entrepreneur addressing a similar solar engineering problem. He explained to Ponec over lunch that solar companies wanted more cost savings in their niche.
On the verge of collapse, they went back to the drawing board. The co-founders sketched a plan for a new device, aimed at reducing infrastructure costs instead of enhancing efficiency. They dashed through formulas and schematics. They built a new circuit from scratch in a few days.
The device plugged into the back of new solar panels, controlled and maximized voltage across systems, and allowed installers to link more panels together. For example, a string of 20 panels in a circuit could be extended to 30 panels, saving labor and infrastructure costs.
Lower costs could encourage more utility-scale solar installations, and solar companies and their customers liked the idea of slicing millions from a project’s cost. Dragonfly drew a grant from the university and cash from new investors.
They moved the company into Hau’s parents’ new Bay Area house while the family waited for it to be remodeled. “You know that show, ‘Silicon Valley’?” Hau said, referring to the HBO comedy. “It’s too close to the truth.”
They turned off the heat to keep down expenses, and walked around in layers of sweatshirts. The Craig’s List refrigerator leaked, but it usually held little more than white bread and peanut butter. Ponec sometimes ate oatmeal for breakfast, lunch and dinner.
By early 2014, they landed a spot on Forbes’ “30 under 30” list. Finally, they were hot.
They considered two paths: building Dragonfly into a solar device manufacturer or finding the right partner to sell to. They chose a deal with San Jose-based SunPower. By their early 20s, they had started and sold their first company.
SunPower CEO Tom Werner said less than one percent of business meetings with entrepreneurs eventually turn into acquisitions. But Dragonfly had come up with a novel way to lower electronics and installation costs by up to 10 percent on large solar panel array, he said.
The parties involved declined to say how much the sale was worth. Werner chuckled and said, “They can afford a decent house in Silicon Valley” or a small village elsewhere. Maren stayed with SunPower to focus on business development.
Despite their new wealth, Hau and Ponec felt the urge to return to school, and moved back into student housing. Ponec bought a new laptop.
They said they didn’t get star treatment. “It’s very hard to be arrogant when you learn new things every day,” Ponec said.
Both are graduating with the Terman award, an honor given to the top 5 percent of graduating engineering students.
Hau starts work as an engineer at Tesla in a few weeks.
Ponec will go to Oregon for a month to be a senior counselor at a music camp he’s attended since middle school. He’ll return to Palo Alto and pursue new projects, he said, but doesn’t know exactly what comes next.
Their families will attend Sunday’s graduation. Ponec’s parents have picked out a nice restaurant to celebrate. He doesn’t expect the same kind of tears.