Marta Hall’s long-simmering frustrations over intellectual property disputes with Chinese rivals reached a breaking point in February.
In a torrent of tweets, the chief marketing officer and former president of Velodyne Lidar Inc. decried the “blatant theft” of the intellectual property behind lidar, the high-tech laser sensors that help self-driving vehicles detect obstacles and perceive the road ahead. She castigated automakers for purchasing knockoffs of this pivotal technology and implored the federal government to better protect U.S. tech companies from patent infringement by international rivals.
“We’ve gone to Washington, D.C., to explain this, but Washington is very busy these days,” Hall told Automotive News. “What do they do about it? What can they do about it? Not much right now. Whereas the Chinese government has given their companies a lifeline. They fund the Chinese lidar. There’s a lot of money being put into that. It’s almost like the Chinese against Velodyne. And we can’t handle that easily. … It’s David versus Goliath. It really is.”
Patent infringement disputes are one factor in an arduous stretch for the company. Over the past year, it has sold its audio technology business; flirted with and ultimately backpedaled from an initial public offering; won a crucial ruling in one intellectual property lawsuit and filed two more; installed a new CEO; and made two rounds of layoffs — with the second prompting accusations this month that the company violated federal labor laws.
While its executives conjure an underdog posture, current and former employees say the greatest challenge for Velodyne, an undisputed pioneer since the foundational days of the self-driving industry, is not knockoffs or industrywide uncertainty. Rather, they say internal discord has contributed to the weakening of a once-commanding position for the company atop the lidar industry.
External forces such as the alleged patent infringement, dozens of new competitors in the lidar realm and a self-driving industry recalibrating expectations have undoubtedly shaped and compelled some decisions.
Last summer, the company filed federal lawsuits against two Chinese suppliers, Hesai Photonics Technology Co. and Suteng Innovation Technology Co. The suits accuse the companies of infringing on lidar-related patents held by Velodyne founder David Hall, Marta Hall’s husband, and impeding on his “classic American success story.”
The lawsuits come amid broader industry concerns. The widespread deployment of self-driving vehicles no longer seems on any company’s short-term horizon. So companies such as Velodyne, which holds a valuation of $1.8 billion, are refashioning their technologies for use in driver-assist systems.
In January, the company unveiled Velabit, its smallest and lowest-cost lidar yet. Officials said the unit would cost $100, and it’s tailored for driver-assist applications. Marta Hall said Velabit is one way the company can deliver lifesaving road safety benefits today without waiting until a fully autonomous era.
Velabit has kept its lidar business well positioned.
“They have a portfolio of products that nobody else really has, and that makes them a legitimate company as opposed to an R&D startup,” said Mike Ramsey, senior research director at global technology consulting firm Gartner. “And they have product manufacturing. … They’re very interesting.”
New CEO Anand Gopalan estimated that two-thirds of Velodyne’s current automotive contracts are related to driver-assist systems, vs. one-third devoted to self-driving vehicles.
Where lidar units are manufactured to meet those contracts remains in question. Three years ago, the company opened its San Jose Megafactory in California, capable of producing more than 1 million lidar per year. But in January 2019, Velodyne signed an agreement to license its lidar technology to global supplier Veoneer, which will mass-produce lidar units to fulfill a contract with Ford Motor Co.
Licensing agreements are “one of the tools in the toolbox,” Gopalan said. “Our goal is to get our technology into cars and systems and be flexible about those approaches.”
Marta Hall suggests licensing agreements such as the one with Veoneer will continue with others. She believes competitors, which sought to capitalize on early manufacturing challenges at Velodyne, soon will endure their own.
“We’ve heard about their breakthrough products, and now we say, ‘Look, we’ve tested every single technology,’” she said. “David and Anand are an incredible technical combination, and they’ll say, ‘We challenge you. We’ve tested all that stuff, and the drawbacks are that it’s either not manufacturable or not manufacturable in an inexpensive way.’”
David Hall has been a serial inventor and tinkerer his entire career. In 1983, he started Velodyne Acoustics Ltd., which introduced new audio and subwoofer technology.
In the mid-2000s, a time when Chinese suppliers eroded the company’s acoustics business, Velodyne says, Hall became intrigued by a series of challenges run by the Department of Defense’s Advanced Research Projects Agency involving autonomous vehicles. Early on, it became clear these vehicular science projects needed a better way to detect obstacles and sense the path ahead.
Lidar, an acronym for “light detection and ranging,” had been invented in the early 1960s. These sensors emit laser pulses and measure the time it takes light to bounce off an object and return to the sensor. Traditionally, they measured that speed along a single sight line.
Hall engineered breakthrough twists, enabling multiple laser beams to spin 360 degrees and generate a 3D depiction of the surrounding area.
By the end of the 2007 DARPA Grand Challenge, Hall’s prototypes were perched atop five of the six vehicles that completed the competition. Hall filed a patent application for the rotating lidar that same year. The U.S. Patent and Trademark Office granted one to him in 2011.
In the days after DARPA, Velodyne pivoted from audio technology to lidar, becoming the first provider of an enabling technology in a fledgling industry attracting billions in investment from some of the biggest companies in the world.
But as business boomed, David Hall still preferred spending time in the laboratory more than in the boardroom.
Friends, executives and current and former Velodyne employees all describe David Hall as a brilliant and introverted tinkerer whose engineering acumen is universally respected. He holds more than 30 patents on innovations that span industries.
“He’s a brainiac, and he just gets bored if he’s not thinking of something new,” Marta Hall said.
But employees say his devotion to that tinkering — both on lidar innovations and unrelated technologies — left a vacuum in daily leadership at Velodyne. In his place, a rotating cast of senior executives often clashed with one another or Marta, who was president until this January.
Six current and former employees who spoke to Automotive News described a “dysfunctional” workplace culture, one in which the Halls viewed the expertise and advice of their rank-and-file employees, and sometimes C-suite executives, with distrust.
The six spoke on the condition they not be named because they feared retaliation for publicly expressing concerns. They spoke independently of one another, without coordination. But all shared nearly identical perspectives on Velodyne’s culture and business outlook.
Nobody expected perfection, and they agreed the Halls had a right to run a family business as they saw fit. “It was more, when you don’t know how to do something and insist that you do,” one said. “Think of the consequences of that. It was, ‘We know better than you.’?”
As a result of the churn and lingering friction, the six said, direction and strategy frequently shifted. Sometimes engineering teams would sit idle with no work for more than a week simply for lack of direction.
Frustrations often were vented in volatile meetings, the employees said. Workers who fell out of favor were sometimes given demeaning tasks, such as walking the couple’s terrier, Biscuit, a fixture at the company’s San Jose headquarters.
Meanwhile, they said, key organizational roles were held by friends or family members of the Halls who had little applicable experience.
Asked about concerns over internal dissent and culture, the company responded with this statement: “Velodyne continues to support teams of employees in operations, manufacturing, engineering, R&D, human resources, finance, business development, sales, marketing and general administration. During these unprecedented times for our community and businesses at large, we continue to work to support our employees as well as meet our customers’ needs to the best of our ability.”
While the six employees who spoke with Automotive News believed intellectual property theft from Chinese competitors was a legitimate concern, they also thought the topic was used as a blanket crutch to explain an assortment of problems. One said the internal turbulence had been “the biggest gift to our competitors” and slowed Velodyne’s first-mover advantage.
Concerns and criticisms expressed by the six are echoed in dozens of comments on Glassdoor, a website where job candidates can submit resumes and workers can leave anonymous reviews of their employers.
Uncertainties cloud the company’s manufacturing plans and the broader lidar industry’s fortunes.
One area where there is greater assurance is in David Hall’s claim to the spinning lidar technology. Last May, the U.S. Patent Trial and Appeal Board affirmed his 2011 patent, following a legal challenge from Quanergy Systems Inc., another early lidar startup. Emboldened by the ruling, Velodyne sued Hesai and Suteng in August.
Velodyne employees initially believed the Quanergy case ruling would accelerate plans for a public offering of Velodyne stock. Meetings were held with bankers last summer. Instead, David Hall soured on the idea, coming to believe the IPO would involve a grueling process with no certain benefit.
“I’m convinced that going through the banks is a dinosaur, and doing a direct listing is the only rational way to go public,” he told Silicon Valley Business Journal in October.
Six months later, Velodyne remains a private company. Business developments have occurred in rapid-fire succession. In November, the company sold its remaining acoustic business to a German company. In December, the company laid off about half of its sales staff in China. In March, it laid off approximately 140 employees in San Jose who subsequently brought a class-action lawsuit accusing Velodyne of violating the federal Worker Adjustment and Retraining Notification Act by failing to give 60 days’ notice.
In January, David Hall elevated Gopalan to the CEO role from his job as chief technology officer. At the same time, Marta Hall stepped aside from her duties as president and chief business development officer. She is now chief marketing officer and remains passionate about spreading the safety benefits of lidar.
“It’s all about safety,” she said. “If we mess up on safety, what’s the point?”
She believes Velodyne’s biggest challenges remain related to Chinese intellectual property theft. She thinks the management changes have positioned the company for long-term success.
“Dave, he was getting kind of tired of the day-to-day business-running,” she said. “Anand is young, and he brings his brilliance in the technology as well as his leadership. We’re excited and feel like it’s going to make the company stronger.”
Through it all, David Hall’s enthusiasm for innovating has remained fervent. In 2018, the Intellectual Property Owners Education Foundation named Hall its Inventor of the Year.
His aspirations stretch beyond the arena of self-driving vehicles. In December 2018, he unveiled a magnetic propulsion system for launching spacecraft, an alternative to the rocket-based approach that consumes vast amounts of fuel. NASA has paid attention.
Since stepping aside as Velodyne’s CEO, Hall remains its chairman, and he spends more time at a marina in Alameda, Calif., where another spinoff venture, Velodyne Marine, is developing an active suspension system that adjusts for waves.
There, Hall aims to do for big ships what leaders aspire to do for their companies — provide stability in the most turbulent of seas.