Princeton Power Systems makes steady strides, despite its youth
By: Hilary Parker
PLAINSBORO Princeton Power Systems is a young company, founded in Sept. 2001 by three recent Princeton University graduates. Despite its youth, however, its reach to date could be characterized as out of this world literally.
Greg Olsen, a local entrepreneur and main investor in the electric power Solutions Company, took a Princeton Power flag with him on his ten-day voyage to the International Space Station in October. On a more local level, Princeton Power was named the Early Stage Company of the Year by the New Jersey Technology Council in November.
The seed for Princeton Power germinated during Erik Limpaecher’s senior year at Princeton University, where he was enrolled in Ed Zschau’s High-Tech Entrepreneurship seminar. For his final assignment, Erik Limpaecher wrote a business plan based on a patent that his father, Rudy Limpaecher, had written. That spring, Mr. Limpaecher and John Lerch, both electrical engineering majors, teamed up with computer science major Darren Hammell and mechanical engineering major Mark Holveck to enter the Princeton Entrepreneurship Club annual business plan contest, which they won.
Their proposal centered on AC-Link technology, a clean and efficient power-conversion method applicable to multiple power areas, including the variable speed drive market. VSDs control motors and allow for more efficient use of electric power by allowing motors to run at intermediate speeds instead of being either full on or full off. Dr. Zschau, a businessman as well as an engineer, recognized the company’s potential and introduced the young entrepreneurs to Dr. Olsen during the end of their senior years.
"An hour after the graduation ceremony ended, we got an e-mail from Greg saying he was interested in investing," said Mr. Limpaecher, the lead controls engineer. Although Mr. Lerch left to start another venture, Mr. Holveck and Mr. Hammell, chief technology officer and CEO, respectively, are approaching the five-year anniversary of their entrepreneurship with Mr. Limpaecher, and the original advisors are likewise still involved. Dr. Zschau now serves as chairman of the board, of which Dr. Olsen and Rudy Limpaecher are both members.
"We’ve been really fortunate to have good guidance," said Erik Limpaecher, explaining that the board’s advice to "focus, focus, focus" has helped Princeton Power make sound business decisions, leading to several lucrative contracts making use of the AC-link technology.
Currently, Princeton Power has three balls in the air. The first is breaking into the established VSD industry, which Erik Limpaecher characterizes as "the bread and butter" of their business. With key players including General Electric, Siemans and ABB already in the market, the company said it must distinguish itself by proving to consumers that they can increase efficiency and decrease maintenance costs, and do it more economically.
"The problem with the existing technology is that it generates really bad harmonics (essentially, noise in the power grid) and large voltage spikes on the motor which lead to inefficiency and maintenance costs," Erik Limpaecher said. The AC-Link technology is designed to scale down these problems, and Princeton Power is creating a line of six different VSD products, ranging from 20 to 100 horsepower, for use with motors in a variety of industries, including water pumps, HVAC systems, and mills.
The second focus is in the grid-tied inverter industry, which will make renewable power more useful in the power grid. "We’re hoping that the long-term big hit will be the renewable energy converters," Erik Limpaecher said, citing the importance of capitalizing on this relatively new market. The company received a subcontract from WorldWater Corp. on a contract from the New Jersey Board of Public Utilities to build a power converter for a solar cell. The AC-link power conversion technology converts the power from solar cells and wind turbines, which fluctuates based on weather conditions, into a steady power source that can be tied into existing power grids.
Third, the company is pushing their technological limits and furthering their development through various government contracts that make use of their technology. They currently have a prototype in their lab for "Active Denial," a non-lethal microwave weapon that will convert low voltage DC to 15 kV DC power. They are also working on a contract with the United States Navy to create a VSD useful in controlling the motors on naval vessels, like aircraft carriers and destroyers. "Princeton Power’s AC-Link technology has the potential to replace existing transformers with a device that is one-quarter as large and weighs less than half as much," Mr. Hammell said.
Although Mr. Hammell and his colleagues have no formal business education Princeton University does not offer business courses they have not suffered for the lack of it. Mr. Hammell was recently named to NJBiz’s "Forty Under 40," a select group of individuals who have shown excellent leadership and achieved marked success. In one sense, he feels that Princeton Power’s youth, both in years and business experience, is beneficial.
"It helps that we’re so young," Mr. Hammell said, explaining that he and his colleagues recognize the importance of relying on their advisors’ years of business experience. At the same time, however, the youth of the company can make it difficult to create new business relationships and win contracts.
"It’s hard to go up against a GE and say, "Yeah, we understand the market better than they do,’" he said, explaining that potential customer response varies from being enthusiastic over the fact that they are a young, small company to being skeptical of a company without a proven track record.
Much of this just goes with the entrepreneurial territory.
"The roller coaster ride is fun," Erik Limpaecher said. "People said, ‘You’re crazy, aren’t you worried about it failing?’" explaining that he pondered the question and realized that, deep down, he wasn’t. "I was willing to take the risk, and the downside wasn’t that bad," he said.
"And, as an entrepreneur you have the ability to control your risks. The harder you work, the better your ability to mitigate the risks," Erik Limpaecher said. The entrepreneurs at Princeton Power are certainly doing everything they can to manage risk: 12-hour days are the norm, and 15-hour days are not uncommon. Despite the high stress and long hours spent together, Erik Limpaecher, Mr. Holveck and Mr. Hammell have sustained a friendship, as well as a business partnership.
Long term, they plan to sell their business, and plans for Ph.D.s in engineering or MBAs are mentioned. Still, no one at Princeton Power is eager to leave anytime soon, and Mr. Hammell commented that he might join another venture to bide his time for a few years while his colleagues earn advanced degrees.
"Then, maybe after some of them finish graduate school, we’ll come up with the next idea and start something else," he said with a smile, entrepreneurial wheels spinning in his head.