WHAT ‘IT’ IS: THE EVIDENCE BEHIND DEAN KAMEN’S SECRET INVENTION

Adam L. Penenberg
[Inside] (cover story), 2.2000 

AFTER DEAN KAMEN WHEELED A LUGGAGE CARRIER PILED with a couple of black duffel bags and some cardboard boxes into a ballroom at the Hyatt Regency, he told the guard to lock up behind him. It was December 2000 and Kamen-inventor, physicist and winner of the National Medal of Technology-had flown to San Francisco to meet some big-name investors. Among them were venture capitalist John Doerr of Kleiner Perkins; Jeff Bezos, founder of Amazon; Credit Suisse First Boston’s Michael Schmertzler; and Vern Loucks, the recently retired ceo of Baxter Healthcare. Kamen had also invited along veteran technology reporter Steve Kemper, who had been documenting the secret project for a book. This event, as portrayed in Kemper’s subsequent book proposal, made for a compelling scene. And Kemper’s proposal was carefully crafted-omitting many key details-to create maximum mystery, maximum buzz and a maximum book advance. (It gained him a very decent $250,000 from the Harvard Business School Press.)

Now, after an extensive investigation that included combing through public filings and documents relating to the secret project, it’s possible to paint a detailed picture of what the tech powerbrokers were so excited about that day. It appears that Kamen began to assemble two “Ginger” scooters with a screwdriver and some hex wrenches while the assembled cast awaited the arrival of the irascible Steve Jobs, another key adviser. Although Kemper’s proposal didn’t explicitly spell it out, the scooter-qua-scooter was actually not the most groundbreaking part of the presentation. If and when the scooter goes into general production, it’s likely it will be powered by hydrogen instead of gasoline, which would give it a smooth, quiet, pollution-free ride. The only emission would be a few drops of water. Several patents and trademarks filed in the U.S. and in Europe also indicate that Kamen and the engineers at his company, DEKA Research and Development Corp. of Manchester, N.H., have created a scooter designed to mimic how upright human beings maintain their balance. Kamen has dubbed the effect “dynamic stabilization,” a term DEKA has trademarked.

Within 10 minutes Kamen had both Gingers up and running. He turned one on and began to ride around the room. Bezos grabbed the other and as he tooled around, he couldn’t help but laugh out loud. Kamen offered his scooter to Doerr, and he began to frolic with his Ginger. They were all having so much fun they barely noticed Jobs slip in to the ballroom. At the time the secrecy-obsessed Kamen had no clue that in less than a month, Ginger would become a kind of latter-day gearhead folk religion. The cause of most of his woes would be Kemper’s book proposal, entitled “IT” (possibly for “Individual Transport”), which was obtained by Inside.com. A veteran contributor to The Hartford Courant, Kemper had profiled Kamen for Smithsonian Magazine in 1994. And even though the text of the book proposal was deliberately elliptical and oblique, it was still revealing.

“From a corporate-security perspective, the leaking of Kemper’s proposal was a nightmare for Dean Kamen,” says James M. Atkinson, president and senior engineer of Granite Island Group in Gloucester, Mass., and an expert in electronic counterintelligence. “If you were to chart the information in the proposal with patents, trademarks, domain registrations, building permits, factory blueprints, mortgage filings and other publicly available information, you could get a good idea what Kamen has been up to.”

Given the media frenzy set off by the publication of portions of the “IT” proposal on Jan. 9, [Inside] set out, with Atkinson’s help, to piece together a more detailed picture of what Kamen was up to.

GINGER MANIA
Certainly Ginger had prompted some wild speculation. At the site the IT question.com, Ginger fanatics speculated that “IT” was a “personal hovercraft,” a “backpack helicopter” or a Star Trek-like transporter, among other things. But 33 percent of its polled visitors had it at least half-right when they ventured that Ginger was a “personal scooter.” What most of them didn’t know is that Kamen’s invention proposes to use a new fuel source, hydrogen-and, possibly, a revolutionary new engine. Its approach to transportation could, if successful, yield entirely new types of vehicles. One clue: in September 1999, Kamen’s DEKA created a new company called ACROS. According to a trademark filing, ACROS’s goal was to create a product line that features “motorized, self-propelled, wheeled personal mobility aids, namely wheelchairs, scooters, carts and chariots.”

In a note the inventor sent to Kemper, he claimed that the project had to remain secret because he was afraid that certain unnamed forces (presumably automobile and petroleum companies), “could appropriate the technology by assigning hundreds of engineers to catch up to us…. We could be left gagging in their dust.” The leak occurred when Rafe Sagalyn, founder of the Washington, D.C., literary agency that represents Kemper, did what any good agent does: try to sell the foreign and dramatic rights to the book. In January, he personally e-mailed the proposal, along with more than a year’s worth of digital communiques between Kemper and his Sagalyn agent, Dan Kois, to a Hollywood scout. Recognizing hot gossip, the scout forwarded it to friends and colleagues in publishing with the note “check this out.”

UNLIKE ANY VEHICLE
Interest was so keen in the days after the “IT” story broke that “Kamen” and “Ginger” were among the most-requested search terms on the Lycos search engine. Kamen declined to detail his plans and issued a statement decrying the “unfortunate, unapproved leak of a book proposal.” “We have a promising project, but nothing of the earth-shattering nature that people are conjuring up,” he wrote. Contacted for this story, Kamen’s publicist said he was out of the country and unreachable.

Yet if the patents DEKA has filed for its scooterlike vehicle reflect the final prototype as accurately as do Kamen’s patents for his most famous invention, a stair-climbing wheelchair, then Ginger will be unlike any vehicle ever mass-produced. Instead of wheels situated one in front of the other-as with a traditional scooter-Kamen’s contraption probably balances on two wheels that are parallel, each one attached to an independently operated axle. There is more evidence: According to the book proposal, Doug Field, a Ford Motor Company veteran, is the head of Ginger’s design team. The project’s “ceo,” Tim Adams, used to run Chrysler’s South American and European operations. A glance at the jobs DEKA is trying to fill through its Web site indicates that the company is seeking several engineers with a background in automobiles, software development and consumer electronics. One job opening of note is for an electrical engineer who can “design power converters, inverters and motor drives in the 500-5,000 watt range,” more than enough power at the top of the range to drive a 200-pound man in a scooter, golf cart or even a larger Ginger “chariot.”

Cross-referencing the book proposal with Kamen’s recent pursuits, it looks like the scooter will run on hydrogen. This would fulfill John Doerr’s vision: the big markets of the future (he’s been reported as saying) will be “clean water, transportation, clean power.” Kamen is quoted in the proposal adding that Ginger “will profoundly affect our environment” and “be an alternative to products that are dirty, expensive, sometimes dangerous and often frustrating, especially for people in cities.” Kamen most likely plans to produce hydrogen from propane, a common, cost-effective method. (Another, more expensive way is to extract it from natural gas.) This may explain the huge propane tanks Kamen had installed at his home in Bedford, N.H.-where he keeps a second R&D lab-and at one of his company’s buildings in Manchester, N.H.

Kamen, 49, maintains an enviable public image as an altruistic Buckaroo Banzai of the 21st century. Countless articles have portrayed him as an eccentric, multimillionaire genius inventor whose name is listed on some 100 patents. His work with his foundation, first, which he uses as a basis for promoting science and technology to children, is impressive. Success has allowed him to play out boyhood fantasies. A recent profile on 60 Minutes II showed Kamen commuting to work in one of his helicopters, which he flies himself, blasting out the theme from Star Wars over a stereo. He also pilots his own private jet. The lifelong bachelor not only owns an 18,000-square-foot home in Bedford, but has his own private island off the Connecticut coast (which boasts its own currency).

As with many Kamen inventions, Ginger has roots in earlier projects. DEKA’s corporate Web site claims its ”development efforts focus upon the creation of technologies which will have a variety of applications. A single invention may become the core technology of numerous, often diverse, products.” Of the almost 100 patents to Kamen’s name, most are improvements on existing patents, filed through DEKA (as in DEan KAmen).

DANCE PARTNERS?
Ginger’s inspiration can probably be traced to 1992, when Kamen began work on a mechanical miracle-on-wheels called the IBOT, a wheelchair that can traverse almost any terrain, and even climb stairs. The project was code-named “Fred,” as in Fred Astaire-and Johnson & Johnson fronted a $100 million grant to develop it. Throughout the 1990s Kamen filed patent applications, both here and abroad, with the World Intellectual Property Organization (WIPO), including “Transportation Vehicles and Methods,” “Constant Pressure Seating System” and “Anti-Tipping Mechanism.” Together, these patents make up IBOT. Approval of IBOT’s marketing claims by the federal Food and Drug Administration, the final step before production can begin, is expected this year. Kemper, in an e-mail to his agent dated Sept. 19, 1999, reports that Kamen had started work on Ginger in early 1998. In “IT” the reporter claims that Kamen’s investors had forced Kamen to create a company wholly separate from DEKA to develop Ginger. Public records show that nine days before Kemper’s e-mail, DEKA registered the trademark “ACROS.” (Interestingly, another “ACROS,” a bicycle-component manufacturer specializing in high-quality forks and shocks, opened up shop in Renningen, Germany, in 1998 as well. Its trademark also identifies the company, in part, as a maker of “bicycles, wheelchairs, scooters” and other bike-related goods. The company didn’t reply to requests about whether it has links to Kamen.)

After IBOT, Kamen applied for a slew of new patents for his next project: Fred’s smaller, sexier, more lithe dance partner, Ginger. In June 1999 DEKA filed with WIPO for a “personal mobility vehicles and methods” patent, which included a drawing (since widely distributed) of a woman balanced on an odd-looking vehicle with two wheels-like the rear wheels on a toy wagon-with perhaps a third, smaller wheel in the front to avoid tipping. Over the wheels is a platform with a long, slender fork that ends in T-shaped handlebars. Making use of Kamen’s patented two-wheel balancing device, such a vehicle would handle effortlessly.

In 1999 DEKA applied for a WIPO patent for a “balancing vehicle with camber and toe-in,” a rough equivalent to the scooter’s presumed suspension system. Combine these with Kamen’s “dynamic stabilization” and other IBOT patents, and you get a scooter.

It’s not clear exactly how fast such a scooter might go. But if vehicles running on hydrogen (as a new generation of fuel cells do) were to become as popular as Kamen and his investors believe they could be, whole cities would have to be redesigned. A hydrogen-supply infrastructure would have to be built, with facilities created to store large amounts of liquid hydrogen, as well as a national network of hydrogen filling stations, either built from the ground up or, more likely, as an overlay on existing gas stations.

All the major oil and auto companies are at least looking at this. Texaco has taken a stake in a company called Energy Conversion Devices. Shell and BP Amoco are working together on a hydrogen project, as is Exxon Mobil. The big oil companies are “selectively making acquisitions and making alliances, because they see this potential movement as both an opportunity and threat,” says Sam Brothwell, an analyst at Merrill Lynch.

But a worry for Kamen is that the move to a hydrogen economy could create a morass of regulatory concerns for ACROS. “One of Kamen’s biggest worries,” Kemper wrote in “IT,” is that “nervous regulators will impose rules that limit Ginger and stop it from changing the world.” The conventional wisdom today is that it won’t be until 2010 that pure-hydrogen fuel-cell vehicles will be common on the road. Next year, Ford, DaimlerChrysler and General Motors plan to market hybrid fuel-cell vehicles that change gas into hydrogen, dramatically cutting down on emissions. A scooter powered by a pure-hydrogen cell is the technological first step before hydrogen-powered cars.

Kamen, it seems, has even bigger dreams than wheelchairs and scooters. As Bezos, who serves on the advisory board for Ginger along with Jobs, reportedly said to Kamen at the meeting with investors after the demo at the San Francisco Hyatt, “That’s why we’re here, not to make $3 billion in a niche market.”

STIRLING OPPORTUNITY
In January 1999, Kamen was listed as an inventor on a patent application for an improvement on a special type of engine called a “cantilevered crankshaft Stirling cycle machine,” and he has subsequently filed for a number of other improvements as well. Invented in 1816 by the Rev. Robert Stirling of Scotland, the original engine was a cost-effective alternative to the new steam engine. A Stirling is an “external” combustion engine that relies on the heating of a gas (such as helium) that expands and powers pistons.

But Stirling engines have proved expensive to develop, especially in a size small enough to be of practical use. If Kamen has solved this problem with his engine, he could, as Kemper’s proposal asserts, become richer than Bill Gates. “The engine that Kamen patented is really a mobile power plant,” says Brent Van Arsdale, the owner of American Stirling, a Wichita, Kan., company that makes rudimentary Stirlings for hobbyists. “It would be a good power source for his IBOT wheelchair, or in any other type of vehicle he might want to design.”

Judging by the domain names ACROS has recently registered, Kamen has big plans for his Stirling engine. The first step would be to combine the engine with his scooters. On Nov. 30, 2000, ACROS registered stirlingelectric.com. Five weeks later Kamen also registered stirlingscooter.com, -.net and -.org, as well as mystirlingscooter.com. To achieve the $5 billion valuation his investors believe his company will be worth in five years, according to Kempner’s proposal, Kamen would have to ramp up production quickly to get into the market. Unfortunately, Kamen has hit some potential snags on the way. One involves the massive, 100,000-square-foot factory he just broke ground on near his home in Bedford. ACROS purchased the property for $900,000 on Dec. 28, 2000. But Kamen still lacks a building permit. Neighbors have been up in arms over potential noise from the large factory air-conditioner units that are required by law, and the folks at a nearby retirement home are miffed about the racket Kamen’s helicopter makes when it flies overhead, residents there say.

According to the town planning inspector, the earliest Kamen could receive permission to build would be in May. But workers at the factory site say they don’t expect the project to get started until August. Kamen planned to unveil Ginger next January, according to Kemper. The most logical place would be at the annual auto show held every January in Detroit. He might have a prototype of a scooter to show then, but he likely won’t have enough on hand for widespread sale-or have in place the hydrogen infrastructure to power them.

Kamen’s biggest concern may turn out to be plain old competition. He isn’t the only one developing fuel-cell-derived transportation. Ford is introducing a line of “Think” vehicles that includes a line of advanced electric scooters, bicycles and cars. Honda plans to introduce a “zero-emission fuel cell” vehicle in the near future. GM has unveiled the Opel Zafira, a prototype car powered by a fuel cell that GM claims is the most efficient fuel cell ever developed. Not to be outdone, DaimlerChrysler has also built a zero-emission fuel-cell prototype.

CROWDED FIELD
Other companies are experimenting with using fuel cells in scooters and then providing the vehicles with hydrogen when needed. In December, Manhattan Scientifics announced an agreement with Aprilia S.p.A., one of Europe’s largest manufacturers of motor scooters and motorcycles, to create a fuel-cell-powered concept bicycle. GRoW International Corp. of North Branch, N.J., recently patented a technique to tap into the electric power grid in order to provide hydrogen to parked vehicles outfitted with fuel cells. More ominously for Kamen, several other inventors have received patents for Stirling engine upgrades. Like many entrepreneurs, Kamen may also have financial challenges. He not only mortgaged his home three times between 1997 and 1999, the last time for $4.5 million to cover Christmas bonuses for employees (according to Kemper’s proposal), but Kamen’s business is leveraged heavily, too.

According to public records, all five of the properties he owns in Manchester, N.H., including the ones he runs DEKA out of, are mortgaged into the millions, debt which he has spread over three separate banks, with the terms of his agreements getting more and restrictive. Many of the tenants to whom Kamen rents space in his buildings, including his own company, DEKA, are now required to pay rent directly to the bank. If Kamen can’t begin to manufacture ACROS scooters and Stirlings in mass quantities, if the delays keep mounting, he might not be able to beat his variously giant and well-heeled competitors to market. In exchange for $90 million in venture capital, Kamen had to give up 15 percent of his new company, implying a valuation of around $600 million. If he runs into another money crunch, he would have to dilute his ownership even more to attract new capital. Eventually, he could lose control. Instead of becoming the next Bill Gates or Henry Ford, Kamen might find himself ending up like another great American inventor, Preston Tucker, who in the 1940s built the Tucker, a car too far ahead of its time. The car was a commercial dud. On the other hand, its creator was immortalized in a Francis Ford Coppola film.

Additional research by Chris Schultz.

Copyright 2000 Adam L. Penenberg (penenberg.com)