Very Small Business

Technologist Eric Drexler envisioned a future in which machines far smaller than dust motes would construct everything from chairs to rocket engines, atom by atom; in which microscopic robots would heal human ills, cell by cell. Sixteen years after the publication of Drexler's book Engines of Creation, the molecular-scale technologies most immediately available to consumers are somewhat less fantastic: stain-resistant khakis and more durable tennis balls.

Much of the hype is gone from nanotechnology, the term Drexler popularized for his world of very small wonders. But something more interesting has crept in: sales. The khakis and tennis balls are bringing in money, as are dozens of other new products made and enhanced through nanotechnology. To be sure, most nanotech companies are still investing more in R. and D. than they are collecting in revenue. But many commercial applications are in advanced stages of development or already on sale: handheld devices that can sense anthrax spores, hand cream that can protect us from them and computer chips that are faster, cheaper and cooler (we're talking temperature here, not hipness) and retain data even when the power is shut off. Says Richard Smalley, a Rice University professor and Nobel-prizewinning chemist: "We are only beginning to see the things nanotechnology can do."

Nanotechnology takes its name from a nanometer (nm), a billionth of a meter, or about one one-hundred-thousandth the diameter of a human hair. In common usage, it refers to an array of new machines and materials whose key parts are smaller than 100 nanometers and to the new tools, such as Veeco Instruments' atomic-force microscopes and Nanometrics' inspection tools for semiconductor makers, that allow the tiny parts and particles to be observed and manipulated. It is a mysterious realm in which the laws of classical physics yield to those of quantum mechanics, in which the powerful bonds between atoms overtake the effects of gravity that rule the big world. Yet scientists have moved beyond the basic exploration of nanotech to its exploitation. The National Science Foundation foresees a $1 trillion market by 2015 for nano products, and businesses and governments around the world are rushing to cash in.

The White House has proposed that $710 million be spent on nanotech research next year a 17% increase over the 2002 budget on the development of everything from water-filtration equipment to military uniforms made from "smart" materials that can guard against germ warfare. Governments in Asia and Europe are investing $2 billion in similar R. and D., according to CMP-Cientifica, a research firm in Madrid. "Nanotech is a three-legged race right now," says Mark Modzelewski, executive director of the NanoBusiness Alliance, based in New York City.

Even enthusiasts like Modzelewski caution that no one should expect an overnight nanotech revolution. The technology will evolve--"radically," he says as its benefits seep into virtually every crevice of human industry, from toys to tanks. And even professional investors are cautious. "True venture capitalists are not investing. They are watching," says Glenn Fishbine, author of The Investor's Guide to Nanotechnology and Micromachines. Only a handful of "pure play" nanotech stocks exist, including Nanophase Technologies, in Romeoville, Ill., which makes nanoscale powders, among them zinc oxide particles for sunscreen that won't turn lifeguards' noses white. Still, investors in behemoths such as Intel, Samsung and Dupont have been indirectly funding nanotech development for years.

Five sectors surveyed here consumer goods, computers, pharmaceuticals, energy and cars deserve particular attention for the progress they have made toward bringing profitable products to market.

Tires and Toys
Physicist Harris Goldberg wants to revolutionize the $1 billion tire-sealant business, but until that goal is realized, he will settle for tennis balls. InMat, Goldberg's seven-employee company in Hillsborough, N.J., regularly ships to Wilson Sporting Goods 55-gal. drums filled with an environmentally safe liquid containing 1-nm-thick sheets of clay. When the material coats the inside of a tennis ball, it traps air far more effectively than standard rubber alone and doubles the life of the ball. Wilson's Double Core, which made its debut more than a year ago, sells at a premium in U.S. tennis shops and this year became the official ball of the Davis Cup competition.

InMat will take in just $250,000 this year, but Goldberg expects to double that figure in each of the next few years, largely on tennis-ball business. Meanwhile, he is working to convince tire manufacturers that by sealing their wheels with his technology instead of butyl rubber, the current sealant, they can produce tires that run cooler and safer, are lighter and increase a car's fuel efficiency. The U.S. Army has asked InMat to develop gloves that will protect soldiers from chemical agents. Goldberg's funding has come mostly from an angel investor and grants, which means he is still on the prowl for cash. "It's been a battle," he says. "It's still a battle. But we're looking at enormous growth prospects."