Is having a versatile technology a blessing or a curse? Prior to embarking on this entrepreneurial path I would have considered that question a joke. After all, what could be the downside to developing a technology with multiple applications? Well, as it turns out, every investor under the sun, whether the government or private, requires a solid go-to-market plan before they’re willing to shell out the funds. It also turns out that selecting the correct entry market is no easy feat. In fact, the advice Venrock Capital Partners gave me a few months back was dead on. The technology won’t be your challenge. Finding the right market will be.
Iterate. Iterate. Iterate. We wanted a lean startup and we got it. The core of our technology is a novel energy storage technique to generate on-demand, -50C temperatures using low cost, off-peak electricity. And we do it a significantly higher efficiency than conventional heat pumps. The applications are numerous and scalable. Here’s a breakdown of our market path, to date:
Coming from the solar power industry, we first decided to use this cold energy storage to boost the efficiency of a power generator fueled by waste heat from PV panels. Grants were submitted, investors received summaries, business plan competitions were entered, and potential clients were interviewed.
Decision: Pivot. Drop the panels.
Why: We don’t want to tie our system to the success of another system: PV waste heat capture. This configuration just had too many components to get people’s attention.
After pivoting away from solar PV, we landed in the industrial waste heat capture segment. There are 260 TWh of low temp waste heat that very few companies are exploiting. The state-of-the-art efficiencies are low, but we can double them. It’s a gold mine, right? WHP (Waste Heat-to-Power) was investigated, investors received summaries, and potential clients were interviewed.
Decision: Pivot. Drop the power conversion.
Why: In the US, low temperature WHP has limited policy support and doesn’t offset much cost due to low electricity prices. Our system has a lot of application in this space, but until the ORC prices come down or our electrical prices go up, we need to find a different market.
So where does that leave us? Next up is a two-part plan, one focused specifically on the technology and another on markets.
First, we’re going to technically validate our system just as it is without any added complexity. We have a unique refrigeration system that, compared to state-of-the art systems dropping to -50C temps, is A) more efficient, B) less expensive and C) saves money by utilizing cheap off-peak energy to offset any peak energy purchases. We’re going to validate it technically just as it is.
Second, we’re going to investigate other go-to-market strategies. Tinkering with industrial refrigerators might end up being the correct path, but Praxair has the lock down on cryogenic freezing and, while they might be interested in buying us one day, perhaps its best to look towards other markets. Right now we’re fired up on air compressors. Did you know that air compressors account for 10% of the entire industrial load in the US and that more then 70% of industrial facilities has one or more air compressor? Did you know that in some markets, they already require expensive dryers that our technology can replace at the same cost while dropping energy consumption by 20% during peak periods? To me the energy savings potential sounds attractive.
Yes, having a versatile technology has its challenges, but as my partner Russell always says, “these are good problems to have.” And the truth is, the market validation process, including the iterations, is incredibly engaging. I’d give up a lot to find that perfect Go-to-Market strategy in the next week, but I do get excited by pivots. They are indicators of hard work, due diligence and progress. Will our technology one day be blast freezing food products throughout the world? I certainly hope so. Prior to that, odds are it will be applied elsewhere. Perhaps providing less expensive, dry compressed air, perhaps not. The journey continues…