Nick Goddard – Episode 9 – Green Add Venture Podcast – Full Transcript

Nick Goddard – Episode 9 – Green Add Venture Podcast – Full Transcript

Here you’ll find the full transcript for Episode 8 of Green Add Venture with Alex Pitt.

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. Today we speak with Nick Goddard, co-founder and commercial director of Spinetic Energy. Spinetic Energy are developing an innovative small-scale wind solution, the Wind Panel, an extremely exciting clean tech solution. Listen to Nick’s story for great insight on how experience from different professions can be reapplied to new markets, how sometimes it’s best for startups to work in stealth mode initially and how important personal friendships can be when seeking investment. Nick’s journey to today as well worth listening into. Enjoy. Hi, Nick, welcome on the show.

[1:28] Nick: Thanks for having us. 

[01:30] Jake: Absolute pleasure. So, to kick things off, please explain a little bit about your current role in the company that you’re working with.

[1:37] Nick: So, I’m currently the commercial director of a startup company called Spinetic Energy Limited. Spinetic was set up to address a gap in the market, which was to allow people who want to harvest relatively small amounts of wind energy, what we call the community scale, to do so with high convenience and low cost. The moment you want to harvest wind energy, you can do it very well with giant wind turbines but they’re not easy to deliver to remote places and they produce megawatts of power. So, if you’re at the edge of the grid or off the grid, and you want a small amount of power, you can put a miniature version of those turbines in place and then you get very steep diseconomies of small scale, and you have to pay an awful lot for the electricity. So, we have tried to find a way to offer those people, if you like, the cost of utility scale wind, but the convenience of community scale solar.

[2:33] Jake: Fascinating. And it sounds like you’re solving a real problem there and that’s always such a great starting point as entrepreneurs. Before we dive into the problem you’re solving currently, I’d love to take a step back. So, I call it the 10 years rewind, shall we say, and your own personal journey, Nick, how did you get into this space? A brief search on your LinkedIn, I see you actually went through Cambridge and an Imperial finishing a PhD. And so, a very technology focus starts to your career, but then that’s developed into the investment banking world. I’d love to hear more about your own personal journey and what’s brought you to this point today?

[3:11] Nick: Yes, it’s been somewhat haphazard, as you say, I came out of school and decided, I wanted to be a technologist, working at the cutting edge of technology, and developing new things myself. So, I did a physics degree and then a mechanical engineering PhD and then I worked for about a decade in industry, essentially trying to develop new products. And I ended that first decade in Ministry of Defense Research Labs Kinetic that was. And Kinetic had a scheme where they were supporting a few people into the city of London to gain commercial experience, because Kinetic was just about to be privatized, and thought that a lot of the technologies it had, could make the privatized Kinetic money from investing them into startup companies and raising venture capital, and so on. So, I was supported on a civil service to comment to an investment bank to get experience in that sector. 

[04:11] Nick: And I guess the first experience I had was, all the people in that sector were paid a lot more than I was. So, I jumped ship and became an investment banker for the next decade and found myself funding startup companies and advising venture capital firms on what were good technologies to back. And that ran through to 2005 and at that point, I thought that the credit crunch looks like it might be leaving, and I’ve done 10 years in banking. So, I left, and I became an independent consultant working with startup companies, which I felt fitted my skill set because I understood their technology, but I also understood the financing landscape. And around the middle of that period, so, that was nearly 15 years ago and after five or six years, I came across a company that I. as they say, like so much I joined it, and that was Spinetic. So, I’ve been pretty much full time in Spinetic for the last six years.

[5:07] Jake: Fascinating and the personal journey of everyone, I always find so interesting that this interview has that relevant moment that another industry might be a better suit to you, you know, you don’t know about somewhere else might be better and that grass is greener thing, it’s always so hard to justify in your own head. Yeah, great. So, having done that, then so you ended up at Spinetic, so perhaps you can talk a little bit now about the stage the company was at when you actually met some of the other founding members. And really dig back into your initial comments about the problem that you were looking at. And as entrepreneurs, you’ve looked at the problem area and built a team and then started to create a solution. I’d love to then follow that kind of development of your business.

[5:48] Nick: Yeah, so there was very much a human story to that as well. When I first joined, the first place I joined after my PhD was BP and this was the face that BP was for the first time in its history, tried to go beyond petroleum and had a lot of R&D work in clean tech. And I joined their research organization as the guy who done his PhD at Oxford. So, I’d come out of Imperial, he’d come out about Oxford, and we found ourselves working together there on a range of potential clean technologies, and then BP’s focus moved elsewhere. And so, the people in that area became surplus to requirement and this guy 06:29 [inaudible] and myself went our separate ways but we have got on quite well in the BP days, this is back in 91, 92. And he went to an automotive company where you have to have a rigorous focus on mass production of components, which you know, have adequate performance, but are very cheap to make. And he then worked for the next 15 years while I was doing my journey into banking, he worked in the automotive sector. While he was there, he spotted this gap in the market and this will probably go on to say the approach Spinetic takes is that automotive inspired approach of mass production of components at low cost. 

[07:12] Nick: And he thought this could apply to solve the problem I explained for community scale wind. So, he worked in a classic garage type startup, you know, which is very rare in the UK, it happens a little bit in California where he left his job, self-fund it and he makes some prototypes of what we now call the Wind Panel, the system that can harvest energy cheaply. And after two or three years, it seemed very promising and he realized he might need equity investment and he dredged up from his memory that I had gone to the city and work roughly in that area. And he reached out to me and said, why don’t we look at doing something together, essentially his tech with my fundraising skills. So, that’s what we did. I think I met up again in 2011, probably two decades after our last seeing him, we explored the idea through to 2012, where we made the decision to create a company and try and seek funding. And these things always take longer than you expect, it took us about four months to to find someone who wanted to fund it. And then about six months to get being on the page, so we got our first VC funding in May of 2013.

[8:27] Jake: Wow, what a story, Nick, it’s amazing when you feel a connection with someone at some point in your life and your stories and journeys, they fall apart, so to speak, you’d go in different directions. And that connection is always still there. How fascinating, that’s really then the bomb that builds the business that you’re in charge of today. And okay to trace back then, so what was it exactly that you guys noticed in the wind space that really got you excited about coming in with the prototype and then trying to fundraise for it?

[9:01] Nick: So, the first thing to say about trying to deliver community scale wind energy, in, you know, at low cost is that everyone is trying to do it, it’s a sort of uncured disease, lots of people know they have the problem, lots of people have tried to deliver solutions, and pretty well all of those people have gone bust. So, it was quite a brave move to go into a sector which, if you like is guilty till proven innocent. You know, if you start a small wind company, people say, well, how do you differ from the hundred or so who’ve tried to do it before? So, we knew that we needed a fundamentally different approach. And I think the great insight the Charles had was that there are two ways that you can achieve the economies of scale, which drive down the costs of renewable energy generation. And this is true in any sector, there’s always two ways to achieve economies of scale. One is an economy of giant size and the other is an economy of you know, fantastically large production runs. And solar panels and wind turbines had sort of instinctively gone down those two different routes. Today, the large utility scale wind turbines are 100 times bigger than the ones that were being installed in the 1980s. But today, the solar panels being installed a pretty similar form factor to the very early solar panel, slightly more efficient, but essentially the same form factor. But they’re being made, perhaps 1000 times the number of being made. 

[10:37] Nick: And so, solar, it’s driven it costs down by mass production and wind has driven its costs down by massive size. And all community wins, you can’t have massive size, we’ve just said these massive turbines are difficult to deliver and if you can get them to the edge of the grid, they have, you know, if you just put one in then building an approach road is very expensive and you have megawatts of power when you want kilowatts. So, Charles pondered whether it was possible to produce a system that collected wind energy but that was assembled from components, all of which could be made in massive volumes and small components, human skeleton components that can be stamped out in massive volumes, therefore become incredibly cheap. And therefore, allow you to have, you know, economies of scale for collecting community wind energy. And that’s what led to what we’ve called the wind panel. And we call it that because the inspiration doesn’t look like a solar panel, obviously, because it’s collecting a different thing. But it’s inspiration in terms of mass produce ability comes from what we saw in the solar industry.

[11:43] Jake: Awesome. And it’s such a compelling story in terms of insight that comes from different experiences and is reapplied to a different problem area and the result being actually a very effective solution. And to bring context to what we’re talking about, for anyone listening out there, it’s in my simple eyes, you’ve almost got a kind of wall of what I would say, are the signs outside of cafe or petrol station that say, open and closed, that simply spinning the wind, because of the circular form that they are. And that’s a really simple way of explaining it. But it’s an amazing image, I’ve seen, of course, the videos that you guys produced and showing the prototypes. Okay, and it’s a cool moment as well to recognize in entrepreneurs that that insight is something that other startups don’t have and that’s what makes you an interesting investment. And at which point, I’d love to dive into the process that you will have been through, which is around, you’ve come up with a problem, you’ve got a solution, you’ve done some research, and how do you look at that leap of faith moment? I think when you go, oh, okay, let’s go for this because we really think we’ve got an opportunity here?

[12:57] Nick: That’s a really good question. And I think that it’s interesting in the UK, that quite a lot of people who make that sort of leap of faith, have had previous careers, and even put it bluntly, their mortgage is paid off, or maybe even their kids are grown up. So, the risk you feel you’re taking is not as high as it might be, if you came out of university and said do i do i spot to be a partner in a city law firm or a Goldman Sachs banker or an entrepreneur, because it is risky. And it’s a hard journey, and certainly at the start of that journey, it’s not very well paid, and the end, may well be poorly paid job leading to failure. It may well be a poorly paid job leading to huge rewards. But the number of home runs where people make multi-million-pound fortunes and startup companies is statistically quite low. So, I think for both Charles and I, we were in our late 40s and had relatively well-paid jobs before we started. So, we were able to do it initially by saying, well, you know, the risk is not great for us but actually, the job satisfaction is huge, because I think we both felt big corporate jobs can be rewarding, but there’s nothing as exciting as doing your own thing. And it could be, you know, slightly tweet about it, trying to change the world, trying to do something yourself about climate change. 

[14:30] Nick: So, that was the mentality we started out with. Not that we did it casually, I don’t think I’ve ever worked so hard in my life. But we were to some extent slightly under written. And I think if there’s one thing that might increase the amount of entrepreneurial activity in the UK, I don’t think we can easily increase the rewards for the people who are entrepreneurs, but it might be nice if there weren’t so many really well-paid jobs in finance, that sort of cream off the best minds, at relatively low risk. 

[15:02] Jake: Yeah, it’s an interesting kind of career path choice and certainly the student coming out of university versus the, you know, 40, something who’s made some money and looking at things slightly differently, it’s why it’s always an interesting question for me, because everyone’s different, and their story is slightly different. And that leads me on nicely, then the Nick to talk about how you’ve taken this problem and solution, etc. and to start to create some traction, you’ve decided to go full time, were there any tips or advice you could give to people about how to take that idea and that prototype and create some real interest in it?

[15:38] Nick: Yes, I mean, I don’t think there’s a one size fits all answer. What I would say is, there’s a piece of wisdom, I was told when I went into the city, I can’t remember where the quote comes from, but they said, “if you look at the stock markets, in the short term, there were voting machine, and in the long term there are weighing machine”. Now to unpack what that means, it means that the stocks that will do well, in the short term, those that become very popular, and that essentially means grabbing attention, making very bold claims, getting yourself associated with sort of razzle dazzle. But in the long term, you know, that can’t be sustained, that the long term in a sense if it’s all black people see through it, and the long-term value of your stock, essentially weighs how much real value you’ve created. And so, I think the challenge in starting a company is you can’t do it without some of that razzle dazzle and raising your profile. And these days, even in seven years since Spinetic was founded, social media provides an enormous sort of increased amount of potential to raise your own profile, your company’s profile, you know people were not tweeting all the time when we started, but nowadays, you could, you know, you can tweet, and you can raise your profile. And you could say the first department any small company should have is a Twitter officer, you can tweet all day long, and maybe get associated with some exciting things and, and in a way, get popularity. 

[17:12] Nick: But it may be the first thing a small company needs is actually some foundational engineering, you know, somewhat below the radar screen to make sure there is real and substantive development there. And that that is protected and protectable. So, I guess our journey was one of working in stealth mode, we were very lucky because I had some personal contacts among people who might be prepared to fund us and who were quite patient and long term. So, in those early days, we didn’t focus on going to a lot of conferences and getting our name known and propagating ourselves to websites and social media. But instead, we focused on building a foundational base of patents, so that we could see competitors, no one had tried to harvest wind our way previously, so, it was like virgin territory and we could stake a claim to all sorts of inventions that enabled you to do that, that other people hadn’t tried to invent because they hadn’t tried at the highest level to collect wind in that way. So, they hadn’t been patented ways of doing it, if you like components needed to do it. So, we patented lots of aspects and we made contacts, particularly with people who we might want to work with, you know, in a sort of business to business way rather than building up popular profile. Whether that’s right or not, I’m not sure if you were trying to do a FinTech startup in Shoreditch doing it anonymously and in stealth mode may well not work and it wouldn’t work if you’re a B2C proposition, but we were B2B and that’s how we started out.

[18:49] Jake: Fascinating, you’re absolutely right, I mean, each company’s slightly different. If you’re looking to set up a payday loans business, well, inevitably you need people to know about you, in which case, you have to approach the social media market much more aggressively. It’s awesome to hear that and I must confess, I was lucky to be part of the Green Angel Syndicate round that invested a couple of years back, which is an appointed moment to talk about invested slightly. What advice would you give to anyone as an entrepreneur out there, or just generally, what insights you may have picked up or tips for anyone about how to approach the investment market and what may or may not have worked for you?

[19:31] Nick: Again, I mean, I have the experiences quite a bit broader than Spinetic, so I can sort of talk in the round because in the six or seven years, I was out of banking and before I became full time at Spinetic, I worked with probably a dozen other small companies. It does seem to me that personal networks are quite important. I think for serious investors, it is quite difficult to build up trust in somebody who’s a complete stranger, you meet them, they pitch very convincingly, the elevator pitch for 15 minutes. Maybe the investor hasn’t got the technical skills or sector knowledge to do due diligence, maybe the investor is thinking of putting in 50,000 pound, it’s not worth doing 100,000 pounds of due diligence. So, what is the proxy to building that trust? And I think that the market seems to be splitting into two now, one is, people rely on a portfolio effect and they go to the crowdfunding platforms and they put 5000 pounds into company after company after company and just assume that one of those will give, you know you’re invested in 100 companies and one of them will give you a 200 fold return, that seems to be one model. 

[20:53] Nick: And the other model seems to be these informal networks where you have an anchor investor, who is putting in quite a lot of money, can be quite rigorous on their due diligence, understands the sector and the technology, and then has followers. And, for us it was in that latter category, when I was a consultant I did quite a lot of work with the Carbon Trust and in the Carbon Trust, I got to know and worked with their head of technology development. And He then moved into venture capital, check with Robert and he worked for IP group. So, Robert and I knew each other. So, I was able to go to Robert and present the idea of Spinetic and the technology, he had the technical and sector knowledge to dig very deeply into that, IP group made an investment, they joined the board, Robert is our chairman still. And that, I think pulled in a series of other investors who recognize the rigor of IP process and wants to follow so we were pre-credentialized, then when we approached other investors.

[22:05] Jake: It’s fascinating, isn’t it? And it’s that kind of warm connection, that warm introduction, that makes such a difference in this space for the type of business you’re trying to create, because let’s be honest, the highlight you’ve already made, this is a clean tech, it’s a hardware, it’s about achieving economies of scale, the process, you know, we’re six, seven years down the line now since you guys began the business. It’s a very different proposition to going on to a crowdfunding platform and finding, you know, the latest B2C software app that’s coming out. And each has different types of investors and that’s what makes this space, startups, such an interesting area because there is no homogenous value across the whole space. One area that we’ve slightly touched on, and it’s, part of your personal story from earlier before, but I’d like to really dig into it slightly, is around the team that you’re working with, and the phrase, talents, that people associate a lot with startups and how important that management team is, etc. How did you and Charles sit down and say, right, we want to work together but also, we need to build a team of people around us? Can you share any insights around that?

[23:12] Nick: Yes, I mean, the team is still fairly small and focused. And I think in the same way that you know; personal connections are quite valuable in bringing in funding because there’s a trust that is sort of been incubated over a number of years. I think the same applies to building teams. So, Charles and I had worked, had known each other 20 years, we hadn’t been in close contact, but we knew of each other and had worked together, we had a fairly similar hinterland and that helps you work together, you viewed the world quite similarly. And you that leads to strengthen teams, because it can also lead to an echo chamber and a group thinking not being challenged. So, there’s always a sense of balance between the harmony of a team and avoiding a team, having a group thing mentality and not being challenged by outside ideas. Robert and I knew each other, Robert was on the board. And the chief Operations Officer, the person who’s heads up a lean manufacturing, in a sense, Charles tends to have the inventive ideas and then we have a chief operating officer who is concentrated on their manufacturer ability, he’s a Six Sigma Black Belt in lean manufacturing and zone. And he had worked in the same automotive company that Charles came out off. 

[24:37] Nick: So, the relationships are pre-existing. Some of the other people we’ve worked with, we’ve also known for quite a while before starting working with them. So, that helps provide cohesion. I think that in teams where people don’t know each other, it is quite good to have some more formal structure than you might think, in terms of decision processes. You know, is it going to be sort of democratic, where you sort of everybody votes on a decision? Is it going to be freewheeling? Is it going to be anarchy? And I think there’s a failing that in startup companies, you shouldn’t really be too hierarchical. But actually, in my experience, the ones where you sort of the Chief Financial Officer, the technical officer and advise, but the CEO decides, and people accept that decision and accept an element of hierarchy in the board, advisors and so on work better in the long term. And I think that you can, is almost the rock group thing, they come together, and they each sort of improvise and play their instruments, and it all works temporarily, but the minute there are external stresses, they tend to break up. So, there is something to be said, for trying to follow large company disciplines and procedures, without becoming restrictive and crushing imagination.

[26:08] Jake: How interesting. And that’s very much, I guess, an experience you’re taking from a previous career and reapplying to the area that you’re now focused on. The next space I’d like to get to you, Nick would be great, is we kind of touched on it earlier and you mentioned your intentions to work on a project that was not only your own, but also to do something about climate change. Can you talk to us a little bit about your, you know, your own personal mission behind this project?

[26:34] Nick: I think it is quite simple, really. You either look at the world and say, you know when I’m dead and gone, who cares? Was it, Groucho Marx, who said, you know, “future generations, what have future generations ever done for me?” I think you can have that slash and burn mentality and just try and make as much pleasure as you can for your own life. And all I think you can instinctively try to leave something behind, leave the world a slightly better place than you found it. And I don’t, that sounds priggish and it sounds like it’s a moral decision, you know, you can decide to be good or decide to be bad. I’m not even sure it operates at the level of moral decision, I think that operates, at least it does for me at that level of just how you’re made you know, I could argue that I’m a total hedonist trying to help the world because I’m just doing what I enjoy. And the person who doesn’t care about the world and wants to make a lot of money and drive gas guzzling cars around, is doing what they enjoy. So, I think for me, the motivation was, I felt good, you know, being able to say that I felt the company I worked in was, you know, on the right side of history, and doing something the world needed. So, it was perhaps, enlightened hedonism.

[27:59] Jake: Awesome, and it’s a good summary, in a sense of what I find so exciting about this space, as well, is not only do we know that the climate is changing, not only do we know that we need to do something about it but there are actually people out there doing something about it. And that’s what really excites me, and you represent someone just like that. The knock-on effect, of course, of a project like Spinetic is, of course impact, could you talk to us, though, I mean, have you ever done any forecasts, perhaps in terms of emissions reduction, if you guys were to hit the kind of targets that you hope to build the company to, from an impact perspective, if successful?

[28:38] Nick: Yeah, so the impact will be significant if you measure it in millions of tons of carbon saved. But it will, it won’t be a top tier solution that saves or provides 25% of the answer. If you look at what low carbon energy sources are, in terms of you know, wave, hydro, biomass, and then the two biggest at the moment, solar and wind, they are presumably going to share the burden between them and I guess, nuclear, or new nuclear. But they’re going to share the burden between them of providing energy once we’ve weaned ourselves off fossil fuels. And if they shared it equally, they might be, you know, between 20 and 30%, from one of those sources. Now, advanced solar panels can be deployed anywhere on roofs of houses, you know, one or two here, one or 200,000, there, and they big quitters and so, if you did come up with a solar panel that was better than any other solar panel the world has ever seen and then everyone in the world used only your solar panel, you single-handedly might have provided, you know, 20, or 30% of the answer. 

[30:02] Nick: Our wind panels aren’t like that, because we’re only trying to pick off the community wind segment, utility scale wind will continue to be huge turbines and in fact, they make it even huger, if most of the deployments shift offshore, because there you can get giant ships putting giant turbines onto giant platforms and, they can come truly huge. So, we are, you know, going to be a fraction of the of the wind energy segment, perhaps 10%. And the second thing is you can’t install with MC collection everywhere, you can put solar panels pretty well everywhere and there will be some solar resource, but people have tried to collect wind energy in cities, urban areas, and so on. And the truth is, the wind just doesn’t blow there. So, we will be communities and we will be edge communities, frontier communities, either off grid or grid edge or remote rural communities. So, I guess we could end up providing, you know, a third of the power for 10% of the world’s population. So, that would be about 3% of the power, not 30. So, that’s what we are, we’re a second order solution, we’re a niche solution. But that’s a good thing to be.

[31:21] Jake: It’s an awesome product and space to be. Just one final question Nick is really around fast forwarding another 10 years. So, 10 years from now, I mean, we’ve just kind of touched on it, I guess, where do you hope to be?

[31:35] Nick: Retired. But I would, again, going back to that instinctive thing, you know, I know lots of. obviously being nearly 60, I’m in a cohort of people who are starting to retire. And again, they seem to fall instinctively, into two camps, you know, great, now I can play more golf, now I can go for more beach holidays. And that is where they take their pleasure. And I think I would like to say, no, now I can perhaps spread myself more thinly and maybe do some non-exec director work or, you know, make some small investments or do some sort of coaching of entrepreneurial companies to keep my mind active while residing to continue doing something I enjoy. So, I would like to do that. I mean, exponentially, we’re going to grow into a billion-dollar business in 10 years’ time, I would love to still be on the board, probably in a non-executive capacity and that would be a tremendous legacy. But I think the reality is that Spinetic won’t sort of reinvent the wheel, in terms of building its own factories to make billions of identical units, that’s done by industries all over the world already. And I think that it’s likely that Spinetic’s technology will either be acquired or licensed by somebody already, with the investment in manufacturing factories. So, I think that with Spinetic, it is likely that we will continue proving the concept, get some early adopters to demonstrate the market traction, which we think fully expected will have and then I think it will be taken to market through partner companies or through a company that acquires us.

[33:16] Jake: Fascinating, very exciting times. Thank you so much for sharing all of that insight today, Nick, and great to have you on the show.

[33:22] Nick: Thank you. Thank you for your time.

[33:24] 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.