Here you’ll find the full transcript for Episode 5 of Green Add Venture with James Johnston.
Listen to the episode available here.
[0:02] Jake: Have you ever wondered what happens when entrepreneurship, environmental sustainability, and venture capital collide? If so, you’re like me, and you’re in the right place. Welcome to the Green Addventure. On the show, you’ll learn from the critical insights of both founders and investors alike, not random advice or generic guides, but real stories born out of their experience with genuine climate action. We aspire to create a network of people collaborating to build the green economy, accelerating us towards this critical target of net zero emissions. I’m your host and founder of the show Jake Woodhouse. For all the notes, links and episodes, please visit www.greenaddventure.com, take care when typing that in addventure is spelled with a double D. Thank you for listening, and enjoy the episode.
[0:55] Jake: In this episode, we speak to James Johnston, founder, and CEO of Piclo. Piclo developed software to make our electricity grid smart, flexible, and sustainable. Learn how critical it is to begin your startup focused on a specific problem, how seeking investment from the right people at the right time is key, and how sometimes a pivot is the best way forwards. This is a great story, born out of academic dreams, and now delivering real value in the race to the green economy. In particular, I love listening to James’s bold vision of the future energy system. Enjoy. Hi, James, welcome on the show. Please, can you start off by giving us a high-level summary of your current role.
[01:36] James: I’m the CEO and co-founder of Piclo and I mean, other founders should know that means, I do pretty much most things, from commercial discussions, strategy, fundraising, team operations, other financial things. Pretty much the only thing I don’t do these days is actually do any coding, which is probably a good thing, to be honest.
[02:04] Jake: Great. Thanks, James. And as initial question, I’d love to start off with the problem or the pain point that it is you’re trying to solve. So please, can you talk us through how you came across this problem or what the problem is you’re trying to focus on?
[2:16] James: So, I’ll actually start it slightly differently, because we made the mistake of not starting with a problem, but we started with a solution. And, that solution, broadly speaking, was to come up with the Internet of energy, which is quite a big idea. And that translated into developing a peer to peer energy trading platform. And the problem was that the solution we built, we weren’t quite clear what problem it was solving and we went in, basically in hunt of a problem and, therefore, the first product effectively wasn’t complete success and therefore, we’ve had to sort of go through quite a long pivot away from that into the, what we’re doing now. And this approach, we took a lot of learnings from the peer to peer, one, essentially, don’t start with technology, don’t start with a solution, start with people, start with understanding who is going to be using it, what their problems are, and how you can help them and basically do their jobs or get on with their lives in an easier and better way. And, yeah, so that’s effectively the big lesson that we’ve had and just talking a little bit what the new product is.
[03:29] Jake: Thank you, James, what an interesting initial insight into how important it is to focus on a real problem. I’d like to take a step back slightly and understand the personal journey that you’ve really been on. So, perhaps you could explain a little bit more about how you first got into the energy space and what it was that got you interested in working in this area and the steps you’ve taken to go about that?
[03:52] James: So, we’re in the wider, decentralized energy space and in that ecosystem, we focus on something called flexibility. So, flexibility is, essentially, the ability for assets such as batteries, electric cars, and demand-side response generators to shift when they consume or produce energy to different times and that flexibility actually has, when delivered to the system creates a lot of value. So, for example, if there is too much wind being generated at one part of the grid, and it creates congestion issues, and either the wind generator has to be turned off, or they start having voltage issues and eventually, they might need to reinforce or build a bigger network to deal with that longer term. Neither of these solutions is great but if you apply flexibility to this problem, what you get is a much more efficient way of utilizing more of the wind resource, and more of the existing grid in a smarter, a more flexible way.
[04:57] James: So, in the wider concept of flexibility, we have developed a marketplace for buying and selling flexibility services. And the buyers of flexibility in the first instance are the Distribution Network Operators themselves, the DNOs, they can place a value on, as I said, avoiding unnecessary reinforcement works, when they can essentially set up a flexibility contract with someone that owns and operates a battery to provide the type of response they need when they have areas of congestion on their network. So, our marketplace, as you know plays, like all sort of online marketplaces has some key functions, first of all, it’s around visibility. In this case, the DNO is the first one to provide that visibility, so, they declare that they have a need, and they can articulate and signpost this need on our Piclo Flex marketplace. And then secondly, the owners and operators of these flexible assets, they can then respond and then also provide visibility and when they have their assets. And then the final thing that we do is run auction service so that the Flex providers can actually win some of these contracts and provide the services to the grid, which as I said is, you know, the overarching goal is to create a smarter, more flexible energy system.
[06:16] James: Sure, it does come back to this concept of the Internet of energy. Before, so Piclo used to be called Open Utility, so that was what we found it. So, before Open Utility was founded in 2013, I was doing research at the University of Strathclyde, attempting to do and complete a Ph.D., but never quite got it over the line. And that Ph.D. research was focused on a similar area, I was looking at direct current micro grids and in the sort of, my part of my wider research and into this space, I realized I didn’t know that much about some of the big concepts of sustainability. So, I decided to sort of educate myself and learn all about what are the big challenges the world’s facing.
[07:01] James: And actually, the end of that, I got quite depressed by what I was reading, because it didn’t seem to be a clear narrative for how we’re going to solve some of these huge problems. And, I, kind of, lead in that sort of data, not quite sure where we’re going in society, that’s a big societal question. Until I came across a talk by a chap called Bob Metcalfe and the talk was called the Enernet. And essentially, Bob was one of the inventors of the Ethernet protocol and also a successful entrepreneur and venture capitalist. He essentially embodies the Internet and the development of the internet, he literally built it. Well, he gave a great talk at the Singularity University, which is a great institution itself, about how we need to take lessons from the success of the internet and how to transform communication and apply that same philosophy, generally speaking to the energy sector. And this was something, this talk was from 2009, so this is going back 10 years now.
[08:04] James: And I got a lot of inspiration from that and it’s based on, you know, we need to meet some more goals because, you know, we’re sort of retracting in our stats and worrying and saying we need less, and we actually need to be talking about doing more and investing more and having a grander vision for how this energy system can be. And that’s where we came from. So, I did start with a very high-level thought of, how can I help play a part in building the Internet of energy, and an incorporated a company and instead of boldly to do that? And you know, there’s a certain level of naivety that you need to be something like that but one of the most important things that I did early on was realized that I couldn’t do this alone, I needed to have a founding team with me. And I spent a while basically being busy going to events in this space, CleanWeb with one of the sorts of meetups we used to go to within one of those that I met my co-founder, Andy, or who become the co-founder of the business. Andy has just much more of a software technical background than I did and so, I knew that there was going to be an essential component and then the two of us, we basically got cracking with trying to cord the Internet of energy.
[09:20] James: And it was only after a couple of months where we, I think Andy mentioned, you know, what problem are we trying to solve here? We knew the big problem upon forming the entire energy system to decentralize one but in terms of who was actually going to buy this, was a bit more the big one. So, that’s when we realized that we needed another co-founder to join and that’s turned out to be Alice. Alice has a design background and effectively a good designer start with people, starts with their needs and understands what problems. And Alice brought that refreshing, sort of different approach, which, you know, we’ve taken, you know, basically our approach to solving problems now. And yeah, so we then started really trying to find the first practical implementation of the internet energy and that brought us down to thinking about a peer to peer energy system where you wouldn’t need to buy your energy from a traditional supplier, but you could buy it from your neighbor solar panels. And as a concept, it’s very neat and intuitive, but the reality is the rules of the system don’t really accommodate that. And that was what we had to basically pivot away from, wasn’t that the idea wasn’t necessarily good in a completely, if we had any fresh start for how the energy system would work, you would probably start there.
[10:38] James: But the thing that we learned over the first couple of years is the energy system is heavily regulated, there is a lot of interest from government, and they’re basically, there are certain things you can and cannot do. And peer to peer energy is one of the things you cannot do. So, it took a while to really find that out, definitively, but we did and, it was off the back of that, that we then start, you know, we became basically in the process of building something that couldn’t, was fundamentally couldn’t really work. We learned a lot about the energy sector, and it was only with that knowledge that we actually managed to find the opportunity or see the opportunity that we’re now focusing on.
[11:14] Jake: So much to really reflect on there. You use many times that those working in the space we familiar with such as pivot, it’s important to be agile, and it’s the one real kind of superpower that a startup actually has. And yeah, it’s fascinating to hear you on the other side of having taken that decision as a young business to focus on a different product. And I’m sure we’ll learn more about it as the conversation continues. But there I’d love to get your insights on is really around the team. So, you mentioned teaming up with co-founders and the process of finding other like-minded people that want to work with you, please can you talk a little bit around how important talent is and what it means to you to build a team?
[11:55] James: Yeah, so, the early days of company, you make some pretty existential, quick decisions, who are your co-founders going to be? Who are you going to embark on a journey with? And these are, at the time, they don’t seem that big because the total age of your company is about two weeks old or three weeks old, and you literally incorporated the company into my bedroom, on my computer in my bedroom. And I think I actually recommend doing that, I think I’d recommend using an accountant for any future reference, but we, well, that’s what I did. But you know, and you’re like, okay, well, I’ll, let’s just, let’s just divvy up this, this company, let’s, let’s embark on this journey. You know, give it a go, give it six months and then you know, if it doesn’t work out, we’ll go our separate ways. That’s the sort of attitude you have.
[12:41] James: But you know, if you have found something which will endure, which obviously we’ve been around for now over six years. It’s fascinating how quick you can make some of these decisions that then, you know, have huge impact. And I think it’s very hard to do like a what if, because, you know, what if I didn’t work with these guys, or some other guys, would that change? It’s impossible to really do that, because so much of our company’s identity is basically the collective people in it. And the founders have a very big impression on that, but also employees as well, early employees have big impact on, not just the culture of the company, but on what we end up focusing on because of experience, because of specific passions or things that are drivers. So, effectively what this is, is an organic, evolving moving thing, this company made up of it, you know, essentially, it’s made up of its people. So, this is just a sort of a statement of who we are and what we believe in.
[13:42] Jake: I personally have met so many amazing people working in this sector, it’s absolutely true, the team members are integral to everything you ever build, and the companies that you work with. Moving on to an incredibly important part of this podcast, and that is the investment piece. So, we wouldn’t be a VC and startup focused podcast, have we not talked about that. Could you share with us some of the insights you’ve gained from the investment conversations or investment friends that you’ve made over the years, the relationship between investor and entrepreneur is critical to the success of startups and really interesting to hear you talk about the timing and how important it is to have the right investor at the right stage of your business’s development?
[14:26] James: I think the first point is there are different investors for different stages, and you can cause a lot of stress by trying to go after the wrong investor and at that particular stage. So, for the first investor was Bethnal Green Ventures and, you know, I was in a, you know, the first six months and legal super early so they like, basically taking quite a big risk, but because it’s so mission driven, they’re like, you know, if this is it, do I want to see this company existing, is it good for the world, but they basically take quite a bit of a punt on their investments. So, I say, though, that they are very popular, so there’s probably harder to get into Bethnal Green Ventures than it was back in the day.
[15:07] James: But yeah, they’re like an incubator, accelerator program and that was perfect for what we needed at that time. We were very young and fresh, full of energy, you know, not necessarily focusing on the right things, that was definitely what we needed. We’ve got a lot of support from grants from the government over the years as well, that’s a different form of investment, not equity investment, but its financial and it’s backing from the government and gives you time to test out things. And, that was the next step for us, was to get some of these grants in place from the government, also from private sources and nominate trust, give us some money as well. Only after about two years, I think we were ready for an angel investment. And what I mean by ready, is we knew enough about what we were doing, you know, still ultimately, we’re very early stage and it was huge risk and ultimately, we have pivoted away from that original model I mentioned. But, still, we were ready, and we started with our first angel investment round and this was just a handful of angels that we, you know, we’d ever met, or we had known from our previous contacts.
[16:12] James: And, then since 2015 and now or the last round, which was the Green Angel Syndicate round, last year, we’ve raised a round of, about 1.4 million pounds and, this, I wouldn’t describe fundraising as, from our experience being very straightforward and neat process. I probably spent a lot of my time over the last three or four years with investment and closing many rounds when we had a critical mass of investors at each stage, rather than just having one or two investment raises is actually a whole series of mini rounds. And so that’s what has been appropriate for us, the Green Angel money was very good because instead of spending a lot of time with one individual investor and then receiving one medium sized check, let’s say 25 or 50K, you put the same amount of effort, maybe a little bit more, but then you get a collective group of angels that rely on that due diligence. So, it’s actually a very efficient process. And I think that was very good experience from our side. I think going forward, you know, we’re really keen to look at how we can get institutional money.
[17:20] Jake: Moving on from that James, I’d love to talk through the mission, it’s very obvious speaking to the passion that you have for this space and back at your university days, the overarching goal that you had about the internet of energy. I’d love to talk through the current project in Piclo and how that relates to mission and with that as well, the impact that you hope to have? So, how important the mission of the business is and ultimately, if your business is successful, the impact you might have will be, in terms of the amount of infrastructure investment that isn’t required due to a software platform, just like what you were building? It makes one wonder what other opportunities that are out there that is similar, where you start to solve real requirements that the green economy needs now and investing and building those businesses today is critical for the future.
[18:12] James: So, we’re a mission driven organization, so this is very much front and center our minds, our mission is to decarbonize the global economy. And so, it gives you a hint that we’re thinking big and beyond just the UK. We share this mission with a very large and growing number of people, which is great, because it’s not just going to be one company that makes this happen. There’s a whole series of different companies that need to share that vision. They might be competing companies, but even if they share the vision, then you know, they’re competing to make the right thing happen. But it’s just that idea that everyone has got that, especially an energy system and working in energy system, having that in their mind, some way, you know why to get up in the morning. And our role in that is around, it’s all around the marketplaces. So, in order to get to a point where we have, whether it’s 100% renewables or, or 90%, renewables and 10%, nuclear or whatever. You know, we’re technically agnostic really on that point, you know, we do know that we need to get to a system which is radically different than it is now. And that system needs a marketplace or marketplaces that can facilitate the hugely more complex, you know, complexity that needs to be managed on, when you have millions and millions, plenty, even a billion different generators and smart devices and cars. So, these cars, batteries on wheels, you know, effectively a generator and also can be consumer and it moves around.
[19:41] James: So, it’s quite a complex ecosystem we’re talking about, and you need a very different type of marketplace that can facilitate all these transactions. And, that’s, you know, that’s what we’re trying to build. So, it’s definitely a journey. One of the challenges we have in terms of measuring impact is, because we are focusing on systemic change, you know, we’re not just focusing on one particular user group or one type of specific problem. We’re talking about shifting $2.2 trillion a year industry, and you know, so it’s a big thing. And, how do we feel comfortable making progress? I think we do need to have metrics that we can measure and the ones that we are measuring or cost. So, are we reducing the cost for consumers? And why does that relate to the organization? I think it’s fundamental that we do transform the energy system, but don’t end up doubling up our costs. I think we need to do this in an affordable and an efficient way. So, that that’s really important.
[20:45] James: The second metric we look at is how much more new renewables can be connected to the grid or how much car, essentially another impression of that, how much electric cars can be connected to the grid, essentially displacing combustion cars that we can somewhat, sort of directly attribute to because of our marketplace existing. So, those are the sort of couple of the metrics that we can look at and we can measure, and we can see if we’re making progress. It changes slow in the energy system, so, you know, we are six years old, but we’re only really, you know, with big pivots, we’re only really getting started with the traction in the last couple of months really. We had the first auction, we completed on the platform and to give you a sense of the scale, so that around about 450,000 pounds of flexibility contracts were awarded via our auction. And, to give you a sense of that, that essentially saves or differs the need to invest conservative estimate, 7 million pounds of actual infrastructure. So, you’re replacing expensive infrastructure. It’s starting, you know, really, we’re starting to get some data and I think of actually making an impact that can be directly attributed to us. But I think there’s also, the indirect stuff is huge as well. So, if we can be seen as a leader and creating white papers and moving the conversation forward, that inspires others to do the same, and to develop similar solutions, other solutions, you know, and that has a big impact as well.
[22:16] Jake: Well, James, that was a great moment to finish on. And thank you so much your time, really appreciate having you on the show. Thank you.
[22:22] James: Have a good weekend.
[22:24] Jake: That was the Green Addventure, thank you for listening. If you enjoyed the show, then please help us out by sharing this episode with your networks and rating us on the platform, wherever you may listen in from. For any questions at all, we’d love to hear from you, so please reach out on social media or email. Whether you’re wondering about a technical term that’s being discussed, would like an intro to a guest from the show, or even perhaps feature yourselves, we’re here to help. My Twitter handle is @JakeWoodhous, spell as it sounds, but drop the final e, my email Jake@Greenaddventure.com. Remember that ‘add’ spelt with two D’s. Finally, for the notes, links and episodes that will be coming, visit www.greenaddventure.com. Remember, that’s add, with a double D. Until next time, we’ll be back soon. Thank you and goodbye.