view episode transcript
We started working on the wind turbine with the objective to democratize the access to energy. We know that we have two options to be a niche for or to change the industry. And if you want to change an industry, you got to know the name of the game. And in in energy, its cost per kilowatt hour.
Jay Clouse 0:20
The startup investment landscape is changing, and world class companies are being built outside of Silicon Valley. We find them talk with them and discuss the upside of investing in them.
Welcome to upside.
Eric Hornung 0:47
Hello, hello. Hello, and welcome to the upside podcast. The first podcast finding upside outside of Silicon Valley. I’m Eric Hornung. And I’m accompanied by my co host Mr. new gear him self Jay Clouse, Jay How’s it going?
Jay Clouse 1:03
I think we’re both Mr. new gear themselves.
Eric Hornung 1:07
Right? But that’s not how the intro goes. So that would have been pretty awkward. Mr. new gear themselves Eric Hornung, and Jay Clouse
Jay Clouse 1:14
Eric Hornung 1:14
so that’s you wanted
Jay Clouse 1:15
Yeah, excited? If you guys are feeling the sultry tones of these microphones let us know tweeted us at upside FM tell us I like the new sure microphones because we got a whole new life
Eric Hornung 1:25
that’s what you want them to tweet. You want them to say that whole sentence just be like I like the new mics.
Jay Clouse 1:31
Yeah, and remember if you guys want merch, make sure you tweet I want merch. But yeah, whole new live podcasting setup here with a new zoom h6 handy recorder. We have four sure microphones are really leveling up here. Eric,
Eric Hornung 1:44
I think we sound great. We always regardless, regardless of what microphones in front of us, but these ones make us sound extra great.
Jay Clouse 1:51
Yeah, we always sounded great. The recording has its limitations as far as technology will go. But it live in person. When you talk to Eric and I, you just notice that we sound great.
Eric Hornung 2:01
That’s the first thing you notice when you see someone and you say well look at that human being who isn’t talking. They sound great.
Jay Clouse 2:09
I’m excited about it, though. It’s nice. It works out real smooth. Hopefully, you know, we get more excuses to use it. Even though we do this mostly remotely. Eric and I are in different cities, as you probably know, as a listener to the show, but real nice setup. It’s real clean. Good lookin mics.
Eric Hornung 2:24
low key. I prefer the Live podcast experience the in person podcast experience, to the remote experience.
Jay Clouse 2:33
Why is that low key, that doesn’t need to be low key,
Eric Hornung 2:35
high key I prefer the live or in person podcast experience to the remote experience.
Jay Clouse 2:42
Yeah, the big the bigger limiting factor is that we interview founders from all over. So it’s not even just us being in the same room. It brings something special and we can sit here with the founder. You know, just kick it around.
Eric Hornung 2:54
I agree. I mean, Skype does a lot of it. But there’s just something to be said for sitting in the same room. I think the people are just more open as well.
Jay Clouse 3:01
I think we have a softer presence in person.
Eric Hornung 3:03
You think we have a hard presence remotely?
Jay Clouse 3:05
No, it’s not. It’s not hard or soft. It’s just relatively softer in person.
Eric Hornung 3:12
So what’s our default?
Jay Clouse 3:13
I think it’s because people assume you’re much taller when they see you online.
Eric Hornung 3:17
You think this is a me thing? You think it’s my fault that guests are not as open.
Jay Clouse 3:21
I’ve had a lot of guests Tell me off air. I thought Eric was taller.
Eric Hornung 3:25
Why did they do it off air?
Why is is that an insult to me?
Jay Clouse 3:30
It’s because I’m making it up.
Speaking of air, Eric, Eric Eric, Rick here. Today we’re talking about the movement of air.
Eric Hornung 3:41
We are talking about the movement of air and how it generates electricity.
Jay Clouse 3:45
Today we’re talking with Ignacio Juarez, the founder and CEO of Semtive. Semtive is a clean energy startup that was born in Argentina spent some time in Sunnyvale and is now in Austin, Texas. Semtive’s belief and vision is that access to clean energy should be effortless and affordable. And in order to achieve that the company developed Nimoy a vertical axis wind turbine designed to work at a very low wind speed, making it ideal for commercial and residential use in urban and suburban areas.
Eric Hornung 4:13
This interview I think, is going to be electric. Yes Jay I brought the pun. And that is something we do a lot here on upside. Something we don’t do a lot here on upside is talk to founders who have even the slightest inkling of a Silicon Valley presence.
Jay Clouse 4:28
That’s true. Yeah, this is almost off brand for us. But I’m going to allow it. I think it’ll give us some some good insight here, you know, from somebody that was in the valley and now has moved out of the valley. I’m sure he has reasons why and we should talk about that.
Eric Hornung 4:40
I agree. I think if it was the other way. It would feel very off brand. But this is a immigrant founder who came to Silicon Valley and then left and came to a different city in the United States.
Jay Clouse 4:51
I like learning about hardware. I’m sure this has been an r&d intensive journey. The company was founded in 2009 and they’ve raised 3.9 million to this point.
Eric Hornung 5:03
Let’s bring in Kevin Kinross, a partner at Taft Stettinius and Hollister teach us about forming a company. Taft is a full service law firm known for assisting entrepreneurs across the Heartland. As a reminder, the following remarks by Taft attorneys are for informational purposes only and are not legal advice. Information is not intended to create and reciept of it does not constitute an attorney client relationship. No person or organization should act upon this information without first seeking professional counsel. Kevin, how’s it going? Thanks for coming on. How’s your day going?
Kevin Kinross 5:33
It’s going great. Thanks for having me on. It’s fun to take a little break from the norms to participate on your show.
Jay Clouse 5:37
I can’t imagine a better lunch break than recording some of this. Kevin, we’ve heard that in the world of startups, you could either incorporate in Delaware or your home state is Delaware really where I need to incorporate and if a founder wants her company to be a Delaware company, does she physically have to be present there to reap the benefit.
Kevin Kinross 5:56
what your initial state of incorporation is can be changed. And as you look to where you should form your corporation, a number of factors come in including what your future growth plans look like and what your future need for additional capital may be with either your initial funding or your series a round the investors with who are providing that funding could require you to read domesticate your company to Delaware. So in some eyes, it doesn’t make sense to start off in Delaware. But it doesn’t necessarily mean you need to do that. Just recognizing and assuming that when that next round of funding comes in, you very likely may have to re domesticate. And this also applies to if you’re a LLC, we’re talking about C Corp. The reason why individuals really do push towards Delaware is primarily three. The first one is well established chance recourt, the Delaware court system provides a jury free court system, at least for a complex business matters that come in at the chance recourt level with judges are well versed on these matters. The second one is the flexibility that it provides for your composition of your board of directors. And finally, a lot of the investors we’re dealing with already have their investment documents that they’re gonna be providing to you drafted under Delaware law. And they’re going to want to not reinvent the wheel just for your financing. Regardless of whether you’re in Delaware Ohio or some other state, you’re not required to have physical presence there. Unless you’re a regulated industry that may require it under those statutes. You’re not required to have a physical presence you are required of a statutory agent. And just to kind of tie it up in a bow from my very first sentence. These are things that can be changed.
Eric Hornung 7:21
Awesome. And if people want to learn more about task or yourself, where should they go?
Kevin Kinross 7:25
Taff law. com.
Jay Clouse 7:34
Ignacio,welcome to the show.
Ignacio Juarez 7:35
Thank you very much for the invitation.
Eric Hornung 7:37
We like to start on upside with a background of our guests. Can you tell us about the history of Ignacio
Ignacio Juarez 7:45
everything started in started in 1981. When it was no. Yeah. Well,
I college dropout. First of all right. I studied a lot of engineering went to three different universities. Basically, I started working on r&d, industrial development, business development for large corporations in the engineering department. That’s how my my thing started. My father was an Air Force pilot. So since my beginnings, I was amazed by aerodynamics and in jeans and the kind of things I was playing with airplanes since I was really young. That’s how I get my interest about these kind of things. With air and wings.
Eric Hornung 8:33
Where are you from Originally?
Ignacio Juarez 8:34
I’m originally from one a Cyrus or Cantina.
Eric Hornung 8:36
Ignacio Juarez 8:37
I’m a real Petunia guy. So from South America, now we have the Pope, the queen of Netherlands messi and myself. I’m really proudabout it.
Eric Hornung 8:47
And you go by Nacho, not Ignacio.
Ignacio Juarez 8:49
Eric Hornung 8:50
we introduced you as Ignacio. But you know, got any formal up front. Now. We’re Nacho
Ignacio Juarez 8:54
Eric Hornung 8:56
Why three universities? Why do you jump around so much?
Unknown Speaker 9:00
I don’t know. If I was the one jumping. Probably they invited me to jump to jump. So was not my decision. I was working in a corporation in the engineering department and learning a lot. Sometimes, you know, you realize that things are not exactly how people is telling you. And I want to learn things by myself with this background had a lot of people that support me, my father, his boss, at that moment, I also try to teach middle of things and those people made me push my professors a little bit harder. I was a kind of a pain for my teachers and my
Eric Hornung 9:36
so you were pushing your professors so hard that they told you to leave the school? Is that what I am geting out of this?
Ignacio Juarez 9:40
They might. They invited me to leave yeah.
Not that they reject me, but they said, wow, you know, so what? I’m here now?
Jay Clouse 9:50
Yeah. When did you come to United States?
Ignacio Juarez 9:54
in Twentieth, actually, the story of semtive began begin began been in Argentina in 2009, when we started trying to figure out how we can join Berkeley power. Right now, after some years, we develop a wind turbine after some years of r&d. But to United States basically we’re working from Argentina at the moment, Argentina was not the best place to do business. And we were lucky to to met a great group of people that support us investors cofounders, or lots of large companies in Argentina, people that are advisors, mostly they used to work for large corporations to in United States and Brazil. And they show us that the main industry for our progress, United States. So they introduced us to some people that help us with the soft landing here in the United States. So in 2015, we raise some money. We I spoke with my girlfriend at the moment, I said we have to move to United States in two month So
Eric Hornung 11:03
interesting, interesting conversation.
Ignacio Juarez 11:05
Yeah, it was it was Today’s my wife. And actually, she’s also a CFO, CEO of the company,
Eric Hornung 11:11
you said it wasn’t a good time to be starting a company in Argentina. And maybe I’m not familiar, but wasn’t there an Argentinian depression in like 2000 or so?
Ignacio Juarez 11:23
was not like that.
Eric Hornung 11:25
Ignacio Juarez 11:26
we have crises every day. So we are used to the kind of things that make us stronger. I actually think that that’s a really good thing for for everybody in Argentina, that you know how to deal with everything, right?
Eric Hornung 11:37
You live in constant chaos.
Ignacio Juarez 11:39
Eric Hornung 11:39
Ignacio Juarez 11:39
So actually, when you have some normal and everything steady, you don’t know what to do, and you get bored about a so you need some caos. was not good for a lot of different reasons. We have a protectionist government, that they don’t allow you to get technology into Argentina. So we’re developing hardware, we need a little lot of things from abroad. Today, even in us, we have to buy things from abroad. It’s a globalized market was was tough to do that you were not able to access two dollars. regulations for hiring employees is also very bad for startups. So it was it was not a good moment there. We were willing to grow the company from there. We have some customers in the government but in the city government, not in the national one, and was tough to try to do that.
Jay Clouse 12:30
What made you want to start a company?
Ignacio Juarez 12:32
First of all, I had something like, well, the same thing would that happen with my teachers happens with my boss as well. They mostly invite me to find another job. I was always pushing them to what else we can do what else we can do whatever you can do. I don’t like to have a boss right? I love to have mentors or people that guide me. Actually. One of my first bosses is a guy that opens me a lot of doors a mentally right, no, not real ones with interest bad. Push me to move forward. Also, I have passion. I was passionate about clean energy. I always was dreaming to have my own company. Have some companies before that before Semtive, I was doing some things about age back refrigeration, and consultancy things. But actually, I used to be a wine broker, too. So
Jay Clouse 13:26
So what do you think about this wine? Have you heard of it?
Ignacio Juarez 13:28
Eric Hornung 13:30
Ignacio Juarez 13:30
That’s all I have to say.
Eric Hornung 13:31
Ignacio Juarez 13:37
I want to confirm that thing that people said about Argentinians. That’s true. We are the best.
Eric Hornung 13:44
Best Food best people best wine. Is that how it works?
Ignacio Juarez 13:47
best soccer players.
Eric Hornung 13:48
So you’re not a Ronaldo fan? Is that what I should take out of this?
Ignacio Juarez 13:52
Ronaldo is a good guy.
Eric Hornung 13:53
Yeah, we like him. When I lived in Shanghai, the World Cup was going on. And one of our buddies and our group was Argentinian. So no matter what time Argentina was playing, we were at a bar watching.
Ignacio Juarez 14:07
Eric Hornung 14:07
so I we will go to Argentina bars, or Argentinian supporter bars. And the whole place would be Argentina. And then just me and a couple other guys that we are with. And it was crazy. It just it’s a level of excitement. And like passion. Like it was crazy in a way that not like American football is where in Cleveland, like you go crazy at the bar, and you’re going wild. But like, at these bars, it was silent. Which was just weird, very weird experience. It’s
Jay Clouse 14:36
I understand when you get worked up. youre at bars, you’re trying new wines, you’re in Puerto Rico.
Eric Hornung 14:43
It seems like everything just come always comes back to me Jay
Ignacio Juarez 14:47
learning about the culture.
Jay Clouse 14:48
Yeah, we’re learning about each other. So what was it about that time in Argentina that made you want to get into clean energy?
Ignacio Juarez 14:55
Well, something was happening, right? We want to do something, as I said, I was passionate about clean energy, I was willing to do something for the environment, and really do something that means right not just recycle my trash or things like that, I want to something I know that I was able to do something for for the energy. And I was always said, energy is the larger industry in the world. So why not trying to do something if you want to really have impact, when not to do something with the larger possible escape. So we said, we’re two guys from Argentina will be tough, no will be almost impossible. So okay, let’s do it. And we start there with the government at the beginning, our first goal was to distribute units from other countries, we start doing some research about what we can solve solar panels, wind turbines, controllers, things like that. First thing that we realize is, was that energy today, we’re not able to import goods. So is it done, we can’t sell anything. And as soon as I realized that I said, Why we are able to manufacture something better. Instead of buying from abroad, we don’t do something that we can sell to everybody. My partner at the moment was a financial guy. And he said, Okay, do it. If you think that you can do it, throw it to do it. And the same day, I took some toilet paper, cardboard, and magnets, I open a transformer using the wiring there, and we created the first prototype of the turbine the same day. I Have picture of that.
Eric Hornung 16:28
Can you share that with us? I would love to put that in the show notes.
Jay Clouse 16:30
You don’t have to do it now. But I’m here for it
Ignacio Juarez 16:33
why not I say that I have one.
Eric Hornung 16:36
Ignacio Juarez 16:37
Eric Hornung 16:38
cardboard, some wires from a box around your house and you just made a wind turbine?
Ignacio Juarez 16:43
This was the first turbine.
Jay Clouse 16:48
we’re looking at a photo on nachos phone here at the turbine
Ignacio Juarez 16:52
the some picture was at home?
Jay Clouse 16:55
Was this functional? Or is this just like a design product?
Ignacio Juarez 16:57
I you have a water meter there. We’re using that to measure
Jay Clouse 17:02
and this is time stamped June 21 2009. My question was going to be so my research show that this was started in 2009.
Ignacio Juarez 17:10
Jay Clouse 17:10
you moved to United States and you said like 2015
Ignacio Juarez 17:13
Jay Clouse 17:13
Ignacio Juarez 17:15
Jay Clouse 17:15
what were you doing?What were you doing from the time of you having a toilet paper roll prototype to move in the United States in 2016
Ignacio Juarez 17:23
first of all, it took four years to develop rough basically bootstrapping, you know, we never had millions of dollars to invest in our company. So we had to be really smart about how we use or proceed in a difficult environment is was difficult to raise money to, for us was huge to get in touch with those people that were able to help us with money and with advises at the moment that allow us to grow and grow and that we met those guys probably I think that was 2014, late 2014 or early 2015. In the middle, we’re trying to raise money survive we were held by our parents, our girlfriends at that moment, and trying to develop this product, right? Having something that we can mass produce produce,
Jay Clouse 18:08
what’s the process like to move to the United States from Argentina?
Ignacio Juarez 18:12
Tough, really, but the good thing is that we never thought about it. We said we have to do it during a probably six months to a year was flying from Argentina to San Francisco once a month or so. And it’s 27 hours, right?
Eric Hornung 18:27
Yes. So that’s not as cheap flight and easy flight.
Ignacio Juarez 18:29
It’s not easy at all. I used to love airplanes. I don’t know why now I’m scared of them. Probably.
Eric Hornung 18:35
You’re scared of flying in airplane.
Ignacio Juarez 18:37
Eric Hornung 18:37
Ignacio Juarez 18:38
No. I love it.
Eric Hornung 18:39
your dad was in the Air Force.
Ignacio Juarez 18:40
I used to play with airplanes. Yeah, I think that I get my first flight when I was three months ago. So I love them. I know that they’re safe. Everything about it. I don’t know the whole thing.
Jay Clouse 18:51
This is in the weeds. But when you’re flying that often to San Francisco, do you just need a passport?Is that all you need to get
No actually from Argentina, we need a visa. We used to have only a passport thing. But after these governments are were populous governments on 9/11, we were required to have a visa from there. And he said tourist visa. And then all at the beginning when we decide to move here, of course, everything have to be within the law. So we have to apply for a visa Good thing is that in Argentina, the former ambassador was really close to renewable energies. So I was invited to a lot of events. When he was there. We were spoken to her about clean energy, what they were doing in California and the future of clean energy. So we present all the paperwork here and for United States something that is strategic. So they run me easily with my documents.
How long did it take? And what did you have to do to be taken seriously, starting from like, literally, a paper towel or a toilet paper roll? You know, like what level of technology did you get to before the ambassador’s like, you guys got to meet Nacho he’s legitimate. He’s gonna change renewable energy.
Ignacio Juarez 20:06
Well, some people still don’t take me seriously. Right? So I can say what it’s need. I think that first of all, have to be believers. For me, it’s really important to deliver, right, I tried to come in with something and show them that I’m doing that not only present a paperwork and going around I try to execute to we are here here disrupting an industry. We have a really long term vision have a vision of the company for 50 years. But I know what I have to do today to achieve that vision. Right? It’s not only a PowerPoint for long term things, it’s a well today we have to do this othewise will never achieve that. And I proved that to to my investors. And still with my first investor talking with them every day if it’s needed. I know that they are backing me up. Some of them have no more money to invest in the company, but they are still there trying to get in touch when I travel to Argentina or I call them or they are always there right now who
Eric Hornung 21:08
is the first person that invested in you in the United States?
Ignacio Juarez 21:12
Well, probably it’s an institution that help us to move here. It’s called Singularity University.
Eric Hornung 21:17
Peter Diamandis’s thing.
Ignacio Juarez 21:18
Yeah, actually Robine Lampascotlant was the first American company then we have an investor here from Austin called Falcon ventures. Those were the first ones. And all everything started with a chain of people in Latin America to Right, right. We were introduced to Marcos Velporine by a friend of mine. This guy, owns the Mark Oliver is a company in Latin America. There. He introduced us to Ignacio Pena, that’s another nacho that he introduced us to the guys at singularity. He introduced me to other guys and other guys. So they were really huge people for us that help us a lot.
Eric Hornung 21:54
When you moved from Argentina. Did you move to Silicon Valley? Or did you move to Austin
Ignacio Juarez 22:00
to Silicon Valley. and straight ahead to Sunnyvale, California.
Eric Hornung 22:04
Was that a requirement by singularity?
Ignacio Juarez 22:06
Not at all, but we have all the contacts there. And for the renewable energy industry at the moment you have Tesla sunrun sun power all of them three miles away. So what’s the kind of place to be for the renewable energy?
Jay Clouse 22:20
What was the state of the product when you moved here,
Ignacio Juarez 22:22
we have the third generation of the product. We were that in Argentina. Just to give you an example, that turbine was producing 200 watts, it’s 1.5 meter by 1.5 meter since we moved, and we just had the wind turbine we were using out of the shelf controller, once we moved to United States, we developed the fourth and the fifth generation, the fifth is the one that we have right now. That for the same price, same size, generate 600 watts, so three x more power.
Eric Hornung 22:50
When you say generate 600 watts or generates 200 watts, is that in a day is that
Ignacio Juarez 22:55
it’s instant power.
Eric Hornung 22:56
Ignacio Juarez 22:57
Eric Hornung 22:57
forgive my ignorance here. But what does that mean? How does that translate to an average american? How many watts do I use in the day?
Ignacio Juarez 23:04
Well,that’s well, you use kilowatt hours, right? One is power measurement. The other one, its energy you consume use energy. That’s what each kilowatt hours kilowatt hours a year. That’s the measurement what you pay at the end of the month of on the Bayliss kilowatt hours, you can translate a kilowatts instant power to kilowatt hours. But just to give you an example, for example, we have two models right now, the small one produce up to 10 kilowatt hours a day, the large one produce up to 50 kilowatt hours a day, the average consumption in United cities 30 kilowatt hours a day, one of the things that we have to do here in the United States is improve the energy efficiency, things have to be more efficient.
Jay Clouse 23:44
As a society, we need to improve our energy efficiency.
Ignacio Juarez 23:47
Just to give an example, the same size and medium sized family in Europe or Latin America consume nine kilowatt hours a day.
Jay Clouse 23:54
Ignacio Juarez 23:54
Jay Clouse 23:55
Where’s all the waste coming from? What are we doing here?
Ignacio Juarez 23:57
AC, lighting? How many lights you have here? You need all of them? Probably there are a lot of other lights on the building that are on, nobody’s using them.
Jay Clouse 24:06
Yeah. So your larger model right now for our inefficient use of power could still take care of our the average Americans use of power using that unit.
Ignacio Juarez 24:15
Yeah, the other thing is that our controller is working on that too, right. So once you connect our turbine, you’re not only generating clean energy, you are also improving your energy efficiency. At the beginning, the system will let you know when you are you’re if you’re spending a lot of energy. But next generations, that hardware is already there, but we’re working on firmware updates will just manage your system better,
Jay Clouse 24:38
we’re talking about the turbines of semtive, which to my understanding is a product of semtive the company, tell us what semtive the company is about and what the breadth of your products are.
Ignacio Juarez 24:50
Our first product was the wind turbine right, we started with that had an issue with is starting and started Sorry, it’s one of my strokes, and being able to porquena and produce,pronounce s a lot of sh. And it’s tough for me to to change that you
Eric Hornung 25:04
You want to go in Spanish for a bit and come back you all right
Ignacio Juarez 25:10
we started working on the wind turbine, with the objective to democratize the access to energy, we know that we have two options to be a niche product, or to change the industry. And if you want to change an industry, you have to know the name of the game. And in in energy, it’s cost per kilohour. That’s all people can say about a lot of things, but it’s cost per kilohour. And I learned that in Germany some years ago, when they embarrassed to the World Wind Energy exhibition. And I realized that even in clean energy, people were only focused on cost of generation of the units and not the environmental impact of those units. They were they were having huge environmental impact. And nobody cares about that. Right? We want to change that. So our first Prague and r&d, everything was focused on creating affordable energy. So somebody in when Buenos Aires in Palo Alto or in Mozambique can use the same target to generate affordable energy right. And with a simple that was important for us from there, we were always working on three main pillars that are the pillars of the company since the first day of the creation. The first one is cost efficiency. We’re aiming to democratize access to energy, so we have to give a really low price point. Second one is environmental one, we are joining clean energy, but the turbine itself is 95% recycled to and that’s pretty important for us. Otherwise, we will never be able to sleep comfortable if we know that we are creating some impact too. And the third one is this social, what we call social impact. Social impact for us is important for different reasons. And what it means is that we are manufacturing the units in the region where we sell them. That’s important first for the environment, because we are reducing the carbon footprint during shipment of the units. Secondly, we reduce customer fees, so we can keep a real low price point. And third is that we joined local jobs, people there will manufacture our turbines and controllers will install them and maintenance them. So at the end, we are creating healthy customer for the future right people that will be to afford motor units
Eric Hornung 27:22
are those three pillars ever at odds with each other like to renewable energy, renewable products cost more than like non renewable products
Ignacio Juarez 27:31
actually is more expensive, we can we can save some money on using different materials. But for us, it’s important to always have a commitment on all of them. Right? We can manufacturer abroad from lower prices to. But that’s not what we want to have a sustainable company in the future.
Eric Hornung 27:50
So those two last pillars feel more mission driven. And the third one, or the first one feels to me like it takes a little bit of a backseat. If those two last ones
Ignacio Juarez 28:00
No actually, actually we use the three of them. And what we do is try to improve their processes, right, for example, for us was really difficult to manufacture. Let’s say in United States have a product that manufacturing in United States, we have the same price point, then something manufactured abroad. So we really send a modification process. And now it’s the same. So going back to your question, using those three pillars, we developed these wind turbines, and then we realized that we were not able to transport the electrons that we were generating to the end user. So we start developing our own electronics. And that electronics actually is the one that is disrupting the energy industry. What we are doing with them is merging different sources. we control our turbine that is our proprietary technology. But apart from that you can emerge any kind of AC or DC input can be solar panels, small hydro, even gas generators, if it’s needing some locations, you can play with different combinations of them. And also you can have storage devices, we merge everything using microprocessor and machine learning. So we choose from the best source in each different time of the day. You know, sun is great at noon, but really bad in the evening, the winter, when is better in the evening. So we can play with both technologies, generating more than 100% of what you need, and reducing the size of each every right, that’s help us to keep the price one way low. And apart from that the controller allows you to do energy p2p. So each controller is talking with another controller, let’s say your neighbor, you can start trading energy with your neighbors
Eric Hornung 29:36
Do you hook into things that aren’t mission driven, so like that controller could theoretically also filter in natural gas or, or or like coal powered energy. I know we don’t use that much anymore. But
Ignacio Juarez 29:49
well, if it’s connected to the from the grid, right? Not generated inside is not that you can have your gas line to our controller, you can be connected regret, and use degrade as a buffer instead of emerged investing in a new coal plant, you can invest the same amount of, of install capacity without technology, price will be cheaper, you can have a better LCE, that is the leverage cause of energy. And with that, you will produce clean energy in a decentralized way. So your maintenance costs will be lower, your infrastructure costs will be lower. And today it’s not something that will happen tomorrow, right will take some years, we have a path there in different stages, we call the three stages from the first event to conquer the world. And
Eric Hornung 30:38
what’s in the middle. It’s like the South Park meme,
Ignacio Juarez 30:41
Jay Clouse 30:43
this is bro down.
Ignacio Juarez 30:44
I told you we have Why do we have to today? Um, well. Today’s the first sermon then is conquering the world, then we have the path that we can show that it’s divided in the stages. Nothing will be done tomorrow. This is 50 years things that we have to do to to achieve that. But we have to do something, right. I mean, that’s why today we are not saying that will replace every coal or nuclear plant or solar farm or wind farm, it will take some years, some of them are starting to reach their life cycles. So have to be replaced. Instead of investing in a new wind farm, we can replace the same capacity with our distributed solutions.
Eric Hornung 31:26
Are these actively in market? And if so how many customers do you guys have right now?
Ignacio Juarez 31:30
We just launched their fifth generation lately last year. So we’re ramping up production shipping unit and getting more customers we have today we have to ship 2000 turbines, we are only five guys in the company 2000 per year, diversion Torvalds this year, actually our pipeline is larger than that we have 5500 units in our pipeline. But we don’t have a commercial department. That’s one of the bottlenecks that we are having. We’re doing everything by myself. And Sophia is my wife that now is the CEO is the one answering the emails there. We are having 1000 inquiries a month from end users willing to acquire our props,
Eric Hornung 32:10
Ignacio Juarez 32:11
we have everything we have a standard lone solutions people live off with. We have a commercial, industrial, residential telecommunication towers. So they’re huge brand. They were things that we do all of them, we ship the same turbines, right, depending where you are installing or applying them is where you find application. Or who is the receiver or who is the guy pulling the turbine right. So now one of the customers that we have are directly utility companies or oil and gas companies that are willing to or they know that in three to five years, the way that we generate our energy will be completely different. They can’t compete today with our one cent per kilowatt hour if you are considering that you’re signing an agreement for the next 20 years at Five, six, and we can offer to the one. It’s something crazy, right?
Jay Clouse 33:04
For the listeners. Can you paint a picture of the size in look of these turbines?
Ignacio Juarez 33:11
Yeah, the best way to look at them is this is our web page. Right? We have pictures, everything there. Semtive.com. But it’s basically three blades in a vertical array, like three steaks, white painted or grey if you want them to be visible
Jay Clouse 33:30
cycles around and like a carousel.
Ignacio Juarez 33:32
Yeah, I also have, we also have a video of them. Also,
Jay Clouse 33:36
I’ve seen it I just want the listener to understand what it looks like. So it cycles around in like a carousel shape as opposed to a pinwheel.
Ignacio Juarez 33:42
Yeah, exactly. Exactly. and how.
What are the dimensions?
the small one one is five foot by five foot. The large one is 10 by 10. And they are extremely lightweight. You think 10 by 10 is huge. But remember that you put it on your rooftop, right?
Eric Hornung 33:56
When You say 10 by 10. That’s the blades or that’s
Ignacio Juarez 34:00
that’s the whole thing, the whole thing there and it’s finished 300 pounds or so. And kilos is around 150 kilos. So it’s it’s ligthweight for your rooftop.
Jay Clouse 34:11
Does that shape just like scale infinitely? Like? Could you make that turbine the size of like wind farm turbines?
Ignacio Juarez 34:17
Theoretically, yes, practically no. And I think that some of the companies have tried this technology before us fail because of that, right? They try to increase the dimension of these, they they vertical axis helps a lot of advantages. It’s completely noiseless, that’s great for urban areas, it takes the wind from any direction, so you don’t have to orientate the turbine. So it’s great for traveling conditions that you can find in urban areas. But I have some bad things to write. The first one is that the turbine works of lower RPM, so you need a larger magnet size. And that means that it’s more expensive, then how the system works and how they the whole turbine works, makes good for small dimensions. But when you scale that up, you still need a huge surface, right? To install them and a lot of materials to support your structure. So horizontal axis, that is three blades turbines, like the ones you imagine when you think about a wind turbine start becoming more efficient. And when you have really high wind speed conditions, those designs are more efficient of the vertical terms. That’s why we keep our solutions for decentralized applications. And today, we can install the same amount of capacity for probably half of the cost of the one of the larger turbines,
Jay Clouse 35:38
I’m a little ignorant on how energy works. So if this thing is generating 10 kilowatt hours or 50 kilowatt hours, do I have to use that today? Or how long can that be stored?
Ignacio Juarez 35:49
Well, you can use any kind of storage device, right, usually, just to give an example, solar needs during a couple of hours a day, around four or five hours a day with the peak afternoon. So you need to store as much as energy as possible there. So you can resell that during the day, in an average solution, it’s basically the same, you have to store that amount of energy in a huge battery bank. So that’s why salaries are so large, because you try to join as much as possible. If you’re connected to the great, the idea is that you sell energy there and buy that energy later. In an open market model. It’s an offer and demand. So at noon there is nobody at home. So people try to not purchase energy, the price of energy is going down. So if you want to sell that solar energy, it’s right for you that way, solar match with storage in the last couple of years. So they can sell that energy later in the evening, when it’s the most expensive tier when everybody’s going back to the houses style, cooking the meals or the laundry, whatever our chairman works weather in the evening, because of the differential temperature in an area location is or wind it’s not a stable, usually it’s very in the evening, that is the most expensive to you, they will think about working together is that you can use couple of solar panels to the amount of energy that you produce at noon and for the rest of the day, you have the turbine, right, that’s the most efficient way to generate electricity using different sources. That’s what we are doing right now you can start out using any kind of device. People think about lithium ion batteries, right? There are a lot of companies famous companies doing those kind of batteries. It’s a great is the most efficient way to do that right now. But you also can use fuel cells, hydrogen fuel cells, and in other countries trying to get a lithium ion batteries almost impossible. So let us batteries are other solution there.
Jay Clouse 37:48
And you’re saying now Semtive in the space of peer to peer selling of the energy that maybe I’m generating a surplus of energy personally from my my turbine and maybe from my solar panels. Semtive is also helping me say a cell to my neighbor, do you have to have to be immediately adjacent.
Ignacio Juarez 38:04
No, actually Well, for example, let’s say you have your energy being generated by when in the evening sun charged the battery at noon, you’re not using the grid, but you are connected with him that he’s having a party with a lot of wine solid,
Jay Clouse 38:19
classic Eric that
Eric Hornung 38:21
sounds pretty great to me.
Ignacio Juarez 38:22
Yeah, And suddenly, you’re bringing a lot of music have a lot of lights there, and you need more energy that the one that you are producing there. So your controller will say, guys, I need to purchase three more kilowatts who is able to sell these, your controller will communicate with him will say I’m available here, I can sell you energy, let’s say for 20 cents per kilowatt hour. And the lady next door can say sorry, I can offer you at 15 would you like to buy mine and your system will start trading those electrons and descending and creating an auction real time auction of all the electrons, and he his system will purchase the most efficient energy for him.
Eric Hornung 39:05
Even if I’m drunk
Ignacio Juarez 39:06
to do it by itself.It’s drunk proof
Jay Clouse 39:08
and you guys I saw on your website can generate as low as two cents per kilowatt hour.
Ignacio Juarez 39:14
It’s one cent per kilowatt hour. Yeah, that’s Yeah, we’ll have to renew the video.
Eric Hornung 39:19
But Does that work If Jay is in a different city than me?
Ignacio Juarez 39:23
Well, actually, if it’s connected, if everything is connected, it can be done. If we work with a utility and the utilities are interconnected, we can do that. Actually. Other ways will be local in the micro grid, the most efficient way to do that is doing as close as possible. Because every time that you transfer data from from one side to the other, you’re having losses, the longer you travel, the larger the losses,
Eric Hornung 39:46
How many kilowatt hours have gone through this platform have been like Bought and sold here
Ignacio Juarez 39:51
today, it’s pilots as they will just start shipping them on December. So
Jay Clouse 39:55
theoretically, though, that’s kind of like an arbitrage for me as an owner of this right? So I can earn money by having this type of system in place
Ignacio Juarez 40:03
It will be an Airbnb of energy, something like that. You have the control. If you buy your tray or whatever you do, and to track everything there and to be able for you to manage that we have blockchain. I think that the best use of blockchain really is energy trade more than crypto because electrons energy is still our right how do we manage as a car? Well, you need wires to transport them, you need its power to create them, everything they are, it’s it’s using this even if it’s something that you can touch. And I think that for that applications, being able to have something that can track the kilohour was you’re generating and potentially create tokens that you can exchange market value and negotiate with other customers.
Jay Clouse 40:43
So that’s kind of predicated on the people around me also have to have this system in place for me to you?
Ignacio Juarez 40:48
Yes, that Yeah. But why not? If you are trying to conquer the world why not?
Jay Clouse 40:53
eventually would that gets to a point where it’s almost commodities, and the auction is going to get so close to the cost to produce that as not even worth it?
Ignacio Juarez 41:00
It’s, it’s possible. Yeah, the thing is that and I will say if something is not worth it, nobody will do it. So if you for you, you don’t need to sell energy, if you’re asking energy is because have some value for you. Otherwise, your system, if you can always do more than 100%, you will never ask for energy from somebody else. So it’s it’s free market. Yeah, right.
Eric Hornung 41:23
What blockchain infrastructure Are you guys going to use? Or are you using
Unknown Speaker 41:27
a system is working today under lithium but what we are doing really, it’s we have a we are providing the signature on the kilowatt. And then we provide that information to the users. Even if we’re working on we have our own blockchain structure, we are creating tokens per kilowatt generated everything they are We are not trading them, first of all, because we needed mass to be able to do that. And secondly, because we’re working with the utilities are the ones that are deploying our turbines with the customers. And we can just merge our technology with them. If they already have one. The system is nimble, so we can add up to theirs. So we’re not selling the blockchain thing.
Eric Hornung 42:07
I was just curious how many cities or geographies or grids or however you wanted to define the geography Are your customers in
Ignacio Juarez 42:16
today We have a inquiries and order from 87 countries,
Eric Hornung 42:21
87 countries, how many cities is that?
Ignacio Juarez 42:24
I don’t know. In United States, basically, I think there are we only have one state, we have no waters from thing that it’s Alabama.
Eric Hornung 42:34
So the model of the peer to peer is, the more you have clustered the better, but your inbound seems to be broad.
Ignacio Juarez 42:41
Eric Hornung 42:42
Which in my view? My seat, it seems like that might be a slower growth movement than if you just focus really hard on Oklahoma City or Austin or you just pick one market and you just dominated that market, what has been the what one is that right? Is my understanding right? And two if it is, right, why has this current model been we chosen for expansion?
Ignacio Juarez 43:08
First of all, we are not selling electricity. today. We are selling turbines, units, we are as I said democratizing the access to energy. So we are trying to generate affordable energy for everybody without borders. So that’s the first reason why we are selling turbines everywhere. For us, it’s basically the same selling a turbine in Austin or in Buenas Aires or in necessarily Mozambique, or in Shanghai, the same turbines to everybody is just who will be buying and paying for that the unit they control and how we can trade those units. Actually, it’s something that will require time we consider that will be using that widely in three to five years.
Eric Hornung 43:51
Ignacio Juarez 43:52
Right now we’re focused on deploying the deployment of units.
Eric Hornung 43:55
So let me pull a question back to the turbine.
Ignacio Juarez 43:58
Eric Hornung 43:58
You You mentioned localized manufacturing, you’re in 87 countries, and you like to do localized manufacturing. What is the threshold for entering? Like, if you’re going to sell one windmill, is it worth it is going to
Ignacio Juarez 44:10
No we are in it by regions? Right? We are doing North America, South America, Europe, Africa. That’s why I say there are commercial clusters, right. So in Latin America, you have to pay fees for the manufacturing costs in countries the same in North America. So we are manufacturing them by region, usually in the larger market, in each region
Eric Hornung 44:31
are using toll houses. Are you guys setting up your own manufacturing?
Ignacio Juarez 44:35
no, we have contract manufacturers Actually, we have also an agreement with probably the largest contract manufacturer in the world. And the only requirement that we ask is to manufacturing each facility in each region. Right?
Jay Clouse 44:47
How dangerous is it to try to disrupt such an old industry that has so much power? Not no pun intended?
Eric Hornung 44:53
That was a good pun.
Ignacio Juarez 44:54
Everybody think that
Jay Clouse 44:56
I like to literally picture like a hitman. I like picture corporate Hitman saying like, we’ve got to stop this Nacho guy.
Ignacio Juarez 45:01
No, actually, the thing is, what I don’t know first, no, I’m scared now. really, we there are some of things right, we first of all, we came from a country where you have to hustle. So we don’t care about that. I heard somebody saying that the only thing that is more dangerous that somebody with infinite resources is somebody that have nothing to lose, we start from nothing. We’ve been accomplishing one by one things and growing, growing, growing bootstrapping on the journey. So if we have nothing, once again, we’ll try to find the reason why we fail and start from scratch. We don’t want to destroy somebody’s business, we want them to adapt. So that’s why we are working with those utilities and oil and gas companies, they know that something will change brought in the past, they lost the first wave with solar, some of them and they realize that if they are not adapting their self, they saw what happened in other industries like Kodak, and other companies. And now they know that, even if it this slowly, is slowly because it’s a huge monster, that is the one that is moving. It’s going to happen. There is a guy that cool that manufacture cool cars, I’ve started doing these things and other guy doing another thing. And people is getting conscious of this too, right? They have bought the limitations too. So for them, it’s better to work with us that fight against us. And we’re having great relations with them. What we’re offering is to keep their business model, but the way that they are keeping those business model, it’s completely different, right, instead of putting holes in the ground to struck fossil fuel to burn them to drain electricity, they will still sell those electrons to the customer. But those electrons will be generating in a conscious way with a recyclable materials. And the business model still will be the same.
Eric Hornung 47:00
What’s the price of one of these?
Jay Clouse 47:02
Yeah, the website said 3100 for the S model and 6400 for the N.
Ignacio Juarez 47:06
Yeah, those are a masterpiece, right? Then get a discount on distributor prices and
Eric Hornung 47:12
what other costs come along with that pricing? Is there an installation costs that’s on top of that? Are there
Ignacio Juarez 47:18
Yeah, usually, usually the installer charge you for the installation. And probably if you need a permit there in United States, roughly it’s hundred to $1,000 above that price to that price in united states that it’s the most expensive way. As I said, those are the MSRP then you have distributor discounts and everything. You have to add a 30% tax refund to that.
Eric Hornung 47:44
That’s what I was just going to ask. So I remember one of my dad’s clients was looking at putting a horizontal windmill in on one of his properties because he lives out in the country, and there was some tax refund. Can you talk a little bit more to that?
Ignacio Juarez 47:57
Yes, not a lot because it’s really new. something new for us used to be it’s called you have different things. One is called PTC and the other one is ITC. Those are two different ways to do these. Now there is new regulation, the federal law applies the ITC there is the HTC that are investment tax credit to the small wind turbines. I think that was late last year. So now we can have access to 30% tax refund or rebates. That was what made the solar industry bloom right?
Eric Hornung 48:31
What’s the formula to calculate costs per kilowatt hour. I understand kilowatt hours on the bottom cost is on the top, but is it cost per year is cost per what.
Ignacio Juarez 48:39
Yeah, actually, there are we are estimating that considering the generation of the turbine and the cost of the electricity of sorry that the amortization of the amount of money that you invest on that system, considering 20 years that it’s a conventional PPA, it’s you’re developing a wind farm you consider that PPA to to get your LC from there, if you are trying to calculate an estimate your ROI that depends on your wind speed and the cost of the electricity in your area. So it’s a different number. That’s why we don’t provide a really accurate ROI there because we need a lot of information that depends on your location. But it will vary from two years to seven years worst case scenario without those incentives, and really low cost of kilowatt.
Eric Hornung 49:33
Is the lifespan 20 years? Or is the tax accounting 20 years?
Ignacio Juarez 49:38
Eric Hornung 49:38
Ignacio Juarez 49:38
The tax. no actually the lifetime I can send say this without having liability issues. It’s more than 40 years. Actually, it’s one of the cool thing about technology. We start installed the first turbine in Argentina 10 years ago and still is working there. We don’t even clean it in 10 years.
Jay Clouse 49:56
Yeah, it’s no problem. Do you like bolt this to the roof how does this stay down?
Ignacio Juarez 50:01
No you have, Well, we have different applications and different ways to install these you can put it on a standalone ball in your backyard if you don’t want to put it on the rooftop. There are different mounting system that you can use the beans to install that there is a side mounting system. That depends on the installation side. But that more day installers today, we are developing our own mounting systems. But it’s we are limited sized company. So we can’t do everything at the same time.
Jay Clouse 50:29
You said your bottleneck is kind of like the the manufacturing of these units and getting them out to market probably a pretty capital intensive business to manufacture the like take the orders and manufacture and ship out is that what’s the biggest hindrance to growth right now?
Ignacio Juarez 50:41
Not really, because first of all, we have a really small production time. So customers are used to pay are willing to pay up front for this unit. So there is not a huge deal to have working capital. Our main challenge today is that we are five guys in the company. As I said, doing manufacturing, sales and distribution, supply chain everything, they’re all together, and at the same time developing the technology doing a lot of improvements on the software. So it’s a huge things
Eric Hornung 51:16
from what I can see you’ve only raised a million dollars to date.
Ignacio Juarez 51:21
we’re raising right now $1 million in a bridge room,
Eric Hornung 51:24
Ignacio Juarez 51:24
we raise up to a 3.9 million.
Eric Hornung 51:27
So we need to update that because crunchbase only has a million and that’s the best
Jay Clouse 51:32
crunchbase is constantly failing us
Eric Hornung 51:34
Ignacio Juarez 51:35
I used to complete that. But sorry, for I realized that was only useful for people that
Eric Hornung 51:41
like us. yeah you just threw us right to the curb.
Ignacio Juarez 51:43
No body writing checks.
Jay Clouse 51:46
So why I mean, why not just hire more people,
Ignacio Juarez 51:49
we are we are in the process. That’s why we are raising this bridge. As I said, we have a lot of orders to fulfill. So we need to get more people and be profitable by q3 this year, and raised to be around with one of the larger partners that we are really working on the due diligence process with them. Those companies are huge energy companies, mostly of them are oil and gas or utilities, national utilities, the thing is that their minimum ticket size today is a valuation of our company, I don’t want to say bye, right now. That’s what we need to scale up the size of the company. And that’s why we are raising this bridge that help us to grow. Unfortunately, I don’t know why people is asking for something called salary by the end of the month. So I can’t get them on board if I’m not paying them.
Jay Clouse 52:36
Ignacio Juarez 52:38
Jay Clouse 52:40
but you can just why not just like pre sell the heck out of this. And and use that as
Ignacio Juarez 52:48
we, we have a pre order, right that people pay off from just a couple of bucks. But really, we need to finish the certification and we’re working on those certifications. By the way, we not only certifying the control, we also certifying the turbine where we want to show the customer that what we said is true. And it’s real one performance is there and everything there. That first of all expensive it takes time. You go back and forth a lot of time with those certifications more if you’re only five guys that have to fill all the forms. So we don’t want to take money from for people that we don’t know what we’ll be able to ship those unit for that application with the certification and everything right now we are doing the pilots, we don’t need the the certification on the units are we are shipping our own locations and in markets where we don’t need the certification done its just compliance with the certification.
Eric Hornung 53:39
So normally we ask something about the total adjustable market but in energy, I’m so sure that it’s just really big that I’m not really interested in that question. Instead, I’m interested in your view of where you think wind energy as a percentage of total energy production will be in your 50 year plan?
Ignacio Juarez 54:00
That’s a tough question today, when is the the larger way to generate renewable energy, right? A lot of people that that just focus on United States, around 10% is generated by renewable sources from that 8 percentage wind. Right? Everybody Think about solar but those are the cold numbers, I think that will the numbers will be like that, right because of limitations of one of the other hubs and efficiencies and other ways. Still, both will be useful. And you need both of them to be able to join the hundred, the goal is to start replacing some technologies with other technologies, right. And this doesn’t mean that people will lose their jobs, they will move their jobs from doing one thing to the other, adapt your industry to move forward with the future. So I’m thinking of our probably 50 to 70% will be wind the rest will be other sources, at least to the centralized part, you have hydro or other sources. But still, I think that high was you have a some environmental impact, right, you have to flood some areas and you have to transport it energy dense is expensive. You have a lot of losses, very 40% losses on transportation. You need substations and from farmers and a lot of things there, right. So we’re trying to avoid that part. Now that I have been in 10 years, 15 years, but probably in 50, and more. And hopefully we can do different sources, where today we have distortment, we don’t know what we are having in 10-15 years, hopefully we have something like this phone that you can just get into your house, plug in and produce hundred percent of the energy in your house you put in your car and produce the hundred percent of the energy in your house. We’re aiming to manufacture something like that. That will be a power so already know how cool name you can use it.
Jay Clouse 55:58
Ignacio Juarez 55:59
It’s something like Trump’s farmers, right? Yeah. But we don’t know how to do it yet. Today we have the windturbine Yeah, we’ll try to figure out how to manufacture this someday. In the future.
Jay Clouse 56:08
What what brought you guys to Austin from Sunnyvale,
Ignacio Juarez 56:11
there are a lot of things the list is long. First of all, the distance from Argentina, we had a long, long flight. So now we’re expecting our first baby with my wife. So we would like to be closer to our family. Secondly, the company’s growing, so we need to move somewhere where we are closer to the energy industry. Houston is the probably the capital of energy in the world, we need to be closer to them. But because our electronics is based on software and development, we also want to be something nearby to Silicon Valley. We think that Austin is is that place. Logistically, we’re in the middle of United States. So we have three hours to everywhere. So manufacturing here in Austin or nearby Texas, we can just shipped units everywhere. taxis an important thing. weather
Jay Clouse 57:01
cant beat that.
Ignacio Juarez 57:02
It’s Yeah, it’s we we like those, see some changes and meat we love asados and BBQ.
Jay Clouse 57:14
Meat, I think he said meat
Ignacio Juarez 57:17
for an Argentine and that’s extremely important.
Jay Clouse 57:19
Ignacio Juarez 57:20
and and then we have a duty that is a great source source of talent. And now people know who we are. So we don’t need to be in Silicon Valley. We have companies from Japan, from Europe, from everywhere in the world coming to see us. So it’s not necessary for us to be there. We develop individually a great group of advisors and people in the decentralized energy industry. So now that we are here, we still have our guys working from there. We still have our office there. And we have a charming working NASA Ames. So we still have our flex
Jay Clouse 57:54
well this has been awesome. Thank you so much for sharing your time with us. If people want to learn more about you or about centers, where should they go after the show?
Ignacio Juarez 58:01
semtive.com They can send us an email, there will respond or look for me, LinkedIn or not a crunchbase.
Jay Clouse 58:11
Not crunchbase. If I how quickly would I be able to get a turbine? If I want to buy one? Just theoretically, if someone from the show maybe but its own as a listener? If I came in, like what’s that turnaround?
Ignacio Juarez 58:21
Well, to end users, what we are doing is we’re expecting to have the certification done before being able to ship that to users, or those pilots. Meanwhile, we are contacting them with distributors that the distributor is working on pilots applications. So we can install them working on pilots, but that will depend on them. We’re ramping up our production so will be month or month and a half ago till you be able to purchase them on Home Depot and Walmart and Stella by your we can project.
Jay Clouse 58:53
Awesome thanks for taking the time.
Ignacio Juarez 58:54
Thank you very much.
Eric Hornung 58:56
All right Jay, we just spoke with Nacho. Man, what a name. love, love the nickname that you embrace as your real name. You know,
Jay Clouse 59:04
Nacho real name,
Eric Hornung 59:06
Nacho real name, that was one of your best ones yet. When I think about clean tech or green tech, the biggest thing that pops into my mind is policy and law. And the business itself. Makes sense. But how does it fit into this kind of legislative space? Do you have any, you know, insight into that?
Jay Clouse 59:28
I don’t. But I did think about one of the smartest guys I know who happens to be my cousin, Benjamin Stafford. Benjamin is a Director of Policy and Public Affairs for clean energy economy, Minnesota, he serves as an advocate and liaison to key industry stakeholders, elected officials, community leaders and policymakers. He works with member companies and stakeholders develop and implement strategies to ensure seems organizational interests are advanced in legislation and regulatory policy work. Benjamin has had years and years of experience in the clean energy sector, both with clean energy economy, Minnesota, and a couple other organizations before that, so I thought it’d be a good idea to call him in and give us some more perspective, from the policy side of things. So we’ll get into that short interview with Benjamin right now.
Benjamin, welcome to the show.
Benjamin Stafford 1:00:15
Thanks. Glad to be here.
Jay Clouse 1:00:16
Could you take us on a bit of a rocket ship through your history in the energy space?
Benjamin Stafford 1:00:22
Sure. So I’ve had sort of a wide and varied career, but I’ve come to clean energy from a number of angles. Initially starting, I worked for a state regulator that has a lot of influence over what happens on the energy system, and particularly around public utilities, during a time when there was a lot of innovation. And so I ended up being in charge of all our workforce training and development, and then just ended up knowing the industry as it changed. And it was kind of an interesting experience, and then moved out of sort of the workforce side and into the full time policy gig started doing public policy where sort of business and energy met. At a time when there was a lot of investment going on in what was at the time known as smart grid, which think now we just refer to as the modern grid. And that’s an essence a whole bunch of innovation coming on to the most elaborate engineering system we’ve ever known our power grid, and then figuring out what kinds of business and regulation and public policy sort of worms we were opening up by inviting in this, this not necessarily disruption, but evolution and how we looked at, you know, our electricity system. So sort of started in more of a state regulator role in a state of Ohio, which had requirements for both understanding how utility business models would operate in a more clean energy future, and a specific requirement to invite a lot of competitive choices, which meant, you know, in some respect, disruption. So we were this really unique sort of policy in business environment. And having that time in order of your career was was interesting, left that or a couple years to go back to academia. So it’s pursuing a pursuing a PhD here in University of Minnesota in Minneapolis, and was actually looking at workforce psychology, which has nothing to do with this, but got pulled into some research with the Public Policy Institute here at the university, looking at energy markets, from my past history, ended up doing four years of research and publishing on how big energy systems Think about this, like the highway system for clean energy is absorbing new technology. So it was kind of I used to sort of describe this as the social side of electrons, which is basically taking you have new tech, you put on the grid, the unsexy part of this world is you have to go through a lot of meetings, and people need to digest this technology and how it works. So never really left the field, had a great time in academia, but ultimately decided it wasn’t the best fit in the world, went back into the clean energy industry and working for a trade association. So that took me to Washington, DC, and was working with the trade association, there was in 27 states and looked across a lot of different business models, a lot of different businesses issues a lot of different rules, regulations, public policies, and how all this stuff is working. did that for a little bit, did some high high sort of Highline technical consulting after that. And then I’m back and sort of just in Minnesota, sort of evolving the clean energy sector here. So that’s a whirlwind. And there’s some grad degrees and a bunch of other acronyms involved in that. But that’s that’s sort of the journey started. And candidly, you know, Jay, Eric, I started this. And I said to my colleagues in the regulatory field, that this is way too arcane. I’m not that interested in this, there’s no way anyone cares about this, I have never been more wrong and more thankful for it. It’s a great place to be there’s a boatload of investment here, and a lot of opportunity for clean energy business.
Eric Hornung 1:03:42
What’s changed the most? You’ve been around the space for a while? what’s what’s changed the most since you first entered besides you? I’m guessing you changed a lot?
Benjamin Stafford 1:03:51
Yes, it’s it’s been an identity, you know? So, you know, when we first started this, this was sort of all theoretical in the early 2000s. There there were all these states that are experimenting with like, what do we need to do for clean energy for a lot of reasons. And that’s, it starts often with state policy and then flows down to business opportunities. And there are, I think, now 29 states and a couple territories in the US that have some sort of renewable portfolio standard. And all this was like, let’s just point in the direction of clean energy and see if it works. And now we’re like, sitting at a point where we know it works. And we’re wrangling with real business problems its no longer theoretical. This technology is proven out the amount of technology that has come onto the grid. And in the last, I’d say, like, No, I’ve been around about 15 years, is far beyond what we could have expected. It’s kind of it was this sort of theoretical principle of clean energy. And now we’re, we’re at the point of, like, an industrial internet of things for energy. And it’s an entirely different discussion.
Eric Hornung 1:04:54
What are the pillars you keep on mentioning the technology and how its evolved? What are the pillars of clean energy from that technological lens?
Benjamin Stafford 1:05:04
Well, let me answer it a little bit nuanced way and see if it makes sense to you. I think it starts with a goal. So states have done a mix of whether they have mandates for particular technologies that end up being the anchor tenants of what clean energy means in that state, and therefore in that market for businesses, and they varied from state to state on what they define is, quote, clean energy, unquote. And it sort of started there. And now we’re at an era where it’s more like we have a just overarching carbon goal or clean energy goal. And we’re agnostic about technology. And that invites a lot of new technology in, I think what’s cored all this is essentially the communications layer that’s being added onto the grid, is when you start to have a grid that understands itself in much more detail. And by the way, if you understood how little the grid understands itself, you would be disturbed and you’d be surprised how often your lights are on. But when you start to have much more system awareness, and there’s no one that’s building a system, a energy or utility system that isn’t cell isn’t aware, now, it doesn’t provide a lot of data. Once you have that data, you can see much more buying green, how technologies help or hinder systems, how there’s business opportunity where these devices could best be placed on the grid to add value, etc. The one other piece I would put into this, too, is we’ve got policy, we’ve got technology, we’ve also got an unreal amount of demand for clean energy that we didn’t necessarily have before view on the commercial side, there are 73, I think maybe now 74 out of the Fortune 100 companies have some sort of commitment to a clean energy, goal, Target, etc. that is deeply embedded in their sustainability plan. And that’s getting up in the mid 40s, almost 50% of the Fortune 500. This is not exactly a bastion of anti capitalist thought here. So we’ve got communications policy, and demand that are all driving in a very clear direction. Does that make sense?
Jay Clouse 1:07:06
Yeah, so how much you know, there are entire cities, states, countries that are built on energy and the old industry of energy? How much do the existing powers try to derail Clean Energy Solutions? Like how much of a sudden there’s a lot of policy and lobbying that happens in that industry?
Benjamin Stafford 1:07:27
That is a full time employment act. For me Jay Yes, you’re right. There are incumbent interests that have have long had had influence in this general field. Some of them make the national news like you would see on the news on a day to day basis about x technology company that has some issue or is in with the president or whatever it may be. There’s also sort of embedded interests in the business model, how we’ve delivered energy. So the energy and utility space is full of of old interest, you know, and that doesn’t necessarily mean they’re bad or good. They just been there for a while. And they’re used to things operating certain way. So a number of these technologies, and a number of those, those trends I was talking about in policy technology, and consumer demand, have really forced them to look at business models they never had to even think about before. So that’s posed a lot of challenges. And there is always interest in disruption. And you know, this from from the literature, that, you know, incumbents have a tough time with that. But they vary on that, you know, in in my state, Minnesota, we have a public utility that is committed to going 100% carbon free by 2050. And it’s one of the largest utilities in the US and XL energy. So they’re going to be 80% carbon free by 2030, which, you know, if I told you that 10 years ago, you would have laughed at me, and then carbon free by 2050. So there are some incumbents that that are embracing the Clean Energy sort of evolution in running with it. They just see it as inevitable. I think it’s a mix there. I think long story long, it’s a mix is there. They’re definitely incumbent interests that that don’t like that there are less part of this discussion. But there’s a clear direction. You know, on the policy front, just as a quick note, for your listeners today, there are about 18 states that are either have already proposed or in the process of proposing 100% clean energy legislation. 18 states, that’s a massive change. And on the business side, you have to recognize that’s a massive opportunity. That is that’s a massive market that did not exist before.
Eric Hornung 1:09:28
What does that mean? Does that mean? These 18 states are going to be 100% carbon free? And then what does 100% carbon free look like?
Benjamin Stafford 1:09:37
Yeah, that’s a that’s that’s what we’re trying to figure out. So this legislation is inherently complex, but it has huge impacts on the business community and one investment will come forward, the state’s generally are moving towards low carbon to no carbon. So there’s a clear direction, there independent of whether it’s 100%, carbon free, or they’re just calling it clean energy, and they define it a different way. They’re all moving no matter what the percentage in that direction. So I think that we’re seeing clear movement towards some definition of clean that is clearly oriented around carbon, state by state, there will be variants in what technologies are included in that portfolio solutions. Some states lean more towards having a defined list. Others don’t have a defined list per se, but are clearly looking at carbon emissions. And and that’s where they put their, their their foot down. And they have, you know, definitive dates. So varies. They’re all in the same direction.
Jay Clouse 1:10:35
So in the case of our guests today, Nacho from semtive, he has a technology that he’s commercialized and is selling both direct to consumer and commercially, what inherent risks exists for a business model like that in the energy space,
Benjamin Stafford 1:10:51
you already hinted at one, but I think in a different way, then you may have realized the incumbent interest. The model is I understand from semtive is largely around this concept and injury we call distributed energy resources. So this is in stark contrast to the long standing business model of a public utility, which was usually huge investments in single plants that in one place, big wires that take that from place a to place b to our homes, when you start putting this on customers property, be a commercial, residential, wherever you’re distributing energy resources elsewhere. And this alters the entire business model of the utilities. And I think there are opportunities for for distributed energy resource model under on a lot of different regulations and rules and regimes. And in state a, that company that has the solutions may work very closely with the utility in and provide solutions to them. And they may be a major customer for them and state b they may be clearly adversaries, the utility business model may not agree with this kind of business model. And figuring out from state to state, what that looks like is a challenge. So you know, where you can grow your market, and what particular market opportunities you’re going to have are tough choices. Even when you see all this clear direction and clean energy, what it looks like in state a and state b for these business models may be fundamentally different.
Jay Clouse 1:12:17
Being from Ohio, there was something that happened several years ago, I remember where they’re trying to bring tall vertical windmills, kind of the standard style windmills to some area of Ohio and in some places was shot down because it’s like higher than the churches. This has nothing to do with actual utility. And that was just a secondary risk that was in play here with this technology. Are there other risks like that? Or like how serious is is that risk of some like cosmetic risk?
Benjamin Stafford 1:12:48
Well, so some of its citing what they call utility citing and like where are you going to cite these particular technologies? So if you have large fields of wind turbines, there’s a always an interesting debate back and forth, of like this concept of not in my backyard, right, like I love that it exists just not my backyard. And that’s I think what you had with some of those, those nuanced county level decisions, is that that there are some creativity there to find some some reasons why not to go forward with certain projects. And this is something that a number of our technologies, in the clean energy space face is some folks are really opposed to Why does my neighbor have all these solar panels in their yard, if they’re a farmer out here, I’m used to looking at farmland, I’m seeing solar panels, and that no matter what your technology, you’re often facing this, it’s not so much in the particular case we’re talking about now. But it’s a lot of it is is also disrupting land use disrupting what we used to see as your neighbor’s yard is on the one hand, leave me alone, I’m allowed to do what I want my land and other hand, why do I have to look at if I’m next door. And this is never going away, in addition to just one more point Jay I made to make is there is a considerable amount of, of lobby from from Old Energy interests, that is going and finding places where they can Stoke that conflict. And there’s a lot of interesting laws in around the Midwest, that are being forwarded by traditional interests to pick these kinds of fights in net, they tend to be losing right now. But they’re definitely present
Jay Clouse 1:14:24
and are those fights happening at like a county level, a city level, state level, national level, all of the above? Like, what layers Do I have to fight through as a business?
Benjamin Stafford 1:14:35
Yeah, it’s all the above the startups in this space, or the new energy technology in the space, need to have a good view of what they’re walking into when they want to go pursue a market. And it is Polly centric to use the term is it is state level is city level, it is county level. And those levels don’t always work well together. So for example, Ohio has a history of what they call home rule, which is that law resides sort of closest to where the decision is. So that may be more on the sort of city or county level. Whereas some other states don’t necessarily see the world that way. And you really settle your problems at the state legislature, they those states, maybe next door to each other. And then you’re just this innovator, and you’re like, I have a technology that works. Why am I running into this? So having sort of a clear line of sight of those barriers, I think is really important.
Eric Hornung 1:15:22
I want to do a little predicting future casting. Let’s say the world is 100% clean energy in the future, what percentage do you think goes to win versus solar versus other forms of clean energy,
Benjamin Stafford 1:15:35
I think it’s going to be interesting state to state what resources you have. So as an example, Minnesota, where I reside, has a lot of really good wind resources, just period, Indiana is the same way. So if you drive up by 65, in Indiana, north of Lafayette, where Purdue is, those fields up, there are just massive fields of wind turbines. And that’s where the wind resources lies, it’s not gonna surprise either view that I would say if I’m doing solar, I might consider Arizona or Nevada, because I don’t know the sun shines there, it’s going to vary, I think they’re that increasingly, for the big resources like big wind installations, big solar installations, they’re working through big regional markets. And those regional markets have sort of two objectives, one, keeping costs low, and to making sure that power is reliable, in order to have power that’s reliable, you have to have a portfolio of all these options. So they’re going to want a percentage of when they’re going to want a percentage. So or they’re going to want energy storage that’s coming on is new and exciting. And those those debates are gonna happen. So look, in the future, it’s just really hard to predict that. And it’s going to be more vocational than anything else. But again, they’re balancing those kinds of technology portfolios, and where solar works, where when works over large regions of the nation. I think that you’re seeing different growth rates in different technologies right now. So energy storage is like gangbusters right now. lots of opportunities there. But where that sits, and what use cases for energy storage will play out, I think remains to be seen.
Jay Clouse 1:17:07
So to ask a super on the nose question here to round this out. You live in this industry, I sent you ahead of time the website of semtive just so you can get a first take on it. Did you have any initial reactions to the technology?
Benjamin Stafford 1:17:18
Sure. The technology itself like I get those Bibles, plug and play, there’s been a lot of work in folks actually like myself or working in what we call the interoperability which basically means plug and play. So you have these technologies, you can hook them to your your systems, and you know, they work a certain way. But they’re going to affect the the system you they are already plugged into. So if I put one of these resources on my house or business, it’s going to then interact with the electric grid in ways that it didn’t before. And that doesn’t go unnoticed. So figure out what that looks like. And whether at that point, you’re a partner with the business or you partner with a homeowner? What’s their level of sophistication with working with the income and energy company or utility? Who has the obligation run their system reliable? So you plug this on your system? How does that change how how their system operates? You need to have that kind of mapped up pretty quickly. in a general sense. The residential sector doesn’t have its highest sophistication, they’ve done pretty well with solar panels, there’s a lot of solar on houses, etc. And I think there’s there’s some institutional learning there. So I’d encourage the folks to talk to folks in that industry and say, you know, how did you tackle these business problems, etc. On the commercial side, there’s tons of commercial demand, commercial customers would be very interested in something like this commercial sector varies in terms of its sophistication with how it interacts with its other energy providers. Company A likes to sort of be separate from the good OR operator company b has a very close relationship with them, and may not understand whether they’re getting into. So there’s there’s a lot of variance there. Like it’s an interesting thing. I’m around distributed energy resources all the time, I’d say there’s probably, at least initially for this type of technology. And as ground I’m a sample size of one, probably more commercial application, at least initially, residential is just a tough market to get into. There’s a lot of ground grassroots work that has to be done there. And that takes a lot of time and depends on where you are in your business cycle, whether you have that time to spend, additionally, you’re going to have to have a lot of local resources to build that residential market, which is you’re going to have to buy you can’t make those you know, odds are you’re you’re not living in those communities. building that means you got to spend money to get somebody local that to advocate for you that depending where you are in your in your sort of funding system can be really challenging place to start. commercial sector has massive appetite for distributed energy resources, and varying sophistication. I’d that’s sort of initial reaction. I think, also, the what operations will will these these technologies serve? Do you pair this with a storage option. So you’ve got wind, this this blowing and in Do you then match this was storage to to make it sort of more stable for for the commercial business, because they have high power quality needs, you know, you have to think through those things. So a myriad of of sort of market opportunities there. There, there’s a level of sophistication there that it’s going to need to push this. And again, distributed energy resources represent disruption to a lot of folks, they also represent opportunity to another understanding how and where your customers are with that is going to be a challenge.
Jay Clouse 1:20:28
Awesome. Benjamin, thanks for being on the show.
Benjamin Stafford 1:20:30
Absolutely. And then there’s there’s more questions going forward. Happy to keep talking with you. It’s exciting to see what’s happening in this industry. Just as one last quick note, and then there’s going to be I think the International Energy Agency, if I’m not mistaken, said there’s going to be something like $2.1 trillion of energy infrastructure worldwide in the next sort of 10 years. And there’s a lot of sort of regulators and policymakers that are having heartburn about that. As a business guy, I see that as a boatload of opportunity. That is, that is a massive market opportunity. It’s not Harborne, it is, oh, my this is opening up, we need more innovation in this space, we need all kinds of business models, the last I’d say is be willing to learn. Because we’re all going to be right and wrong about this. This is an evolution, as well as a revolution. There’s gonna be a lot of problems and opportunity.
Eric Hornung 1:21:25
All right, Eric. Now we have background from both Nacho and Benjamin. Where do you want to start here? Let’s start where we usually start an upside, let’s start with the founder, little bit of a different personality than we’re used to on the podcast,
Jay Clouse 1:21:38
we’ve never had an Argentinian that is very new. He had a very laid back, let’s say, let’s say laid back presence in the interview, kind of fun.
Eric Hornung 1:21:49
Yeah, a laid back personality. But you could tell that there is like this level of persistence in what he was doing that kind of threaded through his classes, and under grad his story, where he spent four years bootstrapping a prototype and three to four years flying to San Francisco from Argentina. I mean, really, he spent a lot of time into this company. And thisidea,
Jay Clouse 1:22:15
there was a very clear sense of, I’m going to do this. And if you get in my way, you’re going to regret it. And I’m not going to worry about it. Because I have nothing to lose, I’m going to do this, he even said, you know that that quote of the only thing more dangerous than somebody with infinite resources is somebody with nothing to lose. They said, you know, if this fails, we’ll come back and try it again. So that’s, that’s the type of tenacity and resilience that I think you need in a founder to do something, especially in a regulated industry, with a lot of incumbent interests with deep pockets, who, as Benjamin said, are actively lobbying the energy, the energy industry. So I think he has the right mental toughness to attack this type of challenge,
Eric Hornung 1:22:55
right? And he’s also thinking about it in such a long view. It’s like, right, what do I need to do today? And what where are we going to be in 50 years, that’s just like the immediacy plus the long term vision kind of summed up,
Jay Clouse 1:23:08
Eric, you’ve spent a lot more time in blockchain than I have. And it seems like in the technology culture, there’s been a swinging of the pendulum in terms of how excited people are to talk about blockchain application. This has a blockchain application and the peer to peer nature of the grid. Where do you currently stand on blockchain technology and your level of excitement when it comes to new startup opportunities in the space?
Eric Hornung 1:23:36
So two separate questions there one, how do I feel about this as a blockchain technology into how do I generally feel? I guess I’ll start with how I generally feel because I think that guides a lot of how I feel about this in terms of the application, I feel blockchain technology has a lot of great use cases. I think that there are certain networks that make a lot of sense for a lot of things. There are a lot that make no sense right now. I think one indicator of whether or not something as a blockchain application, or someone is trying to ride the hype train is how long into a conversation you go before they mentioned the word blockchain. And I don’t think we hit blockchain until we hit like, minute 30 plus of this interview, and we’re talking about the connector. So for this application, I feel that the technology itself could definitely work. Its peer to peer, it makes sense. It kind of is all the things that blockchain does. It secures identity, it allows for transfer of funds through tokenization. I don’t know that a theorem is the right choice. But to be honest with you, I don’t have the deepest technical understanding there. So maybe it’s just the easiest to build on right now for them. But I think that it is such a small component of what they’re doing. That to me, it’s okay. They’re using a new technology, while using a ton of new technologies. that’s, it’s no different than if someone said, Oh, yeah, we’re building this product. And it does all these things. And part of the way we build that product uses machine learning. It’s nice that they’re thinking futuristicly, but it doesn’t like swing the needle for me is like, Oh, this is the next X, Y or Z.
Jay Clouse 1:25:16
So you’re saying you would want to look through the lens of this business as it is today as a business that is in a wind turbine clean energy business, and not think about the peer to peer power grid aspect of it?
Eric Hornung 1:25:30
No, I wouldn’t say that at all. I think the exponential value is in the peer to peer side of things. I just don’t think the underlying technology is that meaningful. I think the idea of the technology is more meaningful than the actual underlying technology. Because it’s all predicated on this idea of can you get this connector and these turbines in enough yards, and then once you get enough yards, if you’re a theorem based technology doesn’t really work, you’re just going to pivot to a hyper ledger fabric or to a different blockchain technology or off and on to like, just some database. And I don’t think they’ll do that last one. But the idea of the blockchain technology is like the key to the peer to peer network, to me isn’t like, super compelling.
Jay Clouse 1:26:14
This is where I got a little bit iffy, because the peer to peer side of things seems like it’s mostly geared towards a future where residential homes are all using this technology. And the peer to peer is between residential homes, buying, storing selling energy. And what we heard from Benjamin was the quickest route to market for a technology like this, where there’s the biggest appetite right now is in the commercial space. And so as I’m looking at this, I’m thinking about nachos strategy, because right now, you know, they’ve, they’ve shipped about 2000 turbines this year, they have a back order of about 5500. They’re an 80 different countries, all over the place. A point you made in the interview as well, peer to peer makes the most sense when you have kind of a concentration of people on the grid. So I’m still a little fuzzy on the go to market and distribution strategy, and whether we’re targeting the residential or the commercial side of things first, because given what I’m hearing from Ben, of course, you want to talk to more potential customers here in both spaces. But it seems like if I’m an investor, I’m looking at this and saying, it seems like the lower hanging fruit right now as the commercial market where there’s more appetite, worrying less about the peer to peer, I think that’s going to be the higher price turbine, because they’re probably going to go with the M model, which is twice as expensive as the S model. Nacho can only manufacture so many right now, because he has five guys. So why not try to spend more time manufacturing the higher priced item? It just seems to me like the commercial route makes the most sense, the immediate term?
Eric Hornung 1:27:40
Yeah, I don’t think I have a strong opinion on commercial versus residential. I think the go to market is definitely fuzzy for me as well. I think the peer to peer is such a vision that it’s like a 30 year vision. And that’s hard for us to say, oh, sitting here today, what are we investing in seven to 10 years down the road? One thing that I will say is that this is a pretty genius idea if you can make it super simple for the user to understand, like I’m thinking like, your nest thermostat, how that made air conditioning simple and like, yeah, it changes things when you aren’t home and understands things like that, if that could do the same. If you could have next to your nest thermostat, if you could have a semtive connector that said, essentially, hey, right now, you’re selling your wind energy, and you’re buying from the grid, because that makes sense. And you’re doing it this way. And here’s your average price of electricity. And that like played into your whole home system. That’s a pretty awesome smart home movement, that a lot of this back end, which is the peer to peer network, and everything isn’t what you will be, if it’s going to be successful, it’s not going to be someone looking at it and saying, Oh, I need to adjust things, it’s going to be happening in the background. So he talked about this leverage cost of electricity and lowering it, if I see a measurable decrease in my leverage cost of electricity as a homeowner or as a commercial enterprise. regardless of if I have the centive wind turbine or not, that is a really interesting idea for me.
Jay Clouse 1:29:07
I love the the future vision of the world. You know, Kara Swisher said on her podcast recently, you know, stop making your dating apps make something that matters. And this type of technology falls squarely into that camp. I love the long term vision of this and the version of the world where I am buying and selling my own energy and storing it. And I’m self sustaining in that way. And I’m sharing with my neighbors, and it’s coming through like that. I love that. To your point, it is a longer term vision. So, you know, this is where our lack of experience as quote investors kind of shines through? How do we approach something like this that has such a longer term vision than the life of the fund that we will be managing? How do we consider something like that into it,
Eric Hornung 1:29:47
it almost seems like this is ideal for what we’ve been learning about which is family offices. Someone who can think about this vision in terms of 30 40 50 years
Jay Clouse 1:29:58
Well, and not to mention that looking towards a Series B, he was raising a bridge Round Round currently, and looking towards a Series B, those were the large utilities companies that were leading that they would also be a good suitor for this type of investment. So I think that makes sense,
Eric Hornung 1:30:13
right? Because they’re investing off balance sheet, which is permanent capital, essentially. the idea of this futuristic vision kind of fits really nicely into this story of these three pillars, which are cost, efficiency, environmental and social. One thing that that doesn’t tell us is, how is this doing financially. So I took a couple of the numbers that he put together. And I want to just kind of get a feel for where we are in terms of size of the business today, and not get so lost in the vision of 50 years from now. So we said that they’ve sold about 2000 units this year. If you say that the smaller one is 3100. And the larger one is 6400. We don’t know the product mix. So let’s just say it’s 50/50, that’s going to get you 4750 as an average price per unit, multiply that 2000 times that average unit cost, you’re looking at like nine and a half million in revenue. That’s higher than I thought kind of coming into the interview.
Jay Clouse 1:31:09
Although we should say that 3100 $6400 price points are MSRP. So what he’s actually selling them for is going to be probably far less
Eric Hornung 1:31:19
fair. So what is the typical discount between MSRP and wholesale costs? I’m going to say 30%. Okay, so if we cut that 30%, we’re still looking at $6 million, still higher than I thought I thought these would be a lower, I thought there would be less revenue at this point. based on how much we talked about the future vision. I found across our podcast interviews that when people focus so much on the vision, it’s usually because they don’t have a product that is currently turning enough revenue to talk about. And that’s not a bad thing. It’s because you’re still in the discovery stage, and you haven’t gone to market or maybe you have gone to Market. But it’s just like, with beta customers. And this is more advanced almost than I was expecting.
Jay Clouse 1:32:04
Yeah, wonder what the cash flow is like of this business, because he’s raised 3.9 million to date was raising a million dollar bridge round. And that is predominantly to help grow the team, because there are five people making this. And that’s their constraint. He said that a 5500 order backlog in his pipeline. And if we’re looking at that number, you know, how much revenue is that just sitting on the shelf? Are we saying are we guessing that that pipeline is already paid?
Eric Hornung 1:32:27
I don’t think it’s already paid. My guess would be because he talked about how it’s important that the he delivers when people place orders. So I’m guessing that’s a he talks about these 1000 inquiries a month? I’m guessing these are the thousand inquiries that are kind of lining up. What percent of those convert? I don’t know. But I’m guessing it’s a decent percentage, he’s already shipped 2000 of them.
Jay Clouse 1:32:49
Yeah, seems like manufacturing must be a real constraint. Because if you have that type of inbound inquiry, and you can turn cash on it, that would help you, you know, not raise a bridge not have to raise immediately, there must be some real bottlenecks in the the manufacturing side of things, which is a little bit of a shadow for me, because I wonder, what is it about manufacturing that slows down? And how do you get this to a level of scale?
Eric Hornung 1:33:11
That’s how I feel as well, I think it’s the decentralized manufacturing network that they’re creating, where everything is created regionally, that is probably making this hard. So when you think about large manufacturers, they have teams and all of these regions that are working with the manufacturers and the local distributors to get everything out to the customer. These are five people sitting in Austin, trying to run a worldwide network of manufacturing and distribution. Because when we asked about the customers, he said, No, they’re everywhere. We have people in Asia, we have people in South America, we have people in Europe. It’s wasn’t like, oh, we’re just selling to Austin to launch and find this thing. So the breath just has to be exhausting.
Jay Clouse 1:33:55
So Eric, all that said, What are you looking for six to 18 months from now from semtive?
Eric Hornung 1:34:00
let me see that team size. Let me see if it’s growing. Let me see if that increase in team size is shortening that pipeline? Because if it’s not, then we have a different problem.
Jay Clouse 1:34:10
Yep, I was gonna say same thing. I’m looking to see what does their output look like? But that’s from Team size, or different manufacturing partners, whether that’s from a different distribution strategy, where they’re honing down and saying, we’re going to go to these regions. First, I want to understand that I want to, you know, keep a finger on the pulse of how our conversations going with the energy and utility companies here in the United States. Are they making headway? Does it seem like they’re going to have a good route to market through regulation in some of these, you know, 18 states that Benjamin mentioned, are in the process of creating clean energy legislation right now Jay, do you think you could make a functioning prototype of a microphone out of some wires from around your house and a toilet paper roll?
I don’t. And when you’re talking about toilet paper rolls, I just thought back to when I was a kid. My dad, I always refer to those things as dirters
Eric Hornung 1:35:02
Jay Clouse 1:35:03
dirtersis like the director that inside inside wrapping paper or inside toilet paper is just a director. So it’s like No, I don’t think I could make a functioning clean energy wind turbine out of a director,
Eric Hornung 1:35:14
listeners. If you have any funny names for toilet paper rolls, like dirters or worpers or who knows what, shoot us a tweet at upside FM. If you have any thoughts on this episode, you can also tweet at us at upside FM. Or if you have something a little more long form, send us a note at firstname.lastname@example.org.
Interview begins: 07:30
Insight begins: 58:56
Debrief begins: 1:21:22
Ignacio Juarez is the Founder and CEO of Semtive.
Semtive is a Clean Energy startup that was born in Argentina. They believe that access to clean energy should be effortless and affordable. In order to achieve that, the company developed Nemoi, a vertical axis wind turbine designed to work at very low wind-speeds making it ideal for commercial and residential use in urban and suburban areas.
Through its state of the art all-in-one micro inverter the whole Nemoi system becomes smart and, using AI and blockchain technology, Nemoi systems nearby can communicate with each other to improve energy management and efficiency. Nemoi can work as a stand alone system or in combination with other energy sources and storage devices.
Semtive was founded in 2009 and based in Austin, Texas.
Learn more about Semtive: https://semtive.com/
Benjamin Stafford is the Director of Policy and Public Affairs for Clean Energy Economy Minnesota.
He serves as advocate and liaison to key industry stakeholders, elected officials, community leaders, and policymakers. He works with member companies and stakeholders to develop and implement strategies to ensure CEEM’s organizational interests are advanced in legislation and regulatory policy work.
Follow Benjamin on Twitter: https://twitter.com/BenjArtStafford
Learn more about Clean Energy Economy Minnesota: https://www.cleanenergyeconomymn.org/
This episode is sponsored by Taft, Stettinius & Hollister, a full-service law firm known for assisting entrepreneurs across the Heartland.
Learn more about or get in touch with Taft: https://www.taftlaw.com/
Follow upside on Twitter: https://twitter.com/upsidefm