SPEAKER_00 0:02

Energy demand is accelerating, but new generation and great infrastructure take years to build. That raises a more immediate question. How much more value can we actually recover from the energy already being used? Today's guest is James Chalmers, CEO of Novel Power and a five-time CEO with experience taking products from development through commercialization. We'll explore what it takes to turn breakthrough industrial technology into an adoptable, financeable, scalable business and how founders can align proof partnerships, capital, and execution across the commercialization gap. JC, welcome to Scaling with Clarity.

SPEAKER_01 0:49

Great to be here. Thanks for the invite, Nathan.

SPEAKER_00 0:52

It's my absolute pleasure. What got you down the path of uh of novel power?

SPEAKER_01 1:05

So going back uh to 2008, um I was actually developing a piece of industrial equipment that um had a very large piece of the the bill of materials going towards cooling. And through that experience, I understood from the engineers that 60% of the total power uh that went into our device to power it was actually being lost as waste heat. And so for the last 20 years, I've been really focused on waste heat and looking for opportunities in this space.

SPEAKER_00 1:38

Are you an engineer by background? Wait, what is your background? How did you come to do what you're doing now?

SPEAKER_01 1:45

So I'm not an engineer. Uh 1500 plus startups, uh, 2800 plus products. I can say uh I can say that um, you know, I've been the business side of things, um, always been working with really strong engineering teams. Um, so you know, this is uh this is not my first time uh doing deep tech, um, but I've been very fortunate to have strong uh engineering partners around me.

SPEAKER_00 2:14

So is as you frame the question um around um 60% of the energy generated being lost. Um what I'm wondering is like is waste heat um a newly discovered phenomenon? I mean, it when I was doing the research for the interview, in many ways this kind of seems very similar to the way that home um uh heat pumps work. So why isn't this technology adopted more broadly?

SPEAKER_01 2:50

So it's actually it's it's it's incorrect to think that it's it's not broadly adopted. Um waste heat's been numb. Um, you know, the organic ranking cycle that uh that Novo Power leverages has been around as the early 50s. Um you know, if we talk about data centers and I to and I say you know they're powered by natural gas turbines, well, those turbines are are essentially using an organic ranking cycle. Um and so uh so it is a common technology. What up to now uh hasn't been uh feasible is capturing low temperature waste heat. So 99.9% of the waste heat that's produced industrially that is lost is low or temperature. And until novel power, there just hasn't been an economical way to capture and transform that into electricity.

SPEAKER_00 3:43

Is there a particular line in the city in terms of waste heat is being captured now versus where noble power uh can capture the the waste heat and turn turn this into energy?

SPEAKER_01 3:58

Yeah, so it's so historically we've just we've had to reject the waste heat because there's nothing there was nothing that we could do about it. About 25 years ago, we started seeing district heating systems and then heat pumps come in. Um, you know, heat pumps were a were a great introduction. The challenge is you're still you're introducing more electricity to get that temperature to the temperature that you need it at. And so the focus, the focus for us is really taking the waste heat as it exists and just economically turning it into electricity.

SPEAKER_00 4:35

Uh understood. Um JC, where are you currently based out of? Are you based out of Monaco or somewhere else?

SPEAKER_01 4:42

So I'm based out of Monaco. Uh part of the reason for that is you know I'm I'm heavily involved in Noble Power. Uh, you know, I'm in the trenches uh seven days a week with uh with this venture. And so I wanted to be location located in uh a market that's gonna be huge for us, which is the European market. Um and then also in a playground that allowed me to go outside and do some of my favorite activities without having to do uh more travel than needed.

SPEAKER_00 5:13

Understood, understood. It makes sense. You gotta be the epicenter of the action. What um prior to Monaco, what was home for you? Where you where are you originally from?

SPEAKER_01 5:23

Yeah, so proud Canadian, uh, you know, proud to be CEO of a Canadian company. Um the company is based in Montreal, which is actually where I was I was born and raised. Uh, but then I spent most of my adult life living in Toronto, Ontario.

SPEAKER_00 5:39

Understood. Um, so it's it's both, both of us are proud Canadians. Um you talked about this the district heating uh centers. Um in Calgary, we we built one. Um I'm originally from Europe, you're citizen. Why is district heating not more common in Canada? Like like in Europe, it's it's so common. Like you have irradiators, like the heat comes via central distribution center and pumps it out. Like it's way more efficient than everyone having a furnace and trying to generate uh heat that they can use.

SPEAKER_01 6:20

It is. Um, so the biggest challenge is that you know the densities of population uh in Europe are just are just it's it's significantly more dense. Um historically had the same densities of population um until call it 30 years ago, even our major urban centers didn't have the same population density. Um, now that we're generating that population density, you're starting to see it become more and more. Um, but you know, I have to say Canada is a great place to develop technology. Um, there's a lot of innovation that happens there. It is not the fastest market to adopt new technologies.

SPEAKER_00 7:03

I agreed, agreed. Um completely agree with you. Um, and and I'm I'm assuming if you know who Jim Jim Bosili is, the the former CEO co-founder of uh of RIM. Like he's dead set on trying to keep as much of that IP that gets developed in Canada, in Canada, we're trying to monetize it. Um, because to your point, Canada is amazing at driving research and development. And when it comes to commercialization, um a lot of those companies end up living and going to uh the US pretty in particular, just because he's our largest trading partner.

SPEAKER_01 7:41

Yeah, so you know, uh so Jim's done a lot of this. Um, you know, I've been a vocal advocate of this. Uh, you know, the the programs, the incentives that we have for entrepreneurs um and and research teams actually encourage us to leave. Um so we get we get great incentives to do RD in Canada. Um but if we pick on the biggest program, which is the Scientific Research and Development Credits, that program forces you to uh forces you to take into account any uh any domestic revenues that you produce tied to that RD. But if I sell that product into the US, I don't have to use that revenue as an offset. And so that encourages me to actually go get a US early US customers so that I can still leverage the program, but it's driving my commercial out of the country.

SPEAKER_00 8:43

Yeah, you know, um I I understand this. Uh and and I mean the the the logic is simple. Canada is one ten the size of uh the US in terms, at least in terms of population, obviously, in terms of geographic area, we're we're bigger. Um, so a lot of the focus, what it's uh uh the Shred program, what it's iRAP, what it's exported development Canada, the the focus is very much on like, okay, great, we've developed technology here in Canada. How do we commercialize it globally?

SPEAKER_01 9:15

Yeah, and so so I don't fault them for that. Um, they just they need to take off one of the barriers, which is they should encourage us to actually sell at home. Um I should have the same benefit if I'm selling uh in Canada versus selling it in the US or Europe.

SPEAKER_00 9:32

Agreed. Yeah, I completely agree with you. I mean, to me, a dollar is a dollar of revenue regardless of where it comes from. Um, because and it and and I I know they're trying to annoy the federal government is trying to uh reduce the the barriers to entry in terms of doing work with the government, government agencies. Um, but it it it's a it's a monstrous ship that it takes a long time to turn around. Now, I want to double-click on on kind of like your areas of focus. Why did you choose to focus on data centers in particular? What what around this particular use case made it so compelling that uh that you decided this would be the area of focus?

SPEAKER_01 10:13

Well, so I think that any anyone in the deep tech innovation space um needs to go after their toughest market first. Um and for us, that's data centers. Uh, it's the lowest temperature waste heat. Um, you know, they require 99.9% uptime. Um, they are some of certainly on the hyperscale side, they're some of the largest customers in the world. They are the most demanding. And so we knew that if we could develop a system that that checked all of the boxes for them, then that same system, that same architecture uh would would go above and beyond in terms of meeting the requirements of stakeholders in other sectors.

SPEAKER_00 10:54

So, JC, I mean this is a space that they're playing. So let's say that it's uh it's a small data center, 50 megawatt, it's it's powered up by two G10, 2500 turbines to power this. How would this work with Nova Power? You have the two turbines generating electricity. How does novel power fit in? Like at what point is it is is connected to recover the heat that's being generated from the data center and kind of pump back into as uh as a power source into the data center.

SPEAKER_01 11:27

Yeah, so there's actually there's there's two opportunities there. Um so I'll address the easiest one that everyone thinks about the compute. Um, so 98% plus of the primary power that comes into the to power compute is then rejected uh as waste heat. Cooling costs are the second largest cost uh in a data center. And so you know that can be roughly 20 to 25 percent of the total power spend. And so, in that scenario, what we're doing is we're replacing the legacy CDU. So the CDU is a coolant distribution unit. Think of it really as like the radiator in your car. We replace that system with a system that has two radiators and our closed loop in between. Um instead of pulling power to cool, we're actually producing power through the physics of our system. This and so then so then that power is just sent back into the internal grid. The second element or area that we have an opportunity is actually right on those turbines. So those turbines are incredibly efficient. Um that being said, they still reject a lot of waste heat. Um it fluctuates in temperatures. Um, it's generally speaking, it's going to be moist heat. Um, so it's it's difficult to use it for other applications. Um, and so we can actually put nova power systems in line, both on the cooling jacket and receiving uh the heat through the exhaust. And so that's a second application for us where we're taking further uh further waste heat from that application and turning it into usable power.

SPEAKER_00 13:07

What is uh what is typical installation? Let's say you continue to use this case, like two turbines, 50 megawatt, um the the data center capacity, the the power generation capacity. What's the what's the cost of installing uh a novel power solution in this case? How much more efficiency is gained via the installation?

SPEAKER_01 13:30

Yeah, so let me address that um in a sliding scale. Um so no matter what the size of that data center is, uh the cost of electricity from a nova power system is equivalent to that of large-scale industrial solar.

unknown 13:47

Okay.

SPEAKER_01 13:48

So it's it ends up being, you know, when we're looking at the LCOE, it ends up being really low-cost power. Um, and and you're taking uh your existing byproduct to produce it. So in that scenario, um, you're looking at somewhere between uh 10 to 11 percent total net benefit for most data centers, um, which means for most of them that they're then looking to do you know about 10% more compute capacity in that existing facility.

SPEAKER_00 14:25

Which is a fantastic gain, um, particularly when there's very few interconnection grid opportunities available, um, with the exception of some of the developing countries, but for the most part, everything is going behind a meter.

SPEAKER_01 14:42

So yeah, so we we were fortunate. We recently were in uh Lisbon, Portugal with seven of the global utilities. I can tell you all seven of them had a major focus on behind the meter. Um, some of them even quantified it to say that up to 40% of the new power that was coming on board was gonna have to be behind the meter. Of course. And so, you know, it was it was really interesting for us because you never know if a utility is going to see you as sort of competitive because here you are producing power, they're trying to sell power, they're all at the limits. Um, their systems just don't have any more power to give. And so anything anything we can do to help folks behind the meter is is a great opportunity, and and they're looking forward to supporting our efforts in uh in the space.

SPEAKER_00 15:33

It's amazing. I mean, I think that like there would there would have to be a um all hands-on deck, all different solutions coming to bear uh to supply the energy demands, and um it's only going to grow in place. Uh we were recently approached by a company here in Canada that specializes in enhanced geothermal as a potential as a viable source of generated electricity. Obviously, typical just geothermal is not does not produce enough heat, but enhanced produces. Um, at least that's the scientific claim being made to us. Um, we're studying to see if that's truly the case, and before we introduce it to prospective uh clients being like the hyperscarce, new clouds, etc. Now, in addition to um AI data centers, what other um industries are you targeting with novel power? Kind of like what is use case two? Three.

SPEAKER_01 16:36

So if I could actually just pick on the on the on the last point you made. Um geothermal, all of these other technologies that exist, um it is a all hands on deck, it's not a one size fits all solution. Um, all of many of these technologies are very complementary. So geothermal for us, uh you know, our physics work because we have a hot side and a cold side. And so as we leverage geothermal, um, our efficiency actually increases. So in a data center capacity, if we were to come forward with sort of a couple of key technologies that we would like to see ourselves also working with, geothermal would be top of top of the list. Okay. In in terms of other industries, um, you know, one thing that I've learned over the last two and a half years of being CO of Nova Power is that every industry uh is energy constrained. Every industry is having uh is seeing challenges with the cost of power and uh and power availability. And so you know our immediate focus is really energy-intensive industries, um, many of those being legacy industries, where just to be um just to be a sustainable business, they have to start bringing in sustainability efforts into operations. And so technologies like ours play a big role in doing that so that they can they can have uh an economic advantage.

SPEAKER_00 18:04

Agreed, completely agree. Now, I can't remember what was the the number of uh of startups that you were involved with. I think you said 1500, but this is a massive, massive number. Uh, you develop quite a bit of pattern recognition after seeing so many startups. What uh what do you think is stopping companies from kind of crossing that cosm from RD to commercialization to scaling?

SPEAKER_01 18:29

So um so through my three engineering firms, um, I've been able to work with 1500 plus startups. And and the the the unifying factor is always um look for products that can be built um in a modular scalable fashion. Um, make adoption easy. So talk to your stakeholders early, understand from them exactly what the pain points are and what some of the operational limitations are. You know, in the first year that I was CEO of Nova Power, I wasn't with the engineers telling them what the product had to be. Um I was with our customer base, learning and understanding from them. Um and it became very clear that, you know, while it would be easy to say, let's just build a bigger CDU and you know, and create more sort of large-scale impact, um, the easiest way to get adoption was really just to be a plug and play piece of equipment within their existing architecture. And so my biggest, you know, my biggest um my biggest share that uh that I have for founders in this space is really talk to your customers, understand their pain points, their limitations, their operations, um, and make sure that whatever you're developing, there's a small version of that you can sell immediately. Um and I always say that needs to be under $100,000. Um, make it easy for them to say yes to something that is then scalable and replicatable across their site and across all of their global operations.

SPEAKER_00 20:14

Makes sense. Uh like if well, I mean every company has a risk profile, and getting them to say yes is a lot easier if the if if if the numbers is is something that's below their tolerance, that the that is um not below the tolerance level, but it's it's it's in within their tolerance limits where even if it doesn't work, we try things and uh it doesn't work. Like we've worked with a number of different companies that measure their failure rate, not uh like innovation failure rate, right? So for them, what becomes really important is um assessing how many moonshots are they trying to take and how much are they failing, not because they're trying to celebrate failures, because if they're not failing, they're not trying hard enough. And and so they they want to be taking these moonshots and they understand. Uh when you're trying to accomplish something new, novel, big, um, it's not always going to work.

SPEAKER_01 21:15

Yeah, I think the second way though that you can de-risk that is really by um, you know, and it's it's an old legacy approach, but but it works, it's proven. Um, you know, do feasibility and integration studies, um small steps. Um, you know, there's an application for Nova Power in particular that we thought, you know, on paper it makes absolute sense. Um there's there's a whole host of reasons why to do it. And we had a customer say, you know, let's just go ahead and and put in a system and and we decided to approach it through um through a feasibility study first because there were a lot of unknowns. Um and it it turned out through the feasibility study that Honestly, the economics of our system on its own for that particular application weren't going to be as uh as high as uh as we all would have liked. Um but it also brought up an opportunity in that particular case. You know, we get to pick on on geothermal. The opportunity was if they're going to implement Noble Power, then it's really great, um, or it's even a requirement that we hook it up to geothermal so that we can have a larger differential between the hot and cold side.

SPEAKER_00 22:36

Makes sense. So I want to double-click on this. What must be demonstrated in a customer's operating environment before a technically successful system can be considered commercially proven? Now you look through the hurdle, right through the economics, and said, Well, we need to couple it with another solution. We're kind of like, what is your perspective on this question?

SPEAKER_01 23:04

Um so I think that um I think that you have to go in a little pessimist um to any to any rollout. Um and and in looking at it from that vantage, you're uncovering all the reasons and why something doesn't work or all the friction points. Um it's it's not that I like to go through uh I like to go through life with a really negative uh attitude. It's just that when I look at when I look at a new opportunity, I have to I have to sort of get to a point where I'm convincing myself that it makes sense as opposed to starting from uh a scenario of absolutely it makes sense. Um I think we just build stronger foundations.

SPEAKER_00 24:01

Oh, I just wasn't sure if you're present. I I completely agree with you. Um anticipating the reasons why something doesn't work, anticipating the the rejection, it helps to make a better product. And and I mean I could not agree more with you with your statement that majority of your time should be spent with customers doing a discovery and seeing what works, what doesn't work. Um, what what will make them say yes? Um, like when you're selling, particularly to big enterprise, you have your economic buyers, you have your technical buyers, um it's it they have different buying needs and and buying criteria. So uh it's not just about a technology. Um you're right.

SPEAKER_01 24:43

I mean, they they all have different priorities, right? They sit they sit in different seats. Um one of the things, and and it actually happened a couple of weeks ago, and it was it was sort of funny. Um, we're on a call, and and I sort of found myself having a buyer and one of the technical leads sort of almost convincing me that Nova Power was right for their application. Um and so all of a sudden, you know, they were sort of selling, and I was like, you know, this is this is an interesting turn of events. Um but uh you know, through that process, we just uncovered so many things operationally that that were potential sticking points. Um so as they you know, as as I challenged them, as my team challenged them, and we really sort of dove deep on those on those elements, they started to sort of look for reasons why, well, actually we could overcome that by doing this. And yeah, you know, and if we introduced this, there'd actually be even a bigger opportunity for all of us. Um, and so it's you know, I really I I can't sort of emphasize enough. I I love doing this early de-risking work uh opposed to just going straight into launch and um you know, because sometimes you're you're just you're missing a lot of invaluable information um by not taking that step.

SPEAKER_00 26:15

I I agree it and it's better to do it at the front end than trying to do it in in P RSA. Well, how do we optimize a further drive out efficiency um at that time you're kind of saddled with uh with with whatever uh uh equipment you have laid down? Another question for you. What is the practical difference between a prototype, a demonstration unit, a PayPal, the commercial repeatable installation? Kind of like where do founders most often confuse these stages?

SPEAKER_01 26:47

I I think uh you know sometimes it comes down to the ecosystem they're working with. Um but you know, generally speaking, I think a lot of a lot of people determine that a prototype is is potentially uh something that is less refined um as it actually needs to be. A prototype needs to prove your your technology. Um you know it it can't be proving one element of the technology, it needs to prove all of them and in the same shell. Um when I was running engineering firms, that was a big focus for us. So we would de-risk, we prototype the individual sort of elements of risk, but it wasn't it wasn't prototype till it all came together and it was the final system that would have most of sort of the functionality proven and demonstrated. Doesn't need to look pretty, um, but it needs to be size appropriate. So if you're gonna say that it's a 10 kilowatt electric system, well, you better be prototyping it at 10 kilowatts electric because you know, doing it at uh at one kilowatt electric, there are lots of things that aren't size up the same way.

SPEAKER_00 28:05

Carrying on carrying on the same talk, um, what evidence carries the most weight with an industrial buyer? Um, energy output, uptime, payback periods, maintenance requirements, total cost of ownership, integration risk, validation from another customer. Like what carries the most weight?

SPEAKER_01 28:24

If you have 10 stakeholders sitting around the table with you, there's going to be 10 different priorities. You know this, Maxim. Um, so you know, ultimately, um, you know, total cost of ownership is really, you know, is the one thing that most of this latter's up to. Um but you do have to be mindful that you can't just go in talking about total cost of ownership, you know, because a maintenance team wants to know about maintenance schedules and uptime. And uh, you know, if you're talking to a buyer, they want to know about the cost of the equipment because they've got you know capital budgets. Um and so you do you do need to know who all the stakeholders involved are and and what the priorities are. Um but if I had to pick one, you know, it's really its total cost of ownership and then uh and by nature of that, sort of its impact on the business.

SPEAKER_00 29:24

Makes sense. Um because that that's the truest cost. In terms of um newer companies, companies that they that they're starting, uh starting out, they have proven well, they have technology, maybe it's DRL7, maybe it's tier 8. Um how do you get to overcome any objection that may be coming from an industrial customer saying, well, you know, like the technology looks good on paper, but I don't know if uh commercial risk, I don't know if you if you're going to be around in a year or two years, kind of how do you overcome this fear of the unknown, the anxiety that comes with uh a newer company?

SPEAKER_01 30:09

So I think part of that is building trust. Um, and and that's another thing that you you really you start planting those seeds and building those relationships when you're doing that early stakeholder engagement. Um, and so you don't sort of find yourself one day just um, you know, folks that know power have known us for two and a half years. Um we've built a level of trust with them because two and a half years ago they saw that we weren't ready for the market. We had no idea. I had never been in a data center. Yeah. Right? And so, you know, fast forward two and a half years, I've been in hundreds of data centers. Um, I've seen every imaginable technology stack in a data center. I know the industrial space. Um, and so because we've been having all of these conversations, we've been bringing more and more stakeholders in, you know, they know that we know their business well. Um, and they've seen the track record of what we've done over the last two and a half years. And so that gives them confidence that you know, even if even if our growth trajectory slows down dramatically, we're still gonna be a go a going concern. We're still gonna have a healthy business. Uh, it's just how big is the business going to be.

SPEAKER_00 31:34

One red flag that we see when when a company approaches this to to work with us is when they're looking for a silver bullet or a way to short circuit um uh getting to outcomes. And what we tell them, uh particularly on the capital side, if if they're if they're raising money, it's like they they there isn't um a short circuit, there isn't a silver bullet. There is we live in a trust economy. Um, I mean, you described this in relationship, but it's the same what are you selling to a customer or what you're selling to an investor. They need to build the trust with you, they need to see you hit all the milestones that you say that you're going to hit, because then that builds trust, and they're far more likely to write a check. Um what it is a purchase order, what is like a check as an investor, if if if they can trust you. Um, and and that trust is not built overnight, that trust is built over months and years.

SPEAKER_01 32:35

It is. Uh, you know, they're I'm 45 years into this. Uh, I can tell you there's no silver bullet, um, there's no sort of fast track. Um, you know, you can do things on accelerated timelines, but you still need to take all the steps to build a solid foundation. Um you know, I think yes, folks want to see that you've hit all of your milestones. Um, what matters even more than that is you know, when you you share the downsides, you know, when you share that you tried something and it didn't work, when you share that you're going to be missing a milestone, uh, and you don't tell them sort of when that milestone is due, you tell them then you know, the moment you think there's actually a chance that you miss the milestone. Yeah. Um, you know, I've had I've had lots of folks over my career say, you know, James, you still have another month to hit that milestone. Yeah, but I just I think from a technology perspective, you know, we're going to be delayed getting to it. And sometimes we surprise ourselves if we end up getting the milestone on top. Um but I think it's a kind of vulnerability that that people really um that people really uh respect. Um and it does it does build trust.

SPEAKER_00 33:52

So I want to unpack this idea. I mean, vulnerability became very, very popular, uh it at least from a leadership perspective, probably about 10 years ago when Brandon Brown became like this huge celebrity that constantly talks about vulnerability. Now, in in this case, um we have a saying, um, you're from you you you were born in in Montreal. You know, like Montreal people love their wine. Um, I love wine. And so we have a saying that bad news is not like wine, it does not get better with age. So you want to be at the at the forefoot in terms of uh driving that transparency, in terms of okay, we're going to miss this milestone because of this in this day's alike. But how do you make the mental determination that I ought to share this? Um, and like kind of the risk reward. Um, like walk me through kind of like your decision process in terms of like deciding that now it's time for for me to share uh the potentially bad news.

SPEAKER_01 34:59

So it's kind of funny that you asked me that. Um so tomorrow's my 10-year anniversary with my wife, and um and I will say that um when I when I met my wife, um you know, obviously it's been my most serious relationship. Um, you know, and and the way that I approached that relationship was just different. The way I approach marriage is different than the way I approach my friendships with with you know with everyone else. Um, and when I started understanding just how much um I could get back from that relationship with my partner because I was being vulnerable, because I was sort of being open and honest and and just you know really um really present. I realized that as that was happening in my personal life, I was doing more and more of that in my business life. I was that way, you know, it started off. I was showing up that way with my business partners, and then I was showing up that way with my teams. Um, and you know, I can I can directly sort of attribute the greatest successes I've had are because that is how I showed up. That was the that was the energy and the and the culture that we built within a business. So everybody was showing up that way. When when we didn't have the same level of success, or when I thought, you know, we could have had even more success than we had, um, you know, it was generally it was earlier in my career where I just wasn't mature enough to know that. Um I didn't know and I didn't know it from myself personally, so there was no way I was gonna know that in business. Um, but I I think that you learn that by by bringing more of your your personal self into business.

SPEAKER_00 36:56

So besides um having this radical candle, besides uh having the vulnerability, um, how do you make founder like co-founder relationships work, partner relationships work? What's your key to success there?

SPEAKER_01 37:14

I think you you have to have equal risk, equal reward. Um, you know, in there's there's sort of no uh no secret that in in Novo Power, myself and the founder, we have equal equity in the company. Um, you know, I'm not taking a bigger stake than he is, nor does he have a bigger stake than I. Um that means each and every day, you know, we have the same number of reasons to to make this a success. We have the same incentive to push. Um, you know, if if I benefit, you know, in from something, he benefits, and vice versa. Yeah. Um and because we're absolute equals, um, you know, it it just it works well. Um there's and and that doesn't mean to say that in every co-founder or every partnership it needs to be equal 50-50. Um, but the equal risk, equal risk, equal. Um, and so you know, if somebody has uh 10% versus 90%, well recognize that they're gonna show up in a different way than the person with 90%. Um because they don't have the same reward. Uh and so um, you know, I refer to it as really size for size, equal risk, equal reward. Um and uh and I think that you really that needs to become a priority for folks.

SPEAKER_00 38:40

So what if uh what if what if you have a partner partner issue, which is not uncommon, where um you have a technical founder, he's the person or she's the person that's like um at the at the forefront at the epicenter of the technology development, and then you have uh uh he, she, another partner, uh co-founder in a business that's focused on call to market and sales and growth and revenue. And so um one person says, Well, I'm the one that's bringing all the revenue. Um, like how do you square these dynamics? How do you can ensure continuous alignment so that it doesn't feel like one person is driving more of the success of the company?

SPEAKER_01 39:25

Well, yeah, I mean, as a go-to-market leader for every one of the firms I've led, um, I can tell you that uh I can't sell what can't get manufactured, what can't get delivered. Um, so I'm selling everyone else's abilities, I'm selling everyone else's commitments. Um, and that's what that's what people are buying. Uh, you know, they I may have built a relationship and built trust with them, but what they're buying is actually the commitment of everyone behind um behind that product. And so I think you you really sort of need to look at the value that you're creating um and who allows you to actually deliver that value. Uh, because none of us do it solo. Um one of the things that I I like to do in in tech firms, especially, is you know, it's very common that uh that sales teams get bonuses, commissions, you know, on selling and and shipping products. Technical teams should also be getting the exact same bonus. Um, sometimes a little different because you know, many go-to-market leaders they'll work a hundred-hour week, they'll work a 90-hour week. They will they will risk everything to make it a success. And sometimes, you know, the technical teams, you know, may not have the same sort of level of commitment, um, or vice versa. Sometimes, you know, the the go-to-market team just doesn't have to be as involved um or as committed. And so, you know, I like seeing uh that there's an incentive plan for the technical team so that you know, as product is shipping, that they're seeing that success um and that they're seeing the upside of that as as much as those forward-facing teams that are actually closing the bus.

SPEAKER_00 41:23

It makes sense. Even though you didn't use the word risk, it's pretty apparent to me that that you're somebody that understands that that's somebody that understands risk really, really well. You talked about on the EPCM side, on the material side, that um cooling with 60% of the cost. Uh you talked about technical risk, uh, delivery risk. Now you have so you you're very attuned to risk and how to make sure that something is executed successfully. Um even if I look at your model, you have decided to partner with uh uh the um with the NXT process for the assembly of the HD 10 and the HD50 systems. Um kind of like why do you decide that this is the right approach in terms of de-risking the strategy? Um what what what kind of insights can you share with founders around how do they de-risk? What is the goal to market, what is the manufacturing, what is the supply chain, kind of like like those processes that they're underpinning the success of a company?

SPEAKER_01 42:33

Well, so I think every so no company can do everything uh at a world-class level. Uh and so you know, at Noble Power in particular, I knew that we were world-class RD experts. Um, when it comes to the organic rank and cycle and and conversion of low temperature waste heat, my business partner is the is the foremost thought leader in the world. Um, and we've got brilliant teams supporting him. Um I also, you know, I know my own experience of taking RD and making it a commercial product. And so I knew that we're gonna do that at a world-class level. Um, and the third element is I knew that we wanted to own the relationships with our customers. And so for that reason, we're gonna focus on three things. Um, you know, I jokingly say we only focus on three things, they're three major things, but none of that matters if if I don't have a team behind us actually doing the manufacturing. Uh and why would I want to build a new team from scratch when I can acquire a team through partnership who you know who can de risk that process for me because they've been doing that for X number of years? Um, it also means that I I reduce risk because I don't need to go out and raise $50 million to set up a shop that's capable. Of producing a thousand systems a year. And so it gives me the ability to sort of keep my costs as variable as possible. And then resourcing a lot of that risk to folks who have proven experience, you know, uh addressing that risk on a daily basis.

SPEAKER_00 44:25

Couldn't agree more with you. What um I want to unpack this in terms of more of a framework, um, like RD customers, this is the these are capabilities that or knowledge expertise that you want to keep in-house. But if if another deep tech founder is listening, what capabilities must the deep tech company keep internally in-house? Um and which should they deliberately um access to partners? How do they make the like you you you have three? You decide how did you arrive at the those of the three? Is it because you know you can be world-class leading those? Um, like how do you make the determination?

SPEAKER_01 45:06

So I always look at something and say, you know, is this is this a commodity or a value-added service? Um, if it's something that's commoditized, why would I want to do that internally? Um, you know, as an early stage founder, you're gonna be resource constrained. Um, and so if something's uh if something's a commodity service, outsource it. If it's something where it doesn't directly contribute to your value proposition, outsource it. Um certainly, you know, if it's if it's a role that you don't require in a full-time capacity, if you don't have a 65% full-time need for that capacity, outsource it. Uh where I think people go a little far is sometimes, and I've been on the receiving end of that, uh, a lot of deep tech companies sort of outsource too much of their engineering, too much of the RD. You know, I think you know, if you're in the deep tech space, if you're in if you're in deep innovation, you need to you need to really be the thought leaders in that space. Um, and you can't be outsourcing that. And so if you use that idea of is this a commodity or is it really building value towards my value proposition? Um, and then the the overlay of do I have full-time need for this or you know, part-time or occasional need? Um that's a really good sort of generalized tool to be able to determine what to insert, what to outsource and and what to do internally.

SPEAKER_02 46:40

Thank you.

SPEAKER_00 46:42

And and and I mean this is not this podcast is not about me. Uh, when it was with Deloitte, we used to have a frame recorder enterprise value map, and we've adopted it uh here within future ventures to be very much focused on uh scaling up companies. And I couldn't agree more with you that you have to go um after the areas of the highest value creation, um, because that that is what drives the disproportionately the most amount of value for the company. And and we're talking about staying power. Um, what are what are those things been on the on the revenue on the cost side? Uh we use um uh Hamilton Helmers, the seven powers as well as one of the columns. Uh but I couldn't agree more. Like, what are these things that that would drive the positioning or go to market or something that that puts you ahead of your competition? But besides these partnerships, um, you have a partnership on the manufacturing side. How do you think about um partnerships and how do you drive the right uh similar to the phones? How do you write the right, how do you drive the right alignment with partners? Because I mean you're creating a bit a dependency in terms of the manufacturing side, so they have to keep capacity for for you. Like, how do you incentivize them to do so? Like what what is your way of thinking and doing there?

SPEAKER_01 48:06

Well, I mean, I think those partnerships, it's just like an internal partnership. Um, you know, it so it needs to be balanced response reward. Uh you know, we don't have uh, you know, our manufacturing partner isn't just randomly keeping a bunch of spare capacity open for us when we need it. Um, but we're actively talking to them, we're actively letting them know what might be down coming down the pipeline. Um, in fact, this afternoon, uh, those partners are joining us on a customer call. Um, we want them to understand even better what our sales cycle is like, and um so that so that they have sort of color and context to you know some of the things that we're sharing with them so that they really understand it so that they can plan within their business. Um the more they know about our business, the more that we share, the more open we are with them, um, the more that we're ultimately de-risking them as a partner, but also helping them strengthen their own business.

SPEAKER_00 49:11

Completely agree, completely agree. Um I love talking to you. It's uh like you obviously be fair and objective and transparent in terms of your in terms of your dealings. Um just gonna be in in preparation for the conversation I I read that uh that you emphasize differentiation over simply trying to be better. Um how do you differentiate the things that you're doing rather than say, well, our system is, I don't know, tries 11% more efficiency. How do you differentiate yourself from um like alternative solutions?

SPEAKER_01 49:53

Um so part of how we differentiated was you know we took a low cap CapEx uh approach. So we knew right away we needed to have a product that um that was just was gonna have a total cost of ownership that was less. Um naturally by doing that, it meant that we really had to simplify the product, and so a simplified product also meant that there was less repair and maintenance risk. Um by doing that, we also ended up developing a product that was much more flexible. So we can load follow where you know legacy technologies in the space can't load follow, they operate at one speed. Our software does a lot of heavy lifting, and so we can absolutely load follow if the heat you know is moist heat versus dry heat, you know, little difference to us. Um but you can't run moist heat through a turbine, you're gonna blow it up. And so part of how we differentiated was really from a product perspective. Um, and the other elements are just how we run the business. Um, you know, our customer feels like this product was developed exclusively for their industry. And whether I'm in data center, whether I'm in you know a dairy or bottling facility, whether I'm talking to a utility about you know something utility scale, they all feel as though this product was developed exclusively for their use case. Um and and you know, that comes back to that that early stakeholder we did. That's one of the biggest ways that we can differentiate. Um just differentiating our approach to business. And the reason why we don't chase better is at some point in time, better comes down to dollars. You know, better service means that you're gonna have a higher cost of service. Uh, you know, better pricing means lower margins. Um, better always becomes a race to the bottom. Um, and so for us, the focus is really how do we differentiate so that it's never an apples to apples comparison? Yeah, it's it's apples and oranges, it's just it's a different comparison.

SPEAKER_00 52:15

Makes sense. Um JC, what does scaling with clarity look like for you? How do you develop that clarity of of thought in terms of where you need to take a company?

SPEAKER_01 52:31

Well, I I think it in some ways it just it happens. Um, if I'm gonna get involved in something, I need to see what it looks like in two to three to five years. Um I need to see what my role is and how I create value in that. Um you know, and I so I think I I sort of come in on day one with with clarity if I've decided to be a part of it. Um and I I sort of I reference uh against those those points, those milestones on a regular basis. Um, sometimes, you know, especially in my space where you're always growing fast and scaling and um you know things that you thought might take five years, take two or three. Um but I think part of the clarity is just understanding like you know where and how I can engage and create the most value. And then also, you know, when is it time for me to bring in others who who are going to take it the next step? You know, if you follow again, you can see that um other than 13 and a half years of the family office, I'm like known as a three to four-year guy. Um that is that is the amount of time that that I'm most useful, I'm creating the most value for for these companies. Um beyond that, it often becomes more sort of management of the status quo, sort of the operations and tweaking. And that's that's just not the space I thrive in. I thrive in in.

SPEAKER_00 54:06

Yeah. And and by the way, statistically, the average life of a CEO is four years. Um if you go beyond that, you kind of need the new fresh line of thinking. Um, no, it's not to say that there are not there are no other uh CEOs that have a long 10 year, 7, 10, 15 years, it's just that um you kind of need this fresh energy. It's it's a high-demanding job, and so that's statistically that's the average life. Now, um, I like to close the interviews with with a with a question. Um, what's uh what's the best advice that you have ever received, or what's the kindest thing that anyone has ever done for you?

SPEAKER_01 54:47

Sorry, what was the second part of that? What's the kindest? Um you know what when I was working with uh when I was working with the family office, I think the kind thing was in 2008, um, you know, financial crisis hits. All of a sudden our customer base is sending in more POs than we have paper to print the canceled purchase orders on machine from. Um, and the kindest thing was really the matriarch of that family taking me into the back uh into the back warehouse and saying, okay, so over the last two years you've convinced us to double the amount of inventory. Uh but this is this is the future of the family. And so we we need to work on making sure that that we get through this. Um and and that was the kindest way that she could put an insane amount of pressure on me. Um because I knew that whatever the answer was, she was prepared to to be there with me through every step of the way. It wasn't a finger pointing exercise. And so, you know, I think that's the the kindest thing. It's it's probably to this day still the biggest lesson I've ever taken. Um, I try to live up to those to those standards in that example with with my own teams. Um, and you know, sometimes I achieve that, uh, and other times I'm reminded that I still have room for growth.

SPEAKER_00 56:14

That's an amazing uh note to close on. Uh, really enjoyed having you on the Scaling McClarity show, JC. Um, you've been tremendous guests in terms of sharing your insights and your path to to scaling companies.

SPEAKER_01 56:30

It's been my pleasure. It's been it's been a lot of fun.

SPEAKER_00 56:33

Thanks, JC.

SPEAKER_01 56:34

All right, thanks, Max.