Lemnis Lighting made news again this week by announcing the first LED bulb light under $5. The company was started in 2006 by a new kind of cleantech incubator in the Netherlands called Tendris. It was the first company to go after the consumer lighting market with an LED replacement bulb available then for $50. It got quickly kuddos from governmental organizations in the Netherlands and the Clinton Foundation, and Lemnis has since shipped more than 5 million Pharox lights. I sat down on wednesday with the co-founder of Lemnis Lighting and Managing Director of its US operations, Warner Philips.
As many media outlets often pick up, Warner is the great grand-son of the co-founder of the electronic consumer giant Philips. I was expecting to hear the story of the Philips family offspring seeking fortune with cleantech innovation. What I got was much more interesting: the journey of a lawyer hungry for social justice, who later reconciled his passion for design with his high-tech heritage to make the world a better place.
Warner Philips graduated from the University of Amsterdam with a law degree. He had always been interested in social justice growing up in Eindhoven. "When you bear the name of Philips in that town, people make sometimes assumptions that are not true" he comments as we chat in his office in San Francisco. He considered a career as an attorney but realized during an internship that it was not his calling. Warner also looked at consulting firms but was turned down. He applied to a number of Fortune 500 companies, including Philips, and was turned down again.
"That is the first wall that I hit in my life" Warner tells me when I ask him about the critical times when he learned the most about himself in his career. It was the mid-nineties and the VC profession was growing. He decided to jump in, and he learned a lot during five years, plowing through hundreds of business deals from early-stage investments to strategic turn-arounds. Some of his investments went all the way to IPO, some went bust. It would have been financially wiser to stay another five years to fully cash in on his "carried" as VC's say. But he caught himself dreaming about something more during the New Year' Eve of 2000.
His firm had just turned down a growth investment opportunity in a fashion conglomerate, the Secon Group, which had acquired a high-couture house in Paris. Warner had always been interested in design. He called the CEO and told him that he wanted to work with them to help turn the ship around, and that they should get together for coffee. They did and he "jumped ships" to get operational experience. After a very intense year, closing one subsidiary in Germany, outsoursing non-core activities like IT, and helping spin-out succesfully some brands like G-Star, the company was in growth mode again.
He took a year off in 2002 to get fresh ideas. He reconnected with his cousin working at the large investment bank ABN AMRO, as well as some hard core entrepreneur friends. They talked a lot, had dinner every week and looked into some investments that were not just financial but that actually created good jobs and did the right thing for the environment. That is when the four friends -- Friedwart Barfod, Ruud Koornstra, Frans Otten and Warner Philipps -- decided to start Tendris Holding BV, to work with and co-invest in companies to make the world a better place for everyone by creating great products and services.
Two more partners later joined. They set up a lab part of their incubator near Amsterdam to develop new ideas in solar energy, battery regeneration, hydrogen powered cars, etc. "I have never really gotten interested into the details of technology" notes Warner Philips, "I am fascinated by what it can do but I am more interested by how you design a product, and position it to consumers." That has become one of the biggest strengths of Tendris, which made a $20M profit on its first company.
With the first company, Durion, they quickly signed up 700,000 homes -- about 10% of the Netherlands -- to switch their energy bill to a renewable source. The key was to make it easy to sign up by offering a small discount while making them feel good about themselves. To be capital efficient, they partnered with a telemarketing call center and a renewable energy wholesaler. They actually merged with the energy wholesaler, Oxxio, which later sold for $150M to the UK-based utility Centrica. In the process, Tendris made a 40-multiple return on their original investments.
"If you look at the 5 companies that we have launched, most of the technology innovation is related to systems: how do you process thousands of new applicants for renewable energy every day, etc." Lemnis Lighthing is the only hard-core technology company backed by Tendris but is still market driven. When the inventor behind Lemnis's light, John Rooymans, came to show an LED chip and argued it was ready for general lighting, they liked it but knew that it would not work with the packaging that he envisioned.
It had to fit in a form factor that can retrofit current light bulbs. That is how Pharox was born. "I totally buy into the fact that consumers do not have a lot of time. You can even say that they are lazy." Warner gets animated as he talks about technology and product design. "If you can get an easy way to switch to renewable energy, an easy way to get a carbon offset credit card, or an easy way to get an LED light bulb and screw it in, done, that is the part where I get excited."
Lemnis went through its share of tough lessons. The Dutch Post Lottery sponsored a program to replace incandescent light bulbs in the Netherlands. It brought awareness and made a difference but consumers did not come back to buy more. Warner and his partners figured out quickly that the light had to be in the ball-park of $10. To that end, they grew internationally to grow demand and set up manufacturing partnerships in several countries to drive costs down.
It is not a surprise that Warner Philips decided to move to San Francisco in 2006 after a reconnaissance trip where they got a warm welcome for their green card company and their LED light bulb idea. This is where the likes of Steve Jobs merged product design and high-tech innovation. During our discussion, Warner points to the thermostat market and how a company like Nest can be a game-changer by designing a product that everybody loves. He was born to be here. Actually, he had lived in Palo Alto as a child when his father was attending Stanford.
It was not an easy move though. He had a family on his own and his wife was pregnant with their third child. They sold their house and never looked back. Warner connected with other cleantech entrepreneurs to form Siderian Ventures to boost Lemnis USA and invest in other companies locally like Sungevity. Today Lemnis is the #1 consumer lighting company worldwide despite increasing competition from company giants like GE and Philips. "2012 is looking out to be our best year yet" Warner tells me as we look outside his office with a beautiful view on San Francisco.
There is an irony in Warner's story: his great grand father started Philips in the late 19th century to sell incandescent light bulbs. His company is now replacing them. The stakes are high: general lighting is responsible for 19% of the carbon foot-print. An LED light is much more efficient than incandescent and CFL lights, and they last longer. Making a positive impact on the environment is one of the things that compelled Warner to start Tendris with his friends.
Another value he was brought up with is to enjoy life and give back. Lemnis has also designed a solar powered light with a USB plug to recharge cell phones. In partnerships with the World Bank and other charitable organizations, they have donated thousands of kits in Africa (picture above - courtesy of Empowered by Light). Somehow, Warner Philips found a way to do something about social justice. He is lighting society. Warner reckons that we are only at the beginning of a decade that will transform lighting in urban areas, and provide off-the grid lighting solutions to emerging countries.