Energytech Startups

00:00:00:00 - 00:00:28:21
Unknown
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00:00:28:23 - 00:00:45:22
Unknown
Welcome back to the show. I'm excited today to be with Gabe Quadra at Powerhouse Ventures, where we're going to learn a lot about AI today, amongst other things that powerhouse works in. And very excited to hear about, one of the active investors who's who still deploying capital and climate energy. So, Gabe, thanks for coming.

00:00:45:23 - 00:01:03:11
Unknown
Thank you so much for having me. Really excited to be here. Yeah. Good. Yeah. Yeah. Tell us a little bit about, what's been keeping you, I guess up at night the last last year. What keeps me up at night is the last year. Our industry is just changing so fast. And, so I started Powerhouse Ventures about four years ago.

00:01:03:23 - 00:01:21:19
Unknown
And at that time, we were still in a time in the power sector where we were really having flat load growth, a lot of focus on carbon decarbonization, what that would look like. I was used in something, something people talked about, but not in the same way that it was today. And definitely not seeing the low growth that we're seeing from it today.

00:01:21:21 - 00:01:39:15
Unknown
I think we are in a moment in time with uncertainty. That just feels, at a, a level higher industry around how much slower growth will come on. How will these tools be used both within our power sector or within our energy sector and outside of it? What does it look like to build a great startup today?

00:01:39:15 - 00:01:54:14
Unknown
What resources will you need or wants you need? How will you continue to assess the evolutions of AI every six months with things changing as fast as they are? So what keeps me up at night is trying to figure out how we keep up with that and invest in really great companies who can support that that transition.

00:01:55:09 - 00:02:21:00
Unknown
Tell us a little bit more about Powerhouse Ventures. How are you guys organized. And you know what do you focus on in your investments. So at Powerhouse Ventures we invest in early stage usually precedes seed stage. Companies that are using digital solutions to advance energy mobility. The built environment in industry. So looking for kind of companies are going to enable the future of power and really a future of our economy in a way that is cleaner, more resilient, and more affordable.

00:02:21:01 - 00:02:41:14
Unknown
I think folks often ask us about the digital solutions side of that, given that, you know, realistically, to transform our energy system, we have to deploy steel in the ground. And I absolutely agree. The way we think about it, the way we've thought about it for a number of years now, is there are a lot of awesome commercial ready technologies today that can help move the needle in terms of creating that future.

00:02:41:16 - 00:03:02:03
Unknown
But if they're going to be successful and be successful at scale, we need to optimize the way that we deploy them, optimize the way that we operate them, and find other solutions that tend to restrict the adoption of of new technologies in that, you know, software. When we started, the fund was a great tool for doing that. I think we look at the landscape today digital solutions, fintech, AI, all of those are great solutions for for doing that.

00:03:02:03 - 00:03:20:19
Unknown
And we have a number of examples in our portfolio, of companies doing just that, enabling us to deploy so large scale, enabling us to deploy and operate, you know, utility scale batteries at scale, unleashing flexibility across the grid. So those are the kind of things that we look for. Yeah, I think one of the the interesting things about digital solutions is they are a huge enablement.

00:03:21:03 - 00:03:39:13
Unknown
When you can kind of think about scalability. But I remember talking to a few of these investors who focus on, carbon abatement and saying, okay, well, we want to invest in things that remove a gigaton of carbon, 100 giga, tons of carbon. And, on the one hand, like, yes, we do need to put stuff, you know, steel in the ground or green steel on the ground.

00:03:39:21 - 00:03:57:05
Unknown
And there's a clear carbon abatement. But I'm very curious if you guys, if you take a lens to say, well, if this enabling technology existed unlocks a certain amount, and I've definitely heard it from, like, a group of angels in the northeast that they like discount, like the effect, like, 100 to 1 because it's really about the steel.

00:03:57:05 - 00:04:19:03
Unknown
It's not about the new tech enabling technology that that leads to decarbonization, so to speak. Yeah. I'm curious how you guys, if you think about that. It's a really great question. Absolutely. Something that we we've wrestled with over time. We're pretty thoughtful about not saying like, hey, X investment is going to drive this amount of decolonization. I'll use a company portfolio called ZT that helps finance electric vehicles, for example.

00:04:19:14 - 00:04:43:15
Unknown
In the UK, it is impossible to say how much that financing moved the needle in terms of getting more electric vehicles, you know, kind of deployed in fleets across the UK. We would be disingenuous to put a number to that. And I think we can agree that having access to thoughtful, affordable, kind of fit for purpose financing is key for deploying the types of solution that we want to deploy.

00:04:43:21 - 00:05:00:15
Unknown
And so what we look at is can we show the way in which it will either drive decarbonization impact or the way in which it will make our power system or our kind of built environment more resilient over time? And so as long as we can point to a company and say, this is the way they're enabling, that it falls in scope for our thesis.

00:05:00:16 - 00:05:13:22
Unknown
Yeah, I feel like I would I would push so hard and say, like, financing is the name of the game here, right? Like, this is like what made like forward work. She was able to like or GM work because they were able to finance cars and like no one will buy a wind turbine today up front. You got to finance it.

00:05:14:00 - 00:05:37:00
Unknown
And if you can't figure out how to underwrite like then there is no deployment. So I but I totally agree, it's hard to measure what that effect is. Because you don't have an experiment you can run. Right, exactly. Yeah. Yeah. I mean talk to us about you know what you've seen change in the past couple of years with the increase in power demand because of AI.

00:05:37:09 - 00:06:07:00
Unknown
How is that maybe changing the way that you're looking for companies to invest in? Yeah, I think there when we think about specifically on load growth in AI, there are a couple of really exciting changes, as well as many challenges that that come with that. One is the way that we are able to model and operate the grid has changed fundamentally, which is really exciting because with the increased computing power that we have, the ability to run simulations on models with new techniques in a way that wasn't possible before.

00:06:07:07 - 00:06:25:15
Unknown
So we're investors in a company called Think Labs, which is providing kind of a physics based AI operating system for the grid and the way in which they're able to improve the way they create is operated, the way in which able to speed up things like interconnection reviews is just really fantastic. And they're running orders of magnitude more simulations of the grid than was possible before.

00:06:26:02 - 00:06:45:16
Unknown
And so there's that of how we operate the grid, where, investors in another company called Digital Energy, which is working on how you predict nodal prices in markets over time. And similarly, they're able to run far more simulations and give you a much more granular view and a much more probabilistic view of what the future could look like so they can make better decisions around our industry.

00:06:45:17 - 00:07:17:16
Unknown
So I think that is one piece that's been really exciting and fascinating. A second piece, is utilities are being driven to adopt innovation in a way that I don't think was necessarily true in a time of a flat load growth. And it cuts in a couple of ways. I think, you know, we are all familiar with the utility business model where you're, you know, looking to be able to deploy capital that you can earn a rate of return on and, and then minimize your O&M costs while meeting kind of, the reliability and other requirements that regulators have in a time of flat load growth.

00:07:17:17 - 00:07:43:15
Unknown
Utilities were looking for those capital projects to be able to deploy. I think we might be moving into an era in which the utility has more projects that they want to do than capital they are able to raise. And so that's going to open up innovation, I think, in areas that were perhaps less attractive to utilities before, but now are and so how do you really think about non wires alternatives for example, instead of building out new distribution.

00:07:44:04 - 00:08:01:21
Unknown
We are seeing a ton of interest in flexibility, both for data centers themselves as well as for other types of load. In a way, I think surpasses the interest that we've seen before. And we, are invested in something called Mercury Computing, which is focused on just that, building the tooling so that a data center can trade flexibility for capacity.

00:08:02:06 - 00:08:29:02
Unknown
And working hand-in-hand with some great utilities to help set that up. So those are things that are fundamentally different now because we are in this era of, of low growth. And then I think the focus on affordability similarly means that, you know, utilities are incentivized from a financial perspective and by their regulators to find creative ways to bring down rates in a way that I just don't think was as pressing of a pain point 4 or 5 years ago, when we were just in a very different era of, of low growth in this country.

00:08:30:15 - 00:08:49:17
Unknown
And you said you invest in early stage companies. Right. So what are you looking for in terms of traction to say okay I have enough, you know, de-risked enough for me to go in and like invest in this technology. Yeah. So for, for context, we tend to invest in companies that range from zero to about $1 million in, in revenue.

00:08:49:17 - 00:09:10:15
Unknown
Right. And so, there are cases in which we invest in folks. Pre-Revenue. And in that case, the team has an even higher bar. They have to clear in terms of, their ability to, run a successful company in that space like that product market fit has to be excellent. I think it's a little easier when folks have some early proof points.

00:09:10:15 - 00:09:25:17
Unknown
They can point to both to be able to say like, yeah, look, we've been able to go to market with some customers that are relevant, and offer them a solution that is valuable to them. That is a de-risking kind of factor that is very helpful and that we look for. Rarely what I say, folks are all the way to product market fit.

00:09:26:03 - 00:09:48:10
Unknown
But they, you know, have those kind of early signals that it could be there and that they can run the motion of, of selling into what are often sophisticated, complicated customers to sell into. Yeah. So those early signals would be like pilots, letters of intent. What are you looking for. Yeah. It depends a little bit on the structure of the company because we are investing in and generally asset like solutions.

00:09:49:04 - 00:10:09:09
Unknown
Often they're able to have a beta or a, you know, kind of first product live and being used by some customers. So that's, you know, that's an ideal scenario. Pilots, depending on what they're building, can be a good proxy. I would say rarely is a letter of intent alone enough to me that we're going to kind of, count a lot in terms of traction.

00:10:09:20 - 00:10:25:13
Unknown
But again, if you have a fantastic founder with great market thunder, market fit and a very clear vision for what they're building, and we're able to validate those pain points with experts, we're able to move even before folks have signed their first contracts. Yeah. So you said it a couple times. Yeah. Finding a founder who has found a market fit.

00:10:25:13 - 00:10:38:12
Unknown
So I'd love to hear and what that is, because I think a lot of times when we do business clinics or accelerators, it's about product market fit. But I think, you're not the first to have said that on the show, but I would love to hear how you find it or how you spot it. Yeah, it's a great question.

00:10:39:23 - 00:10:57:00
Unknown
Maybe to to put some context into how Paths Ventures fits differently than your typical Silicon Valley investor. The teams that we back tend to be more experienced professionals. So we we don't have very many companies where you say like, yep, this team just graduated from Stanford. They're all living in apartment together, working any hour weeks.

00:10:57:00 - 00:11:18:09
Unknown
Like, that's not typically the profile that we've seen to be successful in our in our space. And that is because, as you all know, if you're selling into critical industries, if you're selling into utilities, if you're selling into independent power producers, they're looking for teams and founders and technologies that bring a certain level of credibility that they can trust with things that can explode or things that, you know, materially impacts everyday life.

00:11:18:16 - 00:11:37:05
Unknown
And so they're it it's harder for them to roll the dice on something that is unproven. So when we think about founder Market Fit, we're looking for folks who bring that credibility, who can walk into the room with the utility to walk into the room with an IPO or, you know, population, walk into an industrial facility, and have that credibility right out of the gate.

00:11:37:16 - 00:11:57:19
Unknown
We are looking for folks who ideally have lived the pain point that they really understand it, with with nuance. And they understand the reasons why other solutions haven't worked at it and can articulate that. We're looking for. And then, in a perfect world, we're looking for folks who have taken all of that and found very complementary co-founders who add something to what they're building.

00:11:58:04 - 00:12:18:07
Unknown
And so usually we're investing in co-founding teams very rarely when investing in a, in a sole founder. And it's because we find that our, our best teams are bringing together multiple perspectives, multiple skill sets that is going to be able to set them apart in the market. And you're based out of like you're headquartered. Where did you start as per husband Carlos Ventures is headquartered in Oakland.

00:12:18:22 - 00:12:37:19
Unknown
And that is definitely kind of the core of our operations. But our investment team has become more distributed over time. So I'm here in Houston. I have a colleague in Ann Arbor, Michigan, a colleague in New York, a colleague in Denver. And what I think we've found is, while there are definitely drawbacks to having a distributed team and challenges that come with that, it gives us different perspectives and different networks.

00:12:38:03 - 00:12:59:03
Unknown
And we hear slightly different ideas by having folks spread across the country. And so I think on balance, it's been been really valuable for us. The the conversation in Houston is different than the conversation. And, and it's different than the one in the San Francisco Bay area. Yeah, it's very funny. Last week, we, last year, I think, during Climate Week, I think the discussion in Houston was great.

00:12:59:03 - 00:13:30:00
Unknown
Load growth is coming. Let's figure out how to build everything. And then, the next week I was in New York and all the conversations were, oh, no, I mean, what do we do? And it's just a difference in mindset, which, yeah, it can be, illuminating how that perspective really just is different in different markets and ecosystems, like I see in Houston that, you know, there because of the eye load growth, in our experience in building power plants and like just building anything, private equity is just throwing money at anyone who proposes.

00:13:30:00 - 00:13:48:03
Unknown
You know, we're going to build a natural gas fired power plant. You know, what are you seeing? Really happen, like, especially, you know, putting on your, like, hat, in Texas compared to maybe what's happening in the rest of the world? Yeah, it's a great question.

00:13:48:05 - 00:14:06:00
Unknown
It's been interesting to see the kind of startups that have emerged from our ecosystem. And not surprisingly, they tend to be tied to the industries that have been really successful here in the past. So, we have one portfolio company based in Houston and brand focused on power markets trading, something that has been core to the Houston energy scene for a long time.

00:14:06:00 - 00:14:31:07
Unknown
And I think it made sense for a company here to innovate in that way. I mean, Furbo is the biggest name, but there are a number of great geothermal related companies, that are based in Houston or the Houston area. I think that resonates based on the skill sets that we have here. We're seeing some really cool research come out of our our research universities and out of industry, around industry and industrial efficiency and some exciting things happening there.

00:14:31:08 - 00:14:57:13
Unknown
I think, you know, we've both all spent time I can tell labs and seeing the great work that's happening there. On the digital solutions side, we're still not seeing as much happening here in Houston. I think, you know, while we have portfolio companies spread across the United States and Canada, in Europe. There's still a little bit of a gravity toward, San Francisco and in the Bay area there, I think because of the culture of building, and because of the tech talent there.

00:14:57:15 - 00:15:20:23
Unknown
So we we actually have great founders spread across the United States, Canada, Europe. And so there is there's a lot of great talent spread across. I think culturally, there's still innovation that is happening in the Bay area that is different than what seeing in other places. What's fascinating is even though we only have one portfolio company in Houston, a majority of our portfolio companies have customers or potential customers in Houston.

00:15:21:10 - 00:15:43:02
Unknown
And so I think that's the other really interesting part of our ecosystem is this idea of, yes, there might be innovation happening in other parts of the country, of the world, and we need to get those founders here to be seeing the customers that they could work with, working alongside them. So, you know, if they're not permanently relocating to Houston or setting up offices here, continue to drive events like Houston Energy and Climate Startup Week, continue to drive other events.

00:15:43:12 - 00:16:05:01
Unknown
Like some of the work that Red lines does every Intel Labs does to get founders from around the world. In Houston rubbing shoulders with our, our corporates, and allowing them to go a little deep on their pain points, opportunities and find those, hard to recreate kind of, encounters that I think can really help get innovation into our, our corporate ecosystem.

00:16:05:03 - 00:16:26:03
Unknown
Yeah. No, that is why we started our pilot on this is are like one drop for the show is like in Houston energy and Climate Startup Week is we needed a venue for people to come in and and be less about what the investment and more about like how do we deploy things that are deployment ready. And I think rice hosts a fantastic event, on like Wednesday, Thursday with the Rice Energy Tech Venture Forum, very clearly a venture forum.

00:16:26:05 - 00:16:43:16
Unknown
And and we're looking at this and saying, look, the decision makers are in Houston, the people who are going to buy your 1 to $10 million project to be your first contractor, her contract. You need to be in the room. And so we want to put together that room. And I think that's a very common theme in energy is you got to figure out how to get to Houston.

00:16:43:17 - 00:17:09:14
Unknown
Yeah, but the bottleneck, I feel like in Houston is the capital. We just don't have people deploying capital to invest in these many of these companies. Right. So it's great to have someone like power House ventures here in Houston. But you know, any thoughts on on that, on what we could do more to make sure that other venture firms come to Houston and deploy capital in companies that are based out of here?

00:17:09:16 - 00:17:31:01
Unknown
Yeah, I so for founders that are listening, I don't think you should say, oh, I'm in Houston. There isn't capital available. I think, in today's world with video conferencing etc., it's just much easier to still find ways to get in touch with VCs across the country. And so you should also limit your, fundraising just to the folks that are based here.

00:17:31:19 - 00:17:57:05
Unknown
So I think that'd be kind of point one is send your, your deck and your information to folks in Boston, in New York, in the Bay area. That there's, there's some really fantastic investors who are looking for opportunities and scouring the country for the for those opportunities. I think having events that continue to showcase what's happening here, I think having, the Iron District now, just saying, hey, there's a place for innovation is happening in Houston.

00:17:57:12 - 00:18:13:10
Unknown
And an anchor point that wasn't here, you know, even 5 or 10 years ago. All that is moving in the right direction. It's going to take time. But I think all of that is also really moving in the right direction to be able to showcase the fact that there's innovation happening here. It doesn't have to be the same as what's happening in Boston or the Bay area.

00:18:13:11 - 00:18:32:03
Unknown
It can have it should have our own unique Houston lens and filter on it. But that there's a reason that folks should be spending time coming to Houston for our events and to meet with our startups. Where where were you before you moved to Houston? I briefly lived in Colorado, but when I saw I was already living in Houston.

00:18:32:03 - 00:18:55:03
Unknown
In Houston. Okay, so you've been here for a while. What can we learn? You know, what can founders learn from from the West Coast or the East Coast? Like how to pitch to investors? Yeah. So this is going to be specifically for early stage venture capital. It changes a lot. If you're looking for project finance, if you're looking for private equity investment, right.

00:18:55:04 - 00:19:17:17
Unknown
So it's something to kind of clarify upfront. When you're pitching early stage venture investors, you have to understand there are our economics are such that we need to be investing in things that can have really massive outcomes. And so you have to paint us the vision of ten years down the road, the way in which this company is going to be really big.

00:19:18:22 - 00:19:39:15
Unknown
One thing that we see, you know, part of our diligence process is asking folks about how they will be defensible over time. And a mistake that I see founders make is they list off their differentiation today when we ask about their defense ability. And being differentiated is super important for starting and for, you know, kind of getting a cup off the ground for getting in the door with your first customers.

00:19:39:23 - 00:19:57:18
Unknown
But if I'm going to invest in a company that is going to ultimately, you know, drive outsized returns, you have to be able to do something over time that others aren't going to be able to replicate. And so what does it look like to build your moat? Over time is something that I think founders need to be thinking about early on.

00:19:58:17 - 00:20:18:12
Unknown
And it's something that I think is ingrained in those other ecosystems where there's a lot of conversations among founders around and you're, you know, rubbing shoulders with more VCs in the way they think and talk. I think because Houston is an ecosystem so focused on execution. We we often are thinking more in that, you know, the next one year, three years, five years.

00:20:18:12 - 00:20:33:17
Unknown
And the really one of the really hard challenges of being a founder is you have to do that and you have to be able to think ten years in the future. How am I going to return money to these investors that are putting money in at the early stages? And I think a challenge is a lot of times you'll see on a pitch deck, first mover advantage is the differentiation.

00:20:33:18 - 00:21:00:18
Unknown
It's like, okay, how long does that last? How long does that last? Like, there are plenty of first movers who have not ended up being the successful, you know, kind of outcome in a, in an industry. Yeah. And a lot of investors are talking about how, you know, they're they're also a bit wary of investing in tech, digital companies right now because of AI and its ability to disrupt very quickly something that you're building.

00:21:00:18 - 00:21:17:18
Unknown
And you think you have a moat and you're the first mover. And then another company can come in with very, you know, good developers or whatever. But using AI in, you know, you know, in a week and they can create the same thing. What are you observing and what are, you know, your insights into this? No, it's a great question.

00:21:17:18 - 00:21:37:04
Unknown
And I think we have peers who have moved away from digital solutions because of that concern. Our perspective, and this has been true even before, I think it's exacerbated by AI is the algorithms themselves can never be the moat like they can be the way that you have a head start, but you're never going to design software itself that no one is going to replicate.

00:21:37:04 - 00:21:58:14
Unknown
And, you know, securing IP protection for software is very, very difficult, right? And so what else can you do then to start building up something that makes you hard replicate, in the industries that we tend to invest in. Going back to this idea of credibility. One way you, you do create a moat is by having proof points that folks can lean on to say like, well, like this.

00:21:58:14 - 00:22:13:14
Unknown
This product works and does so really work, really well. And this founding team is credible in a way, and as a unique skill set. Other folks don't. I mean, there is a certain level of moat that can be built there. Maybe it doesn't mean you're the only company that provides that solution, but there's a limited number of folks who who will.

00:22:13:14 - 00:22:32:15
Unknown
And the nice thing about sticking to utilities is they love to show what they're working on, who they've had success with. And so that can be really successful. We also think about data, and data moats, you know, today, data is, is one of the ways in which you can set yourselves apart from the kind of the rest of the ecosystem.

00:22:33:01 - 00:22:50:19
Unknown
It can allow you to run more effective models. It can allow you to run models faster than others can. If you have the right data. And that data has been structured in a way that is excellent. I caution founders not to overestimate how much data corporates will share with them. I think that's the trap folks fall in of, like, yeah, we're going to work with, you know, Chevron or Total.

00:22:50:19 - 00:23:13:23
Unknown
I'm not going to share all of our, all of their data with us. So yeah, be cautious on how you will build that data, but I think that is definitely one piece. So those are some of the areas. You know, in some businesses, you see network effects that can be really powerful. We're seeing more folks embed themselves within companies and make sure their products aren't are embedded throughout multiple steps in a workflow, sometimes even behind the scenes.

00:23:14:07 - 00:23:34:09
Unknown
Which makes it harder to, rip and replace. And so finding kind of opportunities like that, I think, is where ultimately moats can be built in our space. Versus just saying, like, hey, like, I'm the first one to figure out this specific way, building a digital solution and not expecting someone else to be able to replicate it.

00:23:34:14 - 00:23:59:09
Unknown
What's a nice, network effects business that you've seen or worked with? Yeah, we have some, we have a business called Rock rabbit that works in the demand side management space. So they help contractors, manufacturers, utilities, and other incentive providers ease that process of if you're if you can access rebates for a high efficiency air conditioner or for a heat pump or for a heat pump, water heater.

00:23:59:19 - 00:24:16:20
Unknown
And what's nice there is, you know, as contractors are use it, that makes it more seamless for the utility to come on board as utilities using it. That makes it more seamless for contractors are using it and really greasing the skids for that whole process and reducing a lot of the soft costs that are, inherent in, I think, the demand side management space.

00:24:17:06 - 00:24:40:17
Unknown
And so that's one example of where we can see network of action. Thanks for listening. If you're a fundraising now or know someone who is, I want to tell you about saffron, our investor relationship management product for energy tech founders. Think of it as a CRM built for energy fundraising. Use our recommendation engine to find the right investors faster, and then track every conversation and stay connected through your raise.

00:24:40:22 - 00:25:04:01
Unknown
There's a free tier, so you can start today at no cost. That's c y r o n.com. Now thanks. And back to the show. Yeah. You mentioned earlier about, working with, Power Grid company, our grid and utilities. And, one of the things I'm always curious about is as I'm out and at these conferences, I mean, all these, like, little companies are doing a pilot with, like, I don't know, 5 to 10 utilities.

00:25:04:01 - 00:25:32:10
Unknown
And I have no idea if that's a lot or a few and how to tell they're all different because it feels like a lot of them are an algorithm at addressing one part of the problem. And, I'm, I'm curious if you can educate us on, like, when does it become interesting from a, for a company who really just seems to, be an algorithm plus and and I guess I, you know, you mentioned two companies, Amazon and I forget the first one you mentioned, you know, they're clearly doing something that's, you know, beyond like a little a little piece of the puzzle.

00:25:32:12 - 00:25:39:05
Unknown
Right? Yeah. So maybe starting with the utilities piece.

00:25:39:07 - 00:26:00:07
Unknown
Utilities will absolutely pilot a lot with, you know, and the cycle from going from pilot to full contract can be long and painful and is a place where many a startup has ultimately gotten gotten stuck. When we think about utilities, I think it's first important to, segment the utility market in the United States a little bit, in a couple of ways.

00:26:00:18 - 00:26:19:23
Unknown
We'll see some finders companies, which is like, hey, there are 3000 utilities in United States. And you know what is multiply? You know that by 500 K. And look how big our market is realistically. And you understand you've got one about 100 ish, really large investor owned utilities that are very sophisticated in what they do. Deep pocketed, you know, etc..

00:26:20:11 - 00:26:44:06
Unknown
And then you have a lot of really small co-ops, all utilities spread across across the country. And then you also segmented by are you a fully integrated utility like in Excel Colorado that owns, you know, generation, transmission, distribution. And the customer or are you in Texas where all of that is, is separate, right. So you have a lot of different kind of subcategories within utilities at the most fundamental level.

00:26:45:10 - 00:27:06:14
Unknown
Either you need to be able to say, like, we can navigate really long sales cycles with those big utilities. And there's a, you know, multimillion dollar contract or million dollar contract, at least on the back end. And then you you can start to see the pathway for how that becomes very big. Or if you're going to try and sell into the other thousands utilities, you have to make it really easy for your product and really seamless and really quick.

00:27:07:00 - 00:27:29:10
Unknown
That where folks get in trouble, I think, is when they get stuck in the middle where the contracts they can demand from utilities aren't that big. They don't have a pathway, really, for expanding them. And once you're inside a big utility and yet they're still navigating year long 18 months pilot and sales cycles. And then the revenue just becomes difficult to kind of stacked stack together.

00:27:30:10 - 00:27:50:16
Unknown
So what we're looking for, going back to your original question, as folks are piloting with utilities is, why did the utility choose to do this pilot. What is the scope of that pilot versus what a full rollout would look like? And then is this such an issue out of utility to where you might see that sales cycle come, come down a little bit.

00:27:50:16 - 00:28:15:10
Unknown
So, you know, in the best of cases, we're looking for issues that are C-suite level kind of conversations for a utility. And if it's not a C-suite level conversation for a utility, then other pieces of the kind of business model need to be very, very compelling. And you really need to understand or help us understand how you're going to navigate the sales cycle length and how there's an opportunity to really grow revenue on top of those contracts over time.

00:28:17:11 - 00:28:35:13
Unknown
I'm curious, obviously you weren't always a venture capitalist and weren't always an energy, VC but what kind of landed you in this path and and where you said I need to like work on on energy specifically. Yeah. It's been a little bit of a winding journey. The short answer I came from the industry side, which is great.

00:28:35:13 - 00:28:56:09
Unknown
The longer story is, I, I grew up in most in Houston, around the energy ecosystem. My dad spent his whole career with BP as a chemical engineer by training. A lot of his work was in downstream and chemicals. But you guys MBA and spent time in other parts of the business as well. Where he was, I think, drawn to the, engineering side of things.

00:28:56:14 - 00:29:17:00
Unknown
I was always fascinated by the markets, the policy, the geopolitics, etc.. So winter undergrad to study economics, thinking I wanted to work somewhere in, in kind of policy, and, or international kind of work. For those who know Ken Medlock over the Baker Institute. He played a pretty pivotal role. I don't know if you would know that.

00:29:17:04 - 00:29:35:14
Unknown
I took two semesters, of energy economics with him. And this was at the time where Texas had just deployed kind of first wind at scale to where you were being for the first time to see negative prices in Ercot. And so I remember kind of walking through the way, the PA system, how do I been deployed of, you know, your baseload power?

00:29:35:14 - 00:29:50:00
Unknown
And then, you know, as demand goes up, you can play your next kind of tier and then on your peak days, you deploy your pictures. And I'm taken to sometimes like that is changing really rapidly as you have these zero marginal cost assets that are unpredictable, like wind and solar are coming online. And now you have these negative prices.

00:29:50:02 - 00:30:11:13
Unknown
You don't you know, you're trying to manage this. And suddenly I think two things became clear to me. One was that the energy transition was gonna make the power sector very interesting, in that it could have a really exciting kind of impact on decarbonization and climate change. So I tell folks, the, like, light bulb flickered at that point, didn't come all the way on, out of school.

00:30:11:13 - 00:30:35:21
Unknown
I joined the Peace Corps, and went and worked international development. Scratch that itch. Spent, in suspending the normal two years. Spent four years in Costa Rica as a, economic department volunteer. Had a fantastic experience there. Met a girl there, which is important for two reasons. One, she eventually agreed to marry me. And two, she, I followed her to Denver and kind of got my start in energy transition in in Denver.

00:30:37:05 - 00:30:55:20
Unknown
And so I left the Peace Corps, knew I wanted to work on energy transition issues. That had kind of become clear during my time abroad. Didn't know exactly how to get my foot in the door. And after a lot of no's on applications, I took some classes at the University of Colorado Boulder at the time, had a professional, certificate in sustainable energy.

00:30:56:03 - 00:31:16:22
Unknown
And through that program got connected with a company called E source, which does, data science research and consulting for electric and gas utilities across North America. Their origins are from the Rocky Mountain Institute. And the work of a guy named Amory Lovins who was the first to say, like, hey, you know, what people care about is, is services, energy provides not how many hours come to their home or how many therms they use, right?

00:31:16:22 - 00:31:35:10
Unknown
What they want is hot showers and warm meals and or cool, cold days in Houston during the summer. Right? And so I joined e. Sources demand side management team. First, just an entry level position managing a database. Grew that over time and got to run our data products and operations for our division. Got to do some research.

00:31:35:18 - 00:31:50:07
Unknown
And I tell folks I had the opportunity to learn the industry backwards, where normally, I think in our industry, we we started the power plant and worked on and we started the wellhead and worked down. Right. And what it forced me to do is say, okay, so the news customer, what are they? What do they care about?

00:31:50:07 - 00:32:05:21
Unknown
What are they trying to do? What how might we be able to encourage them to do the thing that is most beneficial for the system writ large, and now work backwards and see what those impacts look like and how much value there there is there. And so it was really awesome way to get to learn the energy and that industry.

00:32:05:21 - 00:32:27:11
Unknown
Excuse me. And then I get to work with utilities and to understand a little bit of what that is like. And met some really fantastic, sharp, thoughtful, motivated people within utilities and, and very thankful to have had that, that experience. And then, I know the power ventures interesting for a long time after they raised fund two, they were looking to expand their team and were adding folks with industry expertise.

00:32:28:04 - 00:32:44:10
Unknown
And were willing to roll the dice on someone who didn't bring the traditional finance side. So really thankful for this opportunity. I've been a part of ventures for four years now. I've learned a ton. Work with amazing teammates, amazing founders. And just trying to make the most of the opportunity. That's a fascinating story.

00:32:44:10 - 00:33:06:21
Unknown
I think a lot of people talk about how it's hard to break into venture, and so it's a great example of how, you know, you you can be in industry. And now venture firms are valuing a lot more that, experience that people from industry actually bring. Yeah. Thanks. I was thinking, as you were talking, you know, are you coming from this kind of end user perspective?

00:33:07:03 - 00:33:26:02
Unknown
I feel like a trap. A lot of times we fall into as, like, climate entrepreneurs is thinking that there's a premium or a value on kind of the green or the green premium, and, and, you know, here in Houston, sometimes we would talk about, I was at, root of orange, natural gas. And the reality is the spreads very small because most people just want to be they just want to be the right temperature.

00:33:26:03 - 00:33:45:18
Unknown
They just want to be comfortable. They just want the lights on. And they're the that the, you know, the climate and energy technologies need to to deliver both. But the end user, the majority of them like honestly it's not a big driver for them. And it's unfortunate. But that can't be the only story, right? No. Agree.

00:33:45:18 - 00:34:12:00
Unknown
And the other piece I would add on is most people don't want to think about their energy usage either. They want to walk home, turn their lights, you know, kind of get their build the end of the month, assume it's going to be within a certain range and then go back to the rest of their, their lives. And I think that another trap that I fall into, and then I see entrepreneurs fall into especially we look at kind of demand side management solution or load flexible solutions is assuming that everyone else thinks and cares about energy in the same way that we do, right?

00:34:12:07 - 00:34:39:07
Unknown
And if your solution is going to work, you know, you need to make sure that it can be something that folks don't have to spend much time thinking about. And so there's, there's a psychology part of the flexibility that is really important as well as the economics part. And I think the best founders understand, and best companies, you know, understand both of those when they think about their solutions, especially if they're looking at mass market demand side flexibility.

00:34:40:09 - 00:35:05:19
Unknown
Talk to us a little bit about your process from, you know, when a company comes and, pitches you and you, you kind of find them interesting to actually making that decision to saying, okay, we're going to pull the trigger, we're going to invest in this company. Yeah, absolutely. We try to do as much homework as we can before we take a first call with the company, so we can come and have a real conversation instead of having folks kind of walk us through a pitch deck.

00:35:05:20 - 00:35:25:23
Unknown
So usually we ask folks to send us their materials beforehand. We review those materials and, we really have, you know, like I said, it's more of a back and forth. Tell us a bit about your team, about how you met each other, about why you decided to start this business. Some entry level kind of questions about the product in the market and their perspective on it that we customize based on the startup.

00:35:26:11 - 00:35:43:16
Unknown
Assuming that goes well. Kind of the next step in our process is, meeting with our full team. That has two purposes. We wanted to say, have we seen enough here based on their materials in that first conversation, to commit more team time to this process? And second, what are the areas that we really want to make sure that we dive deep on as we move forward in the process?

00:35:44:05 - 00:36:00:12
Unknown
The third step then is usually when our call that is part product demo, which can vary depending on the stage of the company. It's very different to a product demo with a team who is pretty product compared to one that has, you know, 900 K in revenue. And, you know, kind of a series of follow up questions based on that team discussion from that point forward.

00:36:00:12 - 00:36:17:18
Unknown
Our diligence process varies depending on if we are the lead investor or a follower or investor. You know how much you know about the space, the teams, credentials, etc. but it always includes a couple of elements. It includes a few more technical diligence calls with founders. It includes a lot of behind the scenes work on our end to really make sure we understand the nuances of the market.

00:36:17:18 - 00:36:47:12
Unknown
Talking to experts, you know, that can help us cover our blind spots, like knowing that we will never know as much about a company as the founders do. Like, we want to be able to go to experts and have a lot of this to everything from the founders, validated by those experts. And then we always include something that's called the we call internally a character call, but it's more of a qualitative discussion with the founding team to understand what is going to make them successful, given the pressures that come with taking venture funding and the ups and downs that come with that.

00:36:47:13 - 00:37:02:12
Unknown
How do they work together? How do they resolve problems? How do they think about hiring, which is such a key piece of being an early stage founder? So those are maybe one of the human pieces that we want to bring in as well, because we're investing as much in a team as anything else at this stage that we invest in.

00:37:02:14 - 00:37:16:15
Unknown
Are there any red flags that you know you can think of when you're interviewing the founder or trying to understand the team? Yeah. Red flags.

00:37:16:17 - 00:37:33:08
Unknown
Folks who aren't committed to building a great team culture, or folks who don't have a vision for how they're going to hire, grow, and retain great talent. I think that is definitely a flag. Again, going back to how important early hiring is.

00:37:33:10 - 00:38:03:08
Unknown
Teams that don't have a good perspective on how they're going to avoid burnout. You know, walk us through how you manage stress. Because it's a the journey you're about to go on is a stressful one. And so we need to know that you're going to be able to to do that. Companies that are maybe dismissive of their customers is one that I will highlight, because we see that sometimes, especially for teams selling into the utility space, I think especially teams that are and also in the in the industry, I think generally this is true.

00:38:03:10 - 00:38:23:12
Unknown
You'll have teams who say like, look how far behind X industry is. You know, my technology will solve this. And I think it is important to have some empathy for why the status quo exists. And be able to explain, like, you know, this is why it's been done the way it has been before. This is why this software is used today.

00:38:23:12 - 00:38:41:18
Unknown
Looks like it was built in the 80s or may have actually been built in the 80s. And this is the way in which we're going to help make that transition to something that is going to make people's lives easier and allow them to, unlock kind of their own kind of potential at work. And it's it's a nuanced difference, right?

00:38:42:02 - 00:39:05:06
Unknown
But I think there's a big I've seen a very big difference in founders who disrupt that, an industry coming in with, an appreciation for the folks that are going to be selling to and working with versus folks who are a little bit condescending toward, toward the folks they're looking to sell into or disrupt. I wonder if that also comes back to like, coach ability, so to speak, or just like being able to listen to the customer.

00:39:07:01 - 00:39:28:10
Unknown
You know, interesting. Yeah. Because a lot of times these founders are like visionary. Right. So they have lots of great ideas. But then are they willing to, you know, listen to what the customer wants, what the market needs and adapt accordingly. Yeah, exactly. Yeah. That's a that's a really great point I'll add on to is

00:39:28:12 - 00:39:47:18
Unknown
We sometimes see founders who are in love with their own technology. Oh, I love the science. In the end, what you obviously need to be passionate about what you're building. But not to the extent that it blinds you from the commercial realities. Like you're building a for not only a for profit business, but one that we're investing in growing to be massive.

00:39:48:04 - 00:40:07:14
Unknown
And so if you are so in love with the science or the technology that you aren't able to put on that commercial hat and, and lean into the commercial, into the business, I think that can be something that we, we see some founders struggle with. And one of the reasons that a co-founding team can be so important, because you can find folks that balance you out, in, in a co-founding team.

00:40:07:18 - 00:40:29:18
Unknown
Yeah. Bring us into the, I see meeting. How does that usually go down and work? Yeah. It is a we think about the best way to just find it. I think our team prides itself on on being thorough. And so our partners walk through both the head of time and then in, in those meetings.

00:40:30:16 - 00:41:01:05
Unknown
Elements from top to bottom, starting with the team and working down. And all the areas that there's no no area that I can say that can be surprising. Like we're looking at team, we're looking at market, we're looking at differentiation, defense ability, traction asset. All of those pieces. There's just a bit of an art of how do you weigh the strengths and weaknesses and risks of a company, and how do you think the market will evolve over time, either you know, in favor of the company or against it?

00:41:01:17 - 00:41:27:00
Unknown
And so, it is a lot of having our partners in the broader team challenge whoever is leading the deal on all of those pieces to make sure that we are really pressure testing and something that we did adopt, not at our final like meeting, but in kind of a stage game meeting that we have before. There is actually a signing someone on the team like what we call the Red hat, but someone who's going to come in and be the lawyer arguing against the deal.

00:41:27:02 - 00:41:47:03
Unknown
And what we found is that can be an effective way to help us ensure that we are not getting caught up in groupthink, that we are not, overlooking perhaps some, some issues. And we've found that to be be effective. Interesting. Yeah, I've, I've heard about that before. Like giving someone that red hat and just saying, like, you're the devil's advocate.

00:41:47:03 - 00:42:21:01
Unknown
Yeah, yeah. You know, like, you ask, ask the questions, and it, allows the rest and groupthink is a big, big problem. Like, right now, everyone wants to invest in AI companies, but, yeah. Awesome. What, you know, advice would you give to startups who, you know, maybe. Yeah. Want to pitch, to powerhouse Ventures? And, you know, how can they stand out from, like, the numerous applications that you get?

00:42:21:03 - 00:42:40:17
Unknown
Yeah. First, and this goes, I think, for any investor pitching to is research, the fund before you have the conversation with them, know what they've done before and know how you kind of sit next to their other portfolio companies. I think that is always a really great signal for us that you show up to a meeting prepared, you did your homework.

00:42:40:17 - 00:42:58:22
Unknown
You're taking this kind of process seriously. I think being able to really articulate why your team is uniquely suited to do this work, what is it that makes you complimentary? Like don't be afraid to be, to brag on yourself and your and especially your co-founders. I think, you know, that is something that is really important and that we don't always see folks do.

00:42:59:17 - 00:43:16:04
Unknown
And then going back to something we touched on earlier, you have to walk us through the short term kind of vision for the business and then take it all the way to the longer term. Because we are, investing in a long journey. And we need to understand both how you get the rocket ship off the ground and then how you, you know, navigate it.

00:43:16:04 - 00:43:29:23
Unknown
And then, so to speak, to use the really painful classic VC analogy. Yeah. No, I find the, at least the founders who remember are the ones who really find a good way to insert themselves in the story. And make it easy, obvious in the beginning. Like, why they're the ones who have to figure this out.

00:43:30:00 - 00:43:53:16
Unknown
Yeah, exactly. Yeah. Interesting. I'm just looking at the clock, and I'm like, we got, like, ten minutes left here. Yeah. Yeah, I think we're. Yeah. Almost at the end. Yeah. What what are you excited about in the next couple of years? Within the startup ecosystem to invest in what kind of technologies? What are you. You know what?

00:43:53:18 - 00:44:17:15
Unknown
What gets you excited? Yeah. I'm a handsome team, so I apologize for the repetition, but I think we have seen the ability to unlock capabilities that weren't possible before. Even compute in AI. And so that is really exciting, as well as the ability to do things that weren't cost effective before, thanks to AI and, and, you know, improved compute.

00:44:17:15 - 00:44:38:08
Unknown
And so businesses that just you could never make the economics pencil. All of a sudden they're starting to pencil. And so that I think is, is really exciting. We talked about, you know, changes that come with loan growth that present both real challenges. But also opportunity because of that, where utilities are going to be looking or they're kind of grid players are going to be looking for innovation or for that for innovation in a way that they hadn't before.

00:44:38:10 - 00:45:09:03
Unknown
So I'm excited about that. We continue to invest in resilience. And I think it is something I'm personally excited about. Because extreme weather impacts all of us, right? And we're only seeing more of that, unfortunately. And so, you know, we have a company called class three technologies, which helps building owners or, understand what their risks are in the face of different types of disasters and actually the measures they can take to prevent or to mitigate those, those impacts.

00:45:09:05 - 00:45:26:04
Unknown
And so seeing kind of evolutions like that of we're no longer just putting out scores to say, like this building is a, you know, a two out of ten, don't buy it now and say, okay, this is your building. This is your facility. How are you going to be ready for a storm that could hit? I think that evolution has been really exciting.

00:45:26:11 - 00:45:50:09
Unknown
The changes, what we're able to do in terms of weather forecasting with more precision, more speed, and what that can unlock, both in terms of operations and resilience, has been, very exciting. Other areas that we're I. Seeing the way in which the word flexibility is starting to be accepted as a solution, even more so than it was a couple of years ago, driven by, again by low growth in AI.

00:45:50:16 - 00:46:13:04
Unknown
And so the announcement that have come there. That is something that, I'm personally excited about. And then it's been a quieter time on the electric mobility front over the last several years, especially United States. And, and I think the emergence, of autonomous vehicles maybe rushing a little bit of a threshold, is going to start changing, changing that.

00:46:13:04 - 00:46:27:09
Unknown
And so I don't, don't have a crystal ball in terms of how that will play out. But we're starting to see some innovation on the mobility side and some new challenges related to and new opportunities related to electric mobility that I'm hoping we see more innovation in in the next couple of years. It's a great time.

00:46:27:11 - 00:46:52:20
Unknown
Yeah, it's it's exciting time. Yeah. What are you excited about for Houston? Yeah, that's that's that one for Houston. I think we did our first energy and Climate Startup Week two years ago from New York. And I was like, oh, man. Like, it's going to be like 100 people. And all the folks that I see all the time and the fact that we had folks fly in from around the country and in some cases internationally to come visit that week and that that was year one.

00:46:52:20 - 00:47:09:02
Unknown
And what's something that we can build off of? That's what makes me excited, is that we are we, I think, more on the map than we realized. I think you know, some high profile successes like furlough have put us even more on the map. Right? And so the fact that we have that foundation to build off of that, we're seeing continued investment in the district.

00:47:09:02 - 00:47:29:23
Unknown
You know, I think, Mark kind of going on in the next couple of years, with, activate funding in Houston, another huge kind of coup for, for the city. So we just have a lot of momentum right now. That I think if you would have said 2019, like, you know, why is you need a place to innovate and and we you couldn't point to all those resources that we can point to now.

00:47:30:06 - 00:47:54:18
Unknown
And all the reasons why we're bringing in great innovative, founders. And so that's, that's what makes me most excited. And then I think something that we have had for a long time that is going to continue to help us, play an important role in the kind of the future of energy is that traditional finance arm and great kind of, I call them hybrid investors.

00:47:55:04 - 00:48:15:14
Unknown
NTP is a good example of, of this, where they do some equity investments in project finance, something that look more like something that looks more like venture. And that flexible kind of capital, that can help deploy assets at scale where we need them. It's just really fantastic. And I think not something that every ecosystem has a good muscle for.

00:48:15:16 - 00:48:32:00
Unknown
No. And so combining those two, I think all the momentum we have on the startup side and bringing forward some of the the traditional advantages that we've had on the finance side, are really exciting. Yeah. And, and just to kind of iterate. So Houston energy and climate startup we for those who don't know is the week of September 14th.

00:48:33:03 - 00:48:50:20
Unknown
So we do it the week before New York climate weeks everyone. It doesn't overlap with another big climate week. So if you're not in Houston you should definitely come down for that. It's a great way to meet the industry see what's going on in the ecosystem. And a great way to come down here and connect with powerhouse.

00:48:50:23 - 00:49:08:18
Unknown
Exactly. Would love to let me know. Thank you so much for coming on. How can our founders reach out to you? How how do they connect you? How do they find you? Yeah, our website is powerhouse Dash ventures AE. And so if you go on there, there, is a way to, to contact us, or feel free to reach out to me on, on LinkedIn.

00:49:08:18 - 00:49:20:16
Unknown
Always happy to connect with folks there as well. And you often at Greentown Labs. And I try to be there at least once a week. And so if you're around in labs, please look for me there. Awesome. Thank you. Thanks for joining us. It's been fantastic. Thank you. Really appreciate it.