Great to chat with Lauren Kuntz, CEO and Co-Founder at Gaiascope, Gaiascope is dedicated to maintaining planetary balance and combating climate change! We discussed forecasts on the electric grid, energy trading market, how energy efficiency is correlated with lower carbon, ways energy usage is shifting and more! 

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James

The unedited podcast transcript is below

James McWalter

Hello today we’re speaking with Lauren Kuntz Ceo and co-founder at Gaiascope welcome to podcast Lauren Kuntz brilliant to start. Could you tell us a little bit about Gaiascope.

Lauren Kuntz

Thanks so much for having me.

Lauren Kuntz

Yeah, So we’re really focused on trying to help the assets that we need for a carbon free grid so things like storage renewables demand response maximize their returns so that those projects that are more. Financeable in the future moving forward and we can help accelerate our transition to a carbon free grid.

James McWalter

And what drove and what drove that initial decision to start Gaiascope. Yeah.

Lauren Kuntz

Um, yeah, So my cofounder and I came from totally different backgrounds. But I think had really seen similar Trends Happening. So I.

And very much an academic by nature and training I did my undergrad and physics mechanical engineering my ph d in climate science and had the wonderful opportunity during my education to both take a class around decarbonization and teach classes around decarbonization. And I think in that process I learned a ton about how important the grid was and how we actually had no idea how to operate a grid without Dispatchable Fossil Fuel plants on it and that we like need to fundamentally answer that question so I was. Leaving grad school with this in mind of like this is a question I really want to work on and engage with and I met up with my co-founder Jess Stiles who is a rockstar badass in energy finance and she had been basically 10 years in energy finance everything from hedge fund to. Development deals and I’d realized that like we’re seeing this interest and shift towards renewables and decarbonized assets but nobody understood the economics of them so we kind of just really synced together on those 2 learnings and we’re like hey the way that we can help figure out how to make this grid operate is to make the economics. More transparent across different timescales. So we really focused on short term to begin with.

James McWalter

And so what does that look like in terms of like a product and I guess what the you know the early product look like and where do any pivots along the way I.

Lauren Kuntz

Yeah, so the early product we were just like hey we’re going to be a saas company and we’re going to sell price forecasts on the electric grid. The idea being if you know what price expectations are you immediately know how to make decisions right? like that’s the clearest signal you kind of can have when you’re thinking about revenue and returns. Um, really early on. We learned we had to pivot away from that because almost everybody we spoke to was like if you’re amazing at forecasting prices. Why don’t you go trade and there was a huge skepticism so we’re like okay I mean we’re like great idea. We’re gonna go trade and we’re gonna prove this works and we’re gonna like understand your pain deeply. So we pivoted kind of within that first three months of formation just from trying to be a software platform to actually running a very small trading platform. Um so we spent about two and a half years then trading ourselves building up our models having an amazing feedback loop between. Is the model working and seeing that in returns and now are really launching a product that’s focused on giving bid decisions and optimization optimization around dispatch to decarbonize assets on the grid. Um, so kind of taking that price forecasting a step further for them as well and being like look this is how you should trade. This is how you should dispatch your asset to maximize your returns.

James McWalter

And could you speak a little bit then to exactly how it works today in terms of energy trading and you know I guess where there are ah you know you you mentioned the kind of the old world of like the peaker plant-driven model and this new world. We’re kind of going in through. And how I guess the kind of current trading regime or the current trading model that most organizations who are trading. Um what they’re missing big big topic.

Lauren Kuntz

Yeah, so I mean to date a lot of them. Yeah, not a small question but we’ll start with just renewables I think to date so many renewables have been under ppas for so long that they haven’t had to worry about trading in Wholesale markets. Right? They’ve basically had 0 exposure to this and so they haven’t had to build build out trading teams in house like they’re just like we just need to make sure we produce as amazing Megawatts as Possible. We don’t care about the price because we already have somebody that guaranteed a price for us. Um, and now you’re seeing the ppa value start to Fall. Um, so it’s not quite as valuable to do as it was before you’re starting to see assets that were on ppas now that contract has ended and they’re now exposed to this wholesale market risk and they’re like we don’t know necessarily How do we manage that risk we don’t know how to trade in the day ahead versus. Real time. How much our volumes that we should be sort of Guaranteeing. We’re going to deliver versus leaving open to whatever real time prices are so we really are trying to come in and help with that specific problem.

James McWalter

And it’s so interesting. You also mentioned this kind of ah you know, starting with a saas product and then the the kind of idea of building your own kind of prop trading desk about a year ago to put my kind of cards on the table I actually had a friend of mine who was a machine learning engineer and he had a very similar idea to to. Gaiascope was like okay, let’s take some you know day ahead predictions use some weather data use some fancy different kind of models specifically targeting battery storage and then use the ash somehow to kind of decarbonize the grid and when we were like chatting about it was like okay well. We could probably make a ton of money on this right? We could just trade it like if if our model you know if his predictions are better and than the average predictions that are out there and you have enough capital to deploy. You actually make serious but amount kind of money but I think the thing that we were a little bit struggling at and we we kind of immediately moved away from that and I ended up kind of going in different direction as a he. Um, with a different company but the bit we were always kind of struggling with was the kind of connection to directly nudging the industry into kind of more clean directions and so it sounds like you went through you know way more successful and like more thoughtful kind of way of kind of thinking through those problems. But yeah I guess how did that kind of process go for you.

Lauren Kuntz

Yeah I mean I think I entered with a similar mindset of probably coming from academia was like how does trading help anything like you’re just sort of scraping money away from other people and the more that I’ve been involved in it the more that I see it actually is it is value. Add to the grid. Um, and it is helping decarbonize the grid in the short term long term we need physical assets on the grid that are decarbonized right? like that’s going to be the limiting factor more than whatever you can do with just purely financial trades but part of the reason that even financial traders. Like the work we’ve been doing is allowed in these markets is because we’re basically taking on risks that other people won’t take on and are helping the market in advance get a better understanding of what will happen tomorrow in reality. So if you have no idea what tomorrow is going to look like. You have to make decisions around what plants are going to be turning on at what time. Um and will I have enough generation from those plants and there’s some plants that have a very long time. It takes some to spin up and be ready to produce power and you probably if you have no idea what’s going to happen are just going to be like hey guys. Be ready all the time to produce power be running and then if it gets really windy all of a sudden you’re just like sorry wind we have to curtail you because we can’t ramp that coal plant down. But the more insight you have in advance through the day ahead market through the type of trading that we do the more understanding you can have of like hey there’s actually really a high chance. There’s going to be a lot of wind so we should 3 hours in advance turn that coal plan off so that we don’t have to curtail the wind we can take advantage of all of this really cheap power. Um, and. Because we have different return expectations than say the wind farm or the coal plant were able to bid more aggressively and get the market to look more accurate than they otherwise would they probably are going to be more conservative and they’re like well we don’t want to take on the chance. It’s not windy. Um, so we’re able to really help the market operate more efficiently through our trading and efficiency also is really strongly correlated with lower carbon.

James McWalter

Yeah I definitely take both those points I think the peaker plant point is one that I think is not really noticed in the way that it should be right? And so for the audience you have these typically coal-fired or very dirty sources of energy they tried to to get fired up on a pretty quick basis to kind of fill. Ah, peak issues within in the grid itself so that nobody loses energy and it’s just like an incredibly dirty way of doing those things and so if you can avoid it as as Lauren Kuntz was saying um, you can have this kind of huge benefit and then we’re also moving to this world where we’re starting to have thepach dispatchable, clean energy like things from so storage and batteries. And so how are you thinking about how I guess you know how different models can work across different types of energy sources and how you kind of you know judge that or are your kind of model takes in lots of less inputs and then it’s like we will predict the good price and that price is consistently beating the market itself.

Lauren Kuntz

Yeah, so we really focus on having good inputs that help us get a really good understanding of not just like what is a point price forecast but like what’s the confidence in that which is the other really big piece of what we do that I think is different from how other people look at these markets. But transmitting that into decisions for assets is actually very asset specific because for something like a peaker plant. They can kind of respond to prices as they wish unlike. Storage which can only respond to a price signal if it has power stored up already right? So There’s this time component in storage that makes forecasting there even more important and makes how you utilize those forecasts as well. Even more important because it’s like if you have a $9000 price by coming.

James McWalter

Right.

Lauren Kuntz

And you have an awareness of this even if prices right now were two hundred or three hundred dollars it’s worth it for you to charge so that you can discharge in that even higher price time. Um, and that’s a consideration. You don’t necessarily see in fossil type dispatchable plants. Um I think demand response similarly has that sort of time varying tradeoffs that you have to realize and it just makes everything we do about the christ forecasting and translating it into decisions even more impactful.

James McWalter

And I guess who are today are your customers and what is a process if I was let’s say one of those customer profiles of signing me up as a customer. Okay.

Lauren Kuntz

Yeah, so we are really focusing on storage assets and renewable assets that have basis risks that they would like help managing that’s kind of our initial use cases right now and specifically within the Texas market that’s kind of the grid that we’ve really focused on to date. And the way that we tend to interact with potential clients is we start with just a free trial process. So we engage with you. We kind of show you hey this is a simple strategy that is just for purist illustrative purposes, no bells and whistles on it. You can get an understanding in a back test of how it would have performed um and every day then for the next month we’re going to send you how that strategy would recommend trading so you can kind of see this is exactly the information I’m getting if you’re already trading yourself. You can see how is it different and we do kind of a weekly retro of like. How would our simple strategy have done really get you familiar with kind of how it’s working why it’s working the way it is assuming the trial is of interest and both parties want to keep moving forward. We then move into a pilot phase where we do kind of a 2 to four week period of. Really customizing the strategy to that client specific needs. So everybody has a different risk reward profile. Everybody has different concerns that they’re worried about so we want to actually spend the time upfront really making sure that we’re building the strategy. That’s right for them around our price forecasts. Um, doing a lot of back testing so we establish baselines how much better. Do we think it’s going to do than what they’re currently doing and from there we move into kind of phase two a pilot which is just incubation so similar to the trial. We’re sending them the trades every day the strategy would recommend. We’re not live trading them It’s just kind of but make sure all the processes are working get everybody comfortable and then final phase of the pilot would be an actual deployment so you would be trading around the recommendations of our software.

James McWalter

And what is a kind of typical you know, um excess return um standard that and and Ram charge is a very large range but you know what would you say a good pilot would look like if you know would you make a customer very happy using your your product.

Lauren Kuntz

Yeah,, That’s a great question I mean I think it’s very much asset dependent and it also really depends on kind of what their baseline is like I think there’s some players where they have no idea how to manage basis risk and anything that is helping that is a win in their book. Um, and then you have other players where they already have a decently sophisticated strategy and they want to see like hey it’s only worth it if you’re making 20% plus more I think some back testing that we’ve played with have shown like the capability of five X Ah Roi on some assets. Um, but again it really depends like what are they currently doing how comfortable are they with trading everybody kind of has a different set point.

James McWalter

Um, if I x sounds good though. Um I’m sure I’m sure people are happy when they see those kind of numbers. Um, and 1 thing that again the can canadian might not kind of be familiar with is trading in the wholesale energy markets. Is a has pretty large barriers to entry so my understanding to trade in Texas which is one of the kind of you know the energy regions where this kind of trading takes place is at maybe it’s about but 7 figures about $1000000 to kind of get up and running and similar for other regions and so. As we’ve seen different kind of policy changes happen to allow more distributed energy resources allow a lot fewer or a lot more you know organizations. Yeah, even going down at community solar and like kind of approaching things like mom and-pop dispatchable energy this kind of thing. Um, one of the big barriers to entry is still the access to those wholesside markets. How how do you think about that barrier to entry. Obviously you’re filling out like some of that gap as well. But um, is it where it should be like is does it protects people from like maybe you know the the right and toot and claw nature of markets that are that are like the energy markets or. Should it be what opened up some more. So.

Lauren Kuntz

Yeah that’s a really good question I mean I think we definitely struggled with this super early on as a company and even 3 years into it still can where we ended up in Texas made the strategic choice to start there largely because the. Credit requirement that you have to post is substantially lower in the Texas market than elsewhere so was one where it’s like as a family and friends round and ycy funded company like we had enough barely enough collateral that we could start doing what we’re doing um and as we’re growing. We’re starting to reach those thresholds but even now it’s still hard to kind of show that you have the required collateral to trade. Um I definitely have an understanding as to why you don’t want to just sort of have a free for all be like yeah as long as you have $10 come under these markets like at the end of the day. This isn’t just like stock market where oh it’s going up and down. It’s like if you really mess up electricity markets like you could cause blackouts like there’s severe consequences that can happen and that’s not just like an uncomfortable thing but it’s like. Losing power to hospitals like these can be really extreme consequences if the grid goes down so I understand the need to keep it somewhat protected and somewhat a barrier because you don’t just want anybody playing but at the same time you’re completely right? that these limits are somewhat arbitrary. They’re also somewhat set kind of like there’s the ability of the markets to be like well you’re a small player that we don’t like so we’ll just set a higher credit limit for you in a bigger hurdle that you have to jump over it than somebody else and to really let all of these distributed resources take advantage and give the benefit to the grid that they can provide. I do think we have to be a lot more thoughtful about how do they engage? How do we engage them safely. How do we engage them without really risking the stability of the system I think it’s a question that Ferc is constantly struggling with to be honest.

James McWalter

Yeah, absolutely so for 22 22 which was this new rule that passed a couple of years ago that kind of allows just more types of energy to be allowed onto the grid and in various ways and and I actually spoke to one of the people who wrote the the ra law one of the lawyers at Ferc. About this and I was like hey it is just like a cold message I was like I’m curious of fork 22 22 um, what’s and it was like my my email was like what are the entrepreneurial opportunities caused by Fork twenty two 22 and I a great chat to him and he was like very blut. He was like. Not for like 3 years it was like it’s going to take years just for people to really understand because again he’s like we we’ll write these rules to be more permissive of different behavior but you know as as you’re saying like you’re having all these other layers right? and all these other areas of kind of risk version because it is dealing with something that’s so fundamental like you know. The backbone of our entire civilization is electricity. Basically so um, you know for yourself and I coming from like the startup world. We’re like let’s move faster. Let’s let’s open it up. Um, but I also could understand the yeah the need to move slower in certain areas.

Lauren Kuntz

Yeah, for sure I Guess the one area though that still really frustrates me and like if I could wave a magic wand and get furk to change is around demand response I feel like the way right now Demand response markets are set up. Is you get rewarded for peak Shaving. So. Times when there is a lot of load on the grid if you are able to reduce your load. You can get paid for this but you can’t get paid for filling Troughs. So if you have too much renewable generation and prices are Negative. Most demand rockets are set up where you can’t take advantage of that. And so like you’re really limiting how that resource can interact and what benefit they can provide from the grid because you haven’t incentivized them properly and it’s stuff like that where like every time I see it I’m like oh come on move faster be a little more like a startup don’t be like an old school energy system. But. We’ll get there and just never I think as fast as entrepreneurs like us want.

James McWalter

Exactly but 1 of more gray hairs. But we’ll we’ll get there in the end and I guess you you could have mentioned risk a couple times and especially because you are kind of focused on Texas we you know had this kind of very famous event last year pretty much just over a year ago where and a lot of people outside of Texas heard about this as well. Where. Because of extreme weather. You had very large shutdowns in the grid. You also related to that had these incredible spikes in price which from a kind of pure economic point of view is basically what you want to see right? You want to see these large spikes in price to adjust behavior. But in the same way that everybody somewhat misunderstands surge pricing on ubers and lyfts when there was a disaster and are like oh my god this is like terrible. It’s like well you get any drivers out unless you actually pay them. You know a higher rate. Um, you know there is the I guess the economic reasoning for why an event happens. And then how you know we kind of socialize that and also how we kind of socialize the risk of associated events. How do you think about those elements because you could build a barbell strategy where it’s like we’re going to make it lose money every day until there’s a disaster and we’ll make a ton of money. But you know you you’ll be yeah, like in trouble with the public. We’ll say that.

Lauren Kuntz

Yeah I mean you’ll be in trouble with trouble with the public I think you’ll also struggle to find any investors that are like truly truly okay with you losing money for 10 years straight until there’s like a 1 in 10 year winter storm event that happens. Um I think most investors aren’t okay with that ah level of risk reward. Um I think it’s it’s a challenging question because especially in Texas where you don’t have capacity markets. You don’t have kind of baseline payments that you’re making to generators that are just sitting idle most of the year but are like what’s keeping the lights on on that hottest day. Really operating. Um you end up in Texas with like needing those price spikes to incentivize enough capacity to exist there for like the biggest days that you need it and like the winterstorm is one of those right? where it’s like seeing high prices helps incentivize more people to come build. Um, but at the same time you don’t want to pass that on to consumers right? like you were hearing about some consumers getting $20000 bills where it’s like to an extent like electricity but in basic need like electricity and heat like you need it. We can’t really survive without it.

James McWalter

So bit botch right.

Lauren Kuntz

Um, so we do have various protections in place for most of the country like most people do not sign utility agreements where they’re playing the wholesale price for their electricity like you normally have a fixed rate. Maybe it varies a little bit over the day but it’s kind of a locked in you’re set up in this Contract. So I think it’s partly. Kind of making sure the right people bear the risk and being very cognizant of sort of Okay, if you are going to benefit from the risk. How are you then paying the system back at other times. How are we making sure that like the reward you’re reaping is truly in line with the benefit that you did provide.

James McWalter

That that makes absolute ton of sense and I guess it kind of brings to mind again. How the energy usage itself is shifting right? and so you obviously have this kind of massive increase in the variability of the supply right? as we’ve talked about with you know, renewables and not being the step batchable. But. Now starting to see battery storage which is somewhat but still needs. Yeah to be charged at certain points then on the demand side. You’re also having a huge amount of variability as we start to go from. You know one percent evs and so certain markets to 5 10 15 twenty thirty percent and so on and that is I think in general people are not. Outside of people directly working on this like not really prepared for how wild the change is going to be to the grid and how we kind of cope with that. How are you thinking about that in terms of like you know the opportunities or challenges for gyoscope.

Lauren Kuntz

Yeah I mean I tend to view it all as an opportunity right? I think as an entrepreneur change in any form is generally an opportunity. Um, so for me I look at that I’m like this is huge potential. Um. Part of it does depend on like how do does ferk decide that these types of new loads and new assets that can be dispatchable on the load side. How are they allowed to partake in the markets. Um, but at the end of the day I’m like well that’s hundreds of thousands of batteries. On the grid that all could benefit from price forecasting and understanding their optimization around charging and discharging potentially so I view that as like a massive potential stream of clients for us the timing of it again depends on the markets and what’s set up there but it’s. It’s going to get there eventually because it has to for the grid to work for the grid to be balanced. We have to start treating these loads as dispatchable like they are um I also just in general for the grid view it as a win like storage standalone is incredibly expensive to build still. We’re starting to build more of it and that is fantastic. That is wonderful. We need it but the amount that we need right now is not going to get there so I’m like hey look people are naturally buying evs like I just purchased a Prius prime. That’s a plugin and has a battery like. Why are we not letting these partake in the market they already could help stabilize our grid they could provide more benefit to it. This is a wonderful potentially lower cost way to get a lot more storage faster to the grid.

James McWalter

And by definition are already just going dramatically affected on the demand Side. It’s just reverse reverse the flow right? like um and and the tech is all there to certain extent. You have companies like stem and so on who allow you know what they call Ev Degrade just from a pure like technical ability. Um, but it’s funny I like when I was again kind of investigating a Geiscope esque approach I was like talking to people who are doing Um, yeah software to kind of control battery when it should operate in different markets and so those services market and so on and like ah talk to multiple folks who were just like using a timer like they weren’t even like trying to predict anything they’re like. Oh you know, usually like load is like this in the day. Yeah know at the end of the day versus that. Um and I was like oh well, why? why? Why don’t you try to like actually optimize it like ass a lot that’s a lot that’s complicated. Um, and so but but like all I guess all the but buildinging blocks for this, you know, very streamlined. You know, ebbing of flowing of supply and Demand. Like are all technically in place. But as you said you know the opportunity for entrepreneurs is to actually piece them together into something that actually you know is a new stable hole.

Lauren Kuntz

Yeah, exactly and I think I think they’re right and I understand why they’re like this is a lot like having now spent 3 years building up our models of this system I’m like yeah, it’s hard like why I get why using just kind of a timer is a lot simpler of a first step but I do think we’re gonna see be it one company that kind of. Pulls all the pieces together are many that ultimately come together with all the pieces into a giant collaborative effort I think I think we’re going to get there I think I’m just always questioning when is the timing of it is it the next five years is the next ten is the the next twenty.

James McWalter

You absolutely and then thinking about the timing. So what’s next for geoscope over. Let’s say the next kind of 12 to 18 months. What are some milestones you’re hoping to hit.

Lauren Kuntz

Yeah, so we’re really excited to be onboarding our first pilots fully so that’s kind of going to be the really big focus of this next couple months is success with pilots in Texas’ ‘ market and then from air. They’re really looking to do a series a raise. So we’ve done a seed and seed prime round to date and are really excited that a series a is going to open up us for us the ability to really expand beyond Texas I think that’s kind of the big one that we’re really excited about is like there’s a lot of players beyond that one small market that we could reach so. Unlocking those other markets I think also expanding beyond kind of just sort of the storage basis risk focus that we have right now for storage and renewables. Um and starting to think more broadly about how can we help other players in this space.

James McWalter

That that makes that makes sense and you know very kind of exciting next next next year two and yeah I’d imagine you’re taking lots of data and I’m sure you don’t have to tell me the data are taken in I’m sure most ah that it’s very proprietary but are data sets that you wish were available but you’re just struggling to find. Um, yeah, this is some of the world that. But I live in my own startup. But I also like talk to tons of folks who are trying to think of new ideas and such like an opportunity with collecting data in new ways. But yeah, is it anything that comes to mind or you’re like I wish somebody would actually start collecting some of that data.

Lauren Kuntz

So There’s a good amount of data on the grid collected that we have access to as a market participant which has been phenomenal I Think honestly, my biggest pain is less like oh I wish I had this data. It’s. Generally been around like oh my God I Wish this data was cleaner and less of a pain to work with like name matching between data sets is just so Hard. There’s no consistency. It’ll even sporadically change over time and you’re like why? Why do you do this to me. Um.

James McWalter

Wreck.

Lauren Kuntz

The other thing that would help I understand why they don’t do it but would make our lives a lot easier is we get information on kind of like what generators were producing and various people’s bid information but it’s all delayed by two months so having a closer to real time understanding for some of those numbers would be really beneficial. Um, it obviously is collected. It’s delayed because you don’t want any sort of unfair competitive advantage that you can take from that and like if you are the only natural gas. Or there’s 2 natural gas plants. Let’s say in Houston and one of them is down for maintenance and you’re the other one and you know this you can suddenly ramp up the price that you’re bidding into the market and like really screw everybody over like that’s the reason that you don’t allow this data to be published as soon as it’s available. But it’s also one where it’s like it would just make it so much easier to model like we would do such a better job forecasting if we had this sooner.

James McWalter

Yeah, it’s it’s so interesting. You know, ah Isis sell datasets to quantitative hedge funds in New York and some of them were high-f frequencyquency folks and like the timing was like all all important for certain types of data. It’s like Ken you know and and those these tales at the time of like people just like building things physically closer to. Parts of Chicago where data will be announced and because you’re working with like the speed of light basically to get the data from but you know from 1 place to another and like if you can yeah you can trade a lot in the time it takes for light to move from Chicago to New York supposedly and so yeah, that it’s obviously a more extreme version. But um, once you get kind of getting into a thing that touches a market. You know. Frequency timing. Um like depth cleanliness of data like all those things are interesting and yeah I would love so I would also love somebody to build a pipe of all the different location marginal prices for the country into like a nice downloadable format or you know etl would be amazing.

Lauren Kuntz

Yeah, yeah I mean there’s some players out there that are trying to do that and bless their souls. Um, it is a hard job because everybody uses a slightly different format and especially with the Grid. So many of these data sources are coming from like software that was built in the eighty s. And the 90 s and has like weird conventions to how you can name things so you just see kind of like residualness in it. But yeah I mean I think easier ability to play with data is going to be a massive game changer when it comes to innovation in this space.

James McWalter

Yeah, and I guess connected. You know your background like has a kind of very strong kind of scientific basis. Um, you know you have a ph d you know you’re interested in in kind of climate one of the things that I’ve noticed as I sort of can investigate like ideas would it anything that touches a grid is that we just have not a lot of you know, traditional. Software and tech folk from yeah, the the coasts in that space and you still see a ton of you know, not even Microsoft 95 things being like shared around. Ah you know, not just the utilities but even often private companies as well. What are things that could be you know done to kind of attract more of a you know. Diversity of background and experience into people who are kind of working on the problems that affect the grid and and energy more generally, right.

Lauren Kuntz

I mean I think we are starting to see that to be honest, like I think with all the startups and interest in climate tech There’s so many young people young people in tech who don’t just want to be software programmers but want to be software programmers and something that they really feel like matters in the world and I do think. Grid and energy is a deeply interesting one and especially with all the startups that are popping up I do think there is a bigger and growing diversity of the just talent pool that’s getting drawn here. Um I do think the other one that was representation matters like. Almost all the conversations that I have are with people that don’t look like me in this space right? So decision makers in the space. Do not look like like I look um and I think that can be something that’s hard for a young person just entering this space but I do think over time that’s going to change. Um I think. Seen it start to change even in the three years that I’ve been doing this with geyascope and I’m hopeful that it’s going to continue to just progress in that direction. Um, the one last thing that I’d kind of add though is like this framing really helped me understand. Why so much of energy in the grid specifically is rooted in this like old tech mindset and utilities tend to think like hey I want to buy something and then I own it right? like I pay you to build a solar project and now it’s my project and they tend to think about software the same way they’re like build me software. Now I own it and they don’t understand like software gets updated like there’s license fees for software. So I think a little bit of just like is that mentality of how you engage and think about your expenses as a company can be very different in energy than it is in other aspects of.

James McWalter

Yeah, for those ah you know software folk who are interested in working the space but never took an accounting course like just learn Capex Op X and why utilities love Capex they as as you’re saying hate off X and software is always op X It’s just like you know and we’re just all coming you know and who.

Lauren Kuntz

Business.

James McWalter

Build software from an opx world and it’s just like no yeah, just build it and we literally have $20000000000 for capex and we have 0 like ah $12000000 for op x for the next ten years it’s it’s crazy like the disconnect. Yeah.

Lauren Kuntz

Yeah, yeah forger.

James McWalter

Um, and also you mentioned earlier that um you were yc company number years ago. Actually my governor and I were far our own startup. We were actually just accepted into y see early entry for for the summer batch. Um, it will be thank thank you very much. It will be public information by the time this podcast comes out. Um how how did you find that? um.

Lauren Kuntz

Congratulations. Um.

James McWalter

You know the experience and I guess like any any tips for those who are kind of going through not just YC but you know incubators and accelerators in general.

Lauren Kuntz

Yeah I think we were really blown away by how much value we got out of y c um I think a huge part of it honestly was like that was the first time my co-founder and I and our first employee were all in person working 100 % of our time on this startup. Um. Jess and I we founded the company when we were living on opposite coasts. So I was in Seattle she was in New York and like we met each other like 3 times in person and then why see happen and we’re like we’re moving in together into this house in a place that neither of us live and like all we’re gonna do is like code and make this work and. Having that time together was just so important like we learned so much about each other learned so much about building a company made so much progress on the product and really got pushed by the mentors at yc to like strive for more than we thought was even like possible within a summer so I think that was like very wonderful in that regard the advice that I would give is reach out to all of the partners there and have office hours and take the initiative to get the help I think these programs have started to like really grow in size where. Scheduled touch points of a meeting every two weeks with a group. Super awesome. Super helpful. But you can get so much more if you’re just willing to kind of take that first step and be like hey I really want to talk with you. Let me book some time in your office hours and like just share with you what I’m struggling with get tons of different. Former founders views on what you should do like that’s incredibly powerful and helpful.

James McWalter

That yeah, that’s that’s very helpful. Yeah know I think I think taking that initiative in general whether you’re a part of those programs or not like I always say to people like you know if you’re interested in moving into a new industry just like cold message like 50 people like that’s that’s how I met everybody. That’s I meet everybody at the podcast. You know it’s just. Put yourself out there like I don’t want to trivialize it when you’re new to it it. It? Yeah, there is it like an emotional weight to like putting yourself out there I’ like that. But yeah, you eventually get very use of rejection and I think that’s that’s very helpful than a lot of different initiatives. Ah Forfins Shav was actually looking at your background and I notice ah something called Green Vision. Um. That you’ve you know, kind of working on and and this very kind of cool website um could tell us a little bit about Green vision.

Lauren Kuntz

Yeah, so green vision was like some of the very first modeling I did around the electric grid before gyoscope happened. Um I mentioned earlier on in the podcast but I spent time in grad school helping teach a class. For undergrads that was really focused on what does it take to get to a carbon-free energy system for the us so they had to think about like what do you do in transportation. What do you do in industry and how do your households use like like energy and what I kind of noticed when I was teaching this is all my students would make the choice of electrify as much as you can. And then power that electricity with a carbon-free grid and they came and would start asking me questions of like well how many solar panels do I have to build for that. How many wind farms like what does this actually take so I just started doing for fun during my ph d some really simple and modeling trying to look at like what are the levers that matter. So not looking at the economics of it but really saying if you wanted 100 % solar in the us what would it take like how much do you have to build and just started to kind of do various benchmarking around that and I kind of realized hey I built this really interesting model. My students love playing with it. Let’s try to put it out there for the rest of the world to play with as well because I think a lot of people have these issues and questions and want to know like what does the future energy system look like so the idea was to create something that’s really purely for educational purposes but just a tool that you can go play around with and fiddle with and ask okay. I think that wind and solar are the only technologies we can use and you can look at what this looks like and be like wow that’s going to be really expensive. Maybe I should include some nuclear and like start to kind of just figure out. How do you balance all of those different needs and components of our future grid. Um and kind of. Decide for yourself like what is that right? mix? How do we actually get there.

James McWalter

I yeah I love it I’ve played around a fair amount with this and I also end up put a lot of nuclear I will say it’s like like like twenty fifty numbers I was like it’s like 80% nuclear um which which I say no problem was but it might be a difficult thing to take thing to achieve um Lauren Kuntz has been great. Ah, really enjoyed it is there anything I should have asked you but.

Lauren Kuntz

Um, so we are actively looking for clients and people that are excited about being one of the first pilots with our software in Texas so anybody that is excited about that opportunity wants to learn more should absolutely reach out to us.

James McWalter

Did not.

Lauren Kuntz

at founders at http://geyoscope.com

James McWalter

So brilliant. Well and we’ll include that email in the show notes. Actually I have a couple of people in mind in arcot for you. So I’ll make those interests as well. Thank you Lauren Kuntz.

Lauren Kuntz

Yeah, thank you so much.

Great to chat with Jules Brenner, Founder of Zeus Power, Zeus Power is changing the way facilities add EV charging! We discussed optimizing building installations for EV fleets, the sales cycle in the public sector compared to the private, retrofits, EV infrastructure development policy and more!

https://carbotnic.com/zeuspower

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

Remember, If you want to support the podcast please rate and review 5 stars on  Apple, Thanks so much! 

James

The unedited podcast transcript is below

James McWalter

Hello today we’re speaking with Jules Brenner co-founder at Zeus Power Welcome with podcast, great to start. Could you tell us a little bit about a Zeus Power?

Jules Brenner

Ah, show you how many James. Yeah, absolutely so Zeus Power creates energy solutions for the modern industrial real estate facility. We focus on first creating electric vehicle charging products for the trucks and the fleets that house. Their vehicles in those facilities and really focusing on that next wave of energy where the predominant load of the building is the electric vehicle charging systems.

James McWalter

And so you’re saying those kind of industrial type type buildings. Are we talking about? you know like an Amazon warehouse. Are we talking about? you know a supermarket that might have trucks kind of going in the back something else.

Jules Brenner

Yeah, yeah, it’s definitely more of the Amazon warehouse think ah, it could be a private fleet. It could be a government fleet where they house like city vehicles street sweepers and different vehicles and spec lighting poles all the way to a you know. Ah, kind of a smaller enterprise fleet that has Chevy bolts for their employees. Um, anywhere where you’d have like a fleet and lots of older vehicles as well.

James McWalter

So that makes sense and what drove the initial decision to start Zeus.

Jules Brenner

Yeah, um, it was kind of interesting I was in the industry I was working at a company called exos trucks that was working on the the sales side and we looked a lot at you know installations and deployments of multiple chargers and trucks. And I started just looking at how complex it was to spec out charging systems for a lot of the buildings. You not only had to find excess power in 1 of the buildings but you also had to then go and make sure that the you know the building is really speced and ready for. Lots of chargers at scale and started to think that you know not only are most buildings going to tap out maybe at 5 chargers maximum. But the way that and a lot of the trucking industry procures vehicles is very exponential versus say in like the public charging space. Um, they typically will sit on the sidelines with any new technology whether it’s hydrogen and biofuels et cetera for maybe an extended period of time and then once they like something they tend to ramp pretty quickly with some pretty big orders so really wanted to be able to think about when some of that stuff happens for the. What currently is nascent electric truck industry. How are we going to be able to keep up and you know from there we started doing more research looking into charging systems and came up with the idea of produce.

James McWalter

And you said we there? Um I believe you have a cofounder and would love to hear you know the kind of how you 2 met.

Jules Brenner

Yeah, yeah, absolutely yeah, my co-founder Austin Hunt we actually grew up like 10 minutes down the road from each other in Brooklyn New York we went to high school together went to college together in college we created a school’s first baha racing team basically building. A team to put together a du buggy for school competition from scratch raise money from the school and built the team over course about six months of a team still has stood stay but Austin and I really like working with each other and after you know college we. Separated for a bit. He stayed in the northeast you worked at a few different companies some startups all the way from doing kind of powerpoint product to commercialization. You worked at some aerospace companies and had internships at Spacex and a variety of other. Prominent aerospace firms and um, you know he kind of is the more technical side of everything even though we both have mechanical engineering degrees and his focus is very much on electro mechanical solutions.

James McWalter

And and so you know you had obviously this amazing kind of basis of a long-term relationship with each other but you know we we all have people we grew up with but we don’t always necessarily want to start companies with them in my own case I Even at one point started a company. My brother I wouldn’t say that was the the most successful thing but you know definitely the person I know best in the world and so these things have you know pros and cons how how were you kind of communicating with each other to say Okay, actually we want to start something together.

Jules Brenner

Yeah, it was interesting. Um I think Austin was um, getting to a point of his life where he wanted to get in really early into something he was working at a company that was more like series b stage but he was there through some of the early fundraising rounds and. Think we just kept in touch and when I started to you know census kind of desires to to branch out almost on his own I was kind of thinking about you know, a lot of the growth in the electric truck industry and was managed to to kind of convince him over a course of a few months to come join on. So. I think it worked that well he certainly has a lot of skills that are complementary to mine and I think we create a a very moral round the team.

James McWalter

And absolutely I I think like the you know the the founder fish for this space is like super strong which you two as as a founding team and I guess then so you know you had this idea coming out of your experience at exos trucks. You know you have cofounder with ah. Technical abilities that you have this kind of long-term relationship building things together. Um, and so I know you’re kind of currently working on. You know, designing and and kind of going through some iteration on the Mvp could you speak to what that process is like today.

Jules Brenner

Yeah, absolutely so you know we really wanted to focus first and foremost on a strong kind of customer fit before even getting too far along with the Mvp you know this is probably the fourth or fifth hardware startup that I’ve personally.

Jules Brenner

Either either joined early or in this case co-founded and we’ve seen this mistake over and over again. Austin certainly seen it in his engineering experience. So when we started doing that we first figured out like who could be our initial first customers and started taking a very. Kind of collaborative team approach with them like we have some government fleet managers that will very likely be that first early deployments and we try to speak to them every you know for few weeks as we do this and literally show them everything we have and get inputs as we go through and think of it as we’re custom making them a solution. And setting Kpis for it as we go as well. So that’s been really important and helpful in our in our general goal and you know putting together the Mvp. We really wanted to focus on what’s the you know literally the minimal viable product for um. You know this? So we we focused on a more toned down version of the commercialized solution in terms of both cost and functionality with the thought that the key features that kind of alleviate the largest pain points would be focused on first. And um, you know Austin’s built a team on his side of various professionals in the charging sector power electronics, mechanical design etc. Um to make sure that this is a robust product that is really geared towards the um commercial mission critical flut applications.

James McWalter

And so those design partners that sounds like are kind of running or have ownership of governmental fleets. How did you find those and and get them to agree to chash. You know every few weeks.

Jules Brenner

Yeah, yes, so those? um, those government ah customers like um was actually fairly easy. We really didn’t spend too much time frankly, most of the relationships that I had from my time in industry were with private f athletes and we called the ones on you pretty early on and you know learned a lot. But. Government fleets have been very progressive with um electrification and just clean energy on their yards. Um, you know we pretty much went found a ah list on some of the local agencies of the fleet managers reached out and and started conversations. A lot of the government mandates are really really soon versus private fleets and they’re ordering like you know we were literally ons site with ah a government fleet yesterday and you know it’s pretty bad I mean they were telling us how there is ah 1 of their fleet yards is actually housed in an old. It was a horse barn and the it’s It’s so old that you can see two truth marks on some of the walls from the old horses. But the infrastructure is very weak and I think that’s why they’re most receptive to this kind of stuff.

James McWalter

Yeah, and whenever I kind of talk to people who are starting founding startups and they’re like oh you know I really struggle to find people to help you know, give feedback on the product and it’s like if you can’t find design partners to even talk to you now like you might not be painful enough a problem and so I think it’s like so. You know it’s it’s great to hear that how easy it is because if you find people who are just like loving jumping on a phone call with you to talk about the scale of the problem then there’s definitely something to be solved here. There’s definitely you know a potential solution that you know that smart startup folks can kind of work on and so okay, so the. You have these you know design partners you’re talking to on a regular basis. Amazing. You’re getting you know, physically on site seeing seeing horse barns and and other kind of issues. Um I guess from here like what’s the kind of next mostones in terms of getting you know some sort of Mvp to service those type of customers right.

Jules Brenner

Yeah, absolutely so we are currently in the pretty much supply chain kind of ordering phase of our Mvp. So. It’s designed. We’re focused on ordering parts as the parts come in. We’ll begin to assemble. And then you know at that point start to firm up the exact details of where we want this thing to go first and you know and this kind of stuff should happen pretty quickly next maybe 3 to six months or so and you know to whatever extent possible. We’re also focused on. Really, you know we refining in a lot of the um you know products core like software features so we have ah a sauce kind of very basic software layer that we initially and have for the fleets and dialing that in and then you know we take the data from that pilot or the course of. Subsequent 3 to the six months and feed that back so that we can have a better pilot number 2 as more of a kind of focus on the key features that we need to succeed and then over time as we build the. And these case studies if you will. We can then start to take it to larger and larger customers even like the landlords of some of the private fleets themselves that have you know been more proactive and want to install chargers maybe earlier when the vehicles are on site.

James McWalter

And just so I can fully understand like the use case. Let’s say I’m like 1 of your target customers and everything goes well the the kind of current direction. You know as you’re kind of going through these pilots and the development of the technology all goes well for me, let’s say I want to be onboarded as your customer you know in 6 to 18 months. Um, what would that experience be like and both through the onboarding and then once everything is set up like how would I guess my life change and for the positive.

Jules Brenner

Yeah, absolutely yeah, so you know a few things so I’ll maybe talk to you about the experience. We heard about yesterday with ah that government fleet manager now. Um you know this gentleman he is very you know aware of some of the challenges of just. You know, installing more than even 1 charger in his facility. That’s pretty much where he taps out and you know for their experience if you know they didn’t use ah a Zeus unit. They would literally have to redo their whole electrical room as he was telling us yesterday and and modernize everything and then also pretty much tear up a bunch of concrete on their yard to to get. You know some solutions in that you know they might not eventually scale. You know they’ll install 5 chargers. But then once the the building taps out and they need more later down the line they have to redo it so it’s kind of a messy experience but you know with Zeus it’s very much like just the typical installation of a charger. You know we help you with like. Permitting process to you know start the the application you know once all of it’s approved. You know we’re working through the surveying where this thing is going to sit how it’s function once the unit arrives the site. It’s installed by certified electrician and then after that we help tune in the. Le management software to the vehicles that you have which is just a simple onboarding process and I would definitely say that you know it’s a um, it’s it’s a much kind of cleaner installation because you’re going to save on and only the cost. But most importantly, the time and headache.

Jules Brenner

Of all the other electrical system upgrades which tend to take the whole charging installation process from being maybe six months to you know a year plus

James McWalter

And that that makes sense and the and I guess why? Why do these things take so long. Um, you know is it you mentioned permitting is that like a large component that’s kind of outside the control of both your customers and yourselves is it. Getting the components is it something else like what? what are the reasons for why this is such a kind of long process relative to you know? um, like ah for example, if if you wanted to ah like yeah build ah build a you know an outbuilding as part of an industrial park. You know you could probably do that in a few months right relative to this which which takes ah quite a.

Jules Brenner

Yeah, so so there’s a few things to consider so you know the first thing is that the amount of power that chargers in general are pulling is multiples more than what a building is rated for you know one statistic I can give you about 50

James McWalter

But longer.

Jules Brenner

Tesla supercharr type stations that would basically be for kind of semi truck level draw as much power as a whole empire state building peak load and it’s it’s quite a bit of ask for a yeah old 1920 s you know horse barw.

James McWalter

Right.

Jules Brenner

Right? So You know if you think about kind of what you need to do just from the electrical equipment perspective. That’s not only a big kind of logistical mess. But it’s also a huge capital capital planning allocation that a utility needs to take on plus. Actually all you know applying and installing all the different components transformer substation upgrades et Cetera Um, those things really add a lot of time permitting isn’t too bad I mean it depends on the State. Some are more backloggged than others but it’s kind of you know everyone really has to go through it. It just doesn’t. Um, I just get elongated.. It’s pretty substantially once other equipment gets in often. The thing that happens is that you you tend to really run into what we used to see at Exos which is that you would go down the kind of sales chain. You would get a happy fleet. Everyone would. You know, be working towards the goal of an installation of a certain amount of units and then you know once they start talking with their landlords about you know whether or not who pays for what that turns into like a whole lengthy negotiation and further ads time. So It’s It’s a really big hassle versus if you just install the unit that had. What you need built into it and that thing was as movable as a charger unit will get and just needed to do permanent. Not everything else.

James McWalter

And that definitely makes sense and so I guess then you know know this is obviously very kind of early days but 1 of the kind of challenges that some hardware startups have is you know is this something that I’m selling the hardware and you know it’s not offgraded very often. And I just have a single point of sale with a customer versus things where you have hardware kind of connected to other solutions services software and so on or there something more like a kind of long-term relationship with the customer. It is a long-term revenue stream. How are you thinking in these early days about kind of. The potential monetization of zoos.

Jules Brenner

Yeah, good question I think that’s ah in general, it’s a tough issue for a lot of hardware companies hardware tends to be a much lower margin you know sale and then adding that into you needing a lot of sales time to get it done a more highly technical sale and usually rank day sale. Doesn’t tend to a very cash flow and positive business and you know we’ve thought about that a lot we really didn’t want to end up in this situation where it was tough to scale and then also we didn’t like what we saw in the industry about having this kind of you versus mean type attitude towards a customer. You know we’ve talked to. Ah, variety of different fleets and in general just like talked huge hotel chains that have installed will take thousands of charge points and they would kind of complain that you know the more units that they put out the higher their saas fees grow but the you know their value isn’t increasing anyway, it’s just similar kind of cost tacking on and on for. Essentially charger and energy dashboards. So you know, kind of thinking about that. We really wanted to be able to create a set of products and kind of revenue streams that better align interests. So we have you know our typical revenue from the oem charger sale. So the margins on there are pretty in line. What what? a typical oe yeah would sell their unit for that 40 to 50% gross and then from there you know once we are installed in the building we use this kind of hardware aspect as essentially a moat right? to not have our software. Um, you know, switched out like what might end up happening to some of the other charter oems and you know we encourage the stickiness that the customer there and then we work on the 2 software layers so we have a kind of software layer that’s focused directly on our customer which is in most cases, the Landlord. Sometimes the fleets on their building so they are technically the servers that customer as well. But essentially that software package just focuses on using the batteries that are in the Zeus unit as a literally an energy storage unit for the time that the vehicles are not charging. If you think about a lot of fleets vehicles are actually not using them throughout the day that often is much more so that the battery is sitting around and you can use it all the different benefits that already exist in energy storage today including peak shaving to help you save on utility bills um resiliency to give you. Ah, peace of mind knowing that there is power on sight at all times in some bit capacity especially when you go all electric and then also create random streams to things like wholesal where how sound markets where you’re essentially by low sell high with some of the energy and you know we create our kind of higher.

Jules Brenner

Grow A margin revenue stream from that package. Um and really just try to focus on being more of like a partner with our landlord where we yes we charge for that software. But we also make sure that that creates value to them so that it isn’t just the of and our money. Kind sort Sas fees are growing and I don’t know what extra I’m getting every time it happens kind of thing and then towards the fleets themselves. It’s just the standard fleet management software so they have all your data and you know again know the software side. It’s typically higher gross margins as well.

James McWalter

Yeah, on the kind of bouncing the pricing incentive piece I think is really key. Um, you know you generated their bulk discounts for a reason right? at the enterprise level unless you’re getting some big value ads right? And so. Maybe there’s elements of compliance. Maybe you know there are these other kind of buckets that people can add to an enterprise plan but you definitely if you’re just kind of linearly going up in cost. You’re eventually going to have pushback from enterprises where it’s like why am I getting charged you know per unit. You know 10000? Yeah and I’m buying 10000 units and a smaller company is basically getting a better deal for because they have fewer units and and but our period of price is the same. So I think definitely kind of taking into that concern into account um is is going to be quite powerful as you were kind of looking to kind of differentiate down the road the other piece as you’re took on chatting there. So. Think I’ve mentioned the podcast before that one of the ideas that I explored in the past for startup for myself was some sort of pure software solution that enabled yeah the better. Um, kind of monetization of distributed energy assets specifically batteries but others as well. You know how could you kind of aggregate batteries. That are already connected to grid and somehow in a way that kind of plays with wholesale energy markets and I was talking to a few folks about this at the time the thing we kept coming back to was how how can we make sure that we continue to have access to those physical assets because what would stop you know the owners and. Of the batteries themselves are not the owners of batteries. But the manufacturers of the batteries themselves from having their own software layer sitting on top of those and because they own the physical asset in the value chain. They seem to have yeah the ability to block out other software that’s trying to reach down into the physical asset and so I guess. You have a kind of similar kind of thought process around why the but owning the physical asset and the development of physical asset is so important.

Jules Brenner

Yeah,, that’s that’s ah, that’s a very good point. Yeah I think owning the um you know, physical asset allows you to be better protected. Um you know or or other from the from the oems lens like from Missou lens allows you to be better protected. In a world where there are just a lot of different software platforms that help manage charging systems. Potentially even battery systems. There’s a variety of laws coming out with compliance at Ocp for charging Systems. So I Really see that if you are just a pure like software play In. Kind of control Hardware. You might have a really tough time growing. Um I’ve been in that space before and I’ve just seen it. It’s ah it’s a pretty like tough equation sometimes to manage in terms of customer acquisition cost versus you know what people are willing to pay and to that point earlier about like the the both pricing on Enterprise. The funny thing is the way that the incentives are aligned in the industry right now like we had so many customers that are really just telling us I wish I was paying 0 and you know they honestly mean it like they are to a point where they are just about to ask the charger oems to just shut off their software. Let them use it as what they call a dumb charger.

Jules Brenner

Um, so if something doesn’t change there I mean I don’t know that they’ll get around it but they are certainly feeling like they’re being forced. So um, you know, thinking about like you know how do we ourselves like you know, bring in a battery on site that is you know essentially. Ah, smaller version of what you might get like from an energy storage application and something that we purchase direct so we have full control over how that is used but we are you know, not being very like closed off about this kind of like very Aes or instead trying to be open with the customer and saying. You know now that you have this asset on site. Let’s work together to get the maximum monetization the ah roi on it and roi is a big word. It can mean just the insurance resiliency which doesn’t have an immediate cash number but you know helps out if there is a problem.

James McWalter

Yeah, so.

Jules Brenner

Um, but I think that’s really important you have to look at this industry much more through the lens of property technology than you do automotive technology if you’re going to stand out in you know 2022 and frankly, be profitable.

James McWalter

Um, and you mentioned the the kind of customer segments at the beginning that you’re mostly targeted on is more of the public sector and they seem to be the those who are you know have the greatest need are moving the fastest and I guess like my intuition would be that That’s generally. Not really the Case. So If you’re trying to sell to public entities. The sales cycles can be quite long often. It could be hard to get to the right decision maker and so on whereas you know more typical corporate clients tend to move faster. But obviously if they’re very big corporates. Those can also move quite slowly. Um. I Guess how how are you thinking about that kind of sales cycle aspect and why is this industry or this particular segment so different compared to the typical you know public sector moves very slowly model.

Jules Brenner

Yeah, yeah, good good questions. So you know a few things you know when we think about like who is the ideal customer that buys today I mean the ideal customer is going to be someone that is either the landlord or the feet of an industrial facility that is older and has less capacity. Right? And that could you know that could vary the older the building the more likely they are going to tap out. Maybe even at that first charter and if that’s the case as soon as they go to do some sort of utility study could even be with ah another charger company. They’re going to find out pretty quickly that. Need to do something and when they start pricing out what it costs to do you know all the station upgrades and the building upgrades then they get turned off to the idea sometimes so those those um parties tend to move a bit faster in general but when it comes to government agencies. It’s actually interesting because with. Fleets. They’re not that hard to find um you know they’re mostly the the information’s online and very minimal effort. Um I used to sell to private fleets and I’ll just tell you it’s frankly, been harder um with private fleets than with ah government fleets. Um, government fleets. Also they look at it a lot more through an esg lens than a like fleet manager at a private fleet. Usually the board of a company of a private fleet maybe has some esu mandates. But by the time it hits the fleet managers deaths. They really don’t care that much. So. Um, that’s a big part of it government agencies also usually find themselves with a lot more cash towards this stuff. So while maybe the sales cycles can be slower. They actually have more spending power and they actually have to spend it so you know there’s always some politician that comes out with some new. Idea for how they can clean up the roads and usually gets implemented. You know in fairly short order. Um, but sometimes you’re right, you know it can take a little bit of time the approach that we have always recommended to people is to say you know think about your yard. Not in the lens of you electrified 3 out of 50 vehicles think about it in more the lens of what would happen if you electrified whatever your goal is let’s say 30 out of 50 and maybe the other ones are bioiesel or hydrogen or something or cng. Um, what would the. You know, equipment needed look like what would the cost of your utility bill. Be call your utility try to figure it out and look at it from that lens and then ask them the other important question which is what’s the timing on all this and we would talk to a lot of utilities and you know they would tell us this kind of jokingly where fleets would call them and say I need.

Jules Brenner

All the existing power in this location and I need it in a few months and a lot of them would you know they just kind of say no we get give a few years so when you know some of that stuff you tend to move much faster and and I do think that a lot of the government agencies are a bit closer to their utilities and. Thereby it moves a little more smoothly but um, a lot of them do have you know lots of vehicles on order I mean we were with one yesterday and you know they have like I think they said 15 ford e lightnings and you know so street sweepers and all sorts of stuff coming in at the end of this year going into the end of next year we slow that down a little bit in terms of supply chain. But those vehicles are coming and with the permitting process and even you start to think all that through you’re about right there in terms of when you want to start procuring these things.

James McWalter

Mostly we’ve been kind of talking about retrofits you know the the horse barns of the world and and that kind of thing. Um, but how do you think about like new builds you know would real estate developers generally be. You know, potentially interesting segment to focus on in the future as they’re thinking about New New Bill commercial and industrial um to make sure that they have the right charging infrastructure from the beginning. Um, and before thinking about where you know the heavy automotive industry is going.

Jules Brenner

Yeah, yeah, absolutely yeah, the um, you know we definitely recommend with early builds that you you know you plan twice and you try to also you know, future proof to whatever extent possible. Um I can’t tell you how many different companies I used to talk to that would basically take advantage of every single rebate and grant at a point in time, especially those like really big franchise hotel chains and find themselves in the situation where they. You know install chargers of different brands some that are wi-fi connected. Some are not and then at some point they start to realize we should probably start to really standardize the asset and figure out 1 central place to track them and find themselves then in a position where. You know it gets kind of messy. So I think it’s really important to think about a standardized process for your facilities somewhat early I understand that most will probably not go to 1 technology in total. But definitely you know, keep the batch to a very small limited amount. And you know to whatever extent, you do have the ability to install early from fresh concrete. Um, you’re going to keep your total cost down. Um, but more importantly, you’ll be able to plan for things like footprint right? You don’t want to stick chargers in the front of parking spots and have vehicles have to park. You know three feet from the curb. You also want to be thinking about to whatever step possible how you can use the um, the battery systems to better. You know manage the building. It’s it’s kind of interesting like if you think about the way a lot of like the let’s say office park charges are installed. They’ll be closer to the building and they’ll also be thinner profile chargers just because closer the building means less electrical cost thinner profile because you don’t want to cover up the whole building to a point where you can’t see chargers if you start thinking about like batteries as part of that. Um, you know if you don’t plan electrical lines early. You don’t want to find yourself in a position where batteries start to take up a big part of your front facade as well too. So early planning is really really important and it’s also cheaper.

James McWalter

And then you know thinking kind of on about broader spectrum. The changes at the policy level and so we had the federal infrastructure bill that passed last year. There were multiple billions of dollars set aside for ev infrastructure development. Um, it’s still I guess a little bit unclear to me about the exact kind of deployment structure of that money. But how do you think about either the existing incentives like what was passed last year or things that could potentially kind of emerge in the future and about how that affects how you’re approaching. You know the deployment of your early product.

Jules Brenner

Yeah, yeah, good question I think the um you know it’s It’s very exciting to see that amount of dollars flow in from the federal level I think you know most even you know. Cities now are are adopting their own programs and spending their own money but the federal level should create a lot of opportunities for us to you know, not only find just on government website opportunities for bid. But most importantly, I think what it’s doing is it’s bringing into the light um a lot of grid issues. This kind of chooses electrical infrastructure. Um, and as you start to think more about that you start to really start to weigh whether you want equipment upgrades that maybe give you more capacity but still force the utility to work hard to produce lotss of energy or whether you want the um you know battery systems. Part of the equation that should make it easier for the utilities to generate energy and store them in the batteries prior to use. But I do think that the you know Overall the federal will has been a um, a strong sign for acceleration in the industry and it’s certainly kind of woken up a lot of the fleets to. Um, the opportunity of taking advantage of incentives now a lot of them. You know they maybe were thinking of going electric but they were going to stall closer until the um you know date mandates and now with the money coming out over a limited time here. They.

Jules Brenner

Um, accelerated a lot of their plans.

James McWalter

And then thinking about the team and and kind of as you were kind of building out the team and the company culture over the next few years you know one of the things I found in myself is every kind of new venture thing you know company that I start. The culture is often a either. Ah, reflection in some way of kind of my my past experiences at other organizations or other companies that I’ve involved in so either I’m embracing certain aspects of those other companies and trying to you know, incorporate those in what I’m working on now or I’m kind of reacting against them and saying okay you know that that company was great, but. Had this particular part of their culture or part of what it was to work there that I just absolutely do not want to have at my new company. Um, you know for yourself having you know, worked at a few companies worked at companies that have you know also been part of the kind of ev and electrification space. What are the kind of elements that you’re like okay. These are the things that I really want to bring in and and then still is the culture of ah you know of Zeus versus other areas where it’s like I absolutely do not want to bring those into this new company.

Jules Brenner

So yeah, that’s um, good. Good question. Well I think ah you know a few things some of my past roles and companies I think we’ve worked on some you know products that were kind of similar like some proptex some electroomechanical hardware and I think with those you typically. You know you’ll need your engineering team of course. Um, but most importantly, a lot of those companies they had strong like mission driven values and I think you know with trucking it’s a um, you know in general fleets and all that they they are a small portion of a total transportation. Pi but they are disproportionate part of the actual emissions side. So I think having a culture of people focused on you know, alignment on decarbonization is something that’s important to us. Um, but also a culture focused on strong engineering and. You know, active conversations with customers early is is key as well too. Um I’ve been in companies where you know we’ve cut corners and early stage engineer and design and I think that has certainly come to haunt us later and I think when you’re making a you know a missioncritical product. Like a charging system or energy system for a charge for a vehicle application. You want to do it right? You don’t want a call from a fleet you know someday telling you that they can’t um, operate that day because the chargers are out or something like that which is unfortunately becoming an all too common issue. And the um public charging sector these days. So I think you know those are really important I think really also focusing on you know, a very kind of systematic approach to the growth is is vital to we don’t want to make a product just for. Sake of it so we’ve really focused on identifying customers of pain points today instead of just adding out and looking at the broader market of who will certainly feel this pain in a year or 2 and we want to make sure you know that also really ends up being a kind of. Ah, right? recipe of culture and Zeus.

James McWalter

I yeah I love that um and I think it’s great that you’re already kind of being so kind of thoughtful about those elements as you kind of build out the company. Um Jules Brenner  I’ve really enjoyed the conversation. Um, before we finish off is there anything I should have asked you about but did not.

Jules Brenner

First yeah I think um, you know 1 question that we get a lot is you know, kind of why or maybe 2 questions. Why are we not using kind of those like public charging systems at truck yards and fleet yards and we get this a lot and I think.

Jules Brenner

Few things, the fleet trucking industry is probably about Five To Ten Years delayed behind public charging. Um, you know if you just look at a lot of the even most progressive fleets out there I mean you know like the government agencies they got about you know until the maybe end of this year or so until they start seeing. First batch of vehicles and um and that’s the most progressive on private fleets or some or maybe have you know, been testing a few and this is you know fleets that own hundreds and thousands so you know we’re still early days but it accelerates quickly just based on those purchasing habits I mentioned earlier. Um, but the other thing that we get asked a lot is like you know once the industry catches up. Why are people not just going to use you know a typical non-battery powered public charging station in your application and you know we always encourage people to think about that a the amount of power draw from. A power draww need from a truck or a piece of any heavy machinery is often much larger than what a public charger is typically built for but the just the software and the form factor are very different right? 1 ne’s going permissional critical application. 1 ne’s going to a. You know, kind of more discretionary retail type play and then really important to you also make sure you know you’re kind of thinking about how the landlords of these facilities are going to care about this because that’s a very different um relationship. Typically you’re going to put the charger in and the fleet side. Um, when time of use is low to not existent and you want to make sure that the direct customer the landlord is happy. So I think a lot of you know, just understanding a bit more. The market landscape is is really important to understanding us from a timing perspective. Um, but then to the second and final point we get asked a lot like you know. What is exactly your kind of differentiation. We try to segment ourselves and you know there’s charging. We think of it as like permanent charging and a non-permanent charging non permanent being those chargers built for like construction sites. Um, and then we’re in the permanent charging side and then when you segment.

Jules Brenner

You know who does industrial focus charging units. There are not that many players out there. But when you start digging in further as to who actually puts batteries in a lot of the ones who use batteries they’re just sticking in in a big iso container. Which is not a form factor that a lot of fleets have told us they like it usually takes a whole parking spot and does not look like a charger so you know we are the only industrial focused battery supported charging system out there that we’ve seen that actually looks like a charger and comes with all the typical software tools that you’d expect. The fleets and the landlords and I think it’s a um, it’s really important that we you know consider that in the lens of the industry because things like batteries will likely be mandated at some point if not highly encouraged by Utilities. So We definitely you know want to help. Continue to help find customers that you know like this stuff and if anyone is you know curious to talk to us further about it. We are always happy to chat.

James McWalter

So brilliant and we’ll include those contact details in the show notes. Thank you Jules Brenner  has great.

Jules Brenner

Yeah, absolutely appreciate you having me James take care now.

Title: EV Charging Infrastructure for Fleets – E97

Great to chat with Jules Brenner, Founder of Zeus Power, Zeus Power is changing the way facilities add EV charging! We discussed optimizing building installations for EV fleets, the sales cycle in the public sector compared to the private, retrofits, EV infrastructure development policy and more!

https://carbotnic.com/zeuspower

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

Remember, If you want to support the podcast please rate and review 5 stars on  Apple, Thanks so much! 

James

The unedited podcast transcript is below

James McWalter

Hello today we’re speaking with Jules Brenner co-founder at Zeus Power Welcome with podcast, great to start. Could you tell us a little bit about a Zeus Power?

Jules Brenner

Ah, show you how many James. Yeah, absolutely so Zeus Power creates energy solutions for the modern industrial real estate facility. We focus on first creating electric vehicle charging products for the trucks and the fleets that house. Their vehicles in those facilities and really focusing on that next wave of energy where the predominant load of the building is the electric vehicle charging systems.

James McWalter

And so you’re saying those kind of industrial type type buildings. Are we talking about? you know like an Amazon warehouse. Are we talking about? you know a supermarket that might have trucks kind of going in the back something else.

Jules Brenner

Yeah, yeah, it’s definitely more of the Amazon warehouse think ah, it could be a private fleet. It could be a government fleet where they house like city vehicles street sweepers and different vehicles and spec lighting poles all the way to a you know. Ah, kind of a smaller enterprise fleet that has Chevy bolts for their employees. Um, anywhere where you’d have like a fleet and lots of older vehicles as well.

James McWalter

So that makes sense and what drove the initial decision to start Zeus.

Jules Brenner

Yeah, um, it was kind of interesting I was in the industry I was working at a company called exos trucks that was working on the the sales side and we looked a lot at you know installations and deployments of multiple chargers and trucks. And I started just looking at how complex it was to spec out charging systems for a lot of the buildings. You not only had to find excess power in 1 of the buildings but you also had to then go and make sure that the you know the building is really speced and ready for. Lots of chargers at scale and started to think that you know not only are most buildings going to tap out maybe at 5 chargers maximum. But the way that and a lot of the trucking industry procures vehicles is very exponential versus say in like the public charging space. Um, they typically will sit on the sidelines with any new technology whether it’s hydrogen and biofuels et cetera for maybe an extended period of time and then once they like something they tend to ramp pretty quickly with some pretty big orders so really wanted to be able to think about when some of that stuff happens for the. What currently is nascent electric truck industry. How are we going to be able to keep up and you know from there we started doing more research looking into charging systems and came up with the idea of produce.

James McWalter

And you said we there? Um I believe you have a cofounder and would love to hear you know the kind of how you 2 met.

Jules Brenner

Yeah, yeah, absolutely yeah, my co-founder Austin Hunt we actually grew up like 10 minutes down the road from each other in Brooklyn New York we went to high school together went to college together in college we created a school’s first baha racing team basically building. A team to put together a du buggy for school competition from scratch raise money from the school and built the team over course about six months of a team still has stood stay but Austin and I really like working with each other and after you know college we. Separated for a bit. He stayed in the northeast you worked at a few different companies some startups all the way from doing kind of powerpoint product to commercialization. You worked at some aerospace companies and had internships at Spacex and a variety of other. Prominent aerospace firms and um, you know he kind of is the more technical side of everything even though we both have mechanical engineering degrees and his focus is very much on electro mechanical solutions.

James McWalter

And and so you know you had obviously this amazing kind of basis of a long-term relationship with each other but you know we we all have people we grew up with but we don’t always necessarily want to start companies with them in my own case I Even at one point started a company. My brother I wouldn’t say that was the the most successful thing but you know definitely the person I know best in the world and so these things have you know pros and cons how how were you kind of communicating with each other to say Okay, actually we want to start something together.

Jules Brenner

Yeah, it was interesting. Um I think Austin was um, getting to a point of his life where he wanted to get in really early into something he was working at a company that was more like series b stage but he was there through some of the early fundraising rounds and. Think we just kept in touch and when I started to you know census kind of desires to to branch out almost on his own I was kind of thinking about you know, a lot of the growth in the electric truck industry and was managed to to kind of convince him over a course of a few months to come join on. So. I think it worked that well he certainly has a lot of skills that are complementary to mine and I think we create a a very moral round the team.

James McWalter

And absolutely I I think like the you know the the founder fish for this space is like super strong which you two as as a founding team and I guess then so you know you had this idea coming out of your experience at exos trucks. You know you have cofounder with ah. Technical abilities that you have this kind of long-term relationship building things together. Um, and so I know you’re kind of currently working on. You know, designing and and kind of going through some iteration on the Mvp could you speak to what that process is like today.

Jules Brenner

Yeah, absolutely so you know we really wanted to focus first and foremost on a strong kind of customer fit before even getting too far along with the Mvp you know this is probably the fourth or fifth hardware startup that I’ve personally.

Jules Brenner

Either either joined early or in this case co-founded and we’ve seen this mistake over and over again. Austin certainly seen it in his engineering experience. So when we started doing that we first figured out like who could be our initial first customers and started taking a very. Kind of collaborative team approach with them like we have some government fleet managers that will very likely be that first early deployments and we try to speak to them every you know for few weeks as we do this and literally show them everything we have and get inputs as we go through and think of it as we’re custom making them a solution. And setting Kpis for it as we go as well. So that’s been really important and helpful in our in our general goal and you know putting together the Mvp. We really wanted to focus on what’s the you know literally the minimal viable product for um. You know this? So we we focused on a more toned down version of the commercialized solution in terms of both cost and functionality with the thought that the key features that kind of alleviate the largest pain points would be focused on first. And um, you know Austin’s built a team on his side of various professionals in the charging sector power electronics, mechanical design etc. Um to make sure that this is a robust product that is really geared towards the um commercial mission critical flut applications.

James McWalter

And so those design partners that sounds like are kind of running or have ownership of governmental fleets. How did you find those and and get them to agree to chash. You know every few weeks.

Jules Brenner

Yeah, yes, so those? um, those government ah customers like um was actually fairly easy. We really didn’t spend too much time frankly, most of the relationships that I had from my time in industry were with private f athletes and we called the ones on you pretty early on and you know learned a lot. But. Government fleets have been very progressive with um electrification and just clean energy on their yards. Um, you know we pretty much went found a ah list on some of the local agencies of the fleet managers reached out and and started conversations. A lot of the government mandates are really really soon versus private fleets and they’re ordering like you know we were literally ons site with ah a government fleet yesterday and you know it’s pretty bad I mean they were telling us how there is ah 1 of their fleet yards is actually housed in an old. It was a horse barn and the it’s It’s so old that you can see two truth marks on some of the walls from the old horses. But the infrastructure is very weak and I think that’s why they’re most receptive to this kind of stuff.

James McWalter

Yeah, and whenever I kind of talk to people who are starting founding startups and they’re like oh you know I really struggle to find people to help you know, give feedback on the product and it’s like if you can’t find design partners to even talk to you now like you might not be painful enough a problem and so I think it’s like so. You know it’s it’s great to hear that how easy it is because if you find people who are just like loving jumping on a phone call with you to talk about the scale of the problem then there’s definitely something to be solved here. There’s definitely you know a potential solution that you know that smart startup folks can kind of work on and so okay, so the. You have these you know design partners you’re talking to on a regular basis. Amazing. You’re getting you know, physically on site seeing seeing horse barns and and other kind of issues. Um I guess from here like what’s the kind of next mostones in terms of getting you know some sort of Mvp to service those type of customers right.

Jules Brenner

Yeah, absolutely so we are currently in the pretty much supply chain kind of ordering phase of our Mvp. So. It’s designed. We’re focused on ordering parts as the parts come in. We’ll begin to assemble. And then you know at that point start to firm up the exact details of where we want this thing to go first and you know and this kind of stuff should happen pretty quickly next maybe 3 to six months or so and you know to whatever extent possible. We’re also focused on. Really, you know we refining in a lot of the um you know products core like software features so we have ah a sauce kind of very basic software layer that we initially and have for the fleets and dialing that in and then you know we take the data from that pilot or the course of. Subsequent 3 to the six months and feed that back so that we can have a better pilot number 2 as more of a kind of focus on the key features that we need to succeed and then over time as we build the. And these case studies if you will. We can then start to take it to larger and larger customers even like the landlords of some of the private fleets themselves that have you know been more proactive and want to install chargers maybe earlier when the vehicles are on site.

James McWalter

And just so I can fully understand like the use case. Let’s say I’m like 1 of your target customers and everything goes well the the kind of current direction. You know as you’re kind of going through these pilots and the development of the technology all goes well for me, let’s say I want to be onboarded as your customer you know in 6 to 18 months. Um, what would that experience be like and both through the onboarding and then once everything is set up like how would I guess my life change and for the positive.

Jules Brenner

Yeah, absolutely yeah, so you know a few things so I’ll maybe talk to you about the experience. We heard about yesterday with ah that government fleet manager now. Um you know this gentleman he is very you know aware of some of the challenges of just. You know, installing more than even 1 charger in his facility. That’s pretty much where he taps out and you know for their experience if you know they didn’t use ah a Zeus unit. They would literally have to redo their whole electrical room as he was telling us yesterday and and modernize everything and then also pretty much tear up a bunch of concrete on their yard to to get. You know some solutions in that you know they might not eventually scale. You know they’ll install 5 chargers. But then once the the building taps out and they need more later down the line they have to redo it so it’s kind of a messy experience but you know with Zeus it’s very much like just the typical installation of a charger. You know we help you with like. Permitting process to you know start the the application you know once all of it’s approved. You know we’re working through the surveying where this thing is going to sit how it’s function once the unit arrives the site. It’s installed by certified electrician and then after that we help tune in the. Le management software to the vehicles that you have which is just a simple onboarding process and I would definitely say that you know it’s a um, it’s it’s a much kind of cleaner installation because you’re going to save on and only the cost. But most importantly, the time and headache.

Jules Brenner

Of all the other electrical system upgrades which tend to take the whole charging installation process from being maybe six months to you know a year plus

James McWalter

And that that makes sense and the and I guess why? Why do these things take so long. Um, you know is it you mentioned permitting is that like a large component that’s kind of outside the control of both your customers and yourselves is it. Getting the components is it something else like what? what are the reasons for why this is such a kind of long process relative to you know? um, like ah for example, if if you wanted to ah like yeah build ah build a you know an outbuilding as part of an industrial park. You know you could probably do that in a few months right relative to this which which takes ah quite a.

Jules Brenner

Yeah, so so there’s a few things to consider so you know the first thing is that the amount of power that chargers in general are pulling is multiples more than what a building is rated for you know one statistic I can give you about 50

James McWalter

But longer.

Jules Brenner

Tesla supercharr type stations that would basically be for kind of semi truck level draw as much power as a whole empire state building peak load and it’s it’s quite a bit of ask for a yeah old 1920 s you know horse barw.

James McWalter

Right.

Jules Brenner

Right? So You know if you think about kind of what you need to do just from the electrical equipment perspective. That’s not only a big kind of logistical mess. But it’s also a huge capital capital planning allocation that a utility needs to take on plus. Actually all you know applying and installing all the different components transformer substation upgrades et Cetera Um, those things really add a lot of time permitting isn’t too bad I mean it depends on the State. Some are more backloggged than others but it’s kind of you know everyone really has to go through it. It just doesn’t. Um, I just get elongated.. It’s pretty substantially once other equipment gets in often. The thing that happens is that you you tend to really run into what we used to see at Exos which is that you would go down the kind of sales chain. You would get a happy fleet. Everyone would. You know, be working towards the goal of an installation of a certain amount of units and then you know once they start talking with their landlords about you know whether or not who pays for what that turns into like a whole lengthy negotiation and further ads time. So It’s It’s a really big hassle versus if you just install the unit that had. What you need built into it and that thing was as movable as a charger unit will get and just needed to do permanent. Not everything else.

James McWalter

And that definitely makes sense and so I guess then you know know this is obviously very kind of early days but 1 of the kind of challenges that some hardware startups have is you know is this something that I’m selling the hardware and you know it’s not offgraded very often. And I just have a single point of sale with a customer versus things where you have hardware kind of connected to other solutions services software and so on or there something more like a kind of long-term relationship with the customer. It is a long-term revenue stream. How are you thinking in these early days about kind of. The potential monetization of zoos.

Jules Brenner

Yeah, good question I think that’s ah in general, it’s a tough issue for a lot of hardware companies hardware tends to be a much lower margin you know sale and then adding that into you needing a lot of sales time to get it done a more highly technical sale and usually rank day sale. Doesn’t tend to a very cash flow and positive business and you know we’ve thought about that a lot we really didn’t want to end up in this situation where it was tough to scale and then also we didn’t like what we saw in the industry about having this kind of you versus mean type attitude towards a customer. You know we’ve talked to. Ah, variety of different fleets and in general just like talked huge hotel chains that have installed will take thousands of charge points and they would kind of complain that you know the more units that they put out the higher their saas fees grow but the you know their value isn’t increasing anyway, it’s just similar kind of cost tacking on and on for. Essentially charger and energy dashboards. So you know, kind of thinking about that. We really wanted to be able to create a set of products and kind of revenue streams that better align interests. So we have you know our typical revenue from the oem charger sale. So the margins on there are pretty in line. What what? a typical oe yeah would sell their unit for that 40 to 50% gross and then from there you know once we are installed in the building we use this kind of hardware aspect as essentially a moat right? to not have our software. Um, you know, switched out like what might end up happening to some of the other charter oems and you know we encourage the stickiness that the customer there and then we work on the 2 software layers so we have a kind of software layer that’s focused directly on our customer which is in most cases, the Landlord. Sometimes the fleets on their building so they are technically the servers that customer as well. But essentially that software package just focuses on using the batteries that are in the Zeus unit as a literally an energy storage unit for the time that the vehicles are not charging. If you think about a lot of fleets vehicles are actually not using them throughout the day that often is much more so that the battery is sitting around and you can use it all the different benefits that already exist in energy storage today including peak shaving to help you save on utility bills um resiliency to give you. Ah, peace of mind knowing that there is power on sight at all times in some bit capacity especially when you go all electric and then also create random streams to things like wholesal where how sound markets where you’re essentially by low sell high with some of the energy and you know we create our kind of higher.

Jules Brenner

Grow A margin revenue stream from that package. Um and really just try to focus on being more of like a partner with our landlord where we yes we charge for that software. But we also make sure that that creates value to them so that it isn’t just the of and our money. Kind sort Sas fees are growing and I don’t know what extra I’m getting every time it happens kind of thing and then towards the fleets themselves. It’s just the standard fleet management software so they have all your data and you know again know the software side. It’s typically higher gross margins as well.

James McWalter

Yeah, on the kind of bouncing the pricing incentive piece I think is really key. Um, you know you generated their bulk discounts for a reason right? at the enterprise level unless you’re getting some big value ads right? And so. Maybe there’s elements of compliance. Maybe you know there are these other kind of buckets that people can add to an enterprise plan but you definitely if you’re just kind of linearly going up in cost. You’re eventually going to have pushback from enterprises where it’s like why am I getting charged you know per unit. You know 10000? Yeah and I’m buying 10000 units and a smaller company is basically getting a better deal for because they have fewer units and and but our period of price is the same. So I think definitely kind of taking into that concern into account um is is going to be quite powerful as you were kind of looking to kind of differentiate down the road the other piece as you’re took on chatting there. So. Think I’ve mentioned the podcast before that one of the ideas that I explored in the past for startup for myself was some sort of pure software solution that enabled yeah the better. Um, kind of monetization of distributed energy assets specifically batteries but others as well. You know how could you kind of aggregate batteries. That are already connected to grid and somehow in a way that kind of plays with wholesale energy markets and I was talking to a few folks about this at the time the thing we kept coming back to was how how can we make sure that we continue to have access to those physical assets because what would stop you know the owners and. Of the batteries themselves are not the owners of batteries. But the manufacturers of the batteries themselves from having their own software layer sitting on top of those and because they own the physical asset in the value chain. They seem to have yeah the ability to block out other software that’s trying to reach down into the physical asset and so I guess. You have a kind of similar kind of thought process around why the but owning the physical asset and the development of physical asset is so important.

Jules Brenner

Yeah,, that’s that’s ah, that’s a very good point. Yeah I think owning the um you know, physical asset allows you to be better protected. Um you know or or other from the from the oems lens like from Missou lens allows you to be better protected. In a world where there are just a lot of different software platforms that help manage charging systems. Potentially even battery systems. There’s a variety of laws coming out with compliance at Ocp for charging Systems. So I Really see that if you are just a pure like software play In. Kind of control Hardware. You might have a really tough time growing. Um I’ve been in that space before and I’ve just seen it. It’s ah it’s a pretty like tough equation sometimes to manage in terms of customer acquisition cost versus you know what people are willing to pay and to that point earlier about like the the both pricing on Enterprise. The funny thing is the way that the incentives are aligned in the industry right now like we had so many customers that are really just telling us I wish I was paying 0 and you know they honestly mean it like they are to a point where they are just about to ask the charger oems to just shut off their software. Let them use it as what they call a dumb charger.

Jules Brenner

Um, so if something doesn’t change there I mean I don’t know that they’ll get around it but they are certainly feeling like they’re being forced. So um, you know, thinking about like you know how do we ourselves like you know, bring in a battery on site that is you know essentially. Ah, smaller version of what you might get like from an energy storage application and something that we purchase direct so we have full control over how that is used but we are you know, not being very like closed off about this kind of like very Aes or instead trying to be open with the customer and saying. You know now that you have this asset on site. Let’s work together to get the maximum monetization the ah roi on it and roi is a big word. It can mean just the insurance resiliency which doesn’t have an immediate cash number but you know helps out if there is a problem.

James McWalter

Yeah, so.

Jules Brenner

Um, but I think that’s really important you have to look at this industry much more through the lens of property technology than you do automotive technology if you’re going to stand out in you know 2022 and frankly, be profitable.

James McWalter

Um, and you mentioned the the kind of customer segments at the beginning that you’re mostly targeted on is more of the public sector and they seem to be the those who are you know have the greatest need are moving the fastest and I guess like my intuition would be that That’s generally. Not really the Case. So If you’re trying to sell to public entities. The sales cycles can be quite long often. It could be hard to get to the right decision maker and so on whereas you know more typical corporate clients tend to move faster. But obviously if they’re very big corporates. Those can also move quite slowly. Um. I Guess how how are you thinking about that kind of sales cycle aspect and why is this industry or this particular segment so different compared to the typical you know public sector moves very slowly model.

Jules Brenner

Yeah, yeah, good good questions. So you know a few things you know when we think about like who is the ideal customer that buys today I mean the ideal customer is going to be someone that is either the landlord or the feet of an industrial facility that is older and has less capacity. Right? And that could you know that could vary the older the building the more likely they are going to tap out. Maybe even at that first charter and if that’s the case as soon as they go to do some sort of utility study could even be with ah another charger company. They’re going to find out pretty quickly that. Need to do something and when they start pricing out what it costs to do you know all the station upgrades and the building upgrades then they get turned off to the idea sometimes so those those um parties tend to move a bit faster in general but when it comes to government agencies. It’s actually interesting because with. Fleets. They’re not that hard to find um you know they’re mostly the the information’s online and very minimal effort. Um I used to sell to private fleets and I’ll just tell you it’s frankly, been harder um with private fleets than with ah government fleets. Um, government fleets. Also they look at it a lot more through an esg lens than a like fleet manager at a private fleet. Usually the board of a company of a private fleet maybe has some esu mandates. But by the time it hits the fleet managers deaths. They really don’t care that much. So. Um, that’s a big part of it government agencies also usually find themselves with a lot more cash towards this stuff. So while maybe the sales cycles can be slower. They actually have more spending power and they actually have to spend it so you know there’s always some politician that comes out with some new. Idea for how they can clean up the roads and usually gets implemented. You know in fairly short order. Um, but sometimes you’re right, you know it can take a little bit of time the approach that we have always recommended to people is to say you know think about your yard. Not in the lens of you electrified 3 out of 50 vehicles think about it in more the lens of what would happen if you electrified whatever your goal is let’s say 30 out of 50 and maybe the other ones are bioiesel or hydrogen or something or cng. Um, what would the. You know, equipment needed look like what would the cost of your utility bill. Be call your utility try to figure it out and look at it from that lens and then ask them the other important question which is what’s the timing on all this and we would talk to a lot of utilities and you know they would tell us this kind of jokingly where fleets would call them and say I need.

Jules Brenner

All the existing power in this location and I need it in a few months and a lot of them would you know they just kind of say no we get give a few years so when you know some of that stuff you tend to move much faster and and I do think that a lot of the government agencies are a bit closer to their utilities and. Thereby it moves a little more smoothly but um, a lot of them do have you know lots of vehicles on order I mean we were with one yesterday and you know they have like I think they said 15 ford e lightnings and you know so street sweepers and all sorts of stuff coming in at the end of this year going into the end of next year we slow that down a little bit in terms of supply chain. But those vehicles are coming and with the permitting process and even you start to think all that through you’re about right there in terms of when you want to start procuring these things.

James McWalter

Mostly we’ve been kind of talking about retrofits you know the the horse barns of the world and and that kind of thing. Um, but how do you think about like new builds you know would real estate developers generally be. You know, potentially interesting segment to focus on in the future as they’re thinking about New New Bill commercial and industrial um to make sure that they have the right charging infrastructure from the beginning. Um, and before thinking about where you know the heavy automotive industry is going.

Jules Brenner

Yeah, yeah, absolutely yeah, the um, you know we definitely recommend with early builds that you you know you plan twice and you try to also you know, future proof to whatever extent possible. Um I can’t tell you how many different companies I used to talk to that would basically take advantage of every single rebate and grant at a point in time, especially those like really big franchise hotel chains and find themselves in the situation where they. You know install chargers of different brands some that are wi-fi connected. Some are not and then at some point they start to realize we should probably start to really standardize the asset and figure out 1 central place to track them and find themselves then in a position where. You know it gets kind of messy. So I think it’s really important to think about a standardized process for your facilities somewhat early I understand that most will probably not go to 1 technology in total. But definitely you know, keep the batch to a very small limited amount. And you know to whatever extent, you do have the ability to install early from fresh concrete. Um, you’re going to keep your total cost down. Um, but more importantly, you’ll be able to plan for things like footprint right? You don’t want to stick chargers in the front of parking spots and have vehicles have to park. You know three feet from the curb. You also want to be thinking about to whatever step possible how you can use the um, the battery systems to better. You know manage the building. It’s it’s kind of interesting like if you think about the way a lot of like the let’s say office park charges are installed. They’ll be closer to the building and they’ll also be thinner profile chargers just because closer the building means less electrical cost thinner profile because you don’t want to cover up the whole building to a point where you can’t see chargers if you start thinking about like batteries as part of that. Um, you know if you don’t plan electrical lines early. You don’t want to find yourself in a position where batteries start to take up a big part of your front facade as well too. So early planning is really really important and it’s also cheaper.

James McWalter

And then you know thinking kind of on about broader spectrum. The changes at the policy level and so we had the federal infrastructure bill that passed last year. There were multiple billions of dollars set aside for ev infrastructure development. Um, it’s still I guess a little bit unclear to me about the exact kind of deployment structure of that money. But how do you think about either the existing incentives like what was passed last year or things that could potentially kind of emerge in the future and about how that affects how you’re approaching. You know the deployment of your early product.

Jules Brenner

Yeah, yeah, good question I think the um you know it’s It’s very exciting to see that amount of dollars flow in from the federal level I think you know most even you know. Cities now are are adopting their own programs and spending their own money but the federal level should create a lot of opportunities for us to you know, not only find just on government website opportunities for bid. But most importantly, I think what it’s doing is it’s bringing into the light um a lot of grid issues. This kind of chooses electrical infrastructure. Um, and as you start to think more about that you start to really start to weigh whether you want equipment upgrades that maybe give you more capacity but still force the utility to work hard to produce lotss of energy or whether you want the um you know battery systems. Part of the equation that should make it easier for the utilities to generate energy and store them in the batteries prior to use. But I do think that the you know Overall the federal will has been a um, a strong sign for acceleration in the industry and it’s certainly kind of woken up a lot of the fleets to. Um, the opportunity of taking advantage of incentives now a lot of them. You know they maybe were thinking of going electric but they were going to stall closer until the um you know date mandates and now with the money coming out over a limited time here. They.

Jules Brenner

Um, accelerated a lot of their plans.

James McWalter

And then thinking about the team and and kind of as you were kind of building out the team and the company culture over the next few years you know one of the things I found in myself is every kind of new venture thing you know company that I start. The culture is often a either. Ah, reflection in some way of kind of my my past experiences at other organizations or other companies that I’ve involved in so either I’m embracing certain aspects of those other companies and trying to you know, incorporate those in what I’m working on now or I’m kind of reacting against them and saying okay you know that that company was great, but. Had this particular part of their culture or part of what it was to work there that I just absolutely do not want to have at my new company. Um, you know for yourself having you know, worked at a few companies worked at companies that have you know also been part of the kind of ev and electrification space. What are the kind of elements that you’re like okay. These are the things that I really want to bring in and and then still is the culture of ah you know of Zeus versus other areas where it’s like I absolutely do not want to bring those into this new company.

Jules Brenner

So yeah, that’s um, good. Good question. Well I think ah you know a few things some of my past roles and companies I think we’ve worked on some you know products that were kind of similar like some proptex some electroomechanical hardware and I think with those you typically. You know you’ll need your engineering team of course. Um, but most importantly, a lot of those companies they had strong like mission driven values and I think you know with trucking it’s a um, you know in general fleets and all that they they are a small portion of a total transportation. Pi but they are disproportionate part of the actual emissions side. So I think having a culture of people focused on you know, alignment on decarbonization is something that’s important to us. Um, but also a culture focused on strong engineering and. You know, active conversations with customers early is is key as well too. Um I’ve been in companies where you know we’ve cut corners and early stage engineer and design and I think that has certainly come to haunt us later and I think when you’re making a you know a missioncritical product. Like a charging system or energy system for a charge for a vehicle application. You want to do it right? You don’t want a call from a fleet you know someday telling you that they can’t um, operate that day because the chargers are out or something like that which is unfortunately becoming an all too common issue. And the um public charging sector these days. So I think you know those are really important I think really also focusing on you know, a very kind of systematic approach to the growth is is vital to we don’t want to make a product just for. Sake of it so we’ve really focused on identifying customers of pain points today instead of just adding out and looking at the broader market of who will certainly feel this pain in a year or 2 and we want to make sure you know that also really ends up being a kind of. Ah, right? recipe of culture and Zeus.

James McWalter

I yeah I love that um and I think it’s great that you’re already kind of being so kind of thoughtful about those elements as you kind of build out the company. Um Jules Brenner  I’ve really enjoyed the conversation.

Thank you Jules Brenner  has great.

Jules Brenner

Yeah, absolutely appreciate you having me James take care now.

Great to chat with Rainer Küngas, CTO at Stargate Hydrogen. Stargate Hydrogen delivers turn-key solutions for electrolysis plants and hydrogen trains! We discussed retrofitting freight locomotives, zero-emission hydrogen, hydrogen production by electrolysis, Estonia as the European Silicon Valley and more!

https://carbotnic.com/stargatehydrogen

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

Remember, If you want to support the podcast please rate and review 5 stars on  Apple, Thanks so much! 

James

The unedited podcast transcript is below

James McWalter

Hello today we’re speaking with Rainer Küngas CTO at Stargate Hydrogen Welcome to podcast Rainer. Great to start. Could you tell us a little bit about stargate hydrogen.

Rainer Küngas

Thank you so much for having me.

Rainer Küngas

Yes, we’re a company about 1 year old and we are focusing on 2 main aspects of hydrogen technology on 1 hand we are developing 0 emission hydrogen-based locomotives. Um, and at the same time we’re also developing and and establishing hydrogen production systems based on electrolysis. So how to make green hydrogen with the help of electricity and and water.

James McWalter

And what drove the initial decision. You know a year. Maybe a little bit further ah long ago to start Stargate.

Rainer Küngas

Um, yeah, so I um, kind of have been working in the hydrogen space for about half my life. So what’s that 1520 years and and you can really see that there is momentum in this field at the moment. There’s a lot of you know things happening the countries are coming up with their plans for how to get to net zero how to establish more and more electrical electrolysis capacity and so on so it was really this momentum that. That drove us to establish stargate hydrogen and um particularly we we saw these 2 areas where there was where where we so where we saw that we have something unique to offer so in the case of locomotives. Ah, we could see that this that this market of of you know, true zero emission locomotives was about to pick up and and there was a clear demand from the from the market side. Or more solutions like that and and on the electrolysis part we were. We had this idea to develop a new class of electroizers. Um, which is where we what we’re now doing and. And getting closer to commercialization.

James McWalter

That’s super interesting. It’s just on that first use case so locomotives what is the kind of current status quo of locomotives trains in terms of the type of energy use and I guess water are the kind of advantages of Hydrogen versus the status quo.

Rainer Küngas

Yes, so the um, the majority of of locomotives today run on diesel essentially you have 2 technologies competing at the moment. It’s either. You know, um, electric locomotive is powered by catonary lines. So the overhead lines. Or you have diesel locomotives and in the us it’s actually almost exclusively diesel locomotives. There’s almost no electrified rail in in the us at all. Um, and it’s ah it’s a it’s a. Huge market in the in the us alone. There are 25000 class one locomotives operating and most of them are quite old. The average age is about 30 years in Europe it’s actually forty years that the average age of a locomotive is so you can imagine how much they emit not just co 2 But also you know, partic emissions Nos and so on um, and and and. To to kind of but in the future you know, like ah as countries have this target to go towards net zero then all areas of the economy need to decarbonize including the really hard to decarbonize sectors like like rail transport or heavy heavy transport. In general. So um, and and rail is you know the typical lifetime of a locomotive is perhaps you know if average age is 3040 years then it’s maybe 50 years so um so it’s if we want to get to net zero byte. Ah, twenty fifty then we need to do something without locomotives already today. Um.

James McWalter

Yeah, that’s that’s that’s interesting. So I guess and to take those kind of 2 competing ah kind of technologies as they exist today. So you mentioned you know basically electrify locomotives electrify trains and you have these overhead wires again much more common in Europe.

James McWalter

And and Asia then you see in the United States and then you know for the audience if you you know picture the old west you picture these steam locomotives with steam you know with with smoke coming out the top from the coal. Um, you know we’ve obviously moved on from that but we’re still using diesel which is very kind of dirty and polluting fuel I guess why? why. You know because my understanding is that the electrification is like you know that kind of next evolution of the diesel locomotive historically um, before you know the reasoning around hydrogen became kind of more compelling I guess why? not you know, try to push to you know to decarbonize locomotives into. Ah, electrification rather than through something like hydrogen. You know what are the other kind of pros and cons of hydrogen relative to electrification.

Rainer Küngas

That’s a really good question because um, many countries in Europe for example, are actually pushing electrification really hard this just means a really huge investments like capital investments. In in the rail tracks. So we’re talking about an average I think between 2 and $3000000 per per kiloometer of of track electrified. So you know if you want to do. Even in in a small country like Estonia. You know we have a thousand kilometers of of railways that needs to be electrified and it it all boils down to how how often do you use or how heavily these rail roads are being used if it’s used. Really intensively the electrification using overheadlines makes a lot of sense but you know even in countries like Germany then which you know we have really extensive railway networks and both you know. Also a lot of them electrified then the level of electrification is only 50% of the overall um you know overall track kilometers so you have these always. We’ll have these railroad track sections which are used less than the main lines. And it’s on those lines where where hydrogen is the most logical option because because you can kind of envision it as doing wireless electric electrification. You replace the the diesel engine on the locomotive. With ah with ah a fuel cell and then that will provide electricity that you use to run your your diesel locomotive traction engines. Okay.

James McWalter

And yeah I guess when I think about electrification of Rail One of the big you know blockers for it is basically local opposition to having the overhead wires and so you’re seeing.

James McWalter

You know and I’ve used the word nimbia in the past on the podcast but people ah you know ordinary people generally you know I’m I’m not not saying that these are bad people or anything but people who don’t want to see certain types of infrastructure in their backyard near near their homes. All those kind of things but things have to be built somewhere right? and so you you constantly have this kind of. Clash between um, building certain types of infrastructure versus local opposition and I guess one of the interesting things about going with hydrogen is the the tracks have already been built. You don’t have to change that rather you’re changing the vehicle on the tracks I think that is definitely compelling in a lot of cases. Um, I definitely would also like see us send up more than nimbyism and and then then push back on ah the the you know the kind of the push well pushback on the pushback of the objections to some of this kind of infrastructure build out. Um, but I definitely see that as an argument where you have particularly strong and trenched interests that will. Basically just not allow. Um you to build the electrification that might be needed in particular you know Geographic area.

Rainer Küngas

Yeah, so maybe it’s to comment on this then one of the applications of hydrogen locomotives that we see as like maybe the you know some one of the first applications is the use of um. Locomotives in railyards these are these um locomotives are typically referred to as shunting locomotives in Europe or switcher locomotives in in the us so these are the locomotives that kind of assemble and disassemble. Ah, the. Wagons or cargo or the you know the um the the large trains and then it’s another type of locomotive called mainliners. Then that that then transport these long trains over a long distance. But um, those switch are locomotives they’re typically you know. Oldest and most polluting ones that you have in your locomotive fleet because maybe you don’t can’t rely on them anymore to to operate on ah you know and on a um, long distance track? Um, but you want to have them in the railard where. Easier to maintain them or service them and and you know at the same time these rail yards are often located in urban areas where air pollution is you know a big problem so to replace those switcher locomotives. Is a really a low hanging fruit in terms of you know you you both get your benefits of cleaner air in urban areas and you also take some of them. You know the most oldest and the most unreliable locomotives off the rails.

James McWalter

That that makes a ton of sense and then I guess this other kind of use case the electrolysis itself. What is that kind of current process today and I guess what are the kind of innovations. You’re kind of working on bringing to market in that space. Yeah.

Rainer Küngas

Yes, um, so there are in general um 3 different kinds of electrolysis technologies. There’s the one called alkaline electrolysis. There’s the one called. Um, pem or polymer electrolyte membrane electrolysis and then there’s high temperature electrolysis. Um, we at stargate are focusing on the very first one. The one called alkaline and and if you zoom in through that type of electrolysis more then you’ll see that this. And again kind of has 2 different kinds of technologies in there 1 is based on precious metals. We’re talking about you know, not even silver or or gold but more like platinum iridium ruthenium really the rarest elements that you can find on earth. Um, the the kind of interesting thing is that this these elements give you unfortunately the the best activity and the you know the highest current densities and the the best performance but but sourcing. And availability is really an issue I I made this back of then will calculation that if you took the entire global production of iridium for 1 year and only used it for electronizers then you could install one Gigawatt ahualizers per year I mean this is a lot compared to how much we produce today but to put it in the in a perspective then the european union alone wants to install between. 40 and sixty Gigawatts of electizers by the year twenty thirty so even if we used all of the world’s iridium and only used that to make electronizers then there simply wouldn’t be enough of those rare metals available. So so we need an alternatives and there is an alternative and this is typically nickel based electronizers. You know you have much less of an issue with raw material availability. But unfortunately also these electizers have much lower performance. Lower current densities lower efficiencies and what we then want to do at stargate is to develop a third class of alkaline electroizers 1 ne’s based on ceramic active materials and um, ah it has been.

Rainer Küngas

Shown in the lab that that these ah electroizers are just as active as the precious metals ones. But at the same time you don’t have these raw material availability issues. So it kind of combines The best of both Worlds and this is the technology that we want to scale up and commercialize.

James McWalter

That makes sense and and just for the audience who I know we come in deeply talking about electricalizers but electroalizers are basically just a technology to separate water into the 2 component elements of water which is hydrogen and oxygen and so that’s why it’s you know so so important to the hydrogen industry and. Guess then in that kind of third that third piece so you know looking at your background. You know you’ve worked on different types of you know ceramics and have you know have a very strong kind of academic career as well as commercial career career working on these kind of technologies. Um I guess what? what is the you know. What is the state of play with that technology today. Um, you know? are you some the lab are there kind of initial pilots happening of the the technology around electrolysis. Yeah.

Rainer Küngas

Yeah, so um, so yeah as you rightly pointed out. Electrolysis is really like a key technology if you want to be able to kind of decouple the production of fuels like hydrogen and but also later on some synthetic fuels. From co 2 emissions. So if you use green electricity for producing hydrogen then and and you use electricity electrolysis for that then then then this is a way to produce fuels without co 2 emissions. So this is why we’re doing this and why why. Green hydrogen is so high on the agenda um with coming coming to your question then we are at the moment busy working in the lab developing the first materials and the first electrodes that we will that we will test and then. Gradually increased the the size of the systems so that we can get to commercially relevant sizes quickly. But at the same time. Um, so we don’t want to be be like ah you know a 2 academic of ah of a company. So if you. If a customer comes to us and wants to buy an allegizer already today then we offer that as well. It’s just that if you then at some point want to upgrade the existing electroizer stack with with the with the new one that we’re developing then then. That is certainly an option.

James McWalter

Understood and in in terms of like electro like electroalizers you have you have the underlying kind of chemistry that enables you know that that conversion right? like whatever that kind of internal catalyst is whether there’s rare or metals as you discussed. Um.

James McWalter

You know, Nickla or ah ceramic kind of approach. You’re taking but the other kind of major input is electricity itself so you need some energy to to cause that ah that reaction to occur and you know historically ah that energy has come from dirty sources and and you mentioned the importance of using green sources for this.

Rainer Küngas

Yes.

James McWalter

I Guess how much of a bottleneck is ubiquitous green energy to the scaling up of hydrone electrolysis for the types of use cases. We’re talking about you know where would we need to see you know? Ah, do we basically do we have enough solar and wind and and Hydra right now or a nuclear as well to actually? ah. You know meet the demand of potential Hydrogen applications or do we have to build ton more.

Rainer Küngas

Here again I would just want to start from a bit further and then get to your Aor E So like ah to put things in perspective then if you if you today if you take natural gas and convert that into hydrogen.

Rainer Küngas

Using the normal process of steam methane reforming and then you know you have some emissions actually about ten Kilos of co 2 per every kilo of of hydrogen that you produce so we’re talking about really sizable. AhCO 2 emissions if you then just you know either burn that hydrogen or if you use that hydrogen in ah in a fuel cell for example to power a fuel cell locomotive. Then if you kind of Zoom out and look at the overall emissions then you have produced actually more co 2 emissions in this process then if you just had burned this natural gas in the in a gas engine instead. Um, and so you know this is this kind of hydrogen produced from natural gas is called grey hydrogen. Then you have the ah hydrogen produced from electrolysis and if you use a really dirty electricity to power your electronizer then again you you may actually be much worse than if you just you know burn the fossil fuel. Be it. The. Oil or or coal or whatever in them in an engine somehow itself. So. It’s really only if you have green electricity available that that electrolysis starts to make sense and. Green hydrogen starts to make sense so it is it is like really really important that that there is enough of green electricity available and it’s certainly not trivial actually. Ah. In to fulfill these these goals that the the european union for example, has taken. It requires really massive installation of new renewable energy capacity. So you know gigawatts and gigawats of. Of of solar and wind. It’s it’s certainly an issue and I truly hope that the that the rate at which solar and wind get installed in really all across the world and like. Takes up in the in the in the next years

James McWalter

Absolutely as we all do have I think for the people who can listen to this podcast and then if if I think about like the other potentially use cases for hydrogen. Um, you know some of the ones that either we’ve talked to people in the past on the podcast or I’ve come across recently with my own company. So 1 is long duration storage right? So we one of these issues with the grid where the um, yeah, the renewables that we’re adding more and more of they’re intermittent. You know the sun does not shine and nice as is is very commonly so spoke about and the wind obviously doesn’t always blow.

James McWalter

And also certain times a year yeah the sun shines more right in Summer. So can you capture more of that energy at the moment and deploy it on the bridge when it’s more needed in the evenings and so on the big problem right now is that most of our storage technologies are either dirty or battery based which have a 4 to 8 hour max kind of timeframe for their use case. From a kind of economic point of view hydrogen is seen as this kind of more more akin to something like natural gas because you can basically you know produce it in the summer let’s say store it in tanks and then burn it off as a form of energy in the winter as an example, um, so that’s kind of 1 1 example, another example is around. Other types of vehicle locomotion not not locomotives but things like heavy heavy trucks. Even we’re starting to see some startups kind of explore things like aviation with hydrogen and then and shipping as well as another big one. Did you kind of think through these other use cases and I guess.

James McWalter

Why were locomotives and like I guess like the electrovisor itself is like more of a kind of enabling technology but in terms of like end use case Technologies I Guess why were locomotives more interesting relative is some of these other options.

Rainer Küngas

Ah, yeah, just to comment first on the the first part of your question. So um, hydrogen storage I think makes sense but you need to have some really like good conditions for it. So for example, storing hydrogen is just. In in high pressure tanks I think is unless there’s a real breakthrough in hydrogen storage technologies. It’s quite challenging I would rather like typically you would like you would do that like seasonal storage if you have some like. Geographic geologically favorable area where you can pump hydrogen and under the ground like in a salt cavern several hundred meters underneath the the ground ah where you can be sure that the hydrogen doesn’t get get out doesn’t leak. Um. And and and where you have these you know the volumes available where where long-term storage makes sense but to to store hydrogen on like in um, on the ground hydrogen tanks. That would be large enough for seasonal storage this I’m I’m not seeing at the moment these kind of projects materializing I think that the the cost of storing hydrogen is simply too high. Ah, on the other hand if you do something with hydrogen like green hydrogen is the first step in the production of you know all sorts of green chemicals. Be it methanol you know, synthetic natural gas also synthetic. You know. Liquid fuels like synthetic diesel and so on. So if you combine green hydrogen production with ah with some synthesis like that also ammonia forgot to mention so these kind of fuels are much much more easy to to store over. Long time and as a matter of fact, you can use the existing infrastructure right? You know synthetic natural gas you can pump it into an existing natural gas pipeline synthetic diesel you can blend that with ah with ah you know regular diesel. so that ah so that you yeah it might much more easier to store and at at lower pressures as well. Um, so this is this is where I see the world going I think that.

Rainer Küngas

If you need to store things over a long time or even transport hydrogen over a longer distance then you would convert it first to something hydrogen derivatives like they’re called um and then perhaps even convert it back to hydrogen when you need to use it. But.

James McWalter

So then I guess so I understand the kind of look the locomotive kind of case would then the production of Hydrogen be ah co-located with the the train yard in order to have remove some of that storage issue that you mentioned.

Rainer Küngas

Ah, yes, ideally you would have hydrogen production and and like ah hydrogen refueling station in the railway Hubs so that so that. The the locomotives and and Passenger trains can come there for for refueing and the like it. You don’t really need to have you know huge solar parks or or wind the farms. At these locations. So It’s ah it’s actually quite quite doable.

James McWalter

And and so and then those other kind of use cases. Um in the transportation. Space. So You know have a machinery aviation shipping and so on. Um I Guess how do they compare in the in the kind of framework that you kind of mentioned in terms of like. What when a good use cases and as I’m really kind of enjoying getting into the details of this because I think whenever we see Emergent Hot New Technologies right? Obviously Hydrogen production’s been around a very long time. But.

26:44.82

James McWalter

Um, you know it’s definitely something that ah is is top of mind for a lot of policymakers. A lot of industry people industry and across the sort of Landscape. It’s like okay maybe it’s a silver bullet bullet for every use case right? whereas we have to be I think you know, really clearly look at the technology and say okay, this really makes sense in certain use cases and and maybe less than others. And so yeah, So how do you think? and then when you apply that framework to these other forms of transportation. Why Hydrogen may be a good or less good choice for those and.

Rainer Küngas

Yes, um I think it’s It’s a like a good way to look at it. This would be perhaps to like try try to think of it like as ah as a spectrum of Applications. So we’re on 1 Ah, edge of the spectrum you have these really like low energy applications. Like for example, you know electric bikes Scooters Passenger cars. Um in in that kind of corner of the spectrum I think that battery technology is doing really well. And um I I Don’t think that we are going to see like ah hydrogen powered bicycles taking over the world in the future. But um.

James McWalter

Right.

Rainer Küngas

And then then then you have kind of this ah middle part of the spectrum where you have you know you have locomotives you have ah coaches that. Operate between cities. You know that essentially need to be driving all the time and you cannot afford to have it plugged in you know after you, you take the bus from New York to to Philly where I also lived and. And then they they plug in the the bus after after that trip for for several hours before you can make the return trip. So I mean this just simply doesn’t work so in these applications hydrogen has a clear edge over battery um technology. Um. And then in the far end of the spectrum you then have you know oil tankers real big cargo ships. Ah passenger long haul aircraft and so on where where even the energy density of hydrogen.

Rainer Küngas

Not enough and there you’re going to need green synthetic fuels like synthetic jet fuel synthetic diesel perhaps green ammonia for the shipping industry but but there also you have green highrogen is the first kind of step. In in making those those fields so this is at least how I see the world.

James McWalter

Sure, yeah, no absolutely that that all makes sense and I guess then kind of returning to kind ofs star gate. What are the kind of goals over the next. Let’s say 6 to twelve months some milestones that you’re hoping to reach. Yeah.

Rainer Küngas

So we are really busy designing our first locomotive prototype and so I would very much like to to present the you know the the first. Working prototype of our hydrogen locomotive in in that timef frameme on the um on the electricalizer and development. Um, we want to get to First. Ah. Lab scale results that that we can share with the world and also that we that we can start testing our our technology together with some partners. So. Really talking about proof of concept in in kind of both business lines at the moment but and maybe as a third point kind of that unifies those 2 things is which simply want to grow as a company. We. Moment were about twelve fifteen people I think that by the end of the year will will probably be around um double that or maybe even more than that.

James McWalter

And and I guess the in terms of like the the early team. Um, who who who’s kind of involved in that. Um, how did you meet those people like you know how do you kind of build out the relationships with the you know the early founders early team mates and and oh. How you kind of all got to know each other and decide like this is the thing that you want to work on together.

Rainer Küngas

Um, so Estonia is like this at least we consider ourselves like this the world of or like ah in in a way the Silicon Valley of Europe I know some.

Rainer Küngas

Like at least this is how we think of ourselves. There’s quite a lot of ah nice companies that have come out of Estonia to maybe to name a few then like an early success of Estonia was Skype. That’s maybe not so ah, you know relevant anymore. But at the moment.

Rainer Küngas

Um they’re also some really nice companies and and so it’s it’s this kind of startup scene that has also been active in in in helping to establish stargate. So one of our founders for example is. Is a real pioneer in the field of super capacitors and and another one of our initial investors is the main investor in a. And the largest renewable energy producer in Estonia so it it just was a really good combination kind of combining the knowledge from the renewable energy field and and this understanding of how to scale up new technology. So. Really kept slicing on on this.

James McWalter

Why is Estonia ah better at startups than a lot of Europe and you know I’ve mentioned the podcast before in Ireland we do not do a good job at startups you know and a lot of that is on cultural elements right? You know we we live a good time. We are very you know, friendly people. But we’re also. So more critical of the success of others I think it’s fair to say and so that definitely um, you know, basically the idea of bragging about like your startup and say I just started this something I mean there’s no quicker way to get made fun of in Ireland than than saying something like that. So I guess how do you think about? yeah, are there cultural elements or even you know policy elements that have made Estonia that kind of. Center of so much startup activity and.

Rainer Küngas

I think it’s maybe difficult to pinpoint like 1 specific thing but there has been really a lot of support from the government side on the on like Estonian ii sector. So. Have done some I think nice things there like for example, this initiative of e residency that you can be a resident of Estonia without you know, physically having to be here and kind of getting the perks of being an european union citizen and ah, um. And this I think kind of helps to spur the Estoian startup kind of scene but by now it has really moved into you know the scope is much broader than just I see so you know green tech also um. Like medicine and health technologies. But yeah, I’m not so easy to say exactly what is the reason.

James McWalter

And and you mentioned the and that that kind of innovation that’s happening in Sonia and not just in etonia but kind of around the world like where are the areass though that we’re not seeing enough innovation. You know if somebody was like oh I might want to start a company that’s tackling some big problem. Um, particularly in the climate space where are there areas that like. More smart people should be focused on in your opinion. Um that we just don’t have enough you know startups being formed ideas being you know, attempted to turn into business that kind of thing.

Rainer Küngas

Um, there are some areas which may sound boring and I mean so ah, for example.

James McWalter

No such thing in startup world. Ah.

Rainer Küngas

It’s like 1 really important topic for for renewable energy and also like green hydrogen in general is everything that relates to standards and guarantees of origin and you know things like that. How do you make sure that if you actually produce green hydrogen that you know. That you can also sell the green hydrogen that is considered as green hydrogen and that the same time that you cannot sell it somehow twice that you sell it to 1 person and then you also sell it to another person or under company and how do you make sure. For example that the that the. If you use and if you buy a green electricity that it is also actually green. Not just you know, ah that 1 at 1 moment in time somebody produced green electricity. But what you’re getting ah through the lines is actually electricity from coal. It’s um, to me at least it’s an incredibly incredibly boring topic but it but it and and and really ah you know heavy on on on the like legal aspects and ah.

James McWalter

Business.

Rainer Küngas

But it’s extremely necessary without this then actually there will be no massive scale adoption of of Green Hydrogen technologies.

James McWalter

Yeah there’s ah this guy saw griffiz you might have come across him. He wrote a book about kind of electrifying. Ah yeah, the economy in the Us. But you know he’s got this line that yeah even lawyers have a role in in the kind of green future right? like navigating these these kind of different waters. Um. We’re absolutely you know essential and a company kind of agree with that. You know I think wherever there is a yeah I guess I have a think about like how to like the kind of modern technology that started in the late 90 s you know was very much driven by software sliding in to ah. Kind of new use cases right? You know the emergence of things that had never existed before like social network and so on Google etc and over the last like decade we’ve really seen you know software just starting to eat more and more into very old industries like change how they work how they operate all those kind of things and. That is basically just started right? like I come across. Um, you know my own startup like everyday like industries that are using. Um, basically you know pre-exel models from like 1988 to run things like the electricity grid and so on and nobody.

James McWalter

Like literally at the company knows how to how to fix it if it breaks like it just doesn’t even exist anymore and and we just have these things all the way down the way and so I think like you know my message is always just start talking to people in these industries and they will just start describing the status quo and I think people who are coming from a technology mindset will be so much shocked in a positive way that like oh these are massive opportunities.

James McWalter

To try to improve on great. Um, so ranar it was. It was great chat and before we finish off is there anything I should have asked you about but did not.

Rainer Küngas

I Completely agree with this.

Rainer Küngas

Um, yeah, maybe when would the you know 1 be able to see a first stargate locomotive running. And yeah, the us. Yeah because ah.

James McWalter

So yes, yeah, I’m very excited. What’s the timeline for this? yeah.

Rainer Küngas

The the interesting thing with our prototype locomotive is that we’re actually converting an american origin locomotive like ah through some well kind of an interesting story then in a Stonia. We. Almost exclusively use american general electric locomotives. Um whereas all the countries around us are using either. You know european or or russian technology and but and this is kind of. Going to be our entry ticket into the and into the us market. So our idea is that once we have have built the prototype. Um, then we will also get it certified on the us market and and and bring it bring it there. So so because there’s actually you know hundreds. If not thousands of of similar locomotives in the us just waiting to be retrofitted with with our technology.

James McWalter

Yeah, it’s that’s super exciting and I’m looking forward to that to that news. Ah Reiner. Thank you so much.

Rainer Küngas

Thank you.

Great to chat with Quincy Edmund Lee, Founder & CEO at Electric Era, Electric Era engineers and manufactures AI-driven high-power storage systems for EV fast charging stations! We discussed the importance of feedback from customers, what is needed to build out EV infrastructure, the need to unblock power constraints and more!

To find out more about Electric Era, contact them here! https://www.electriceratechnologies.com/contact

https://carbotnic.com/electricera

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

Remember, If you want to support the podcast please rate and review 5 stars on  Apple, Thanks so much! 

James

The unedited podcast transcript is below

James McWalter

Today we’re speaking with Quincy Edmund Lee founder and CEO At Electric Era, welcome to Podcast Quincy. I suppose to start could you tell us a little bit about Electric Era.

Quincy Edmund Lee

Thanks James good to be here how you doing today.

Quincy Edmund Lee

Yeah, electric era is a company based out of Seattle Washington we’re about a mile from the space needle our company focuses on building AI driven high power storage solutions for the ev fast charging market. So electric area is it’s an startup in Seattle Washington founded by myself. My co-founder Elliott Owen we are. About a mile from the space needle we focus on building an ai driven high power storage solution for ev fast charging stations. So specifically we sell a behind the meter high power storage system that lowers the load required the load capacity and power capacity for an ev fast charging station. So you think of peaks. Peak shaving. But for e fast charging stations. So we’re really trying to position ourselves in the market to be the energy brain of an ev fast charging station handling all the power flows and energy flows at a fast charging station so that the customer can lower the grid capacity requirements the demand charge costs. And operate the station intelligently. So we’ve we’ve built out a software platform and a hardware component that allows us to go and do those things.

James McWalter

So very good and what drove the initial inspiration to start electric Era. Yeah.

Quincy Edmund Lee

Um, yeah, it was it was about 2018 and I was working at Spacex and I was launching launching or watching a rocket launch and it was a deep space orbital entry mission. Um, and as the kind of rocket took off and and started to go into deep space to deposit the satellite. There was this earth-facing camera and showed the earth and it showed the earth getting smaller and smaller and smaller at that moment you know looking at that beautiful blue and green. Orb I realized I was spending all my time and energy and talents building technologies that were sending things away from earth when the problems on earth. We’re actually growing in magnitude. So you know that was kind of my existential moment. My aha moment hey I need to institute drastic and urgent course corrections for the the climate problem here on earth and there’s no better way to do that than a participant in the private sector as an entrepreneur so really started to focus my attention on. Problems here at home at that point and noodle on ideas ah around how you know I could contribute to the climate crisis in ah in a positive way. You know and stem the issues that are plaguing our planet.

James McWalter

Yeah I think it’s very similar to I think a lot of climate entrepreneurs where there’s kind of this default. Yes I believe in climate change the fact of it all those kind of things but had never really been maybe internalized to degree that the responsibility feels focus on oneself and I think ah you know. Talked to many many entrepreneurs and and also speaking for myself when it comes. It’s like it’s like a train that hits you and you don’t really you know it’s It’s nearly impossible to resist. It’s like oh I actually do need to make dramatic Change. You know career change focus change all those kind of things.

Quincy Edmund Lee

Yeah, yeah I think I think that’s right and I think what’s pretty cool that I see is there’s a huge wealth of talent of really capable motivated people coming from other sectors into the sector I think a lot of people recognize hey there’s this you know existential threat that I need to address. Um, but I think a lot of other people and just generally everyone participating in the process realized that this is a huge shift of Capital markets. So. There’s like a massive undertaking of wealth creation happening so like arguably like a really good industry to go into because we’re reindexing. Um. You know, value creation around solving climate problems and the capital markets are moving accordingly. So You know so selfishly I think all entrepreneurs should have both those things in mind of hey this is a um, a really big problem but hey there’s a huge amount of opportunity here. So like let’s go solve these issues and and create value for humanity and value. Um, for our shareholders at the same time.

James McWalter

Yeah, absolutely I think the best climate companies are ones where they’re very conscious at the beginning that the business model has to be tied to the climate impact in a very like specific and and direct way and I guess like so once you had you know this this you know step change in your kind of outlook you know and the underlying kind of emotions of that the the sentiment of like I’m going to. Yeah, make this change in my career in my overall direction. What was the next step. So.

Quincy Edmund Lee

yeah so yeah I started putting pen to paper I started building business models in the early mornings and late at night and reading about um ultimately the duck curve and and the the issues associated with onboarding bulk amounts of renewable energy onto the grid. So company originally started off with the idea of hey let’s like build load shifting batteries that have like vanishingly small dollar per Kilowatt hour costs and bulk onboard them onto the grid so that we can fill them up during the day and discharge them at night when renewables aren’t around and we realized you know that was that was. Was a big problem. It still is but the business case for it is probably not venture backable. We also realized that you know our expertise is our expertise didn’t really lend itself to making fundamental changes in that technology space. You know that’s like more of a chemical level innovation than it is like a product or. Mechanical engineering level innovation. So we kept looking around. We realized hey um you know there’s renewable onboarding and then there’s also clean vehicle electrification onboarding that needs to happen and what do you know? ev fast charging the big you know. £800 gorilla in the room of the electrification. The vehicle electrification process is not being really looked at or absolved um and and the more we looked into it the more we realized it was a huge impediment for people to adopt evs and I’m ah I’m a Tesla driver and even on the tesla network I find that coverage is actually kind of lacking. You know it’s it’s it’s still kind of hard to fastharge. So there’s there’s a very strong psychological need to have more infrastructure in the ground. Um and when we when we started digging into that we realized wow these stations pulled neighborhoods worth of power on one city block. There’s a clear mismatch there like literally thousands of homes worth of power. On you know, yeah, a single city block. Um, so when you dig into it. There’s a huge amount of cost impediment and time impediment to go and activate fast charging stations. So that was the genesis of the idea. Let’s build a high power behind the meter energy storage system that peak shaves. Load at a fax charging station and this and the software system that operates. It.

James McWalter

And once you hit kind of had that direction What kind of validation like who are the potential users potential customers potential clients who could be to yeah, come down the road as you kind of think in the long term about monetization but in in the short term like how do you kind of think walk through that validation process.

Quincy Edmund Lee

Yeah I think any engineer listening or sorry any actually yeah, any engineer that’s becoming an entrepreneur listening should should definitely just pick up the phone and start talking to customers and you don’t need to go and try to sell them on anything you can simply schedule introduction calls and say hey I’m interested in learning about your industry and this problem. Etc, etc, etc. That’s exactly what we did we we read a few papers to start and we’re like oh yeah, this is like actually fairly wellresearched and there’s a lot of you know publications that have suggested that demand charges is an issue for this industry and that fast charging stations are power intensive. But the very next thing we did was really start calling a lot of people and connecting with them on Linkedin and scheduling intro calls and like validating directly from the customer voice that this was a problem. Um, and that was I mean that was immensely helpful. It validated the thesis that this was a big cost driver for the industry. Also validated the thesis that there was a need for high power storage systems and there was a validated the thesis. There was actually already purchasing behavior for batteries in general for fast charging stations. So we had a lot of good market indicators early on directly from the customer and that was I think the key first step that. In hindsight was the right thing to do.

James McWalter

And we’re running kind of surprising insights from those user research interviews that came out of that period. So.

Quincy Edmund Lee

Yeah, definitely? um I think I think a big one was that you know there’s multiple considerations that dictate the site economics at a fast charging station and power cost is just one of them. Um, we also got a lot of indications that. You know the current battery solutions are just too big and it takes up too much space and it makes problems for citing and that can add land lease cost so you can flip the entire economics on its head by adding a battery but you know given that you solve 1 problem but that you create another so we had a lot of. Strong market signals and customers telling us hey make sure this isn’t a huge big shipping container like it can’t be because we’re trying to put this in urban tightly dense areas and that drove a lot of product decisions around optimizing the footprint of our power node battery product. So the system that we built and designs about. You know four by four feet it’s pretty small and it’s got. It’s got 120 kilowatts of power in it. So you know it’s half the size of a parking stall and you know 120 homes worth of instantaneous are 30 minute power actually so we really want to you know condense the footprint.

James McWalter

So.

Quincy Edmund Lee

I Think the other thing that a lot of customers indicated was um, they were going to try to find other solutions to this problem other than storage and I think that’s actually really important for entrepreneurs to hear you need to not Over-index on your technology and think that it’s a panacea for the Market. Like you should not assume that that is True. You should try to find direct buying behavior from customers for your product and not try to force your solution into their problem because they’re they’re creative people. They’re creative buyers and they have a mandate to not spend money and increase I R for a station. So. Best way to do that is to find other creative solutions. Um, and that was something I think we should have paid a little bit more attention to at the beginning because it probably would have shaped our product earlier on in our approach but you know that was another surprising anecdote that we found.

James McWalter

Yeah, it’s its so interesting. You know the problem solution dynamic and ah you kind of mentioned the you know the and engineering soul of of your founding founding team and how building things is like very close to the the kind of overall ethos for engineers and and the like um whereas.

James McWalter

Think the best entrepreneurs who are engineers who move into becoming startup founders and and early employees. They become very very obsessed with that problem piece and they don’t to your point try to you know Square Peg round holele type solutions because you know what? what? If. Let’s say the solution was more of a um, just trying a random thing but like you know a chat bot didn’t. Tells people about the the closest free ah fast charter right? Like if you’re kind of coming to the space with like just kind of a completely open. You know like an open kind of map of where the possible solutions are I think you end up getting to a place that’s ah, better. But Also you’re also even within that you’re bringing to. Conversation your own context about Solutions. You’ve seen in the past and I think like that balance is where you get like really smart people coming from outside a specific industry coming in and disrupting it in in a kind of new way.

Quincy Edmund Lee

Yeah, yeah, that makes that makes a lot of sense I think um, any like any product solution or problem solution orientated person engineer or not coming into a space will look at a problem and say oh well here’s a solution for it. I came up with solutions but that might not be the right solution and it. Certainly might not be the solution. That’s moizable. So you know like your your singular data point and idea is is one of 1 of many in a constellation of ideas and you’re trying to find the one that’s monetizable. So like lesson learned for me is you know, think through product design in a way that’s within the framework of the customers.

Quincy Edmund Lee

Desired solution space and then push the product envelope all the way out out to the point of monetization. Um, and then ah yeah, validate validate validate get lots of feedback from customers.

James McWalter

And absolutely and and so then you you do start building. You have this validation like what was that first mv he looked like.

Quincy Edmund Lee

Yeah, so we given we developed a brand new product. You know brand new high power battery. We had to do a fair bit of you know r and d to build it and you know brand new engineering to build it. So um, the first and Mvp we had that we were charging cars off was like a lab demonstrator of our battery. Um, it was you know a small I guess like 60 Kilowatt Twenty Kilowatt hour battery it it didn’t even have an inverter attached to it. It was just something to get us operational and prove that prove the thesis that we could make high power batteries that wouldn’t burn up. When you discharge a huge amount of power. There’s a ton of amperage amperage creates heat heat destroys batteries. So we had to solve a lot of thermal fluidic engineering problems to solve it first. Um, and you know we just did an engineering development front runner as an Mvp um, but we slowly developed that and matrod it to what we have now which is. 120 unit. That’s operational and testing cars and charging cars in our lab. That’s our go-tomarket product. That’s our Mvp. We’re deploying that with customers later this year after certification and with another customer that we’re gonna announce soon that is. Buying a pre-certification unit for a demonstration. Um, so you know ultimately we we pushed the envelope. We got the the product operational and um, you know there at this point just thinking about finishing certification and scaling up.

James McWalter

So yeah, not super super exciting time and just on the certification point you know one of the in in the startup world. You know we like we like to move fast ideally not break too many things but you know there’s definitely like a mindset of try to. Ah, trying a lot of things seeing what works but whenever you’re touching atoms especially things that are you know charging multi-thousand pound vehicles down down roads and and and related and you’re using different types of chemistry. You start to have to adjust for the risk of those things and and kind of deal with certification bodies and so on. You found that process and um I guess you know are there ways that government can work better but especially kind of small emergence startups for figuring those kind of things out. So.

Quincy Edmund Lee

Yeah I think um I mean it’s It’s like any sort of adamtom engineering or adamm entrepreneurship versus the world of bits and software is just going to be extremely hard. Our our approach is a hybrid of both. We do a lot of ah engineering and product development in the world of atoms and. You know with our high power battery system and then also in the world of software as it pertains to developing those solutions. It’s just time you need to add to your roadmap as it pertains to certifying those solutions. It’s even more time you need to add to your roadmap I would recommend like any entrepreneur going through certification do like. Early calls with certification bodies and and developed like the framework and the scaffolding of all the specific milestones along the way to completion of certification as early in the process as you can. Um I think ah I honestly pretty I’m pretty like not optimistic I guess around. Possible improvements. It’s just a slow encumbersome process. It’s with you know, fairly bureaucratic companies that are not really incentivized to move fast. The government has done and I guess the certification bodies have done what they need to do at this point which is create standardization processes and standardized certification requirements. Um. Honestly I think you know there’s actually probably a. There’s probably a business play in expedite math process I’m sure you can make a lot of money I know I would have paid more money to to help us go through it faster. But yeah I think you know the certification bodies They basically had done what they need to do I Think now at this point we need to just.

James McWalter

Right.

Quincy Edmund Lee

Push more companies through the process quicker um governments can probably help more broadly with standardizing utility interconnection I think this is this is like important for all distributed energy resources which fast charging is actually a distributed and energy resource. Um. But any time you’re interconnecting with the utility. It’s really Slow. It’s not necessarily clearly laid out um and having like a standardized process for permitting and interconnection. That’s more expeditious is is going to be hugely valuable for the broader energy. Industry because basically that’s what sets our time constant of energy transfer. You know like we’re going from internal combustion type technologies to clean energy technologies the rate of change between those 2 things is dictated by this fundamental interconnection Piece. So It’s It’s super valuable for the broader industry to do that I think.

1

James McWalter

Yeah, and I guess for the listener you it’s pretty much a hodgepodge of systems United States like at the state level at the multi-state. What’s called an iso level these are different types of what are called interconnection queues and and formats depending on how much energy you’re trying to put on or even sometimes take off the grid. And ah to give people one one idea like if you’re trying to build a large-scale project that generates a lot of electricity onto the grid in somewhere like Pennsylvania that’s taking offward of 3 years now to actually get get the process kind of through interconnection queues and so on. Um, so it’s absolutely like a massive problem and. And of a couple startups who are kind of working on like the information around the timing of these things but we absolutely do need you know some of the step in and at the kind of government and policy level and sometimes I do think it’s like you know can we have a whip around of a few million across a lot a cartel of startups and and other kind of companies to try to fund some of the speed and interconnection. But. Having looked into it a little bit. It’s actually less of a money and resource point. Well, it’s definitely a resource point of view but our issue but less of a money issue is just they’ve never had this such pressure to build so much as the last five years and you know has produced and that’s getting you know, increasing ever faster and just the hiring plans at these entities. Just are not ready for this. You know the massive increase in physical assets that are going to hit the grid.

Quincy Edmund Lee

Yeah, yeah, yeah, that’s that’s exactly right? I Think if anybody has a good idea for a interconnection as a service business model with high-gross Margins I would invest in that because honestly, if you’re able to like deeply integrate with utilities around the the nation and help them solve this problem. They’d be Happy. They might even pay you too. You know like there’s there’s definitely a problem there that needs a solution and there’s probably ah, a good clean solution that can make a lot of money doing it.

James McWalter

Ah, see the podcast about my own startup from last week which is such upon some of that for the listener. Um, cool and so in terms of the so you mentioned you were kind of signing contracts with a couple different customers. Um, who’s the kind of ideal customer is it the car manufacturer who’s looking for their own network. Is it. You know I guess these kind of more emergent ev infrastructure focus companies some of which have gone public via spac over the last couple of years is is it a different type of entity right.

Quincy Edmund Lee

Yeah that’s that’s a really interesting question. So um, as you know as we’ve seen it so far the automotive ilims haven’t really doubled down dael that much. They’ve kind of like half doubled down on adding infrastructure for the sale of their cars. Vw obviously being the leader there out of the obligation with the diesel gates scandal they funded electrify America I put like $2000000000 or something like that in that company. Um I think I think automotive oils that do not do that are going to be in a world of hurt and honestly I think tesla’s. Going to continue to kind of run the show until auto automotive williams take the charge the fast charging the public fast charging infrastructure component more seriously. Um, you know and and not to say they’re not thinking about it. But I think they just they need to think about it as part of their rdroadmap and product development roadmap. Um, because it is a clear leader for vehicle sales as tesla demonstrated basically. But now you know we haven’t we haven’t really made a whole lot of headway with automotive volumes. Our ideal customer is you know a grid constrained high value property. That’s trying to add fast charging as an a minute the augmentation so that can take a variety different fan that can be a seat a cpo like some of the charging companies that have sped that can be charging point operators sorry to use acronyms um, that can be a convenience store. That’s you know, trying to add. Charging grief fill to their property to keep driving foot track to buy their snacks um or it can be a utility. That’s you know, putting an infrastructure It can be a fleet that’s you know, charging their vehicles but then opening up the charging station at night. Um, for public usage ah or during the day for public usage for that matter so any of those you know customer archetypes actually are good fits for our technology. Um they they they use the technology to lower demand charge costs. They use it to defer or entirely avoid infrastructure upgrades and interconnection timelines. While at the same time adding premium a premium fast charging experience for their customer base.

James McWalter

Yeah it’s so interesting we’ve we’ve had a few folks who are looking at the kind of ev um, infrastructure space over the last on the podcast over the last few months and I guess the introduction of different types of business models to interact with the charging is one of the kind of really interesting pieces. And you mentioned one of them which is the idea of yeah fast casual dining or restaurants or you know convenience stores where people you know can set the the car and forget it for the fifteen twenty minutes whatever it may may take um and so yeah, so I guess. Speaking to that. Let’s say I did you know you know when your product is kind of deployed in the field later this year and I drive up to it and let’s say it’s at a convenience store for the sake of argument. What’s the kind of experience for me versus the status quo from using your product.

Quincy Edmund Lee

Yeah, so the world that we envision is a world filled with ubiquitous, highly findable. Ah high quality fast charging. You know we we need to as an industry think of this as a critical piece of national infrastructure and we need to drastically increase the availability and the quality of the fast charging experience. And by quality I’m using that as a proxy word to really indicate uptime I come from the aerospace industry and while at Spacex I worked in the telecommunication industry on the space starlink constellation and both those industries have you know success criteria measured in the 99.99 percent levels um and if you think about gas stations I mean it’s fairly rare. You go to a gas station and they’re not operational and like we as an industry need to be pushing the uptime availability quality of fast charging accordingly. Um, so your customer experience would be you. You know, discover electricera enabled station. Um, that’s in your neighborhood or along your route and you go to it and you you plug in and you walk away and you come back 15 to 20 minutes later with you know, 70% state of charge and then you go on your merry way and while you’re there, you spent. Ah, good share of wallet on buying a latte from Starbucks or a Taco From Taco Bell or whatever it is. You know? Um, but yeah you, you know? Honestly, we don’t really aim to be like a in your face. Front in brand we think of ourselves as the stripe of power management services for the industry. We just want to be like underlining technology the energy brand for the industry. We don’t care about branding ourselves or being front and center. So and that’s that’s intentional and that’s like part and parcel of our business model and go-to-mark strategy. But um. So honestly to answer your your question. You wouldn’t even know you were charging in a fast charging station and enabled by electric era if I had my way you know like we you would just be showing up and charging in a great in a great location on a great with a great experience.

James McWalter

And I guess just moving from a world with ubiquitous Well not even ubiquitous, but a lot of slow chargers to ubiquitous. Everything’s a fast charger right is the the kind of said.

Quincy Edmund Lee

Yeah, yeah, you know I think um, it’s definitely going to be a hybrid world. You know I opportunistically charge when I can like of course and I think most people will um so that leaves a lot of room for level one and level 2 charging which are as you mentioned slow charging. For the listener. But yeah I just think we need a lot more fast charging even for the tesla network I’m like man I wish I could charge my tesla at like a lot more locations. It’s like hard to find the stations. They’re all over the place and you actually have to fill up quite a lot because there’s just not a whole lot of mileage and a battery like that’s just the fundamental truth of it even for a 300 Mile ranged car. Um, so yeah I think I think if we really want this industry to take off. We need a lot more fast charging.

25:31.26

James McWalter

No absolutely and and you mentioned a moment ago. This idea that ev infrastructure is if I’m now but becoming a critical piece of national infrastructure and we actually had a fairly large infrastructure bill passed last year through congress is one of the the bill that did pass not the other bill that that. Back badder that that failed um but it had a fairly so large amount of money earmarked for building on ebch charging network I guess what? what are your kind of thoughts on how that will impact you know the grow to evev infrastructure um is the money set up in a way that’s. Yeah, optimal. Um, whether there you know any changes you would want to make and how does it get does it affect electric era.

Quincy Edmund Lee

Yeah, um, well yeah, first off shout out to the joint office the department of energy and department of transportation. They actually I think did a really good job of structuring that bill I think that they were really intelligent to allocate the majority of that capital to the development of alternative fuel. Corridors to establish fast charging on you know, transit routes for on routee. Sorry for corridor charging the bill is yeah you know there’s 5000000000 going to to the development of those alternative fuel corridors the the way that they specified the requirements actually have a lot of really good things in it 1 is that. There. There’s a mandate for fast charging. It’s you know the average station that they propose is for one fifty Kw charging stations which is like a lot actually um, the other thing that they they did well was they actually put language in there that basically. Fires slash recommends that utilities and construction agencies develop standard processes for interconnecting fast charging. So if we can use that as a framework for fast charging. It’s probably applicable to other distributed energy resources which solves that interconnection problem. We talked about earlier. Um I think. You know if I had my way I would say hey 1 recommendation recommendation I would make is you know push for um, monitor monitoring monitorable and measurable metrics of success around station interconnection timelines and station uptime availability. That are pretty good and high and that that didn use that as an economic forcing function to award the revenue or the the funding in that bill to people that are meeting that like high bar of criteria um, those you know like life’s all about of incentives. And I think that is like a really important incentive that we put into the industry and we specifically fund companies that have like high quality stations.

James McWalter

Oh that that that makes a ton of sense and I think it’s I think the best kind of government policy is when you do have those experts that you mentioned from you know department of transport and so on department of energy etc. You know working hand in hand with lawmakers and policymakers right? because the nature of any. Yeah Multibillion Dollar bill is that there’s going to be a lot of opinions in there and if you can get something that’s 75% good like you’ve done an amazing job right? And like if it’s if it’s directionally correct and I agree like in this case they seem to have done a kind of a bang up job and. I think it’s ah it’s a good framework for again. Some of the other bills that are pretty stalled or stopped completely but might potentially get get through over the next few years um and I guess you know thinking about yeah electric era over the next couple of years like what’s the kind of Target. Kind of your two year three from now.

Quincy Edmund Lee

Yeah, two years out we want to be deploying around 10 to 30 in a battery enabled fast charging stations a month we’re really yeah, like we’re really thinking. Okay, how do we scale this up as quickly as we can. How do we design the asset to be mass manufacturable and low cost.

James McWalter

Amazing.

Quincy Edmund Lee

How do we design the interconnection process to be quote Unquote mass manufactureurable and low cost and then how do we attach ourselves to the vast majority of vv fastch charging stations that are being installed over the next 5 to 10 years. So It’s for us. It’s you know the the products. Products here. The product’s working. You know we’re charging cars. The software is working. Um, we’re we’re pushing through certification and then scaling up Quickly. You know like that’s our next mandate. Um, you know we we really feel strongly about but ahholding that customer promise like we need to unblock power constraints so that we can add fast charging. So that people can participate in the fast the energy transition The vehicle electrification Energy transition. Um, so that’s what we’re doing.. That’s what we’re focused on and we’d love to chat with you about your application. It’s It’s very likely we can drastically decrease for anybody listening your interconnection timelines and you know. Deployment timelines toward your fast charging station and lower the cost for you and provide a better experience even during high periods of demand and usage. So yeah, give give us a give us a ring.

James McWalter

Yeah, and absolutely and we’ll we’ll put some contact details in in the show notes as well and I guess then you know in terms of yourself. You know you as you mentioned you you left Spacex looking at your your bio I think Spacex was your you know main company you worked out coming out of university and then you kind of went from. Ah, company. That’s fairly large I think at this stage you know, even though it’s so quote unquote startup ah to to founding something yourself. Um, what I guess have you learned most about or surprised you as part of that transition from you know someone managing a team within Spacex to you know, being the person. Ah the you know the founder the Ceo who has to.

Quincy Edmund Lee

Oh man where to start? Yeah I mean I mean space Spacex really put put me through the ringer. That’s a great company like what a great place to work and and learn. But you know the skills I acquire were really just engineering skills and of course as the Ceo you’re doing a lot more than just engineering. It’s actually rare that I do engineering you know like I get like I get to like boss people around and say hey that products should do this or that or like what about this approach but I’m not really putting pin to paper that that much in preventing canops anymore. So.

Quincy Edmund Lee

You know, growing the Ceo skills understanding the investment cycle process how to acquire funding how to market your company how to develop like a really strong corporate strategy and business model how to market and sell to customers. All those things were like major growth variables for me like very painful growth variables that I had to learn very quickly. Um, but ah yeah I think you know also the the really challenging part about starting a company is you don’t have any sort of embedded like cultural infrastructure.

Quincy Edmund Lee

You have to and you have to build that yourself like if you if you show up and you work for Apple you’re working at a company that has like literally 4 decades or 3 decades worth of like cultural heritage or at Spacex these yeah the Apple way or Spacex. It’s like everybody’s like drinking the coolid and saying hey we’re going to Mars you know and.

James McWalter

And the Apple way.

Quincy Edmund Lee

And literally they will go to Mars that’s definitely going to happen so that cultural infrastructure is not there at at a startup as as you you yourself know James you got build it and as its Ceo you have to manage morale and culture and cultural alignment and like bring in really key hires that facilitate that um and that like kind of. World building process is very challenging and something that um taught me a lot over the last eighteen months since I left Spacex.

James McWalter

Yes, I actually Spen to 8 years at a company a fintech company back in the day before we call ourselves a fintech company. We’re financial services back then but um I think there’s a I think a lot of founders will either. You know have a reactive or you know i. I guess proactive kind of ah adoption of their previous company’s culture in some way now of course as you said like as you add people, you know everyone’s kind of the all that early team even the type of product you’re building these all affect kind of culture over the first you know year or 2 um, but it is absolutely a process which I think the more. Conscious we can be of what we’re building and how we’re building it the better because one of like a mentor of mine was like if you ah you know if you like are in the room and you a piece of paper drops on the ground and you don’t pick that up and somebody sees that like those little elements all build in a way that like kind of affects. You know the actual. Culture out the company because especially in the early days basically culture is often just a mirroring of what the founders and the you know the first 5 employees are doing and you know and I think people sometimes want to shy away from that a little bit because it’s like oh we didn’t write down our culture document I was like no, it’s like your actual actions coupled with that later process of going through a culture document and so on um, is what actually. Makes people do the things that they should do in the right way from the the point of view of culture down the road and.

Quincy Edmund Lee

Yeah, well well said that that makes a lot of sense That’s right on. Um, yeah, and and that’s that’s a big challenge and I think like pretty much no first time T would have experience doing so good luck. Anybody listening.

James McWalter

Yeah, no, Absolutely we and and when you make the mistakes along the way. Um, yeah, and you mentioned you had a few of these kind of growth trajectories that you’re kind of working on for yourself around sales. All those kind of things you need like particular you know heuristics or or structures for. Fast learning in areas that maybe you’re kind of have less background experience in.

Quincy Edmund Lee

Yeah I mean I think ah I’m I’m pretty biased here but I would say try to go down to the axiomatic truths of whatever you’re trying to learn and explain from the bottom up higher order behavior that is emergent and observable. Um. So like don’t try to explain and inform mental models around the higher order behavior start much lower than that and learn like the first principles or the axiomatic truths of whatever you’re trying to learn and then form and then think for yourself and try to actually like develop you know your own mental model with those in mind around. How the system or process or behavior should work. Um, that second party super key because that’s actually like when you put the that’s when you embed the and information in your neuroplasticity of your brain. Um, so it’s it’s really about like. Learning the lowest level things and then trying to use them on a daily basis and then they’re just imbued into you and then it’s like then you can kind of churn it from an active prefrontal cortex type activity to something that’s more passive and more natural.

James McWalter

I Yeah no I Love I Love that I think that’s like a really kind of fascinating way of like adopting new knowledge figuring it Out. Um I think one of the other like somewhat similar to certain extent but just taking a step out and like looking at yourself from the outside not in a kind of judgmental way but just kind of noticing things. You know I think there’s a lot of um. You know intentionality as productivity elements. But there’s definitely something there where it’s like oh if I notice that I’m doing something like that doesn’t mean necessarily will change it but at least like I’ll have a better ah understanding what I’m doing and then I can you know, maybe sometimes even back out the framework for what is what is kind of leading to that behavior. You know, positive or negative. And again, especially when you are trying to build a company and you know initially you know your co-founders early employees then later investors then you know later as you get bigger. The media all these kind of things. Um, you know you have to kind of craft these different ways of navigating how you’re expressing yourself and communicating because if you’re not. Kind of noticing that like definitely other people are and yeah sometimes I think we can get get caught up in I Guess the wrong things as part of that process.

Quincy Edmund Lee

Yeah I think I think a lot of people um would benefit with the realization that everybody has their own unique worldview and if you can understand how they see the world and speak to them through that ocular view in a. And a language you know and a framework and in ah with a world experiences that they understand then communicating ideas whether it’s to the media or a customer or an investor or an employee or a future employee become much easier so you know just acknowledging people want to you know, see things in their own specific way and trying to mirror that and. And give them the information. That’s most digestible to them in a way that’s most digestible is a really big win.

James McWalter

So hunt was I couldn’t agree more Quincy. It’s been great I’ve really enjoyed the conversation. Um, before we finish up is there anything I should have asked you about but did not so.

Quincy Edmund Lee

Um, yeah I think ah you know our companies scaling up at this point we’re were’re adding a lot of customers to our pipeline and we’d love to chat with you about your application and get you in our queue, we’re got a finite finite demand or finite supply of of ah batteries and. You know we’re we’re lining up our our partners for the next you know 6 to twelve months so now’s the now’s the time to to chat with us and and really see how we can um, best help you in your expansion efforts. You know we’re we’re also hiring. We’re always hiring an electric era where we have a super hard. High barrier of entry into the company. We really want excellent people. Um, and you know most likely the listeners out there fit that mold so come to chat with us and you know we love. We love. We’d love to chat with you.

James McWalter

Amazing and we’ll include on those careers page and and other links in the show notes I Thank you Quincy Edmund Lee.

Quincy Edmund Lee

Take care James nice to talk.