Following the lunch break, nLight CEO and founder Scott Keeney joined me on the stage for a fireside chat-style keynote. Keeney started nLight roughly 21 years ago based on a vision that semiconductor lasers would improve in terms of efficiency, power, brightness, and reliability, while ultimately redefining a wide range of markets. Today, nLight serves three primary sectors: industrial, aerospace and defense, and microfabrication.
Keeney took nLight public in 2018, shortly after presenting a keynote at LPMS. And as we all know, a lot has changed since then. One big change for nLight was the amount of business the firm does in China. Much of the change centers around how the world has changed, including the tariffs issued by the Trump Administration shortly after the company went public.
“Frankly, that was a surprise. We saw not only changes with respect to China, but a global manufacturing recession that occurred thereafter,” he says. “The capital markets also changed pretty significantly, most notably in China. There are key markets in China that became far less attractive than they were up through 2018. I see continued opportunities for lasers, and especially semiconductor lasers continuing to improve at a rapid rate. I think we’re still in the early innings.”
While China was a significant market for nLight at the time, it had interesting opportunities outside of China, leading the company to focus on growing its business in those core markets. nLight has been growing on average of over 20% a year, in part because of its market diversity.
One such growth market—space. For instance, the NASA satellite measuring changes in polar icecaps with a level of precision that has never been achieved in the past. “We’re getting to the point where lasers are playing an important role [in space],” he says. “And it’s pretty interesting on everything from additive manufacturing with laser processes to build rocket engines to guidance systems.”
China advice
Don’t pretend you’re an expert on China. “China has an incredibly rich culture with a fantastic set of opportunities. But it’s complex,” he says. “When we’ve tried to put China into a more simplistic sort of lens, businesses outside of China have gotten into trouble more often than not.”
The timescale is different. “You have to think in terms of much longer timescales,” he says. “It’s a concept of how China oscillates, not between left and right in terms of sort of decentralization, centralization, and we could see those cycles continue.”
Putting photonics in perspective
“It’s hard to think of a single important technology in the works today or that could change the world where lasers aren’t involved,” says Keeney. “The opportunities are very broad, very rich—and substance becomes the challenge. Where tech companies make the mistake is they have new technology that is great for a lot of different things. But they don’t focus on the one that’s going to get across the chasm.”
Within the photonics community, Keeney suggests manufacturers focus on applications that can make a difference. “As an industry, we should be very proud of the work we’re doing. But we’re small. And I don’t think it’s helpful to hide things,” he says. “We have a narrow set of markets. We need to be very thoughtful about our efforts.”
Insights into acquisitions
Prompted by audience questions, Keeney also shared his views on mergers and acquisitions. “Acquisitions can be incredibly powerful, but they’re very difficult to do well,” he says. The reason for the difficult comes down to culture, explains Keeney. “An acquisition is fundamentally bringing together two groups. And where that overlap is, and where those teams exist, depends on the particulars. At the end of the day, that’s what you’re doing.”
nLight has been successful in its acquisition strategy by making sure it spends the time needed getting to know people. “That’s one of the big challenges with the pandemic is when you can’t go and interact with people with the same level of depth in the past,” he says.
One example of a successful acquisition was a company called Nutronics. The thesis was fundamentally about vertical integration of spaces, explains Keeney. “The idea that vertical integration somehow just naturally leads to lower cost—that’s a major fallacy. People need to be really careful.” For nLight, vertical integration of Nutronics was more about “breaking down, what economists would call vertical market failure…where if the engineers on both sides were working together as one company, we would optimize things in a better way.”
Parting words
With new working in quantum, new work in UV, new ways to deal with pandemic, new medical devices, and new additive manufacturing technologies, there is a lot within the photonics community to be excited about, explains Keeney. Knowing that nLight lasers are playing meaningful roles in an array of important applications (everything from helicopters ferrying people out of Afghanistan to new surgical applications) is understandably encouraging. “It’s something that I personally have found very rewarding,” he says.
What keeps Keeney up at night also resonates with anyone in business today. “The supply chain…this is a really difficult time to manage.”
