Danielle Fong started in physics young, then walked straight into one of the hardest problems in energy: storing power at civilizational scale. LightSail made her famous and the cleantech bust made the lessons permanent.

In this episode, we go back to the beginning — Canada, physics, the bet on compressed-air storage, and the collision between deep technical ambition and a market that wasn’t ready.

Transcript

Pablos: I know you grew up somewhere in Canada, where was it?

Danielle: That’s right. I grew up in…

Pablos: Rural Canada?

Danielle: No, it was urban, like Dartmouth, well, suburban, Dartmouth, Nova Scotia, in the greater Halifax area.

Pablos: That sounds rural to us.

Danielle: A lot of Victorians.

Pablos: Not having been there, what are we talking about?

Danielle: 200,000 people on a peninsula, so everything’s pretty walkable. Lots of universities, lots of researchers, lots of army bases. Like, all kinds of activity, actually. It’s really nice.

Pablos: That’s cool. Industrious. I love that. What are the universities doing?

Danielle: They do a lot of that. One of the things that for a long time they’re known for is, and still are, is batteries. An extremely well-regarded professor also teaches the first year course at Dalhousie. And his name is Jeff Dahn. And I was a grade seven dropout, dropped into university, and decided I wanted to do physics sort of halfway through, starting from computer science. And he kind of picked me out after midterms. He was like, hey, do you want to do research? I’m like, yes, I do. But by the way, I’m 15. It’s like, oh. And basically, he had to get away with it. I could get away with it.

In general, it’s funny because people always have expectations, but expectations are always subverted. Anyway, Jeff was an excellent battery and experimentalist and had a huge program, but I started out with a theorist, Jordan Kiriakidis. He did quantum computation and a lot of highly correlated quantum systems and was hoping to get some help from me on programming that. That’s how I got started. Child labor.

Pablos: It’s really one of the key cornerstones of the Danielle Fong economic policy. I love it. These kids these days aren’t working hard enough.

Danielle: They are working hard on some things. We want to provide ideal bullshit.

Pablos: Better bullshit for kids. You can quote me on that. Okay, so you end up at the university and then getting to work on research pretty early, pretty young, compared to anyone else.

And was it on batteries or quantum stuff?

Danielle: It was on quantum stuff. But I was asked by Rutenberg if I thought about grad school. And I had always been really interested in energy, and particularly in nuclear fusion. And so I applied. He did his PhD at Princeton. I applied, I got into Princeton’s Plasma Physics Lab. And so this was awesome. It was like one of the massive, and actually, and now there’s amazing progress in private fusion.

But at the time, such a thing did not exist, or was just very, very, very nascent.

And it was sort of the hangover from, well, we had built this in a sort of Soviet competitive context and then just sort of like weren’t investing in it that much anymore. And so all of the records, which inspired me to get into the field, were like when they ran the thing for the last time because they were using deuterium tritium. And so it was like, oh shit. And so we were looking at this and like, how are we ever going to get enough money? And also how is it ever going to be like cost competitive with coal for a source of heat? So it was always bothered by like, ultimately we’re using this to generate, we’re going to boil water? Is that the really best thing that you can be doing for all of this tech?

And I’m still very close friends with one of the grad students that I met there, Abe Fetterman, and we would joke around like we would say, nuclear fusion is kind of not getting the best rap because we say it’s nuclear, but like what if we extracted the energy with PV cells? So you got a plasma, I’m like, that’s funny. Why not, actually? And that actually never left me, right?

So never left me. And so I, one of the other questions come up is, okay, why do we have to go through all this trouble? Make a fusion reactor when we have a fusion reactor in the sky, and it’s like, well, it’s the energy storage problem.

And after I dropped out and kind of bumped around Silicon Valley for a while talking about different things that I could do, focusing on the energy storage problem was really considered to be key. And as a result I was like, well, what can we do with compressed air? And I had this idea that you could dramatically increase the efficiency of compressed air if you didn’t throw away all the waste heat, if you could capture it and then recycle it back.

This was the key. So water has this really high heat capacity and it’s much higher density. And if you had a very fine spray, it would have a lot of surface area. Basically add the heat capacity to the air.

Pablos: Turns out that’s what’s going on in the atmosphere. Quite a lot of heat stored in small water droplets.

Danielle: It’s primarily that.

Pablos: Created this pattern of dropping out? I presume in high school, junior high or whatever.

Danielle: Junior high. Junior high sucks. Well, there’s kind of two stories. The official story is basically, I didn’t think that fusion was necessarily going to be the answer immediately. And maybe you can solve energy storage and go some other way. And also, I wanted to do entrepreneurship as an alternative to the financial problem, because I saw my amazing professors who still had to scrape around, just not getting adequate funding. But in addition to that, I was trans, and they were not supportive at the time. I should have come out to the faculty, who in retrospect, I’ve talked to them since, and they welcomed me. But at the time, the administration was like, we’re a conservative school.

Pablos: This is like 2025.

Danielle: Oh, sorry, 2005.

Pablos: 2005. So different era.

Danielle: So I was like, well, it’s impossible to live here. So I’m gonna try San Francisco.

Pablos: The fusion stuff, I get it, especially in that window of time. Probably still looked like it was gonna take too long, be too expensive.

Danielle: The other thing to say about it again, Abe and I would talk about this, and it was like, if you’re going to do a fusion company to solve the techno -economic problem of energy, you need to build a reactor company that gets incredibly good at building the reactors and scaling those down the learning curve, and then you can tackle fusion, which is like the most challenging reaction that you can imagine, because it requires 100 million Kelvin. But this is skipping forward a bit. This is a reactor company that we’re working on. It does chemical reactions because they’re easier to start off with.

Pablos: I don’t want to get you on the record weighing in on the current state of fusion.

Danielle: There’s a bunch of things that are in the air right now.

Pablos: And it’s really cool. And honestly, I believe that we need a thousand silver bullets, and we’ve got to try all these things and figure out what works. So I’m excited about it in that sense. But we’ll talk about that some other time.

I think the energy storage thing got me to think of coal and oil and gas as storage. Came from the sun, it’s being stored here for millions of years. And I think of uranium that way as maybe it came from other stars, but it’s storage, it’s long-term storage, and it’s up to us to learn how to use it. And I think that’s a different way of thinking about these fuels. And I feel it’s important to be responsible with how we use them because you only get to use them once most of the time, but not everything. If we get fusion working, we’re not. But I think storage is important to think of in a broader sense.

Danielle: So I looked at the chemical storage of energy as being couple orders of magnitude more intense in terms of energy per given amount of weight versus batteries. And like 70X. And even if it’s less efficient, it’s still like 20, 30X is possible. So we were looking at it from like what is the most valuable power possible? And it’s like, well, whenever it has to carry itself. So we were thinking flying cars, drones, but also that there was a chicken and egg problem with synthetic fuels that we could solve.

Because if you can have a flame of any kind, this is skipping a whole bunch ahead, but basically if you could burn anything, then anybody that could convert what they had, be it biomass or hydrogen, solar, hydrogen into fuel, they could have a market and this would solve an ecosystem problem. But that also we can use all of the existing infrastructure for fuel. So, but it would have to be relatively flexible. So really relying on the energy content of the fuel rather than the specific qualities of it.

Pablos: So I don’t understand that part. So maybe you should rewind and just explain what you’re trying to build. And then we can pick apart why it can work with all these fuels.

Danielle: So LightSail Energy was one of the storied and great clean tech 1.0. Where we were like, everyone’s going after batteries. We think that compressed air has a place to dramatically reduce the cost of energy storage at large scale and at industrial scale. And using this water spray, we can improve the efficiency of compression because you do less work to compress it. And then on expansion, because you have more of the energy from the higher temperature and therefore higher pressure air on expansion. And we chose instead of turbines to use reciprocating compressors because we thought that would be a much easier job basically to fight with valves versus the water-laden aerodynamics.

Pablos: Fair enough. I get it.

Danielle: So additionally, when you’re looking at how you’re going to store the compressed air, we saw that because the cost of industrial carbon fiber had dropped so much that it had become economical to consider using carbon fiber. And then you have like eight times the energy density for a given amount of weight versus steel tanks. And we ended up being half the cost of steel tanks. So this was like we hired racing engineers and also people from the compressor world. And we hired people who made rocket engine boosters and new composites through that. And all kinds of different. And scientists who studied shadow graphy to study the properties of spray. We figured out how to make all these nozzles. And we raised from first my co-founder who funded the initial work. We threw something together with our other co-founder, his former partners, Garage. And then we raised from Vinod Khosla, who funded the first two rounds and has always been with us.

And then in 2011, Peter Thiel was already saying, and this is after the financial crisis, and basically, the initial wave of clean tech really was in a bad way. First, because of the financial crisis. The next, because the loan guarantee program was basically shuttered under the Republicans when they took the Congress. And a lot of factories that people were basically financed by part of these partially public programs, suddenly the loan guarantee went away. And then many of those companies were shuttered and then many of the funds which were heavily deployed were shuttered. And so people were like, and Peter Thiel was like, hardly anybody’s talking about clean tech. It seems to be a disaster. And no one was raising after that, basically.

And I was like, okay, well, that sucks. However, for us, we can kind of break the logjam if we can raise from Peter Thiel.

So I then engaged on a campaign which didn’t require much guile because it’s a small community.

I happened to meet, and we talked with, we’d pre-talked with like his partners at Founders Fund who were interested in, I was just like, I know you guys don’t do this, but I’m interested in talking.

And then when I met him, he was like, oh, this is really cool. it’s too bad that we don’t do this. I’m like, well, it’s good news. I already talked with all your guys at Founders Fund, and they really like this. They just say, it’s too bad, Peter.

So he came in and led the round ultimately, although there was sort of big momentum, Benoad was going to do it with Bill Gates. Anyway, so there was this big concern, and then after that, sort of the logjam broke for some time.

And so for a while we were very well funded.

And we did make amazing progress on this sort of massive challenge of making a 220 atmosphere compressor that could do all of these different pressure ratios and compress and expand and spray and a custom water pump and everything.

Pablos: What’s the scale of storage you were going for?

Danielle: We were trying to have the same machine. You could run it in compression or expansion at higher levels, but the design points were about a quarter of a megawatt to start out and then going up per cylinder.

Pablos: And so basically you survived the initial demolition of clean companies, managed to thrive at a moment when probably none of them did, and then you…

Danielle: The really big problems—no, we still had, we were still able to raise just multiple rounds. So really we had a really big blow in 2014 in the entire industry when the price of oil sank 6x, because an enormous number of business cases, which are incredibly attractive to focus on, is hey, we’re saving you money because we’re saving x amount of oil. And even when you talk about all of the majors, anybody who was involved in this who would have been spending money on this, they weren’t really doing it.

Pablos: That’s been really the kind of the history of, say, solar too. When oil prices up, solar gets funded. When it’s down, it gets defunded. And we couldn’t break that log jam for decades and we finally did, but it sounds like some analogous thing happened to you.

Danielle: Well it made it more difficult. It didn’t make it impossible. We were still able to raise money from individual investors because we’re pretty prominent. We’re doing something really interesting. Of course at the same time the price of batteries was plummeting.

It’s a combination, in the West it was really driven by Tesla. And then it is really China, especially LFPs and so on. But also people would start giving credit to, well, they’ll get there eventually. Initially, you’re like, oh, we’re competing with lithium-ion batteries which are a thousand dollars a kilowatt, but now Elon’s saying it’s going to be $100 a kilowatt. Well, it’s still not $100 a kilowatt, maybe it is for him.

So that made it more difficult. But the other, probably the worst, this is a little counterintuitive. I wouldn’t have thought about this. It’s worth thinking about this. After we raised money, particularly from—and people would always report on it—from Bill Gates, who funded the company. Thank you, Bill. As one of the investors, people kind of imagined that it immediately came out of Bill’s pocket. And if I were to ask them for money, well, why isn’t Bill funding it? And he was a significant investor. But something like five-ish percent of KV and five percent of the money. A little more than that. But it made it incredibly difficult to raise money from elsewhere.

And when he was getting things organized for Breakthrough Energy, it just took them time to get organized. And after they announced it, they’re like, oh, great, all of the billionaires are doing it. And unfortunately, this included the other source of money that I had, which was oil companies and the majors. Then 2014 it crashed, then it’s like, oh, go to China, and then I’m like, oh, the stock market is going to crash, it’s way overblown. And then they did crash. And so 2015, we raised from individual billionaires. But then we even met with Jeff Bezos. He’s like, this is a brilliant idea. Send me your memo. Okay, great, I’ll write a memo. Okay, here’s a—yeah, great, is he reading it? Let me nudge his investment. Oh, thanks for talking to me. We are doing our investment through Breakthrough. And I’m like, I gotta talk to Vinod about it being log jammed on Breakthrough doing something.

And Vinod, a huge amount of respect for him, was the last guy funding a lot of these things. I think we were not the only company that this was the exact same.

Pablos: But basically what happened is all the people who wanted to do this kind of stuff decided it would be better to join to break through cabal and get into that.

Danielle: And then in the meantime—

Pablos: Long to materialize, to be able to pick up as a—

Danielle: Which led to a 100% fatality rate for our cohort, it turned out.

Literally, oh, so in the meantime, we have all this value, there’s stuff that’s gonna take more money to materialize, the compressor stuff. But the tank stuff, there was still this surplus of CNG, natural gas.

And so we were like, hey, we can certify these tanks. They’re eight times the amount of natural gas for an over-the-road trailer. They’re half the cost. Let’s do this. We should be able to make profit manufacturing this right here. And they just, this is one thing I’ll disagree. Again, I get a lot of respect. But instead of manufacturing it ourselves, we were pushed to license. And I’m like, oh, you guys really just don’t want to think about this. So I’m like, fuck. And a lot of investors are like, hey, do you want to be a venture capitalist? Do you want to come with it? I wanted to hide my head under a rock and figure out, how am I going to solve the energy storage problem? What the fuck? I literally just got to the top here and everyone’s just lost attention about it. How are we going to actually really solve the problem?

Pablos: All the people who’ve been in Silicon Valley for a long time have some story like that where we just got fucked over by the sway of the market.

Danielle: Everyone who is involved tried hard.

Pablos: I have no doubt. I understand how that goes. And it’s not totally clear to me what to do about that.

Danielle: I think it’s probably… the stability of the structural form.

Pablos: One thing, though, I think it, I don’t know if it’s better now. Certainly venture has grown a lot in the last 20 years. It’s much bigger overall. It has a wider variety of investors at every stage. I don’t know if that helps. There’s still a lot of lemmings. But it would be one of the important things to say because so much collateral damage from startups that were kicking ass and still got shut down.

Danielle: A lot of it is spilled milk under the bridge, except people are learning the wrong lessons from this.

It’s like, wait a minute. There’s a lot of tuition been paid here. We still have the problems, all of the intensity of the problems and the time frames we have to solve it and how important it is has increased. How much has all been thrown? Everything has increased. We’ve learned a whole pile about it. But we failed to think of the less because we can’t really imagine the degree of the difficulty and how many different things have to be solved and sort of the great filter problem of getting it right and then also maintaining a capital market for that. And so you find things are out-competed by a consistent market that’s being pushed by state intervention. And you have to think pretty hard about how you’re going to beat that. It’s not that you can’t, obviously, like Elon, it’s like the lever is reusability. Therefore we can do, so people can do it, but in general, there’s a lot of, not only is there a lot of damage, but people tend to think every time they hear a good new idea, they’re like, well, why hasn’t that been done yet? Like, you must not think this. You can try to understand once, at a different technological period, under different conditions for different reasons, you can probably learn quite a lot about that.

But most great ideas aren’t done.

It’s incredibly difficult to execute to ubiquity. So it means a lot more things are possible, really, but then you have to know the price, which is the difficulty of executing it.

Pablos: I think that there’s a kind of miscalibration in Silicon Valley around that. Everything is hard.

Everything is hard. And honestly, it’s not totally clear to me that executing to ubiquity for you would have been harder than for Stripe or PayPal or fucking Airbnb or something. It was just that that’s what got the support all the way through. The machinery to support at each stage didn’t break for them. And they got lucky or got the timing right.

Danielle: Very long-term thinkers from the beginning.

Pablos: No question, but they didn’t end up with a catastrophic failure. I’m sure they had trouble and struggles along the way, but nothing existential.

Danielle: The funds that they raised were never really super existential to the proving out the next edge of the company, which, to be clear, this is what you want.

Pablos: They get revenue earlier, those kinds of companies.

Danielle: In general, yes.

Pablos: But I think that’s the job here, is to figure out how we co-opt the aspects of the Silicon Valley operating system that worked with software, figure out which ones we can apply to doing harder, hardware and hard stuff, and make it happen faster, because if you take too long with anything, some…

Danielle: I think that speed is really the critical thing. Speed is really the critical thing.

Pablos: So LightSail was compressed air to store energy, got derailed and presumably had to shut that whole company down or what?

Danielle: The IP for the tanks was acquired and not really aggressively put into practice. I wish they did. Retroactively went back to the VCs that owned the IP for all the other stuff. And then they let that expire. Guys, well, thanks for my tuition, but I really feel like we have a lot of energy problems to solve.

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Recorded on July 20, 2026