President Obama visits with Solyndra chief executive Chris Gronet during… (Alex Brandon, AP )
Reporting from Los Angeles and Washington — It was the better mousetrap.
From Silicon Valley to the White House, Solyndra's unique solar panels left everyone gasping for a piece of the action.
Analysts gushed over the cylindrical design, so much more exciting than the dull, flat panels coming out of China. Company executives promised huge revenue, supporting thousands of permanent jobs, while a stream of state and federal politicians toured the Fremont plant, basking in what felt like the glow of the future.
Investors, convinced that Solyndra was the big one, the harbinger of a solar boom, poured more than $1 billion into the company, with the U.S. government guaranteeing 50% more in loans.
Then suddenly, the bottom dropped out last month. In a matter of days, Solyndra ceased operations, plunged into bankruptcy, was raided by the FBI and found itself thrust into a national political firestorm.
Nearly all the attention in the Solyndra case has revolved around the Obama administration's $528-million bad bet, with partisan congressional finger-pointing growing increasingly nasty. But in many ways, Solyndra's tale is one of irrational exuberance, a collective belief unswayed by blown sales projections, yanked IPOs, shuttered factories and fired executives.
Almost to the end, private investors continued to pump millions into the company. Officials in Sacramento; Madison, Wis.; and other statehouses, thrilled to see jobs being created in a terrible economy, extended the public's largesse, offering sales tax breaks and loan guarantees to Solyndra suppliers.
And when the balance sheet got really grim, everyone doubled down.
Whether corporate managers issued misleading financial information or covered up growing problems remains to be determined as federal authorities probe the company, which fired its roughly 1,100 employees on the last day of August and filed for Chapter 11 protection Sept. 6.
But to grasp the saga of Solyndra's rapid rise and even faster fall, one has to understand the dazzling appeal of its product. The company's advancement in solar power was hailed as an invention so brilliant that it blinded everyone to the truth: Solyndra never had much of a chance in a fast-changing market.
"It was revolutionary," said Walter Bailey, a former Macquarie Capital investment banker who specialized in green technology and visited Solyndra in 2008. "You had some of the smartest money in the world getting behind it. It was a real company with a huge factory and an extremely unique product.
"The only problem," said Bailey, now a senior partner at boutique investment bank Focus Capital in New York, "was that it never penciled out."
Unlike the increasingly ubiquitous flat solar panel, Solyndra's design completely rethought the process of turning sunlight into electricity, creating a product perfect for flat roofs of warehouses, supermarkets and other commercial buildings.
Its rectangular panels, called modules, are made of dozens of horizontally arrayed cylindrical tubes — hence the name Solyndra. As the sun tracks across the sky, the curved surfaces stay perpendicular to its rays all day, unlike conventional flat panels. And light reflecting off the roof hits the underside of the tubes, increasing production.
In addition, Solyndra's product weighs much less than flat panels and is far simpler to install. Best of all, said Laura Weilert, a Denver solar engineer, is the way the modules let air circulate through them.
"Wind tends to pull every other kind of panel off a building, but not Solyndra," said Weilert, who has installed Solyndra modules on about 170 buildings in Colorado and had $300,000 of additional modules on order when the company shut down. "For the right market, it's hands down the best thing out there."
Solyndra's founder, Chris Gronet, invented the panels and left his job as an executive at Applied Materials Inc., a major supplier to high-tech companies such as IBM Corp., Samsung Electronics Co. and Texas Instruments Inc., to focus on solar full time.
He formed his own company in 2005 and lured investors with another selling point of his modules — the fact that they didn't use silicon, an essential and expensive component of conventional solar cells.
By early 2008, the price of high-grade silicon had reached almost $1,000 a pound, nearly 10 times what it had been just a few years earlier. Venture capitalists raced to get in, making Solyndra one of the hottest bets in Silicon Valley at a time when solar was rapidly expanding in the U.S. and Europe thanks to government subsidies.
"They were considered very exciting," said Shayle Kann, managing director of consulting firm GTM Research's solar practice. "They had the potential to substantially reduce solar costs at the time, and they had attracted an enormous amount of private investment."