Startups like their technology. Can’t blame them. You get to witness awesome feats of engineering when you work with startups. But I tend to treat those like works of art, rather than products. Because they command prices like valuable art, rather than products. Founders tend to focus too much on their technology. This is understandable, but that is not what your corporate purchasing manager is after. To win that B2B contract focus on these three things in this exact priority. Price Corporate customers don’t pay green premiums for commodities. Forget marketing your product as sustainable. Batteries, solar panels, and wind turbines have become commodities. You can begin trying to sell in these markets your new technology only if you can offer a lower price. No amount of “sustainability” or “quality” differences will be relevant. Lower life-cycle costs are also a poor sell. Corporate purchasing managers do not get rewarded for paying higher prices now for possible savings later. They have a budget, and they need to stick to it, or better, spend less. In a consumer market, you could charge a green premium, as there will always be a group, willing to pay it. Like in electric cars. But not in the B2B. Reliability Even if your price can beat Chinese competition any day, you still have to prove that your product can actually perform as promised. A good price doesn’t guarantee good performance, and the purchasing manager will take some heat if your product doesn’t perform. Get any certification you can. Run your product for a year or more in industrial park test zones, or in less regulated markets. Show your corporate customers that your product works reliably. Resilience COVID-19, war in Ukraine, and China’s dominant position in many parts of the green supply chain got everyone thinking of supply chain resilience. An innovative product, relying on 90% of Chinese-made parts has a much lower chance of being purchased, than a product with a diverse supply chain. This sounds like a contradiction. How can you make a cheap and reliable product, if you don’t source all of its parts from China? The straightforward answer is to use subsidies. You can get compensated for using local content in some places, like the USA. Another would be innovating along the supply chain. Get someone to make you your product, instead of doing it yourself. A manufacturer-as-a-service is likely to have bigger economies of scale than you and a more diverse supply chain. Partner with startups, who are working to disrupt your supply chain. They also need customers, and you can be their first customer. Keep in mind, that If there is any premium that a corporate customer might be willing to pay, it is the resilience premium, but not a green premium. Sustainability This is what startups usually put first when marketing their product. In reality, this should be the last thing you say. Ah, and by the way, it will enhance your sustainability. If the product is all of the above, sustainability is a nice bonus.

A recruiter recently reached out with an intriguing proposition: the position of Chairman of the Board at a burgeoning battery company. Initially, it seemed like a fascinating opportunity, but after careful consideration, I decided to decline. I want to share the thought process behind my decision in this post. The Company’s Background The company in question is owned by three friends who founded it over two decades ago. Their primary business revolves around selling lead-acid batteries, imported from China. This product line makes-up  90% of their revenue. Recently, they ventured into assembling lithium-ion batteries, attempting to diversify their offerings. Two years ago, they brought in new management, aiming to drive growth. However, despite these changes, significant revenue increases remained elusive. The Chairman’s Mandate The role of the Chairman came with a substantial challenge: devising a new strategy to propel the company into new markets and triple its revenue within the next five years. This ambitious goal was at the heart of their recruitment drive. So, why did I ditched it? 1. Market Realities: The core of my skepticism lay in the market dynamics. The company’s foundation in reselling lead-acid batteries is stable but limited. Transitioning to a dominant player in the lithium-ion battery market posed significant challenges. The local demand for lithium-ion batteries is modest, and existing suppliers hold a strong foothold. It was hard to envision a pathway for this company to disrupt such an established market. 2. Founders' Dynamics: Another crucial factor was the company’s internal dynamics. The founders have operated without a formal board for over twenty years. Introducing a Chairman into this mix seemed counterintuitive. Power-sharing with an outsider, who hasn’t been part of their longstanding camaraderie and internal battles, would likely be resisted. It’s natural for founders to be wary of diluting their control, especially when the board is a new concept for them. 3. Potential Internal Conflict: The scenario I foresaw was less about collaboration and more about internal power struggles. The founders might leverage the Chairman as a counterbalance to the CEO, fostering a competitive rather than a cooperative environment. In such situations, the CEO often has the upper hand, given their direct influence over company resources and personnel. Employees, whose paychecks come from the CEO, are more likely to align with their directives rather than those of a new Chairman. While the opportunity to shape the future of a growing company was tempting, the inherent challenges and potential for conflict outweighed the potential benefits. A successful Chairman’s role requires not only strategic insight but also a conducive environment for change, which I did not perceive here. In leadership, sometimes the best decisions are those that involve walking away from opportunities that don’t align with one’s strategic vision and values.

EU companies seem to be unable to get their gigafactories up and running. Britishvolt, Italvolt cancelled. Freyr and Beyonder are moving out. Northvolt is struggling with quality issues, after almost two years after launch. After so many grand announcements, things look like they are fizzling out. I don’t have the answer. But what I know is that launching large-scale manufacturing is f***ing hard even if you’ve done that once already. Or even twice. When I was just starting out in my manufacturing career, I was charged with building wind turbine manufacturing in Russia. I was not sure if we could pull off blade manufacturing. So I’ve talked to Vestas, Enercon, Siemens, GM, and so on to learn about blade manufacturing. At one time, I was sitting in a meeting room at Charles de Gaulle airport with a representative from Gamesa (they were not yet acquired by Siemens at that time). We were talking about possible localization of manufacturing of blades in Russia and that’s when he told me this story. Gamesa was setting up blade manufacturing in the USA. The factory was closed after three years of operation. The scrap rate was over 50%. And they couldn’t find a way around it. That was when I decided that we were not going to even try to localize blade manufacturing. I remembered this story when I read recently about Northvolt’s woes. I can only hope that Northvolt investors will have enough patience, and its engineers and workers enough diligence to overcome the current manufacturing difficulties. There is a way around it. EU doesn’t manufacture its own chips. But it does manufacture the equipment needed to make those chips. And its companies design chips. And the chips are then made in Taiwan, at TSMC factories. Nothing wrong with doing the same with batteries. EU could focus on development, and outsource making batteries to, say, Korea or Japan. For full disclosure - I am working with JR Energy Solution, a Korean electrode foundry, offering manufacturing-as-a-service for lithium-ion electrodes. Or is there another way? I would love to know your thoughts.

In the 90s Intel was considering switching to making a completely new chip. It was simpler and consumed less power. It was clear, that the chip application would be on mobile devices, which would also be the future of computing. There was just one problem - it would be less profitable to make them than to continue the production of existing chips. A couple of years later, Steve Jobs approached Intel with an offer to make chips for his new iPhone product. Intel, and Jobs himself at that time thought that the product would be niche. After some thought, Intel turned down the offer. Again, it was simply not feasible to serve the emerging niche market. I can see how perfectly sensible that decision was. Investing in a new, risky product. Similar ventures in portable devices have failed. Even if it became a success, then it would still make less money than the current product - the chips for PCs. No way you would get such a project approved by any sensible board of directors. Several years later, Apple made more money from the iPhone than Intel from PC chips.

I first saw a flying car while watching Blade Runner, in the early 90s. Five years passed since 2019 - the year in which the events of the movie take place, but only last year we got ourselves the first certified flying car. And that was in China, not in LA. All the technologies necessary to make a flying car are available today. The key one is the high-density lithium-ion batteries. These became light and cheap enough thanks to the progress made in making electric cars. Cells with Nickel-Manganese-Cobalt cathode (NMC) seem to be the preferred type for these cars, as it currently packs more energy per kg of weight The growth in the drone market also helped to develop the necessary technologies, for controlling flight. The emergence of AI paves the way for making flying cars autonomous from the start. Two things hold back the development of the personal flight market. The first is regulations. Western regulators have been slow in allowing cars to fly over cities. Chinese regulators came a little faster. This year should see other places like Israel and France have their first flying cars. In Israel, AIR One is expected to start shipping first commercial orders and Volocopter is expected to launch its flying taxi service in Paris.  Still, any new vertical take-off and landing (VTOL) vehicle will take years to test and certify. The electric aircraft market is around $8B now and is projected to grow to about $35B by 2030. This includes drones, which are by far the most visible representation of electric aviation today. The growth could become exponential closer to the end of this decade, as more electric VTOL aircraft get certified and take to the skies. But there is a second problem, to be overcome. The problem is why. Why do we need a flying car? Zipping above the traffic jams seems cool until you factor in the cost. Current models are priced over $300K, making them unaffordable for all but the super-rich, corporations or governments. If the price of EVs is any guide, then it would take 15-20 years for the prices of flying cars to reach the prices of EV today. As more flying cars fill the skies above the cities, AI air traffic regulation is likely to happen, queuing all the flying cars in the multi-story air traffic jams. Getting to work 20 min earlier is not the problem I’d want to solve with a flying car. I rarely travel to the office now, and public transport is getting better all the time. From the climate perspective, flying cars will not contribute to any meaningful CO2 reduction. All air travel today contributes just over 2% of global CO2 equivalent emissions, and most of it is from long-haul flights. VTOLs could be taken up first by city services like police, ambulances, and firefighters. Big cities could afford them. Ambulances have a hard time pushing through city traffic, and for these kinds of life-or-death situations, flying cars can make a real difference. But as budgets and procurement procedures go, this will take a couple of years. With this in mind, I see flying cars as a luxury market. It doesn’t solve global climate or other global issues. They definitely will not save the world. But they may save lives.

Recently, the EU and the US slapped import tariffs on Chinese electric vehicles (EVs). In my circles, the reaction has been one of outrage, with many accusing the governments of undermining climate efforts and harming consumers. But let’s take a step back and look at the bigger picture. While these tariffs may seem counterproductive at first glance, they are, in fact, a prudent hedge against over-reliance on China for critical goods and technology. The COVID-19 pandemic taught us a valuable lesson about the power of distributed systems. These systems, which Nassim Taleb describes as 'antifragile,' actually grow stronger under stress. If you do not want to put all of your eggs in one basket, then you need to buy a second, and maybe a third basket. Three baskets are more expensive than one, but then, it may let you bake your cake. A system that may look good and work best during normal times (like cheap Chinese EVs), may, and most likely will, shatter in crisis. A system that is a bit more expensive, and slow. and a little inefficient, can be the only one you can rely on in your time of need. Consider this: a system that functions perfectly under normal conditions, like the availability of cheap Chinese EVs, might crumble when a crisis hits. On the other hand, a slightly more expensive and slower system, though less efficient, can be your lifeline when things go south. It’s like having a sturdy backup generator or battery when the main power grid fails. The Russian invasion of Ukraine starkly reminds us that global stability is never guaranteed. Russia isn't the only player—China has made its intentions towards Taiwan clear. What seemed unthinkable is now within the realm of possibility. So, why continue as if it’s still the calm of 1999? We are all in it for the long haul, and the more we become antifragile - the better.  It’s past the time to prepare for a more unpredictable future.

Imagine standing at the edge of a vast canyon. Your goal is on the other side, seemingly unreachable. You lay down one brick, then another. Sometimes, despite your efforts, the other side doesn’t seem to get any closer. But you keep going, brick by brick. This requires immense mental stamina. It’s about recognizing how much you’ve done, seeing how much more there is to do, and not throwing up your hands in despair. In my interviews with startup founders, a common trait emerges—resilience. These guys and gals just don’t give up. Day after day, they show up and do the work. They call investors, reach out to clients, and coach their teams. They confront the yawning chasm between their goals and their current position every day. And they choose to step into it every day, or, more accurately, build a bridge across. Mental resilience surpasses entrepreneurial drive, motivation, and even passion. On tough days, when a client decides they don’t need your product or another investor turns you down, no pep talk or a positive attitude will push you forward. It’s your will, your grit that keeps you moving. So, to all the startup founders out there: stay strong. Stay resilient. Put your helmet of mental resilience on, and stride forth!

Startups often dream of being acquired by big corporations or growing to become such giants themselves. But to succeed in either path, understanding how corporations think about innovation is crucial. The best place to start? Clayton Christensen’s seminal work, The Innovator’s Dilemma . Christensen dives deep into the nature of disruptive technologies and why established corporations struggle to invest in them. Disruptive vs. Sustaining Technologies Consider Tesla, the iPhone, wind turbines, solar panels, AI, and now NVIDIA chips. Then think about ICE cars, mechanical excavators, 5-inch floppy disks, and old cellular phones. The latter set were once disruptive technologies, now replaced by newer disruptions. Many believe new technologies win solely because of their superior technological value. They think being better is enough. But that’s far from the truth. Clayton Christensen dissects the success factors of disruptive technologies, showing convincingly that it’s not technology that wins markets, but flexible business strategies and cost structures. Characteristics of Sustaining Technologies Christensen differentiates between sustaining and disruptive technologies. Sustaining technologies are well-established, providing high margins. Customer demands are clear, requiring massive investment for incremental gains. Think smartphones: each new model slightly improves on the last, but no groundbreaking changes or new markets are created. Characteristics of Disruptive Technologies Disruptive technologies, on the other hand, start as underdogs. They’re less sophisticated than sustaining technologies—simpler in design, often smaller, and more convenient. Their value proposition isn’t immediately clear. They don’t solve the problems of existing customers, appealing instead to small, fringe groups with small margins. Challenges in Corporations Interestingly, many disruptive innovations occur within large corporations but fail to thrive. Why? Why do industry leaders consistently miss the boat on disruptive technologies? Imagine pitching a disruptive tech investment to a corporate committee. You need market size, pricing, investment estimates, and financial returns. The problem? None of this data exists. Christensen explains, “Companies whose investment processes demand quantification of market sizes and financial returns before they can enter a market get paralyzed or make serious mistakes when faced with disruptive technologies. They demand market data when none exists and make judgments based on financial projections when neither revenues nor costs can be known. Using planning and marketing techniques developed to manage sustaining technologies in the very different context of disruptive ones is an exercise in futility.” In essence, approving a disruptive project within a corporation is nearly impossible. It will lose to existing products on margins and risk-adjusted returns, and it will cannibalize current markets. No sensible manager will allow it. The Solution: Starting Anew So, what’s the solution? Start a new company focused on the smallest viable market. This new company’s business structure, strategy, and costs will align with this small market. It will build its supply chain from scratch, becoming leaner and faster. This is the only way it works. Christensen’s research shows that new entrants were responsible for every successful instance of developing and adopting disruptive technologies, not the incumbents. Corporations that thrive long-term master the art of adopting disruptive technologies by creating new companies completely isolated from their core operations. From Disruption to Sustaining New products usually involve little new technology. They take existing tech, find the market, adapt the product, and simplify it. Starting with a small market, they grow. They develop the disruptive technology until it matches the sustaining technology, eventually becoming the new standard. Due to lower margins and a leaner structure, the new entrant eventually drives out the incumbent. Conclusion The Innovator’s Dilemma is a must-read for startups and corporations alike. For startups, it provides invaluable insights into how to navigate the challenging path of innovation and disruption. For corporations, it offers a clear roadmap on how to embrace and foster disruptive technologies without being paralyzed by traditional business practices. By understanding and applying Christensen's principles, both startups and established companies can better position themselves to thrive in an ever-changing technological landscape.

🌱Everyone seems to have forgotten blockchain now that AI is the hottest topic, but it’s far from dead. Recently, I discussed the potential of using blockchain for tokenizing greentech technologies with a startup founder. ⛓️It can be tempting to add flashy technology, especially to attract investors. I’m no crypto expert, although I have some experience in the crypto markets—both positive and negative. So, hear me out and help me understand. I see two potential ways blockchain tokens could be used in greentech. 💹First, the shares in a greentech startup could be converted to tokens, which are then sold, giving investors a claim to the company’s profit. This sounds simple in theory, but I imagine it would be legally complex. 🤷🏻‍♂️But why would this be necessary? Tokenization allows ownership to be divided into very small slices, possibly suitable for crowdfunding. However, most greentech hardware products require large investments that are hard to raise through crowdfunding. If you just need funds, why complicate matters with tokens? ⚡️Second, tokens could be issued based on output, like kWh from a solar plant or kg of hydrogen from an electrolyzer. My friends in the crypto world say these tokens can be traded, but I don’t understand the underlying value of the token. It could be tied to carbon credits, but that would limit it to projects actively removing CO2 from the atmosphere. ❓Maybe it’s just ex-crypto enthusiasts looking to apply their technology somewhere. While tokens can be added to greentech, I just don’t see the point. Outside the carbon offset market, it seems like additional costs with zero benefits. What’s your opinion? #Blockchain #Greentech #Startups #Innovation #Crypto

The Tyranny of Choice I've recently completed ten market research assignments for a corporate investor looking to dive into green technologies. We explored  hydrogen, carbon capture, circular materials, renewable energy, batteries, EVs, waste management,  and more. Each sector had numerous technologies, all at different stages of market readiness.  Which ones should the investor pick, and why? The IEA database lists over  550 different technologies for the energy transition.  These include renewable energy technologies, abatement technologies like CCS, energy efficiency technologies, and industry-specific innovations like electric vehicles and industrial heat pumps. How do corporations decide which ones to invest in? Greed and Fear in The Towers of Steel and Glass In 2020, I pitched an investment in lithium-ion batteries to Rosatom’s investment and scientific committees. At that time, the cost of cells was over $300 per kWh, three times what it is today. My task was to secure $100M to start the project, with an additional $500M of equity investment to come later. Despite the growing EV market worldwide, my superiors were concerned about two things: lack of demand for batteries in Russia and the risk of choosing a technology that might become uncompetitive and fast.  This scenario showcases the two main motivators in corporate ecology: fear and greed. Overcoming Fear The fear factor was overcome by demonstrating that our NMC technology was gaining market share worldwide and that we were acquiring a company with robust R&D capabilities. We also had to to a 100+ page report detailing all other chemistries of anodes and cathodes, and demonstrating that the NMC technology would survive for the next decade at least. Also, owning a battery technology could in theory make it possible to use them at nuclear power plants, making them more flexible energy generators. A sort of insurance against an overabundant grid (which was and still is the case in Russia). This reassured my superiors that our investment was sound. Leveraging Greed The company had a strategic goal of doubling its non-nuclear revenue by 2030, under a strategy dubbed “let a thousand flowers bloom,” which is a shorthand for «we have no idea how to get there». My project promised significant revenues by 2030, and the company we were acquiring was already generating revenue. The manageable risks, combined with the strategic fit, made the investment appealing. The Insider The balance between fear and greed determines whether your technology gets funding. Many startup founders mistakenly believe that corporations are eager to invest in new ventures, as they are supposed to maximize profits in the interests of their shareholders. In reality, 98% of corporate executives are terrified of investing outside their core business. Their salaries and bonuses are tied to the core business’s success, with any new venture KPI added as an afterthought. To tip this balance in your favor, you need inside help. Most successful corporate investments in new tech have a corporate insider, who champions the tech before various corporate committees and decision makers. When a fellow corporate sees such a champion, he or she is happy to let this champion handle the startup, as this champion will bear all the blame. This person usually works in the strategy department, and that is no coincidence. You need to show that your strategy is working, by matching it with potential startups. Other places, such as corporate accelerators or R&D hubs could be a good place to look for. Getting your foot in the door To get your technology deployed at scale by a corporation, consider these strategies: 1. De-risk Your Technology:  Provide robust case studies to demonstrate success. Show that technological risk is non-existent and that market risks is solved by having real customers. If those customers are currently your target corporation customers - so much the better. 2. Understand their KPIs:  Know the key performance indicators of your corporate counterparts. While none of them are likely to share theirs with you, ask leading questions like, “How can this project/technology help your department’s goals this or next year?”. Focus on the now, as KPI’s are usually quarterly or year-based. After that nobody really cares, even the guys in the strategy department. 3. Position as Insurance:  Frame your technology as a way to protect the market share of existing products or ward off competitors, not just as a new venture. 4. Find an Insider:  you’ll need a champion in the Tower. Someone, who will constantly bother other corporates about your startup, so much, that they will just give up. If you want your technology to be deployed at scale, you’ll need a corporation. But remember, the more boring and de-risked your technology appears, the better the chance it will be invested in. Understand their KPIs, position your technology strategically, and address their fears and greed to get your foot in the door. And above all - find an Insider.

In a few weeks, I'm gearing up for a road trip around eastern Turkiye. Renting a car is a must, but I want to do it in an environmentally responsible way. My algorithm is clear: go first for a fully electric car, and if that’s not available, get a hybrid. EVs are the cleanest, ICE cars are the dirtiest, and hybrids are somewhere in between. Simple, right? Still, some naysayers claim that EVs are bad for the environment. What they’re implying is that ICE cars are somehow better. These folks clearly haven’t lived near a highway or a busy city street. For those lucky enough to live in a cabin in the woods, driving gas guzzlers around tree stumps, there's now a nifty tool to compare EVs, hybrids, and ICE cars. The IEA recently launched a new interactive tool that compares all these types of cars. It’s fun to play with and takes into account years of use, average daily driving mileage, and the energy balance of a region. The only downside is the limited number of regions, but hopefully, more will be added soon. And before you come throwing sh*t at me in the comments about batteries being left in the open, higher tire wear, etc., try living in the center of Istanbul for a summer. I bet you’ll become an EV convert in no time, just like all those investors who poured record funding into EVs last year—almost $90 billion, according to Pitchbook INC. Have a nice summer! #EV #Summer #ClimateChange #Startups #innovation Here is the link to the IEA comparison tool: https://www.iea.org/data-and-statistics/data-tools/ev-life-cycle-assessment-calculator

About 8 years ago, I was working in Novawind and running several projects simultaneously - acquiring wind turbine manufacturing technology, rolling out the production of wind turbines, and developing wind farms. Given that this was the first time wind turbine manufacturing and wind farm development was done at a scale in Russia, I pitched my boss the idea of hiring consultants. He didn’t see a point but allowed me to continue. I had in mind several tasks for consultants. First, as usual, I needed consultants to review our strategy. I didn’t need their review per se, but I needed the stamp of a major consultancy on my strategy, so it would have more weight in the investment committee meeting. Second, I needed access to experienced people from the wind industry - engineers, supply chain, and factory managers. We didn’t know much about running a wind turbine manufacturing company then, and desperately needed advice. Third, I was about to manage a Russian and a Dutch team and ensure they worked well together. So I decided I needed a mixed Russian-Dutch consulting team. Finally, as our company was a part of Rosatom, a state nuclear energy company, I needed consultants with experience in complex project management with large Russian state corporations. My ToR reflected these needs pretty well. I wanted a Russian-Dutch team, with experience in managing $1Bn+ infrastructure project for a Russian state corporation, and access to at least three professionals from the wind industry with 20+ years of experience. The task included organizing project management, team integration, consulting on factory roll-out and supply chain organization, and, of course, strategy stamping review. Soon, I had a score of top consultancies to choose from. KPMG, EY, AT Kearny, and McKinsey, all submitted bids. These ranged from $ 300,000 to almost $2M. Now, the rule of dumb thumb of Rosatoms’ procurement is to go for the lowest bidder. I couldn’t afford that, as the lowest bidders matched max two of my criteria. The highest bidders also couldn’t match all criteria, especially in fielding needed industry experts. And then there was a mid-range bid from Roland Berger. I knew I couldn’t just award RB the contract, as it would go against all corporate rules. So I went to my boss with these arguments. First, they have experts with 20+ years of hands-on experience in wind turbine manufacturing. Second, they are ready to assemble a Russian-Dutch team to help us coordinate cross-cultural communication. Third, they are already working for Gazprom on the South Stream project, so they know well what it is like to work with a Russian state-owned company and run a $1Bn+ project. I visited Roland Beregers’ Moscow office shortly before the start of the Russian invasion of Ukraine. By that time, they were on their third or fourth contract with Novawind. The Russian-Dutch cooperation mechanisms, project management and reporting techniques, and much more were established and polished over the 5 years since we first hired Roland Berger. My former management saw the added value of not-so-cheap consultants and continued hiring them for new projects without my insistence. Two months later RB closed all its Russian operations and moved the team abroad.