Stopping Food Waste With Imperfect Produce – E79

Great to chat with Jan Heinvirta Co-Founder at Perfekto, a company that wants to change the broken food system by giving consumers access to edible food typically lost due to things like cosmetic imperfections! We discussed the problem of food waste in LATAM, the demand for imperfect produce, his experience at YC, the experience of delivering food boxes in Mexico, how they are thinking about raising capital and more!

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Thanks so much! 

James

The unedited podcast transcript is below

James McWalter

Hello today we’re speaking with Jan Heinvirta co-founder of Perfekto, welcome to the podcast Jan! Brilliant Could you tell us a little bit Perfekto.

Jan Heinvirta

Thank you very much for having me James.

Jan Heinvirta

Of course. So essentially what we do at Perfekto is we aim to reduce food waste in Latin America We do that by offering a subscription box of imperfect produce. So that means that ah.

James McWalter

Bowed Perfekto.

Jan Heinvirta

Weekly or biweekly. You will get a box sent directly to your home that includes fruits and veggies that might look a bit odd so maybe a bit bigger bit smaller than your usual produce at the supermarket or even out of shape out of color and whatnot.

Jan Heinvirta

Can also be because of our production so sometimes to perfectly normal and that’s um, what we offer with an aim to reduce the problem in Latin America since 54 percent of all fruits and veggies in the region end up wasted.

James McWalter

And and what drove the initial decision to start perfekto.

Jan Heinvirta

Well, it was a bit of a personal motivation I would say um during my time in Switzerland studying international management. Um I worked in a lot of restaurants as a waiter and I saw the amount of food waste that occurred. Every day and it was quite heartbreaking because it was such amazing food cooked by 1 of the best chefs in the country and we just had to throw it away. We weren’t even allowed to take it home and it was something that bothered me a lot at that time took it to go launched in switzerland.

James McWalter

Right.

Jan Heinvirta

Which is essentially an application to save meals from restaurants at the end of the day. So I really fell in love with that model. Um, ultimately I went to Mexico for an exchange year then worked that a swiss fintech helped him to expand to mexico. So. Food waste problem went away a little bit and then last year I was like I need to do something against food waste. I mean there’s something I want to be part of of the solution somehow and.

James McWalter

I.

Jan Heinvirta

Decided. Okay, why not adapt the model from tiga to go to Mexico so I started working on that I had a first prototype and then ultimately when I found my co-founder we decided to actually pivot to what today’s perfecto so it was a little bit of a process.

James McWalter

That that’s fascinating. So what was that first version and I guess what were the reasons to pivot. So.

Jan Heinvirta

Yeah, so that first version was a really um, very ugly looking prototype that I um built using a nocode platform. So I’m not really a techcky. Um, but I love to get my hands on and. So I so I built a prototype with ah with a nocode platform then showed it to restaurants to potential customers. Got their feedback and yeah I I started to see that were that were a lot of cultural issues on 1 side.

James McWalter

And.

Jan Heinvirta

Um, of why this model will not work exactly how it does in europe um, starting with the fact that we don’t really have a takeaway culture in Mexico whereas you certainly do in europe um, and then also when my cofounder anie joined joined me on this journey.

James McWalter

Right.

Jan Heinvirta

Together We realized that in Latin America Most food waste actually happens across the supply chain not at the consumption level which is the case in Europe and the us. So we also realized that if we really want to have a big impact. We need to focus on the big problem.

James McWalter

And.

Jan Heinvirta

Which lies in the supply chain.

James McWalter

And yeah, so Interesting. You know I think a lot of um, you know founders make the mistake of building more product than they validated it and so you know a system that our model that worked elsewhere. You’re like oh I can just plug and play this here. It’ll be completely fine and there’s no problems whatsoever. But then you just bring it to see the market and all of a sudden you you get? ah you know feedback pretty rapidly was that your kind of experience.

Jan Heinvirta

Exactly Yeah, that was that was pretty much that right. We saw that a lot of restaurants were kind of reluctant as well to speak about food waste. Um, others who were willing to talk about it. Ah.

James McWalter

And.

Jan Heinvirta

Told us they already had solutions for it. So They maybe donated to the church they donated to people on the streets right? So We we kind of found out that it’s not really that urging in our Opinion. Um. And also like for for people they were saying yeah I would need to have a delivery option right? So you would need to deliver that to my door now imagine you give and ah a meal already fifty percent off then you still have to do a delivery like economics else. It just didn’t make much sense.

James McWalter

And right.

Jan Heinvirta

And also um, what we saw is that annae actually for some context she worked at Uber at that time and amongst other things also Uber eats and so she knew that exactly at the end of the day was often when the restaurants were.

James McWalter

Said.

Jan Heinvirta

Um, getting a lot of traffic. Um via the platform because it’s when people order at home to eat dinner and with the model of 2 good to go. The idea is that at the end of the day you pick up what was not sold right now. There is a big a bit of an overlap.

James McWalter

Right.

Jan Heinvirta

Because you’re essentially taking away the opportunity to sell this food at a better price for the restaurant. Um, if if you make them sell it via this platform to rescue food waste. So It’s of course it can work right? But it. There were so many things that we saw that it will be difficult while understanding that there is the big problem is not there that we were just like okay we have to change how we approach it interestingly enough since the beginning we were thinking. Okay, this too good to go model will just be the beginning so that we.

James McWalter

Okay.

Jan Heinvirta

Can then go into grocery delivery right into into other areas where food waste occurs and so we essentially just decided to skip this ticket to go part and go directly into the supply chain. Um, also because.

James McWalter

And.

Jan Heinvirta

And nais father is actually a citrus producer here in Mexico and so as we were progressing and talking about the conversation about the problem she remembered how her father always came home with boxes of um.

James McWalter

I am.

Jan Heinvirta

Of lime of Mandarins right? that he wasn’t able to sell to restaurants because they were too big too. Small this this colored maybe too many seats right? So she remembered that that is a real problem that she even experienced herself and yeah, so that’s how we. Ultimately ended up with with perfecto.

James McWalter

Yeah I guess that you know very much resonates with myself so you know I mentioned before that we grew up my family grew on an organic farm and we sold boxes of vegetables and the vegetables we ate were the you know the carrots that hit the rock and became ah. You know, quite funny looking shaped carrots and so on and that’s what we ate every day because we had to sell the nicer looking ones at the Farmer’s market

Jan Heinvirta

Ah, yeah, exactly exactly So we we we heard that already like so so many times it’s really cool to to see that our assumption was was right? it was This was very um. Yeah, it felt good to know that other people who grew up in farmer families. Um had the same experience and and that it is indeed a big problem that we can help solve.

James McWalter

And so you’re looking at this. Ah you know the value chain so you have the farmer who’s growing the produce you then have this kind of production line right? That’s getting the produce you know, washed or processed in some way and then eventually it gets to the distribution whether it’s a restaurant or whether it’s you know. The the supermarket all the way into people’s homes or into people’s bellies depending on on the stage and so now that you’re kind of looking further up that that value chain. Um, how did you kind of start to kind of talk to those people What you know what were the initial kind of Mvps in that space.

Jan Heinvirta

Yeah, like in in the beginning we wanted to have it as simple as possible. We were both still full time in our day jobs and operating a logistics company at the end of the day while having a full time job doesn’t allow you to operate it at night right.

James McWalter

Sharp.

Jan Heinvirta

Um, so we were looking for the easiest way to do it. So what we did was we approached other grocery delivery companies so companies that were already delivering fruits and veggies and try to figure out what they do with their.

James McWalter

To her.

Jan Heinvirta

Imperfect produce and we found ah 1 that was open to share more information with us with whom then ultimately we started a pilot where they sold us all the produce that they were not able to sell to their customers because of. Um, physical appearances and that was how we got started to actually first prove that their hypothesis was correct that people are open to buy imperfect produce or not perfectly looking produce.

Jan Heinvirta

And once we we had that um proven we had to to see how can we offer a price that is also fair and accessible. Um, because at that time the prices were quite high since we were getting it from that intermediary and. What we did was we started to talk with farmers and especially Mexico with sellers at the central de abastos which is a sense essentially like a supply center. So it’s a concept that is very common in latin america you get it in in most major cities where. Concept is that it’s a place in the city where all the farmers and disbutors bring their produce and then sell it to wholesale right? Um, so we went there talked with the sellers and producers that had stands at the Central de devastos.

Jan Heinvirta

And try to understand whether they also bring produce that is not always accepted by the traditional Market. We found that it is and so we started to just switch the supply to them and yeah it was a continuous process. But. I would say given that we have this concept of the supply centers in Latin America It was actually much easier than you would expect um to get a lot of different produce because the challenge that we saw that we see for example in the Us is that you often have to source directly from Farmers. If you want to have a ah decent catalog. You need to open up different logisticals.

James McWalter

It yeah, it’s finding the aggregation of supply is like the struggle that so many marketplaces have right? you know and your your cofounder worked at uber and you know their original model was you know the City -by-city model and then looking how to aggregate at let’s say you know an urban kind of city by city level.

Jan Heinvirta

Exactly.

James McWalter

You know you’d have to build all the relationships freshly every time you’d launch and if there are already this existing framework for the aggregation of those of that potential supply like absolutely it makes a ton of sense How to kind of jump on that I Also think it’s like such a clever way to target the companies that potentially are your future competitors. Um, who’ve already sorted a lot of the kind of Upstream problems out and so because really what you’re just trying to find out is like will somebody accept this box of veggies. You know on the demand side and like if somebody’s already done all this splye side Piece. It’s like okay we can figure that out later you know Demand generally is is.

Jan Heinvirta

Um, yeah, will.

James McWalter

You know you always find supply for demand typically right in most marketplaces. Um, so speaking to that kind of demand side. How did you kind of validate that side of things and.

Jan Heinvirta

Well what we did is and what it was quite organic I have to say um we went with the approach of instead of having a lot of interviews with potential customers. We said let’s just launch it.

James McWalter

I.

Jan Heinvirta

And and see what happens because at the end of the day we had some validation of the model already from Europe and the us where you have similar um very similar models like imperfect foods like misfits or oddbox. Um, and so we said okay the the possibilityies that.

James McWalter

Sharp.

Jan Heinvirta

It finds a market in Mexico is relatively high, especially now that grocery delivery is on the rise in the region. So we just launched it. We did an Mvp with a nocode platform as well. So we built the website integrated a few tools used google sheets and. Um, launch it at the end of January um, sold it to four friends so got them on board as first customers they shared it on social media and then from then from them. It started to grow organically so already in the second and third week we had the first customer that we didn’t know. And it started to grow like that. So by the end of February we already had like certainly one third of customers that we had never heard of them right? and so it. It’s really started to grow like that. Um quite organically like a word of mouthuse and that basically validated that there is.

James McWalter

So amazing.

Jan Heinvirta

And Interest um to to help reduce food waste and to buy these produce. Um, and now it was just about seeing how we can scale that right.

James McWalter

So and I guess yeah you, you’re still working these kind of full-time jobs you and your kind of cofounder and it’s like oh you’re starting to see that growth rate. Um at what point you’re like okay now now is the time to kind of go full time on this. Okay.

Jan Heinvirta

Well I guess we already had talked about that before we even started it um or let’s say when we were still at the other idea the initial 1 Because when I looked for a co-founder I actually had quite a rigorous process that involved many questions and 1 was it super.. It was super tough but it was very worthwhile because I’m super happy to have found that a and we got along perfectly. Um, and.

James McWalter

And it’s tough.

Jan Heinvirta

1 of the questions was under which so circumstances we go full time right? And so in my case I had already taken the position come? What will I will go full time by March right? because I had already decided I will resign my job. I want to do this full time be at this idea another 1 whatever happens I I wasn’t happy anymore in my previous company so I was going for a change anyway, um, in Annae’s case what we said is okay if if we see that we can work together.

James McWalter

So chirp.

Jan Heinvirta

And we believe that we’re onto something then she would resign around aprima may of of the year right so we had ah established some sort of timef frameme but we had else established what happens if not. So. That’s why um, when we saw that there is growth the decision to to leave the job for her was already very easy. Um, on top of that we just got accepted into why see the month where she resigned so it it all worked played out very.

James McWalter

Yeah, and I’d love to because you mentioned Ii What was that kind of experience like I believe you’re in the batch. The most recent batch. Um, and yeah, what was I guess both the interview and and that kind of process and then the actual being in the cohort itself.

Jan Heinvirta

Very well.

Jan Heinvirta

Wouldn’t.

Jan Heinvirta

Sure, um, so we at the beginning of this year we had kind of mapped out when we would want to start fundraising or preseed round and also like what accelerators we would be willing to participate in right.

James McWalter

And.

Jan Heinvirta

Because um, there are a lot of accelerators that take just too much time. Um and away from the founders and might not really give too much value for what you got um and so of course Ysi was 1 of the accelerators that we had on the top of our list of where we want to be in. However, when we applied we had like ferdy customers so we were like ah there’s no way they they’re going to be interested in us. But hey let’s give it a shot. Um, so we we did prepare our application Super Well. We got a lot of feedback from founders that were kind enough to to help us out.

James McWalter

Sure.

Jan Heinvirta

So x y c alumni and we applied one month later we got the interview so we couldn’t believe it and by then we had think 60 customers or ninety customers something around that we had the interview which was ten minutes um Rapid fire questions again, we had a few x y alumni that were kind enough to help us prep for the interview. Um, and it it paid out right? So we had the interview then we didn’t get any answer until like Eleven zero p m in the evening so we had already given. Ah, yeah, we were already certain that we we didn’t make it but then we we got an email hey we would like to manage to join y c and let’s have a quick call and we were yeah we were out of our we couldn’t believe it right? So we were super happy. Um.

James McWalter

Right.

Jan Heinvirta

And so that was around April I think and then the batch started in June july yeah july and night june sorry and and it was a great experience I mean.

James McWalter

And.

Jan Heinvirta

Our batch was remote as well and they probably will continue to be remote and this certainly has its dropbacks because of course you want the full I see experience of being in San francisco seeing all these amazing advisors founders partners in person.

James McWalter

M.

Jan Heinvirta

Bonding right? So unfortunately we didn’t have that opportunity. Ah, but on the flip side. It was also a big benefit because that meant that the cash that we get from Yc we can actually use it for the company. Not for the flights and the accommodation. Um.

James McWalter

And it goes a little far outer in mexico.

Jan Heinvirta

And yeah, and also um, since at that time it was still just me and Ana the team like we were making the deliveries we we were picking the boxes we were um. Making the orders right? So It was all us so we we anyways couldn’t have gone to San Francisco because who would deliver the boxes. So at the end for us. It was actually beneficial that was remote and and yeah, so then it was like 3 months of.

James McWalter

Um, ah.

Jan Heinvirta

Ah, the pro of program with the demo day at the end and yeah, can I say it’s it’s It’s a very very valuable and unique experience. Um, you learn a lot of course it’s very inspiring as well because you get to hear from founders like. Brian Jesky from Airbnb right? The founders from from Stripe from Gitlab So it’s it is really inspiring as well and what I liked the most about it is it on 1 way it puts you in a mood Of. Um, being fast right and and and seeing how how you can um, be faster than anyone else and and just launch and test and launch and test. Um, but so it it sounds very stressful. It is stressful.

James McWalter

So.

Jan Heinvirta

But at the same time they go a lot into the mental. Well-being of being a founder so it was very helpful to hear from successful founders How they had the same fears. They had the same doubts. They had the same issues right? Um, they had sleepless nights and and and and get to getting to hear that from from someone who is now already with a company that has done its ipo and has done super well.

James McWalter

Mother.

Jan Heinvirta

Is very comforting and and gives you some mental peace that even if shit hits the fan. Um, it’s normal right.

James McWalter

You right? And honestly, if it didn’t right? You’re probably not taking enough risks right? You’re not like pushing pushing and you know the business and in the right kind of ways I get is this a couple of really fascinating parts that that and thank you for telling that story. Um, you know.

Jan Heinvirta

Exactly.

James McWalter

Would I absolutely agree a lot of accelerators are a bit of a mixed bag and I think like the best accelerator is you know tech stars y see I guess you know 500 startups a couple others they’re very very obsessive around. Um you know showing how their program like ah makes a specific portfolio company actually.

Jan Heinvirta

Okay.

James McWalter

Become successful right? I think like the fascinating thing about yc is like they always said no to co-works right? whereas like a lot of accelerators. It’s like oh the first thing we do is throw everybody into co the cowork together and it’s like well you know we want people kind of interacting but like if they’re all just like looking over each other shoulders. You know it’s more distractions than focus I also think you know your story is quite fascinating. We had a ah.

Jan Heinvirta

Yes.

James McWalter

Yeah, know another guest on the podcast but six months ago and she’s working on a um, yeah, ah cell-based meat startup and they’re based in canada and basically they got into yc and they were like absolutely delighted that it was remote because it wasn’t remote. They couldn’t have done it because they needed to be at their lab you know developing the product very similar to you guys.

Jan Heinvirta

And hit.

James McWalter

If if you were there like your business literally stop and like the the target of like this week over week growth just wouldn’t have been even realistic and so I think as y c becomes more atoms orientated versus just pure bits and like as yc has more of ah like an effect in the real world. Um, keeping a remote I think makes a ton of sense because otherwise you’re going to miss out on like founders working on like. These mega mega problems that are you know Ah the atoms of of of you know that have atoms of as a framework rather than just bits.

Jan Heinvirta

Yeah. Yeah, and also like it. It. It is makes it also more inclusive because you can see that now they’re investing in more Latin companies. They’re investing in more African companies right? So it. It makes makes it I think elsea more inclusive. Um, the fact that they can now invest in companies that might wouldn’t have the opportunity to come to San Francisco for whatever reason also mainly because of the business model itself. But but yeah I think that’s that’s a great thing about it and just something that I wanted to add also regarding the cowork. Right? Not that it is remote still a lot of people want to socialize with the batch right? So They actually maintain this advice of telling you hey we know you want to make acquaintances with other people in the batch. But hey keep it for the end of the batch focus now on just your company. Um, that’s that like listen to your customers build product. That’s that’s what you need to do right? Um, so they they.

James McWalter

Correct.

Jan Heinvirta

Continue to instill that in in everyone.

James McWalter

No, Ah, but that makes a ton of sense and like it’s going back to kind of Perfecto. You know when I think about this kind of connection between you know, perfectly. Good food that is just being wasted because of various kind of aesthetic standards. Um. You know there’s very very much like a trust component into that right? and so the consumer has to trust you guys that you know you have maybe a different aesthetic standard. Um, you’ll accept things that look ugly but the quality standards are still there. How do you kind of communicate that trust and build that trust in your consumers.

Jan Heinvirta

Yeah, um, it’s a good Question. So I think at the end of the day The best way for them to see um that it’s not bad at all and to trust us is via word of mouth right? And that’s how we have grown so far. Um. Because someone they know tried it. They liked it. They didn’t see any difference right? Also for many people. It’s just obvious takes just never thought about that. This is actually a problem. So Sometimes you just basically hit the switch. And people’s mind that hey yeah, makes actually sense like of course not everything will come Perfect. It’s nature right? Um, and then also um, it’s It’s a lot about how we Communicate. Um, so we try to have a very friendly. A very transparent communication. Um, to to also always be available if they have questions so to really be close to the customer. Um I think that helps as well and now ultimately the other thing is that what’s just important to note, it’s It’s not everything is ugly looking though.

James McWalter

So.

Jan Heinvirta

Right? So sometimes looks perfectly fine. Maybe it’s just the size or it’s even just because it’s over of overproduction right? So because 1 of the biggest issues. Um in in the food waste. Um, sphere when it comes to produce is because of overproduction.

James McWalter

And.

Jan Heinvirta

Which happens especially with seasonal produce and since consumers have been kind of yeah let’s say custom that they can get mango all year long the demand started to switch right? and now they want. Mango when it’s not mango produce and so instead of consuming the produce that would actually be in season mangos being imported or being created in in in How do you say that in in in yeah and these temperature cultural houses.

James McWalter

Yeah, so bankers are producing like greenhouses.

Jan Heinvirta

Um, exactly thank you and and so that’s why also with us you can actually only get seasonal local produce So We we only sell Mexican Produce. We only sell season of produce exactly because sometimes the produce. Ah, you will get might not be ugly looking but it might be um, saved So So so to say because it’s in season and there was too so much produced that we need to so switch Swift Shift The demand to that produce.

James McWalter

Oh.

James McWalter

Right? Yeah, no absolutely you know it. It is this kind of funny development or a funding development but coming you know coming out of world war 2 right? There was like this big move to a certain type of kind of consumption pattern you know in the developed world and that that had a.

Jan Heinvirta

Hope that makes sense how I explained that.

James McWalter

You know, whatever you want, you can have it. Um, you know at a certain price and that might make sense for a t-shirt but that kind of fed over into the food system and so you know Mangoes literally grow on trees all over around Mexico I’ve seen them fall and they can be bit annoying if you live outside of maggotree and they’re like all over the ground sometimes there.

Jan Heinvirta

Yeah.

James McWalter

Um, so have too many mangoes. But yeah, but as you say like they don’t grow and and they’re not harvestable all year around and so you know I guess it’s like eat strawberries the other times a year eat something at bananas the other times a year and just basically start to adapt our palates to having you know more of a variance over time and I think like you know, culturally that.

Jan Heinvirta

Well.

James McWalter

How a lot of food has gone. You know you eat certain types of food at certain times a year and the reason why people have pumpkin pie in the United states in you know october november december is because that’s when the bumpkins are ready and the reason we don’t eat them in March is because they’re not ready then and I think I think returning to that? um actually has a lot of like positive kind of you know effects from like a social.

Jan Heinvirta

Next.

James McWalter

Point of view because we start to get get into these kind of seasonal thoughtss and those kind of seasonal patterns are connected to these different types of events in our lives you know holidays and so on and so what’s what’s the kind of primary business model. Are you taking? um.

Jan Heinvirta

Um, totally totally.

James McWalter

You know is it a slice from on the consumer side or on the demand side and how are you balancing that because in any sort of kind of Marketplace dynamics. You know there’s always this tension between growing fast making sure that there’s a business to be had um on the. Yeah, on supply side in particular but then also you know making sure that you have enough of a cut and enough of a margin to like maintain your own growth.

Jan Heinvirta

Yeah I would say it sounds important to to to mention that um, we’re not like a marketplace model like for example, uber eats or or something like that right? So we actually first buy the produce and then sell it so well. Basically.

James McWalter

I chirp.

James McWalter

So.

Jan Heinvirta

Right? So get let me get more into detail with that. So how it works is that you subscribe to perfecto you might pick five Kilogram Box fruits and badggies. You might want to choose what produce you have in that box and might add it then weekly to your door.

James McWalter

No.

Jan Heinvirta

So you sign up. Um and your order gets confirmed. Let’s say your delivery day is every Monday because we actually don’t have an on the math approach. We’d rather take a slow shopping approach and that allows us to further reduce food waste. Because by having this planned week. We know exactly the day before so in this example on Sunday what we need to buy for Monday and so according to the orders of our customers. Um, we’ll create the order list on Sunday evening and then.

James McWalter

Chirp sure.

Jan Heinvirta

Monday early morning our buyers go with our suppliers buy what we need for that day and then bring it to our fulfillment center pick the boxes and send it to the customer the same day. So that means um in our model. Essentially we don’t take a cut.

James McWalter

What.

James McWalter

Sure yeah.

Jan Heinvirta

From from either right? So um, we we buy it and then we so we we sell it at the at a higher price um to cover our costs. Yeah.

James McWalter

And that that but that makes make sense and then the that communicative piece as you’re kind of scaling up on the supplier side. So how are you? You know you have your list. You know we’re trying to have this many boxes you’re going to you know Central to abeto sort are similar and. Trying to find you know those suppliers now that they know you a little bit. Are they starting to put aside boxes with the knowledge that perfecto you know that’s a perfecto box versus a different type of box.

Jan Heinvirta

Yes, yes, some actually already do that. So that’s super cool to see especially with the banana suppliers because actually it’s just received my box so on the podcast. They might not be able to hear it but I’ll show you? um so we got what I’m showing.

James McWalter

M.

Jan Heinvirta

Right here is a banana that is single and so what happens with bananas that are not part of a bunch but are single They don’t get sold to supermarkets because supermarkets only buy bunches because it looks better. Um, it else has some it if they’re part of a bunch. It will also um.

James McWalter

Button.

Jan Heinvirta

Live a bit longer and and so it’s expiry takes a bit longer. But yeah, so the banana sellers. For example, they always have a box ready with single bananas. Um for us because they know that we will buy these from them. Um, so they won’t go to waste.

James McWalter

M.

James McWalter

Yet so fascinating just the experience in a supermarket and how the I has been. You know the average consumer and I’m guilty of this is well as well. Of course has been trained to expect certain things and so bunch of bananas. Absolutely um, you know we already mentioned perfect carrots but then something like Ginger which is like a kind of a messy looking.

Jan Heinvirta

In.

James McWalter

Object We don’t mind that that looks a bit random and and you know skewed all around and so like we’re completely fine with picking you know, quite ugly looking Ginger next to like perfectly you know, orange, clean carrots and I guess a lot of it’s just moving people into this you know I got an understanding who.

Jan Heinvirta

Exactly.

James McWalter

People who if you didn’t grow up on a farm you just wouldn’t know otherwise that like these things come in all shapes and sizes and so on.

Jan Heinvirta

Um, totally yeah, so it’s but I think we’re guilty of it all everyone right? Um, because most of us just grow up with that and that’s how. 1 side. It’s a consumer’s fault on the other side. It’s a bit of Supermarke’s fault as well. Um, but I mean if you go to a supermarket and you see a perfect looking carrot and then a very weird looking 1 possibility that you will go for the best 1 best looking 1 is quite high I mean how many of us. Go to supermarket now always try to look for the nicest looking apple right? So that’s why everyone like touches down put some back touches then put some back right? So um, yeah, it’s it’s something that happens. Ah that happens to all of us. It’s just about changing a little bit this yeah just this habit and so that also supermarkets can change what they supply because they will continue to only buy the most perfect looking produce.

James McWalter

M.

Jan Heinvirta

If they see that they’re not nice looking wealth 1 is not being picked by customers right? So it’s else a little bit on us to change it so that supermarkets can change.

James McWalter

No.

James McWalter

Makes a ton of sense and then looking out over the next. Let’s say year so like what are some of the goals you’re trying to reach over that timeframe.

Jan Heinvirta

So I would say now we really want to. We really want to close some of the issues that we had so far on the tech side. Um, and now so implement some of the feedback that we had from our customers.

James McWalter

No.

Jan Heinvirta

Um, really to to be able to get to a point where we can say okay, we think we found product market fit fit right so that we can really start scaling. So now it’s about first um, ironing out all the the issues that we that we’re seeing um, we just raised the.

James McWalter

A.

Jan Heinvirta

Preeed 600000 dollars. Um with that. We also want to expand the team. Um and to to expand to a new fulfillment center as well. So that we can actually handle um more more orders. And then over the next year we will certainly start our seat round within the next six months so that we can raise money to go to the next 1 or 2 cities in Mexico so this will be 1 important part to to go into new geographies. But at the same time.

Jan Heinvirta

We want to go from only offering produce to also offering other grocery items. So the reason for that is that food waste of course doesn’t only happen with fruits and veggies. But also with consumer packaged goods and we saw that.

James McWalter

No.

Jan Heinvirta

It happens quite a lot there for quite stupid reasons like for example, short shelf life. So to give you an example supermark market might not accept accept a chocolate po anymore because it only has one month left of expiry until it’s expiry date but it’s still one month right and even after it expired date.

James McWalter

Here.

James McWalter

Ah, sure.

Jan Heinvirta

Most chocolates are still fine. So that’s 1 part where we want to help reduce food waste another is like damaged packaging labeling errors etc so we want to. Start including these items to reduce more food waste but at the same time to offer more products to customers and um, we nevertheless want to also kind of become a sustainable grocer similar to good acts. Maybe in the us.

James McWalter

Okay.

James McWalter

No.

Jan Heinvirta

Um, might be a good reference because we know that maybe we cannot rescue milk every every month um so but you might still need milk every month so we want to make sure that we at least have a sustainable alternative ready for you in case, we don’t have a rescued product. And that’s how we plan to to grow our catalog to not only offer you fruit emergggies but really all kinds of groce grocery items that you need on a recurring basis.

James McWalter

That that that expansion makes a ton of sense to me. Um, you know we’re talking a little bit offline but and I don’t know if I’ve mentioned as much on the podcast but I lived in Mexico the last few years and you know the scale of opportunity in Mexico is is quite massive across pretty much and any type of startup or problem you want to solve.

Jan Heinvirta

Yeah.

James McWalter

Um, you know some companies are doing a great job. You guys are up at ah at an early stage in your journey. But there’s just absolutely ton of opportunity. You know in a country with the population of Mexico and then and the city’s there and so yeah, you know, expanding it out of mexico city. Um. Yeah mexico city is what 3 times population of ireland right? you can have quite a nice market there before you kind of go on to guadalaha etc. Um, and so that makes us all of sense of my.

Jan Heinvirta

Yeah, yeah, the the opportunities are really almost endless right now. So and now finally there’s also a lot of capital flowing in from investors was a very recent. Development because like I’ve been here now for over 4 years and when I got here working at the al startup fundraising was super tough here like there weren’t many funds us funds european funds were almost not interested in the region.

Jan Heinvirta

And now just completely changed now. Latin America Mexico is super hot um a lot of E Cs are trying to get in and that of course helps the ecosystem incredible in an incredible way because there have been so many companies popping up um now finding a lot of unicorns and exits. As well which is helping the the ecosystem grow. Um, and now finally a lot of problems can be addressed by by entrepreneurs who who want to make a change right? because the thing is before and you had this big. Um, national companies almost conglomerate that were leading and in several industries but giving a shitty service. So um, it’s great that now there are coming a lot of alternatives coming up um in in all verticals.

James McWalter

That’s ah makes a ton of sense. Um and looking at your background. You know I believe you grew up in Rural Switzerland and Mexico City is as far away from Rural Switzerland as possibly 1 could Imagine. Um. You know what?? what? What are the some of the things that I guess have surprised you from like a kind of culture point of view but pros and cons.

Jan Heinvirta

Yeah, certainly a lot. Um I think the first thing as a swiss I have to say is when it comes to time. So as you know we swiss are obsessed with time. That’s why I have so many.

Jan Heinvirta

Watches and so in swit turn. Everything is super punctual right? So if the train is 2 3 minutes late. There will be an announcement made to tell you hey the train is late 3 minutes right? So it’s yeah and so and.

James McWalter

As as it should be as there should be.

Jan Heinvirta

And that entire dynamic is of course very different in in Mexico so was 1 of the first things that I had to um adapt to and learn that not everything will always be on time. Some things might take a bit longer and you have to calculate that. In not just in your private life when you go to a party right? Um, but else in business because in in in in private life. For example I mean my in in the beginning when I was invited to a party they said? Yeah, we see us at apm and my place so I show up 7 55 right? um.

James McWalter

Right.

Jan Heinvirta

And they’re like I haven’t even showered. They’re not even ready like hey why are we already here. Yeah you said eightpm? Yeah, but no 1 shows up at 8 pm and so and in business is it kind of works similar in a way that you have to understand that if they if they expect a time that it might take to get a license because. Especially now Mexico fintech licenses very is a big topic if they tell you yeah it takes you 6 months? Yeah, forget about it might take may take longer so you need to calculate it in because if you if you think that everything work will work out as smoothly as.

Jan Heinvirta

In in a country like Switzerland where time is very well calculated or taken into consideration then this can really kill your business right? because if if you say okay in six months we will achieve this so I will I need a runway of seven months. Yeah, maybe that won’t work up right? so. It’s important to calculate in these buffers and I think for me time 1 is 1 of the biggest topics.

James McWalter

Yeah I definitely appreciate that I mean ireland is not as ah, not as strict as Switzerland but I’ve also shown up at the at the early party I’ve also helped them get ready because there’s nobody else there. Um, and and so on and and yeah I think the the point about Runway is well-made you know. When you’re raising. Ideally, you’ll always try to have you know six months spare runway potentially before before you get to the end of that trench of funding. But yeah, if if you have to add that bit of leeway then that can take even longer.

Jan Heinvirta

Yeah, equally um at the end. Not really I Really ah liked the questions you made and maybe just to.

James McWalter

Ah, yeah, this has been great I’ve really enjoyed the conversation before we finish is there anything I should have asked you about but did not.

Jan Heinvirta

Give a little um plug there like we will be raising in the next six months. So if anyone is interested in in the opportunity. We’re happy to start scheduling first meetings we already have the first 1 set up. So if you want like early access. Got to know about the the opportunity happy to talk about it and also if you’re in Mexico feel free to reach out always happy to to help people got to know that mexico city um to appreciate the beauty and and then hopefully also help.

James McWalter

Yeah, need some delicious ah delicious veggies and and soon to be delicious other things as well. Thank you very much john.

Jan Heinvirta

Grow the ecosystem.

Jan Heinvirta

Exactly exactly Thank you so much.

Clean Energy Traceability – E78

Great to chat with Grant McDowell, Co-Founder and Head of Commercialisation and Strategy at Enosi Energy, a company that unlocks the promise of clean energy for all households and businesses! We discussed the future of renewable energy, the energy grid mix needed to reach true zero, how Australian energy compares to the USA, COP26 and more! 

https://carbotnic.com/enosi

Download Podcast Here: https://plinkhq.com/i/1518148418

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Thanks so much! 

James

The unedited podcast transcript is below

James McWalter

Hello! today’ ‘ speaking with Grant Mcdowell co-founder and head of commercialization and strategy at Enosi, welcome to podcast grant brilliant I suppose to start with. Can you tell us a little bit about a no see so.

Grant McDowell

Thanks, Very much James Great to be here. Thank you.

Grant McDowell

Well Enosi is a um, an energy trading platform Traceability platform. In fact, what we we do in principle and Essence is match the the solar farm and the wind farm energy with the household consumption. And we do that by measuring the generation that’s coming from a solar or wind farm meter and and then match that with the meter of the household or business and in doing that simple matching and Traceability. We can unlock source time and price. Um, so a small small ah essentially a counting exercise but because that counting exercise is is allowing us to see where the energy is coming from at a specific time and um, what power Tracer does is add price onto that layer. Um, there’s an enormous amount of value created and so yeah, that’s what that’s what power Tracer does.

James McWalter

And what drove the initial decision to start a Enosi.

Grant McDowell

Well, the the um the initial decision for me was ah I’ve been on this kind of personal quest for a long time. In fact, I had this idea in 2000 7 so you know almost 15 years ago where I I was living in a. In sydney and australia and and had a lots of trees covering my roof and I was frustrated by not being able to put solar on the roof so worked out that if you put solar in the solar farm and matched that to the meter of the house there. There would be this economies of scale. And access to clean energy and that simple idea sent me on this path to join the industry to get an innovation patent. Um, which which I then went out and and and learned about the industry but I was way way too Early. So what I ended up having to do was to. Join the industry join the solar industry and in in in residential solar and then in commercial solar and over that interim period came to meet the team 3 years ago who had started out doing energy traceability on anosi and joined as a co-founder so we. Business has been running 3 years um and and primarily here in australia but we’re starting to to look ah abroad. We’ve got a retailer. We’re working with in singapore we’re doing some work in South africa and and the uk so it’s um, you know we’re creating a. Strong foundation with retailers here in in australia with the view to take our tech global.

James McWalter

And and what change in those nearly 15 years that made you know this idea ripe today versus versus like over a decade ago.

Grant McDowell

So the the biggest change is the cost of solar to be honest and and wind but the cost trajectory of solar just is unlocked and an enormous amount of value. The nobody is and as I’m sure most of your your listeners would be aware. Nobody had got any of the predictions. Right around how that cost trajectory was just going to be. You know a steep steep curve downward. Um, and that’s what’s unlocked the value. So so when I came into the industry was very expensive cost. Yeah 60 or seventy thousand dollars to put something on the roof it now costs three thousand dollars to put.

James McWalter

So thankfully.

Grant McDowell

Solar on the roof same size. So you know that that an incredible certainly in australia we’ve seen australia leads the world in rooftop installations. We have over 3 million rooftop installations and when I first joined the industry there was fifty megawatts of solar installed. Across australia we now have twenty three and a half gigawatts of solar installed across that 15 year period so yeah very um, ah surprise is the big big driver big change and and where the unlocked unlock the value and and as Matt campbell said.

James McWalter

Meza. Yeah.

Grant McDowell

On your podcast in an earlier episode. It’s this next trajectory of price which we’re still in this steep decline to bring 1 cent per Kilowatt hour sole intivity solar to the market which is which is what we’re really excited about because that will then unlock the the next stage of Making. Factory Storage Hydrogen and other applications of energy possible. So yep, the the cost trajectory continues down.

James McWalter

Yeah, and absolutely yeah, the the level of excitement for all the the enablement of those different kind of industries that you mentioned you know there’s a lot of people running around with pitcht text right now for those industries and 1 of those have a incredibly cheap renewable energy as part of like a necessary risk factor. Them to actually you know reach their kind of larger vision and so yeah, absolutely and you know it is everyone got it wrong thankfully because it’s been obviously way better than anybody predicted and you know long may it continue because it doesn’t unlockck all this other value.

Grant McDowell

Yes, that’s right? and and I you know I think offshore wind is the next frontier and it we’ll be seeing huge huge value brought and and and again downward cost trajectory. The interesting thing about the work that we’re seeing in this next frontier so this was first period that I you know that. We’ve been I’ve been witness to the last fifteen years is to to prove out that renewable energy is going to be the next you know our? ah next base load power if you like and that moving off fossil fuels is possible and I think we’ve proven that that the the next 10 years are critical though. In that we need the diversity. It’s not It’s not just about simply rolling up more wind and solar only um, we need the diversity in the mix to create that firming when the wind’s not blowing and the sun’s not shining so power tracer and and the work we’re doing with 24 7 carbon free energy. Um. Is is that next stage is that next phase in in development in in the in the tech and the industry.

James McWalter

And so let’s say I become a customer of an Oc I start to use your power tracer platform. Yeah what? what does that experience look like what does my onboarding. You know what? what is the entire process like.

Grant McDowell

So what we do is we? Um, we’re a software layer that that the different retailers in australia and you know our retailers will partnerships. We’ll work with globally will have within their billing systems. So we’re’re. We’re not a retailer with just a layer of software. Essentially a counting layer of software. Um, and so if you would if you lived in australia and you wanted to sign up to to power tracer you could do through do that through our 5 electricity partners through energy locals or simply energy or or some of the others and and essentially you can. Gain access to a utility scale profile. Um or indeed you can you can do peer-to-peer trading with people who have rooftop solar installed so those things sound you know, quite straightforward, but but what they do is unlock. Enormous opportunity because we’re seeing variations on that theme where a big tech firm in Sydney is about to launch a staff program where they have a power purchase agreement from 2 solar farms here in new south wales and they’re extending that. Power purchase agreement through to their staff working from home in the pandemic people have started to live from home of course and and and what what power tracer is enabling is for those that us to have a staff energy program so that those team members can get access to that clean energy. Um, during the day so it’s from the solar profile and the fact that tech company is going to pay for that energy through the year and so not a huge cost imppost on them. They get the scope 3 benefits the team get to sign up to a collective sustainability action and. And so small change. but but ah you know I think a ah real innovation in the way energy is being being consumed here in australia.

James McWalter

And I guess if I think about yeah, what I how I think about the way people are selling renewable energy to customers to consumers of commercial entities today. They’ll say look you could buy a or going to a power purchase agreement if you’re a commercial entity with a solar farm. And you’ll buy a certain amount of electricity from that soil farm not so a farm could be in a different state across the country. Um and the odds of the electric electrons being produced by that sort of farm getting to your actual business are pretty slim and so there does seem to be this kind of great difficulty in saying you know if I if I’m buying renewable energy like is that actually renewable energy. That’s. Getting to me and how do I kind of trace all that um I guess how is your you know how is power tracer kind of changing that kind of status quo.

Grant McDowell

Well, what power trace is doing is is measuring the source at that in that half hour trading period australia now has five minute trading period. but but but the rei meters are still half hour so in that half hour trading period. We’re seeing how many megawat hours are coming out onto. Grid and then we’re seeing how much energy is being consumed in that half hour period by the household and power traces matching that out within that half hour period at a particular price. So again in australia we we the utility says solar is cheaper than the firming price. And so we’re able to offer clean energy cheaper than firming um because we’re able to bifurcate the price for the first time so traditional retail is a kilowatt hours a kilowatt hours is just a grid mix and you might have time of use which gives you some variation in the price. But it’s never related to the source of the energy and and this is classic measure and manage as soon as you’re able to measure that source and match them through what you’re consuming and then we’ve done the modeling on this across nine thousand household households um, historically. Here in in in sydney and when we match that to a solar farm. It comes in around around forty percent of the of the consumption and when we add a wind profile on top of that that comes into seventy six seventy seven percent of that profile so we call that. Path to true zero. So instead of just having 1 hundred percent renewables and by the certificates what power tracer enables you to do is to buy cheaper energy because the solar is cheaper and the and the wind is slightly cheaper. So we’ve got cheaper, clean energy. That’s seventy six seventy seven percent of your load. And then for the balance of that um load of 22 or 23 percent you can buy certificates and be 1 hundred percent for your renewable. So it’s complementary to the certificate market. But most importantly, you’re able to see where that energy is coming from and now add our second solar phout. A second wind farm but you might only then get into the early Eighty percentile and then the incentive is well I’d like to pay a bat. Ah you know, have battery storage and you’re prepared to pay now above the firming rate because you’re into these high percentages and what’s happening is that the humble consumer is driving the the mix driving this diversity. In the generation mix because the battery then has is as as clean energy from the solar stored during the day and then used in the evening. Um, and we we we we get you on this path to to true zero which which is aligns perfectly with what google.

Grant McDowell

Trying to do with the the 24 7 carbon free energy compact with the United nations and recently we you know he was invited to to cop 26 to to give the first foundation meeting for the un carbon-free energy compact very exciting stephen. Hoi our ceo and I went and we think that this next um, you know innovation and which has been driven by the big tech companies. What powertrace is doing is ah is expanding that that accessibility to just general business. But then right down to the household where. Where we where everyone can be on this same path essentially towards true zero and unlock the value because the choices will drive the the clean energy uptake and then those higher percentiles will be driven by the diversity and and people be be prepared to pay that little bit extra.

James McWalter

That’s yeah I love a lot of that I I like all of it. But I think what’s really interesting is moving the standards piece right? because generally standards are adopted by players that fit their existing ah the existing status quo in some way right? So we’ll say. You know it’s easy for us to supply energy in this particular way. Um, but what’s the cleanest way we can kind of you know, put move some things together to make it look like it’s it’s it’s a kind of carbon zero energy mix. Um and let’s do that and and it’s not the worst idea in the world right? It’s the first chapter. It’s the first version that makes a ton of sense.

Grant McDowell

Um, sure.

James McWalter

But actually shining a light on it and saying hey there is this gap and the way you can fill that Gap is through some sort of transparent purchase and that could be carbon off like credits or as you mentioned or that could be you know, actually investing in more expensive Energy. You know, battery storage that might be more expensive in a given time of day and all that kind of thing. I Think that’s that’s really interesting because what it also gives is a signal to the kind of entrepreneurs and the product developers of the world to say oh you know where? what’s the next layer in that kind of in that slice that we should be building towards you know.

Grant McDowell

Sure, but more importantly, it it to echo that it it unlocks the op a new understanding for the retailers because in australia we have gentators so they they generate and retail electricity and and and what. What power tracers doing is showing for the first time to you know, demonstrating to the retailers that the customers will buy these products and that they can build these products with a customer base behind them and so you know in the past they’ve had to just build the assets. And and and use this idea of the energy trading as ah as a big amorphous blob of energy. Essentially we call this the the energy lake um that that the energy retailers are buying and selling into and and now traceability unlocks this visibility of where the. Where the energy is coming into the lake. Um, and where it’s going after the lake and and then paying for that directly and and and through the the payment we’re able to track and and drive and show incentive to the market that you know more solar and wind is is needed. And there’s ah, there’s an appetite and market for it. But then the diversity mix as as people are on this true zero ambition would be people will be prepared to pay for it as we use battery storage and and and hopefully hydrogen storage down the track to to then? um. Complement these very tough parts of the the small percentages at the top end that will be harder and harder and we need to create a market for that and we believe that that you know this this 31 enty four seven carbon -free energy is the is the foundation to unlocking that and. You know our our expression for is true zero because that’s much more consumer, friendly and easy to to understand and we’ve had great reception to the idea of true zero and and and people being wanting to sign up for that because it makes sense if we can take the heavy lifting.

James McWalter

Sure.

Grant McDowell

Out of the equation and make it simple and cheaper. Then why wouldn’t you sign up for something that’s cleaner and cheaper and and and and has you on a path of sustainability over time so it can complement the existing infrastructure with Certificates. We’re not, we’re not saying don’t buy the certificates. We’re just saying that. There is a um you know a ah grid 2 point zero here and and this unlocks an enormous amount of value to move fossil fuels out of the the grid mix and keep the lights on.

James McWalter

That that’s fascinating and I suppose that kind of lead me to think about things like monetization right? because within all these different systems. How these things are Monetized. You know has a direct effect on the incentives right? to kind of push to something like true zero. How are you thinking about Monetization. What’s the kind of. Model of it today for.

Grant McDowell

Well, the monetization. Um, for for everyone in the ecosystem works I think particularly well because as we’ve said the solar trajectory um is you know that that continues to go down and and so that’s price that those prices can be reflected. Um, back to the customer but the margins are still there for for the retailers. So they’re not out of pocket. Um, the you know from our point of view. The the cost of energy is going down therefore the electricity consumer should pay less and we’ve seen this in australia you know the the. Everyone always said, we’ve always pay a premium for renewable energy and as it’s turned out. Um, ah, clean energy certainly in South australia’s put the prices down and across the rest of the country. We put the prices down so we you know we’ve hit peak pricing in australia where I’m the downward trajectory of that now. Um, and and that’s. And again locks unlocks the value for the general consumer. Um, and then our tech you know in terms of the cost. We’re a saas play so software is a service and we only charge the householder 2 dollars fifty a month to to use power tracer and that’s done through the retailer. So. It’s such a small number that the retailer is absorbing that figure anyway. So it’s ah it’s a it’s a really good news story if we can get this right to bring down the cost of energy. Um and and to keep the reliability there and move fossil fuels out and in an excessive accelerated way. So.

James McWalter

Not so that’s fascinating and yeah, that definitely kind of lines. It makes a lot of sense to me. You also mentioned this ability to you know for a consumer to basically trade energy with a specific source in some way. Um, that’s kind of fascinating to me like.

Grant McDowell

We we think it has great potential.

James McWalter

Who’s I guess is like a typical profile of somebody who might do that on your platform.

Grant McDowell

Sure so we have um, ah layers of trading on on the platform and and our peer-to-peer layer is just 2 options. Somebody can go onto the power tracer platform and set their own price for the solar energy that they are exporting out onto the grid. You don’t need to go through your retailer to have that conversation and you set up a trading partner. So if I want to sell my electricity to a family member I can sell it to my sister-in-law. Um, and I can offer a zero price for energy for just the the energy part. So so. In that in that stack we have the energy Sta energy cost the poles and wires cost the enviro costs in the retail margin and all we really all power traces do is calculating the energy only part of that stack each time and comparing that to either feed tara or or the standard. Price from the retailer. So in this case, my sister-in-law would would pay would have a saving of around 8 cents per kilowatt hour if I was selling that electricity. That’s um, if I had a trade of zero cents on power tracing with her I could also send it. To an uncle of mine who’s lots of money so he’s prepared to pay more so so you know um an uncle would pay potentially you know 10 cents per kilowatt hour so on power tracer you’re able to to go onto the platform and then and then set your own set an invitation at an offer. To to trade directly with those trading partners that you may know and and that that you know it’s ah it’s a feature to be honest peer-to-peer trading is ah it’s a great feature but it’s not where the action is it’s it’s you know? ah people aren’t that interested in energy I always say that you know there’s this. Tiny space in our mind where we we prepare to look at energy for about um you know I think I think the average is about ten ten minutes a year and the rest of time is on Netflix. So so you know we have to keep we have to always as energy people be aware that the punterellial or the customer isn’t that engaged and we have to make it simple accessible. And and and and and and and as cost effective as possible because it’s a commodity people are are are far prepared to pay less for energy than they are to pay a premium for Green. So so that’s the kind of ethos behind it. The last thing I’ll mention in the trading. Ah, the next trading layer is the is the community trading a where if both in this case, my sister-inlaw mine haven’t consumed all the excess energy I’m sending out onto the grid I can I can offer that into the community pool and and and that.

Grant McDowell

Allows anyone in my community pool to match out that electricity in the way. It’s a very kind of Australian algorithm we we match out the the person offering the the the lowest price matches out with the person. Um, who’s prepared to offer the The. Ah, the the highest buy price and so the the match the the the algorithm works out where the lowest and highest match out and then it runs all the way through to the centre and and it’s naturally a very equitable way of of matching out all those trades across the community. So We have those 2 layers of of a um you know peer-to-peer trade which we call a nominator trade and then a community trade as well.

James McWalter

This is absolutely fascinating and I think what’s remarkable to me mostly is that a lot of what you described there for the audience is basically illegal most of the United states um, the idea of moving. Um, what they call distributed energy resources are drrs. Um. Having kind of a prosumer layer or even like a somewhat aggregated you know mom and pop business d layer where you might have ah you know a farm at putto and solar panels and they you want to bid into a local market. Um, that is incredibly expensive or illegal or both in most parts of the United states. And so the thing you’re describing is actually something I’ve heard a few people kind of like you know shake their fists at the at the sky about in the us about these are the kinds of models that would be amazing to have emergent in that market and so yeah and you know I guess is that your kind of experience as you look at other markets around the world is australia like. Specific you know particularly kind of you know, open relative to other types of energy like trading to to that level of granularity. So.

Grant McDowell

Sure so so look australia has led the way in so much of this distributed energy future just because of the the low cost with the lowest cost installed solar in the world rooftop specifically. Um. You know we’re down to less than a dollar a watch I I think the us is still hovering around 3 dollars or what it’s you know it’s ah, incredibly expensive still and I you know I think there’s been some work done to to reduce those soft costs and applications and things which have only recently come through in the last few months. Few months which have been led by open solar and others. So so I think ah, but because we’ve had such an aggressive rollout of of Solar. We’ve you know we’ve just we’ve an energy only Market so very different to to other other markets. Um, so we are progressive in that way. But. But ultimately, what’s happening if you look at it from a macro point of view electricity has always been the central central system where big generators like coal generators and gas generators have provided all the energy centrally and then that’s gone distributed out onto the electrical grid. Um, and now those. End nodes are now the centre of the universe. The end node is is where the action is the customer. In fact, can put solar on the roof a battery on on the on the wall and and will soon have an electric vehicle and so their influence on the grid is so much more. Important now than than the centralised system. So I think the policy needs to catch up in the us I think the policy needs to reflect that the the homeowner um will be the centre of the universe. And and then and then that distributes um, how do you How do you track value and and allow the homeowner to participate in the ecosystem by by being able to you know capture some of the value themselves.

James McWalter

I Yeah that was actually the next thing kind of of my mind to kind of ask you about is you know we we do have this kind of ev future I think every day it seems to be coming faster and I also think more and more that um, we’re.

Grant McDowell

Um, so.

James McWalter

Collectively pretty unprepared for how different things will be once we get to a plus thirty percent penetration of evs in a given neighborhood. Um, you know there’s all these positive effects. It’s quieter. You know it’s less pollution. All those kind of things but the strain on the kind of local grid. Is something that has a kind of very very large management problem that know utilities as great as they are and I generally do think they’re great tend of moves not to me slowly um and adopt things and and very careful kind of risk you know, obsessed fashion as they showed right? like losing electricity is like a major.

Grant McDowell

Are.

James McWalter

You know downer for for everybody and life and death really? So yeah, so how how are you thinking about you know ios the role that in Nosu will play in this kind of rapidly emerging ev market.

Grant McDowell

Well before we get to anoci I think again, there’s another macro 30000 foot view which we should. We should take and um, which is yeah know another thing we’ve been looking at in australia which is instead of thinking about 1 hundred percent renewable grid. Let’s look at a five hundred percent renewable grid and and that just that exercise that mental exercise of of to get back to the terror base example of 1 percent. What 1 cent per per kilowattho you know this is a market driven exercise and if solar is that cheap. It’s going to be everywhere and and and if we’re able to to um you know.

James McWalter

I No no.

Grant McDowell

Blow past 1 hundred percent and get into 1 hundred and 50 or 200 and 3 hundred and certainly in australia with all the space and great sun hours. We’re able to get into you know the 500 percent renewable economy what that unlocks is cheap Green steel. Um. Cheap hydrogen which we’re able to export um and and and evs become the the the sponge they become the energy sponge to soak up all that excess in the day. Um and and then and then play a role with vehicle to grid. Um, in stabilizing the grid in in providing you know v to g or v 2 h v to household and the the vehicle but is that that instead of a stationary battery on your wall becomes a you know sogryphersis you know, 5 or 6 or 10 batteries on wheels.

James McWalter

Right.

Grant McDowell

And the car just happens to come with it. so so I I you know I think that that opportunity is is so I’m not as concerned about the grid not being able to cope with the volume of energy and and this flow of energy which is. Which just gets back to the earlier point the the grid now is 2 wo-way. It’s been a 1 way from the centralized sending out across the the grid network and now we have a very much a 2 wo-way relationship with with the householder which is why we need the householder engaged not necessarily. You know. Themselves. But but we need the value to be filtering through to make that ev more affordable to provide some of that you know whatever those grid services are that the ev can provide um to to extend that back into the lease or whatever it might be and get the adoption curve. Accelerated and then we move fossil fuel out of the market that much faster. So ah, you know that’s my you know my first take on it the second. So how power tracer fits into that is this bringing this value of of source time and price means that there’s some accounting. To to take some of that value and extend it. Toever who’s whoever the participant is um and and what power trace is doing that is instead of behind the meter where most of the value is is is happening at the moment where you do have control. We want to bring that onto in front of the meter. And allow allow participants in the network and participants on the grid to to you know have have value attributed to whatever role they’re playing at any and any given moment so already australia’s in the five minute settlement period. Um. And and we’re able to you know that that gives batteries much much better opportunity to compete in the market than the big gas turbines and so that’s the reason for the change in the rule and that stimululates the battery market so there are there are there is policy. And there’s a policy framework and a policy vision today. There’ll be a new aemo which is our regulator will be publishing a integrated systems plan the new version which I haven’t had a chance to to read it. It’s published today but that will set out again. These. Goals that we set twelve you know, maybe twenty four months ago we’ve blown past them and and and there’s recalibration. so so I think um, the regulators will need to be much more dynamic and and ah.

Grant McDowell

You know there’s more change in the next 10 years in the electricity sector than the last hundred years combined.

James McWalter

Yeah, that makes absolutely ton of sense and just to your kind of point of Batteries. You know was 1 of the kind of surprising things I learned relatively recently is that you know a battery as storage for stabilizing the grid is just far better than existing peaker plants like coal and gas because a battery if you turn it on it immediately. Generates. Gives you power within in you know a second whereas coal and and and oil you still have to you know heat up a furness. You start to kind of go through this process and so yes, moving to this kind of five minute um dynamic ah you know timing gives a huge advantage to something that can be as nimble as a battery right. And then the other power of the batteryter is that they can move across lots of different types of electricity markets and stabilize the grade all the way through and service services and everything in between in a way that most other types of energy cannot do so because they just lack that flexibility right.

Grant McDowell

That’s right batteries have the ability to attract Eight value tree 8 value streams. Um, and so when you unlock a single resource that’s able to capture 8 value streams then you know it’s creating a much healthier greater much. More stable grid. Um, and and there’s certainly challenges to come with. We’ve got you know batteries operate great fantastically within the millisecond and over 2 and 3 hours we need long duration storage solutions and this is the reason why Google have got behind this 24 7 carbon free energy idea is that. The hard parts those top you know, eighty and ninety percentiles is where the work needs now and then we need to find a way of conquering those single percentages over this next decade so google will be 24 7 carbon free by 2030 and all their their data centers around the world and all their their operations. Um, and so that’s a tough call I mean that that means in in singapore where there isn’t much solar penetration renewable energy solutions that need need to be found and and supported and so that innovation. Most innovation exists today and we can we can invest in it and grow it and and blow past 1 hundred percent renewable as I said but there will be new innovation that that certainly in battery storage and others that that will come to the market but but the stimulus is needed but you know we need to create the market and and what the market then. You know if there’s if there’s sufficient market behind it that unlocks an enormous amount of value.

James McWalter

Yeah, you know you talked about australia up from ireland originally and the ah the energy mix in Ireland just can be very different right? It’s going to be onshore and mostly offshore wind and there’s a large investment in Hydrogen happening today to kind of solve for you know the longduration storage piece.

Grant McDowell

Um, sure.

James McWalter

Are you know the hydrogen fee in particular is like an you know nascent Marketll we’ll see how it scales up but you know there’s already billions of dollars from the Irish government going into this as we’re seeing in projects across the world. So Yeah to your point last hundred years you know and’s ah everyone I talked to. It’s like get into clean energy. You know there’s a lot of opportunities and exciting things Across. You know the climate solution space. But if you want to kind of get to massive scale quickly like energy and the related aspects of the energy is where it’s at.

Grant McDowell

Yes, I mean the the other interesting thing is that certainly australia we’ve we’ve got a huge penetration of of renewables. You know I think solars around yeah nearly thirty percent of whatever it is. It’s massive but globally. Um, solar is only 1 percent of the energy mix now we need to be in the seventy percentile in the next twenty Twenty five years. So if you map that out. It is just an incredible amount of of clean energy. That’s that’s coming in an industry that that will continue to to grow.

James McWalter

Fresh.

Grant McDowell

And prosper and bring lots lots of jobs, lots of innovation and you know I think I think like electricity said it’s been very dormant and and boring for a long time. But I think it’s going to be the next 10 years is going to be a wild ride.

James McWalter

Absolutely. And yeah, the next 10 years they were definitely out top of mind for the people like cof twenty six as you mentioned you were there. You know what surprised you most about your time there.

Grant McDowell

So ah, the you know the biggest takeout from Cop Twenty six is that and this is not being publicized in the media to my mind is that it’s no longer cool to have fossil Fuel sub subsidies. Um.

James McWalter

Yeah.

Grant McDowell

And that’s a big deal. You know the fossil fuels subsidies and governments that have just you know randomly so ongoingly support year in year out subsidized fossil fuels I think will be more and more tough politically? Um, so that’s. First observation the the the second observation is that although it was you know the um, some of the the ambitions weren’t achieved that we set out to achieve it at a cop and not me but the the broader cop ambitions um, the we were able to get. ah well ah next year will be another opportunity to to come back to the negotiation table rather than wait in 5 years and I think that’s an achievement. Um, so the urgency is is has dawned although you know not much progress was made this time. The the urgency has meant that that cop 20 7 in in in egypt Next year will be I think another big opportunity to to move things forward. So yeah, progress incremental but those are 2 but those am my 2 takeout.

James McWalter

Yeah I guess my view’s pretty similar. You know I think that in any sort of sit like setup like that if you get sixty percent of what you want going in like you’re doing pretty well 50 1 percent is probably more typical at best and so.

Grant McDowell

So.

James McWalter

You know there’s obviously a huge amount of disappointment from large parts of know society in general at the climate community in particular, um, you know small outland nations around the world. Obviously you know are are feeling this most harshly but you know we went from like Decade long conversations to like yearlong actions and um and I think the levers that we’re seeing right on the consumer level the kind of company such innovation level and now more and more on the governmental level to kind of you know, accelerate? What’s happening on the innovation side. Yeah I think it’s actually fascinating and you know there’s few big bills happening some of past some are about to pass across europe. Um, leave australia some as as well as united states and yeah and some starting to see real dollars going into this space as well.

Grant McDowell

Yeah, and and I think the the yeah that’s exactly what? um the opportunity really is is we we’ve got um a tenure window and we can embrace that opportunity because. We’re running under time I mean the it’s no fun to live in a world that’s gone up 3 degrees celsius you know climate the impact on the Climate. We’re seeing it already. Everyone’s aware of it. The the exciting thing about the electricity sector is we can play a big role we can play if you look at it. Um, from electricity directly and then how that flows through we can we play a role of around seventy percent of emissions. Um, when extended through to transport and so the electricity sector is by its nature then an exciting sector to join because the contribution we can make is enormous. Um. And and we’ve got ah we’ve got to roll out and replace the huge amount of fossil fuel in the next 10 years um and Beyond and and do that effectively by creating. You know the price signals to the market to to get access to those cheaper prices. The clean energy brings and ah and a sense of. Being of everyone being able to participate and that’s why 1 of the things that I’m particularly excited by an ocn power tracer is. We’re able to enable just ah, a regular household to be on a path towards true zero. And to to get on board and and then measure and manage their own performance against resources that are out there in the in the market and then with vote with their dollars to say you know I want to say to the retailers to say to to to generators the signal le we want more of this and we’re prepared to pay for it. And and so if we can bring that radical transparency across the grid. Um, we we hope that that will have a positive impact and and and accelerate the adoption.

James McWalter

Yeah, you know the level of apaqueness across the global economy. Um, you know some of it accidental a lot of it have planned um is really what I think the common thesis of many many companies trying to either decommorize the grid or decarbonize other industries. It’s like really trying to shine a light. Um, these different incentive structures and so on and what I think is fascinating but what you’re doing at a noc is that the ah the business itself like the more transparency like your business model is tied basically to a transparency that also decarbonizes and I think that is I guess the sign of like ah like a. Climate company. That’s properly tacking Climate. There’s a lot of climate companies that like may might do the measurement piece but like that doesn’t necessarily like drive change in the same way and so yeah, but I’m quite fascinated by kind of that approach. Um, 1 thing you know as I like kind of looking into your background and so on and started listening to some of your podcasts. So I believe you have.

Grant McDowell

Um.

James McWalter

Podcast called Spark Club Yeah I’d love to hear a little bit about what kind of was genesis of that project.

Grant McDowell

So I I um I was a startup founder in in here based in sydney and really felt long for a community. So if you can’t find 1 they say just build it yourself and and and so in 2000 16 I I set up spark club which. And and the premise behind it is that we’ve got to some credible opportunity here in Australia. We’ve got great Universities. We’ve got great abundance of clean energy and and and in aspects of of this distributed energy transition australia leads the world and so the idea was to. To create a forum spark club for people to come together and and and and learn from each other so I interview founders and and and elders and and and then particularly depending on the policy. We. We do a policy piece as well. We did 1 on blockchain 1 on. Big battery storage and five minute settlement and and so ah, you know the idea is to to share this knowledge and experience with the with the broader community here and replicate the success of of silicon valley um, in in what they were able to do in the early days. Um, was was communicate and share as a community and learn and accelerate by by taking tech that was developed universities and bringing those successfully out into into the broader market and so yeah, that’s been I’ve been doing this since 2000 16 and and it’s been. Fantastic opportunity to to learn and share ideas across the the clean energy entrepreneurial space. So it’s been a good journey.

James McWalter

Super cool. yeah yeah I think you’re you’re kind of slightly smiling because that’s somewhat similar to obviously what reform we’re trying to do ah on on this podcast as well and I think the trying to recreate the kind of innovation of of silicon valley around the world. Um, like I think this is like fascinating story and some places do it better and worse I think. Having a very much a kind of Storyd driven approach can help a lot because to me like the core value or the core reason that Silicon valley is what it is today is that basically failure is not really punished like risk is very very rewarded in general. Um, you know you can go and like tell somebody like you lost 15 million dollars last week and they won’t.

Grant McDowell

Um, so.

James McWalter

Like an eye whereas you know you’re castigated and pretty much everywhere else in the world. Um, now if you just if everybody is just losing all that money obviously like they would never have gotten into it but because it encourages that level of kind of risk takingking around specific types of business. You know it’s had success and I think hearing stories of success and all the failures that led up to that success. Because everybody has like 20 failure stories before they got into success I think that encourages like that next kind of generation of entrepreneurs to like take the chance.

Grant McDowell

So And and this is the premise that we have at spock Clubb um is that we can no longer afford given the climate emergency to have a 1 in 10 ratio. So The Silicon Valley ratio is. You. You know you have 1 unicorn or 1 success and and and then it’s nine failures and and our premise is that we needed to change that ratio if we’re going to be successful to 30 to 1 and we we need to blow up some money. Um and and in blowing up some money we can indeed.

James McWalter

Right.

Grant McDowell

Ah, from an innovation point of view. Bring some some new ideas new tech into the market and make those successful. But if we sit in an old paradigm of 10 to 1 we might get there by twenty forty or twenty fifty in which case it’s just too late so you know let’s blow up some some money now. And and and try and accelerate some of the the you know these ideas that are coming out of the university ideas coming out of entrepreneurs young and old and and and if we can do that successfully can certainly australia we can do as silicon valley did export those ideas around the world. Silicon valley is done very well and handsomely from the success of of what I you know um we we call you know I think that that’s tech 2 point Zero. We’re now in in in the third stage of tech which is is how do we leverage the internet against the internet of things against the real world bricks and mortar. And that’s the electricity sector and and that holds the the largest opportunity. So um, yeah, very but very much um in favour of of a 30 to 1 ratio how vcs feel about it is is different. But I think there’s lots of money out there. It’s just about framing those risks. Umm, interviewing some fantastic entrepreneurs to come who have I think the the potential to build building dollar billion dollar businesses and that’s the first time I’ve seen it not since ah doing doing this in 2000 16 it’s the first time I’ve seen. Okay here are the unicorns coming and. And I think they’re they’re going to come thick and fast in the next twenty four months.

James McWalter

Very exciting. Um grant is of e Been brilliant I’ve really enjoyed the conversation before we finish off is just anything I should have asked you about but did not.

Grant McDowell

Now I think we I think we did cover the ground that I really wanted to share the 1 little tip Thatt I’ll I’ll share is that we were um on an oc we’ve been um. Going through years. But but recently we’ve had a successful recruit in in David letwi who’s joined us who who’s out of voltus and and that’s really got us excited because having this tech depth will allow us to really accelerate what we’re doing. Um, and oes is is just raised ah around and will be going out next year in 2022 for a series a in late late 2022 to allow us to go to go global. So just ah. Wanted to share that on specifically on on an oc which is which ah so thank you.

James McWalter

Absolutely and the people can check out a no see sign up, check out the careers page. Potentially you know try to try to get hired and kind of go from there. Thank you very much grant.

Grant McDowell

Um, thanks, very much very much appreciate it. James.

Reduce Urban Flooding – E77

Great to chat with Greg Johnson CEO of AquiPor Technologies, AquiPor is revolutionizing hard surface building materials, improving the way urban stormwater systems work and interact with the natural environment! We discussed stormwater flood control, urban water contaminants, concrete CO2 emissions, crowdfunding and more! 

https://carbotnic.com/aquipor

Download Podcast Here: https://plinkhq.com/i/1518148418

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Thanks so much! 

James

The unedited podcast transcript is below

James McWalter: And so once the so let’s say we have like a large storm and we have a lot of kind of stormwater gathering sort of the flood. You know our lovely City streets. Um, you know and and so say you know Aquipor has been distributed and now it’s actually has the opportunity to soak through and and disseminate. Where does it go? um, is it soaking into soil is it so you know because we’re talking about generally Urban neighborhoods.

Greg Johnson: Yep, Um, well ideally yes, it does it soaks back into the ground to Recharge Groundwater Now our material needs to be used or utilized with corresponding really competent engineering. So. You can design these systems to have full attenuation or you know partial infiltration where some of the water gets piped um to another area where you can recycle the water. There’s a lot of different things you can do and all of this is going to depend on the capacity of the underlying soil to take On. Um, ah a good amount of rainfall. You know there are some soils that are pretty Impermeable. Um, just naturally and so you’re gonna have to design for those type of parameters. But the ideal is yes, let’s get rainwater or stormwater back into the ground naturally to kind of Recharge groundwater and. Replenish the natural cycle.

James McWalter: And you also mentioned that yeah 1 of the other reasons that people are concerned with stormwater ther is because of the potential contamination of fresh bodies of water from you know from the stormwater. What are those contaminants and what are the kind of big concerns there. So.

Greg Johnson: Well, you know at 1 time it was really about combined sewer overflows happening where you would get you know sewage actual raw sewage into water bodies fertilizers. Things things of that nature that would cause you know Algae blooms and things like that. But now I think the big concern is microplastics and pfas and some of these things that or even a big issue. We’re having in Washington State like in the puget sound area. Co-host Salmon populations are being like decimated and what they found was it’s particulates from tires um like vehicle tires and so these really toxic particulates I think are the bigger concern now.

James McWalter: So that’s fascinating and and the idea is basically if they’re permit going into the ground the ground you know and has a pretty good track record of filtering water especially through a bedrock.

Greg Johnson: Yep, the ground is our best filter and you know that’s not a perfect scenario either if you have you know soluble toxins that are getting into soils. Um, So there’s something that needs to be and part of our so you know. I Think the magic Well, that’s not a good word but what we’ve tried to develop with this material is to have such small porosity that the vast majority of total suspended solids are filtered onto the surface and what we know is that dissolved metals some of these other dissolved toxins Attach. To total suspended solids and so if we can just filter the the solids where they can now be swept up by a vacuum sweep or street cleaning equipment then you know we’re we’re solving some of that issue.

James McWalter: Um, and as different materials are moving through. You know aquapore is there a potential that the permeability goes down over time.

Greg Johnson: Yep yep, it certainly can all filters clog and so we we think that our materials akin to a hardscape filter and the reality is all filters do clog eventually what we do believe though is the material will last years if it’s maintained properly and.

James McWalter: Just ah.

Greg Johnson: We’re also developing it with large service factors so that if it’s not maintained properly. It still retains you know enough permeability to Handle. You know a large rain event and then over time it will eventually clog and at that point it’s precast material. Can be ripped up replaced and the beauty I Think with our technology is it can be recycled and then go back into new products. So We’re really trying to develop the technology and our whole business model as sort of this, you know cradle- to cradle model and that needs to be proven out. That’s kind of what we’re working on now. But that’s very important to us from everything that we do in terms of development to installation and you know the full the full business model.

James McWalter: Ah, on that recycling piece is that ah is the a model potentially that it always goes back to you are there other essential use cases for recycling of the product of of the material.

Greg Johnson: Well I think it it could go back to us or it could go back to any real precaster concrete precaster. You know you you go ahead and recycle the material and you would want to you know have a process. Ah, chemical process where you get out the gunk if you will that has collected and accumulated over time and then you would have clean agGreg Johnson:ate you know, clean materials that could go back into whether it’s permeable or impermeable concrete.

James McWalter: Understood and you know when I was looking into. You know the issues around stormwater and the issues around having very impermeable urban landscapes you know some of the city planning approaches are to you know increase the amount of parks and Green greenways and all this kind of thing. How do you think about how your product kind of intersects with some of those other kind of urban planning approaches.

Greg Johnson: I love those approaches I think they’re very important I think the more and for more reasons than just you know, stormwater and dealing with water I think the more green spaces we have in cities the better I think for us what we want to do is is say hey what if we could make. And this is a design that we’re working on what if we could make all the sidewalks permeable and have it be a situation where you have urban you know space that you’re going to need concrete. You’re going to need hard surfaces to transport people in goods and and services. Well why not. Use our material for those surfaces and solve the stormwater issue at the same time and so that’s really our approach I think we could do a lot with our material in terms of you know, giving usable space back to cities and developers which I think is important. If you’re a commercial developer. You know you don’t necessarily want to put a 1 acre then this is like a master a master plan community developer. We talked to in the Dallas area said you know they’ll they’ll do a community and they’ll have a retention pawn that takes up an acre. And you know that’s a couple lots potentially so if we can give them back that usable space and solve the stormwater issue at the same time I think you know it’s ah a win-win.

James McWalter: And and how do you think about I guess Monetization you know when I’ve talked to other companies who are trying to bring new. You know eco-friendly or sustainable or carbon. Friendly materials particularly like advanced materials to bear often. They’re kind of competing with commodity products that are already out there. Um. And what’s interesting I guess about yours is you also have this kind of key differentiation which is the Permeability piece. Um, so how do you think about? you know like is this a we’re trying to get to price pardity and just you know, blow blow existing commodity out of the water or more is this more kind of a value play where you kind of speak to them. The permeability versus impermeability kind of differentiation.

Greg Johnson: I think it’s a value play. We want this to be a premium solution but at the same time we’re also very cognizant of we don’t want to compete with. We’d be foolish to want to compete with the cement or the concrete industry what we want to do is partner with the industry. And what we know is we have a technology that they don’t currently have and so what’s been really painstaking. But I think very worthwhile in our pilot manufacturing and the current stage we’re at is getting the process and the technology to the point where it can just be a turnkey solution. Existing manufacturers so instead of saying and there’ve been some you know some stories of companies that have come out 1 was ah a company that had a fly-ash cement type solution for brick and they wanted to take on the brick industry and they raised 60 or seventy million dollars and you know tried to. Build a bunch of plants and and take the industry head on and of course they you know they were bankrupt like 2 years later and you know we saw that as a cautionary tale. We also don’t think that’s how you get this out at scale either. You know we want to see this everywhere and so what we’d rather do is team up with the industry. Um. Industry right now they’re trying to decarbonize concrete industry as I don’t think they have great solutions. Um I’d like to think that we do you know and we have to prove that but the idea is you know let’s let’s team up. Let’s partner up. Let’s make this a situation where it’s a high-margin product but everyone. Um, you know can can take part in it. Basically.

09

James McWalter: Ah, and so would that be kind of a licensing model or near day like ah but you said plug and play you like a factory in a box like how how do you think about it.

Greg Johnson: Yep yep, we think about it 2 ways. So a licensing model for sure on the concrete side so to produce the material. But then we also want to be a project company and so as an epcm engineering procurement construction management company. We would come out and we would work with civil engineers. In a given area. We would stamp whatever design they had for the project. We would be responsible for procuring all the materials we would procure that from our licensed manufacturers and then we would oversee the construction of these projects but we wouldn’t do the construction we would work with a given contractor in that area. And and then I just think it becomes it becomes a nice I think potentially high margin business business model for us. But then everyone has access now to play with this technology and and you know, kind of bring this to bear.

James McWalter: And I believe you’ve um, kind of engaged in some crowdfunding. What has that experience been like.

Greg Johnson: Crowdfunding has been It’s been quite valuable for us. Um, there are times where it is a lot of work. That’s 1 thing I’ll tell you and I think raising money is always hard work but crowdfunding is it’s a full time job because. You’re out there. You take inbound questions. It seems all day every day from potential investors. But for us, it’s been extremely valuable and I think it’s it’s coming of age crowdfunding is for us. We turn to it because this is. In the early stages of Development. We need real patient capital. We’ve purposely stayed away from traditional venture capital and nothing against vc I think venture capital has a great role to play obviously in the incubation of technology and the development of companies. Like ours. But what we’re doing. You’re dealing with heavy civil construction again. Infrastructure. Um, you know these are and it’s a hard technical challenge to solve it just requires a little more patient capital at this stage and we’ve gotten that from the crowd and and it’s been great and then I’d say the most valuable piece of that is. You would be amazed. Ah, you’ll get a water engineer from say georgia that puts in 1000 dollars just because they’re interested in the technology and now they’re on your cap table and you can talk to this person who’s an industry expert. Um I don’t know it’s just been with the contacts and the network that we’ve.

James McWalter: And right.

Greg Johnson: Kind of gained from this has been incredible.

James McWalter: And yeah, it’s interesting kind of dynamic between the the traditional quote unquote bootstrap versus funded company and you know bootstrap you may as well. So the saying goes like you may as well bootstrack because your customers are paying you to to build your company.

Greg Johnson: Right.

James McWalter: Um, versus venture where your investors are paying you to build a company and if you could do you know 1 like it’s better to have your customers because ah, you’re they’re media getting value versus like investors who are looking for these kind of multi-year Very very outsized exits I think crowdfunding from the way you’ve kind of described. It is kind of falls in the middle right. Like they are also looking for a return of sorts. But also um, near by definition. The kind of people who would be engaged in a crowdfunding campaign like yours um might have some deep experience might have some deep interest might even be future customers.

Greg Johnson: Absolutely absolutely and and I think that it’s the other thing is not to get off too too much on this but the ability now of Everyday investors to have the chance to invest in startups which wasn’t possible before I think could be a real game changer I mean. You know and they’re not putting in a ah thousand box here or 500 bucks. There’s not a ah you know significant chunk of capital but maybe for that person it is and then suddenly if they can say you know you get in on a a startup that all of a sudden becomes you know a billion dollar market cap someday that goes public. Um. You know that turns into some some wealth for people that didn’t have that opportunity before and so I think it really is coming of age. It’s going to be really interesting I think the next five to 10 years to see where it goes but we’ve certainly yeah, we’ve gotten value out of it.

James McWalter: And I guess how how did you get those first initial you know the first hundred people right? It’s hit to because those are the key people.

Greg Johnson: They definitely are the key people. They were mostly local type investors who knew kind of what we were doing and once they saw that we went live. You know we had sort of that I guess that built-in crowd. Um.

James McWalter: M.

Greg Johnson: And then I think there was an appetite you know, especially the first crowdfund there was just an appetite for something new. Um in stormwater and in the space and so we were very fortunate our first crowdfund and now we’re we’re into our second one and it’s going. Well. Too. But I just think there’s an appetite for the retail investor right now they are cognizant of climate change. They’re cognizant of the environment and I think we’ve gotten you know some of those factors in our favor.

James McWalter: And I guess what you know if you think out over the next kind of year or 2 What are the problems you’re trying to solve to kind of get to that next level those next milestones.

Greg Johnson: Well, we certainly want to get our manufacturing process to the point where it’s highly scalable and it can go into any precast plant throughout the country or throughout the world. Um, so that’s definitely a goal in the next you know six months to be able to do that. And then we’re building a neighborhood scale mockup right now which will actually be our permeable sidewalk design and there’ll be some other Multi -utility technologies that we introduce on these mockup or on this mockup project and. So once we get those 2 things done I think you know we’ll be able to build an economic feasibility study based on that and it’ll almost be like we have a spec that we can now hand to ha presidents or private developers. The engineers that represent those people. As well as cities.

James McWalter: So that’s fascinating and I guess you know if like if I’m trying to I want to walk on this pavement in the next or the east sidewalks in the future. You know what? what would like the best potential timeline for that. Be.

Greg Johnson: Ah I hope that we have the goal is really to have our first major project in the ground by next year and even by the the first first half of next year um and then we have I have.

James McWalter: I visit.

Greg Johnson: Ah, list going right now of like it. It gets back to crowdfunding ah but 23 potential projects that vary in size and scope. But they’re all from you know crowdfund investors that say hey I’m a developer I have a small commercial lot in say like Dayton ohio um. We have a hotel in texas and right right outside the fort worth area. Some small residential type projects that people want to do so I think once we get to that point you know we’re going to have I don’t think demand will be much of an issue. But. Yeah I mean that’s the plan we have to prove it out. We want to do it first with you know, a larger scale mockup.

James McWalter: And how do you think about? Well I guess I’m trying to think through like the incentives right? So like for society at large for things like you know so storm water flooding and and all that kind of thing so in theory you know we have a big storm like Hurcan ida as you mentioned. Yeah, we hear hear these numbers about hundreds of billions of dollars in damage but things like your kind of product to be to be implemented right? like that would help prevent some of the worst damages. Um.

Greg Johnson: Um, rob.

James McWalter: Like I guess like how do you think about the pressure points that need to be brought to bear to have that your a product like yours kind of rolled out at as City level. Um, especially when it’s like the insurer I Guess the insurers are the ones who care the most um, do they have the power I guess to kind of push that back onto municipalities like like how does that does intended flow.

Greg Johnson: No.

Greg Johnson: That’s a really good question. Um I think that that’s an interesting angle I think cities right now have some pressure on them coming from like the epa for example and I know even. Like our our city spokane when they were under a consent decree where they basically had to stop or limit combined sewer overflows into the spokane river to like 2 per year um and otherwise they’re getting fined and they’re sizable Fines. And so I think you’re getting pressure from the epa and some of them were you know federal agencies that and you have watchdog groups right? So here in Spokane we have like the Spokane riverkeeper and there are ngos that are putting pressure on cities to kind of clean up their act and so I think you’re seeing some of that. Um. And spokane you know to their credit and they invested heavily in like a gray infrastructure solution which I think is a pricey way to do it and it has a role to play. But anyway my point is you know they they got in front of the problem they solved it and so. Think you’re gonna see more of that from cities just because of that pressure. Um the insurance aspect is interesting and I’m actually seeing some of that in coastal cities like Miami. Um. Where real estate prices continue to go through the roof and and people are still moving there in droves which is interesting. Um I seriously seriously I’m with you man. Ah so.

1

James McWalter: if I if I could short the Miami real estate market easily I would do so yeah.

Greg Johnson: So yeah I don’t know I think you know cities are are feeling some sense of pressure more from federal agencies.

James McWalter: Fascinating and you know if I think look at more of a kind of a broad view about what is needed over the next you know, couple of decades to mitigate a lot of the problems we’re seeing um what are areas that you’d like to see more innovation in smart people you know saying Okay, there’s a real problem here. We need some sort of solution and Then. Ah, what those solutions potentially could be.

Greg Johnson: That’s a great question. Um I think there’s a lot of smart people working on various aspects that are dealing with a climate crisis that gives me a lot of hope I would like to see more innovation in we talk about industry steel cement. Think people don’t understand like the sement industry right now is responsible for eight percent of global c o 2 every year and right now the solution for them is to basically capture c o 2 and reinject it into concrete. Um, which is that’s a fine solution. But. My whole thing is let’s not calcine. You know limestone in these chemicals at 2500 degrees fahrenheit and blow off all this c o 2 in the atmosphere to to begin with and so that’s really what our focus has been with this new cement is. Can we just do away with that process completely and that’s our north star is to see if we can get this to the point where it can be implemented everywhere and to say that we actually are impacting a major reduction in c o 2 that’s coming from the concrete industry. Um, so the short answer is I’d like to see more innovation and more hands on deck when it comes to cement and making cement green.

James McWalter: And I guess for your product in Particular. So if you can I guess cast the concrete at a lower temperature. You don’t have to use dirty factories that are using natural gas. Whatever it may be to kind of get to those high temperatures to cast concrete today and so I guess is what is the? ah. Yeah, 1 of the different of the concrete right? have different structural integrityities for different types of building and so is is that the kind of problem you’re kind of navigating right now.

Greg Johnson: Yes, yeah, it is and so strength durability. You know those those issues are being worked out right now. But I think 1 of the problems I see with the current. I think solution or 1 of the solutions of injecting c o 2 into concrete they claim it makes it Stronger. We have reason to believe and we actually know that that’s not necessarily the truth. Especially if you’re trying to get super high strength structural concrete. Um, and so that’s something I think we could. Potentially effect down the road to the cement company that’s doing development on this cement for us I think is actually onto that and that’ll be interesting I think the next 2 years much will be publicized about some of that work. That’s the hope.

James McWalter: Yeah, absolutely I guess I knew personally you know when did your fascination or passion for the environment start.

Greg Johnson: I’ve always kind of had a passion for the environment. Um, we spent you know as a kid growing up. We spent a lot of time at the lake you know we’re blessed in in this region to have so many lakes and mountains and there’s great outdoor life here in the spokane area. Went to school in Montana um, where nature is obviously beautiful as well and and I just always you know I was always keen on this is our environment. We have to be custodians of it. Um, and I don’t know if there was ever a. Ah moment where I was like you know this is what I want to do with my life. It was just always kind of having a connection to to nature and as far back as I can remember you know when we’re going to the lake and you know my mom would always when there’s litter somewhere around. She’s always like hey pick that up. It’s like well it’s not our litter. Doesn’t matter just pick it up. You know and that’s something I try to instill in my kids too as we go on a walk with the dog or whatever and there’s litter bring a bag and just pick up. Keep keep our neighborhood clean. Keep the environment clean I don’t know it’s just kind of always been parted.

James McWalter: Yeah, that makes a ton of sense. It actually reminds me of a story I was probably about 10 or 11 years old and we were driving in the car in ireland and it was my father and we were at some sports match that we were playing as kids whatever it is. We had a couple of neighbors in the back of the car and we’d just gone to a shop to get some chocolates or whatever it was.

Greg Johnson: Part of me I guess I don’t know.

James McWalter: And 1 of the lads in our in the backse who we didn’t know that well. But anyways he ate his shock bar and he just put it out the window of the car and my father noticed this in the rear mirror slammed the brakes and made him go out and pick it up and yeah and and and bringing it in and he was like the kid was like so shocked like it was unbelievable and that was just and we were just like of course like it’s.

Greg Johnson: Um, good. Um, yeah yeah.

James McWalter: Wild You could never throw like a wrapper out of you know a car window. Absolutely um and I guess then you know you’ve obviously had a lot of kind of a long kind of journey to get get to this point you know some pivots along the way. Um.

Greg Johnson: Um, right, It’s a no brainer. Yeah, that’s funny.

James McWalter: You know what’s what’s the kind of biggest learning you’ve had about you know trying to lead a team through those kind of changes.

Greg Johnson: Well, it’s just really been and I’ve so kind of said it before is the obstacle I know this is like kind of cliche the very stoic you know Cliche is the obstacle is the way but I truly believe that. So. Um, we’ve had a ton of constraints throughout this whole venture that I think have actually sharpened us. It’s made us better and so I think the key takeaway. Um, and we’re to the point now where you know nothing really phases us. It’s like something doesn’t work out. You know 3 years ago I would have been freaking out now I’m just like okay you know it is what it is. What did we learn from it and I think just really embracing challenges you you hate to say embrace you know like mistakes and failures. But. You kind of have to as long as you have you know the perspective of we need to learn from this and so that’s been a key takeaway and the other thing is just patience. Um, we have our goals are audacious I mean they’re they’re big and so you have to have patience with. Those type of goals and it’s hard because you do have some investors that you know they want to see a return on investment right away and you have people that are going to be in your ear about you know, speeding up and which is totally understandable, but just having patience and. Developing the business the right way.

James McWalter: Yeah I guess im at the latterer point I think a lot of startups and and people in the space often confuse the the speed component and how linked it is to Market readiness in general right? And so ah, you know all the kind of legendary.

Greg Johnson: And.

James McWalter: Companies that went from zero to a billion in like a handful of years mostly software companies in general anyway, but a lot of them were because like all of a sudden. Ah, you know we we had ubiquitous you know Handheld supercomputers that allow and enable a ton of things that just weren’t possible before right? Like if you had a certain type of company 2 years before the advent was the smartphone. You just would never have been a big company but because you were a right place right? time and then also of course smart people executing well right? like you still obviously I have to yeah, be good at what you do Um, like those are the the ways to kind of speed up things and so you know at some point the concrete industry will shift right? and.

Greg Johnson: Um.

James McWalter: You know, hopefully that’s tomorrow but it might be 3 years from now but being kind of well well readied and well structured to kind of capitalize on a market shift. That’s where I think real kind of extraordinary growth can come from.

Greg Johnson: I totally agree and it and you nailed it I mean it’s nice to think like so Mark zuckerberg’s like yeah you know thematically like move fast and break things which is great I love it. But in construction if you do that like people are gonna die and buildings are gonna crumble and and so it is. It’s a different this is a different animal but you’re right I think you get to a point where if you get the development work done and then you get to market and then suddenly this starts to be adopted then I think the growth trajectory could be pretty substantial and that’s what we’re. Were shooting for.

James McWalter: Yeah Greg Johnson: does absolutely agree and this has been absolutely great. Um, you know I’ve really enjoyed the conversation before we finish up is there anything I should have asked you about but did not.

Greg Johnson: I think you covered the gambit. 1 thing I will mention we talked about crowdfunding we actually have a crowdfund open right Now. Startengine Dot Com forward slash aquapore and it’s going. Well I think we have just. Under 600000 Rays We’re trying to raise 3 million nine hundred and 30000 so we’re getting there and that was the only other thing I was going to plug.

James McWalter: Yeah, no, that’s that’s fantastic and we’ll include that link in in the show notes and and even just you know to hear like you’ve raised 600 thousand dollars from you know so many people and you’ve done even more in the past I think it’s incredibly impressive and I’ve no doubt that you’ll you’ll hit that 3 point nine.

Greg Johnson: We are very very hopeful and it’s just been. It’s been a good journey and like I said it’s amazing to get these people on our cap table that you know it’s a construction.

James McWalter: And our targets.

Greg Johnson: Management expert. You know in Michigan or you have the water engineer in Georgia we even have angel investors. You’ll like this which is funny. It’s like they will put in their thousand bucks or 1500 bucks just so that they can be on the update list and kind of have deal flow so that as things progress and grow. Maybe they tap into their.

James McWalter: No.

Greg Johnson: Ah, more institutional investment type networks and it’s just interesting. The whole thing has been quite eye-opening to me but it’s been valuable.

James McWalter: I think if you can get angel investors to pay you to be on the update list I think that that’s a great model and then startups take advantage of that you know great this 1 great! Thank you so much.

Greg Johnson: Right? Ah, absolutely thank you James This was fun.

The Future of Roofing is Solar – E76

Great to chat with Martin DeBono, President at GAF Energy. GAF Energy offers homeowners elegant, roof-integrated solar and is part of Standard Industries, the largest roofing materials company in the world! We discussed the benefits of solar roofs relative to solar panels, the role of contractors when homeowners are choosing replacement roofs, the role of subsidies and carbon taxes in a clean energy future and more!

GAF energy is also hiring!

Download Podcast Here: https://plinkhq.com/i/1518148418

Transcript

Remember, If you want to support the podcast there are two amazing ways!

  1. Subscribe to the Carbotnic patreon  
  2. Rate 5 stars on Apple

Thanks so much! 

James

Shopping Sustainably Online – E75

Great to chat with Lizzie Horvitz, Founder at Finch! Finch is a tool that educates people on the ins and outs of sustainability by turning complex scientific facts into simple, actionable insights! We discussed sustainable choices while shopping, how Finch will be able to help you choose better products at Amazon, the sustainability paradox, the greenwashing behind packaging and more! 

https://carbotnic.com/finch

Download Podcast Here: https://plinkhq.com/i/1518148418

Remember, If you want to support the podcast there are two amazing ways!

  1. Subscribe to the Carbotnic patreon  
  2. Rate 5 stars on Apple

Thanks so much! 

James

———————-

The unedited podcast transcript is below

James McWalter: Hello today we are speaking with Lizzie Horvitz founder at Finch. Welcome to Podcast Lizzie. Brilliant I supposed to start with it. You tell us a little bit about Finch.

Lizzie Horvitz: Thanks! Both so much for having me James. Absolutely, so Finch is a platform that decodes products environmental impacts to help consumers make better purchasing decisions. So We rate products based on their environmental footprint and then. Incentivize consumers to switch products based on what scored Higher. So I’ve been in the sustainability space for my entire career passionate really about climate mitigation in the private sector.

James McWalter: And what drove that initial decision to start finch.

Lizzie Horvitz:  And something interesting started happening in around 2 16 I started getting a ton of questions from family and friends about their own purchasing decisions. Everything from you know I just had a baby. What diaper should I be buying to ah, what’s this ingredient doing in my deodorant and. I’m 1 of the only people in my larger community who has an actual background in this and not even I knew all the answers and I didn’t know where to direct people I found that the content online was very difficult to sift through because you had these wonky academic papers that were not meant for normal people to read and then you have this rise of bloggers who are. You know, hugely. Well-intentioned but saying things like all natural and eco-friendly and that doesn’t really mean anything these days and so I started a newsletter basically aiming to distill this type of information and that newsletter kind of took a life of its own I meanwhile left unilever. Ah, massive massive company to join a startup and completely fell in love with entrepreneurship taking a company from inception to scale and decided that this newsletter could actually be be my own startup and that’s when I decided to to do it full time.

James McWalter: That’s so fascinating like I guess you know what was the ah the lead up to that decision right? like you’re looking at your maybe subscriber numbers kind of jump up and like oh ah, like yeah I’d love to like what what were the few weeks before you made that jump look like.

Lizzie Horvitz:  So interestingly you know the newsletter was popular among the readers but it was a total side project I was probably posting once a month and it was honestly just people that I knew maybe a quarter of of the subscribers were were forwarded from a friend or something. But. It wasn’t really the numbers. It was just what what are all these people doing who don’t have me on their speed dial. Um, and so personally in my mind I was thinking about how can we democratize this type of information and bring it to people who didn’t have a degree in this or who don’t want to spend thirty minutes a day researching. Um. Meanwhile what was going on in the world was covid was just starting this was March of 2020 ah, and you know obviously at the time we all thought that that might be a couple weeks setback and now look where we are but um. The company I was working for was based in Asia I knew at that time I was pretty locked down in the United states was not planning on moving to Asia anytime soon and was just really looking to to switch gears and take the skills that I had learned in this very intense startup space into my own and so I decided. To to shift and and really do this full time and covid was honestly the best time to start a company if we could turn back time and I could tell everybody to start their their company during that time I would because you know everybody was stuck at home looking for interesting things to talk about or do and so I was able to capture all of these. Fairly important people where I just cold called emailed everybody saying do you have fifteen minutes to let me run run this idea by you and everybody said yes, please I’m dying to have some sort of stimulation and so I was able to really um, bake that idea. Fairly well and in the first couple of months and I think under normal circumstances that would have taken several months.

James McWalter: Yeah I kind of agree more I guess yeah I was actually also planning to like leave previous company I was ash and I was like March twenty twenty 1 that was like the kind of rough date. You know it like a year before I was planning to leave and then covid hit and it was like oh this is actually a remarkable time to leave early in za coming exploring startups. I started this podcast like a month into covid because it was like oh you know there is this kind of great leveling of the types of people you can talk to as well. You have to go you used to have to go into the Bay area or certain kind of parts of the world to talk to people like investors and so on and then all of a sudden Everyone’s just on the other end of ah of a zoom and it just ah massively enables. Um, yeah.

Lizzie Horvitz:  Exactly.

James McWalter: Certain types of connection. Maybe not the world’s deepest connection but lots of kind of light connection and so okay, so you kind of you know, decided to kind of start this and so as you were trying to think through like what a potential product could look like to kind of respond to this problem. What was that process like yeah.

Lizzie Horvitz:  Absolutely I couldn’t agree more.

Lizzie Horvitz:  So my first. My first idea was that we should be able to better explain people’s impacts because they’re so unclear about it people are choosing. You know to be a vegan but then flying across the country twice a week um and if we could only tell them and I don’t have the exact numbers so I won’t even. Attempt but if we could elucidate like you actually wouldn’t have to be a vegan if you just cut under flying or vice versa. Um I thought that would be really helpful and so I was thinking initially of an app where you could really track that footprint. Um, and the more I thought of that. 2 things happened first I started looking at the competitive landscape and there are incredible companies that already do that like doro I’m a big fan of um and also to be quite honest I didn’t have faith that people would go to a separate app and track that information I was looking for something where. Convenience was baked in and where people could automatically make changes ah by doing what they’re what they were already doing and so I thought a browser extension made a lot of sense because people already shop online. You’re not asking them to go to a different marketplace go to a different website. They’re already going on Amazon. So. If you can just get them to download a browser extension that 1 time then every single time they shop online finch will will show up and so that all that iteration started happening pretty quickly. Um my brother in law was he was just my sister’s boyfriend at the time was living with us. Um. And he and I just spent a lot of time really my whole family sort of spending a lot of dinner table conversations around like how would this look? Um, how do we really make this happen and 1 idea was that you know it could be really cool if we could monetarily incentivize these people to make better decisions and so.

James McWalter: Now.

Lizzie Horvitz:  When you buy a product that might be more expensive but better for the environment. You could get a kickback in some way and so that’s not part of the that’s not part of the extension right now. It probably won’t be for this next version but um shortly thereafter we would love to you know bake that in as well.

James McWalter: Yeah, it’ so interesting around the user research right? And so um, many aspects of climate where people are moving into the space and like trying to figure out how do you decarbonize cement and a lot of people who might have the academic background for doing that like maybe have never already talked to people who make somement right? and so you’re trying to find those users but I guess in the consumer space. Like actually having dinner table conversations gets you to the core of like your potential user your potential Demographic. You know the people who have that problem. So yeah, like like like I think this is kind of fascinating thing where you’re like I guess writing notes as you’re in having those conversations around the dinner table.

Lizzie Horvitz:  Exactly and I think what’s so helpful is this is something that every single person understands right? because everybody shops and so and that’s a generalization but I think I just looked at the numbers I think 1 hundred and 55 million people in the United states shop online at least once a month so that’s a pretty good market to start with and everybody has their own opinion about sustainability right? It’s everything from I don’t even believe climate change is real all the way to I make significant changes every single day to make sure that my my carbon footprint is is decreased. And so what finch was really trying to do in the beginning was tackle all those people in the middle. So people who believed in climate change wanted to do something about it but did not have more than seven minutes to research any of it online and that actually ends up being a massive part of the population close to a Hundred million people in the United states.

James McWalter: Yeah, that’s that’s such an interesting kind of framework I mean 1 of the similar framework that I I think about is what I call like the next million right? So I feel like there’s about a million people who are like very deep and internalized climate and like those are all the way from activism to government to startup people and everyone in between and then you’re like that next million who you know are.

Lizzie Horvitz:  Prison.

James McWalter: You know, ah mid-level managers at companies making decisions or individual. You know, parents who are making decisions about going on vacations. Um, who get the the scale the problem right? like they had to move because of forest fires or because of flooding whatever it may be um, but don’t really in their day to day like roles like have ah or. Perceive that they have much of an impact on climate and like that next million people like are going to be I think such an important piece because they make every subsequent million group a lot more you know open to change right? because now they’re seeing more people like themselves kind of making changes in their lives.

Lizzie Horvitz:  Absolutely and you know the the we have a lot of ah tailwinds in ah in a good way where you know Gen Z is rising and becoming. So knowledgeable about sustainability in the environment is I think deloyte just did a study that said and the environment was their number 1 priority among any other pressing issues facing the planet or facing the world and so as they’re you know, graduating from college becoming more um in the purchasing space I Think. We’re we’re getting to those those next millions pretty quickly which is great.

James McWalter: And absolutely and I guess so you know if I was to start with the kind of chrome extension. You know I install it like what what would that experience potentially be like for me.

Lizzie Horvitz:  So we’re launching a new a new version in about a month in January at some point and what that will look. You know so much user research has been done since you know day 1 in Covid. But also we we just did another round about a month ago and or 2 months ago. Um, and what’s been really interesting is that the the level of detail that people want to see really varies. Some people say how do I trust you guys if I don’t see every single source every single calculation etc and most are saying I don’t need to see any of this I just want to know what to do just give me a quick answer and so that. Caused a lot of stress in designing the product because we didn’t want to overwhelm those people who just wanted to see 1 score but we also wanted to show that we were very legitimate and so likely what you’d see in the chrome extension is just 1 overall score that says here’s how you’re doing on a scale of 1 to 10 so. I would say anything over 7 point. 5 is is pretty good, um, anything under five should probably be avoided. Um, what’s interesting to note about the scoring is we do it by category and we normalize them so you know what would happen if we didn’t do that is that. All diapers would have a 2 and all body washes would have a nine because body washes are are just by default less impactful generally than diapers. Um, and we didn’t want to. We didn’t want the consumer to feel deflated every single time they they went and chopped for diapers and saw like there’s really no good solution here. So. But we do is we take the entire category overall and we say okay, here’s the best thing on the market that’s going to get close to a 10 and then everything else sort of falls under that.

James McWalter: That’s interesting and I guess as we see more innovation from yeah other startups who are let’s say tackling these different kind of consumer product verticals right? So like there’s a new diaper in the market. That’s entirely. Ah, you know, decarbonized right? Like let’s say that comes on the market like yeah, probably 8 years from now. But you know but may may hopefully maybe shorter than that. Um, that resets an essence potentially like what a 10 would be and then the kind of more traditional diapers would then be kind of adjusted downward is that the kind of basic model.

Lizzie Horvitz:  Exactly and what’s what we love about our model is that it’s mostly it’s mostly automated and so when that new diaper does come to Market. Um, all the scores will just change dynamically based on what that new. What that new score is um I think what else I love about what you just said is. That finch will also be housing all of this data on where that innovation is happening right? We will be able to go out to the world and say diapers really need a disruption and we need a diaper that can be composted so someone should start this because we will know in all of these categories where those gaps are and and how we can improve. We also track. Um. How much people like the product because we think that’s really important and we would never want to recommend a product that people didn’t want to use for obvious reasons but also because in sustainability. That’s the most important part right? If you if you buy any product regardless of its sustainable impact and you don’t use it. It’s then wasted. Um and that’s not a good thing and so. You know, right now off the top of my head I can think of shampoo bars. As 1 example of this is amazing. It’s plastic. Free. It’s so easy to carry around I don’t like what they do to my hair I have not found 1 that that is as good as a panine per v or what you get in the hair salon and so. That’s the type of innovation also where we can keep track of yeah other shampoo bars that people can buy but we’re not thrilled with any of them.

James McWalter: That’s that’s really interesting and I guess like the um, well okay I think about the human psychology of this right? quite a bit and again in my own kind of personal life as well. And really what I guess I’m looking for and I think it might be pretty common is just the guilt-free moment right? when I’m making some sort of financial exchange right? like. And sometimes other emotions like override right? So convenience timing. Um, you know if I’m like I literally ran out of you know, ah body wash or whatever it may be and I’m going out to a nice dinner like I’m just going to run across the street and grab something because even with our fifteen minutes deliveries in new york now. Um, that may not be quick enough right? and so I’ll just literally. Grab whatever iss on the shelf there. Um, or you know I’ll over it or whatever is like quickest available on Amazon whatever it may be um and so the ah suppose the ability to kind of um, kind of manage that emotion right is very dependent on like context and it’s very dependent on the types of a product I guess as well. Um, how do you think about that piece I mean you know 1 of the things I think about it especially with online shopping is people will put things into carts and like go back to them like 3 or four days later. Um, you know I guess in your kind of user research. Do you see you know human behavior double checking your scores and then going back to them and like how how they’re trying to maybe way up. Things like convenience against things like impact.

Lizzie Horvitz:  It’s a really good point I remember ah several months ago before we had even had the beta out I I woke up in the middle of the night and was like oh my gosh I just overlooked 1 of the biggest barriers which is once we’ve rated a product. Then people are like great. This is my new go to toilet paper and I never have to use finch again and that was a ah real fear. Um and and it add you know it goes to your convenience where people say I read about this in finch six months ago I know that it’s good I’m just going to keep going and now I don’t need the platform. Um I think.

James McWalter: Oh.

Lizzie Horvitz:  Finches scores aren’t always changing so much that it’s going to be important to sort of go back. Um, every couple of months and make sure that that the scores haven’t changed at all. Um, but I think you’re right and we don’t we don’t have user data on this yet. We’ll we’ll have it when we’re live. There are certain products that people are not willing to switch on. There are certain products that people love the brand and are not interested in buying sustainably there are other products that people are completely brand agnostic about and so you know worst case scenario for us. What’s exciting is that even if people aren’t switching. That’s data in and of itself that finch can then utilize and sell to brands where they say you know people are only willing to switch detergents if they’re saving five dollars or x y and z and so um, we’re we’re really excited to capture that data I think um. Yeah I lost my train of thought so you can you can take that out. But I think.

James McWalter: Yeah, yeah, no that that makes a ton of sense. Um, and I guess like you know 1 of the questions is impact can cover a lot of different things. Um, and so what are the kind of data points that you’re taking into account when you’re calculating your score.

Lizzie Horvitz:  So we have identified 80 attributes that go into the sustainability of a product. Um and part of our sort of trust metric is that we will not incorporate an attribute until we are 1 hundred percent confident in the studies and the data behind it and so for example.

James McWalter: And.

Lizzie Horvitz:  We know that Microplastics are a massive problem but they will continue to to grow in Concern. They’re just simply not good studies out right now that show the exact impact and so that’s not part of our of our writing system yet it will likely take 2 years to get to what our eighty product categories. Um, or what our 80 attributes are right now and then beyond that there are going to be I mean we’re reading studies now that came out a month ago that are incorporated. Um, they’re all based on environment. So. It’s real environmental sustainability in terms of quantifiably measuring these things. It’s everything from. Origin of manufacturing. Um you know greenhouse gas emissions um company level certifications and everything in between we would love to figure out a way to incorporate social factors as well. Um, like ah is child labor being used. Is there bipoc leadership on this company etc. The problem is we don’t feel comfortable for obvious reasons putting a waiting on that right? So when we look at a category we can say the impact of toilet paper is thirty percent end of life seventy percent you know pulp mill manufacturing and we can actually put numbers behind that. We would never be comfortable saying like Bipac leadership is probably like 50 percent important. Well everything else exactly right? And so um, we’re sort of toying around with maybe just saying as an addition like by the way this is child labor free or this is.

James McWalter: That counterbalances the child’s you know the child labor right? yeah.

Lizzie Horvitz:  You know we’re not convinced that this is used without child labor just as an addition so you’ll have the environmental score and then you have those social factors sort of qualitatively more than anything. Um, we’re using in terms of data. We’re using several different sources we’re we’re doing a lot of academic studies Ngo reports.

James McWalter: So.

Lizzie Horvitz:  Um, governmental reports that show sort of what the latest research is and then we’re buying some data sets. So we’re not I think what’s important to note, we’re not really reinventing the wheel in any way we are just taking you know. What ewg already has what B Corp party has and combining everything so that you don’t have to go to 1 place to get your human Health score and another place to get your sort of corporate governance. Score.

James McWalter: That’s interesting and I guess like so you know generally the environmental things will line up, but there are definitely situations where carbon emissions. For example, may be intention with like plastic so the creation of plastic right? So plastic doesn’t ah. And it decomposes. It doesn’t really produce any carbon like you know 1 of the problems with it right? It just sits in landfill for 100 or years or 1000 years whatever it may be but any carbon that is within the material itself is captured and not going off to the atmosphere and so how do you think about the weighings of those yeah things that could potentially be in some tension.

Lizzie Horvitz:  It’s such a good question and we have so many our our most popular blog is called the sustainability paradox written by our scientist mark and he looks into that exact issue which is people think they’re making the right decisions and then they’re actually doing ah worse. Um. For for like because of misinformation and so 1 of the biggest um 1 of the biggest issues is plastic straws versus min straws and so I think what happened was people were seeing you know pictures of sea turtles with straws up their noses and seahorses with q-tips et Cetera. Um, and that was really troubling. But what people don’t understand is that you know 1 in 7 plastic straws ends up in the ocean. Maybe um when a metal straw is made There’s absolutely an environmental a carbon impact that’s significantly higher than plastic and so. What people don’t understand is that when they buy 1 metal straw and use it 3 times they’re doing a significantly more. They’re doing significantly more damage than just using that plastic straw once it’s the same idea of if you go to an into a grocery store and you buy you know you buy your groceries you you forget your canvas bag in your car at home. Um, lot of people are so tempted to buy another canvas bag when in reality it’s significantly less harmful just to get a plastic bag sort of slap yourself on the wrist and move on because that 1 canvas bag needs to be used over 100 times to like recapture that carbon footprint. Um, and so you know it’s it’s really. Tricky james it’s complicated because we’re undoing a lot of information that that people have been used to for several years um and trying to retrain them and almost teach a new language around. This is what you should pay attention to um, the other thing that’s I think interesting is I’ve gotten a lot of feedback around I’d love to be able to. Toggle on what I care about. So if I care about water issues I can you know some so products can be rated higher than you if you care about carbon or things like that and we push back on that because that’s really what finches’ value ad is we say you know what when you’re buying a bed the um. When you’re buying a mattress like a b and c factors. Don’t really matter you really need to care about you know x y and z so it’s cool that you care about animal welfare but that doesn’t come into to play here and so we would rather tell the consumer. What to what to worry about and and inform them as opposed to sort of them driving whatever their decisions are.

James McWalter: Yeah I guess like so much of that misinformation right? I guess comes out of ah I guess under kind of understandable if not, ah yeah, positive corporate um green washshing of of various sorts and so like when I think about how you’ll be situated I guess in the marketplace you know like. Mentioned this like kind of ability to share these insights with corporations so that they can be better stewards right? Overall um, but then also obviously the consumer can make those kind of better choices. Um, how do you think about that balance right? because I mean a lot of the corporate players are already. You know ah trying to you know Pivot quote unquote at least the messaging for their products in a way that like. Implies more sustainability and I think like pretty much every major consumer brand will have sustainability on their website even if you know they just hired the first sustainability person last last summer or whatever. Maybe um, so yeah, how how do you think about like greenwashing how it intersects with your product.

Lizzie Horvitz:  So I think the smaller companies are definitely struggling more than the larger ones because they don’t have the first of all, they don’t have the money to pay for Bcorp certifications and and other things like that which already sets them back at at a disadvantage. Even though they might be doing just as good as a p and g um, and they also don’t have the the economies of scale that a unilever would have right? if they’re trying to buy recycled plastic um pcr. They don’t have the market share to be able to. Purchase that at ah at a price that makes sense and so they’re really in need of accurate information where we can say okay, here’s what matters here’s what doesn’t matter. This is these are the places where you need to where you need to invest and so I think that finch could actually be really helpful for those types of smaller companies. Larger companies have a slightly different issue which is that they don’t know what their consumer wants. Um, you know they spend hundreds of thousands of dollars on focus groups where consumers say I would absolutely spend money on a shampoo bar that was you know made without plastic and then at checkout it’s a very different story and they don’t end up doing that. And so it’s not because they’re being dishonest. It’s because we don’t know ourselves as as humans very well and what we say and what we do are are different. It’s just human nature and so and that gap is is actually fifty percent 65 percent of consumers want to shop more sustainably only twenty six percent end up doing so and so. Um, because of or I guess it’s less than 50 my math. My math might be a little off but it’s a huge gap and what what finch is able to do is go to these large companies and say okay when people are buying shampoo they care most about the end of life and they care most about the ingredients and so when you’re. Building your new product or marketing your new product. This is what you should keep in mind. Um and I think once people sort of get comfortable with that. Um, then it’s a different story I also think you know as I said earlier with gen z and more informed shoppers. Um companies are not going to be good. Able to get away with saying things like eco-friendly or all natural much longer because um, the the sheets being pulled back and people are understanding like what does this actually mean um and I kind of want to understand the details and not just see 1 word.

James McWalter: Yet.

Lizzie Horvitz:  That that really any and that’s the problem with greenwashing right? is that literally any company right now could put on their packaging eco-friendly. All natural chemical free and there’s no regulation for most of these words.

James McWalter: Yeah, and because that lack of regulation to your point. It just consumes or confuses the consumer I started talking to a food delivery company who tried or has implemented sustainable packaging as part of their product mainly because it was driven by the leadership team wanted this? Um, but. The ceo is saying to me that it was so disappointing because when they actually then like interviewed people as part of this they would ask them like you know which is like the most or how how much value do you place on 1 percent ten percent or 1 hundred percent sustainable packaging and it was basically the same response across the people who cared about sustainability once they saw sustainability it was like 1 percent.

Lizzie Horvitz:  Wows.

James McWalter: Um, there was very very little change between that and 1 hundred percent because they just saw the word sustainable or sustainability and it was like oh like we’re great. That’s sufficient like that was like the the weighing was on that word rather than the percentage which was the the entire piece. Um, so yeah, and but I think a lot of that is just down to the fact that people are so used to seeing.

Lizzie Horvitz:  Um, good to go. Um.

James McWalter: Word natural I mean the word natural in in terms of ah dietary type labeling has been you know debunked a million times because like literally pretty much everything I guess can be ranked as natural like if it is the molecule that appears in on the planet. Um, and so but so people have been looking at natural orange juice for you know, 20 years and just being kind of somewhat deceived and so I think. Um, we have a similar problem to kind of go against within the sustainability space.

Lizzie Horvitz:  Completely and you know 1 other example that that we always use is Palm oil is as natural as it gets right? but that is could not be moreive disruptive to the environment in terms of you know the monocultures and the destruction of deforestation and so um. People and that’s the balance that we’re really trying to reach is like I understand that people don’t have the time to really learn about the nuances with palm oil versus another ingredient I Totally get that. Um, but we would like to at least have that information in case people are interested but also be able to. Put a score on that. Um, as opposed to having people feel that own responsibility themselves to be like I don’t remember what the deal is with Palm oil should I buy this or should I not they can just see a score and and make a decision.

James McWalter: And yeah I guess 1 thing that you mentioned a couple of times that that I’d love to take in a little bit is around the kind of studies themselves and so um, you know you mentioned kind of studies who are kind of writing these studies already typically academics are enough I’d imagine. There’s not um and you know is there a kind of um. Like what pressure I guess could be or opportunities can be shown to whoever whatever type of groups are creating these studies today. Um, like do they need more people did they need more funding did they need more direction like what is the kind of gap in the types of studies that are needed to make product like yours shine.

Lizzie Horvitz:  It’s a really good question and I think I would have to ask Mark who is admittedly reading most of these studies. Um I’m trying to stay stay out of that as much as possible. But I think he might tell you that the biggest problem is that we can’t move quickly enough. There’s absolutely enough. There’s.

James McWalter: I.

Lizzie Horvitz:  There there are enough people there are tons of brilliant minds out there working on this around the clock. Um, but in order to get something peer reviewed up published etc that is incredibly bureaucratic. It can take a lot of time and so um, that’s really the barrier is that like. On our side. We don’t have the resources to read fast enough. All these all these papers that are already out there. But also um, it takes it takes a lot like there’s there’s probably research going on right now that we would love to incorporate that likely won’t be published for another year and a half and so it’s just sort of this lag time and and as I mentioned. We could probably get access to some of those studies and and talk to more academics about the races that they’re doing right now but we also have a reputation that’s really important to uphold and we we have standards on you know, making sure that our data is coming from at least 2 peer reviewed art studies and. Um, it’s you know it’s been in the wild for a little bit.

29:07.61 James McWalter: And those studies are they generally targeting kind of a product category generally or are they going into specific brands and and getting very kind of granular and saying ah you know take of argument unever versus P and G you know detergent right? And how those compare.

Lizzie Horvitz:  It’s actually neither we so that’s the work that that Mark is really creating on his own that’s our I p is um, what’s happening in the academic studies is looking at particular chemical makeups looking at. Newest research on packaging. Generally it’s it’s brand agnostic generally and it’s product agnostic but we have these different categories so you know climate change water use energy use natural resource depletion a couple of others and Mark is basically reading all of those studies and then. Putting numbers on how to quantify them and so 1 thing he’s doing right now is going category by category and seeing okay, what are the top we know that there are probably 10 environmental impacts that go into these products but what are let’s just start with the top 2 or 3 and so we know that. For mattresses. The biggest impacts are whether or not, you’re using a foam or spring mattress and what happens at the end of life and so for simplicity’s sake and because of where we are on the stage. We just take those 2 factors. Um, we read as many academic studies as we can about those specifically and then we make we make a final decision on mattresses and then with an amazon details page with you know anything we scrape from the public domain we can find out what individual mattress companies ah are made of. And then and then we we incorporate those ratings does that make sense.

James McWalter: And makes all sense. Yeah, and I think like developing that internal research and that that I be I think is incredibly value as well. 1 thought I suppose that I’ve been thinking about is there’s a lot of movements around or there’s a lot of energy. Um, even if ah I have. My own views on a maybe fatally flawed energy around things like degrowth and like the reduction in consumption Overall as like a strategy around climate and sustainability. Um, how do you think about that because I guess the ah you know the finch approach is to make have. Consumption. That’s already going to occur be the best the most optimized from a sustainability point of view consumption. Um, but there’s a ton of consumption that maybe not be quotequote needed and so the overall reduction of consumption right? Like can also have a large impact. Um, yeah, how do you think about that kind of tradeoff.

Lizzie Horvitz:  I couldn’t agree more and I think that’s absolutely a big part of it we as as you said so eloquently like our main goal is that people are shopping anyway. So when they’re shopping. We want to make that as as seamless as possible. We do try to try to. Implement a couple of things to reduce consumption and so part of our rating is in the use phase what’s happening once you own the product. There’s so much focus on how it got to your house and then how it’s disposed but not as much of what’s actually happening when when you’re using it. So we think of you know, washing a pair of jeans charging an ipad et cetera and so I think part of that is here’s how you can make your pair of jeans last right wash them in this specific way use this type of dishwasher this type of detergent. So that people won’t have to buy a second pair of jeans after a year or 2 right? And so I think. We’re really, um, pioneers in many ways of the use phase um and thinking through how all these factors fit together just to make things last longer It’s also important for finch that our monetization is not paired to purchases right um. So we thought incredibly hard about that. We’d love to get to a point where when someone’s shopping on Amazon. It’s so advanced where you know we’re saying you just Bought. You know you just bought deodorant. Last month do you really need this again or you just bought a pair of white sneakers last month do you need this purple pair of sneakers right? So um, sort of nudging people to second guess if they actually if they actually need things. Um, we’re starting with consumable so it’s it’s a little less relevant because. I don’t think there’s a way if there is I haven’t found it to sort of reduce toilet paper use for example or shampoo or I mean ah yeah, like of of course we could. We could do education on how to shower less and things like that. But um, the consumables are are easy. What’s going to get really fun is when we start getting into.

James McWalter: A world of B days.

Lizzie Horvitz:  Apparel and luxury items and things like that where we can actually say buy this not that um and and try to help drive those decisions.

James McWalter: Yeah, that makes sense and I guess there’s well so you mentioned monetization. So yeah, how are you thinking about monetization.

Lizzie Horvitz:  So we think of ourselves as a data company and we are creating 2 valuable types of data 1 is right now which is this proprietary algorithm of here are the most important factors that go into a product and these are the scores.

James McWalter: And.

Lizzie Horvitz:  And then the other is once we have a large group of people using the extension. We’ll be able to capture that data on behavior that would be able to sell to companies and to be very Clear. We’ve never sell personal Data. We only aggregated and anonymize it and so you know you James are a man of a certain age in a certain city nothing more than that. Um. And so that you know that monetization will come a little bit later but right now we’re having a lot of fun talking to potential partners who are thinking about their own shopping experience on their website or um, their own sort of internal. Ah. Internal test to say like should we carry these certain products. We’d love to see the finch scores on it. Um, so that’s been really fun.

James McWalter: Yeah that’s fascinating and you know you’re experiencing unilever I’m sure kind of aligns with this. But last company I was at was a marketplace for research participants and there was a ton of cpg market research being done by people within our space and so I talked to a lot of the big cpg companies who are customers over the over the last yours at that company and the amount of money that are spent on agencies and like all sorts of lists and all those kind of things I think would astound people and having like actual data where people’s actual behavior relative to what people are telling them and try and remember 6 weeks later um is incredibly valuable.

Lizzie Horvitz:  There’s so much there I agree it’s it’s we’re excited to sort of go down that road and we’re really just scratching the surface right now.

James McWalter: Absolutely and so you know you mentioned a little bit earlier about you’ve been in sustainability your kind of whole career and um, we already kind of mentioned like being as covid a lot of people kind of reassessing their path maybe starting companies. We’re talking hearing about this kind of great resignation. That’s been happening over the last few months where people are kind of. Changing or reassessing the kind of careers and so in general, we’re just seeing a ton of kind of new people kind of coming into the climate space. Um, but I guess like what are your views on that you know like generally more people working on these things is is the that positive. Um, but there are also can be kind of clashes as people like try to understand what’s kind of gone before and ah how we kind of con merge people who may not know much about sustainability or and but want to do good? Um, but how how do you think that’ll kind of evolve over the next few years

Lizzie Horvitz:  It’s 1 of my favorite questions I think about it all the time because the bottom line super clearly is the more people in this space the better and I have loved 1 of my favorite parts of my career is talking to people who are shifting and saying you know I come from Financial services I come from pr I would really like to use my power for good. We just hired a full stack developer who I’m so excited about who um you know studied environmental studies in undergrad but then did tech for forever and now just really wants to get back into that space and you know. Environmentalism is so intersectional that you need all those different skills to be ah ah to be honest to be a generalist like me is less and less helpful. Um, because we need all these different skills to sort of push the push the envelope. Um I will say it’s been interesting in the. Startup space to meet so many entrepreneurs who are who think they can start their own companies in the space after having never never been a part of it. Um I think that to be totally honest I’m probably offending a lot of people I think that’s interesting, an interesting decision because I’ve just There’s no way I would have ever been able to start this had I not had that experience at unilever had I not studied this in at yale at business school and and sustainability school. So um I would I always recommend that if people are entering in the space they sort of look towards someone who’s been in the space a little bit longer. Um. Because I can’t tell you how many how many people I meet who say yeah I I just like got really inspired by regenerative agriculture and I’m I’m gonna start my own farm and you’re like I don’t really get how you think that that’s something you’ll be able to do um just like leading a company like this. Um, so It’s probably a hot take that that’s unpopular by some but I think generally yeah, the more people the more people the better.

James McWalter: Yeah I guess the you know the tradeoff is the scooping up of capital right? And so if you have a ton of people who might have incredibly good connections within vc community or coming from you know building crms for. Um, favorite example, buildings urms for hairdressers are barbers right? like and then then moving into climate um and trying to kind of bring those kind of software and marketplace let’s say development skills into or so you know just Saas b 2 b saas skills into climate. Um, you know, then it’s kind of seeking out like use cases that might actually kind of apply. And I think in general where that’s kind of been most successful is the types of you know b two b esg carbon accounting type plays which and that’s why we’ve seen 200 of those companies in the last year kind of evolve and I’ve had a couple of them on on on the podcast as well and I think you know some of them will.

Lizzie Horvitz:  Um, either.

James McWalter: Do incredible things and some of them will be very very successful. Um, but I guess I think what’s really interesting even though but the point about yeah, starting some from gender farming or whatever is that like in a year like they’ll be like world-class experts unlike all the mistakes that they made with the thing and then maybe they they can do the other thing as well. Um, because I can kind of merge those 2 experiences. Um, and I guess like the other piece is just you know so much of the I guess the start of space is like developing in like 3 or four look at global like locations that are very very different to how the rest of the world operates and I think by like moving into these other spaces people are like getting experience and I think farming is a great example like I grew up on a farm.

Lizzie Horvitz:  Um, yes.

James McWalter: Ah, hadn’t but I hadn’t farmed for 20 years or whatever and then I started exploring regenerative vag and I very rapidly was like oh this the sales cycles are too long. This is just not the space for me even having grew and grown up on a farm and I think like having people just getting exposed to those different you know, ah types of life will. Make better founders better early employees and so on with.

Lizzie Horvitz:  I completely agree and I’m thinking you know I’m thinking back to when I lived in San francisco in 2014 I would meet all these people who would say like yeah I just started this company where you know you’re able to order at. You’re you’re able to order your food before you even get to the restaurant and then like it’s waiting there and and I would think to myself like this is so dumb and like so not what the world needs and so I guess the positive to your point is like at least people are trying to do something that like will improve the the planet and I feel very strongly. You know we’ve gotten a lot of pushback on the question of like. Our individual choice is going to push the envelope enough or will this be like large infrastructure decisions and there’s no doubt in my mind like we’re going to need serious changes to get our grid off of the dependence on oil and switchs chenoables no doubt in my mind but I don’t think it’s an either or it’s it’s like a both and like. We need all of these solutions to be happening simultaneously if there were a silver bullet. We probably would have already found it and figured out a way to to scale. It. So um I think the more sort of solutions. The better.

James McWalter: I yeah I think that’s like ah it’s 1 of my tests for seeing how like involved into the space like somebody is it’s like do they say silver bulleta type stuff or do they say like portfolio approach they say portfolio approach like they’re like oh they’ve talked to people for at least a couple of months you know.

Lizzie Horvitz:  Yeah, exactly.

James McWalter: Um, Lizzie Horvitz:  is actually brilliant before we finish up is there anything I should have asked you about but did not.

Lizzie Horvitz:  We covered a lot of ground I think I I would ask everybody to you know, check out our website for any resources, please share feedback. That’s the only way we we get better and we’ll be launching our browser extension in early Twenty Twenty two so I would encourage everybody to look out for that.

James McWalter: Brilliant and I think you can sign up on the website to get on to marketing list I just sign up myself and will add that link on to the show notes.

Lizzie Horvitz:  Thank you so much Dane This is this is a pleasure bye.

James McWalter: Thank you Lizzie Horvitz:  Bye now.

Solving EV Grid Challenges – E75

Great to chat with Apoorv Bhargava, CEO & Co-founder at Weave Grid! WeaveGrid works with utilities and electric vehicle (EV) owners to enable and accelerate the electrification of transportation! We discussed the system solutions for decarbonizing electricity and transportation, the venture ecosystem’s view on climate, utilities as regulated monopolies, aligning incentives for a comprehensive energy policy and more!

WeaveGrid is also hiring, apply here!

https://carbotnic.com/weavegrid

Download Podcast Here: https://plinkhq.com/i/1518148418

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Thanks so much! 

James

The unedited podcast transcript is below

James McWalter: Hello today we’re speaking with Apoorv Bhargava CEO and co-founder at Weavegrid welcome to the podcast Apoorv. Thank you so much. As was to start could you tell us a little bit about Weaverid.

Apoorv Bhargava: Hey, Thanks for having me James really excited to be here. Yeah, sure So Weavegrid is working at the intersection of the most carbon intensive industries in the World. So electricity and transportation as we think about decarbonizing both of those spaces. 1 of the the most important and most interesting things rather about what’s happening is that we’re seeing this curve happen obviously in the electricity space where we’re going from Centralized possible generation to more and more renewables and we’re hoping we can accelerate that as quickly as possible at the same time we’re seeing this s curve and this transition happening in automotive in the automotive world where we’re going from. Internal combustion engine vehicles to electric vehicles and I think the sort of genesis of the name but also the sort of resisone for this company is really that these 2 spaces are converging right in this moment they are both becoming 1 integrated system. They’re going from transportation and electricity. To electrified transportation and so what we’vegrid does is it tries to think about the systems levels problems and the system solutions that we can develop to enable that acceleration of electrobyte transportation to make sure that as more and more electric vehicles come onto the grid. The grid is ready to support them. And actually taking the really positive view. How can we leverage all these giant batteries on wheels in a way that can actually you know, almost add to the resiliency add to the value to the grid and make the grid make the grid really kind of even stronger and and more um. More valuable for all so that’s that’s what we’ve grid on we sit at that that intersection we work very closely. We’ve developed software that that helps utilities. That’s our core customer helps utilities and of course drivers who drive electric vehicles. Um, really kind of benefit from better charging and better understanding of charging.

James McWalter: So yeah, that makes a ton of sense and I guess you know sitting today in November of 2021 like absolutely yeah, you can very clearly see I think the average person on the street can see that these are apps you were at this juncture of this s curve. But I guess when you started the company a few years ago you know.

Apoorv Bhargava: And then of course better management of that charging.

Apoorv Bhargava: Um, yeah know when I we started the company of cute a few years ago it was funny I was at ah was at a climate happy hour last night and somebody said you know when you started the company a few years ago I thought you were crazy and I was like that’s great I’m glad I’m glad.

James McWalter: Was was that as known or there was a different initial inspiration to start the company.

James McWalter: That that’s what you want.

Apoorv Bhargava: Um, glad you thought I was crazy back then? um, but but it was. It’s funny like you know I’ve been in energy my whole career. My cofounder has been an energy and transportation is all career and I think what both of us saw was this like inevitability that was going to happen. But I think I’m um. You know and we can of course talk about my background later but like I’ve been trained both. You know, educationally, but also just workwise to think about the problem and how it affects every stakeholder and or any problem and how it affects every stakeholders and having empathy for all the stakeholders involved and I think as we thought about this rapid and impending. Growth in electrification. The question that kind of hit us was just that are people thinking about the second order effects. You know I think everybody often talks about the first order questions of are there enough charging stations are there enough batteries are there enough cars out there. All those kind of things and those are super important but our question really was philosophically like What could we as a small you know as a small startup do to accelerate decarbonization. Um, and that’s that’s our mission. You know at the end of the day like both my co-founder and I we we didn’t have like any sort of wild aspirations to go become startup ceo a startup ceo and as a startup. Ah, cto or whatever and just do that for the sake of it. We really wanted to say what can we do and what leverage can we provide to accelerate this decarbonization off our far economy and um as we thought about it. We said there’s this really important challenge that there’s very little understanding. In the whole system in in both these systems as this massive transformation happens and and actually data is really valuable in that and so if data is really valuable, then how do you build the software and the product around it to to enable understanding enable better management and and that’s. That’s the genesis of how we’ve get started. There was probably even more into that but we’ll leave it for later.

James McWalter: Well yeah I guess you know so you mentioned your co-founder. Yeah, how did that kind of initial relationship come about you know and and I guess as you’re kind of ideating on what? yeah, we’ve bridge could become and eventually did become I guess this you know random coffees you know, are you meeting socially like how did that all go.

Apoorv Bhargava: Um, yeah, it’s actually funny to say that so so we were both at graduate school at Stanford I was getting my mba and my Ms. In energy and environment and resources engineering and. I had kind of come in asking a few different questions I had had a career before that working again in clean energy and and and climate related things and um, always at the intersection of technology and climate technology and and energy. But when I came into grad school my my 3 big questions were really like okay, how do we innovate better in this sector. Where does venture play a role where does other kinds of financing play a role. What’s changing rapidly on the battery side I’m I’m a chemical engineer by training so I had done a lot of research and in sort of nanomaterials and batteries and so that kind of stuff previously in another life and then you know what? what role the do tools like machine learning and so forth have. In in the space of energy and climate. How can you leverage that given that there’s so much data today which still wasn’t even ten years ago john my cofounder he had he has had sort of ah a mirror image but but different background where he had also. He was also at Stanford getting his ph d in what’s known as management science and engineering very operations, heavy energy modeling about his whole core thesis and and focus was actually on on evs. In fact, he had worked for the cto and cofounder of tesla j b strabble for many years and in fact had also been his ta when jb taught at stanford. And so I think John had seen that world and understood that look at electrification is happeninging. It’s going to be inevitable and I had seen it more from the the utility side but we both didn’t really know each other in graduate school though and so we had a mutual friend who now happens to be a vc as is the way and he was like. Hey you should. You should both connect and so I still remember our first meeting was ah was a coffee and and I keep joking with John we’ve been coffee. We’ve been dating founder dating for a 3 and a half years since then he claims were found or married at this point but you know ah that might work out. Um, but yeah, so we met for coffee started talking I think.

James McWalter: It might work out.

Apoorv Bhargava: We both understood that there were a lot of unanswered questions and I think we we realized that there were some things that were happening rightly and there were some things that people just not thinking deeply enough about and and that led to more and more coffee gates and here we are 3 and a half years on.

James McWalter: Yeah I guess like looking again kind of at where the space is right now you know we’ve seen a ton of sps in the ev space utilities are finally getting some boat internal but also some regulatorgatory pressure to actually open up. Ah you know x for 44 eight forty 1 all these kind of things have been passed.

Apoorv Bhargava: Are.

Apoorv Bhargava: Um, no, you’re really knowledgeable about that. Yeah, yeah, yeah, very good.

James McWalter: And so um, so like again, it seems like now like there are a huge amount of kind of tailwinds to kind of make the speed up kind of development of the company. But what do those first couple of years look like in terms of like what initial mvp looked like the initial traction of that woman.

Apoorv Bhargava: Totally yeah I mean it’s interesting to to think back to those days and just think about different as a percentage that we spent our first year so we we met in 2018 early 2018 and we spend our basically almost our first year just doing product market fit analysis I was having this conversation again recently with someone with just said you know, but what was the technology. How did you like come out. Did you come out of lab. What did you do and I was like no no, no, we we had a technology idea we had an idea of what the tech and all the stack would look like but. But fundamentally we we were first fixated by the problem and the problem was what happens when all these vehicles come on to both the road and then the grid right at the same time and what impact does that start to create across the entire system and and again for all the stakeholders who are involved in that system’s transition. What value but also what pain do they each experience and how do we build something that works for them so we spent most of 2018 frankly, living off of that ramen that classic Robin budget and and and just spending time talking to as many potential customers partners users. But we could. We got a really, we were really fortunate to get a grant from Stanford about 50 K I used to hire some interns. We did some market research flew out to conferences John tried to finish up his ph d I think I definitely distracted him from that and so we just spent like ah almost a whole year just doing that. Literally didn’t even incorporate the company and yeah, when we when we started to really see conviction that hold on there’s something here because everyone’s seeing they’re worried they’re thinking about this. They’re not yet committed but they’re thinking about it as like okay there’s something here. There’s a negative fit.

James McWalter: So.

Apoorv Bhargava: And yeah, that’s when we started to to pull together. You know, put put together the company itself incorporated the company and started kind of developing a little bit of an Mvp showing that to customers and saying is this what you would buy would you be interested in it. How much would you pay for it like you know doing that classic kind of customer customer. The the kind of like asking customers. The right questions I guess and then just making sure that there’s validation from them. Um, ours are enterprise customers. So it’s not easy. It takes time to to build those relationships to to put yourself out there to to get that feedback and so we did a lot of that work and then. Yeah, ended up in 2019 approaching the the venture ecosystem which at that point did not view climate and especially selling to utilities did not feel that as a as a hot space so that was a that was a pretty interesting experience going through fundraising but I think we we were. You know, very fortunate and very well just very privileged that we had the opportunity to meet a bunch of venture capitalists and also I had had a brief stint in vc so so new enough of the ecosystem and raised a small round initially and then started building on our team and really building out the product.

James McWalter: Right? And then we we kind of ask forward to now and everybody the amount of Vc dollar is pouring into space is kind of extraordinary. Um, and so I’m sure fundraising now has gotten slightly more selective and easier I’d imagine.

Apoorv Bhargava: Um, that’s only. Um, it’s different.. It’s definitely a lot different now. Yeah um I I think I think it’s I think it’s about time that the space gets this as somebody who’s kind of worked on both sides I mean like I think ah.

James McWalter: Um.

Apoorv Bhargava: Ah, it’s wonderful to see this amount of capital flowing and I think public markets have started to figure out first that climate esg all these all these issues are really really, really a big deal and and are going to. Be 1 of the greatest you know, kind of wealth creation opportunities. But also 1 of the greatest dollars can actually produce some of the most meaningful impact and I think as that as that realization is kind of sunk through to the private markets and private investors. Obviously that that that. And see dollars are now starting to accelerate too. So it’s been really wonderful to see that there’s still a huge concentration effect I really still think that there are a ton of amazing companies out there who are still not getting funded and there’s still ah only a small handful who are but but at least that handful is growing. So I feel grateful for that.

James McWalter: Yeah, this is an extraordinary kind of matching issue that still remains like I was talking to a vc friend yesterday and he’s a clean tech vc in New York and he’s like all I think about is like how to improve dealflow and then I talked to to tons of founders who are just like absolutely struggling to get funded at all and it is ah.

Apoorv Bhargava: Um, ah grab.

James McWalter: I guess like the actual conversations just are not don’t think being ad and the signal is not being produced strong enough for I guess startups to actually know where to show right? because like if you’re not part of the game like really hard to kind of break into the game to certain extent. And then vice versa like vcs who are you know looking in theory for the Diamond and the rough founders or or startups that are just all around the world. Um, like where those people are congregating is bit of bit of opaque but as much as you want.

Apoorv Bhargava: How much do you want me to opine over here versus Okay, well here’s here’s what I’ll say I think I think having having perhaps both deployed vc dollars but also having like explored and raised from and just like. Thought deeply about the rest of the possible capital stack that could exist I think 1 of the very very very big challenges that we’re dealing with still is that in the early stage fundraising environment if you have a great idea that could be transformational from a climate impact perspective but also. Are not sure if it can grow in the ways that the Vc asset classes used to it can still be really hard to fundraise and the reality is that vc I mean we can dub whatever types of vc what we want to, but like you can call it deep Tech Climate Tech X Y Z Tech Abc tech. But the reality is like Vc has to look like a certain way and a lot of our business model and a lot of the way I had to think when we were building this company was can it fit into a model that not the the climate focus and the clean tech focus people back then can understand but also the andreessen Horowitzs could understand. Because if you can’t get them to believe in it and you can’t get them to buy that like there is something here that’s going to grow and it’s going to look like a vc return if it’s if it succeeds it’s going to look like vc returns then it’s really hard to fundraise and I think there is still that gap which is that to your point you’ve probably met a ton of climate founders who are like I’ve got a great idea I’ve got a great business. And then you’ve got vcs saying oh I Just don’t know where to go find them and and that that mismatch happens because we still lack the capital or the conviction from some vcs that these businesses could be billions of dollars and sometimes we lack the actual capital type that should fund those companies because they aren’t going to grow. In that J Curve esque way and so maybe there’s something else that that needs to fund them. It’s been a. It’s been a huge like passion project of mine to find how we how we fill that that that capital gap and yeah.

James McWalter: Yeah, it’s the you know I often talk to like other kind of climate founders and and that and I’m always like you need 2 decks right? You need like deck for the impact like of venture source and then the impact ah the deck for everybody else and like how you structure.

Apoorv Bhargava: And.

1

James McWalter: Your story is going to be quite different and like 1 of them has a much more tabm and business model first than the other which is about you know molecules of carbon being the sequester or whatever it may be um.

Apoorv Bhargava: Um, totally.

Apoorv Bhargava: Um, yep.

James McWalter: You know 1 of the other things you you mentioned is who you sell to right and the trepidation that I guess some not just vcs as we’re talking about but in general when I’ve looked at the energy space and potential ideas for myself I’ve looked at utilities and sign to utilities and it completely terrified me. Um I guess you know you you do come out of ah like a clean energy kind of approach. Um.

Apoorv Bhargava: Ah.

James McWalter: But a lot of the sales cycles for utilities I think can be multiple years Sometimes there’s not always the right incentives internally. Um, how have you found kind of selling to utilities. And yeah as as a kind of general approach for not just yourselves. But then I guess other founders in the space.

Apoorv Bhargava: Sure.

Apoorv Bhargava: Um, absolutely so this is gonna this is you know if this podcast makes it to energy Twitter one day ah this is either gonna make me friends or lose me friends I don’t know. But um, the way probably both It’s fine. That’s just the life of Twitter. Ah I think I think the reality is that like. We love painting narratives of black and white and like none of those narratives making a ton of sense I I think utilities are let me let me back up before even going into utilities and who they are as stakeholders I think the electric grid is the most amazing and transformative technology. That as a society we have had the privilege to to benefit from and if we don’t see if we don’t understand that like I think we’re doing ourselves a huge disservice. The twentieth century would not have been possible. Had it not been for the fact that you can flip a switch and have access to light have access to power have access to motive force have access to all these things. Like we’ve just done so so so easily now like I mean we don’t even think about the fact that literally we’re blowing things up in the background somewhere or transmitting a bunch of power across massive power lines and bringing it to our homes like we just don’t think about it. It’s literally disappeared in the background given that I think. Transformative effect that that has had on societies and I can speak to this as a person who has seen countries without that that privilege like it is so transformational from a development perspective from an industrial perspective from everything I think of course there are going to be stakeholders whose job. It is to build and maintain that. Incredible infrastructure I think utilities I’ve done that and I’ve done that really well. So my question is as you think about the next wave of what we need to transform which is mobility what platform do I believe can give us the ability to scale that super quickly cost effectively. And do it in a way where where we can actually you know we can. We can actually like make that electrified future happen and what tools and services. Do we need to provide those people and be empathetic to the fact that you know they’ve got they’ve got Regulators who regulate them. That’s a good thing about being a Monopoly utility you have you are regulated you know and then. There’s a lot of businesses that I won’t I won’t name names but like who aren’t regulated and are basically monopolies so at least utilities are regulated monopolies and and I think that’s ah, that’s a really great thing because it means that they are constantly scrutinized and ask questions of like why are you spending these dollars what objectives are you trying to meet. And there’s a great set of stakeholder. There’s a stakeholder dynamic around that for that reason though, you know they’re prudent in the way they behave they’re they’re obviously risk averse because every decision they take if it causes the power to go out. Yeah, it’s a really big deal lives are at at Stake you know so they’re slow their risk.

James McWalter: No.

Apoorv Bhargava: Risk averse etc. That said electrification is something that they are super excited about and want to enable oh by the way transportation is 31 percent of emissions. It’s the largest form of emissions in the United states electricity is actually only 29 percent and I mean I say only but like. Reality is like that’s an amazing opportunity for utilities to both continue helping the decarbonization pathway of their own fleets on on the on the power plant site but also to actually enable the future of electrification and leverage this grid this platform that has done everything from you know, massively industrialized certain countries and. Provide really high quality power for all of us so that we can live these lives with computers and phones and all of this other stuff and now electric cars and I think to me it was about being empathetic to our customer recognizing that nobody goes to work at a utility because they want to burn a ton of coal and like. A bad person. No they want to go there because they think they’re doing a really great job helping people and helping people’s lives and there’s some really really smart people inside of utilities and so understanding what they really needed not what I think they need not what I want them to want but what they really need. And then making sure that our product actually meets those meets those needs and provides those provides those outcomes for them. It is a long sale cycle. You know you’re not wrong about that. But I think about a lot of other climate tech like there’s a lot of you know there’s a lot of development time and technology to be risking time in all these like. You know, carbon removal companies and things like that so time is time like that time can go into technology. They’re risking. It can go into product Market. Be risking. It can go into sales ultimately the question I ask myself is like do I have confidence in our technology do I have confidence in our ability to execute do i. The ability to hire an amazing team to go execute against it and do I think that sales being lengthy is something that I can continue to shrink down and and I have confidence in all those things. So um I think I think it’s a lot less risky to some extent than than hoping that like this new innovative approach to I’m just going to pick on technology Green hydrogen works. 10 years from now and then I can sell it and scale it after those 10 years like it’s it’s just as risky or probably more so.

James McWalter: That’s super interesting I mean in 1 sense, you know we’re going to elect try everything right? or some portion of the world economy over the next few decades and so the centrality of utilities and people who are managing the energy and in some sort of way becomes ever more important and I guess like 1 of the I guess the.

Apoorv Bhargava: This. Yeah.

James McWalter: And I’ve talked to maybe a dozen utilities as part of some my own kind of research on and on different ideas and I guess like the thing that I would love to see potentially morphine utilities is kind of ah a bit more of a seasonizing of the day like you know the utilities save the world right? like you are the heroes of the of the potential future to a certain extent like in the enablement of the technology. And all these other elements that are emergent right? So like Green hydrogen doesn’t work without a massively like larger more fortified grid with basically you know negative and negative solar power costs. You know, same for direct our capture same for vertical farming like a lot of these things are very very dependent on a.

Apoorv Bhargava: Are here. Yeah.

James McWalter: Yeah, a clean grid a but then also like ubiquitous cheap solar and some of the other types of renewable energy all built on you know wires that a utility at the end of the day in any sort of 30 year time horizon will still be run by utilities to a certain extent. so um so I guess like so 1 of the things I’m still trying to figure out and maybe some of this is regulation. Maybe some of this is just.

Apoorv Bhargava: Shirt. Sure.

Apoorv Bhargava: Um.

James McWalter: Pressure being brought on to bear by companies like wavegrid and so on is about like how the incentives like pledgey have to shift because the incentives in the I guess old world right were but are maybe not kind of suitable for the new world that’s kind of emergent. So how do you think about those kind of incentives. What levers could potentially have to be pulled.

Apoorv Bhargava: Um, yeah I think it’s a fantastic question and and I also I think I also sometimes feel similarly ah sad that like you can’t grab the the opportunity by the horns as easily right. I mean it comes down to like what the definition of the institution is the institution that is today called the utility in America is generally about the maintenance and the upkeep off poles and wires that bring electricity to your home There are some utilities who also own power generation. Are some entities that are not utilities but are what are known as independent power producers who do ah produce power and sell into energy markets and do things like that I think every utility is asking themselves a bunch of questions of like what can we do, but ultimately it comes down to like what are they regulated and able to do. And I think there’s an intense debate going on between like for example and and this is the area we operate in. But there’s an intense debate going on is to can Monopoly utilities own and operate like the default charging stations that are required across. Like an entire service territory right? So instead of having 15 different brands of chargers where my keyring looks like I have like you know a thousand different key cards and things like that can I just have 1 experience across my entire ah entire utility service territory right. And if you if you kind of shock to the federal government. They’re talking about now creating a federal charging network and all that so like how do we simplify that. How do we make that easy. Well I think if you talk to most utilities, you’ll say yeah I want to do that I totally want to do that I have onboard but under what jurisdictional authority are they allowed to do those things right. My argument is. It’s probably the most efficient thing there’s reasons why you don’t want that to happen also but like okay like what what do we all care about and I think the problem is that we all don’t care about the same thing I care about decarbonizing as quickly as possible. Don’t care as much about the extension of Monopoly power for somebody who is already regulated as a monopoly because that’s a whole point of regulation. It is to make sure that they don’t make unfair profits and so Forth. Um, and I think like that is a different view frankly like that is 1 of my hot takes that I often have when it comes to like. You know, debating others in my field is like I don’t I don’t think that there’s that much sense to like balkanizing every part of clean energy and making it such a complex ecosystem to navigate that like we actually lose sight of why we’re doing this in the first place which is decarbonizing as damn quickly as possible.

Apoorv Bhargava: Seizing the day on every other thing from Green hydrogen to vertical farms to all of that I think again like there is a question of what can the regulated and the unregulated arm do if you are regulated. You are regulated as a monopoly because of the compact that you struck which is like I own every single customer and in order to do so. Have to like you know, not make unfair profits and here are all these opportunities to make unfair profits in some sense right? and so it’s like who you know what can the platform that the utility has with their customers with the grid itself the neutral physical platform. What can they do. To enable all these amazing technologies that will decarbonize the future and I think there are a lot of ways where you can accelerate that you can you can improve it. Some of it is cultural. You have to of course you know you’ve got to have the right people inside these institutions. Some of it is technical. So of it is simplest processes I mean seriously, there’s like antiated processes and in many institutions where you are talking about like oh I need to go get this permit this is going to take me 15 pieces of paper that have to me move from 1 department to the other because that’s just how it worked and nobody’s thought about going and upgrading that. But I think 1 gives me a lot of hope is that. There’s a big utility backed fund called energy impact partners based out of new york and a couple of other places they just raised a billion dollar fund today like the climate focus vc fund growths fund I mean that’s amazing. You know, like that is that is so cool to see that kind of capital also moving in of course a lot of it is going to be strategically aligned. So. I I totally agree with you. It’s it’s 1 of those moments where I’m like ah it would be amazing. but I but I think this kind of goes to the comprehensive this this just goes to a frustrated for mine for the last decade and a half that I’ve been working in the sector which is like we just don’t have comprehensive energy policy in this country or climate policy. And I think if we had more comprehensive policy I think then we could have the conversation of like who owns jurisdictional rights to do what and you know does a carbon price or a carbon fee or whatever you want to call it does that for example, align incentives in a certain way because it all comes back to exactly what you said which is. How do we align incentives to do the right thing right? And and I think there are there are pricebased signals. You can take there are regulatory based approaches. You can take and and the question is just like what do you need to do to to accelerate that. Um, yeah I don’t know that answer to your question I think I just too great. Ah.

James McWalter: Yeah, no, no, it’s it’s super helpful I mean I I guess kind of you know, thinking about like specific kind of paths to where we’re we’re potentially going to go over the next you know, 5 to ten years and I guess I’d love to kind of get back into. You know the the role we’ve it’s going to play in in those kind of immediate next five to 10 years but 1 of the kind of things I keep thinking about is once you start getting to thirty percent plus ev penetration for a given jurisdiction right? particularly in cities where you might not have like ah a ton of single-fami homes for people to plug in. Um, what does the Friday before long weekend but fourth fourth july weekend look like right? like do you have? ah you know queues down the road.

Apoorv Bhargava: Um, yeah, yeah.

James McWalter: Um, do you have just a kind of all of a sudden like there’s going to be some weekend that’s going to be very very stressful to the average ev owner because all of a sudden. There’s just tons of evs and then you also get into ideas around like straight on the grid.

Apoorv Bhargava: Um, yeah, exactly.

James McWalter: Um, maybe they’re all trying to charge at the exact same time if you all of a sudden have this massive spike in the price of electricity at like 6 p m on a Friday before fourth july weekend like what what does that mean and what is the reaction to the average consumer to and does that potentially like slow down the adoption of dvs and so you know I think often like I think having learned a bit but.

Apoorv Bhargava: Um, totally.

James McWalter: We’ve grade like I think a lot about how we’ve gri can potentially like you know, help stop something like that kind of happen. So yeah’d I’d love to hear how you think yeah, weve it’s going to have that sort of impact of the next couple years

Apoorv Bhargava: Ah, hundred hundred percent. So. that’s that’s like that’s again the whole reason for starting this company. It’s it’s it is the belief that you know the the system that is electricity is incredibly powerful. It is incredibly it has just been such an amazing amazing system. Drive so much growth and so much prosperity and so forth and at the same time electrifying transportation is a very necessary thing we need to do in order to decarbonize transportation that said the grid is not ready for that many vehicles to show up tomorrow. It could be ready in 10 years question is do we have 10 years to to slowly and gently bring them online so exactly to your point if we want to grow electrification exponentially what steps do we need to take both at a planning level at a management level at a forecasting and prediction level at an intelligence level to just understand and manage. All of this growth of ah evs and really really importantly going back to the consumer. How do we ensure that this incredibly huge behavior shift that’s happening where a person goes from driving an internal combustion engine vehicle to driving an electric car. That behavior shift happens in a way which is seamless and where the customer doesn’t have to ever worry because anxiety is like you know people talk about range anxiety I think there’s charging anxiety and I think like charging anxiety kills people more kills this this thing slows down the growth way more than range anxiety does I think we’re going to. Surpass range anxiety easily in the next couple years and I think charging anxiety too will also be removed as more and more cars are capable of really fast charging but that doesn’t actually explain consumer behavior like most consumer behavior is not the fourth of july weekend and I think like. That’s the point is like actually ninety five percent of consumer behavior is something totally different and so how do we take that behavior. How do we take? The. How do we take the the implications of that behavior if that driving and charging behavior and turn that into insights analytics management. Everything for the entity. That’s managing the grid. And also enable them and other stakeholders who are trying to put out the requisite infrastructure such that when it comes to those edge cases. No 1 is ever feeling stranded or or not not ready to do what they need to do right? and so I just think I think that’s that’s like. Fundamentally the question behind wevegrid right? is like how do we enable this like this electrification transformation to not run into roadblocks and and speed bumps. Um, as as it kind of takes off and and and we think that there’s a there’s a there’s a ton of work but but like any system you got to start with just understanding things.

Apoorv Bhargava: I mean I feel like you know, um I always use the the metaphor of like you got to monitor and understand you then got to predict and then you’ve got to manage and you know I think that that applies to basically every system in the world. But but I think especially now so with electrification.

James McWalter: I Guess like in a situation where we’vegrid is deployed. You know I’m I’m an Ev driver wevegrid is deployed in my local Mo local utility like what? what? how does my experience change.

Apoorv Bhargava: Yeah, your experience looks really damn good. Ah, basically um, if you’re if you’re a customer in a utility where reprint is deployed your utility would offer you some sort of. Better rateed or a incentive or whatever and through very very very simple, um, experience through a very simple customer experience. That’s all kind of white labeled. It’s white labeled eds or it’s your utility as your auto make or whatever the stakeholders that you’re comfortable and they’re aware of we’ve could basically. Brings together those data streams that matter to us you go through a 2 step signon process takes probably a minute and then on the back end what the utility gets to see is again that analytics those insights. All of that. But for the consumer you have access to suddenly. Wide variety of charging insights understanding what you’re doing behaviorally understanding what you could be doing better and then most importantly, just setting and forgetting hikiope want to have to think about your charging again. dayto- dayto day. You just want to come home plug in your car. And the charging will be taken care of and that’s what we enable for you as a consumer of course while saving you money of course whilst getting you the the cleanest energy possible of course while doing all of those things but like we we consider that table Stakes. We consider you being fully charged. We consider you being you know, getting the greenest and cleanest. Electricity fully you know like as table stakes and I think the key thing is like we want to remove any cognitive burden that you feel as a consumer your needs always come first as a consumer that is like the thing we believe is like actually the utility needs to understand the consumer’s needs and needs to play with. What availability the consumer provides them not the other way around and I think there’s too much conversation in the energy world of like but what can the consumer give the utility. It’s like no no, no the consumer’s needs come first and then whatever is remaining goes to the grid and the utility and so forth.

James McWalter: So and so I guess then you know I let’s say I have an ev I want it fully charged in the morning because I need to call my commute. But for example, would it be something like I only charge between 2 am and 5 am because there’s actually electricity very cheap. The grid is very stable at that time and night and that would be optimized.

Apoorv Bhargava: Um, yeah.

Apoorv Bhargava: Sure I think I think you would not have to think about any of that like again, my point is like we should not be asking people to make those kinds of decisions because no matter no matter how much information we provide you like you’ll never really know.

James McWalter: Everybody involved.

Apoorv Bhargava: The exact right time and the reason I say that is because those rates that you’re describing those like really cheap charging rates and so Forth. They only actually tackle a part of the system that is at risk from electrification. They’re only actually helping us take advantage of like the cheapest power prices. But it doesn’t actually start to help us understand like what risk the rest of the grid is at if everybody starts charging at 2 am and so it’s actually not beneficial for everybody to to be charging it to am it is beneficial for us to spread the charging out and so our view is like we just don’t want you to have to think about it. It will be done. It will be fully charged. It will be charged well before you need it.

James McWalter: That makes sense 1 of the things I notice about weavegrid because you mentioned white labeling and 1 of the I guess struggles I’ve had with as I’ve dug into the energy space is that a lot of the big kind of exciting companies tend to be vertically integrated.

Bhargava: And you just need to go home and plug it in.

James McWalter: And when I look across like where are the horizontal companies right? Where are the you know type of energy the Aws of energy like you know companies that service a lot of stakeholders like across the energy space. Um, and we’verid is you know a horizontal play that I think is absolutely Fascinating. Um, but I guess you know so my question is like are there other kind of. Yeah, where is there scope for more innovation. More smart people to kind of come in particularly in horizontal plays and it could be to do it. Tv It could be you know anything within clean energy. Um, because I’ve talked to tos of people who want to like get involved or coming from a software but or data background and energy is so hard to get into that like everyone just.

Apoorv Bhargava: So yeah.

James McWalter: Seems to end up. Well let’s get some assets and then let’s vertically integrate all the way up to you know some customers and kind of go up through there rather than um, building software data that actually can service a lot of different stakeholders. Yeah.

Apoorv Bhargava: Um, ah, it’s really hard but I think it’s really hard I think that’s why most people don’t do it. So so transparently the reason I think we are that way is because we just spent an immense amount of time understanding each of the stakeholders involved and. Also we’re ready to take the bet that even though the stakeholder sales our conversion cycle. Whatever you want to call it right is long. It just it’s it’s something that um we were willing to better so bet on and we were willing to bet that like we could we could get through that. How do you innovate better. How how do you create more horizontal businesses in this space. Um I think you have to look the like the constant struggle right? between vertical and horizontal is like you have to look for products or you have to build a product rather you have to look for a need that is consistent across every single um across every single stakeholder. And then once you find that need you have to build a product around that need that can easily scale horizontally but energy has not traditionally been that way like I think it is it is ah it is an industry that has been built around a lot of bespoke use cases and things like that and so I think 1 of the classic examples of this often right is like. People who try to break into energy tech and say oh like I’m going to go solve building energy efficiency and that is like the 1 where like most people go in and they’re like well there’s 1 hundred thousand buildings in the city of new york what I’m making it up and then they realize building a building b. We’re go to building 100 thousand all look entirely freaking different and it’s so hard then to build a horizontal business because what you end up saying is like actually this is just there is no consistency right? So I think but that’s not true. You just have to keep digging. You have to keep looking. You have to find. Have to find the thing that every 1 of those those entities is experience in the the same pain that every 1 of those entities experienced so I don’t know if I answer the question but what I would say is like spend time really getting to know your customer I mean that’s that’s the thing that’s just like we spent so long doing obsess less than the technology obsess more in the customer. That’s like that gives you the the patterns of like oh this could go horizontal. This could go article and I I’ll just say like again having worn an investor hat previously and and some of the angel mess against so forth that I do like I I have noticed so many people who want to pitch me on like the ai for this and the ai and the ml for that like.

James McWalter: Makes a Thomas sense.

Apoorv Bhargava: Look guys like that’s all great, but ultimately like what is the pain point you’re going to actually solve and like that that is what I want to hear.

James McWalter: Right? Like talk talk pain talk problem. Don’t talk the buzzwords which are very easy like those can always be added later. You know.

Apoorv Bhargava: Totally and I actually think like that’s the thing that tech does so well I mean like honestly our team is you know we have a ton of expertise and internal Expertise internal knowledge about utilities Policymakers I often joke like. Our stack starts at the regulator and goes all the way down to our kubernetes cluster like we have to think all the way and and but at the same time like we we like have hired some of the best and brightest people from companies like slack Google Facebook you name it like get around I mean like we have. Ah, very traditional and incredibly and I say traditional but like incredibly smart tech team and engineering team because the problems are the same and and this resonated a lot with them when we describe what we were doing because they’re like wait I get it like this is this is a data problem. Um, So yeah I think I think I Think. Tech knows how to solve these problems. It’s just you got to spend time actually getting to know your customer.

39:45.36 James McWalter: And I guess you know as you’ve kind of yeah as a role in your role a ceo right? Um I believe this is first time you’ve been ceo of a company. It’s been a few years in you’re you’re hitting again. This inflection point or you’re kind of you know the company’s doing quite well, what’s your biggest surprise as a ceo over the last few years.

Apoorv Bhargava: So. Oh.

Apoorv Bhargava: Oh that’s a good question. What has might been my biggest surprise over the last few years. Ah that it’s been doing so well I don’t know I just like I I’m like wow this worked I think you live. Live in a lot of imposter syndrome when you’re when you’re starting a company and like here we are we were 6 people pre covid and this week we’re 36 I think we’re going to like 45 or something in the end of here. Um I don’t know I think my biggest a surprise is just like ah.

James McWalter: Yeah.

Apoorv Bhargava: There’s team surprise and then there said I think there’s personal surprise I Think let me start with the personal surprise. My personal surprise is like being being deeply appreciative to just like all the mentors all the like investors friends family Whoever who has taken. So much effort to like continue to guide me keep me motivated dealt with my ups and Downs. Of course my cofounder goes in there like the ups and downs of running a company and like that has enabled me personally to grow and recognize my strengths and of course very importantly, my weaknesses I think at a team level.

James McWalter: Button.

Apoorv Bhargava: I day in day out I’m just amazed at like I’m a big big big believer in delegation and like I’m just amazed like at the capacity that individuals have to like go from day 1 saying hey I came in wanting to do this 1 x y z thing and that’s what I was told and like by day ninety they’re saying. Actually owned 3 other things and I have it under control. Don’t you worry about it and I’m just so blown away every time I see that because I’m like I didn’t even tell you to do that’s amazing. How did you figure that out and that that blows my mind every day because I think every time we’ve added even 1 person. We suddenly see this like. Exponential expansion of capabilities. That’s just like mind blowing to me when I remember myself like me and John sitting there tunneling write out a bunch of crap by ourselves everything from the powerpoint deck to the Mvp to the whatever and like here we are and I’m like like all these amazing people doing all these crazy things. So i. That that continues to all unsurpris me every day I don’t I don’t have much better for that for that answer.

James McWalter: Love love that I guess like on the imposster syndrome Piece. It is this fascinating thing I was in a room full of founders. The youngest of which was 18 the oldest of which you know in their forty s and like everyone’s like talking about you know of like to be by definition in that room like everyone thinks they’ll build a billion dollar company but then like. Also thinking in the elevator up or down like I’m just full shit like you know it know it’s just like you’re just moving between these 2 like extremes like on constant basis. Um, poor. This has been absolutely Brilliant. Oh massive This has been brilliant I Guess from finish up is there anything I should ask you about but did not.

Apoorv Bhargava: I’m full of shit. Yeah.

Bhargava: The Cognitive dissonance. Yeah. About the 1 Sorry no I Love these conversations I don’t I don’t think so I mean like here’s the thing we’re Growing. We’re hiring, please come check out our roles I think that’s great I Think for everybody who’s listening to this podcast.

James McWalter: Is there anything I should have asked you about but did not.

Apoorv Bhargava: Keep listening to amazing podcasts like this keep getting inspired by the things you hear by the people you talk to and seriously like come up with ideas reach out to people talk to people. It is so amazing I like take four to 5 calls from people that I know I’m never going to hire a week but I just talk to them because I want more people in the sector I think a market success for me is. Seeing more people in the sector of course I want this company to succeed. Of course you know I want to grow it do all that but like I just want to see so many more people come into this, you know and I think that’ll that’ll that’ll truly be what we need that is truly what we need to to make a dent and to to really go after climate change and um, yeah, like. But you know on a very personal and and selfish note go check out the jobs and we’ve read and I’m sure sure a lot of you will be good fit there.

James McWalter: And we’ll add it to the show notes. And yeah I definitely echo those sentiments. Thank you very much.

Apoorv Bhargava: Yeah, likewise. Cheers! Thanks so much James.

Recovering Minerals from E-waste – E74

Great to chat with Megan O’Connor,  CEO and Co-founder of  Nth Cycle, a company that recovers and recycles critical minerals from waste materials for the clean energy transition! We discussed the very small amount of batteries that are recycled worldwide, the process of recovering the minerals for the battery manufacturing supply chain, how Nth Cycle can help reduce the carbon footprint of the mining industry and more! 

https://carbotnic.com/Nthcycle

Download Podcast Here: https://plinkhq.com/i/1518148418

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Thanks so much! 

James

The unedited podcast transcript is below

James McWalter: Hello today we’re speaking with Meghan O’Connor CEO and co-founder of Nth Cycle! Welcome to podcast Meghan.

Meghan O’Connor:  Thank you, thank you for having me today.

James McWalter: Brilliant I suppose to start could you tell us a little bit about Nth Cycle.

Meghan O’Connor:  Yes, absolutely Nth Cycle’s mission is to really enable a very clean, streamlined supply of the critical minerals we need for the energy transition. So we’re really trying to recover as much cobalt nickel. Ah, really the main battery materials. We’ll need from any type of feedstock. So we’re looking at mining in the different ores we have around North America as well as the spent materials. So like the laptops the cell phones even the ev packs that come off the road trying to recycle those to get those materials back into the supply chain.

James McWalter: And what drove the initial decision to start Nth Cycle .

Meghan O’Connor:  Let’s see it was back in 2014 when I was in graduate school actually um, the technology itself was invented over 12 years ago by my co-founder Chad Vecitis who was a Full-time professor at harvard university and he had developed it actually for a waste remediation strategy in fourteen I saw him give a talk on this technology and I thought wow that is a very different way of remediating different wastewaters than and I had seen before and around the same time that that happened. I was also getting very very interested in circular economy electronics waste recycling and really reading more and more into the projected supply chain delays as well as shortages that were you know, projected for 10155 years on the line with respect to critical materials and how that was going to impact.

James McWalter: So.

Meghan O’Connor:  The energy transition long term and I was actually in the hallway when I was at yale university and 1 of the professors there was trying to put together what he called a green electronic summit and this is where he invited some of the folks from Apple dell um. You know all the big electronics and semiconductor companies. You can think of to yale to talk about the major sustainability issues they were seeing at a corporate level to try and help yale’s internal research direction and so this was completely closed to students and. I was very determined anyway to try and get into this meeting and so I banged down this professor’s door for about 3 weeks until they finally let me in as a scribe. So I sat there taking notes for for many many hours by hand because I couldn’t even use my laptop but it was totally worth it to. Be the fly in the wall and to hear you know the real sustainability issues that all of these corporates. You know, truly saw coming down the line and over and over again I kept hearing you know waste management and recycling is is very much needed and will become an even larger issue right? as. More cell phones come out of consumers hands as more evs come off the road. This is just going to be a growing problem that we currently have no solution to and the main reason that is is that there’s really no ah economic way to recycle these materials the other problem that I kept hearinging over and over again was supply chain.

Meghan O’Connor:  Delays and management of that and how they saw these huge supply gaps coming down the line and how you know where are we going to get all this material from especially when you know the ev Boom boom happens because they think these were very early adopters of of that belief and so.

James McWalter: And.

Meghan O’Connor:  You know I walked at that meeting thinking like how has nobody developed a solution to not only recycle these materials and really develop a rigorous waste management strategy while also pulling out these metals. You know, very economically to put them back into the supply chain to help create a secondary source of all these materials that are very much needed. And so from there I actually you know walked into my ph d advisor’s office I said I’m going to change my project. You know I saw this chad vaidis guy with this really interesting technology. Um I think you could really work for mental recycling and so I asked both of them if I could work on it and that’s what I changed my ph d project to and worked on for the next. Ah, three years and so that’s yeah.

James McWalter: That’s absolutely fascinating. Yeah, and and so so so what point you know before that meeting that you’re ascribing within or during the Ph D we were like okay this is actually a company that I personally want to build versus a technology that maybe somebody else can you know, utilize to solve this problem.

Meghan O’Connor:  Yeah I got you know as I was developing the technology and and scaling it for you know metals recycling over the 3 years finishing out my Ph D you know I kept thinking about that same question of of you know we could go and you know license this to 1 of the you know big companies that was in the room. But. Felt like it could have so much more potential if I brought it out into the world on my own and and I always knew I didn’t want to take the traditional path of of you know, becoming a professor or going into a standard industry position after my Ph D and so I think sort of the combination of the things really drove me to just take the risk and the leap into entrepreneurship to try and at least um. You know, commercialize it for the greater Good instead of just having 1 company sort of use it for their recycling purposes.

James McWalter: And in terms of the core technology. Ah you know as you kind of developed it into commercial applications. Did you have to pivot did some of your early suppositions not pan out. What was that process like.

Meghan O’Connor:  Absolutely I think every entrepreneur will say that they’ve had some kind of pivot for us. You know the technology works for many different metals across the periodic table so we actually started the company off with a huge focus on rare Earth so where earths are another. Ah, group of critical minerals that are in the magnets and big winter turbines and they’re the the magnets that power the motors and eves so they’re using similar technologies that you find batteries but the rare earth supply chain is quite difficult to get into because the majority of it is over in Asia. And so while we have sort of the end of life feedstocks here. We learned very early on that it might not be the best market for us at least to start off so that’s that was our first I wouldn’t say big pivot but definitely a pivot to a different feedstock to start with which is the lithium I batteries I mentioned.

James McWalter: And so the I guess in terms of let’s say you’re so where are you sourcing those that feedstock today like what are the primary sources and ah how again I guess how has that changed over the years

Meghan O’Connor:  Yeah, so we we primarily work with folks collecting different types of scrap in this case, Scrap lithium I and batteryteries. So they can come from directly from some of the oems if they’re if they’re they have manufacturing defects or things like that. Or if they’re just simply cell phones and laptops that consumers bring into like a best buy or any of the sort of drop off locations for your electronics. It ends up at a big recycler and then we partner with them to actually chemically recycle that back to the individual metals that go into manufacturing again.

James McWalter: So It’s a ton of kind of working to find partnerships where basically these yeah Lithium ion batteries are moving into like a waste stream and there might be some existing recycling but it’s not fit for purpose or just some sounds of it often. No recycling whatsoever and so your primary I Guess. Customer In this case is the ah you know those companies who are doing the recycling or trying to dispose of the waste in some way.

Meghan O’Connor:  Exactly exactly less than five percent of of lithium I batteries are recycled worldwide and the folks in the United states at least who are you know electronics forcycles and doing air quotes are just legally allowed to collect them and then basically find a home for them which sadly the vast majority of the time is in Landfills. And so yeah, we’re helping them to to find a better home bike actually being able to chemically recycle not just collect and ship to a landfill but actually chemically fully recycle them back into a used product again.

James McWalter: And so let’s say the ah you know you get a shipment in lithiumy batteries into your facility. What is the process. So and what can you share about I Guess the the kind of core ip that you’ve developed.

Meghan O’Connor:  Yeah, no great question. So so we work with folks that take the batteries and they shred them down into this material. That’s called black Mass. It’s a very generic name but it really looks like black mass looks like salt water and it contains all the valuable metals right? It contains the cobalt The nickel.

James McWalter: And.

Meghan O’Connor:  And then some graphite which is the anode of a battery so we take that black mass and we put it through our process which is called electro extraction and you can think about it as an electrified Britta Filter. So It’s a carbon filter that we push an electrical current across and while we’re pushing the dissolved black mass through. Electal current helps select or recover the individual metals out at that specific voltage. So That’s how we’re able to selectively remove the metals that we want while the rest of the stuff goes through to the next stage.

James McWalter: And so the the filter I suppose what is the kind of Ma material to use for the filter and can they be reused and I guess then the other kind of major input is electricity itself and so I suppose how electric electrically intensive is the process.

Meghan O’Connor:  Yes, so the filters can be reused. They are made out of a carbon material and the electricity inputs actually are the lowest part of our total operating cost. So it’s It’s a very very efficient process in terms of how much electricity put in to turn that metal into a valuable product.

James McWalter: I Love this and and and so then for a I guess a battery manufacturer um like those are your primary kind of customers on the other side then is is the case.

Meghan O’Connor:  Yes, yes, we do make a product that can be put back into the battery manufacturing supply chain. Exactly.

James McWalter: And are a lot of those like onshore or you’re then kind of moving into a more globalized supply chain I Guess where are mostly these Lithium iron batteries being built.

Meghan O’Connor:  Yes, so the US and North american in general is building out facilities to to create and manufacture cathodes. We’re still a few years away from that. So the majority of the material is moved um, offshore to europe at the moment. But.

James McWalter: And.

Meghan O’Connor:  Yes, the the goal is to keep all this material sort of in the North american supply chains as we continue to grow out and invest in our own you know, entire supply chain and the manufacturing that goes along with all the various steps to create you know the batteries that you see you know once you drive your eb around.

James McWalter: And I was going to the earlier mention you have of circular economy is there any limit to how many times your process could recycle a given material. Um and you know can I actually could get circularly back into the economy each time.

Meghan O’Connor:  I love that question because that is where we got our name from so end cycle um is right unlimited amount of times we can recycle this material. You know as many times as we can get up back to our process and so yes, in theory you can recycle Metals. You know an unlimited end amount of times. Um, so that’s what’s so great about it is once we have enough material. You know the goal is to truly enable a decrease in the the total mining that we have to do around the world.

James McWalter: Yeah, and actually that was going to my next question about how you think this will affect the mining industry writ large you know when I think about the different industries that need to Decarbonize. You know there are some that are moving pretty quickly and and I think about energy and transport to a certain extent. Some that are kind of in the middle which is a lot of the kind of food system and then you have the very hard kind of last togo industries and I think you know aviation and mining are probably chief among Them. How do you think about how your how end cycles kind of process will potentially help decarbonize mining.

Meghan O’Connor:  Yes I think I think mining has you know a very negative connotation for good reason right? that the technologies and the the processes they use today are very dirty. They are very carbon intensive like you said, um and a lot of the you know mining space has has seen as you know, not really wanting to move forward and and evolve and. Um, Sadly, we do need to mine more material. We simply do not have enough coal to nickel and all the other critical minerals needed. You know within the waste streams that we have um to be able to continue on this path to clean, um to a clean energy economy so we do need to think rethink about mining and that’s you know the other side of NTHcycles business is sustainable. Mining. Actually pulling these metals out of the ground in a much more sustainable way with a much lower carbon footprint. So we can go on site with these mine operators help them pull the cobalt and the nickel out of the ground and we can reduce their carbon footprint by seventy five percent so no more of these very hazardous chemicals or anything that you know. Is is traditionally thought of when you when you think of mining.

James McWalter: That’s that’s absolutely fascinating and I guess we’re also in this kind of ah massive acceleration in the amount of lithium ion batteries needed and obviously evs are emergent. Everybody has a mobile device or most people have a mobile device in their in their pocket everything from drones to many other use cases are using these type of batteries. And so I guess how do you think about the kind of addressable Market how that how that that is expanding and how that affects your business long-term.

Meghan O’Connor:  Yes, yes, So so the market is quite large I mean with the the amount of batteries that are needed again to to fully electrify and and move us forward to this clean energy economy the market just just grows astronomically over the next 10 years but for recyclers. In particular, we’re sort of 8 to 10 years behind any massive growth in manufacturing because we have to wait for all those packs to come off the road. So The average you know, expected lifetime say for a Tesla is 8 to 10 years. They’re they’re estimating and so we have to wait for those to come back out of the consumer’s hands and into the recycling market to see that so we see sort of a delayed bump.

James McWalter: So.

Meghan O’Connor:  Um, in terms of our market growth. But if you look at the total sort of critical minerals market in general and not just the the fraction that goes into batteries I mean it is you know 1 hundred and sixty 7 billion dollars by 2030 it is you know that’s how much material will need for this for this transition.

James McWalter: Absolutely massive I guess 1 of the issues when I’ve talked to other companies who are trying to replace or recycle commodities in some way in in a way that’s less’s carbon intensive or fully decarbonized. There’s often this kind of challenge between ah, getting to price parity versus you know the the status quo. How do you think about the pricing of like what is I suppose like ah like a perfect case for encycle down the road is price parity a name or is the fact that it is a recycled material. There is value in that feature in of itself means that price parity is I guess less important.

Meghan O’Connor:  Yeah, so electro extraction in general can reduce the overall cost of of pulling these metals whether it’s out of you know end-of-life batteries or out of the ground and and new mining operations by fifty percent or more and so we are very cost competitiveive with the traditional technologies and on top of that. You know it is a recycled material so there is a little bit more demand for that type of material in general I wouldn’t say it’s ah, there’s any kind of monetary Value. You can put to that quite yet. But we are starting to see more and more movement especially in the commodities trading space of folks wanting and. Being able or being willing I should say to pay a higher price for recycled content especially in in the Automotive space.

James McWalter: And where you have to today you know in terms of like the size of facility. The amount of processing you can do in a typical day or year or whatever the kind of relevant frequency and I guess what’s the kind of plans over the next yeah 12 to eighteen months.

Meghan O’Connor:  Yeah, so right now we actually just moved into a 12000 square foot facility so this is our headquarters just outside of Boston massachusetts on the North shore. So we’re very excited we yes they get up and running there.

Meghan O’Connor:  Um, and we actually will be at our we’re still in the scaling process in terms of our technology development and we’ll be at our full commercial scale in Q One of 2022 so at that point we’ll be able to process about 6 metric tons of battery waste per day.

James McWalter: And if you considered licensing the technology um with other kind of partners globally um versus kind of having it all under your roof in in your kind of initial facility and then subsequent facilities.

Meghan O’Connor:  Yeah, so our actual business model is more of a tolling model so we’ll actually go on site with these various customers because again 1 of the largest challenges with batteries in particular is that it’s a very distributed form of waste and it’s very hazardous to ship all this material to 1 location. So.

James McWalter: And.

Meghan O’Connor:  I’m sure you know we can all think of the videos that we saw of these batteries sort of spontaneously combusting right? and so you can imagine when they’re of a lot of defects and they’re at their end of life and they’re being transported in a truck and they’re being jostled all around a lot of safety issues. You know can can can come up and so the value of Encycls technology is not only in.

James McWalter: And red.

Meghan O’Connor:  The you know greenhouse gas reduction and the cost reduction but also in the modularity so we can actually go on site to wherever this waste are located so saving an entire transportation step which also has you know a carbon impact and process that material right there and pull out these products which are then you know much lower volume much higher Value. You know, much easier to transport to that final stage of of the refinement before it goes into manufacturing and so here again, we’ll be on site with these customers and we’ll charge a fee per Kilogram of of say battery waste that we process for them. And so we have thought about the licensing model. But again the real value. You know we can bring to this feedstock in particular is is being on site and operating for those partners.

James McWalter: And I believe you recently raised a round of Capital. Um, you know you’re I’m sure talking to tons of investors some who I’m sure earns Yeah, understand the space but I’m sure there’s also a lot of generalist investors and vcs who may be a little bit less familiar with the space. You know what? what are the elements that they found most compelling as part of those conversations.

Meghan O’Connor:  Um, yeah I think our investors were not only impressed with the technology and how we were you know the technology allowed us to come up with a completely different business model right? This very distributed modular approach. Instead of having to raise you know hundreds of millions of dollars to fill out this 1 facility for 1 feedstock like you see in the battery recycling space right? now you know our technology can go out and process really any type of scrap that has cobalt and nickel in it and I think they really loved the diversification that we could bring to the table and the overall mission of again, not trying to focus on on 1 feedstock because. You know recycling lithiumine batteries is a very much needed a space to be in. But even if we were tocycle 1 hundred percent of lithium ion batteries in 2030. It would still only be about ten percent of the total metals for cobalt and nickels specifically that will need you know for the projected demand so we need to look at you know. All the different feedsocks across the entire so value chain and think okay, where can we get that other you know ninety percent of metal that we’ll need if it can’t come from from spent lithy mine batteries and so that’s really what end cycle I think brought to the table that was quite different from our competitors and even some of our partner facilities that we work with is. You know we’re really trying to take a holistic view of this and I think you know that combined with the team and and really our passion for the space was was what really sold them.

James McWalter: And that’s absolutely fascinating and and I guess there’s a couple different other kind of tailwinds that are potentially kind of would come up when as I was in the research into into encycl and into the space and I guess 1 is you know postco there are tons of concerns around ah supply chains. Um, and. Even supply chains that have some sort of national security element right? So chips but lithiumyon batteries are arguably becoming part of ah you know like a national security point point of view as well. How do you think about how like en cycle intersects with some of those concerns some of those tailwinds around. Tighter supply chain supply chains that you know national economies that have a large technological yeah use case are kind of dependent on.

Meghan O’Connor:  Yeah, absolutely we hear all the time that right? This is a big national security issue for for lithium mine batteries but also for a lot of the materials that are used in the defense space for a lot of the the technology that’s used there as well and and you know having. You know the pandemic impact that even more I think just shown a light on it. You know, even brighter that you know we really are truly almost 1 hundred percent dependent on overseas metal supply chains and we really need to start looking and investing at Technologies here to bring. Not only the manufacturing back. But also the refining capacity because that’s really the biggest pain point that we’re trying to solve is that you know the United states and north america in particular just really didn’t invest in the refining capacity that is needed to bring all the manufacturing back here because where even if we had battery manufacturer. We’d still have to get the metals from Overseas. There’s multiple parts in that supply chain that I think you know we’re really riding the tailwinds of of of you know the government is starting to realize industry is starting to realize that oh hey this is and a really big deal and it’s coming a little bit faster than I think folks thought and people are starting to you know think. Think a little bit more strategically about where we get those materials from and what types of technologies. You know they’re willing to invest in even if you know it is earlier stage than what traditional you know investors would look for especially in climate tech.

James McWalter: Yeah I think you were speaking a little bit about this in your recent techcrunch presentation I believe that you came runner up in that just last month I guess what was that experience like.

Meghan O’Connor:  Why for Tech Crunch. It was great. I mean that audience was phenomenal and we’ve never really been able to pitch to a global audience before so that in itself was very exciting for us and I think just the coaching and and ah, really all of the fabulous people that we were in the competition with was just really wonderful. It was It was. About 8 weeks of really intense training sessions to to get ready for that. So that was you know something on its own. But yeah, once we got to that day. It was just it was really exciting to be able to just you know tell the story of end cycle to as many people as we could possibly reach.

James McWalter: And I guess probably helpful from a kind of challenge point of view as well. Um, as you kind of scale up I’m sure you need you know, very very smart people across a lot of different. Um you know domains to really make end cycle bring an end cycle to that next level and having that kind of global form potentially helps with that as well.

Meghan O’Connor:  Absolutely absolutely the team I think makes or breaks a company I think you could have the best technology in the world. But if you don’t have the right team behind you. You’re never going to execute on that on that vision and so yes I think that too again just telling the encycle story having as many people whether they’re investors or potential Employees. You know here. You know what? we’re all about and what we’re trying to do or the next several years was was really exciting and we did actually get a lot of inbound interest from that So I was you know, really really happy with that.

James McWalter: And so when I think about how kind of lithium ion batteries and the use cases for them. You know a lot of them are in our mobile devices and the large yeah mobile devices manufacturers apple samsung etc. Basically there’s a kind of system of planned obsolescence. You know there’s always a new phone coming out the the next year or the next quarter. And people are encouraged to yeah, replace their phones. Ah what is your kind of general view on that that form of planned obsolescence is that sustainable I mean obviously what encycle can do is dramatically reduce the the cost of that on on society and the cost of that from a waste point of view. Um, but what about that as a practice are we going to see moves to kind of move away from that type of business model.

Meghan O’Connor:  I hope so so could say about that I I really hope so I do not think it’s sustainable I think you know, ah you know planning these for these devices to die after 2 years at best for these phones is is. Horribly unsustainable, especially when you think about the design changes that have happened even over the past five years right? I remember you know back when I had my first couple of cell phones. You could take the battery out you could change the battery you had you know the removable parts of the phone and now if you look at phones like you know I have a phone here.

Meghan O’Connor:  And I can’t remove the battery out of it. You know so that if you think about how that translates to recycling that’s you know, an excessive amount of labor that goes into actually disassembling the phone because you can’t simply pop the battery out so they actually shred the whole phone together which makes it you know. Ah, orders of Magnitude more difficult to actually recycle and so if we could go back and you know manufacture these phones and think about I like to call it design for disassembly it would make recycling easier. We’d be able more of these components back into the supply chain instead of a lot of them just ending up in the trash.

James McWalter: Ah.

Meghan O’Connor:  Because they’re so difficult to disassemble. That’s really I think the the major challenge on the mechanical separation side I think there are people literally using their hands to separate these. There’s no automated way to do this yet unfortunately and then in every phone there’s seventy five different elements so that makes it very comfortable.

Meghan O’Connor:  Folks like us to be able to separate individually all those 75 elements out some of them are metal Some of them are not and so if we were able to separate out these different components if they change the manufacturing design. We’d be able to just pull out the Lithium ion battery and then the magnets that have the rarersenum and really be able to separate out those those individual component streams I like to call them. Which you know takes it from 75 elements to down to maybe 5 which is you know much more reasonable and much more efficient to recycle.

James McWalter: And I guess thinking about to that meeting. You sat in on 4 or 5 years ago whatever maybe compared to those conversations you overheard or you were sitting in on then versus the conversations with the oems and these large corporations I’m sure you’re having today has the messaging changed are they getting the need to change some of their manufacturing processes. Or is it pretty slow going and and you know they’re not close to where you need to get to.

Meghan O’Connor:  Yes, so I think the consumer electronic brands are definitely moving a little bit faster I think they see the value in it having a lower carbon fiber material and in that transparency that comes along with you know, really tracking where the Michelle comes from so I think.

James McWalter: Button.

Meghan O’Connor:  And and a lot of that is coming from consumers right? I think a lot like Apple and dall I think are leading the charge in that sense of of really trying to be more transparent of where you know the aluminum comes from where the cobalt comes from um, right because people don’t want a phone that you know the cobalt content comes from the democratic. To the democratic republic of congo where you know there were so children mining that material and so I think you’re starting to see a little bit more movement there and then in the automotive space. You know you’re starting to see them think about okay, what are we going to do when you know they made they’ve all made these massive announcements if they’re going to be fully electric by I don’t know 2045.

Meghan O’Connor:  30 whatever the number is for that specific oem but you know what are they going to start to do with all this waste. You know, very difficult to handle waste. You know 10 years down the line so they’re a little slower because I think their problem is a little further pushed out than like you said right cell phones in the last 2 years so the electronics manufacturers have to think a little bit faster on that. But.

James McWalter: And.

James McWalter: Right.

Meghan O’Connor:  Um, they definitely are are both. You know, definitely seeing the urgency of the problem now.

James McWalter: I Guess what is the kind of role of the consumer in this you know I think there’s often this kind of pressure where people across the you know the consumer side the business side. The government side often. It’s like oh well, you know consumers made better choices than business would respond to that and Or. Consumers Will you know like organizations will say Well yeah, business are pushing upon them ah products that are just you know net bad for the planet and you know consumer choice is somewhat limited.. How do you think about? Let’s say the role of Consumer choice in yeah, reducing this as a problem.

26:34.78 Meghan O’Connor:  Yeah I think from a couple of different angles right? You can choose where you want to get your phone so you know do your research you know the what companies are actually using recycled content or trying to use recycled content or at least have goals of reusingcycled recycled content by. 202055 because there are companies out there that are actively trying to work on this and then from the other side you know you know if um, you know plans obsolescence doesn’t go away and you have to get rid of your phone in 2 years right you know truly try to find a place where it can be Recycled. Don’t throw it in the trash I can’t tell you the number of people that I talked to that still don’t realize you have.

James McWalter: No.

Meghan O’Connor:  Recycle e-waste. We’re like oh yeah, just you know, throw it in the regular trash and I’m like no don’t do that? Um, because it’s in at least in the United states right? It’s it’s a very state by state thing in terms of the regulation. There’s no sort of federal regulation that says you have to recycle ewaste. Unfortunately so you know.

James McWalter: All right.

Meghan O’Connor:  I Think consumers you know, need to take that upon themselves which I think Education is a big part of it of of teaching people where to take these devices and but them figuring out you know, take these is a huge part of it because if if they don’t return them in and they just sit like like I know my parents have.

Meghan O’Connor:  You know a couple cell phones sitting in their sock drawer because they didn’t know what to do with them right until I helped them figure out where to take them. Um, you know if they’re sitting in a door somewhere. We can’t we can’t recycle them so they’re just really lost content to us at that point.

James McWalter: Absolutely and I’m definitely guilty as well of having the random drawer full of random batteries and the old phones and you know and in theory right? You’re going to bring them to the right place. Ah, but you know but the greatest will in the world often. We make those mistakes and it it is quite difficult because. Like it should be I don’t know I guess any electronic device just have like a big sticker. It says you know you’re in New York State or you’re in Massachusetts and you know here’s the closest place to your address. Ah try to reduce somewhat. But again it is to your point. Um, you know the consumer does have to take some role in that as well.

Meghan O’Connor:  Yes, and it should be. It should be easier I Hope we get to that point of where it’s it’s It’s very obvious and and very easy for people to figure out where those go because you’re right part of it is. There’s just really no communication on it in general.

James McWalter: And I guess as you look across you you know, but your space as well as I guess circular economy approaches and in general where would you like to see more innovation I mean I’m sure there’s a bit of an all of the above like answer that question but specifically like where could you know? smart people who want to start companies or join companies doing smart things where are the areas that you kind of. Point them towards besides nth Cycle. Of course.

Meghan O’Connor:  Yes I think ah plastics recycling Um I can tell you how much I Wish we had a better solution for plastics recycling right? I mean I as try as we might to to.

James McWalter: Ah.

Meghan O’Connor:  To go away from single use plastic. There is still plastic in so many of our devices in things that are packaged and sent to us and you know soap from the store and things that you somewhat can avoid um you know it’s sadly like even if you put it in the recycling bin.

James McWalter: Ah.

Meghan O’Connor:  The the chances are that it’s not recycled right? So I Hope that somebody is out there and I’m sure there are very very smart people like you said out there developing a much cleaner more efficient way to sort the plastic which is I think challenge number 1 and then actually getting it to be recycled and and back into products and then I’ll say the other 1 closer to myspace is. I think I mentioned this a little bit before but you know right now even for Ev packs and consumer Electronics. You know, part of the recycling challenge is that all of these components are stuck together so you can imagine when recyclers get these massive ev packs in right? They’re the packs.

James McWalter: Ah.

Meghan O’Connor:  And then you have the modules and then you have the individual cells like somebody is manually standing there in this you know giant suit so they don’t get electrocuted pulling out these cells 1 by 1 it takes you know, basically a whole shift 1 shift to take up our 1 pack if it’s a big enough pack so you can imagine once we get to you know the massive eve the messes of evs that we want to. That is going to be a huge bottleneck so I hope somebody is out there and you know if anybody’s thinking about this. This is a great opportunity to to figure out how to automate that. How do we efficiently start to to depack these cells and and even for consumer electronics right? How do we do that you know Automated. So I say those are the 2 big things that come.

James McWalter: Yeah, so I love that as an idea and it’s definitely something that as I know talked to a lot of people or never researched people for this podcast I think there are people working on plastic actually. Ah.

Meghan O’Connor:  Top of mind.

James McWalter: And julia from sway is going to be talking I think right before this episode comes out. Um they’re doing ah like an algae- based ah plastic replacement for sing these plastics and we’ve got a few other people kind of working on like plastic substitutes. Although the recycling piece is still quite difficult but that separation piece absolutely and ah, we’ve also talked to some people in the more in the food wayside. And even kind of sorting out food waste into composting and so on these are all just very very difficult things. It needs a combination of both mechanical biochemical and maybe other processes as well. And so yeah, you kind of it sounds to really tackle that problem you need smart people coming from. A lot of different disciplines and perspectives to try to build out a process that works at scale very good and so yeah as I kind of dug into your background I almost fascinated. You know how people’s was fascination with the environment and with I guess sustainability with large starts.

Meghan O’Connor:  Um, absolutely.

James McWalter: Yeah, is there anything that you can point to in your kind of early early days. Um, that got you excited about this space.

Meghan O’Connor:  Yeah, so I think when I was an undergrad at union college in Upstate new york I in general they’re a very environmentally conscious school and so I think just being there and having you know all the clubs and and just having a really eco-conscious. Campus to live on was like sort of the first thing that sort of hit me is like wow like I’ve never been around this before and this is pretty cool but then the research that I did there I was it was a chemistry major and I worked specifically in an environmental chemistry lab and you know my professor and just everything she could teach me about you know how.

James McWalter: And.

Meghan O’Connor:  Chemicals are transported through the environment and how it affects like different ecosystems whether it’s human Animal. You know, whatever you know the being is that’s being affected but just really learning about how every single thing that we make you know has an impact on this world and and trying to figure out how we can. Sort of mitigate that or at least try it to stop it from happening trying to create a solution without causing a whole bunch of other issues along with it was just super fascinating to me and that’s you know, doing those projects you know was great and I loved looking at you know how these molecules are transport the environment and can affect. You know, very small scale things but it. It didn’t really um, satisfy my desire to to make an impact at a very large scale and so I actually transferred um at once I graduated from Undergraduate I went into civil and environmental engineering so still doing a lot of that and like environmental chemistry work that I really fell in love with. But at the engineering Scale. You know you can make a much bigger impact in a much shorter period of time and so that’s really where I fell in love with you know all the different technologies and how they can solve some of these really large sustainability challenges in general.

James McWalter: And and thinking then about let’s say you came out of a University background with a technology designed as part of your Ph D with these amazing advisors who became your early team members. But I suppose I’ve talking to a lot of people who’ve developed. Cool Technologies in Academia and the technology then never really gets commercialized.. There’s kind of this breakpoint like in the kind of space between academic kind of applications and then commercializations and sometimes it’s down to funding the funding environment’s too opaque or sometimes you know the. Right? Kind of operator person coming from start of world doesn’t speak to the right academic coming from the kind of technical side. What could be done to kind of create a better pipeline of companies coming out of universities.

Meghan O’Connor:  Oh that’s such a great question and I and I see that all the time and it’s something that we suffered with right I mean my co-founders and I are very academic. Um and you know as best as I could to learn all the business stuff. There was still certain things that I just couldn’t grasp fast enough.

James McWalter: Er.

Meghan O’Connor:  And so I think for us it was really finding that right partner which is not always the easiest right? Like you said finding that right person who understood the type of business model that we needed and could help me with the financial side of things not to mention like learning how to fundraise the right way and what types of capital you would like at certain stages I think. Something that I found is really really interesting at least the universities that I went to was a lot of times they have really great competitions internally where they pair some technical folks with folks from the business school who are very interested in entrepreneurship and climate in general and building those teams with people with you know all the right skill sets coming together. Um, and trying to start a company that way I think has been really interesting and I have seen a lot of success stories of that of those of those folks and those groups that have won these competitions going out into the world and and creating these successful companies. So I think that’s been I Think the the biggest thing that I’ve seen work. Um. If if you’re sort of in still in University and and looking for folks to help you sort of build out the team in the right way. But for us, you know we really just went out and and I tried to meet as many people as I could tried to Network tried to tell our story and the more you tell your story and the more you harness that in.

James McWalter: And.

Meghan O’Connor:  Um, you will find people who also fall in love with it and believe in you and believe in the team and and you’ll find you’ll find the right fit.

James McWalter: Yeah I think of universities have this great potential for matchmaking right? You know people find the the people they phone love with and people find you know business partners and and some of the best friends of their lives and all these kind of things and that yeah I love this model that that you mentioned of the business school and the the more technical people are are otherwise kind of. Meeting up and working on projects together because that kind of cross-pollination you know allows pretty interesting things to potentially be emergent and I guess you know you your came straight into you know from mind understanding. This is the first kind of company I guess you worked at I know it’s and it’s also you know you you found that it you’re the ceo.

Meghan O’Connor:  Exactly exactly.

James McWalter: What are some of the things you’ve learned as Ceo that I guess you found a bit surprising once you kind of were kind of building out the company right.

Meghan O’Connor:  Oh so many things. Um I think 1 h r in my mind was something that was not going to be difficult and oh boy that is that is not far is not easy. So.

James McWalter: Paper.

Meghan O’Connor:  Think next time I do this or if I had to do it again I would hire you know an external firm to help me with that almost immediately because there’s so many things you can want on that side. Um, in terms of payroll whatnot but the other thing I think was was you know, just really finding the right support system finding the right investors finding the right cheerleaders.

James McWalter: Okay.

James McWalter: No.

Meghan O’Connor:  Was I knew would be important but I didn’t realize how important right? Those people are really there to support you but also to go and tell other people. How great you are and what the company’s mission is and so that that networking piece is just so much bigger than I ever thought it would be so I think those 2 things are the first things come to mind. But I think I learned something new every single day.

James McWalter: Yeah, no, absolutely yeah, no so and it’s funny like I was at a previous company and our 10 to tent hire was actually a full-time hr person which is pretty pretty unusual I think but it was a fully remote company. This is a number of years ago and it actually really helped massively particularly for.

Meghan O’Connor:  Um, and the challenges that come along with.

James McWalter: Remote company because you could start to have a single person to kind of like start to figure out like what Ra remote culture could look like and all those elements and and then also the day to day of yeah making sure everyone gets paid and and all those kind of things. Um and the other bit around the I suppose that that networking piece is kind of fascinating I think as people are trying to.

Meghan O’Connor:  Um, and Then. Um, but.

James McWalter: Build companies until they kind of get I guess it’s like this kind of wedge is kind of filter where it seems like nobody’s returning your calls. Nobody’s like answering anything. Um, you’re like you know you’re looking around and everybody seems to be raising money and everybody seems to be like you know, getting featured on different things and then it often just takes like 1 or 2 people to. Make a little bit of a bet on you. You know make that in shirt that you mentioned and then all of a sudden. It’s like oh like it’s it’s kind of easy. You know all of a sudden and and I guess I think a lot of people and I definitely don’t think you’re in this case but I think a lot of people forget how difficult that early filter. Processes um, until they get into you have that next step where they have a few investors or a few people senior in the industry to kind of vouch for them.

Meghan O’Connor:  Oh absolutely I could not agree more again. This is our fourth year and we are now just starting to gain traction and to really you know, go out and talk to customers and folks like yourself right? so. Took us many many many years to to like you said filter through as many people as we could to find the right support system and the right cheerleaders that we needed and and I think a lot of it was you know we finally were able to get you know, clean energy ventures and that you know wonderful backing by them that led us to different mentors and and team members and so I think. Like you said you just have to really you get through that part. It is not easy I will say it was a really long 3 years but you know you get to that point and you find those people who who truly get and understand and believe in what you’re doing like it’ll just start to happen and it’s ah it’s a great time.

James McWalter: Absolutely yeah and I’m really excited for you know what end cycle is going to do in the future I suppose before we finish off is there anything I should have asked you about but did not.

Meghan O’Connor:  Um, well we are always looking for great team members. So if anyone is interested. Please feel free to to contact us on our website at Encycle Dot Com We’re looking for some really great engineers and some business development folks. So I would love to hear from you if you’re at all interested in in end Cycle’s mission.

James McWalter: And we’ll include your careers page in the in the show notes as well. Ah Meghan O’Connor:   This has been absolutely brilliant. Thank you so much.

Meghan O’Connor:  Thank you so much for having me today bye bye.

Responsible Venture Capital – E72

Great to chat with Zécca J. Lehn, General Partner of Responsibly Ventures, a PreSeed VC Impact Fund, backing remarkable teams in both sustainability and social good! We discussed the process to become an accredited investor, how VC can be aligned with sustainability, the general process for evaluating a company, the difference between venture backable vs venture geared and more! 

https://carbotnic.com/ResponsiblyV

Download Podcast Here: https://plinkhq.com/i/1518148418

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  1. Subscribe to the Carbotnic patreon  
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Thanks so much! 

James

——

The unedited podcast transcript is below

James McWalter: Hello today. We’re speaking with Zecca Lehn general partner at Responsibly Ventures, welcome to podcast Zecca, brilliant I supposed to start, will you tell us a little bit about Responsibly Ventures.

Zecca Lehn: Thank you So nice to be here. Thank you.

Zecca Lehn: Ah, yes, so the fund responsibly. It’s a preseed vc impact fund align with both direct and indirect impact. I like to have every deal have an aspect of sustainability or social good aligned with the fund.

James McWalter: And what drove that initial decision to start the fund. Okay.

Zecca Lehn: Well, ah you know I’ve been I’ve been ambitious to be a professional investor for some 20 plus years and have invested in sustainability for a long time. And for me this was ah, kind of a natural step after having started as an angel investor or an impact focus angel investor a few years back and so starting a fund just felt like the natural progression I just love every minute of it.

James McWalter: Like absolutely and this was 1 of the kind of amazing like opportunities when you start a fund that is the types of kind of boat on the limited partner side but also the kind of founders side of things. So How you found you know, like building those relationships finding. Like really smart founders to speak to and what’s your kind of general process for that.

Zecca Lehn: Well I’m learning as I go and this is my first time to the rodeo as they put it and being a general partner a solo gp as an emerging fund manager to a first time fund is it’s a learning process. What I did first is I got engaged with the founder institute. They have ah an incredible program called the vc lab and it puts together a group of people around the world and each fund manager or group of fund managers helps build their thesis. 

Zecca Lehn: Ah, sort of pull the market get some feedback from potential customers or potential lps. They put you through this kind of brute force. Incredible! Incredibly difficult program that they kick people out if you just don’t hit certain benchmarks on a weekly basis and it’s I think it started maybe like five percent of us.

Zecca Lehn: Out of a thousand applicants got accepted of those. Let’s say 1 hundred and twenty funds or so I think there were remaining 10 funds after 2 months or 2 or 3 months and it was grueling. It was amazing though it was ah it was a great process. Probably 1 of the most difficult vc Boot camp style programs out there especially aligned with sustainability. Um, that’s kind of their their core their core goal right now.

James McWalter: It’s kind of this fascinating transition that I guess the venture world has gone through over the last kind of Decade or so where you know became very professionalized I guess in the ninety s you had you know the a 16 z’s and benchmark and into coas of the world kind of emerging as like those first kind of major funds. And then we started to see the kind of emergence of smaller mid tier funds especially ones that’re targeting either geographic regions or specific industries and that we’re seeing like this kind of a massive increase I guess in even more kind of micro-targeted funds. Um often driven by you know, solar gps or.

James McWalter: Ah, people who have you know particular perspective I’m thinking of the likes of Jason jacobs and my climate journey. You know, kind of I don’t think he ever had a right exactly he didn’t really have a kind of view when he started the podcast eventually be you know a fund manager but that’s kind of where he ended up and so yeah, it is this kind of fascinating.

Zecca Lehn: Rolling fund.

James McWalter: Period And so yeah I guess you know like when you when you were kind of looking at the space were you kind of like oh this is now changing in a way in a direction that I want to get involved in or I suppose what was that kind of thought process. Sure sure.

Zecca Lehn: Well okay I think it’s important to start like how did I get exposure to vc and sort of a lot of people use the term. How did you break into Vc I I kind of belly-flopped into Vc I I was actually working on in the quantitative finance side as a former data scientist I was working.

James McWalter: Right.

Zecca Lehn: For this proprietary firm that was investing quantitative strategies and I started engaging um with their division on a very very ad hoc basis to to dive into some more technical due diligence around the. Software the data platform etc and realize that venture Capital is quite fascinating and I tried to volunteer myself more for that and understand a little bit more about it and it just so happened that 1 of my colleagues at time gave me a.

James McWalter: And.

Zecca Lehn: Give me a book from Jason calacanis called angel um, and they said just read this book. You’ll love this book and I said oh I don’t know angel investing what that is and they just said you know, check it out readdit I ended up reading the audio book version 3 times and for the most part that that book gave me a great foundation in terms of understanding.

James McWalter: All right.

Zecca Lehn: What venture capital demands and what the landscape looks like and some of the signals that go into um what a founder may want to consider when they go out to raise early stage venture capital and um, it really just opened my eyes and and from that point I actually branched out and became accredited. It took a long time for. Myself and my family to get to that state and um and and just for those listeners that I’m not sure. But um, you know accreditation in the us is usually ah about 2 hundred thousand or 3 hundred thousand depending on your household for the last 2 years that’s the threshold Thecc sets. But then they also have an net asset. Basis of I think it’s a million plus they also have some new requirements which allow for finrabased brokers. Do someone to take the finra license for example and even be an unsponsored participant under finra I can’t remember the series number I’ll we’ll have to get that. But um. Yeah, you can become accredited now whereas for some 60 years the only way to become accredited was to have your corporation ah above five million net worth or your individual household etc. But it’s become more accessible long story long story short that happened just recently a couple months back.

James McWalter: Yeah. Very very exciting. Yeah, and I guess that kind of leveling or that ability for more people to kind of have access to what is you know and not an inconsiderable path to ah like wealth right that a lot of people have kind of taken advantage of because you know they had a high- paying job or them from family Welt and so On. I guess some of those doors have now opened a bit more for kind of a wider group and a more diverse group of people.

Zecca Lehn: Yes, exactly? yeah, it’s a good thing overall for the ecosystem. Ah, 1 thing that I have to say that’s positive about the move from the scc this this finra-based approach is that there’s. Quite a high ethical standard to you know pass these tests and there’s a lot of rigor that goes into financial modeling and all the rest. So the level of sophistication for those who choose to take a path say in the direction of finra are presumably going to not be dummies when they first get started. Whereas if you were to just say lower the bar all at once and say anyone can invest in any financial project. There could be unintended consequences I suppose if I had to just kind of look at it through the scc’s you know, lens for a moment. So I think the step that they’ve taken the. Pretty low barrier 500 dollars. Let’s say in a couple months of studying and you can if you’re really ambitious and you want to become a crowded investor participate in syndicates or funds etc. Um, it’s actually quite a good change in my opinion.

James McWalter: Yeah, this is hard balance because if you completely open to floodgates. You know you you have a ton of access to like really cool companies but you also have a ton of you know, pyramid schemes and all this kind of thing that are hard for I Guess a person who doesn’t have the time for due diligence to really process and I think that’s a lot of.

Zecca Lehn: Gap.

James McWalter: Piece and I’d love to hear you kind of thoughts on how you think about? you know the time or what’s I Guess your general process for evaluating a company.

Zecca Lehn: Oh okay, good question I was also going to give a shout- out to the reg cf side of things. The jobs act that changed made accredit they made access to early-stage deals available on these regulated crowdfunding platforms.

James McWalter: No.

Zecca Lehn: Which has also been a great advancement for the industry to allow retail investors to participate I’m not sure you know how much listeners want to know or know. But that’s also an avenue um, in terms of deals and in terms of way I’ve I’ve looked at my own angel investing over the last 2 3 years actually um, have invested about forty different companies I invested all through syndicates because I was a small angel investor to get started so I used that as an avenue because you can usually check kind of check less than say 5000 what they do is they pool these things together with other investors and you can invest with say 1 hundred and fifty. Plus people and maybe they raise 2 hundred thousand they have ah a fee on the the frontend. The the thing about these deals though. Just like you would get with regcf through a platform is you don’t necessarily have a deep view on diligence that the the manager the the platform gets when they select these deals. So you have to get kind of creative in terms of other deals. You’ve seen what’s in the marketplace you have to look at sort of reading more about the news of the company. You may be able to ask the questions to some of the the syndicate leads etc. But it’s not necessarily as involved as a fund manager would have in terms of looking at. Different deals. So what I chose to do instead to kind of level myself up to become an eventual venture capitalist was to work as a venture scout so working on an a non-exclusive basis with funds around the the us helped me to kind of go out into the marketplace and just.

James McWalter: And.

Zecca Lehn: Be able to talk with any founder that’s raising at any stage and say you know hey I want to learn about your company tell me about you. You know I do the you basically do the vetting and then as a scout the way that that’s going down a rabbit hole here. But. Ah, scout would basically take a percentage of carried interests under contract if there is an eventual exit so long story short that process of discovery from both the diligent side this more technical side but then also just from the the top level screen side. The market side. It’s it. Ever evolving process for myself. What I did is I I started out putting together about 30 different questions that were all very ah, kind of dry and very kind of force functioninges. We’ll say these types of questions there was 1 I would ask myself for almost a year looking at 1000 deals or something I would ask is this a.

James McWalter: Rise.

Zecca Lehn: Vitamin or is this a pain Killer or is this a pain killer with side effects and questions like this. They force your brain to kind of get realistic about what it is. You’re actually seeing like okay how big is this market. Um and write up a bit little bit about that. What’s what’s the defensibility of this actual strategy.

James McWalter: And.

Zecca Lehn: What are some attributes of the other startups out there and those types of types of questions help put yourself into a mindset where you become a little bit more skeptical about each situation to some degree and that’s a good thing in my opinion.

James McWalter: Absolutely and I I think going into depth is actually like super beneficial. You know to people you know we’re hoping to reach through the podcast and I say that because you know so many. There’s not that many like vcs in the world or Angel investors even in the world right? Like we’re talking you know hundreds of thousands of people. You know in a population of billions. And I feel like because it’s such a small group. You know there are like any small group ways of talking things that people in the group like just guess wears people outside the group. You know what was it.

Zecca Lehn: Yeah, it’s opaque.

James McWalter: It’s opaque and they’ll say the kind of embarrassing thing. It’s like going to you know the showing up at the party and everyone’s in you know suit and tie and you show up in ah or short or shorts or whatever maybe um, and so these kind of tradeoffs I Guess are this kind of lack of access to just.

Zecca Lehn: Patagonia vest.

Zecca Lehn: Yeah, it you can yeah it it can be. It can also be ah, a can. It can be a really good way into the space I wouldn’t disagree with you there. But I think.

James McWalter: Basic knowledge of how things work I think holds out way more people than we want because you know there’s a ton of smart people out there who would be amazing Vc scouts and I think that’s a great like route into this space and people are interested.

Zecca Lehn: Um, also just being working in a startup and understanding sort of like the operational side of a startup is also a tremendous way. There are so many ways that you can get exposure.. There’s not I think there’s it’s very unique to every person in my opinion I think it’s important to be open. And be accepting Obviously I get I Love going on podcasts and telling a little bit sharing knowledge I host host rooms on clubhouse all the time and try to be as candid about things as possible. But I think Also it’s important to recognize that everyone’s going to get a different experience on their way to where they want to go I don’t know that’s probably. Just my opinion I guess I think it’s also important what you said though too to be opaque less opaque if possible and and to be candid about some of the realities of of being a venture capital.

James McWalter: And absolutely and honestly like more you know people who’ve worked at startup who’ve been operators would in funds I think is generally in net benefit. You know there’s often I guess like this detachment between you know the founder trying to talk to. Ah, you know a vc especially like ah, an associate or junior associate who maybe you know is like 2 years out of their nba and so on right exactly and so I think I think again just having more ways of shared language shared experience I think is in general like this kind of net benefit.

Zecca Lehn: Someone that’s trying to impress the founder.

Zecca Lehn: Yeah, and back to your point I would say being a scout what that does do is it puts you into the mindset of what you don’t know very quickly and I think maybe junior vcs may sometimes get themselves into trouble where they. Want to sound smart. They want to impress people around them and they just don’t necessarily go in with that mindset of not knowing I have to say 1 thing I don’t think that that’s something you’ll get necessarily by being someone who’s scaled a company per se I think. Being inquisitive and being open-minded and being there to help on whatever regards it happens is a really useful mechanism or you know sort of strategy I think it’s a really great way to go and when I first got started as a scout at a particular I got a lot of pushback because I would go into meetings with. Founders who are you know? third-time founders telling me about what they’re working on and immediately asking about my background you know feeling that they’re a little bit defensive and um, that’s okay, actually it’s good because it put me into that state where I was having to be way more open to what I didn’t know and i. Consciously speaking I never put myself out into that position where I tried to pretend like I had advice to give and 1 thing about advice in general is in my experience is that it’s it’s easy to think that we’re. You know, adding value when we know something and that’s an immediate win to kind of suggestions but it’s it’s a lot harder and probably better to resist that urge to kind of like kind of put everything into a forcing function and give that quick advice etc and but rather to just ah set a point to. Statistics or point to broad ideas pointing people sort of in 1 direction versus the other without saying this is the direction you should take that aspect is something I had to learn myself and it’s been. Ah, it’s been a great tool and I still try to continue in that fashion just to. Just to be as supportive as I can and not go in with the assumption that what I’m going to say is should be steering someone towards something.

James McWalter: Right? I mean the hardest lessons are always aren’t true practice. Anyways, right? and so you know I think when I’ve managed teams and you know like ah that tookled me a while to be. You know, be somewhat of a a better manager to when you start off with but 1 of the things that I guess I’ve been learned. Managing different teams over the years is that sometimes I’d have like a direct you know Junior come and say okay I want to do this thing. Um, we we agree on the outcome that we’re looking for and they’re like I want to do it this way and as long as it’s you know it’s a week long experiment to kind of get there I would always be like yeah, go for it even if in the kind of back of my head I’m like hey i.

Zecca Lehn: That’s cool.

James McWalter: Pretty doubtful that this will work. But you know why not like like try it out and what’s amazing I think by giving that freedom if I just said like this is not going to work. They never learnt the underlying reasons why it didn’t work. They just had James given out and and and given an opinion and like it’s it’s disabling in some ways whereas if you give them the opportunity to grow.

Zecca Lehn: I Say either.

James McWalter: Like then the next time they’ll actually start to form the kind of thought patterns for why that first idea maybe didn’t work and like why the next idea has to be a little bit different.

Zecca Lehn: Right? That’s really wonderful. Yeah  I think that um I haven’t found that level of confidence in the founders because  I just try really again I just try to show as much support as I can and create ah but the only value I. Say that it can be generated just by being more open-minded toward the founders and is just creating a safe space where they don’t feel like they’re being judged and where they can just talk openly and freely and they know that your reputation is aligned with their outcome in a way that you know you’re not there to Judge. You’re not there to. Tell them what to do? You’re not there to give them. You know, quick advice etc. I’ve found generally speaking that the founders loved that. They’d love them when they can just kind of have a conversation disarm conversation. Of course sometimes you get some red flags when you create an environment like that so you could somehow use that in some sense. But. For the most part I just I just try to keep it all confidential and all very like very very cleanly focused sort of thing.

James McWalter: And in terms like the specific criteria that you use to kind of evaluate like ah like an opportunity at a particular company today with it with the current fund. You know what’s the kind of framework that you use to see you know as I’m sure you mentioned you’re seeing tons of potential companies to fund. Um. Why pick 1 versus the other What’s the framework you bring to bear.

Zecca Lehn: Well I wish I could say it’s always ah a very you know, like a perfectly aligned system that I have you know, clean, outcome. Ah, but I actually have to say that I think 1 of the things that is less discussed as ah as a professional investor. Is that we’re dealing and ah with Uncertainty. We’re dealing with probability pretty much in everything we look at Um, so what I think my job isn’t to necessarily nail down kind of what exactly is a process to get to this exact outcome. Is is more so how do I debias myself? How do I how do I look at um, ways that I may be getting in the way of finding value and generating value etc and that that goes not only to this the investment selection process but to the way I allocate my time the way I engage with of lps and things like that. There’s an element of of confidence and subjectiveness that goes into decision making that I think is kind of why there are even our vcs or or and professional investors. Um, we need to deal with limited information or. Bars information or confidential information every single day you know that I get ten twenty conflicts of interest and I need to know how to you know, navigate that in an ethical manner. Um, it’s not easy you you kind of have to lead forward with just being ethical first and to be there. Ah, as sort of as open as possible but you you can’t share. Yeah frank this is the funny funny part about this experience. You cannot be fully open about things because it will it will materially damage other parties you other founders. It’s their other people’s futures are at Stake and. You know, obviously um, we need to be selective ahead of time. We don’t want to like create scenarios where we get information and use it and that wouldn’t be ah my reputation would would be destroyed quickly if I operated that way. Um, you know so I think it’s just a matter of some ways. Um. But again more specifically your investment process. I mean we can talk about impact and those other things but generally speaking. It’s very situational. It’s very very unique.

James McWalter: Yeah, it’s interesting I mean it’s actually there’s a lot of these kind of overlaps with entrepreneurship or founding in general like 1 of my favorite definitions of what an entrepreneur is is somebody who like makes the opaque transparent because to start any business you’re like um, you know like is this going to work right.

Zecca Lehn: I Like that.

James McWalter: You know and and the bigger the potential outcome the more uncertain you are at the beginning right? and again that like goes into the world of vc-backed versus something more like a lifestyle business where you know you can kind? yeah.

Zecca Lehn: Wow. Well, we could talk about that. It’s maybe too contentious but I’ll go there if you want to I’m just yeah I think you pretty much summarized it I mean really? Well, I Love do you know? who said that quote about the opaque to the transparent is that your idea I like that.

James McWalter: Please please have to absolute comfort.

James McWalter: Know it was actually there’s a podcast I listen to because I definitely listened to a lot of what’s coming from the lifestyle entrepreneurship side of things but a podcast called the tropical and Mba and it’s a pretty interesting name and but these are guys who built you know a.

Zecca Lehn: I see Yeah, ah yeah.

James McWalter: Distributed team business. It was a physical product based in the us it’s valley podiums or something like that back in like 2000 four and then they sold it like 5 years ago or something um, but they but they basically are I think there are like a thousand podcasts and they talk a lot about you know the kind of.

Zecca Lehn: Awesome! Oh my gosh.

James McWalter: Bootstrap or mentality the kind of li lifestyle entrepreneur mentality. Um, how wealth is 1 prism to like look through success but also freedom and time and location or these other prisms and I actually do think I put a lot of people in the kind of vc backed startup space like onto them because I think they definitely inform. Um.

Zecca Lehn: Yeah.

James McWalter: You know the tradeoffs you make right? because very few startups even with the best will in the world become billion dollar companies and if you end up spending 8 years and you have very little to show for it and you know the relationships in your lives are damaged and all these things was that kind of worth the tradeoff and I guess it’s it’s. Bringing those to bear as you kind of think through what you really value? Yeah, go for it.

Zecca Lehn: I’m I’m getting into your head James watch out be careful I’m going to brainwash you I’m just joking I like your mindset. Um I have to say there were a lot of things there that I would like to try to address and I don’t know if I’m right about everything but I have slightly slightly different take on some things.

James McWalter: Enters.

Zecca Lehn: Um, ah I think 1 thing is this billion dollar aspect if you we just wanted to accentuate that for 1 moment. Yes, we we know that there’s a power law in in venture backed companies and that probably is true in all forms of. Companies in general, you’re just going to see failure rates higher higher at certain time slots, etc. Um point is is that ah the question is I think the question is why do we look at those things. It’s it’s important to recognize it’s it’s a cultural thing but it’s also a um. It’s also a little bit ah Structural. So ah, the aspect of returning the fund this idea of returning the fund and when a company does run and hits these great targets and they hit break out velocity and they they you know Peter thiel’s idea of kind of becoming the monopolistic player for some time. On their way to the public market. Obviously that’s ideal because there’s less friction etc. The the blitzscaling idea in general I think has an alignment toward venture capital especially this silicon valley version of venture capital in my opinion. Um. However, having said that um I have been exploring over the last couple few years, especially on Twitter this idea of I call it. The green unicorns. So um, it’s a little bit of um, a little bit of ah a play on like ah the binary you know dialogue.

James McWalter: And.

Zecca Lehn: Um, I do know that we have different forms of patient capital or like you said Lifestyle style businesses or even smbs and things like that I think that there’s a little bit more nuance to this to this aspect of venture capital and the unicorn story. So the 1 that I’ve been exploring and given that we’re a preseed fund. We can have this in our dialogue more often earlier the stage fund the lower the valuations now all all that really just means is that we can have similar types of returns assuming all lsql. You know, failure rates, etc. At a smaller exit but still get a tremendous multiple so we can still have like ah just it’s maybe a moot point but we can have a great portfolio return Even if the company exits let’s say it like a 200 million on average or or actually 1 fifty million on average because I think the the average us company.

James McWalter: Or.

Zecca Lehn: That is venture backed exits I think 2 hundred thousand or 200 million average I think that’s the average. So imagine just lowering that average for earlier fund. But then it’s you know, not to get too deep in the weeds. But basically it just your failure rates. Go up the closer you go.

James McWalter: And right? okay.

Zecca Lehn: To accelerate around so to speak Anyway, Long story short is that another thing about this idea of venture backable I don’t like it too much I like I think about this a lot and I use the term venture geared very intentionally because it puts so in the impact space. Um I see this a lot.

James McWalter: Yeah.

Zecca Lehn: Where certain founders have a mission that is very societally focused or mission focusedcused or environmentally economic impact focused and um, oftentimes the narrative surrounding Venture Capital is 1 where. Is my experience 1 where you know it’s like okay we don’t want to be a unicorn and we don’t want to go into grind mode where there’s nothing else, but you know month over month return and or else we just we just Fail. We want our mission to be accomplished for example and I say that’s great I Want to support that. Um, but what I do do as I focus on this venture geared aspect which to me just means that you understand a little bit about some of the tradeoffs that go into taking higher risk capital and some of the constraints of who your next competitor is going to look like and if that’s a non-impact focus company then you. You You know for me I Personally want to look for companies that have a defensible impact that drives additional revenue Potential. So I call it an impact Moat for yeah.

James McWalter: Yeah, no that that makes a to sense I mean I think on the impact piece specifically the best impact companies that I’m sure you’re seeing and and definitely I’ve seen are ones where the impact itself is contained within the business model where the every excess dollar or every.

Zecca Lehn: Um, right? Yeah, that’s it.

James McWalter: You know the growth itself like generates increased impact rather than it’s you know we’re doing this other thing and like this impact on the side or we if we don’t make money we actually have greater impact. You know the alignment has to be there and it’s quite difficult right? because a lot of things don’t align with the impact.

Zecca Lehn: Yeah, it is difficult I agree I agree and maybe that’s a event a lifestyle business and lifestyle impact business would be 1 perhaps where the company you know takes some of it. It’s like say it 1 that is. Over-indexing on all the external factors first. Okay, so just to paint a clearer picture I usually refer to impact first versus finance first or what I like to call it vc impact which is slightly modified. But. A finance first impact company is 1 where it’s aligned or geared toward venture in my mind and that just means that they understand that we’re presumably looking for a more aggressive growth pattern and that means also in my opinion. That external aspects that all positively impact positive impact focus. Let’s say you know community outreach or having um very deep layers of stakeholders that are intentional and conscious and good. But they don’t drive again back to driving value to the the the revenue you know revenue-based value. They may not be appropriately timed so those things would be you know less so inclined toward venture capital in my opinion only because. Because they’re delaying. They’re delaying growth for something that is intentional now and and good and costly let’s say something like that. Um those businesses tend to I think what you’d call maybe more lifestyle businesses perhaps and or lifestyle businesses. Also this is maybe a little tune and out nuance. But. Lifestyle businesses also tend to have more competitors and they tend to be more friction based they tend to be um, you know, lower total addressable market or even sizable markets things like that and and I think like a good example would be say like ah. You know, um, a restaurant chain. That’s a franchise you know in Southern california doesn’t really line up with venture capital the way it’s currently Structured. It doesn’t mean that it can’t it’s just that it’s not geared currently toward I guess hopefully that’s a useful example.

James McWalter: Yeah, no absolutely and and and I guess there’s these even kind of in between types of companies that have been emergent where there are these new types of financing around kind of revenue share and so on where there’s so potentially like a software ah a business that could scale.

Zecca Lehn: Yeah, exactly.

James McWalter: Um, potentially but um, you know, maybe some of the reasoning that you mentioned whereas farmers ah founders not even farmers but founders might be interested in scaling at a different speed. You know they might again might have like different criteria that they’re looking for things like revenue shared based funding are these kind of interesting new directions.

30:00.97 Zecca Lehn: Yeah, Blend blended finance. For example, as as well it really and jed emerson is 1 of the pioneers here and and I think it’s wonderful to see that those avenues for founders to have more tools to be able to scale their businesses the way they.

James McWalter: Yeah, yeah.

Zecca Lehn: Intend to that’s also I’m I’m a big supporter of this myself.

James McWalter: And you kind of mentioned. We’ve obviously been talking about impact I Guess how do you evaluate impact you know, are their Predictive Frameworks I think I saw the U n sustainable development goals as mentioned on your website.

Zecca Lehn: Yeah frame I don’t use the word Frameworks and I use the sustainable development goal Sdg is the seventeen s stgs as a proxy for ah like a goal set because they are goals for 1 I use multiple per deal. So What I do is I say okay. Is this a diverse team working in water impact and are they focused on um, some other social impact aspect. Um, you know, clean water. There’s a health overlap etc. That’s a top level screen for me like ah, kind of the the stakes are you know, have the a nexus opportunity set. Ah, sustainability focused in in its in its broadest sense. Um, That’s what I use initially and then I look I go down into looking at every individual deal and I say okay, ah you know what is the um Like. What does the team look what does the team look like are they focused on impact is there is this their objective. Usually that’s the case most of the deals we see are just like this and then I I just go in and looking you know what are what are the metrics look like um yeah I’m I’m not partial to putting. Constraints on founders and saying you know you have to have this clause at the other you need to go after this particular set of Capital etc. All I’m concerned about is whether or not this company has a scalability component and again like you said the the objective is to have. Impact that scales with the revenue. So you know take for example, um, Tesla you know the bigger Tesla gets presumably if they operate in a similar pattern. Let’s say they’re presumably going to create more positive impact I mean that may be too simplistic, but that’s that’s.

James McWalter: And not so and you know I had a couple other interviews today that that are coming out around the same time and 1 of the really nice things about other kind of founders I’m was talking to today are that they share that kind of tesla piece if they get big if more people use you know their seaweed-based plastic.

Zecca Lehn: More or less the idea.

Zecca Lehn: Yeah.

James McWalter: Um, we have less actual plastic out there in the world and it’s just like completely tied to the actual um you know amount of impact like you know the more skews that are that are sold like the better kind of thing.

Zecca Lehn: Yeah, it. Yeah, it’s it’s important to to see that but it’s also important I’ll say and where my where my expertise does come in is I’ve worked in the negative externality space for a long time ah in and in impact with within large renewable energy projects. And intermodal logistics and things like this I I think personally that it’s ah, there’s always going to be ah, there’s always going to be an externality and there’s always going to be a risk reward aspect to impact so I like to ask founders before I get started because I generally don’t know as much as they do. I so I ask openly can you list say 5 or 10 potential positive impacts and potential negative impacts and then you know then I go and I kind of reverse that do I look at well how could this negatively impact the revenue stream or how could this you know potentially be a ah. An impact factor. Not worth taking a risk on For example I could throw out some obvious ones like ah, a business model that has a very obvious positive impact. But then a very obvious negative impact or non-obvious impact negative impact such as you know something like. Crypto you know the mining aspect of layer 1 solutions being what’s currently used or what’s being planned to use I mean I’m just using that hypothetical I don’t mean to pick on Krypton per se but there there are a lot of nuances to it for sure. It ah takes time.

James McWalter: Yeah, absolutely, and just because you mentioned crypto. Um, 1 thing I don’t think I’ve done this on the pack before but I’d love to kind of throw out a couple of different you know sectors or that are out there and you know what you see as the opportunities for either existing startups or future startups in the space there we go.

Zecca Lehn: Sure I love it that.

Zecca Lehn: Oh you get to test me 5 years from now when we do this interview. Yeah, you’re wrong.

James McWalter: Yeah, yeah, um, so I guess first um, you know Regenerative ag is obviously this area where we could have potential you know change farming so that we have more carbon sequestration. Um, there’s some carbon credit marketplaces the norrris and in the goes of the world kind of moving into that space. There’s a lot of measurement technology being developed. What are your views on can region ag and the opportunities there?

Zecca Lehn: I’d like to understand more about it. We have a roundtable this Friday on sustainable agriculture and I plan to bring in so and I I would love for you to be there james um on clubhouse we do we weekly shows 3 thirty Pm Pacific time fridays we have these roundtables with vcs founders and other thought leaders like yourself.

James McWalter: Ah, great.

Zecca Lehn: Um, that get together and we just kind of go through this process and regenerative ag I think is 1 of these emerging areas which is really exciting I have I’m aware of a lot of companies work in this space I think there’s a lot of room for potential opportunities I don’t know all of them yet. So I’m still trying to kind of explore and if sustainability sustainable egg and or regenerative egg combined somehow and there’s going to be some nexus opportunities presumably within biodiversity banking or water mitigate mitigation or you know, clean streams or yeah. Other types of auxiliary ecosystem credits that I imagine could tie in well to these these subsidy models or these credit-based models that are voluntary, etc, Etc. I think we have a lot of opportunity there I just don’t I don’t know whether or not I see them as being quite yet ready to scale in certain markets I think maybe. Um, I mean I don’t like to give a times stamp because 1 never knows. But I think that there’s a lot of opportunities for the carbon, the biodiversity, the water quality aspects that we’re just going to continue to see a lot more fire mitigation all these aspects and I think that doesn’t necessarily tie right into sustain ah regenerative ag as you mentioned it. But I think you’re going to see opportunities that have overlaps machine that in my opinion.

James McWalter: Yeah I mean I think like because ah, anything that has kind of a land-based solution for climate I Think what we’re starting to see is more of an ecosystems-based approach right? which do take into account these things I Mean. Agriculture is very linked to things like migrant Labor. You already mentioned water. There are all these other elements and you know when I’ve talked to like large yeah large the biggest Ag companies in the world. Mike Brian Mccargill and and and then companies like this you know they’re They’re not always. Ah historically the best for the planet.

Zecca Lehn: Things.

James McWalter: Um, but it’s interesting talking to some of those companies they are now taking more of a kind of comprehensive view at least some parts of those companies about the approach and there are teams dedicated to figuring out the waterside of some of their you know products and then the kind of solutions. So.

Zecca Lehn: Yeah, and I also appreciate you bringing in the migratory labor and or just the labor component because I actually think that that’s a much-overlooked aspect of this regenerative agg discussions I Really appreciate you bringing that in.

James McWalter: Um I was pivot to a different kind of sector. Um, you know 1 view. That’s all griffiths talks a lot about in Electrify America’s like we need to electrify everything. Um, you know,? let’s let’s say wood the home as as an initial stop No more gas you know gas gas cooking everything needs to be. You know heat pumps rather than driven by Fossil Fuels and so on and what do you think about the opportunities within the kind of electrify the home electrify society type type thing.

Zecca Lehn: Yeah, it’s certainly interesting I don’t know a whole lot about it I haven’t read the article. Um I think 1 thing is just gri you know grid stability always an issue things like just personal risks associated with having things overly electrified could be. You know, depending on where you live in the world I think it probably depends I would I would just I don’t want to dip into the policy discussion because I’ll probably get everything wrong, but um, in terms of opportunities I imagine you were going to see a lot of that, especially you know voluntary markets that link payments to to that. Um, I actually am still even even though they’ll counter to a lot of discussions around offsets and things I’m I’m still very bullish on the future of of offsets. Personally I think we’re going to go through multiple iterations of of what more appropriate responsible offset mechanisms and and sort of. Markets look like there’s a really great book called good derivatives which I’d highly recommend you to read or anyone to read just it goes through the original voluntary markets and the regulatory markets in europe on the carbon side and again I won’t get political here but definitely worth considering just because a lot of those things will.

James McWalter: So.

Zecca Lehn: More than likely tie in both on the consumer side but also on the on the commercial side.

James McWalter: Yeah I mean it’s interesting so offsets and derivatives This is actually where a lot of my thinking has gone on the offsets markets I think in ah in general the there’s probably a not and a lot of people disagree across climate and these are dirty words I’m about to say but.

Zecca Lehn: Dot O interesting.

James McWalter: Feel like just not enough speculation I guess on the value of a given asset and so the the you know what are markets good for right? like ah 1 of the main things they’re good for is some sort of price discovery really right.

Zecca Lehn: Finding a price.

James McWalter: And so at the moment we have a ton of very very important companies who I think are doing a great thing. You know vertically integrated companies likehammer and Ori and and these kind of companies whoever you know who are deriving acred using some sort of measurement technology or using Outsource measurement technology.

Zecca Lehn: So yeah.

James McWalter: And selling that credit to a fortune five hundred company to offset some amount of you know of credits and where I guess the breakages happen right now is that once the offset is sold. Um, the price of that offset is kind of locked in but that offset might be 3 times more valuable or.

Zecca Lehn: Hey I was aware that.

James McWalter: Ah, third more valuable and if that value is like not captured or not traded the landowner who’s the person literally responsible for keeping the forest there not burning down or like doing the farming practices is not really getting ah rewarded and so this is like a wild idea that I’ve talked a few people about and decided not to go down that direction myself. But.

Zecca Lehn: Fifth.

Zecca Lehn: You’re pitching me right now like yeah I like it I Just endorsed you come on. Now you have to make me an advisor I Thought you’re good.

James McWalter: Umm of a not quite ah but if anybody’s listening to this and wants to do this I would happily riff on this because I think this needs to be in the world but some there you go absolutely but something a lot like like like a an exchange ah rather than a marketplace but an actual exchange right? where you can.

Zecca Lehn: Ah, yeah I like that.

James McWalter: Trade things and if you do take something like a blockchain as ah as your kind of underlying technology. You could link the traded value back to the landowner. So let’s say yeah they ask if it’s traded. It’s changing hands. It’s you know it’s 2 dollars and that’s twelve dollars and it’s Eighteen dollars if you link that back to the original landowner give the landowner seventy percent of the final traded price. That they’re always getting a fair share of the captured value from the trade.

Zecca Lehn: Now I would suggest you know you giving away your ideas for free is wonderful. But I would suggest you maybe edit this part out because you know it’s just amazing like you probably have a whole business here right now.

James McWalter: Yeah, and um, honestly I hope someone does that I think but yeah, but so as I’m happy to kind of throw out those ideas and I never feel where have people stealing things. It’s a good fun space. But yeah look I’ve seemed fascinating and you know I suppose before we kind of finish up.

Zecca Lehn: I Love it.

James McWalter: You know you have this podcast. Um, what have you learned most from like hosting your own podcasts in space.

Zecca Lehn: Well I I could say that I’ve learned how to listen better. But I’m not sure if that’s true I’m just joking. It’s um yeah I’m constantly just trying to just be a better listener because like what you just showed me as you showed me that you have this.

James McWalter: And ours.

Zecca Lehn: You know, the incredible idea this invention this um this passion and if I’m if I’m too busy hearing my own self speak I’m probably you know not giving others the opportunity to really explore and again that’s out of full appreciation having me here. It’s ah it’s been wonderful. Um, I’d say for anyone who is I I always like to encourage people to do more podcasts I don’t think they’re enough Frankly I I think it’s always great to just get started and try something experiment and as you know you’ve probably learned a lot of things along the way I imagine.

James McWalter: Yeah, absolutely honestly I originally started the podcast just to they’re just selfishly learning and you know I still am very very anxious those first five guests who just take a punt on some random guy reaching out to them on Linkedin or twitterter.

Zecca Lehn: Um, yeah, it’s fine. So cool. So good.

James McWalter: Um, but now like we’re up in you know we’re up in the seventh I think this is might be the seventieth coming out or something along those lines and is a lot of work. But I guess the um and then just gabby who’s is my producer I you know she does not ninety ninety-nine percent of the work of I just talk but I guess like.

Zecca Lehn: That’s a lot of work. Amazing. So great.

Zecca Lehn: The wonderful. That’s nice.

James McWalter: You learn something different from every guest but you also start to see the patterns and I think it’s this remarkable thing where you know where we’re more. We’re more similar than we are different. The differences are still important. But I guess when I think about what we need like the types of people we need to be working on problems. Um I get more and more excited I guess doing the podcast every time about like.

Zecca Lehn: Yeah, you.

Zecca Lehn: So still good. Yeah I think you and I are very similar in this regard I like to be fully inclusive in terms of.

James McWalter: And anybody could be involved right? and there’s a role for everybody in these kind of like global scale problems right.

Zecca Lehn: Making people feel welcome and listen to and just highlight it. It’s I mean everyone deserves that it sounds like you have a similar mindset.

James McWalter: Absolutely well Zaka This has been brilliant I Guess before we finish off is there anything I should have asked you about but did not.

Zecca Lehn: Thank you? Um gosh um, well okay, here’s my chance for an ask I think I would love to get new lps into our fund. We’re raising right now under 5 ah 6 c designation so public solicitation. Just.

James McWalter: Please.

Zecca Lehn: Any lps that care about doing good and want to participate in Venture capital, I always enjoy those discussions. Ah I appreciate you letting me do that and I appreciate you having me today. James has been tremendous. Wonderful.

James McWalter: I Thank you very much Zecca I’m very really excited to see all the companies before the company is coming out of responsibly.

Zecca Lehn: Thank you

Decarbonizing The Electric Grid – E71

Great to chat with Matthew Plante, President and Co-Founder at Voltus! Voltus is a distributed energy platform that accelerates the energy transition! We discussed bringing renewables online to prevent massive blackouts and reduce energy consumption, wholesale trade energy markets, opportunities for startups in the energy space, the importance of building a world class team and more!

https://carbotnic.com/voltus

Download Podcast Here: https://plinkhq.com/i/1518148418

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Thanks so much! 

James


The unedited podcast transcript is below

James McWalter:  Hello today we’re speaking with Matt Plante president and co-founder at Voltus welcome to podcast Matt, brilliant I suppose to start with. Could you tell us a little bit about Voltus?

Matt Plante: Thanks for having me.

Matt Plante: Voltus is a distributed energy resources platform. Our job is to help make electric grids modernized which means they’re decarbonized. They’re reliable and they’re cost-effective and we do that by. Bringing to the electric grid resources typically customers who reduce their consumption of electricity when the grid needs them to.

James McWalter:  And what are some examples of those distributed energy resources.

Matt Plante: We help monetize resources everything from a smart thermostat to an electrical vehicle charging station to a wastewater treatment plant to a big industrial Factory Steel Mill. For example, a paper Mill For example.

James McWalter:  That fascinating and we can use the term the Er So just for the audience. The ers are kind of distributed energy resources. We’ll probably use that phrase as we go along and it’s basically just the kind of items that matches outlined and I guess kind of going back to the beginning. You know what drove the initial decision to start Voltus.

Matt Plante: My cofounder and I spent ten years together building Enerno which was sort of a version 1 point zero in the demand response space 10 years later the need for distributed energy resources has grown considerably. The market. Has grown considerably. You can monetize these resources in many more ways than you could ten years ago and so the market was growing at a time when we felt like the competition wasn’t doing exactly what we thought they should be doing and so that was the perfect combination starter business. Growing market and no 1 taking advantage of it.

James McWalter:  And so you already had that kind of existing relationship with your kind of cofounder. You know you decided this is the big problem to kind of tackle for the next decade or multi-decades. What are the kind of first like six months those early days look like.

Matt Plante: We got really lucky so partly because of the work that we had done in a similar space for a long time when we hung up our shingle a week later we were reached out to by an entity that needed our help and so right off the bat.

James McWalter:  So.

Matt Plante: We had a four hundred thousand dollars contract that we did not expect we said holy cow this is really really nice apart from that you know you’re hustling your we had spent time with customers making sure that our solution was 1 that they wanted and needed.

Matt Plante: But you’re hustling you know you’re doing everything you can to get the business up as running as soon as possible and we were determined from day 1 to get to profitability as quickly as possible I think there have been I used to pay attention to an event call that. National town meeting on Demand response. It isn’t since merged with a solar meeting but it’s still held in this was in 16 when we started the business if you looked at all the companies that had presented at the national town meeting on Demand response. 80 percent of them were no longer in business so you had these companies with great ideas. But who never found the right business model to allow them to survive to allow them to actually deliver on what they were trying to deliver on so from day 1 We were very very determined to make the business model work straight away. And so most of our early efforts were around making sure that we could do that as quickly as possible.

James McWalter:  And so those other 80 percent. You know what are the number 1 or number 2 things that like stops people getting up and running I know from my own research having looked and you know, starting at the early stages of looking at yeah, clean energy startup on my own side. It is could be a very difficult industry to break into. Um, they’re you know the graves of many many companies. Many startups are kind of strewn about um but it’s such a big massive industry. The opportunities are so large the shift in energy consumption is so large so there’s yeah lots of dollars there. Um, you know I Guess how do you think those companies could have kind of pivoted or you know made a better ch. Yeah, had better odds of success.

Matt Plante: I Think it is paying attention to the business side and creating a long-term sustainable competitive advantage that’ll allow you to be a healthy financial business and the good of our industry is that there are so many mission- driven people. We’re trying to solve climate change which as far as I’m concerned is the challenge of our time we’re trying to solve this big meaty Problem. So The wonderful part about that is that our industry is full of mission driven people that doesn’t always equate to people who are hardcore capitalists.

James McWalter:  Sure.

Matt Plante: And Greg and I are hardcore capitalists. We understand that our business won’t be able to attract the investment we need unless we create a very financially sound business. That’s going to make our investors a lot of money.

James McWalter:  And so you have on the business side. You know that that kind of core focus in terms of the product side. You know what are the earliest version of that product look like and what are the kind of pivots that you kind of went through to get to where you are now.

Matt Plante: I Think the question is can I rephrase your question.

James McWalter:  Please.

Matt Plante: When we when this industry first started largely as a result of the northeast blackout of 2003 we were asking commercial and industrial customers to reduce their consumption of electricity in order to prevent the next big Blackout. We had a peak demand problem fifteen years later than that the need for distributed energy resource was was entirely different. We’re no longer simply preventing Blackouts from happening though that certainly is a part of our business with whether it’s. Wildfired driven Blackouts in California or ice storm-d driven blackouts in texas or polar vortex driven Blackouts in Michigan that’s still a part of our business but increasingly our resources are used by grid operators to balance the grid. Having to do with bringing renewables online and so when that’s the case we’re no longer used 1 or 2 times every year to prevent a blackout rather we are called upon dozens and dozens and dozens of times a year to reduce our energy consumption oftentimes for very quick periods of time to help balance the grid when a power plant both thermal and renewable trip offline and so in connection with that change. You need to move the. Industry from largely manual based asking people to shut things down to a much more automated process where we are paid to quickly bring resources offline to keep the grid balanced and so now we saw these changes coming and. Invested in day 1 in a lot of product. There hadn’t been a company in the space where product was the competitive advantage previous I think to voltus it was largely marketing and sales and sometimes first mover advantage that created a competitive advantage. But. Said look when we want to think long term and here’s what is coming down the road here’s what we’re going to actually get paid for product needs to be the competitive advantage.

James McWalter:  And so that product just how is your product. You know that kind of next step on picking the kind of demand response space I Guess you mentioned there is this kind of ah you know low-tech you know, pen and paper type approach. How does Volt How is voltus kind of virtually different.

Matt Plante: In 2 big ways. The first way is that we wanted to be able to provide these resources across all markets. Lots of people had entered pgm in a manual way we wanted to enter not just pgm but.

James McWalter:  Okay.

Matt Plante: Each of the other 8 wholesale markets in North america that hadn’t been done before no 1 had entered the southwest power pool. No 1 had entered myso which is the second largest electric grid in North america and so we actually started there. Started in peoria illinois to bring resources to myso for the first time so that was 1 big way and the second way was being able to integrate with and automate lots and lots and lots of. Types of loads so that the types of loads we support and bring into these markets is very different than what was done 10 years ago we can support smaller loads via integrating with a ah building automation system. We can support residential loads through integrating with. Partners who manufacture Smart thermotats for example. Ah.

James McWalter:  And and so I suppose in practice. Let’s say you know I’m managing a ah you know, kind of a commercial building. Um, and I’ve you know, signed up for voltus. You know what? what is that kind of I suppose process like and what are the benefits to me as that building owner or building operator.

Matt Plante: The benefit to you is cash. That’s an easy question. The answer we are paying our customers for the right to help them reduce their electricity consumption a certain number of times per year the process is we. We understand what assets that commercial real estate owner has that will allow us to affect its consumption of electricity and by learning about that building. We can say aha here’s how we’ll monetize it. So we may go to Manhattan in 1 building they have the ability to reduce their energy consumption for several hours at a time great then we can monetize that in a certain program in New York city the building across the Street. Doesn’t have the ability to reduce consumption for hours at a time but can reduce energy consumption very quickly dozens of times a year great we’ll monetize that in a different way. So we learn about the building’s capabilities and then we say how do we optimize the amount of money that the customer can earn by taking a certain action. And then we put those practices into place.

James McWalter:  And so then I suppose the money then for you that comes from basically these kind of wholesale traded energy markets of various types who are the other players in those markets.

Matt Plante: Ah, so yes, that’s correct and the other players in those markets we compete sometimes with other curtailment services Providers. So Annell X C power. Sometimes there are regional players Texas has. Regional players California has regional players those are main competitors.

James McWalter:  And so you mentioned a little bit earlier that you know 1015 years ago there were actually more limited ways to monetize these types of resources I guess what changed like was it regulation was it. The tech has improved combination something else.

Matt Plante: The tech has definitely Improved. We’re able to serve smaller loads than we were a dozen years Ago. Regulation has changed dramatically and that’s been a big theme throughout my career is that there’s always. Lots and lots of money to be made in advance of or right on the heels of regulatory changes and so part of these ferc certainly has been involved in helping accelerate. The ability of companies like ours to participate in Wholesale markets to bring demand side resources to wholesale markets and have those resources be paid similar to how supply side resources are paid. That was a big regulatory change. Ferc recently issued an order call but that we call 2 by four ferc 2 2 2 2 which is almost a final barrier to unlock distributed energy resources. It’ll allow ders of all types to participate in all Wholesale Markets. And that’s going to unleash the resources we need in order to fully transition the electric grid to renewable energy to create the electric grid we want which again is is decarbonized resilience and cost.

James McWalter:  Yeah, ferc is this kind of fascinating organization which I just kind of got to know in the last few months you know this is the kind of federal energy regulatory commission I actually reached out to a few of their economists who worked on 44 I managed to give 1 of them on the phone.

Matt Plante: Active.

James McWalter:  And I straight up was like what are the kind of opportunities for startups in the space. What is the opportunity like basically what do you want to see happen. Um, and what he said to me was we you know have obviously goals like we want to completely have these things open up in ways that you know a thousand new companies are started um but he also was like. May well just be that it’s a kind of a nationalized version of what’s happening in California you know some states that are already kind of moved along to this kind of more giving the ers a little bit more access to wholesale markets I guess yeah when you yeah and I guess the book because they have to be written. But how do you think? just because the regulation I guess has started to move in that direction. Um, how it’s actually executed across these regions I guess a so little open question. So how are you thinking about that?

Matt Plante: 1 of the statistics that we pay a lot of attention to is the fact that most electric grids in the United States haven’t seen load growth for a very long time. But if you look at projections. We expect to add about forty percent. The total demand of this country over the next 30 years and there are four big drivers of that. It’s electric vehicles number 1 it’s the electrification of the home number 2 as heralded by organizations such as rewiring America it’s vertical farms. Number 3 and then its data centers connected to everything from google to bitcoin and so when you consider what everyone expects to be a huge growth. For the demand of electricity. We’ve got to figure out how to get supply to match that demand the combined capacity from all lithium-ion batteries. That will exist in electric vehicles by the year twenty thirty is forecast even by the most conservative forecasts for ev penetration to be 2 times that of existing power plants currently in the United States so take every nuclear plant. Every gas plant every coal plant every central power plant multiply that by 2 and that’s the estimate for the combined capacity of batteries driving around in electric vehicles. You have to figure out then how do we use these. Evs to help be a supply resource to the grid. It’s going to be a huge challenge. Everyone talks about the energy transition. It will not be smooth all the time there will certainly be bumps in this energy transition.

James McWalter:  No, that’s fascinating I guess you know 1 of the aspects of the energy system which you only really getting a sense of in the last little while is this kind of you know, big gap that sometimes called the duck curve between net load in the middle of the day when there was a ton of solar and you know the reasonable amount of wind. And then kind of early afternoon or sorry late afternoon early evening when everybody goes home turns on their air conditioners and so on and the sun isn’t shining it in the evening and definitely not shining at night and so you have this massive kind of dropoff and so that dropoff I guess to the listener is the reason why we have to keep. Dirty. You know gas and coal power stations longer than we would like right because you know building kind of solar and solar but solar doesn’t replace the type of energy we need at that point and batteries I guess are this kind of fascinating potential alternative. Um. But you have I guess 2 directions you could go with a theboan Batteries. You could have what they call utility scale where you’re building. You know, kind of shipping containers worth of batteries in the yeah, the desert somewhere and that’s your kind of way to balance the grid at that time of the day or the evs which which you mentioned and I guess if you think about evs you know there’s certain parts of. Country is still figuring out even to allow what they call ev to grid is it even going to be Allowed. How do you think about like that that transition you mentioned it’s going to be bumpy but I guess like what are the first steps you’re going you see as kind of emergent as we make that transition.

Matt Plante: Um, reliability has to be job number 1 and that’s not lost on us and I and I think sometimes it’s easy to ah to excoriate the. The coal miners and the coal plants I think it’s helpful instead to understand that our economy and our way of life was built on the backs of those coal miners and that we have the luxuries we have today. Because of fossil fuels and I think it’s a really helpful framing. We do need to transition to a fully decarbonized grid. We can’t sacrifice reliability to do that. So when we think about how to get there 1 ah. 1 thing we look at is Australia fifteen years ago Australia had a very peaky electrical grid system and it slowly began to bring on new resources and it slowly began to decarbonize its grid and it slowly began to add renewables and renewables and renewables and. Now the problems in Australia are not so much peak demand related but they’re intermittent related and so they’re 1 step ahead of the United States in terms of integrating renewal resources and figuring out how to not compromise reliability while you do that and batteries are certainly part of the solution. There. Distributed energy resources will be a big big part of the solution here.

James McWalter:  And so what the other kind of implications of of this shift is you know we have these physical assets out there batteries you mentioned or we talked about you know Smart thermostats and all those kind of things you know, solar plus a battery you know something like a powerwall maybe in the home and so. When you have all these different types of distributed resources. There’s different ways you could aggregate them right to have these positive effects in the grid and and also to make money of course and in theory things like fork twenty Two twenty 2 you know offers people the chance to make money off these things in new ways. Um I guess 1 question I think about in terms of like. What the landscape looks like from an innovation point of view is you know? will there be kind of mom and pop. Yeah know the er aggregators who can actually you know engage in the wholesale markets or are we going to see you know a dozen you know vol deceptures 1 but. The dozen or so kind of fairly large vertically integrated companies who kind of dominate in the space.

Matt Plante: Probably the latter but it’ll be fun to say you know there are certainly economies of of scale. Ah, and I think there aren’t many barriers to entry but there are barriers to scale and so I think that.

James McWalter:  Now.

Matt Plante: It’s likely that ah there will be a few large winners in the space.

James McWalter:  Yeah I actually agree and yeah you start with 20 then there’s some m and a activity and that’s a and then we have those 30 years going ahead.

Matt Plante: Her You do part of the benefit of being an aggregator is exactly that the more resources that you have as an aggregator. The.

James McWalter:  Five here.

Matt Plante: Larger the value to the grid from that aggregation. The risk of your portfolio sort of mathematically decreases as you add 1 more resource. Ah so that lends itself to a few large players winning.

James McWalter:  So when you mentioned the barriers for entry are not that high I Guess again as a outsider looking in I’ve actually talked to a ton of you know, smart software people Typical Silicon Valley type starter startup kind of person and a lot of them looked at clean energy and they like oh like there is a lot of opportunity here.

Matt Plante: We’ll see.

James McWalter:  And we’ll do a deep dive for a month or so and then a lot will just kind of turn away because when you start digging in to all the different regulation in particular but also um, yeah, some of the kind of challenges we were talked about it can be quite difficult and so how do you think about that piece. You know what are the I guess as a general question like what are the opportunities that. You know, smart people either within or outside the industry should be kind of taking advantage of over the next few years

Matt Plante: I think 1 of the particularities of the energy grid is that there is no standard market design across the wholesale markets that exist in the United States for example, the rules that pertain to the Texas energy market and. How you participate in that market are very different than the rules that pertain to the new England energy market we call them Balkan eyes but there’s no so 1 standard market design. So for voltis our software has to act and look. Differently depending upon which market we’re talking about that’s a cost a real cost to us and so that is a barrier of entry in a way because you can’t simply build software that works for. 1 sort of code that works everywhere for all programs for all customers. But it allows for really deep specialization and I think if I am a software engineer or a company getting off the ground. There is an opportunity to focus on a particular niche and do that niche very very very well and that’s going to have value to somebody.

James McWalter:  That fascinating. So you know there’s a ev charging ah battery management for school buses right? something relatively niche that that might be something that somebody could tackle and actually I think there’s a company called proterra that’s doing something similar. Ah, excellent and.

Matt Plante: I Think that’s a good example.

James McWalter:  Believe you had a reasonably large raise earlier in the year and you know that I guess always when I’ve or I’ve been involved in in those kind of processes. It always like that very much kind of concentrates the mind on like the kind of near future and the the kind of medium term milestones. Are we thinking about you know what? Volt like the next steps revolt is.

Matt Plante: We spent the first five years really building the foundation and that means a couple of things it means creating a product advantage. So we we say internally that it’s technology to make your life easier but there are. Very concrete ways in which our technology helps our customers do things they couldn’t do before and can’t do with others and the second foundational piece to us was existing in each and every market so that when we approach a national account. We are the ones who can serve them across North america that foundation is now set and so now it’s about really pouring fuel on the fire and so much of our rays is dedicated to growing the. Go-to-market team and allowing us to bring on many many more customers than than we than we have currentlyle in an effort to scale. So we’re looking forward to that. It’s a huge part of what we’re doing the second part of what we’re doing is accelerating our product roadma roadmap with regard to international efforts.

James McWalter:  And that’s kind of secondary piece. Ah yeah, in the same way that the us has a dozen different ways or more of um, you know selling and buying electricity depending on on where you are. I’m from ireland originally ireland has a very different structure to the United kingdom which has a different 1 to france and and so on around the world. Um, how are you thinking about that internationalization piece and I guess what have you learned from the you know navigating so many different jurisdictions in the us that kind of gives. A insight into how to expand internationally.

Matt Plante: It’s a good question. It’s not entering a place like Ireland or the uk or Japan or Korea or or south africa isn’t that different than how we think about entering Ontario or California. There may be a language difference obviously but the market works differently. In fact, the market in Japan may resemble texas more closely than the market in California resembles texas so in some ways we’re very prepared to enter these markets because we’re used to them being different I think. That with international expansion. There’s always the question of how do you do it right? Do we acquire local talent to help us grow. Do. We replicate the success we had here and and move those teams somewhere else to do it all over again and that answer will probably. Look different depending upon where we’re talking about.

James McWalter:  And fascinating and you mentioned earlier. Yeah, these kind of the need or the how the energy grid itself is going to I think you said something like forty percent over the next Decade or so um through the kind of different aspects. You mentioned you mentioned vertical farming you mentioned some other aspects and then there’s also the. Ones that you didn’t mention which I Also think you know are more maybe kind of moonshots but things like direct our capture. Um, you know, carbon sequestration The cost of that is very much a function of cheap electricity things like long duration storage in the form of hydrogen through electrolysis or some other kind of processes are also very dependent on. Ubiquitous, clean electricity and so I guess you know 1 of the tensions in the energy space is a lot of these things have to get energy to such a level of cheapness to enable these other aspects and so near your but definition that’s squeezing margins elsewhere. How do you think about the business model and business case for the need for these, you know this kind of ubiquitous cheap electricity but also potentially squeezing margins for the actual energy managers aggregators and producers and.

Matt Plante: I’m not sure that it affects my business but it certainly affects the ecosystem writ large 1 of the reasons we started voltage and that 1 of the reasons we do what we do is because we can have. Impact now we have in 1 of our markets 1 percent of system peak enrolled in a quick response program where we are called to reduce our energy consumption when. Thermal power plants trip offline that has removed the need for 2 peaking power plants in the region. It has helped make the grid cleaner while suppressing prices that are. Passed on to a commercial industrial customer so it makes the whole region more cost competitiveive. There’s no subsidies involved. There’s no need for the cost drivers down that business exists right now today and so that’s why we chose voltta when when we think about the ecosystem. If you look at wind batteries solar all these costs have come down much more than was anticipated ten years ago and so there is a sort of a learning curve. Before you can get to the point where those costs come down but they are coming down dramatically you know there is a reason that 80 percent of all new capacity in the united states last year was renewable. It has nothing to do with subsidies. It has everything to do with the fact that the economics of wind and solar are better than the economics of thermal generation right now and so you know ultimately, it’s going to be. This is an economic driven decision. We’re going to get to a 100 percent renewable energy ecosystem not because of regulation but because that’s the cost effective way to build a grid.

James McWalter:  It right? and it’s really just you know is it a like 25 year project or 50 year project right? You know regulation can help at the margin sometimes it will often hinder at the margin. But yeah I mean when ah ah we I think we both seen the same charts where you know, very smart people. Predicted lithyyon. Ion battery prices or solar pat prices and they were way off in terms of how much cheaper they got like by a factor of tanoff I was 1 of the aspects that kind of underly this and you mentioned at the beginning as ah, kind of very core to the missionion of voltus is a.

Matt Plante: That’s right.

James McWalter:  You know, zero carbon the carbonized grid. How do you kind of look at that or track that internally are you having a sense. You know you mentioned 2 specific peaker plants. But you have a sense of like you dont have to give specific numbers but you do you have a sense of the amount of carbon that’s being saved by Voltus yeah voltus expanding out.

3

Matt Plante: Of course so that figure is important to our our teammates. It’s important to our investors who whose mandates are to invest in decarbonizing solutions and increasingly it’s important to our customers. Who fact of the Matt Plante:er have larger esg goals than they had 10 years ago. So it’s a really important metric for us to track for those 3 reasons.

James McWalter:  And for you I Just personally you know you you’ve been in the industry a while um I guess you know that now Voltis and and the kind of Eu success that Voltus is having what is the kind of biggest thing you’ve learned at voltus that was kind of new to you relative to your kind of previous experience.

Matt Plante: Everyone ah I think I’ve known for a long time that the importance of team and to surround yourself with great people. But I think that message has been hammered home and voltage more so than anywhere else I’ve been where. We are a more ambitious company today than when we started 5 years ago and that’s not because greg and I suddenly found drive that we didn’t have but it’s because our teammates have delivered. Think more than we thought we were capable of doing in a short period of time and they have lifted up the ambitions ah of the company. They’ve shown us that we can do more than we were capable of they act with an urgency in order to solve climate change that’s inspiring to everybody. And as we continue to hire and bring people onto the team who feel this way. It becomes a force multiplier and so I I didn’t anticipate that happening but it’s probably the most wonderful feeling I’ve had in in business.

James McWalter:  Yeah I Really do think that this kind of talent issue is going to become ever harder for you. Just even non. You know, not dirty, not clean, but just kind of in the middle type industries or companies people. Yeah the best talent want to. You know, wake up feel very very proud of what they’re doing every day. Um, you know we all we all deceive ourselves to a certain extent right? But ah, it’s very easy if you have like a big number on the dashboard up there with yeah carbon prevented or carbon sucked out of the atmosphere. Whatever it may be you I guess have more of a skip to your step kind of going in. And you’re more likely to tell your friends who are also you know potentially very very talented additions to the team as well.

Matt Plante: Absolutely we most of our folks are hired actually from referrals and it’s easier for us to hire now than it was 2 years ago partly that’s because of the network effect and so each of our. Teammates now has a network that they can call on part of it’s due to this fact that we’re having some success but most of it is due to the fact that increasingly everyone and maybe it’s this pandemic. But. Everyone wants to feel a great connection to their work. Everyone wants to have great purpose. So we’re seeing a lot of flight from traditional tech companies into voltus and we would have had a hard time attracting that talent.

James McWalter:  And and absolutely.

Matt Plante: Just even a couple of years ago.

James McWalter:  And it’s fascinating even when I talk to you know people the fang and like the big tech companies. Those tech companies are now starting to have you know climate-related perks to try to keep those people and you know they’re potentially you know installing Smart thermostats at at their at their employees’ homes. Ah, in a way which you know is also like a ne net net positive for the lexa voltas.

Matt Plante: I Would tell those people there’s a more direct way to to work on that.

James McWalter:  I no absolutely um and let’s say I was you know a young person I’m yeah, 20 year old maybe I went to college. Maybe I didn’t and I’m wanting to have a big effect. You know what kind of advice would you give to that person to try to get involved. Ah. You know in the kind kind of climate in a positive way.

Matt Plante: Couple things come to mind jump in. However, you can. And develop some deep subject Matter Expertise I Think because of because there are so many niches it’s easy in a sense for it’s it’s possible in a sense through hard work to develop. Skills and know how that that aren’t common.

James McWalter:  And yeah, I definitely can echo that I think especially when we have so many emergent new industries right? and so ev charging infrastructure. There’s absolutely to too many you know, maybe a couple thousand single digit thousand experts on that in the world today. There’ll be 1 hundred thousand of those right in the next five to 10 years but you could kind of be you know a top ten percent in the world person just by dint of there’s ah not that many people pretty quickly in some of these spaces and so there was a friend of mine came up with this idea of um, you know, climate madlibs. You know come up with a emergent industry. Like a region of the world and a basic concept of making money and just like read aton talk to a ton of people and in six months you’re kind of a world expert not not in everything but in a lot of these areas. There is that potential.

Matt Plante: I subscribe to that thinking very much so traditionally the way of hiring is yeah who has done this job before and has the person demonstrated the ability to do do the Job. We don’t hire that way at All. We hire for potential. Partly because we’re in an industry that’t hasn’t existed before. So No 1 has had this Expertise. No 1 has actually done this job before and so we don’t look for experience doing the job we look for what we call break reading good and there are sub bullets that under pin those words. But it’s not experience that is going to move the needle here.

James McWalter:  So yeah, I’d love to hear a little bit more about that phrase you? What are the kind of some of those bullet points that you look out for.

Matt Plante: We look for people who are nimble and creative. We look for people with intellectual curiosity I think when I think about our engineering team I’ve been on very talented engineering teams but the. This 1 is different because our engineering team they see the forest for the trees. They understand how what they do contributes to why we win they’re connected to our our mission very much. So. And that’s due to their intellectual curiosity to understand the space to understand our position in that space again to understand how we win. Ah we look for folks who are man eyefully self-initiated. We look for people who like to win as a team who are Supportive. Who are loving in an effort to at the end of the day create an atmosphere that allows people to do their best to do their best work.

James McWalter:  No Absolutely and I think those are just you know, phenomenal ways to kind of build a team. You know the best teams are those greater than some of their parts where everybody is not just kind of pulling together but like they feel great right? and I guess 1 thing that I think a lot about when have managed teams that. Like I’ve been incredibly proud of you know, like just they’re they’re surprising every day right? They’re just bringing something.. It’s like oh I would have done it something way different, but what they bring bring to you is like way better than what you ever could have come up with yourself.

Matt Plante: So I think that’s the absolute best part about being a founder because in the early days right? going back to the early days where you asked me about you had a say in every single decision. The color of your logo to what market you entered right? There was nothing that escaped you.

James McWalter:  And.

Matt Plante: And then over time you sort of seed some things and then when you start to have some success. There are things that happen that you had absolutely nothing to do with and that’s the best failing in the world.

James McWalter:  Yeah, yeah, and absolutely will echo that Matt this has been really great. You know I really enjoyed the conversation I suppose before you finish up is there anything I should have asked you about but did not.

Matt Plante: You know we didn’t talk I’ll say 2 things. The first is that it we do feel an increased urgency to act. Um, partly because. Of real world events like the wildfires in California like increased hurricanes like what happens in new orleans and so that makes us want to move very very quickly to solve some of these things but the other. What else is happening is that we have bipartisan support to actually act and do things that’s rare. We have corporations with esg girlss who also are thinking about their company’s resilience. And so we have right now an incredible amount of tailwind that isn’t always the case in business. In fact, you’re often swimming upstream but when the opposite happens which is happening right now. That’s when you have to go you got a poor fuel on the fire you have to take advantage of that and so that’s what we’re looking to do it. And volt is in connection with that we are hiring across all functions and so we certainly would love people who are committed to our cause to join us.

James McWalter:  You and we include your careers page in the show notes and absolutely I think that’s phenomenal kind of I think like this is a you know once in a lifetime opportunity and obviously like a massive problem that like we all have to pull together to solve and but the opportunity level. It’s like you know it’s a trillion dollar. Ah, you know opportunity to solve across all the different parts of of industry. Sorry but ah, but across all the different parts of society because climate affects everything and so yeah I guess I’m always encouraging people I’m always envangelizing with people get involved in some ways as you’ve kind of said yourself.

Matt Plante: Thank you James! Thank you very much I enjoy this.

James McWalter:  Great. Thank you so much for that.

Sustainable Plastic from Seaweed – E70

Great to chat with Julia Marsh, Co-Founder & CEO at Sway, a company that is building a plastic-free future with the regenerative power of seaweed! We discussed the carbon sequestration power of seaweed, the negative environmental impacts of single-use plastics, how to alleviate guilt for the shopper, the reality of compostable products and more! 

https://carbotnic.com/sway

Download Podcast Here: https://plinkhq.com/i/1518148418

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Thanks so much! 

James

The unedited podcast transcript is below

James McWalter: Hello today We’re speaking with Julia Marsh:   cofounder and CEO of SWAY. Welcome to podcast Julia!   brilliant I suppose to start could you tell us a little bit about sway.

Julia Marsh:     Hi James nice to be here. Absolutely so sway is tackling 1 of the biggest challenges facing our planet which is the plastic crisis which directly feeds into the climate crisis and how we’re doing this is utilizing this beautiful regenerative material which is seaweed. And creating ah replacements for packaging that are compostable that turn into healthy soil while simultaneously replenishing Ocean ecosystems I’m really excited to dive in with you.

James McWalter: And yeah, absolutely and so what drove that kind of initial decision to yeah, you know, basically use seaweed to develop a plastic substitute.

Julia Marsh:     Well a little background I’m a designer by trade and really looked at the plastic problem as a design challenge and I thought let’s look at every single. Alternative to plastics and specifically thin film plastics because they’re the most difficult to replace they gum up recycling machines. Um, they’re very difficult to find ah reusable solutions for wrappers and chip bags and and poly bags et Cetera. And let’s find the best possible alternatives and then improve them further and what I was seeing is that bioplastics have this immense potential but they are costly. They’re incompatible with existing infrastructure and they’re dependent on resources like corn and sugarcane. Which actually don’t make the planet a better place or are really necessary as a food crop. So let’s push beyond the existing you know limitations of bioplastics and find something better and that’s what led me to seaweed.

James McWalter: And so those kind of existing limitations. Um, you know you say they gum up to works and I guess I haven’t heard too many use cases of those other kind of alternatives who are using those or is that much of a market today. Um, and yeah, what what does that space look like.

Julia Marsh:     Yeah man, the Bioplastics market is enormous. Um, mostly you see bioplastics either used in rigid applications like cups and utensils. Maybe you go to a sweet green or an adjacent company and you’ll see that the. Fork is labeled as being compostable the other most common use case is for things like maybe the grocery store you know produce bag that green bag that’s labeled as being compostable when you order clothing online. Maybe it comes in a poly bag like 1 of those. Thin film bags sometimes and they go straight into the garbage. Yeah maybe the amazon mailer would be a great candidate for where you might want to use bioplastics and then all food packaging really struggles to find compostable replacements.

James McWalter: That that goes straight into the gar garbage every time right now.

Julia Marsh:     And these are the primary interest areas for me more so than the Rigid ones because there’s yeah, there’s very few solutions that can do it right.

James McWalter: And so you kind of came upon seaweed I suppose What are the kind of what was that journey like to find seaweed as a potential solution for the problem.

Julia Marsh:     So I became enraptured with this idea of regeneration. It’s like an age-old practice. It’s nothing new but increasingly brands and activists are focusing on the idea of regeneration that we can restore and replenish life on earth. And integrating that into new systems and products and so I wanted to understand what are the most powerful regenerative source materials on the planet and how can I integrate that into a new material a replacement for plastic packaging and so when you do that.

James McWalter: Sure.

Julia Marsh:     Kind of survey you land on trees you see mushrooms and you see algae and you get micro algae and Macro Algae and I grew up next to the ocean so immediately I’m into seaweed I understand generally how ocean ecosystems work and I knew there was some beautiful poetry of taking something. From the ocean and helping the ocean live and thrive by creating this new material.

James McWalter: Absolutely and I guess when you’re kind of going through that survey and you’re looking at mushrooms you’re looking at you know clium out of trees and and so on like what was that process where you talking to academics where you kind of talking to people within supply chain. Yeah I’d love to hear a little bit about how you research that.

Julia Marsh:     Yeah, 1 of the beautiful things about this industry is everyone’s so friendly and wants to talk about the work that they’re doing because it’s so dependent on collaboration. So whenever I would reach out to either. Yes, academics in the space material libraries like the folks at material connection in New York or just reaching out to the heads of these companies themselves. They’re more than willing to share what their journey was like what the stumbling moments were and what I might need to do in my position as a designer kind of entering this space to be successful.

James McWalter: And yeah I found that as well and I’ve mentioned a few times in the podcast that because these people are so friendly. Um, mainly because we’re just trying to get more people to work on these problems. Um, that people you know there’s a bit of vulnerability involved. But.

Julia Marsh:     Right.

James McWalter: You know having ah guess a little bit of an impetus to kind of reach out cold sometimes to people on Twitter or linkedin um, you know very rarely. You’ll you’ll never may never say never but you’re very rarely you get like a negative reaction. Um, you might just not get ignored but a lot of the time you will have people from pretty big companies say yeah I’d love to have a.

Julia Marsh:     Absolutely and I feel that oftentimes there’s this misconception that you need to be a materials engineer or you need to be a scientist to enter the climate space and that was not the case for me as ah at all outside of maybe.

James McWalter: Twenty minute chat.

Julia Marsh:     Leaving my ego at the door and acknowledging when I Definitely don’t know things and am underqualified to fully understand me to the chemistry but you know there’s a role that everyone has to play in the climate crisis and designers are especially well equipped to make these impossible. More novel futures visible for people and make them Attractive. So actually I was welcomed into these conversations because folks kind of recognize that.

James McWalter: Yeah, and actually if you go to this way website and we’ll link it in the in the show notes. Um I was very much struck by like the design aesthetic of the of the website. No absolutely and and and mainly because like when I think or the average purse I think thinks about like raw materials.

Julia Marsh:     Ah.

James McWalter: Um, and there’s just something to be I suppose ignored or in the background or something not thought of you know we have a disposable culture in many of these particularly around like single use plastics and so in general the people who are creating those don’t really want to like yeah highlight them right? as ah as a use because they just wanted those things that disappear and for people to forget about.

Julia Marsh:     Right.

James McWalter: The negative environmental impacts of those things and so I think you know I’ve seen a couple companies ah you know again? what what I think you’re doing from design point of view is really interesting. Um, but a few who are trying to like put make them make things look nice make things look you know like fascinating make things make people more curious about the actual things that go into.

Julia Marsh:     And.

James McWalter: You know as so as the the things we buy every day.

Julia Marsh:     It’s a wonderful design opportunity because all of a sudden especially during Covid when we’ve all been receiving so many packages to our homes and we’re inviting all these materials into our house for a brand to say to their customer. We care about you. We realize that.

James McWalter: But right? okay.

Julia Marsh:     You’re inviting these materials into your home. We’ve gone the extra mile and chosen a material that actually creates life that actually employs you know in our case in Sway’s case employs coastal communities and. Sequesters carbon and regenerates ocean health and encourages biodiversity. Oh and it’s going to turn into healthy soil at the end of its life what you’ve done all of a sudden is not just created a beautiful sort of tool to alleviate guilt for the for the shopper. But you’ve also enabled them to become a part of the climate movement and materials like plastics these basic building blocks of modern society are I think 1 of the best opportunities we have to do that to to make people feel like oh hey I can be It’s it’s not this inaccessible thing I can be a part of it too and I feel really good about myself.

James McWalter: Yeah, absolutely and I guess so you’ve kind of identified like seaweed. Um, what was that kind of initial you know Mvp or like starting to develop that mvp and what does that process look like.

Julia Marsh:     That was me in my kitchen mixing up seaweed extracts with various sort of plant-based additives and making really really horrible. Smelly films they were. They were ugly um, they curled up they smelled bad.

Julia Marsh:     I very quickly realized that I needed to bring in material engineers. It’s quite obvious in retrospect um and we partnered up with ah the usda as well as folks at the Berkeley school of Green chemistry to create more advanced prototypes.

And as we constantly constantly iterated we were able to get a really beautiful crystal clear film. That’s Odorless. It’s stronger than Ldpe. It’s got amazing heat ceiling Properties. You can adapt the opacity etc so it actually was quite a quick evolution of bringing in the right talent. Unfortunately I can’t go into too much detail because we’re currently filing a provisional patent for the formulation. Um, but yeah, it was. It was really quite ah, a beautiful and and rapid process going from.

Julia Marsh:     This ugly ugly film to something that’s perfectly clear and really high performance.

James McWalter: But I think like I think like that time spent in the kitchen right? I’m sure was invaluable right? because even though you know some very well-qualified people in a lab. You know it’s ah it’s definitely a more sophisticated process. It’s pretty similar process right? We’re trying to heat up things and cool down things and move things from different types of vessels.

Julia Marsh:     Right.

James McWalter: I Think especially you know I’m also coming from like a non-technical point of view and like starting technical companies like getting into the weeds like on my side. Yeah trying to do some coding and your side like in the kitchen you know, stirring some pots I think these are really important because you have to be able to engage with the with the technical team that you’re building and and I think like I Absolutely yeah, think that it duffly stands to companies and and. And to non-technical founders to get their you know Roltra sleeves at at times.

Julia Marsh:     I definitely empathize and admire that the skill set needed to do it Professionally yeah.

James McWalter: Um, so those 2 organizations you mentioned were they like looking for people and wanting to kind of work on these type of things or did you kind of reach out to them.

Julia Marsh:     Yeah, the the wonderful thing about especially the Usda is that they’re set up to help facilitate american investments in new materials or specifically the usda offices in Albany. Looking you know there are adjacent companies to ourselves who have gone through that program including Mango materials which is a ph a company and corramat which creates ah a corn-based foam.

James McWalter: Um, and so you know so seaweed you have this kind of formulation. You’re developing what are its kind of the pros and cons of it versus let’s say conventional. Um, you know film plastic.

Julia Marsh:     Right? So the wonderful thing about seaweed is that it is extremely abundant. It grows on every coastline in the world. 24 7 3 hundred and 65 days a year there’s seven million square kilometers. Seaweed growing today which is roughly equivalent to the size of the Amazon reed forest I think that’s a nice comparison and they’re roughly equivalent in their environmental contribution to the earth as well seaweed sequesters an insane amount of carbon some papers from harvard say seaweed can sequester up to 20 times more carbon.

Julia Marsh:     And per acre than trees. Um, but they also do all these beautiful ecosystem services. They encourage biodiversity by creating habitats for hundreds of species. They mitigate the effects of ocean acidification actually reversing the effects of climate change the more cwed plant. Healthier the ocean or the quality of the ocean will be. They are ecosystem architects as Well. They they help combat um erosion and they’re this amazing source of employment for coastal communities that have maybe been affected by overfishing or by climate Change. Seaweed itself is just the definition of a regenerative resource. It’s doing all this work. Um Fray of charge while also being wildly abundant and growing more quickly than land-based crops so seed grows twenty to 30 times faster than corner sugar cane and you don’t need land.

James McWalter: Right.

Julia Marsh:     You don’t need fresh water. You don’t need pesticides you just plant it and it grows So it’s a fantastic resource compared with the Fossil Fuel industry.

James McWalter: And in terms of let’s say the different types of seaweed. Um, you know some are I’m sure like more you know evolved to work within tropical waters versus Colder waters etc. Um is there particular types of seaweed that work. Best for the kind of process you’re building out.

Julia Marsh:     Ah, right. There are so we primarily work with 3 different species of seaweed and we’re always working to expand the the varieties of seaweed that we can work with. We never want to be too dependent on 1 species. We want wherever possible to encourage the diversification of ah farming practices. Because that creates a healthier ocean. There are beautiful regenerative ocean farms popping up all over the world. We primarily work with farms based in North and south america and yeah, you have. Well over ten thousand species of seaweed to choose from. So we’re just scratching the surface of what might be possible with with seaweed bile palmers.

James McWalter: And so let’s say once it kind of goes through this you know this process that you’re building out. That’s you know the core to your Ip and we have let’s say you know a conventional plastic film and and the sway plastic. Yeah, the seaweed-based film. Um, how do they so differ you know would somebody notice to the eye like what what does that kind of comparison look like so.

Julia Marsh:     Yeah, so visually. Our film looks basically identical to a traditional piece of plastic which can be a beautiful benefit because for instance, If. Ah, cosmetics company wants to sell their extremely gorgeous products. They want the customer to be able to see the the product in the bag and maybe if it was opaque or had some sort of tint that would be a hindrance to purchase. However, we’ve learned actually that customers respond or shoppers respond really? well. The material when it looks like it’s made from seaweed So when it’s tinted green or it has a texture because it gives a little bit of I Guess Social clout or there’s like a social reward for saying I’ve chosen a better material look at me, you know.

James McWalter: No absolutely it that that social pressure piece I think is something that is definitely underwede in a lot of climate startups trying to think through go-to markets. You know we.

Julia Marsh:     Letter.

James McWalter: You know we’re we’re human beings We We express things through what we wear and how we you know what we buy and all those kind of things and because so many things are now just like a pure kind of emar Ecommerce Play. Um, like. People don’t if they’re not getting the social like kudos right of having the book up on the wall or whatever it may be um I think sometimes we struggled and so I I think that makes a ton of sense in terms of having something that you know has the the look and feel of seaweed more so than conventional plastics.

Julia Marsh:     Right? It’s like it’s a great design Opportunity. There are so many different colors and textures that we can play with utilizing. What’s naturally found in different types of seaweeds and then in addition to that we’re looking at the different messaging that we can use to make again. Make people feel really great about this choice whether that’s being able to track exactly where this seaweed bag came from maybe the farmer who grew the seaweed that was used to make the bag again kind of reaffirming that connection between the person and the material they’re using or. Humans and nature and then also really assuring them that this is not some attempt at greenwashing that we’ve gone through the necessary actions to get this material properly tested and that it is in fact, home compostable such that you could mix it in with food scraps in your backyard compost. And it’s going to turn into healthy soil.

James McWalter: Yeah, that was actually the next question because we have you know, definitely on the production side. You know see we is this kind of net sequester of carbon relative definitely relative to petrochemicals going into pastek and then on the disposal side as you mentioned it’s this kind of home compostable. Um I guess 1 of the things with with any sort of kind of material science.

Julia Marsh:     Um, as a.

James McWalter: You know the the more composable It is the more I just open it is to ah degradation through the supply chain and and so how do you think about that balance I.

Julia Marsh:     Right? Man it’s such a fine line to walk. Yeah, so we are constantly treading this line and trying to find what are the absolute best applications for this material where it’s okay that when it’s exposed to heat. And moisture. It’s going to degrade very quickly. We found that retail bags and poly bags are a great first starting place. So that’s why we’re focused on working with brands like Target walmart and cbs to help replace the retail bag and we’re also focused on working with Apparel brands to find really great. Yeah partners who want their customers to engage with plastic- free packaging. Um, so that’s that’s a focus at the moment. The the degradation timeline is quite quickly right now and so we’re also constantly improving the formulation so that it can withstand higher humidity. And temperatures while in shipment but that when it does enter a compost environment. It’s going to degrade extremely quickly.

James McWalter: Yeah I could imagine this kind of a wedge of potential products that could be wrapped right in the in in the sway material and you you start at the at the area. That’s you know pretty high turnover. You know, used very rapidly and then over time as the formulation gets you know more stable. Um, from degradation point of View. You can kind of move into that like that that larger wedge of like every product in the world kind of thing eventually there you go.

Julia Marsh:     Exactly every product in the world. It’s an ecosystem we never would claim to be the Silver bullet or the 1 answer there are so many cool materials out there in new systems. A lot of the best climate solutions are just related to efficiency and and common sense.

James McWalter: And.

Julia Marsh:     So wherever we we make the most sense that’s where we want to deploy ourselves.

James McWalter: Understood and I guess yeah 1 of the as was difficulties with new materials is there’s typically a pretty sophisticated and well-established supply chain to move that material through so you know from constructing plastic to its molding.

Julia Marsh:     The.

James McWalter: And then being delivered on ships to you know the manufacturer and all those kind of things. How do you think about? let’s say fitting in versus disrupting parts of that supply chain to I suppose that have the greatest impact. So.

Julia Marsh:     Right? We want to create the lowest lift transition to using our material. We want to make it extremely easy for brands to work with us and that means we’ve designed our material to plug into existing plastic infrastructure and plastic. Companies a lot of them really are dying. They’re itching to bring in more sustainable materials that are compatible with their machinery plastic production is a well- oiled process. It’s ah that was a nice little pun I inserted there the actual you know? ah. Production of plastics from from pellet to film is quite efficient and and can be very low energy and there’s actually a path to decarbonizing that process. What’s missing is the material itself is not. Good for the planet at either end of life and so that’s how we kind of fill out this system um to be eventually fully decarbonized as well as fully regenerative.

James McWalter: That’s interesting. So you mentioned both the brands. But then also the I guess the plastic Manufacturers themselves and so are you you talking to? both? are you interested in potentially licensing to the plastics or working with brands who have more maybe of a vertically integrated model. How do you think about those kind of tradeoffs.

Julia Marsh:     Yeah, at least to start. We’re just again focused on getting our material in the hands of brands and and in the hands of shoppers because we really want to get that data back about how people interact with the material are they Composting. It does any of this seaweed Story Resonate. Um. So to begin with. We’re going to be working with contract Manufacturers in the future. It may be the case that we do vertically integrate and either we work directly more directly with seaweed farms to refine and extract the useful parts of that seaweed or we produce our own um resin that can be distributed to plastic Manufacturers and that’s sort of a ah. To be determined decision.

James McWalter: Absolutely and I just what are those kind of next you know next 1224 months time you know Milestones that you’re hoping to can reach.

Julia Marsh:     We’re focused on pilots we we were the winners at the Beyond the bag challenge which is how we’ve come to. Thank you really amazing experience. It was sponsored by ideo closed loop and then the consortium to reinvent the bag which included Target walmart cbs and a number of other global retailers.

James McWalter: Congrats.

Julia Marsh:     So what? that’s enabled us to do is really understand in ah in a micro level what these brands need us to achieve in order to adopt our material so over the course of the next couple of years. We’ll be working for pilots with those folks and then we’ll also be launching smaller scale pilots with apparel and cosmetic companies. And then the other big thing is we always constantly want to be achieving the highest level of certification. Not just related to the compostability of the material but also the nutrient quality of the material this idea that we could actually add again benefit to. Soil when the material decomposes and how well the the source material is certified as important as well. So there are all these emerging standards around ocean forestry that we’re really excited to hit partake in such as. This sort of fsc certified equivalent for ocean forests called the asc msc seaweed standard and expanding fair trade practices for the seaweed industry which is like very quickly growing so those are 2 focus areas I would say.

James McWalter: On that latter point. So what are the other kind of use cases for seaweed and I guess is there enough supply on the seaweed side. You know if were more and more different types of use cases are now turning to seaweed that we need to see a massive ramp up. You know the Amazon size you know area. Do we need. More than that. How do you think about that.

Julia Marsh:     So currently seaweed is primarily used in food or as a thickening agent in different pharmaceuticals or cosmetic products. There is more than enough seaweed seaweed is not the issue. Challenge in the bottleneck that we’ll run into is the processing capacity of those yeah existing seaweed processors so we will eventually you know at least in our current projections in about five years we’ll need to see growth with our current network. Expanding the capacity of yeah processing the seaweed but there’s quite a lot of ocean and the main limitation is yeah, not the seaweed.

James McWalter: No. Yeah, it’s interesting because you mentioned the carbon sequestration power of seaweed and I know there are a few companies who are looking at just seaweed as a pure carbon sequester so grow a ton of seaweed cut it allow it to sink to the bottom of the ocean. Hopefully it’ll stay there for at least a few decades and that’s a potential method. You know.

Julia Marsh:     Here. And.

James McWalter: But that’s to be honest I think that’s the big question right? It’s like we don’t we know so little about you know what happens you know below a mile below the surface that you know do these things kind of stay down there. Um, and so it is interesting where you have a number of people kind of re-looking at something that you know people have been using for.

Julia Marsh:     Is it.

James McWalter: 10000 years for different types of materials in these kind of new ways to combat you know the the climate crisis.

Julia Marsh:     Yeah,, there’s wonderful opportunities eventually for us to develop simile systems or to partner with farms that are trying to build out you know Kelp or seaweed related carbon Offset Programs. Science is constantly evolving and of course we would also want to focus on the farmer themselves benefiting from that um system. So It’s something we’re keeping our eye On. We’re also want to maximize the amount of carbon sequestered by our material itself and. Creating the best pathway for it to actually be composted so that we’re not sending it to landfill and further contributing to other sorts of emissions. Um, but something cool that I didn’t mention before is that when our material goes to landfill if it does it emits and these are based on our just our initial projections. But it is. It’s projected to emit eighty eight percent less C O 2 equivalent emissions in a landfill than paper which is something I thought was so wonderful and unexpected because you know whenever we’re considering any of these replacements for plastics 1 way that plastic does win is in the C O 2 equivalent emissions.

James McWalter: Right? It just stays there forever right? And so it it never actually goes into the atmosphere.

Julia Marsh:     In landfill? Um, so yeah, right? So that was 1 kind of great if you’re comparing paper to seaweed we win in that category.

James McWalter: Yeah, that’s fascinating and and super interesting and I guess you know there is this kind of balance between um, yeah, personal and I guess institutional or or commercial behavior around where the material ends up going right? And so.

Julia Marsh:     Um, ah.

James McWalter: Yeah, there’s a lot of cool companies, comassing companies and so on and so we also have to I guess Collectively have a lever around changing behavior to actually you know.

Julia Marsh:     You have.

James McWalter: Put it into the compost or learn about how to kind of dispose properly of these things as we kind of add materials that just don’t go into a landfill or shouldn’t be going just into a landfill and.

Julia Marsh:     Yeah, it shouldn’t feel at least composting behavior shouldn’t feel alien or like an exclusive process someone in a city can compost. You know in their own home with ah with a bucket and a carbon filter. It’s actually. Ah, quite easy to do and the wonderful thing about it is we divert. Yeah, all this food from landfill and all those additional carbon equivalent emissions and there is increasing compost infrastructure. It’s sort of an inevitability. You know, recycling infrastructure’s only really been around since the Seventy s compost infrastructure is. Inevitably going to scale and be more accessible to more people.

James McWalter: And you mentioned a bit earlier about you know during Covid we got used to a lot of packages of various types showing up at the home and besides that you also have this kind of um, you know because of fears of cleanliness and so on people I think got very used to or begin more positively. Came to more positively view disposables of of various types right? kind of a health point of view. How do you think about that like is that going to be something that’ll take a little while to go back to what have been before which was like a kind of ah a move towards us disposables. Um, and yeah, how do you think Covid I guess changes The space.

Julia Marsh:     A.

Julia Marsh:     That’s an interesting question I think more than anything we are programmed to desire convenience and who can blame us and I think that what. Solution We’ve developed represents is a pathway to still provide a very convenient solution to the shopper. Not necessarily asking folks like yourself or anyone else to do anything wildly outside of the ordinary but to engage with composting behavior and. Make it as easy as possible for you to do the right thing just by swapping out the material and I think that’s a great opportunity that brands have like I was mentioning before that brands have this great opportunity to enable guilt free shopping by by subbing out their plastic packaging. Um. But I don’t think it’s impossible that we might return to the milkman and always have you know, reusable packaging for our bottles and and our bags I think that’s entirely feasible.

James McWalter: Yeah, and I guess I goes into this concept of circular economy nearly by definition circular economies become more localized right? because the transit is such like ah becomes a larger factor the more circular the the economy I guess and so if you can make that transport piece tighter.

Julia Marsh:     The earth.

James McWalter: Um, especially if it’s going back to the same place from where it began. Um, you have this kind of you know your like scalability kind of reverses in these interesting ways.

Julia Marsh:     Right? Yeah and I think just another piece because you hinted at it when we talk about circular systems or closed-loop systems so often we focus on mechanical recycling and I think oftentimes we we forget about biological recycling and that’s what compost infrastructure represents.

James McWalter: And.

Julia Marsh:     Opportunity to feed into other aspects of the regenerative movement by creating healthy soil more nutrient-rich soil which is responsible for like all life on earth.

James McWalter: Absolutely yeah I guess I guess even the way I was describing. It was very much a literal circle right? like the same thing starts an end in the same place and with a few different kind of steps but it’s definitely something much more akin to you know, rebuilding an ecosystem of sorts right? where you have tons and tons of inputs and tons ons of outputs become inputs.

Julia Marsh:     As a.

James McWalter: And basically ah like an interweb of yeah things like ah, any ecosystem whether you know it’s a field in the west of Ireland or the rainforest or like you know, ah seaweed off the coast of Carmel Um, you know, ah like yeah right? So like if you look at those like all the inputs and outputs are constantly kind of like interacting at each other.

Julia Marsh:     Right.

Julia Marsh:     Isn’t it.

James McWalter: And I guess I also fall into that kind of engineering mindset of a circle being a circle and not a lot else outside of it. Yeah.

Julia Marsh:     It’s a multi-ringed Venn Diagram Probably I love solutions for the climate crisis that tackle multiple issues at the same time and what I love about our solution in particular and many of the emerging sort of benevolent materials in the space is that. We’re addressing not just the climate crisis not just the plastic problem. But also all these social injustices that have emerged as a result of the climate crisis and so the more we can find solutions that democratize access to benevolent materials I Just think that the more we bring it humanity into the conversation. Which again is also very often overlooked.

James McWalter: Absolutely and you mentioned kind of going through some of these certifying kind of processes and I guess 1 of the difficulties that the average consumer has I guess is figuring out what all these potential labelings or you know is fair trade. Okay anymore we don’t know anymore you know like all these kind of things.

James McWalter: Um, how do you think about like the balance of give oversupplying information to a consumer who often are making a relatively snap judgment and really at the end often. The consumer just is like is this the guilt-free decision or not right. And so I myself couldn’t go back and forth. But yeah I’d love to hear your thoughts On. Um yeah, labeling and of packaging and things like that. So.

Julia Marsh:     Well specifically with packaging and specifically with compostables. There are some very frequent yeah confusing labels that make it really difficult for someone to do the right thing if something says it’s 1 hundred percent compostable that does not mean that it’ll degrade in your backyard. And it doesn’t mean that it’s made only from plants. It just means that it’s industrially compostable and composting is binary. It’s either 1 hundred percent or it’s not at all so saying it’s 1 hundred percent compostable is not a further like reassurance. Um, and I think. Yeah, oftentimes the materials that we’re interacting with that are available to us that are labeled as being compostable are only part biobase. They’re not even 1 hundred percent dependent on plants. They can still have petroleum-based binding agents integrated in them which means you’re not actually breaking free from plastics or the fossil fuel industry. Um. There’s also yeah, this opportunity to yeah, better label the actual time span that a material might degrade in ideal conditions. So increasingly I’d like to see labeling that very quickly tells the shopper without them having to think too much about it. This is going to decompose in 4 to 6 weeks. It’s. Ah, carbon-neutral or its carbon Negative. It’s made from x y and z materials. In our case, seaweed and plants. Um, and maybe even if they do care it was it was you know, cultivated or produced under fair trade conditions and those are the four major. Points I would look out for although we can we can add more the more information I generally think the better.

James McWalter: Sure on just that um and so I guess you know if I think about ah the more people and we talked about this little bit at the very beginning but like you know we want more people working on these problems while more people doing interesting things often. It is there are these barriers. Entry both real and often perceived right? We talked about you know this perception. You need to be scientists or this perception that you need to yeah have worked in the industry for 30 years or whatever it may be um, let’s say you know I was a next or there was a person who’s like the next generation analog of you know what? you’re what you’ve been doing over the last few years.

Julia Marsh:     Um, here.

James McWalter: And what’s kind of advice. You tell that person get started.

Julia Marsh:     I would say that the network that you have available to you multiplies so quickly as soon as folks learn you’re trying to make the planet a better place from a practical. Perspective. So I think the more practically grounded and the more intersectional your solution is the more likely folks are to help you and the biggest thing that I learned early on which I hinted at earlier was i. Need to to become very good at admitting when I did not know something or fully understand something that humility made it much easier for me to learn and to bring in the right people to help and then the other thing I would recommend is that you bring in talents which really well complement yourself. So. I’m a designer I love to make beautiful objects I love to communicate stories. But I don’t necessarily have a granular understanding of seaweed chemistry. So I brought in the talent and the skill set as quickly as possible to round out my own skillset. Have 2 amazing co-founders who complement me very well. My co-founder Matt has a background in sustainable Development. He’s worked with public and private companies expanding their triple bottom line has a really robust sense of what needs to go into a lifecycle assessment my other co-founder leland mashmere was the former chief brand officer at Giboni he’s built. Global brands. He understands executive leadership. He understands how to you know, build a massive company that’s going have massive scale. So I’m really thankful for those skillets and I could go through the whole team but we won’t do that now.

35:32.79   James McWalter: And yeah, no, and it’s great. It’s great to to kind of mention those cofounders you know it’s it’s so such an interesting kind of set of relationships and how those develop over the years and you know all the best companies like have really strong like early relationships and and that kind of trust that kind of goes from there. Um.

Julia Marsh:     Over.

James McWalter: I mean it is you know I guess the thing that I find ah people which kind of touches upon your your previous point. Um that I find catches people up is that either people you know don’t talk enough about what they’re thinking right? or are talk so much. They don’t listen.

James McWalter: Right? And like these are 2 kinds of spectrums are 2 2 side of the same spectrum I guess and so on on the first point which I get your man like like I tell people all the time if you have an idea like just tell tell people about it just hey I have ah you know do you know anybody who knows anything about seaweed.

Julia Marsh:     Um, yeah, that happened. Um, let a.

James McWalter: It’s like oh you know my cousin Susan like has ah you know she was ah a Ph.D. in seaweed like in Norway or whatever maybe and like all of a sudden you have that connection and if you keep it to yourself or um, yeah, you don’t get there but equally on the other side I think like asking those questions like.

Julia Marsh:     Ah, address.

James McWalter: You know when you actually then get into the room with the expert. It’s just asking questions. It’s like really you know you can give your 1 minute spiel or your 1-minute pitch and so on. But I always find that it’s so helpful to just like go in and you know be but well prepared with like the 5 questions like you would love to have answers with and like. If you knew the answers those they would move you 1 Step forward to like having a real product or a real company.

Julia Marsh:     Yep, absolutely and then walking away from that conversation saying or maybe understanding what ah you know the 3 things that this person I’ve just met really loves to do and would be willing to continue helping me with and having this. Network of advisors that you can just immediately call on is really really helpful because building a business especially in the climate space can be very isolating sometimes and I drive so much comfort from yeah, connecting with other founders and yeah and with another climate. Enthusiasts and cried, enthusiasts. It makes you feel a lot less alone.

James McWalter: It just on the kind of aloneness then I guess do you think kind of climate is lonelier than some of these other spaces or how do you think about that.

Julia Marsh:     Well I don’t know because I I guess I can’t compare it to anything else. No I think that it I misspoke The challenge is so great and the potential and the urgency of these solutions is so great that it can feel at times Like. You’re you know, working on a never-ending problem so seeking out these kinds of friends and and and advisors yeah can help you feel less alone in the fight against the climate crisis.

James McWalter: Right.

James McWalter: Yeah I guess that’s why I think you know you mentioned this earlier but like why people are so friendly. It’s like I think you go through this process of like oh no like semi despair. That’s just too big for 1 person and then it’s like oh I literally need everybody I need competitors.

Julia Marsh:     Ah, right.

James McWalter: Right? Like you know I need at every point like we need 20 million people like changing their lives like tomorrow to work on some of these things just have a chance of um, you know something close to success and so yeah, go on. Yeah.

Julia Marsh:     Um, is a. Oh It’s yeah, it’s very freeing actually that I can approach most if not all of our competitors and say hey let’s be friends you want to figure this out together. Um, but that’s overall been the theme. Especially in the seaweed space. But I imagine throughout the climate space as well.

James McWalter: No absolutely and I was working on a kind of agtech idea like a year year and a half ago and I just contacted every ah competitor in the space and like ninety percent of them got on a call me I was like I’m competing with you you know? and so on I ended up not working on that idea too much longer, but it was fascinating how yeah open people were because.

Julia Marsh:     Enter.

James McWalter: Pretty much everyone was like all right? We just you know even if we become a billion dollar company. We need a hundred more just to to like tackle the problem Julia Marsh:   does but absolutely brilliant I suppose before we finish off is there anything I should have asked you about but did not.

Julia Marsh:     Right? This is.

Julia Marsh:     Oh boy? Well, we are hiring currently. So if anyone listening happens to know an incredible Ph.D. Biopolymer scientist. We’re looking for a very senior role to help.

James McWalter: Bright.

Julia Marsh:     Expand our engineering team and we’re hiring actively at this moment. So our job descriptions are listed at our website Swayfuturecom/careers would be the biggest help.

James McWalter: Absolutely and we’ll post that link on the show notes as well. Julia Marsh:   Thank you so much has been brilliant.

Julia Marsh:     I Really appreciate it. Great to meet you and great to have this conversation.