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

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guide him around campus. Thiel came to town along with Derik Pridmore, then a Founders Fund principal (also an MIT alum). Sanchez met Thiel, but he talked more with Pridmore, and the two stayed in touch about CoolChip’s ideas and business prospects—more on that below—after the visit.

After a few months of meetings, phone calls, and due diligence, Sanchez and CoolChip co-founder Steven Stoddard (another MIT techie) flew out to the West Coast to meet with Founders Fund about CoolChip; their most recent trip was in February. Bruce Gibney is the Founders Fund partner on the deal. (Not to be outdone by his fellow partners, Gibney was an early investor in Confinity, which became, you guessed it, PayPal.)

Of his new investors, Sanchez says, “They get it. The data center efficiency space is really big.” But, he says, “It took a new concept to get them in.”

At this point, it would be helpful to explain what CoolChip actually does. The company is commercializing what it claims is a better cooling system for computer chips. The idea is to use a new kind of air-based system (not liquid, which tends to be more complex and expensive) coupled to a heat-conduction layer, which stays in contact with the chip. CoolChip has customers already, mostly in the gaming industry, but it is aiming eventually to help cool servers more efficiently in data centers—a huge and growing problem worldwide.

The company’s prototype is a 4-inch-diameter contraption that it calls a “kinetic cooler” (see photo, left). When the blades on top spin, they create turbulent air flow, with higher air speeds than that of traditional fans, to dissipate the heat. The net result is that the device “uses surface area more effectively” to cool a chip, Sanchez says. “Not only do we get a big jump in performance”—more heat rejection, less noise, and smaller form factor than traditional heat sinks and fans—“but we got to where we are with the basic economics in mind. We have to make it competitive,” he says.

In case you want a deeper dive, the theory of the device is rooted, in part, in Navier-Stokes equations, advanced fluid dynamics, and thermal conduction. (If that sounds a bit like a flux capacitor, well, I didn’t build the thing.)

Sanchez says the company’s new funding will be used for expanding engineering operations and product development such as integrating better materials, as well as for building up intellectual property. CoolChip says it has patent agreements with MIT and Sandia National Laboratories for the technology and is in the process of transacting the licenses.

Which brings us to a bit of controversy. Last May, the startup won the $200,000 MIT Clean Energy Prize. I won’t rehash it all here, but a dispute ensued over CoolChip’s rights to the technology and whether the company misrepresented its IP position in the competition; the case was resolved (at least from MIT’s perspective) in the company’s favor earlier this month.

CoolChip has been based at Geek Offices in Cambridge, MA, but is moving to Boston (near South Station) in the next month or so. Sanchez points out a number of cleantech-related companies that are headquartered in that part of town, including Altaeros Energies, Cambrian Innovation, EnerNOC, FastCAP Systems, OnChip Power, OsComp Systems, and other startups in the Greentown Labs space.

It’s still early, but what’s the biggest challenge for CoolChip? Getting its dance card punched quickly, says Sanchez. “If we stagnate, we don’t stand a chance.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] 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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  • Troy Homenchuck

    They rejected my cloud funding startup for a cpu cooler? All I blech!