KiOR: The inside true story of a company gone wrong

Funds run low

By Q4 2008, a staffer recalls that “available funds to operate KiOR were practically depleted, and a considerable amount of the available funds were consumed in R&D funding of the four Labs conducting projects for KiOR’s business mission and objectives, and this difficult situation became a serious concern and aggravation to certain KiOR Managers.”

By this time, work was underway at ITQ (Valencia, Spain); Twenty Universit (The Netherlands); CPERI (Greece); and KiOR’s own lab in Houston.

And, the BCC one-pot reactor and the previous catalyst were not discarded, either — work proceeded exclusively on these systems “for over one more year,” according to one staffer, “while delaying KiOR for another year in starting to develop a new feasible Technology.”

An Internal War Rages

In October 2008, KiOR’s VP for Strategy, Andre Ditsch, “who also was looking to raise funds urgently needed for KiOR to operate,” as one observer put it, issued an internal challenge to the cost and results associated with the work with the outside labs. Cost was one issue, but usable information was another.

“Ditsch concluded that KiOR was not getting any useable and valuable information from these four KiOR sponsored R&D projects. Also it was holding back the KiOR R&D work from being able to develop new technology that could have been able to meet the KiOR business objective,” recalled Dennis Stamires.

In October 14th and October 18th emails to CEO Fred Cannon and CTO Paul O’Connor, Ditsch questioned the value of sponsoring such outside R&D work, and proposed to terminate all the three outside contracts. As an alternative, he proposed to use the funds to hire qualified technical personnel to do the work at KIOR’s own laboratory facilities.

The result? In the short-term, discord and friction between Ditsch and O’Connor, which staffers described as becoming more serious and disruptive to KiOR’s business in the following months.

But Ditsch was far from alone in questioning the value of the work. More than one year later, Robert Bartek, writing on Nov. 30, 2009, said “From my point of view, the value of the work done at Valencia is essentially useless“. With the departure of Jacques De Deken, Bartek had assumed the direct responsibility of Catalyst Development and Pilot Plant testing work, reporting to the CTO.

However, the work was not stopped or fundamentally re-scoped, as the timing of Bartek’s email outburst confirms. The reasons are unclear.