With a mechanical engineering degree from MIT in hand, Dave Lyons was drawn West in the late 1980s by the irresistible energy of Silicon Valley, where new tech enterprises were sprouting like mushrooms.
Today, after two advanced degrees from Stanford, Lyons looks back on a career spent finding technical solutions to confounding human problems. Whether that’s as the lead engineer at Tesla Motors, or working to improve fuel efficiency and safety in commercial trucking, or simply helping people sharpen dull kitchen knives with his latest venture, Lyons is always open to the next challenge as long as it solves a real-world problem.
You joined Tesla Motors as director of engineering in 2004, the year after the company launched, as employee no. 12. What appealed to you about working there?
How could you not want to be part of someone saying they wanted to start the first new car company since DeLorean? And Tesla has exceeded our wildest expectations. We were able to reinvigorate an electric vehicle power train — we didn’t invent it, but basically improved on what was done by GM and a bunch of technologists out of Caltech — and built a business that moved the needle on the auto industry. If you drive around Palo Alto today and see how many Teslas are on the road, that’s incredibly rewarding to me. That was just a glimmer in our team’s eyes when we started.
What was it about working there that made it such an important part of your career?
We got to work on a really challenging technical problem, but more important, we got to work on challenging organizational and business problems. It was Wild West times, where we had incredible influence among ourselves on how to best solve the challenges in front of us. People had a great deal of mutual respect as we each brought strong positive ideas to the table. I gravitate toward environments where technology and business intersect, and hard-working, less egotistical teams are given the freedom to succeed.
Most people spend a lot of time looking for that, and you seem to have found it multiple times in your career.
I’m truly grateful for that, but not every year of my career has been like that. There are years when I realize I’m in downer situations and that it’s time to cut my losses and find the more fertile ground.
You seem like a quintessential East Coast/New England guy. What originally brought you West, and why did you stay?
I wanted to be where things were happening. In the 1980s at MIT there was a pursuit of excellence, but with an academic flavor. I felt as if the school was there to breed the best academics for the future. Stanford always felt like the promised land. It was focused on entrepreneurship and growing of businesses and industry.
You’d been out of college for almost a decade by the time you arrived at Stanford GSB. Why’d you decide to pursue an MBA?
In the 1990s, I was rising up the management at IDEO through its meteoric rise. I was like a kid in a candy store with all the great opportunities I was being offered. Each year, I thought about heading back to get my MBA, but I kept deciding to wait another year because I didn’t want to miss out on the cool opportunities in front of me at IDEO. By 1998, the dot-com boom was in full force and I had accomplished most of what I’d hoped for, so I decided it was time.
Looking back on your time at Stanford, were there any specific experiences, books, or professors that stand out now as being particularly influential?
Professor David Beach ran the Product Realization Laboratory at Stanford. His passion for engineering, manufacturing, and product design are unsurpassed. His nonjudgmental enthusiasm was infectious, and his boundless energy toward teaching the methodologies are things that I employ in my life today. I have never found anyone quite as encouraging to take risk and to continue to persevere on the challenges you face in designing world-class products.
Resharp, your latest venture, turns the old-fashioned grinding-wheel business of knife sharpening into a tech business. Why did you jump into that?
It’s a classic value proposition. Everybody has knives, and they all go dull sooner or later. Most people have no idea how to get them sharpened properly, and if they do it’s a chore. When I was shown the business opportunity, I said, “Gosh, this is an easy problem to solve with machine tool technology.” Imagine being able to take your knives to a hardware store or grocery store and have them sharpened on the spot, any time, on demand, and 10 minutes later walk away with factory-sharp knives. The skilled tradespeople out there are charging about a dollar an inch to sharpen a knife. That means sharpening a knife costs between 5 and 10 bucks. The marginal cost for a machine to do it is pennies. We can create a really nice customer solution with a high value proposition, and maybe even charge less. So there’s a huge profit component to that. It’s a win for the customers, a win for the retailers, and a win for the company that manufactures the machine.
It sounds as easy as going in to get a new key made.
It’s exactly like getting a new key made. We started that company in summer 2017, and it still has just five full-time employees. But we’ve just been funded by a partner that can help bring this to a national rollout.
You cofounded Peloton Technology nine years ago. How does its automated vehicle technology differ from other self-driving solutions?
We put radar systems and automatic emergency braking systems onto commercial vehicles, along with vehicle-to-vehicle communication systems. We use this connection to synchronize the control systems of two trucks on the open road. Once they’re close enough, the communications link allows them to maintain a tight and highly controlled following distance so that both trucks benefit from the aerodynamic savings. If the lead truck has to brake, it could brake in a full emergency stop and the rear truck would brake with the same authority. We can maintain that safety gap under all conditions. Platooning addresses the two biggest pain points in the commercial vehicle industry: safety and fuel efficiency.
The song “Convoy” is now unspooling in my head.
It’s exactly like a convoy, but it’s automated. It doesn’t require the driver to be as vigilant as in a convoy when you’re close-following the way, say, NASCAR drivers do. That requires tremendous focus.
How much more efficient is it than a regular trucker-driven convoy?
There’s a fuel savings of about 10% on the rear truck and, surprisingly, about 4.5% on the front truck.
How many of these systems are now out there?
We’re still piloting with large fleets, but trucks are on the road today in multiple states.
During your career with Accel, you did due diligence on potential venture investments. What did you look for when considering a startup investment?
My focus was on new energy technologies — solar and renewable energy, electric power systems for vehicles, and a tremendous number that dealt with solving grid problems. First, we would try to find out if the technology was real or vaporware. I would go out and give a sniff test to see whether the tech team had produced what they were promising. If the technology was real, then the next question was this: Can this business make money and provide venture-level returns? In the end, very few clean-tech startups were successful. Tesla may be the poster child for the clean-tech deals from that era.
You’ve focused more on investing in recent years rather than mechanical engineering. Was there a moment when you made a single decisive pivot, or did your career path evolve more gradually?
In the 1990s, when I was at IDEO, the design and innovation firm, I got to do some world-class mechanical engineering design. And I got to be around some of the best in the industry working on problems brought to us by our clients. I got to see how important those technical skills were to our clients. They came to us because they didn’t have that skill in-house, but they did have other skills and they also had entrepreneurial aspirations. It became clear to me that just having mechanical design excellence was not sufficient to be successful.
So, a pivot?
I want to solve problems that people care about. Many people can identify those, but can’t come up with technical solutions that are cost effective. My skill set sat in the space between those human, technical, and manufacturing challenges. I tried to be a universal translator between those three fields. Every problem I’m involved with has some sort of technical challenge that’s not easily solved.
Any disadvantages to having an engineering mind in a business world?
I think engineers often miss human factors and adopt solutions that may not be optimal. Sometimes you can miss the inherent irrational nature of consumer behavior. You might think you have a great technical solution that’s superior in every way and you can prove it rationally, but in reality rational thought is only part of the game. Emotion has to be taken into account.
Makes me think of the U.S. auto industry of the ’70s and ’80s.
They were trapped behind the times, studying their current customers as opposed to studying young up-and-coming customers. They ended up with dinosaur cars during that period that were surpassed by the European and Japanese cars. They classically missed the emotion about vehicles.