Thursday, January 13, 2011

Skepticism and wealthy investors

I know a rich bloke who is usually pretty switched on who is a private investor in Black Light Power.

That is - at least to my eyes - a very strange thing to invest in. Firstly the company seems to have identified the mysterious “Dark Matter” in the universe. Moreover this provides a miraculous source of power (through machines that are small enough to be used as the power source for a car). Finally they claim to have demonstrated this motor almost two years ago.

I should quote their web page executive summary:
• BlackLight Power, Inc. is the inventor of a commercially competitive, nonpolluting new primary source of energy that forms a prior undiscovered form of hydrogen called “hydrino” which is very likely the identity of the dark matter of the universe.
• Proprietary electrochemical reactants or solid fuels undergo reaction to cause hydrogen to form hydrino with energy released as electricity or heat, respectively. The net energy released from this "BlackLight Process" may be two hundred times that of combustion of the hydrogen fuel with power densities and performance comparable to those of batteries and conventional central power plants, respectively.
• Water can be used as the stored hydrogen, generated on demand by electrolysis using less than 1% of the electrical output. With the elimination of fuel and fuel infrastructure costs, the operational cost of BlackLightPower generators is likely to be very inexpensive. Moreover, the process does not give rise to pollution, green-house gases, or radiation as conventional systems do.
• The Company has developed three systems for producing electricity powered by forming hydrinos: one electrochemical and two thermal systems. A CIHT (Catalyst Induced Hydrino Transition) cell generates electricity directly from hydrogen. But, unlike a conventional hydrogen fuel cell, the cost is forecast at $25 per kW compared to thousands per kW for a fuel cell.  This is in part due to the CIHT cell’s electrical energy released per hydrogen being over 200 times greater, and the CIHT materials being inexpensive.  Moreover, fuel cells can’t use water as the source of hydrogen, since their product is water. For CIHT, no fuel infrastructure is required to provide on-site power allowing the CIHT cell to be autonomous.
• BlackLight Power is focused on advancing CIHT technology to produce power to ultimately sell directly to consumers under power purchase agreements. Rapid dissemination at nominal historic cost is expected by deploying many autonomous distributed units that circumvent the huge barriers of entry into the power markets such as developing and building massive billion-dollar power plants requiring enormous thermally-driven mechanical generators with their associated power distribution infrastructure. This is especially advantageous in emerging markets.
This sounds to me like arrant nonsense. But hey - my friend has invested in them and when I express skepticism he tells me he will rub it in when he is a BLP billionaire.

Moreover the board of Blacklight Power look clever enough (even if I have not bothered to check their CVs).

Besides, the company claims to have demonstrated a 50 kilowatt “hydrino engine” as early as 29 May 2008.

If this is the case then it would be fairly easy to demonstrate now - and they would easily be able to sell a 5 percent interest in the company for $1 billion plus. So they would hardly need to be door-knocking merely middling rich investors.

Wikipedia has some detail on the Blacklight Power controversy. (Even that relatively small Wikipedia article is subject to over 1000 edits which suggests promoters and skeptics at war.)

I will side with the skeptics on this one - and if it were a listed company I would short it.

I am not sure that Blacklight will ever solve the world’s problems.

I can't drawn any conclusions on this one not found in the various Wikipedia edits -  in my (possibly incorrect) view they have demonstrated something somewhat less valuable: if you market arrant nonsense with wild-get-rich-quick claims to sophisticated investors enough of them will give you enough money to make it worthwhile.

I guess we knew that already.


John

PS:  I wonder if the converse marketing result is true:  If you market modest truths you will be thought of as smart but possibly boring and shown the door.  Comments on that would be nice.

PPS:  Wikipedia suggests - without citation - that Blacklight has raised $70 million.  Maybe they have found the risk-loving investors I was moaning about in the last post.

Finally - if you want a stronger view than mine go to the website of Professor Park (Physics, Maryland). Search for Mills (the name of the CEO).  You will get the idea.

31 comments:

Rocky said...

I'm not convicned the board looks that good. For a company making breakthroughs in physics/chem, they don't have a lot of highly qualified scientists on the board. It's one engineer and 2 guys with chemistry bachelors. Looks like a bunch of finance types (promoters mostly)...I'd be short too.

michael webster said...

Your friend is suffering from the secular version of Pascal's wager - yes he knows that there is a only a small chance that it will pay off, but oh what riches it will bring.

Unfortunately, for your friend, the chances are so small, that there isn't enough gold in this world or the next to make the bet a positive payoff.

Anonymous said...

Look John, people just don't make sense. Get used to it. If you're going to keep appealing to rationality, you're going to keep doing only "ok". It's as simple as that.

Who are my sources for this depressing (from your point of view) news? Well, JM Keynes for one (you know, the "animal spirits" thing.)

Another is Dan Ariely (author of "Predictably Irrational"), and the Freakonomics guys (Levitt and Dubner).

Actually, Freakonomics recently had an interesting piece on exploiting people's irrationality... they talked about Prize-linked Savings Accounts. Too bad that you will never get a licence for one of those, because *that* my friend, is how to make money.

John Hempton said...

Anon - you are alas right. Doomed do to merely OK ...

I suspect that my clients would like that in the long run - because OK compounded is pretty good.

In fact after a long time it is astounding.

But it is not easy to sell.

Anonymous said...

Why does the board need more scientists? They have access to them via GEN3 Partners as well as having staff. The board at this time is equipped to handle the real problems, which are how to protect IP and how to manage imminent rapid growth.
Although hard to folllow, the big book Mills has produced lists vast numbers of very accurate computations based on his theories, and some were made before scientists found the experimental data. Mass of top quark, expansion of universe accelerating, characteristics of Helium atom which quantum theory has never been able to handle, and more.... So it looks as though something real is there.

John Hempton said...

OMG - my readers include true believers.

Systems and Limits said...

Sorry boys, this is a scam.

The blurb claims that they do electrolysis of water to produce hydrogen.

There are two problems with this - you have the same amount of hydrogen on each side of the hydrolysis reaction, it is just in a different chemical form. The second problem is that electrolysis consumes a LOT of energy! Hydrolysis is the reverse of the process that fuel cells use to produce energy from hydrogen gas and oxygen (oxygen is available in air). Hydrolysis is also the reverse of the hydrogen burning reaction - the overall chemistry of a fuel cell is identical to burning, but it makes the reaction work more efficiently to produce more usable energy.

A third problem is that they claim to produce hydrinos, then to generate energy from them (net, I assume, otherwise what's the point of the technology?). Sorry, but that is claiming to have discovered a perpetual motion machine.

This is a brazen con, on the same scale as Firepower, which ended up embarrassing a lot of wealthy and scientifically illiterate people (scientific illiteracy doesn't mean stupidity). I highly recommend that you have a scout around on the web to read up on Firepower if you are thinking of throwing your money at this bunch of con artists. You will not see your money again if you do.

Another giveaway is that their webpage isn't even particularly well written.

Keep your money in your pocket, boys.

nick gogerty said...

I have followed Blacklight since 2002, waiting for sustained power generation. I have taken an interest as former chief analyst of an advanced european research institute.

The claims made scientifically require significant proof and vetting. The path from science, to technology (applied science) to commercial and industrial application is a long and tortuous one.

As to investing it would seem challenging to invest prior to power generation on an ongoing scaled basis. The promise and premise are significant, only overshadowed by the requisite burden of proof required on scienctific, technical and commercial bases.

John Hempton said...

Nick

You are too kind.

They claimed to have an engine running that made 200x the energy needed to split the water as long as two years ago.

Run a perpetual motion machine for a year and you get a patent.

They ain't done it.


J

Anonymous said...

Work in professional science or engineering for long, as I have, and you develop a really good BS detector, as opportunities to hone it with practice come along frequently . Mine not only went off when I read this, it broke out laughing.

But that was just before I turned sad, because in addition to the MIT degree, the PhD, the experience as an engineering professor, decades as a researcher, etc., I have another "qualification" here: I grew up in the household of a schizophrenic, an experience that sharpened another kind of detector.

Randell Mills doesn't need investors; he needs a good psychiatrist. The poor fellow is quite ill.

phys 711 said...

I am a theoretical physicist, and I too have been watching BLP from the sidelines for a couple of years. I even went to the trouble of downloading Mills' enormous opus maximus. It is a true milestone in pseudoscience. The calculations in there are really mind boggling - and completely nonsensical. How Mills manages to come up with relatively simple expressions for very disparate physical parameters is a real tour de force of numerology. But it is not science.

Those of you who feel in your bones that this is "too good to be true" are correct - the only thing that BLP generates is false credibility. We have here a very naked Emperor.

Anonymous said...

@phys711

I've been following for many years and remain as skeptical now as I was then. However, the only thing that has keep me remotely interested is those "simple formulas" you mention. It's true he may simply be engaging in, as you say, numerology to derive, for example, the anomalous magnetic dipole moment in three factors. However, when compared to the Herculean efforts required to derive similar figures using standard QED, it's hard to completely dismiss this as crankery. Those "simple formulas" seem annoyingly elegant, in fact. I'm with the poster, btw, seriously doubt that anyone will ever make any money off this. However, I do wish the formulas weren't casually dismissed - it seems to me like there's something there worth investigating.

Jeremy Stark said...

This is up your alley, John--long BBerg piece on short-selling dubious crosslisted Chinese companies: http://bit.ly/gML9ax

Anonymous said...

You are right to be cautious but the comments show that some of you don't even understand what he is claiming. Electrolysis does require input energy- about 7ev to get two H atoms out of water but what he is claiming is that each of these atoms can be collapsed by a simple, reproducible mechanism that results in the release of hundreds of electron volts per atom. It's nowhere near the output of nuclear but far in excess of chemical burning.

I've been looking at this guy and his company for over ten years now. This isn't some uneducated bumpkin in his garage with a magnetic motor. I think he is legit, his science and published papers are understandable and more importantly, testable. His papers detail the use of existing tech like NMR to show the electron is closer to the proton in hydrino based compounds.

Personally I intend to invest but I would also be prepared to lose everything I invested. Even if the science pans out in the face of fierce opposition from mainstream science associations, the question remains if he can produce a working product. This is a very smart guy as even his harshest critics attest. He has 70 million dollars in private investment, 30 employees, many of them Phds (none of whom have broken ranks to claim the company is not legit) and is now backed in his claims by the entire chemistry department of Rowan University. It is useless pointing out that those that attack Mills have a lot to lose if he is right- their careers, their nobel prizes and perhaps their certainty in the universe.

His theory explains dark matter quite adequately and links hydrino spectra from deep space to dark matter clouds, it explains the solar corona temperature difference, the expansion of the universe and his theory condensed into molecular modelling software provides a speed and accuracy in computation chemistry on a basic pc that outperforms QM based methods on supercomputers.

The reason your friend believes he will be richer than Croesus is that if Mills is right all electricity in the world will ultimately be generated by this non-polluting process with BLP taking a cut for each watt generated. On top of that are the claims for novel chemistry with his shrunken hydrogen having binding energies that result in unusual properties- some potential claimed products are high energy explosives, rocket fuels, conducting plastics, rust proof coatings, diamond films and high energy batteries that store and outperform exisiting battery tech by at least ten and perhaps as much as a hundred times.

So very high risk but what isn't? If you want to be safer wait until the claimed 2011 demonstration of the new direct electrical conversion which is something the company has never claimed before and for which I think the patent was filed in April 2010 (not yet issued last I checked). If that demonstration succeeds it will prove that the core theory is correct and QM is fundamentally incorrect. If it doesn't happen I'll reappraise the company's ability to deliver. Given his caution to date Mills won't go public until he can show he can deliver and by the time that happens, every man and his dog will be subscribing.

John Hempton said...

To the person who thought I did not understand what he was saying - he says he has a motor which generates enough power to split water - and then burn the split water and have 99 percent of the power left.

He says there is a strange low-energy state of hydrogen you can get by splitting water.

He calls it a hydrino.

Nobody has observed it and it is probably the dark matter in the universe.

Because it is dark matter nobody has observed it.

Despite the fact that nobody has observed it it has strange chemistry.

Go figure.

Crocodile Chuck said...

BLP: Short it (a 'lock')

Anonymous said...

LOL a sucker is born every day.

These scams have occurred since the dawn of time, and these scams will continue on until the end of time.

There is a great variability in the intelligence level and wealth of humans across this world, and unfortunately intelligence and wealth do not correlate.

I suppose it's only fair that the stupid rich people get their money taken by poor smart people, at least smart enough to know how to take the money from the rich, stupid people.

Guys, there is no such science. People are being too kind. The entire thing is BS. We saw it with cold fusion, 20 years ago, and even after that was debunked, people are still trying to chase it. The same goes for the Loch Ness Monster, Bigfoot, and this crap.

Kim Rampling said...

Strange your post arrived on the same day as this one from Giszmodo entitled Smoke and Mirrors: The Greatest Scam in Tech.

Wonder if this Scott Redmond is connected to Black Light Power as well.

Oh well, must be that time of the year again...

sargon tm said...

Try submitting

"Randell Mills" "Robert Park"

to Google.

George said...

I too have been following the BLP for the past 5 years, read some of their material, and spoken with several of the management team. I have also passed some of the technical information packets to chemists I know. I have not spoken to the Rowan faculty, which I believe would be enlightening. The "I'm right and everyone else is wrong" routine is generally a red flag for any scientist. When I spoke with them about biz dev, getting other third party verification, and generally legitimizing the process for proving what they had, they balked saying that they knew it was true and that was good enough . . . again another red flag. I have broken ground in science and technology with businesses before and it is necessary to get purchase by others to be accepted, and these guys don't want their science to see the light of day. With all of that being said, there are pchem discoveries waiting to happen, heck they just announced discovery of antimatter coming from thunderstorms yesterday . . . who knew? I give this a 2% chance of being correct. They may have some anamolous data (similar to those from palladium electrodes in the cold fusion work) but that does not mean a new energy source.

Matin Eliasson said...

I would argue it's a bad investment that can make some good profit.

Remember the 90's when people realized the internet and the web was going big? It became bigger and more powerfull than imagined. Look at the profits of Google or Amazon... Way back in the 90's people were right about the bright future but few could pick the winners. There were enourmous malivestment, a bubble and a crash.

So in my view, the pattern is repeating. We are in for a hugh bubble, but this time it's energy. Lot's of smart people will be correct about energy having a bright future (brighter than most of us imagine). The people jumping off in time can retire early, but there will be spectacular malinvestments and an epic crash.

And after that we no logner depend on coal or oil and live happily ever after.

Anonymous said...

That reminded me of SunRGI the company supposedly having technology for extracting solar power for less than price of coal energy.
Most of their technology seemed to be put into making computer generated animations of their non-existing solar power technology

Anonymous said...

A company doesn't raise 70M without having a representative from a VC firm on its BOD. Does this company have one?

Anonymous said...

The part that makes this an obvious scam to me is the supposed involvement of Rowan University.

Note that this is within a short drive of Princeton and the Institute for Advanced Study. There is a serious concentration of physics brainpower and testing capacity in both public and private labs.

Getting validation from real names there would be worth hundreds of millions/billions of dollars. Lots of physicists about who could do/supervise these tests for the cost of staff/lab time for underemployed graduate PhDs and modest bonuses (under NDA); this is what your rich friend should do.

And the best they can do is a single researcher at Rowan. Obvious scam.

BUT:
1) In simple terms, this is not that different than a lottery ticket. Why should only the poor be fleeced?
2) The real problem is that this could be a Ponzi - meaning the current investors, incl your friend, are now incentivised to deceive subsequent investors (marks).

This is why you need regulators and shorts.

James Randi said...

As soon as ANY of the "high energy explosives, rocket fuels, conducting plastics, rust proof coatings, diamond films and high energy batteries that store and outperform existing battery tech by at least ten and perhaps as much as a hundred times" show up, I'm investing, but BL has been bleating about their discoveries for years now, and claiming that they're being cruelly ignored. How long can they get away with such nonsense? Stay tuned...

Tenney Naumer said...

Why aren't business people applying the same level of acuity that I see in these comments to the "we few are right and everyone else is wrong" so-called scientists who deny climate change?

Anonymous said...

Bummer. A lot of science know-it-all-ing and chest-thumping, but not one comment about the really interesting question you raise: "What does the empirical evidence tell us about 'bad and loud' vs 'good and modest'?"

This is a great question, one that I have considered my entire life both personally and professionally.

I just completed an MBA from a top 15 school that had the culture of "good and modest". Interacting with peers from other schools, I certainly saw that they emphasized the former characteristic. Looking at the job stats (prestige of companies, salaries, % hired, etc) across schools, it appears that aggressive self-promoting is effective (many, many other factors, obviously -- but maybe those factors are all self selecting?)

On the professional front, my company (a start up) is currently pursuing a very modest and conservative strategy, despite being the most knowledgeable and experienced of any firm in the world in a new and growing industry. The industry itself is rife with "bad and loud", so we are striving for under-promising and over-delivering credibility.

I constantly wonder if our efforts towards cautious legitimacy are holding us back.

Anonymous said...

Hydrogen (water) powered cars have long entertaining history in the annals of Queensland politics -

http://www.couriermail.com.au/news/features/horvaths-hydrogen-fairlane/story-e6freoro-1111119160884

Worth a look just to remember when Joh was duped! Of course - one day, some day it may all be true. But we have to get around the 'Big Oil' conspiracy first :-)

Patrick F said...

John, digressing from topic, I am not really conviced that this is a good looking board. It looks like a board mandated by a set of VC investors, not one curated by a canny CEO/shareholders(at least ones not seeking cash out in the next three years).

I get the point about protecting IP etc, but you don't need two lawyers as well as three bankers on the board. I am seeing less experience in execution of the business ideas and more people watching over a pot or pots of money.

Now this is a much better looking board:
http://www.appliedmaterials.com/about/leadership/board

Anonymous said...

Hi John, thanks for uncovering the story of this "dark matter company". I am a chemist and it is real fun to read the business case and the hydrino stuff. If they get it, they get the Nobel prizes for all disciplines of a year! But I join your opinion that the real invention is the marketing engine that creates enough money for this company to survive so far ...
But on the other hand we should not be too harsh with the company. Real new ideas always have a difficult start and even Einstein was wrong in his dispute with Bohr over quantum theory.
May the engineering skills of the company yield a "by-product" in material science or measurement devices which then - hopefully - is less controversial in its application.

Anonymous said...

So far, all I have seen from critics is a bunch of declarations. Not one actual experiment and related data showing that the phenomena he is reporting isn't observed. I don't care how much Park thinks he knows. Science is about actual experimentation and observations and data.

Park. Do the freaking experiment.

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