2006 Small Business Success Story of the Year -
Southwest Virginia finalist
It's the small things that matter at NanoSonic
Company spins off university research into commercial products

by Paula C. Squires
Virginia Business
February 2007

Most entrepreneurs succeed by thinking big. Not Rick Claus. He thinks in nanometers, and it's paying off for his Blacksburg company. At NanoSonic Inc., Claus and his staff are developing products with wide-ranging applications. And it all starts at the nanometer level.

A nanometer is one billionth of a meter, or about 1/100,000 the thickness of a strand of human hair. At this atomic dimension, scientists can re-engineer materials, changing their properties and structure in ways not possible with bulk matter.

Consider Metal Rubber. One of NanoSonic's patented products, it's produced molecule by molecule, into a self-assembled, free-standing form. The finished material looks like a shiny mouse pad, but with super powers. Metal Rubber is so elastic that it can stretch 10 times its original length, says Claus, and it conducts electricity. Possible uses? NanoSonic already has a partnership with Lockheed Martin Corp. to explore Metal Rubber's potential in aerospace and defense.

Plus, Claus sees plenty of applications in electronics and biomedics. "The materials used in things such as knee and disk replacements are rather crude, and Metal Rubber could bring about improvements. We're working with an orthopedic surgeon now on a possible deal," he says.

So great is nanotechnology's potential to produce a new class of revolutionary materials that Virginia's secretary of technology likens it to the Internet boom of the 1990s. "Nanotechnology is this decade's World Wide Web," says Aneesh Chopra. "The Web is essentially the platform upon which creative applications grew our economy and delivered value to citizens. … Nanotechnology is the same concept. It's the platform from which many creative applications can flow."

Imagine, for instance, a world where surgeons could implant a nano device to perform surgery at the micro level. "Imagine a probe in your body that hunts down the blockage in your arteries," says Chopra. Such technology, he adds, is possible in the not-too-distant future.

With nanotechnology poised for broad commercial development in Virginia and nationally, Virginia Business selected NanoSonic as the 2006 Small Business Success Story of the Year. This is the second year the magazine has given the award to recognize the accomplishments of small businesses in Virginia. Finalists from four regions of the state were selected from nominations submitted to the magazine. All four finalists were honored at an awards luncheon in January at the Darden School of Business at the University of Virginia.

NanoSonic stood out from the other companies because it represents Virginia's new model for economic development. The state wants to leverage the innovative research coming out of major research universities into commercial applications that will lead to new businesses and jobs.

For years, Claus was a professor in Virginia Tech's College of Engineering. He held one of its endowed chairs and taught in its electrical, computer engineering and material sciences departments. In 2001, his work in fiber optics and nanotechnology earned him Virginia's Outstanding Scientist Award, an award presented annually by the Science Museum of Virginia.

After more than two decades in academia, Claus took a leave from Virginia Tech last month so he could spend more time building the company he co-founded in 1998 with Linda Duncan, NanoSonic's CFO, and Yanjing Liu, then a graduate student at Virginia Tech earning a doctorate in chemistry.

The company licensed several patents from Tech, including two that use a process known as electrostatic self-assembly. It has been key in the development of NanoSonic's films and products, because of its ability to create nanocomposites at room temperature and in an environmentally safe (and low-cost) manner.

NanoSonic got its start in a kitchen, recalls Claus, with two part-time employees. Three years ago, Liu returned to China, but Claus, 55, stayed on as the company's president. Today, NanoSonic leases 12,000 square feet of office and manufacturing space in a building on South Main Street. Its staff has grown to 62 employees, and three more hires are in the works. Annual revenue stands at about $8 million, according to Claus. "We've grown the company modestly," he says. "We've been in the black every year."

Over the years, NanoSonic evolved from a commercial contactor into an innovative research firm eligible for grants. Now it manufactures products sought by government agencies and large companies. "We've turned the corner and have real sales and make things that companies buy," says Claus. In fact, 50 percent of the company's revenue comes from such sales, he adds, up from 5 percent just two years ago.

Mostly, NanoSonic sells Metal Rubber, a wearable textile that incorporates the product and basic chemical materials.

Customers include major chemical suppliers, rubber industries, electronic companies and defense contractors such as Boeing and Northrop Grumman. The company even got a call from Walt Disney World. "They wanted to know if they could use Metal Rubber in their fun house mirrors," says Jennifer Lalli, NanoSonic's vice president for business development and director of the nanocomposites division. "We're talking with them about a range of possible uses."

Lalli, 32, received her master's and doctoral degrees in polymer chemistry from Virginia Tech and stayed in Blacksburg to work at NanoSonic. She led the research team that invented Metal Rubber in collaboration with Claus. "I told her what we wanted. She's a chemist and figured out how to do it," he says. The major discovery with Metal Rubber, explains Lalli, was the scale. "Most self-assembled coatings are thin films," she says. "We were able to take the nanotechnology and scale it up in size and functionality." Metal Rubber is sold in one- and two-foot squares, and Claus is looking for a West Coast location to expand the company's manufacturing space so that one day the flexible, conductive material could be sold in sheets.

Business is definitely picking up. In December, NanoSonic gained 11 new contracts, including one from NASA to make a flexible solar sail for use in space. "We're looking at an incredible array of applications with nanostructured materials," says Mark Sheffler, a senior engineering manager for Boeing in Philadelphia, who has collaborated with NanoSonic on small-business initiatives.

NanoSonic's story is a good example of the type of research spinoff that Virginia hopes to nurture. "Because of startups like NanoSonic and Luna Innovations [which has six offices in Virginia], we have remained very visible on the national scene," notes Lisa Friedersdorf, a research program manager at the University of Virginia and member of the Citizens Advisory Committee for Nanotechnogy for Virginia.

In December, Friedersdorf helped write a white paper for the state's Joint Commission on Technology and Science that lays out big-picture goals for Virginia's growing nanotechnology industry. In 2006, about $1 billion of Virginia's manufactured goods incorporated nanotechnology. The paper calls for greater collaboration between university, industry and federal labs and legislation to promote funding and marketing for nanotechnology.

While Claus shares in the excitement, he worries about the hype. "Remember the dot-com era and what happened? You were going to be able to make a million dollars selling dog food on the Internet," sniffs Claus. "If we could rename our company, we would take the word nano out, because there's so much hype associated with nanotechnology."

Still, this scientist never thought that a product produced by his company would be the subject of high school science projects. About five high schools across the country are doing projects on Metal Rubber, and Claus enjoys fielding questions from inquisitive students. "One kid wanted to know, 'Can you make a baseball out of Metal Rubber?'" As a matter of fact, it falls into the realm of possibility. For the emerging industry of nanotechnology, maybe the sky really is the limit.