How CoolChip Got $500K from Peter Thiel’s Founders Fund: A Salsa Story

4/25/12Follow @gthuang

It’s rare that chips and salsa lead to a startup funding deal. But this isn’t your average startup, and I’m not talking about the usual kind of chips and salsa.

CoolChip Technologies, a Boston-area tech startup looking to make data centers more energy-efficient, raised $500,000 in seed funding earlier this month. What the company didn’t reveal, however, was that the money comes from Founders Fund, the San Francisco venture firm started by PayPal co-founders Peter Thiel, Ken Howery, and Luke Nosek. What’s more, there is a bit of controversy and intrigue around the startup’s technology.

Here’s the story behind the financing deal. It begins with CoolChip CEO William Sanchez, an MIT lifer (undergrad, master’s, and PhD just weeks away) originally from the Bronx, who started the company in 2010. But long before that, Sanchez discovered salsa dancing as a sophomore in college and says it kept him sane while he adjusted to life in Boston. Over the years, he has kept it up and even formed a salsa teaching and performance company. He says he still dances about twice a month.

Why is this important? Because one of his good friends from salsa, Gleb Chuvpilo (a fellow MIT techie), used to work with Peter Thiel on a few different ventures over the years. For the uninitiated, Thiel—in addition to being PayPal’s former CEO—was Facebook’s first outside investor. In the interim, he founded a global hedge fund (Clarium Capital Management), helped start an analytics and data visualization software firm (Palantir Technologies), and more recently set up a fellowship to encourage college kids to drop out of school and start new businesses (20 Under 20). Chuvpilo worked with Thiel on finance at Palantir and managed portfolio risks at Clarium Capital.

So when Thiel visited MIT last spring to give a talk at the Stata Center, Chuvpilo and Sanchez signed up to be his “secret service” and … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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  • Jorge P

    I think Willy’s future looks very promising, let’s not forget he has a wife with a Harvard Business School degree (besides being his salsa partner). Power combination right there.

  • Davisthewatchdog

    Some people are of the opinion is that William Sanchez may be a pathological liar deserving of punishment rather than a viable young entrepreneur deserving of praise. There does appear to be a great deal of solid evidence to support this assertion.  Substantive due diligence is definitely warranted here.  Try googling William Sanchez MIT CoolChip.  Take the time to read the articles about Mr. Sanchez and CoolChip (as well as the comments on these articles) and judge for yourself who sounds credible, and what is really going on here.

    The trail of evidence makes for fascinating reading.  Ask yourself if MIT had an acute conflict of interest in their recent “investigation” of the alleged scandal involving the 2011 Clean Energy Prize   Ask Mr. Sanchez simple yes/no questions such as whether he had obtained authorization to exploit the Sandia Cooler as clearly required by Clean Energy Prize rules.  See if you can get a straightforward yes or no answer out of him.  Did William Sanchez ever provide the inventors of the sandia cooler any opportunity to object to its exploitation by CoolChip?  See if Mr. Sanchez can produce any evidence of authorization.  If he does produce what he purports to be evidence of authorization, verify that any such purported evidence has not been fabricated after the fact.

    In each instance you encounter individuals wanting to dismiss allegations of plagiarism, deception, fraud etc. against CoolChip, ask yourself whether the individual in question has an obvious conflict of interest (e.g embarressment, the possibility of being exposed as unethical, and/or the possibility of being fired).  Ask yourself whether such individuals may be under pressure (political or otherwise) not to blow the whistle.  Investigate for yourself whether CoolChip and MIT’s assertion that the Clean Energy Prize rules were unclear is in anyway plausible assuming Sanchez and MIT administrators are fluent in the english language.  Consider MIT’s extreme lack of transparency regarding the evidence they weighed in the CoolChip case, which conveniently is not available for public scrutiny. 

    Scrutinize the CoolChip website.  There appear to be plenty of vague claims but is there anything of actual substance there?   Does Mr. Sanchez have on hand all of the world class technical expertise he claims on the CoolChip website or is he fibbing?   Consider all of Sanchez’s interactions with the media during the past 12 months.  Does Sanchez make it sound like CoolChip invented the intellectual propoerty in question?  Does it look like there was any fact checking for these stories? Ask yourself whether CoolChip likely has a good relationship with their prospective licensor.  Ask yourself whether down the road Sanchez would likely be truthful with you if you invested money in his operation. Google SearchI’m Feeling Lucky Ask yourself whether the evidence available from a simple Google search may only represent the tip of the iceberg.
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