The Exchanges

Q of the craziness and changes in input prices, etc. Um, you're continuing, presumably, now to acquire customers and kind of move things forward. So let's talk about what was happening to the company kind of as we start emerging from COVID. What was your idea on kind of the next set of things to go do now that you're able to at least theoretically operate at this hundred megawatt scale?

A Yeah, so, uh, the market in that kind of ensuing period from when we first were building our projects to the early, you know, twenty-twenty-one, twenty-twenty-two time frame. Solar had used up a lot of the flatland that we talked about earlier, and so there started to become a lot of projects that were on undulating terrain, and we looked at that, and we said, oh wait, that is one of the things we always knew we could do well, and when we started doing testing on it, we realized we could do it phenomenally well, because each of our actuators is driven by air. Most trackers are connected with a long torque tubes, It's long steel tube, and so all of them are connected by the super long steel tube, which means that the ground beneath it has to be flat. Um, and so that usually means you're either on flat land or you need to make the land flat. And generally in solar at the time, people were just, uh, doing the grading. And on some sites, that was not a big deal, and on some sites, it both was, I would say, ecologically devastating as well as very, very expensive. Um, but it was happening a lot. And we saw that and realized that this value proposition we had discounted early on when solar sites were flat was suddenly something that made our technology unique and exceptional in terms of the value it could bring. Not just value in terms of cost, but value in terms of preserving the la…

AI assessment note: “there started to become a lot of projects that were on undulating terrain”

Q Okay. So let's talk about how you're gearing up for that. So now you're building projects. You're continuing to try to bring the cost down. As you say, you're Growing your company. So what are some of the things that are happening that are, that are both challenging and exciting in that period as you're trying to think about, like, how to get that to that next step in scale?

A It is thrilling to see these huge fields of something that you brought into the world. It is wild. You dream about it after you see it. It's just such an amazing thing. It's, it's like you had all of these generated graphics of what it was going to look like, and then you see it in real life, right? It's just this wild experience to have. Um, and to realize it works is just, it's an incredible moment for any kind of innovator. Um, so that was really, that was amazing, and it was also amazing how many people wanted to buy the product. So we had quite, quite a slew of, um, projects in the works that we were executing on. And that led us to, that led us to our Series B, where we are, we went up in scale very successfully leading up to our Series B. And we wanted to get to the next level, and so that was the next piece, although you did ask me something before that I, that I should address, which is we still weren't at positive margin, and so that means that effectively we're still kind of paying for each project. We are not making any money on any project, which means that we have all this great pipeline of projects, we have this portfolio we can use for bankability, we can use for raising money, but we aren't yet Profitable. We felt that if we raised enough money to get to the next level of scale, we would unlock, unlock some of the scaling reductions you get in cost, which you d…

AI assessment note: “we still weren't at positive margin, and so that means that effectively we're still”

Q So in some ways, there's a lot of logic to the fact that you have pressure around going this big this quickly. Um, but so that's the moment that you're in. So talk about, like, what it was like to contemplate a utility-scale solar project now. Like, what were the things you were thinking about as you were maybe making the decision on whether to pursue that project or not?

A I can still remember the day we made the decision. I actually remember sitting there. Because I knew that that decision was going to make or break the company, personally. You know, you know how sometimes when you get food poisoning and you remember that thing you ate in the moment, you know? I thought, I don't, I don't know that I knew that for sure, but I knew that it was going to be a big deal. And we, we had been in that undulating terrain realm, but we didn't have an undulating terrain project of that scale that was ready to go. Because one of the things about solar is the sales cycle is long. The building cycle is long. It could be as short as three months, but it could take as long as two years just to get to a signed PO. Um, so we had things in the works, but that was the one that was ready, and it was this big project on totally flat land where we're going to be losing a ton of money, and we had to make the decision, is it worth it to do something that doesn't Show off our value proposition that we're trying to sell on, and also shows that we are not making money on these projects, should we still do it? And ultimately, we did decide to do it because we felt that we needed to show the revenue numbers, and we needed to show growth, even though we weren't showing profitability, or even necessarily the value that was unique to the product in doing this project.

AI assessment note: “we had to make the decision, is it worth it to do something”

Q So, that moment to shut down, that has to have been painful. How did that feel for you? How did it feel for the team of folks you worked with?

A I was really heartbroken. It was like, um, the, the worst thing I'd ever imagined happening to this company happened. It was really sad for everyone, but the connection I had with the team for that last, that last year especially, everyone was so locked in. Everyone was doing everything it took. The communication was amazing. We didn't always agree, but we were communicating, and people were putting in just the most heroic efforts. To have all, even with, like, the supply chain challenges, making it all happen. Just over and over again, heroic. Uh, and so, I was sad about the company, but I was also sad to lose this amazing team that I just loved working with, and who were just some of the greatest people I've known. So, that was really sad. And, you know, I think that It was heartbreaking, but the, the day that, the day after we shut down and everyone came in to get their stuff, the amount of times people said, I'm so thankful I got to do this, kind of made up for some of the heartbreak.

AI assessment note: “I was really heartbroken. It was like, um, the, the worst thing”

Q Yeah, well, and let's talk some more about that. So, I mean, what are some of the things that, like, the ecosystem can be doing differently? Maybe, like, you know, are there things, for example, VC investors could do to- To make this go better for these companies.

A Interestingly, I think the VCs have really stepped up for climate. I think that, you know, you may, you may listen and think, oh, it's because VC is not, not doing enough. VC, to some extent, is doing more than a lot of other sectors to step up and take risks. VC is good at taking risks, and they've taken a lot of risks. I think that the ecosystem has to stop pushing founders toward VC immediately. Uh, the current work I'm doing is thinking about what are all these different resources and tools you can use outside of VC. And you can buy a hundred books about how to build a company based on VC. You can go through every single accelerator, even in the climate space, and they will all be setting you up to raise VC. There's not that much of how do we build a coalition. There's all how do we just graduate you to getting a pile of money so then you can go.

AI assessment note: “I think that the ecosystem has to stop pushing founders toward VC immediately.”

Q We got the utility scale project, but things start to kind of turn for the company, and there were some impracticalities around raising a serious seat, so that was something that was not kind of the right next step for the company. What happened, and why did you decide to shut down?

A We were, we were trying to raise money for that whole time, and we ultimately came to the conclusion that it wasn't going to happen, and our Existing investors were tapped out, and without someone to pass us to, to take us to the next phase, there just wasn't enough cash, and it wasn't like we just needed a small amount of cash. This business was so capital intensive, it had to be someone with a stomach for these, this crazy cash flows, and crazy amounts of cash up front, and you know, these projects, a hundred megawatt project, is a lot of money going all over the place, and ultimately, again, I feel like we You know, we just, like, I think the story at the end is always the company couldn't raise money if you think. So that is, that is ultimately the case. But, you know, I think if you ask any person in the company, they'll be like, well, if I hadn't made this mistake in 2016, this never would have happened. Like, I think everyone will have their own story around it. Um, but I think, I think as a founder, as a, as a, as a founding team, which everyone at Sunfolding was, um, to some extent, you just do the best you can. And I would say overall, um, We did the best we can, and then maybe 50% on top of that every single step of the way, and it just was too much to do with that amount of money in that amount of time.

AI assessment note: “Existing investors were tapped out, and without someone to pass us to”

Q the pandemic, crazy things start to happen. Is it, like, you're just kind of watching as, like, the price of steel ticks up slowly? Did it happen suddenly? Were you, like, waiting to see if it would come down again? Like, how did you think about whether this was an aberration versus, like, a long-term issue that you That required a change in how you thought about sourcing your parts?

A Well, I think an important part of whenever anything quote unquote goes wrong as a founder is you have to figure out how to work it to your advantage. With Steel, we used it to look at what, what our, what was, what, what impact was it having on all our competitors? And we could see which projects they were walking away from and which ones they were staying in. And we could start to make some assessments about what their underlying costs were and what their drivers were. So it helped us draw some of our own new milestones based on what we knew we had to achieve. So that was the positive side. The negative side was we realized that even though we were going to keep our supply chain in the US, we also had to diversify with something outside the US just so we could compete at all for certain during this time period. So I can tell you that trying to set up international supply chain for the first time for a very complex machine during a global pandemic is not Fun.

AI assessment note: “we realized that even though we were going to keep our supply chain”

Q And this is also when, as you alluded to, you're starting to see some challenges, particularly out in the field, so can you talk about what those looked like?

A Yeah, so we saw some issues with some of our sites, and we realized that a lot of it had to do with Possibly not having as many resources to invest in manufacturing and supply chain processes as a bigger company would have taken when launching a new product. And so we had to take a step back, uh, right at the beginning of 20 20 to pause on operations so that we could implement more best-in-class processes, uh, and best-in-class testing on top of what we were doing because Sometimes you think order of magnitude scaling that the same processes you were using translate, but as soon as you're making that many of something, you have to go to several more levels to make sure that what you're building is what you think you're building.

AI assessment note: “we saw some issues with some of our sites, and we realized”

Q Okay, so you've made the decision. Now what? What were the next things that you all did as a company to try to, to try to meet that moment?

A We had hired a wonderful COO, um, who had what it took to kind of build this kind of thing, but interestingly enough, a lot of the Supply chain had been set up before he got there, so he didn't actually have much input on how he built that supply chain, and there was a gap between kind of an older regime and the new regime coming in, so there's a lot of new stuff happening, so there were new suppliers on that project, um, there were new people working on it, but, uh, overall, because we had so many processes in place, a lot of that stuff cleared itself up, um, but we had another kind of interesting event, Which was, we had been using a material from DuPont that had been used in automotive for 40 or 50 years. It was one of the most utilized polymers in the automotive industry, and it was at the core of our product. And throughout Sunfolding, even from the beginning when we were working with the government, they were like, don't you need two different materials so that in case something happens with the one, you'll have something to fall back on? And we said, sure, when we have enough money to do so, we'll do that. But This material is so widely used, and it's been around for 50 years. So something could happen, but we don't think that's our highest risk. So we're gonna stick with this one material for now, and, and we kept testing other materials, but this material was so great,…

AI assessment note: “We had hired a wonderful COO, um, who had what it took to kind of build this”

Q So what does this mean, then, in terms of the other things in the coalition? So, so government funding, depending on which government you're talking about, may or may not be a good source of funding.

A I want to see the, including some of the VCs, I've talked to VCs about this, too, start to think about new kinds of asset classes that we can use. That's a whole nother podcaster series. Like, what are these asset classes? People are thinking about it. And what gets me excited is I start talking about these ideas, and then I am, the, the VCs are almost sometimes the first ones to step up and be like, I can't do this as a VC, but I want to help you think through, like, what do we do? What do we do here? Um, talking to banks, they, like, they'll, they'll be like, oh, yeah, we need that. Tell me what you figure out. You know, so, so there's, everyone wants to solve it. We all see that it's a problem. We've seen the bloodshed, right? And I think just continuing to have these conversations and to really look at the data and to figure out what the data is telling us about what work, what is working and what is not, and what as an ecosystem do we need to do to give more support to these founders so they don't have to figure it all out on their own.

AI assessment note: “including some of the VCs... start to think about new kinds of asset classes”

Q thinking of this as, like, each step is an order of magnitude, and you're ready to go to hundreds of megawatts projects? Okay, and as you're going out to raise your Series B, what were the milestones that you wanted and needed to hit before doing that, and what were the milestones your investors wanted you and needed you to hit before doing that, and were those the same things?

A At the time, I think I was still a pretty naive founder, even though I was, you know, maybe eight Eight years, and I'm like, this technology works, and people want to buy it, therefore someone should give me money to do it. That was my thinking. That was my thinking. So I think now, if I were to do it, I would have thought through some more of the high, higher level metrics around it, for sure. Uh, but it seemed like that was logical enough to make it, we needed money, we had a product people wanted, let's just go. I will say, though, I wonder how much Our desire to get to that higher level of scale was driven by expectations around what you need to be as a company when you're on that pathway, when you're on that venture pathway, because so many of the conversations were around how do we become one of the top three companies in the world. They weren't about how do we utilize this unique technology to Help specific communities or sectors of the market that no one else is addressing. It was just about what is the biggest total addressable market? How do we get there fastest? And that was really the quest, that was really the mantra that was in my head, was how do I become that? Well, I wonder sometimes if we instead had thought about what is the niche market where this is the most needed? And can we somehow address that in a different way than going on this Journey of venture cap…

AI assessment note: “I'm like, this technology works, and people want to buy it, therefore someone should give me money”

Q happening. You've got this massive supply chain disruption. You're calling customers. You're saying you're late. You're, you're trying to ramp up into this utility scale project. What else is going on as you're trying to really, as you're starting to see strain, like as you're trying to increase your resources and be able to meet effectively these projects that you have out there? Say more about how that all looks.

A What's interesting is I feel like even though this feels like the biggest challenge Horrible thing that could happen to a company. I still think we could have recovered if we had that same sort of argument we had when we raised our Series A and Series B, that, that moment, or when we got bankability, which is, this is a technology that has risk, because it's new, but it has a value proposition that's worth the risk. Our value proposition of preserving the land, I think at that point in time, wasn't Accepted as being a good enough value proposition to be worth the risk of us moving forward. That is my assessment. I think that it is a good value proposition, and for me, it was what I was most, it was the most passionate I'd ever been about the technology at that moment, but that doesn't mean that that translates into monetization.

AI assessment note: “Our value proposition of preserving the land, I think at that point in time, wasn't Accepted”