Infinite Composites Technology was founded to develop composite materials for high-pressure vessels and structures for the aerospace, transportation and industrial gas storage industries. SURGE Ventures is providing support.
Joaquin Altenberg came to Houston seeking resources to start an energy company and ended up establishing an energy finance company. Vert acquires solar renewable energy companies then provides financial support and expertise to grow.
Russ: This is The BusinessMakers Show, brought to you by Comcast Business, built for business. For this week’s guests we’re featuring three companies from class 4 of SURGE Ventures, the firm that enables entrepreneurs to solve the world’s energy problems. First, Infinite Composite Technology, a company developing new strong, light weight, high pressure composite structures and vessels for aerospace, transportation and industrial gas storage. Then next we’ll visit with Joaquin Altenberg, the Founder and CEO or Vert Solar, a renewable energy company focused on the solar middle market space delivering a concept to completion power service for commercial and industrial companies, providing a stable price hedge for power. And then our third SURGE Ventures company In-Acuity, headed up by Ryan Austin and aimed directly at the knowledge transfer challenge for the great crew change in oil and gas.
So let’s get started with Infinite Composite Technology, where I sit down with Michael Tate and Matt Villarreal. We enter the interview where I had just asked Matt to tell us about Infinite Composites Technology.
Matt: Infinite Composites, our mission is to develop composite materials for high pressure vessels and structures which are used in aerospace applications, transportation and industrial gas storage. So we want to make these storage technologies more efficient and easier for people to use.
Russ: Okay, are you even talking about like tanks that might even people use for CNG in some of the vehicles nowadays?
Matt: Yeah; compressed natural gas, compressed hydrogen and other gas storage applications.
Russ: Okay, what was wrong with the technology that we have today?
Matt: So what they’re using right now is heavy metal vessels; they take 5lbs of metal to move 1lb of gas. So we’ve created technology where we can move 1lb of gas with less than 1lb of metal – or less than 1lb of storage tank.
Russ: Okay, pretty cool.
Michael: And 93% of the market is heavy steel tanks, so there’s a lot of opportunity out there to improve on existing technologies.
Russ: Okay, so when I think of composite I think of these new – this is probably going to be wrong and I don’t mean to offend you – but these new hard plastics, they even use composite material on airplane structures; is that the same thing?
Matt: Yeah, definitely the same space.
Russ: Okay, is it wrong to refer to them though as plastics?
Matt: They’re reinforced plastic. The main structure is a polymer-based material but it’s reinforced with carbon fiber or glass fiber to make it incredibly strong.
Russ: Okay. So why isn’t somebody else already doing this?
Matt: There are others who are making composite tanks like this but they have drawbacks. So some of them have a metal liner or plastic liner on the inside which adds quite a bit of weight, it takes up usable storage volume and it costs more. It’s also a major point of failure; so the liners themselves, they wear out, they can become brittle from the gases having other contaminants and stuff in them and so we created technology where we don’t have to have a liner so you only have the composite carbon fiber structure that’s holding the gas and holding the pressure.
Russ: But is it stronger if it has a metal liner.
Michael: It’s equally as strong with our material. The liner only counts for a small percentage of the strength barrier and that’s only in the metal liners. The plastic liners, everyone uses the same amount of carbon fiber so essentially what we’re doing here is giving you more space inside at significantly less weight.
Russ: Okay, real cool. So what was it that triggered the idea that you could do this better?
Matt: So in 2008 Michael and I were on a collegiate racing team where we built a quarter scale Formula 1 car to race against teams from all over the world.
Russ: Quarter scale? Is that about the size of a go-kart?
Matt: It’s bigger than a go-kart, used a 600cc motorcycle engine. And so to raise money and separate ourselves from the other teams we created the world’s first compressed natural gas Formula racer and we set 3 world records in an endurance event while driving 590 continuous miles. While we were driving we started realizing that every 4 to 6 laps we were having to fill this thing up and we realized that it was mainly because the fuel storage tank was too heavy and it was too bulky and it didn’t hold enough fuel.
Michael: So we got what they refer to in the industry as range anxiety; we were actually afraid of running out of fuel before we got to in our case the pit stop but other people in the industry, you know, before they get to the next natural gas fueling station, they’re kind of far and few between. So we started doing some homework and realized that this was a major industry problem and that the tanks were one of the major holdbacks for getting people more gas and fuel economy in their vehicles.
Russ: Well I don’t suppose that you’ve managed to build one bigger now and put it back in the same quarter scale racer that you guys used beforehand?
Matt: No, we haven’t put them in that application yet but we’ve done some products for NASA and we’ve done a mobile CNG fueling station; that was our first customer actually. So we built some very high pressure tanks.
Russ: Well wait, a mobile CNG refueling – I mean that means that you’re there storing all the CNG that’s being put in it so it’s a real large tank, right?
Matt: Yeah, so these are – they hold about 100 gallons equivalent of natural gas, you can fuel up about 5 F150 trucks for example per day. So they wanted to be able to pick this thing up and move it from site to site where ever they were working and fill up off the gas that was coming out of the ground. And so their only alternative was a steel sphere, which weighs 9,000lbs, and so they wanted to be able to pick this thing up and move it easily and 9,000lbs of steel is not very practical. So we delivered a system that only weighed 900lbs, it held 15 gallons more of fuel and it actually costs less than the steel sphere.
Russ: Really cool, really cool. So I’m curious, what was it about SURGE Ventures that was appealing to you guys?
Michael: I think for us the biggest thing that we gained was the network. So we’re a Tulsa based company, we really wanted to expand who we were meeting and get into different clients. You know natural gas is really dominant in Tulsa and so it was a great place to build some initial customers and stuff like that but we knew that the technology and the products that we were developing had much bigger applications and so in order to reach those places we needed a bigger network and SURGE was definitely a great place to provide those contacts.
Russ: Okay, I know you’re still early stage but you’ve mentioned NASA, you’ve mentioned CNG refueling, I mean you have a lot of options, are you homing in on one in particular?
Matt: So we’re still doing vehicular applications, that’s still part of our plan moving forward but we have some potential opportunities we’re exploring for bulk transport of gases. So you fill a 40 foot storage container full of tanks and you can move gas from – like stranded gas where there’s no pipeline or you can move gas from the processing plant to the end user for fueling vehicles or for burning during processing or boiling or whatever.
Michael: Capturing the flare gas, stuff like that.
Russ: Okay, really cool. So early stage here at SURGE Ventures, but it’s now SURGE Venture so you guys had already raised some money and have you already sold some product?
Michael: Yeah, so we raised about $400,000.00 and some change before coming here and done 5 pilot projects, all of which were paid from groups like NASA and the mobile refueling station and we’re in the process of raising some additional capital right now which we’ve started securing through introductions from SURGE.
Russ: I love that their idea was motivated by a collegiate racing team project. Okay, up now Joaquin Altenberg, Founder and CEO of Vert Solar. We join the exchange where I’d just asked Joaquin to tell us about Vert.
Joaquin: Vert Solar Finance is a renewable energy company focused in the solar middle market space. We’re looking to ignite the growth of the solar middle market by delivering a concept to completion website and platform to support developers and others in the industry get large, what we call middle market projects completed.
Russ: Okay, middle market solar projects completed.
Joaquin: Solar, precisely.
Russ: Okay, tell us what the middle market is.
Joaquin: So the middle market is a little bit undefined but it sits somewhere between residential rooftop and massive utility scale projects.
Joaquin: Our projects range in size between 500 kilowatts and 20 megawatts, or another way to think of it is they sit on top of businesses, big buildings, flat rooftops, open unused space, parking garages and parking lots.
Russ: Okay, but it’s mainly commercial customers?
Joaquin: Primarily commercial, industrial businesses and municipalities so it covers a pretty wide range, it’s not easy to identify specifically.
Russ: Okay, okay. But you define it mostly by the size; what size of a solar installation they might want?
Joaquin: That’s correct.
Russ: So are you having to convince these people that solar is a good answer or have they already decided that usually?
Joaquin: Many of them are already looking at it and a lot of them are making the choice for their own reasons; both for financial reasons – when you look at the operating costs of a lot of industrial plants, if you have like a bread factory, a large component of your costs for a grocery store is the electricity costs. So they’re already looking for solutions to hedge that cost and many of them have gone to the market trying to find a solution that is large enough and what they find is there’s nobody there financially to support them. There are a lot of great builders out there but at the end of the day there’s nobody that will actually do what they want which is just give them a power contract.
Russ: Okay. And so when you talk about hedging, what they’re looking for is that in the future to power their business and to keep it going they don’t know if the price is going to go up or down, but on solar it’s pretty much once you’ve signed the deal and gone forward it’s pretty stable, is that right?
Joaquin: That’s correct. We give them a fixed cost they know every year, they can put into their operating budget what their electricity costs are going to be and they do often have small escalators, 1, 2% and some of them are flat, but basically you know exactly what your electricity costs are going to be for the foreseeable future. And none of us, including you and I, in our own homes have any sense for what that’s going to be, imagine when you magnify that by 10 or 100 fold to operate a facility to see that much variability.
Russ: Right. Now are these customers operating and supplying 100% of their power through solar or is it usually a partial?
Joaquin: It’s usually a partial amount. So again, it depends by how much space they have and what their consumption is, so we size it to an amount that supports both of those and that’s reasonable. So it wouldn’t be unreasonable to offset 40% of your power.
Russ: Okay, okay. So I’m curious, what was it about SURGE Ventures that attracted you to think that they can help your company move forward?
Joaquin: Sure, so I moved to Houston from New York City. I moved here to start a renewable energy company and I was looking for technical resources. I have a lot of relationships, I spent over 10 years on Wall Street so I know the financial world, but I don’t have the network and the technical relationships here in Houston and more broadly to get the system that we wanted built. And so I approached the team here and they were gracious enough to start making introductions and then we broadened the relationship to join this class and take on a little bit more than what originally was what we thought which was really getting into the network of Houston and really meeting a tremendous amount of folks like yourself and plenty of other capital resources, technical resources and it’s really expanded the business for us. So it’s been pleasant, I’m grateful and a lot more than we expected.
Russ: Well that sounds real cool. Have you found much solar expertise here as well?
Joaquin: Houston’s the energy capital of the world so there are a lot of experts here that we didn’t realize but at the end of the day we’re in the business of energy.
Joaquin: And there’s no better place to be in the business of energy in Houston.
Russ: Okay, so before I let you go let me know today, what’s the status? I mean, do you have customers today that you have installations on and are you pursuing more or are you not at that stage yet?
Joaquin: So we today have launched our platform which is bringing customers in so we can analyze and review and provide them tools and capabilities to assess the development of their projects.
Russ: Right, okay.
Joaquin: And so we already have over 100 megawatts so we’re pretty excited of opportunities. We have secured large financing for the debt side of the projects and that’s really been very difficult; there aren’t any banks really lending in this space who have less than $10 million and we’re currently in discussions with equity partners and looking to close that pretty quickly. So once that happens we actually move right into building our projects.
Russ: Okay, and our last SURGE Ventures company In-Acuity. I asked Founder and CEO Ryan Austin to tell us about In-Acuity.
Ryan: In-Acuity connects organizations and their leaders with wisdom from proven subject matter experts. We do that through knowledge capture transfer and accredited learning programs. Over the last 2 years we’ve developed a framework that we call knowledge transfer to learning and we designed this framework with a group of instructional designers and an international accreditation body so that we could teach these experts how to take a step back, map out their knowledge and develop learning curriculum that can be attended by less experienced leaders to accelerate their career path.
Russ: Okay, so when you’re talking about sort of training the trainers there, weren’t you?
Russ: Yeah, okay and we’re mainly talking these days about the oil and gas space, would that be right? That’s your target?
Ryan: Correct. Yep, we focus right now 100% in the energy sector; we’ve worked with over 250 companies to date. We’ve hosted over 800 learners through our programs to really prove that these wisdom-based and experience-based learning programs that we’ve developed – which are very unique – are proven learning programs that can help other people. And so now we’ve validated that.
Russ: Okay, and we’re really talking about the great crew change which I think most of our audience knows about but share your perspective on that.
Ryan: Sure. It’s a major problem because you have a lot of vital knowledge leaving and exiting companies and there’s 4.2 million professionals that are retiring out of the energy industry by 2018. So we’re only a few years out and the abundance of knowledge is still sitting there. Actually when these experts leave the companies the companies are hiring them back as consultants because there’s still a gap. So what we do is we provide a platform for these experts to earn a supplementary income which motivates them not only for that but to share their knowledge with less experienced leaders on a profit share model while they still have the flexibility to enjoy retirement. And for businesses we provide a platform so they can acquire that wisdom and that knowledge and allow their learners within the organization to acquire these talents that the retirees had to accelerate their growth.
Russ: Okay, it seems like you focused a whole lot on the teachers on this side, do you have as much confidence in what the learners are going to be able to learn from these guys through your method?
Ryan: Yeah, absolutely. So since our inception in 2012 we decided to deliver our learning programs through piloted open workshops and through that method we hosted these 800 learners from more than 250 energy companies so that we can truly understand the behaviors between experts and learners. Since our inception of our business we always knew that we were going to become an education technology business but we knew that we couldn’t just launch the technology first because it would fail until we truly had enough confidence and we’ve developed the right processes where the expert and the learner can mesh together in an effective manner; and so now we’ve been able to do that.
Russ: Okay and you’ve done that to know it works in actually a classroom environment, is that right?
Ryan: Correct, yes.
Russ: Okay, real interesting.
Ryan: Thank you.
Russ: So when you look at it from the learner’s perspective – and as we all know from the oil and gas space there’s always this up and down – you started probably this process and oil was going up and up and up. Now it’s obviously come down – even though it’s kind of creeping back up – but there were a lot of learners that were just starting and then lost their jobs; has it impacted your business?
Ryan: It’s impacted the entire industry. Anytime you’re in a cyclical industry you have those issues. By having different layoffs and whatnot in the industry it accelerates retirement, but it also extends the gap of the knowledge between mid to senior level leader compared to their predecessor. And so there’s still a major pain in these businesses and these people and that’s where we can come in and we’re doing that through the development of expertknowledge.com; and these are knowledge market places that we provide to the industry. A public marketplace where experts who are retired can come to the platform, apply, use our framework once they’re approved on the platform to develop learning curriculum without the need of an instructional designer, but these courses still become accredited because our processes. And learners can then sign up onto the platform to learn from these mentors essentially.
And then we also white label that technology to corporations so they can build knowledge communities within their own companies where their resident experts can use the platform, convert knowledge into learning programs internally so the less experienced leaders can learn from them before they retire. And these learning programs are captured using video so they go into a corporate styled wikis so that companies can access new knowledge or store knowledge before it exits the businesses.
Russ: Okay, back up a little bit, expertknowledge.com, is that owned by In-Acuity or – okay, so it’s yours.
Ryan: It’s owned by In-Acuity, we’ve owned it since the inception of our business because we’ve always known that we’re going to be heading towards this direction, but we’ve been patient and we wanted to make sure we had absolute confidence that we understood the learner and the expert behaviors and how they would interact with learning experience-based and wisdom-based learning – which is what we develop – so that we could do this successfully.
Russ: Okay, what’s the status of In-Acuity today?
Ryan: So In-Acuity has been operating since November 1st, 2012, we’ve done extremely well in a short timeframe but now that we’re confident with the direction and we’re confident executing our plans with the technology, we’re starting to move slowly towards the online edtech delivery method through experknowledge.com and taken a step back in the face to face learning.
Russ: Okay so in the face to face learning that was actually generating revenue, did I hear that correctly?
Ryan: Correct, yeah.
Russ: Okay, okay, real interesting. And so, at some point, a year, 2 years down the road people will think of you more as expertknowledge.com than In-Acuity, is that right?
Russ: Okay and you said a lot when you were describing it, but it sounds like it’s very well thought out but at expertknowledge.com you use that also to train the trainers?
Russ: Okay, real interesting.
Ryan: So we’re taking all our offline processes that we’ve proven and validated and using technology to automate them so that we can scale and help a lot more people. The face to face learning, it was a great method to pilot or model, learn these behaviors so that we can do this at scale and help a lot of people. We want to provide this 4.2 million retiring professionals with a home where they can monetize what they know and also have a platform to give back to the industry to really bridge the gap with the crew change; and also a marketplace where learners can come and find wisdom-based learning programs or experience-based learning programs on almost any topic. And then lastly we want to help businesses capture knowledge internally before it leaves and develop a community of knowledge sharing so that employees are sharing what they know and that will help companies become more innovative and competitive and it improves performance as well.
Russ: Okay, but eventually your customers or the businesses – and maybe some individuals – who want to learn, they’re the people that come to you and pay you to train them, right?
Ryan: So our customer’s businesses can license our SAS platform which are the private corporate marketplaces where we build knowledge communities and marketplaces within their own organization. And then we have a public market place, so any learner on the business marketplace automatically gets a corporate discount to the public marketplace, but the public marketplace also allows the public to come and access knowledge and wisdom that they need.
Russ: Okay, but a business might sign a license and they have just their own internal utilization of your technology because they might have some internal things that are specific to their company and they have their teachers and their learners within their community but not shared with the public, is that right?
Ryan: Correct. SO the corporate marketplaces are private to them but they do have the ability to pull content from the public marketplace to build that in their own private corporate marketplace.
Russ: Okay, so they existing traditional classroom instruction companies that are out there, that’s your competitor?
Russ: All right, and aren’t some of them trying to move online as well?
Ryan: They have moved online. They’ve actually acquired other businesses to do that at an accelerated pace, but they’re developing very technical, MOOC styled programs where we develop very deep, knowledge-based programs; so programs based off of best practices and lessons learned from experts. So it’s a blend between problem solving and obtaining mentorship while you’re learning from our programs. And these are programs that you can’t find anywhere else; you can’t go to YouTube, type in exploration and strategy and find deep content on how to build a strategy around the whole life cycle of exploration. So that’s where we come in, we’re developing very deep unique content in the energy vertical. Later down, down the line we plan on doing that in other major industries.
Russ: All right, and that wraps up our review of three class 4 companies from SURGE Ventures. And this is The BusinessMakers Show, brought to you by Comcast Business, built for business.
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