Toward Zero-Energy Buildings: Kevin Surace, Serious Materials (Part 5)

SM: How long were you at Perfect.com?

KS: I did that for three years and left in 2002. I enjoyed every bit of it. We did several acquisitions and then decided to do a merger of equals with a company called eScout, with the headquarters moving to Kansas City. I left the company at that time.

SM: What was your next step?

KS: When I left, a friend approached me and told me that he had bought a polymer technology from an inventor in Arizona. I felt material science had been under-invested in, and I thought that it would be fun as a hobby. My wife came in to do some sales and marketing, and we were just going to run it for fun.

We were making car coatings that would make cars quieter. We kept getting calls about sound issues with rooms such as media rooms or hotel rooms. I figured that we could develop something for that, even though it was not the polymer we had.

SM: What was already being used in that kind of situation?

KS: There were a lot of things being used, but they were old techniques from the 1960s. Often, it was just eight layers of drywall. The number one complaint in hotels is noise. I began developing products in that field and started filing patents.

SM: Did you then go out and raise some money?

KS: No, we just wrote checks for four years and funded it ourselves.

SM: Were those four years mostly an R&D period or were you selling?

KS: We were shipping product beginning in 2003. We were selling mostly to builders and commercial contractors.

SM: What is the form factor of the product?

KS: QuietRock and QuietWood were the first products on the market. QuietRock looks like drywall but is 100 times quieter, offering a 15-20 db improvement in noise reduction. I built a simple website and started advertising on AdWords. We had not made any of the product because I just wanted to see if anyone would order it.

Initially we had a few orders here and there. I had a small production team and we learned how to build the stuff. At the time I thought it would be a hobby, so while I kept the CEO title I left to run a non-profit. I would stop in about 30 minutes a day to check up on things and the company took off. We did $500,000 our first year without even trying to do business.

I went back to the company full time and we changed the name to Serious Materials. Within a year or two we began focusing on energy-saving building materials. In the meantime we have shipped over 1.5 million panels of QuietRock.

SM: What kind of revenue is that?

KS: It sells for $20-$60 per panel. Overall product shipped to date may be in the $120 million range. I didn’t bring in any VC money until the end of 2006.

SM: If QuietRock was generating that much money, why did you bring in any venture capital?

KS: Because by 2006 there was an opportunity to turn it into something big. We began putting a lot of R&D into advanced energy savings materials, and that R&D costs real money, and real production plants also cost real money. In late 2006 we raised our first $5 million from Rustic Canyon and in 2007 brought in $52 million from NEA and Rustic Canyon.

This segment is part 5 in the series : Toward Zero-Energy Buildings: Kevin Surace, Serious Materials
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