The Exchanges

Q Great, and then for, I heard, I heard part of the definition in there, but for our audience, audience benefit, what does biomass consist of?

A Yeah, great question. So biomass is basically Any material, um, generally produced through nature that contains carbon. So a lot of times when people think about biomass, they think about forestry, or landscaping, or agricultural waste, and all of those are different forms of biomass. Um, it's all, you know, basically plants capture carbon through photosynthesis, uh, and then that carbon is in that material, and that material can then be turned into energy. Um, so those are all traditional sources. What we're doing, what's different is, There's a huge amount of wood waste in construction and manufacturing. I mean, a huge amount of wood waste in general, but particularly from those two sectors, um, US landfills are about 30 to 40% wood by volume. Just wood that has value that's being put into landfills and really filling up our landfills. If we can take all of that wood and instead of putting it in landfills, it will extend the life of landfills and we'll find a second value out of all this really valuable material.

AI assessment note: “biomass is basically Any material, um, generally produced through nature that contains carbon.”

Q Um, that makes great sense, and, you know, tip my hat being in a space where, you know, Material difference for a whole bunch of reasons. Top line growth, cash. Um, curious though, while we're on the subject, uh, you guys focus exclusively on, uh, domestic U.S. opportunities, or, or have you gotten into Canada, or are you thinking internationally yet?

A Um, so we launched initially in Detroit. We've expanded across the whole state of Michigan. We're starting to expand across the Great Lakes area. Um, but really our intent is to Really perfect and mature our AI platform over the course of twenty-twenty-five, um, so that the end of twenty-twenty-five, our processing facilities in Michigan really become showrooms, where people from all across North America, or frankly, anywhere across the globe, could come and see our technology working at scale. Uh, so, so for example, our, our brand new facility in Grand Rapids, Michigan, Is an all-electric full-scale biomass processing facility, and it's, uh, fully enabled with our Woodchuck AI platform. Um, so if someone wants to come and visit Grand Rapids, they can see the AI platform working at scale with fully, uh, electric equipment processing thousands of tons of biomass. So it's, um, it's, we're, we're not doing this in a test lab. We're not doing it on a test bench. Uh, or a computer lab. This is, this is full-scale operation with a, with a maturing AI platform. So it's, uh, it's pretty powerful, and I think puts us in a really good position for twenty-twenty-six when we really want to scale by licensing this technology everywhere.

AI assessment note: “we launched initially in Detroit. We've expanded across the whole state of Michigan.”

Q Um, you know, um, it makes total sense. One of the things you just said that kind of triggers my mind has come up on the podcast before is at what point, um, or do you have an opinion at what point a founder should reconsider their approach and question whether or not they're on the right track and subsequently pivot?

A Yeah, that's a great question. And I think, you know, every time you, you have a challenge, you, you, you have a hurdle, you need to at least some degree question, you know, why is this a hurdle? Why is this a challenge? Is it, you know, fundamentally a challenge that we need to overcome to get to our vision or is there a better path? Um, and that can be on the, the, the financing side, the company strategy side can certainly be on the product side. Um, On the product side, I think two of the most common mistakes, the first most common mistake the startups make is the founders develop a tool or a product or a technology that they think is really cool, and then they go out and try to find somebody who can use it. Um, I think that approach almost always fails. Um, the key is to start with a problem. What is the problem you're trying to solve? Whose problem is it, and will they pay you to solve it? Then go out and build a specific solution for that problem. Um, that works much better than starting with a cool idea and going out and searching for somebody to buy it. Um.

AI assessment note: “every time you, you have a challenge, you, you, you have a hurdle”

Q podcast to the subject, uh, but, but be curious, you know, what are the big drivers of, uh, the energy demand? I mean, I, I want to say that I have actually, it's more compute power behind AI than it is population growth, but, um, this is outside my area of expertise and, you know, if, I don't know if, if it's an easy or if it's a complex one.

A It's, it's a complex answer, but you're right. I mean, compute power is a lot of it. Crypto, AI, the growth of data centers, I mean, those, those are creating a ton of energy and, and the demand for that's only, you know, accelerating. But at the same time, there's also the electrification of everything, electrification of cars, of tools, of household appliances. Um, I mean, you can see the, The weakness in the infrastructure, if you say, take a look at the state of California. California buys a lot of EV vehicles. Um, the local infrastructure doesn't support the cars that are there. It's really hard to, to charge your car easily. If you live in LA and you're going to drive to San Francisco, um, there's a Starbucks about halfway up there that has 10 Tesla superchargers. That's awesome. But if you get there on a Saturday morning, when everybody's going back and forth between L.A. and San Francisco, you might wait for an hour and a half, two hours to get your shot. So we have a, we need to build a ton of infrastructure in this country, and frankly, globally, to support the electrification of everything. And so that, again, becomes a complex issue. What is the initial energy source that is driving all the less electricity, and then how do we transmit it to the places that need it? So it's an infrastructure question. It's a storage question. It's an original source of energy questi…

AI assessment note: “compute power is a lot of it. Crypto, AI, the growth of data centers”

Q And so, I mean, it's complete and total sense. Um, so I curious though, was there a conversation, at least in the beginning to go off, go after small regional builders just to accumulate some wins and experience, or, or was the team pretty set that, uh, best use of resources was going after the large builders?

A Um, great question. And yeah, there are advantages to, you know, the regional guys or the local guys and that yes, they can move faster and they can pivot faster. So it has a, it's a nice way to add smaller local clients that can just help you kind of immediately start to grow your revenue, uh, and get operations going. Um, but we have also found that those smaller guys or regional guys, they don't have the same appetite for the really meticulous tracking, reporting, and validation of what you're doing. Uh, and that's a big part of Woodchuck's differentiation, uh, our ability to track all of that and report on that and validate all of that. Um, and so we really found the bigger enterprises had more appetite for that. Um, and We've had pretty good growth, uh, right off the bat. Um, so I think we found that We can last the sales cycle. Um, we, we just closed a, uh, a seed round funding, so we're well funded, we've got money in the bank, so we can, as long as we plan well and budget well, we can handle the sales cycle. Um, so I think it's better use of, again, limited resources, right? Every startup has limited resources. So for our limited resources, with the sales staff that we have, we find it's the best use of our time to, to focus on the big boys.

AI assessment note: “we find it's the best use of our time to, to focus on the big boys.”

Q for it. So let's come back then to Woodchuck. Um, so having success, uh, with Ryan construction, you know, can you unpack for us, you know, how you determined who your ideal customer profile or ICP was? Was there any iteration? And, um, you know, how, how do you, how do you think about sales cycles, you know, generally speaking, knowing that, you know, larger enterprises take longer to close?

A Yeah, that's absolutely true. So we started really with large construction companies. Our original thought was Large residential developments, you know, multifamily developments produce a lot of wood waste. So that's, that's kind of where we started, and we figured the larger the construction company, the more of these large projects they're going to have, so the more volume of wood. So that's where we started, um, and quickly that expanded into their suppliers. So take, for example, a truss manufacturer, right? A truss manufacturer builds trusses at their own facility, and then they transport that to job sites often. That's a Uh, pretty, uh, common setup. Um, so that trust manufacturer, is that a construction company or is that a manufacturing company? So our, our definition quickly expanded. We started looking at manufacturing companies, and then we also quickly learned it doesn't really matter what you're manufacturing. Everything that comes to your factory and everything that leaves your factory comes on wooden pallets. So even if you're in the auto industry and everything your construction is made out of metal and plastic, um, you're still generating a massive amount of wood waste. So pretty quickly we said, look, we can look at Any construction or manufacturing firm or the suppliers that work within that industry? Um, and then we found that the companies that were most in…

AI assessment note: “we started really with large construction companies... quickly that expanded into their suppliers”

Q And how much of, how much of Amazon's motivation is just the DNA of the company versus regulations?

A Well, I think what we're seeing from Amazon, what we're seeing from a lot of major, uh, enterprises, and that is they're under Increasing pressure from the public to be more efficient, to reduce costs, to reduce waste, uh, to reduce landfill usage. So, I mean, even as a consumer, you can see that Amazon is putting a lot of focus on how they package things for all of those deliveries. Uh, how can they reduce that packaging and make that packaging, uh, recyclable or reusable? Uh, so they're putting a lot of effort into that. So if we can also help them on the construction side, To reduce their waste and add efficiencies on the construction side, um, that helps their overall goals and the messaging to the market, and, you know, Amazon is, that's the first example, because that was the first project we did, but we're seeing that across the board. Um, Ford, Ikea, GM, Starbucks, um, there are a lot of companies that are very interested in driving efficiencies and reducing waste, and so our clients, the construction companies, are under more and more pressure to Build the buildings, and while they do that, provide efficiencies and reduce waste. Um, but also the, the other missing piece is Not just actually divert waste, but be able to track it and report it. So you can give a validated report to your client at the end of the project and say, you know, this is how many tens of tons of …

AI assessment note: “they're under Increasing pressure from the public to be more efficient”

Q Great. Um, I'm curious. So, uh, you know, you're an entrepreneur, you have a vision. How, you know, how have you managed, um, executing on that vision relative to Northwestern who has an opinion of how they'd like to see on things unfold?

A So execution's a great word. One of my favorite expressions is execution is the chariot of genius. Um, so it doesn't matter how brilliant your idea is. If you can't execute, It doesn't matter. So execution is everything, and I think that's, that's really true for startups. Um, you know, in the startup world, by definition, you have limited resources, and you need to be really efficient with your time, with your funds, with the skills in your house, um, so you really need to be able to execute. Um, also startups, by their nature, are opportunistic, um, and you are often seduced to pivot or to expand, Um, and you need to be really careful about those things, um, because I think that the thing that can help a startup really succeed is clear focus, a single clear focus, and when you, you make an unnecessary pivot or, uh, an unnecessary expansion of your scope, um, it is a risk to that focus, which ultimately can kill you. So, um, you need to be really clear on when you're looking at all these great new opportunities, do they align and support your long-term vision?

AI assessment note: “So execution's a great word. One of my favorite expressions is execution is the chariot”