Hop, Skip, Go. Stephen Baker
centers. From this spot, just a few feet from the opposing quarterbacks, he waged war on the offense. “For three years,” wrote the Harvard Crimson in 1980, “the key to the [Yale] defense’s success has been middle guard Kevin Czinger.” The article quoted the coach at Brown University, who said that Czinger had “singlehandedly” dominated his team two years in a row. “He ruins your whole game plan.”
After college, Czinger signed up for the Marine Corps and went to law school, also at Yale. He later clerked for Gerhard Gesell, a federal judge who presided over momentous cases, from the Pentagon Papers to Watergate. When Czinger expressed an interest in prosecuting crime, Judge Gesell lined him up at the US District Court for the Southern District of New York, where Czinger soon found himself working as an assistant US attorney under Rudolph Giuliani. There he worked with a host of rising stars, including James Comey, the future FBI director.
Czinger’s career reads like a guidance counselor’s greatest hits—except that it’s all one person. He won a prestigious Bosch fellowship in Germany, and he ran media and telecom for Goldman Sachs in London. For a couple of years, he was a top executive at the German publishing conglomerate Bertelsmann. When the Internet started to percolate as a history-changing force in the mid-1990s, Czinger landed in Silicon Valley, where, as chief financial officer and head of operations, he ran one of the most ambitious and visionary of the first wave of Web companies—and one of its most notorious failures. The first big online grocer, it was called Webvan.
Although Kevin Czinger’s career continued its hopscotching path into this century, let’s stop for a moment at Webvan, because it offers some parallels to his current venture, Divergent 3D.
There was a brief time, in the late 1990s, when Webvan had the look of a rising giant. Right after the 1995 initial public stock offering of Netscape, which set off the first Internet boom, a host of start-ups raced into what was then called “cyberspace” and carried out (online) land grabs. The thinking at the time was that each niche would eventually support only a couple of competitors, and perhaps only a single dominant player. Amazon, in these early days, was shaping up merely as the leading online bookstore. Webvan’s aim was much grander. It would disrupt the $430 billion market for groceries. It promised to feed the nation, and with time, much of the world.
Venture capitalists showered millions on Internet start-ups, pretty much indiscriminately. Few of these dot-coms swallowed up bigger bets than Webvan. Leading venture firms, including the Silicon Valley titans Benchmark and Sequoia Capital, plowed hundreds of millions into the company. Webvan, intent on quickly establishing itself as the rising giant of e-grocers, rushed to open operations in ten major cities, including Chicago, San Francisco, and Los Angeles. This meant building high-tech warehouses and torturously complex supply chains, and delivering food to customers within a tight deadline—ideally, before it went rotten. It was insanely ambitious, and Kevin Czinger was calling most of the shots.
Czinger’s current automaking venture is in many ways similar. It’s ambitious and disruptive. It benefits from investors’ rush into mobility. With Divergent 3D, Czinger continues to make bold promises. This time, instead of feeding the world, he’s out to change the way we make things. Manufacturing, after all, is the foundation of the global economy. Snipping out 90 percent of the industrial process, as Czinger plans, could eliminate tens of millions of jobs. But it might also be the key to cleaning up humanity’s ways—and carving out a path to sustainability.
Soaring visions like Czinger’s flourish during the hype stage of a technological revolution, a period of sky-high promises and fearless investors. Visions sell and money flows. For many companies, profits are far off, and during this glass-half-full stage, that’s OK. Each company can sell itself as a survivor, even a potential champion.
But Czinger’s Webvan experience might tamp down a bit of the giddiness. There’s a point in every boom, he knows, when markets turn from wonder to skepticism. This usually occurs after an early highflier goes bust, which leads investors to start asking hard questions about revenue and profits.
As pretenders fail, investors retreat and survivors feast on the fallen, picking up their code, their brainpower, their customers. In the aftermath, giants emerge. We cannot say at this point—no one can—where the companies we’re getting to know, including Divergent 3D, will end up in this food chain. But whether they emerge as champions or fall and get swallowed along the way, they’re busy building the next generation of mobility. Their workers and the code they write, and the industrial process they create, will play a part of this revolution, no matter which competitors emerge on top.
This was true for Webvan as well. The company was investing mightily, its monthly expenses dwarfing revenue. Profits, if they ever arrived, were years away. By the time the market’s mood changed, in the spring of the year 2000, and investors’ gazes turned from soaring visions to the bottom line, Webvan might as well have worn a sign around its neck saying SHOOT ME. The company’s funding dried up, and it declared bankruptcy in 2002. Amazon, the survivor, promptly pounced on Webvan’s assets, including its warehouses. That giant got bigger. “The core team up at Amazon,” Czinger says, “is the old Webvan team, from robotics to warehousing.” He and his team lost control, but fed the ecosystem.
Nonetheless, Kevin Czinger managed not only to escape this Darwinian drama, but to walk away a rich man. He had managed to vest rich options while Webvan’s stock soared. He subsequently added to his wealth with lucrative stints in private equity.
So in 2008, not yet fifty years old, Kevin Czinger decided to do something big. His goal was nothing less than to save the world from global warming, while at the same time returning to his lifelong passion for cars. So he cofounded an electric car company, Coda Automotive. Most of his investors came from China, and the venture targeted the Chinese market.
As it turned out, Coda released its only model, an electric sedan, in 2012—the same year that Tesla came out with its hit luxury car, the Model S. The Tesla bested Coda in crucial categories, including range, and trounced it in the marketplace. That spelled Coda’s doom. Within a year, Czinger was shoved out, and Coda was seeking bankruptcy protection. Now having succumbed to two iconic companies, Amazon and Tesla, Kevin Czinger was plotting his next move.
Even before Coda’s fall, he says, he realized that his push for affordable electric cars was foolish—or at least dangerously misinformed. He had believed, like millions of electric car drivers today, that shifting the auto industry to an electric fleet would help save humanity from overheating our planet and killing ourselves. The cars don’t pollute. They don’t even have tailpipes.
But in 2009, Czinger came across a document that changed his thinking: a five-hundred-page report, Hidden Costs of Energy, produced by the National Academy of Sciences. It introduced the concept of life-cycle analysis and convinced Czinger that his entire vision (and those of other electric car companies, including Tesla) had everything backward.
Cars begin polluting, the report argued, long before a new owner presses the accelerator for the first time. It detailed the immense energy consumed in manufacturing a vehicle. This consumption starts with iron miners digging deep into the earth, hauling up mountains of ore, and loading them onto trains or barges. They transport it usually hundreds of miles, which consumes more energy. In steel mills, iron pellets fired with hard coal, called coke, are smelted in roaring blast furnaces that reach nearly 3,000 degrees Fahrenheit. The molten iron ore flows into other furnaces, where it’s refined into thick slabs of steel, which are pressed by massive rolling pins and eventually flattened into sheets. Then the gleaming rolls of steel are shipped off to an auto plant. Each step of this process burns lots of fuel, in turn spewing metric tons of greenhouse gases into the atmosphere.
The other materials arriving at the same auto plant’s docks—the plastics, glass, and chemicals—each emerge from their own industrial processes, most of them involving fires and furnaces. The manufacturing of a car, according to the report, consumes more energy and creates more earth-warming havoc than the actual car will produce as it plies the streets and highways for a decade or two. As Czinger read the report, it became clear to him that practically any new car, even an electricity-fueled Leaf or Tesla, was an environmental liability. “I was such a dummy,”