Episode 58: Shawn Murphy, Titan Advanced Energy Solutions
Today’s guest is Shawn Murphy, Founder & CEO of Titan Advanced Energy Solutions.
Titan is an advanced battery management system technology company, which is revolutionizing the renewable space by lowering the cost of lithium ion batteries by at least 30 to 40%, and doubling their expected life.
Titan's technology uses ultrasound to measure and determine the state of health, and state of charge real time and is about 100 times better than the current state of the art. This technology will eventually be implemented in electric vehicles, stationary storage and consumer electronics. Previously, Shawn was the founder and CEO of multiple successful startups, the former head of Space Science and Technology for Draper Labs, and was also the founder and former director of Shell's innovation center called Shell Tech Works.
We have a wide ranging discussion in this episode, including Titan, where it fits in the broader battery landscape, how the battery landscape fits in terms of the grid, and the rise of things like solar and wind, and also how to think about all this in the context of climate change. We then come back around to have a great discussion on the proper sources of capital for this type of innovation, the role of startups versus incumbents, and of course, the underlying motivators that make Shawn get out of bed every day and give him purpose in his work.
Enjoy the show!
You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast) or @mcjcollective (company). You can reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
In today's episode, we cover:
Overview of Titan Advanced Energy Solutions
Shawn’s background leading up to starting the company, including at Draper Labs, Shell, and several startups
Titan founding story, long vision, traction to date, and next steps
How Titan’s product fits into broader climate fight, and what success looks like at scale
What else can be high impact in climate fight
Shawn’s advice for how you and I can help
Links discussed in this episode:
-
Jason Jacobs: Hello, everyone. This is Jason Jacobs and welcome to my climate journey. This show follows my journey to interview a wide range of guests, to better understand and make sense of the formidable problem of climate change, and try to figure out how people like you and I can help. Today's guest is Shawn Murphy, the CEO and CTO of Titan Advanced Energy Solutions. Titan is an advanced battery management system technology company, which is revolutionizing the renewable space by lowering the cost of lithium ion batteries by at least 30 to 40%, and doubling their expected life.
Jason Jacobs: Titan's technology uses ultrasound to measure and determine the state of health, and state of charge real time and is about 100 times better than the current state of the art. This technology will eventually be implemented in electric vehicles, stationary storage and consumer electronics. Previously, Shawn was the founder and CEO of multiple successful startups, the former head of Space Science and Technology for Draper Labs, and was also the founder and former director of Shell's innovation center called Shell Tech Works.
Jason Jacobs: We have a wide ranging discussion in this episode, including Titan, where it fits in the broader battery landscape, how the battery landscape fits in terms of the grid, and the rise of things like solar and wind, and also how to think about all this in the context of climate change. We then come back around to have a great discussion on the proper sources of capital for this type of innovation, the role of startups versus incumbents, and of course, the underlying motivators that make Shawn get out of bed every day and give him purpose in his work. Without further ado, let's bring him out here. Shawn Murphy, welcome to the show.
Shawn Murphy: Thank you so much. Thank you for inviting me.
Jason Jacobs: This interview is at Greentown Labs, where you guys have your office. And Emily, of course came on the show and Greentown is great. And I'm a Bostonian, which is a neighbor to a Somervillian. But Katie MacDonald from Greentown is in the room, but she's not allowed to talk. So how is she going to do that? How is she going to make it through a whole show?
Shawn Murphy: She just has a big huge smile, which is being covered with both of her hands, because that's how much it takes to cover it up.
Jason Jacobs: Katie, you want to say one "hello" before you go?
Katie MacDonald: One hello!
Jason Jacobs: Okay, let's get going. I'm psyched for this interview. I actually was not aware of you and what you're up to. But when I was interviewing Emily, her and Katie said, "You need to meet Shawn." And the more I learned, I said, "Wow, I need to get Shawn on the podcast."
Shawn Murphy: This is kind of the same thing that happened when Emily talked about what you're doing. I said, "Wow, I really need to get on the podcast." So this is this mutual love fest that's going on. So thank you so much for inviting me. I'm really, really, really psyched to be here.
Jason Jacobs: So what is Titan Advanced Energy Solutions?
Shawn Murphy: Titan Advanced Energy Solutions, we just called it Titan for short. What we do, we use ultrasound technology to measure the molecular state changes of the battery as it's charged and discharged and how it's aging. And with this, we created a real time in situ non destructive measurement of batteries. And you'd say, "Wow, that's a mouthful of something." But what it means is, we have about two orders of magnitude, higher accuracy of measuring and controlling batteries.
Jason Jacobs: What kind of batteries are you referring to?
Shawn Murphy: These are all lithium ion batteries. So basically, cell phones, cars, stationary storage. Basically where the world is kind of moving right now, is moving towards lithium ion.
Jason Jacobs: Nobody working on lithium ion ever mentioned boosted board, when they're going through their list of things for the batteries. That's an electric skateboard. So you're speaking my language, not about the battery itself, but about the things it powers.
Shawn Murphy: Basically, when you think about it, what is the usability? And the usability is, how much capacity? Because everybody knows how much your battery degrades over time, your cell phone being an Apple or a Samsung doesn't really matter. After about two years, it goes down, the capacity constantly fades. The reason why this capacity is fading is because you don't have accurate measurement of the precise voltage in charge.
Jason Jacobs: Who doesn't have the measurement?
Shawn Murphy: Apple, Samsung, the voltage car companies, all of them. What they're using, the traditional method of how they're measuring batteries is using a lookup table and the voltage measurement and the current measurement with temperature. And that goes back into a lookup table and then you say, "I am approximately 95% charged." But you have about 8% error. So if you think about a Gaussian distribution of your error rate, you're always overcharging, and you're always under charging the battery. This micro overcharging and undercharging degrades the life of a battery faster than what it usually would.
Jason Jacobs: So by stopping a little too early or going a little too long accidentally, because there's a wide margin of error, the battery has a shorter life, which means it needs to be replaced, which means more waste, which means more cost.
Shawn Murphy: That's exactly what it is. There's two components to this aspect. If you have a higher accuracy, you do not have to have... in the battery industry, what they have is a buffer. And they have a 10% buffer on the upper voltage range, and a 10% buffer on the lower voltage range. So 20% of every single battery that everybody uses is not utilized, and it's not utilized because of safety reasons. Because of your 8% error rate, if you go into those no go zones, you will start splitting basically the electrolyte and you'll start out-gassing. So you produce helium-
Jason Jacobs: This is no go, meaning like overcharging?
Shawn Murphy: That's even worse. Under charging, you'd start producing hydrogen. When you're overcharging, you start producing lithium plating. So there are multiple bad consequences on overcharging and under charging. And this is one of those problems that you have fires in batteries, is that the BMS, Battery Management System is really inaccurate and it goes into these no go zones. So how do companies prevent this explosions, fires and all that? They create buffer zones, and those buffer zones increase over time. So constantly, you're just shrinking the usable capacity of a battery.
Jason Jacobs: So the degrading is actually, it's like a fixed schedule?
Shawn Murphy: It's a schedule. That's correct.
Jason Jacobs: No way.
Shawn Murphy: Yeah. That's exactly what's going on. Because they're preventing their liability, because they're running blind.
Jason Jacobs: No, it's because they want to compress the upgrade cycle to sell more hardware.
Shawn Murphy: Well, that too. But if you are a car company, or if you are great, you're more concerned about liability. If you are maybe a cell phone company, your motivations might be slightly different.
Jason Jacobs: I have lots of questions about what you do. But before we even get there, how did you get here?
Shawn Murphy: I would say, I was a very inquisitive kid. I'd go a little bit further back into normal. And so I always liked physics. So that's what I studied when I was on the younger days, but I was a serial entrepreneur. So every single thing after going and studying astrophysics, everything was, "I want to start a company." So I started a company right after school, which was basically doing arbitrage between Eastern Europe and in the US.
Jason Jacobs: Isn't that what all early 20 somethings do?
Shawn Murphy: Yeah, I think that's exactly what we do.
Jason Jacobs: Certainly what I was doing when I was 22.
Shawn Murphy: And then after that, I was like, "Okay." That one kind of sold successfully. So I said, "Okay, I'm going to go and go to school." So I went into B school. Then at MIT, I started what was the 50K at that time, so that we won the One-K competition through creating an E-book. And we did a lot of work around that. We got funded internally with the Brain and Cognitive Science Department and started doing gangbusters building E-books for the education market, because always in my mind was, this proliferation of knowledge is very important.
Shawn Murphy: But .com comes, crashes that aspect of it. So I was like, "Okay, start a new company." So the next one after that one I started was a fabless semiconductor for creating security systems, like chips and microchips. That one actually was successful. It exited out nicely. Then I said, "What do I do with myself?" I was in my mid 30s. And I said, "Why don't I do space? Because I really, really loved space."
Shawn Murphy: Then I worked for Draper Laboratory. And in Draper Laboratory, I started as a program manager, but on the end, I wind up being the head of Earth and Planetary Science Group. So I ran all of their science projects, and had fantastic experience working on moon projects, Mars projects. This is all with NASA Of course.
Jason Jacobs: I'm so curious, as a serial entrepreneur at that point, why go back at essentially a research lab?
Shawn Murphy: I had burnt out. It was 12 years of continuous startups, raising various rounds. And as I exited out, I was so burnt out. And I said, "You know what?" I considered going into my midlife retirement. And it's absolutely right.
Jason Jacobs: Should I go there?
Shawn Murphy: It's fantastic. I mean, I would say the Draper Laboratory is like one of the most wonderful places in the world. It's the Willy Wonka military factory.
Jason Jacobs: So you were there for what, five, six years?
Shawn Murphy: Eight years. And then at that time, the CTO of shell gave me an offer that I could not refuse. I started working on some projects with MIT Energy Initiative from Draper. And that's how I got to know the Shell people.
Jason Jacobs: I mean, one of the reasons I was interested to speak with you on Pod... not the only reason, but one reason is that you did .com stuff, you spent time in a research lab, you were in a big oil and gas company, and now you're building a battery startup. You might be the only... actually, I can say confidently, you're the only person I've ever met that's done all of those things.
Shawn Murphy: It's kind of funny. I'm going to tell you a funny anecdote for that. This is a very interesting thing, because when I was interviewed at Draper, there was the VP of programs who... I would not report to him, but he was the one in between. There was my boss who became famous, who was the director of space, but he was reporting to the VP of programs. And he looked at my resume, three startups, astrophysics, did [inaudible 00:10:49] and he kind of looks at me and he says, "Shawn, it's a very impressive resume, but you don't have a single day of aerospace. What does it make you to work here?" I told him, "Well, that has nothing to do with it. You have to have a good brain, great attitude, and really perseverance to get things done."
Jason Jacobs: Let's get back to Shell, because I worry we're going to spend the whole episode talking about your background.
Shawn Murphy: What happened with Shell, they wanted to have a research center, but not a research center as a R&D Center, but the execution. Meaning, deployment of technology, because what they found out, that internally in Shell, program is on average takes about six to 12 years to complete if it's successful. And in that process, it goes through about six, seven or eight different management reviews, and about 80% of the programs gets killed.
Shawn Murphy: So they start a boatload of projects, but very few are completed and brought to market. So the proposition was, to shell, was to create a fenced off organization that does not have oil and gas employees, that will work very quickly on critical programs within the oil and gas and the energy sector, that was the critical part, the energy sector because I really wanted to work on renewables at the time.
Jason Jacobs: And when you say not oil and gas employees, you mean not people that came from the industry?
Shawn Murphy: There was only one person out of 85 people that came from oil and gas industry.
Jason Jacobs: So it was a division of people that didn't come from the industry that were working on industry specific problems?
Shawn Murphy: That's correct.
Jason Jacobs: Well, you guys must have been hated.
Shawn Murphy: Hated and loved at the same time. It was a hate-love relationship. It was very, very interesting, because we had biomedical, we have chemistry people from Johnson and Johnson. We have people from Aerospace Corporation, from NASA, from Draper from the DOD. I mean, from the semiconductor space, from Intel.
Shawn Murphy: We just brought this whole group of cadre of 60 engineers that would just focus on breaking down what oil and gas has been doing for the last 30 years systematically, and just improving it on orders of magnitude. And it was an extremely successful organization, it still is. But they would get really, really angry at us, the traditional managers, because we would come there and not only would we invalidate their assumptions, we would prove it mathematically, in product wise, with improved systems, sometimes an order, or two orders better. And they just did not know what to do with us. Sometimes they would block us, sometimes they would accept us. It depends on which group.
Jason Jacobs: So how did you find your way into working on batteries?
Shawn Murphy: What we were trying to do at Tech Works, was trying to get the spark on renewables. The story of how it all happened, which actually has to do with my co founder, Sean O’Day, and I was at a conference that is hosted at the Tesla conference. This was 2016, and it was... [inaudible 00:14:03] does this. This is the world Energy Innovation Forum. So Elon is there, and everybody kind of parades at a time. Just a lot of good host speakers. And there was Sean who comes from.... the other co-founder, he comes from Sonedix, which was IPP, basically, kind of competing with ENEL, and those worlds.
Shawn Murphy: He saw me with a Shell badge, and he started giving me crap at the bar. He says, "What is big bad oil drilling over here?" And what I said, "Well, what I'm doing, I'm trying to push us into...," and he was for about two hours, selling me on the concept of stationary storage. And I was like, "Holy moly, this is amazing." And I was not focused. My brain wasn't focused on that. So the first thing I did on that Monday, I called up Bloomberg, and I called up McKinsey and I called up my other colleagues in Shell. I said, "Okay, I want to have our report, everything about batteries within 30 days."
Shawn Murphy: I organized a workshop in Boston, where they came and presented and I had all the data on batteries. And the follow on is, I try to push more batteries, the Second Life batteries to use for Shell. They didn't want to have anything of it.
Jason Jacobs: What does that mean, second life battery?
Shawn Murphy: Second life is meaning, batteries that are coming out of EV cars are generally destroyed today, because it's very hard to determine its true state of health. It takes about eight to 20 hours. You have to hook it up. You have to discharge it first, then charge it and discharge it and you take a value. That whole process takes about 20 hours. And the equipment that does it is a classical cycler. It's between $20000 for about four channels, and sometimes $100000 for about 20 or 24 channels.
Shawn Murphy: It's an expensive equipment. It takes a long time to do, and what they do is they say, "That's not our business. We are going to grind up the batteries mechanically, chemically and thermally." And you only recover about 6% of the battery. At Shell, I was trying to figure out what to do with this thing, they did not want to do anything with it.
Jason Jacobs: This thing being the 94%?
Shawn Murphy: Meaning Second Life. I did not have the idea of what to do. I just wanted to do something in Second Life.
Jason Jacobs: To move that 6% to a higher number?
Shawn Murphy: To a higher number, so that it can be utilized, it can be for schools, it can be for hospitals, it can be for a second World country, anyone who doesn't want to pay the premium of $200 or$185 per kilowatt hour.
Jason Jacobs: Looks like a reconditioned laptop?
Shawn Murphy: That's correct. And there's a lot of people out there that will use it. But if you do it right, most people don't even know that is a reconditioned thing, because the performance is exactly the same.
Jason Jacobs: And nobody was doing this?
Shawn Murphy: Nobody was doing it. In Shell, it's like okay. They didn't want to have anything to do with it, and we departed our ways. Then I went, spent the summer in Croatia. And I tried to figure out, how do I crack this nut? And in that process I figured out, if I use ultrasound, and I can determine non-destructively on these used batteries, very quickly, how much the state of health and the state of charge it is.
Jason Jacobs: So did you just fall down in the shower and hit your head?
Shawn Murphy: No, no, no. This is the funny thing. I'm dangerous with a marker. So I usually have a board and a marker. I brought the idea, paint with me on my vacation and I basically painted the wall where we were in the guest room. And I had my idea, and I basically went through the fundamental equation of wave speed going through a lithium ion battery, how much will change?
Jason Jacobs: I do the same thing on my vacations.
Shawn Murphy: Yeah, there was some contention with the family at that time, because why am I writing? The whole wall was scribbled and trying to figure out, and it basically came out of it, that if I put a certain amount of energy, the change of the battery state of charge, and state of health, that I would have a different signal.
Jason Jacobs: what made you so intent on solving the Second Life problem?
Shawn Murphy: My professional life was always driven to... there has to be a cause. I have to do something that is meaningful for society, for environment, and for the people around me. E-books was a proliferation of inexpensive books for the rest of the world. Rosetta was all about encryption, meaning that people cannot steal digital content. Space was how to move people into the second stage, which is basically, getting inexpensively into space. And that was my kind of driver when I was at Draper.
Shawn Murphy: Shell, I really wanted to use Shell to get into green energy. That did not work out the way I wanted to. So I needed to do this myself, because solving the second life, we would reduce all the batteries that are produced for cars, which cannot be used for cars. They can be used for stationary storage, and that is a huge amount of reduction of the carbon footprint.
Jason Jacobs: What is stationary storage?
Shawn Murphy: Stationary storage is basically large battery packs in one concentrated area. If you think about a shipping container, what you do is you put about 10 Teslas over 100 kilowatt hours inside. So usually that's like a megawatt. Then if you have that with wind, because wind is intermittent... so sometimes it blows, sometimes it doesn't.
Shawn Murphy: The same thing is with solar panels. Sometimes you get them pick energy, sometimes... and then if you're getting the solar, let's use PV for example, that will be a good example, during noon hour, peak time, you can charge all those batteries during the peak amount or hour. And then when the people are using it the mostly, it's around 5:00 or 6:00, when there's no sun.
Shawn Murphy: That way you can do basically almost like a micro arbitrage. That way you reduce the overall cost of the system. So you use batteries as collecting the electricity generated by the photovoltaics during the daytime, because you overproduce. So about, some cases 20, 30% of the electricity that is produced by the field is just thrown away.
Jason Jacobs: But the cause for you that led you to work on this problem is, filling the blank?
Shawn Murphy: For me, it's to reduce the overall cost of electricity and electrification through reduction of the cost of batteries. The reason why I wanted to do that, if we bring the price of batteries lower than about $100 dollars per kilowatt hour, and with the low cost of photovoltaics, we can completely reduce our dependency on hydrocarbons. Those two equations, if you put them together, they basically break the cost structure of gas.
Jason Jacobs: So you were focusing on stationary batteries?
Shawn Murphy: Originally, yes. That's what we did. But what happened was, we realized that this technology is applicable for electric vehicles. That you can do real time monitoring of electric vehicles. You can put them in stationary storage, and in consumer electric devices.
Jason Jacobs: And the technology, using this ultrasound, what is it actually achieving?
Shawn Murphy: If you send a pulse into the battery, and it could be a cell, it could be a modular... a modular is multiple cells at the same time, or a stack as multiple modules, consistent in the stack. We can determine the state of charge of each cell or each module real time, and we enable the battery to access additional capacity, about 20%.
Jason Jacobs: Which extends its life?
Shawn Murphy: The first part is you increase the volume. So if you're a car company, you get automatically 20% additional range. If you're a cell phone manufacturer, you get 20% more time. And if you're a stationary storage, you can reduce your capex by 20% and still maintain the same tender that you agreed with the local utility.
Shawn Murphy: And then the second part is, because you do not overcharge and under charge, you basically double the life of the battery. So instead of replacing the battery in five years, or 10 years for stationary storage, you can replace it in 15 years or 20 years.
Jason Jacobs: Ultimately, you're envisioning that this will be horizontal across battery use cases? What's your initial market?
Shawn Murphy: Our initial market is Second Life, because right now, that is the easiest to come into.
Jason Jacobs: Specifically for EVs?
Shawn Murphy: This is EVs, and we are right now working With Nissan. We're about to start working with Mercedes. We are having conversations with Renault, Hyundai as well. So all of them were very interesting, because we came, we demonstrated how this thing works. Instead of that 1820 hours, we do it basically in a second. The results are always far greater than any other way.
Jason Jacobs: Do they make their own batteries?
Shawn Murphy: No, they buy the batteries from Panasonic, LG.
Jason Jacobs: So why are you working with the car manufacturer, and not with Panasonic and LG?
Shawn Murphy: They are the owners of the battery. Because how the value chain is currently, is once the battery manufacturers make the battery, they ship it, just like if you would buy it in the store. They just have warranties behind it. So what the OEM does with them, that's their own business.
Jason Jacobs: And have any of these battery companies started climbing the stack, and offering things like better monitoring?
Shawn Murphy: They do. But still, they're always using the old paradox of voltage, current and temperature. It's like, if you remember from innovators' dilemma, that you have this S-curves. Basically the S-curve of using current and voltage is coming to the top. So anything that you're adding on top of it, you're getting diminishing returns.
Jason Jacobs: So what does this compete with?
Shawn Murphy: Well, it competes with traditional BMS of voltage and current. That's the mainstream technology.
Jason Jacobs: Are these car manufacturers doing it in house? Or are they getting it through the battery companies?
Shawn Murphy: The people who provide BMS systems are semiconductor companies. So it's Texas Instruments, Intel, Maxim. They all provide microcontrollers that basically measure current, voltage and temperature, and they sell into the system, the same thing for Apple and everyone else.
Jason Jacobs: So is this a replacement for those?
Shawn Murphy: First we're going to do augmenting. Basically, we're going to create a microchip as well. That's what we designed. And then we will just say, "Send the information to the current system."
Jason Jacobs: And when you say first, does that mean you'll ultimately displace it if you're successful?
Shawn Murphy: I think so. That makes more sense, to reduce the cost or the bill of materials.
Jason Jacobs: How are you taking this to market? Is it direct to the car manufacturers?
Shawn Murphy: Right now, in the EV market, it's directly to the OEM. In the Second Life, it's to the recyclers and to the OEMs. In the stationary storage, we have investment from Schneider Electric. So we're working with them directly. They're the integrator in the stationary storage place. So basically, we're partnering with them. So they'll be the integrator that will work with the battery manufacturers. And we will provide that component.
Jason Jacobs: With my climate change hat on, it's interesting because, I hear again and again that batteries in storage are a big gap that's holding back the progress of clean energy. But on the other hand, batteries in storage have their own footprint, and their own waste and their own land use, etc. So how should one think about those trade offs when assessing the role of batteries in storage?
Shawn Murphy: It's a very, very valid question. And the way we think about it is, if you have a battery that lasts twice as long than the current one, that means you don't have to have a bigger footprint of long term, because usually how these contracts are set up, is that you have to provide a certain amount of storage over time. And then they oversize the battery, because they expect the degradation.
Shawn Murphy: Then for the next five years or 10 years, you always see these slabs of concrete that are put right next to where the container is, because in order to maintain the contract with the utility, or with national grade, or whatever it is, they all of a sudden, after five years are said to maintain that level of capacity, they add another storage.
Shawn Murphy: So this eliminates that whole process, because instead of adding another container and building another whole battery storage, we're just optimizing the battery so well that you can do with the first container, what you can do instead of with two.
Jason Jacobs: Like the way there's companies that are using things like AI to make the grid more efficient, you're essentially using ultrasound to the battery footprint more efficient.
Shawn Murphy: That is absolutely true. That's one of the best ways that anybody articulated in a single sentence what we do.
Jason Jacobs: I fully a credit beginner mind. I'm a dummy. I come in with no preconceived notions, and I'm just active listening to figure this out.
Shawn Murphy: It's optimizing it on the molecular level. So basically, if you think about how batteries evolved, not just for cars, they were always controlled and designed by chemists. That's how usually all batteries are made in labs, and all that. And the people who do it are electrical engineers. But this is a multidisciplinary approach, because it's actually physicists who deal with waveforms. That's never in the same food chain of building batteries.
Shawn Murphy: You don't have physicists, because they do different things in the [inaudible 00:28:06], not talk to actually to the battery people. The battery manufacturer being A123, or Samsung, and all that, they just buy a component. They're not involved early on into the design process. It just has to do with how the industry evolved over time, in being in a semiconductor place or in the battery manufacturing place. That they never went to first principles.
Shawn Murphy: And this is something that I always think. As a physicist, I always go to first principles. What are we trying to achieve here? I'm trying to optimize the battery. Well, first it was, I'm trying to understand how I can understand the battery, and not touch it organically, or not open the casing and that was my first principle. So I looked at spectroscopy, I looked at impedance, I looked at x-ray.
Shawn Murphy: So I looked at a various set of things. The one that was mostly economical, and it can penetrate through many, many layers was ultra sound. Then later on, when we were doing... in optimizing and creating a BMS, why are they not doing it this way? It came very obvious after, once we were looking at it, because the battery people, they don't build BMSs. And BMS people, they don't make batteries. They meet far, far later in the food chain, when both products are completely locked and ready to ship for market.
Shawn Murphy: So they didn't go to first principles to design. "I'm going to design a battery with...," or designing a BMS, that is optimized for this chemistry or for this system. They didn't even hire the people to even think about that. So what I did, as for BMS, I went all the way to first principles, instead of looking at the battery, and tried to use physics in order to come... what is the most optimal way to measure and control a micro-fluidics device, which tend to be a battery?
Shawn Murphy: So just from a timeline standpoint, that way boarding in that epiphany, what year was that? And then, at this point in time snapshot, what does the business look like today?
Shawn Murphy: That was August-September 2016. The proof of concept came that December. We refined the formulas, put the signal through it, 2017 January-February, we started getting algorithms, and that's when we built our first. Moving from lab equipment to first prototypes, that was designed in March 2018. Summer 2018 was first prototypes. April 2019, second pre production prototypes. For Second Life, we will have product in market, probably Q1, 2020. And for probably Q3, for the consumer electronics market of 2020, like pre production and production in 2021. And the same timeline is for stationary storage.
Jason Jacobs: Are there formal relationships now with the car manufacturers, or are they just discussions?
Shawn Murphy: No, no, no, these are paid research projects. In some cases, we are going down the pipeline to market. In some cases, it's in their R&D group, where they're basically evaluating before going to senior management.
Jason Jacobs: So is there more science to prove out at this point? Or is it more now about engineering and deployment?
Shawn Murphy: It's all engineering. It's basically cost optimization right now.
Jason Jacobs: And how has the business been capitalized today? You mentioned Schneider, how much have you guys raised and who's involved?
Shawn Murphy: So it was Schneider and EIC, which is the Energy Innovation Capital. They are, call it a scattered group, because they're in San Francisco, but they're in Houston in Seattle.
Jason Jacobs: The ERPs, is it the big oil and gas companies that are their limited partners?
Shawn Murphy: It's not oil and gas. It's utilities, where the most are. And then Schneider of course, is basically a component for electricity.
Jason Jacobs: So how much have you guys raised to date?
Shawn Murphy: We've raised 10 million, because I have to say that MassCEC, they did a convertible note as well, and they were very critical to help us out, as we were going through the last stages.
Jason Jacobs: I haven't talked to anyone at but I heard that you can get some interns there.
Shawn Murphy: My God, we love MassCEC.
Jason Jacobs: Can you help me get some interns from MassCEC?
Shawn Murphy: Absolutely.
Jason Jacobs: All the listeners will hold you to that.
Shawn Murphy: Always a big shout out to because we have three interns per semester, four interns on a summertime. And they have been instrumental in helping us through this process. And of course, not to mention Greentown, which Emily and of course, Katie, and everyone else in the staff helped us tremendously, because not only did they incubate us throughout this process, but they're the ones who introduced us to Schneider. And there was a program called Bold Ideas.
Shawn Murphy: The bold ideas was basically a $20000 challenge that we would do, and pitch Schneider. There were three or four companies. It was a hundred and something companies, we were one of the four. But what it gave us to do, is to navigate the insanity of a large company, because they're a multinational company. And then we got to various people. And it took a long time to navigate to the right people in Schneider, that they saw this as a strategic thing for them.
Jason Jacobs: So how far is that 10 million going to take you? What's the next big milestone that you're driving towards?
Shawn Murphy: I am a very frugal, economical person. I'm not going to go and go get steel case tables, or start flying business class. So economy plus is always on the menu. And we always buy stuff off of auctions. So what we want to do is get to revenue through Second Life, starting next year. And there's a lot of NRE, Non Recurring Engineering costs from OEMs. So we're hoping that the next time we raise another round, it'll be for scaling and not for continuing getting customers. That will take us about two and a half to three years.
Jason Jacobs: And then, are there clear thoughts on a business model at this point? Or is that still to be determined?
Shawn Murphy: No, no, no. It's all block and loaded. We're executing on that very, very clearly.
Jason Jacobs: What is the pricing structure?
Shawn Murphy: It depends on the market. Meaning, because we need to build ASIC components for consumer electronics. It's a different pricing structure. And that's more like a licensing deal for automotive. It's a licensing deal with reference designs for stationary storage. It's a component with our potential partners in the semiconductor industry. And for the second life, we will provide the device as a service and paper scan.
Jason Jacobs: So what does success look like in 10 years, if you guys, not the cover off the ball, what have you done?
Shawn Murphy: We look at it, I've reduced the carbon footprint by extending the life of batteries by twice as much enabling multiple uses of battery, so they can be not only in the high paying data centers, the UPS centers, I know, which is very expensive. But that same battery can be in a school. It can be in a second World country. It could be used in residential. Every efficient cars will be, so you don't have range anxiety.
Shawn Murphy: So when you drive your electric vehicle, you know exactly, you have 50 miles to go or 22 miles to go. The most expensive components the car is the battery. For the same range, you can reduce it by 20%. And that's a big capital cost that can be used for another battery, for another car, for another car, for another car. For consumer electronics, it comes in, you don't have to replace your device every two years. I think they might like it or not like it, but you have that option, that your battery will last longer.
Jason Jacobs: You probably weren't asked this question when you raised money, because most investors still don't care, but have you actually modeled out what kind impact this can have relative to other climate solutions, in terms of GHGs?
Shawn Murphy: Actually MassCEC asked the exact question.
Jason Jacobs: And nobody else, right?
Shawn Murphy: Before funding, only MassCEC asked us, and that's because it's part of their charter. After funding, EIC asked us to send a slide over, to see what is the carbon footprint production. Now I do not know on top of my head. I can look it up and I can give you the numbers of what that carbon footprint offset is.
Jason Jacobs: I'm less interested in the exact figure, and I'm more interested in just kind of a thumb in the air. Is it an incremental swing or a big swing? I know that financially I get it, it's a big swing and then enabling products to be more attractive, so they can win the customers in crowded markets. I get that part too.
Shawn Murphy: It's a big swing. It really reduced... you don't need to use the batteries again, because if you think about, instead of building a whole another battery, doing the packaging, sending it off, shipping lithium from the mines in Africa, putting the packaging together, assembling it in China, and then you shipping into the United States, going through the whole value chain, just so you can get another price of it, instead of it's already shipped. It's already manufactured. And what it needs is just to give it a price point. To say, "This thing has 77% state of health, it's good for another 700 or 3000 cycles. If you use it this way, you integrate it, this is the value too and it can be used for residential or school or whatever."
Jason Jacobs: So I think at this point in the discussion, I want to say, okay. I get that it can have a meaningful impact. I get that it can also have meaningful kind of second and third order impacts, because it's not just about the waste and the efficiency, but by making an EV, for example, reducing range anxiety, it makes EVs more widely adopted. By making EVs more widely adopted, it helps us electrify faster and get us off of fossil fuel. Right? So all that I get. So what I'd love to talk about now is, what's the best way to fund a company like this? Is it a good fit for traditional venture capital?
Shawn Murphy: This is a fantastic question, because that was the question that we asked ourselves. When we said, "Who do we partner with?" Because this was for us, meaning, when we went down this path, we had a series of maybe about 100 venture capital. But what we always understood was we needed to find a strategic partner, because who is our strategic partner into it? And after about five, six months of looking who has the right attitude? Who is committed to the electrification? Who wants to reduce the carbon footprint? And all those things came to be Schneider.
Jason Jacobs: So is there any traditional VC that's in the deal?
Shawn Murphy: While EIC is a traditional VC.
Jason Jacobs: And what made you think that you needed a strategic or that a strategic made sense?
Shawn Murphy: The strategic was because, they can scale the technology globally. Because they would have that outreach, especially Schneider is so involved in grid scale. They're so involved of doing this electrification. They support all the utilities around the world. So implementing this technology through them as upstream through the value chain, you basically increase the speed of adoption and electrification of the 21st century.
Jason Jacobs: Okay, well, I have a few questions just to kind of pressure test, and also crystallize your view of the world on this topic, because I think it's an important one in a whole, like, how do these companies scale? So one question I have is, do you think there's a capital gap for this kind of tough tech business and if so, what stage?
Shawn Murphy: So you see, it's very hard to get capital for hardware companies, I have to say. We went... Usually, if you're a software company and you're in Silicon Valley and you get this and that, the next thing, you raise money, much easier.
Jason Jacobs: And do you think that's warranted? Just strictly from a mercenary financial investor standpoint.
Shawn Murphy: That's what the market says. That's what it does.
Jason Jacobs: Do you think the market is rational?
Shawn Murphy: They're greedy. It's not. And the other part is, hardware is hard. It's not easy. To build hardware is not easy. It takes multidisciplinary, so that means multifaceted things need to be done. The value chain is complex. It's not as simple. And especially if you don't have an already pre baked platform, like a iOS or a Microsoft or whatever it is, all of a sudden, all those barriers, when investors who are very hard to educate, because this is the problem with the venture capital thing right now. You have a very small amount of time to educate them. And educating them and getting them over the hump of that risk-
Jason Jacobs: When you say a small amount of time, what do you mean?
Shawn Murphy: It took us maybe six months to get them really educated. So I understand, because you go there and you have one meeting, they're going to yawn, or are going to run away. A lot of them are just going to run for the hills because they're going to say, "Well, my dollar, if I put it in software, I'm going to get a better return."
Jason Jacobs: If education is the problem, then rather than just having a first touch when you're out raising, I'm not saying you did that, but wouldn't that just suggest that could be mitigated at least partially by building those relationships over time?
Shawn Murphy: That's exactly what we did. When I say educated is, building those relations for continuously proving them and bringing customers. I cannot stress enough how much our customers are OEMs, how much [inaudible 00:41:53] helped, how much the Mercedes, how much all of these, they helped educate our investors.
Jason Jacobs: So is there a capital gap?
Shawn Murphy: Yes, there is.
Jason Jacobs: In what stage?
Shawn Murphy: series A.
Jason Jacobs: Got it. And is it about educating existing VCs? Or is it a different kind of structure? And if different, what are the differences?
Shawn Murphy: See, I would say both. One thing is, there's very few capital intensive VCs, per se. Some of them are custom, are medical. But if I look at the companies that are investing into energy, and for the good, it's breakthrough. They have long term breakthrough energy ventures, and they do R&D and they've been investing into batteries. So they are supporting that. But there's very few companies, traditional VCs, like breakthrough and there needs to be more.
Jason Jacobs: And so is the biggest difference between a breakthrough and traditional VC, the longer time horizon?
Shawn Murphy: It's a longer time horizon, a mandate to focus on energy, because some times these funds are focused on biomedical or softer consumer or IoT. And even today, when they think about IoT, they think software. They don't think hard, right? If you have two companies, one that says, "I'm going to make a little widget that's going to implement IoT." And the other one says, "I have a software that's going to implement existing widgets." They will always go with the implement on existing widgets. It's just unfortunate but true.
Jason Jacobs: So you mentioned capital gap, and it's partially about educating and partially about maybe bringing some people in that have expertise in energy and also patience, and deep pockets to weigh out the energy requirements and time horizons.
Shawn Murphy: And the returns are fantastic, once you score on a hardware, because the barriers to entry.
Jason Jacobs: But it's a different profile. And so in some cases, it can be a square peg in a round hole. That makes sense. What are the biggest obstacles to tighten in being successful?
Shawn Murphy: Timelines. The OEMs and the auto motives are extremely slow. They're very, very conservative. It takes years. So we expect to, in order to get to market, it'll four or five years.
Jason Jacobs: So then one business opportunity potentially, is almost like a hedge, it's like copying you guys but waiting 24 months?
Shawn Murphy: No, no, no. It's exactly what it is, but you see, the way how we offset it, is that stationary storage is on a 24 months cycle. Second Life is right now. So, all of a sudden, we have these four markets, second life, stationary storage, consumer electronics and automotive. The [inaudible 00:44:30] to market is at different time cycles. But that is the risk. So our timing is to be smart about, which adopts market first? And how much they adopt, to fund... not only fund the money to support the long term for the automotive and stationary storage, but transfer the know how that we have learned on these, so it's constantly reinforcing each other.
Jason Jacobs: Just to bounce back to the capital one for a minute. So we talked about the series A gap, and then there's strategics. Are strategics the best source of that growth capital? Or is there a gap there as well?
Shawn Murphy: I think the strategics are pretty good partners in that case. And the reason why, is because they have a global overview of the market and they have contracts with countries. They have the know how to scale this. And this was always the same thing when I was a child. You can develop a fantastic technology. But how do you implement it globally? How do you scale it? That's always a problem with the startup. You don't want to go through the scaling process. You want to find a partner that utilizes you, so you have a win-win scenario.
Shawn Murphy: They have the marketplace, they want to have a competitive advantage. You implement that key component technology for them. And so you have a win on both sides. And of course, it comes down. It's not just good enough to say it's the company. You have to have the right people within the company, in the right mandate. So the risk is there that, you have to have the right connection, meaning the right person into it, the right champion within the company. They have the mandate and the capital, and the external forces naturally, that it's conducive for this type of thing.
Jason Jacobs: And how does the regulatory landscape factor in if at all?
Shawn Murphy: A lot, and that's what we're finding out. There's more and more regulation occurring to lithium ion shipping, lithium ion on plane, between states in the United States, between countries in Europe, shipping from one country to another, and there is new laws that will be kicking in. And that's being another very, very big debate right now, of how do you ship used batteries between one state to another, or in one country.
Shawn Murphy: And right now, one of the propositions are, that we're working with, is to work on this thing in the European Union. That we provide the services, that you can do a quick test very quickly to determine what is the state of health and state of charge, because right now, one thing is that you can't ship used batteries unless the state of charge is less than 30%.
Jason Jacobs: So this is interesting. And this allows me to pressure test, kind of a follow up from something that I talked about with Ramya from Malta on her episode. But if the regulatory landscape is important, and it needs to shake out a certain way to be more favorable for the company, then who's doing that work? And is that work important for your company's success?
Shawn Murphy: It is. We don't factor it in our financials, because you never can count on the regulatory aspect. But we know that's one of the things, that we were going to join certain conferences. We are going to join certain organizations that participate, so we can educate the regulatory bodies that right now, you can determine for safety reasons. You can determine the state of health and state or charge of all of these batteries being used or new, and you can safely determine which ones are going where across certain borders.
Jason Jacobs: So what's the answer, though? Like for a company like this, where you have a bunch of challenges, before you even get to the regulatory stuff. If the regulatory stuff is important, how do you think about whether to build those resources out in house, rely on them from somebody like your investors, look to trade groups or hire a consultant?
Shawn Murphy: We're doing all the above. It's so funny, because we are working directly with Schneider on this for the European, especially because Schneider is a French company. So they're looking internally how to do this. There is a consultant that we are interviewing, and they're actually one of them, who comes from the space, and who is going to help on behalf of us, work with the trade organizations to put this in place, because they really currently do not know or understand how our technology works.
Jason Jacobs: So I asked you about the capital gap, and you answered that and said you think there is at the A round? Is there an advocacy gap? And if so, what does that look like?
Shawn Murphy: I guess it's fair to say, I don't know. And the reason why I say I don't know, is because this is just such a brand new way of looking at the battery.
Jason Jacobs: Because one of my ideas... because I've heard of that capital gap from other hardware, tough tech types of companies, right? And so it's like, "Okay." So capital gap is one area of white space for these kind of important breakthrough technologies. But what about regulatory, and especially as you get into some of these later stage rounds? What if you have those under one roof? And have a firm that spends as much time in DC and in the States as it does in the valley?
Shawn Murphy: How you educate the market about this can be done multiple ways. You can do it through of course, through nonprofits, through states. There's many ways. I mean, Green-town does advocacy, all the time. I mean, what they do is quite remarkable, because they educate the corporates, they educate through... I know the governor comes over here. Governor Baker comes over here, the senators come over here, and they push to give them education of where the gaps are.
Shawn Murphy: So in many ways, the advocacy, but there's only one Green-town. If you ask me, I would like to see 20 Green-towns in the United States pushing for this. And it could be Green-town or it could be a Green-town equivalent, because this is a safe harbor that has the right type of... how would I call it? It's not only words, its deeds. And the deeds are here, evident all the time. And that is far more important than just having PowerPoint slides and some explaining to bureaucrats.
Shawn Murphy: I mean, you can see day in and day out how much there's energy being worked to show how this thing is going, being from a funding perspective, from sending technology to the market.
Jason Jacobs: I buy that because it's interesting. I mean, it's a very... you'll think it's a strange analogy to tie into the discussion, but I heard that in some countries, the nuclear plants are much closer to the cities. And they're much more open to the public. And they give tours and things like that. And in places that do that, there's a lot less resistance to nuclear, because there's a much better understanding of it.
Jason Jacobs: And so to some extent, you can tie that same analogy to the regulatory landscape, where if you're just showing up in DC, once a quarter with a PowerPoint deck, that's going to be much different than if you have some place like a Green-town, or others where they can see it. They can meet the people, they can build relationships, they can understand that, they can feel the energy.
Shawn Murphy: You need to. It's very funny, because when I was about 12 years old, I went on a tour of a nuclear plant. And it was like four hours, and it was fantastic, because it took all those fears. Then later on, of course, studying physics and understanding all that stuff, I understood how little danger there is. There's no fear to it at all.
Jason Jacobs: Just it's kind of finding ways to bridge the gap in terms of just getting more exposure across the DC crowd, and the innovation community for example.
Shawn Murphy: And the DC crowd is a difficult crowd because it's cluttered. There's a certain amount of bandwidth that a politician or government can take, and everybody's going there. And it could be from the carbon emissions to the EPA, to all of our national parks. It could be from water. There's so many issues.
Jason Jacobs: Well, stick with me. I bought a couple of DC suits, and I think I can help you. So here's a pointed question for you then, if you could wave a magic wand and change one thing to accelerate your progress, what is it?
Shawn Murphy: It is to get and have the largest systems, such as the utilities, such as the car companies and all that, to see the benefit and not be driven by traditional economics, meaning by fear of it's a new product and God knows, it could fail. It could do this. Just go through the standard adoption rate, but not resistant, meaning saying, "It is important for us to go to the 21st century electrification, reducing of carbon." If I have two products right next to each other, and one reduces the carbon and one does not, even if it's 5% more expensive, choose that one.
Jason Jacobs: Certain companies get the value of brand, right? And they invest in brand. You can't directly track all the ROI from investment in brand. But if you believe in brand, you invest and then it pays dividends over time. In a way, being green and pushing towards carbon neutral or carbon negative is similar. In a way it's different, because it's not just about green washing and putting a fancy coat of paint on and saying, "We're green." Right? But actually, you're doing the right thing and that feels good.
Jason Jacobs: But by doing the right thing, and having it feel good, maybe if you just look at short term quarter to quarter, it looks like an irresponsible thing to do, but there's a big drag, a lot of positivity that comes with that. Because then, you get more loyal employees. You attract better employees, you attract better partners, you surround yourself with people that play the long game, and that leads to better products, better teams, better culture and ultimately better results. Maybe not in quarter one, right? But it's like an investment in brand.
Shawn Murphy: Exactly. It's in quarter six, quarter seven, and the dividend start. It's like the story of the Chinese bamboo. When they say, you water it for five years, and nothing comes out. And then in the year five, it starts growing almost an inch a day. And that's exactly the same thing.
Jason Jacobs: One other topic I want to cover, and we're already getting a little longer too. So we should probably wrap up pretty soon. But we've talked a lot about Titan. It'd be great to take a step back and just talk a big picture about the climate fight. So if you weren't building Titan, and you weren't trying to generate returns for all the different stakeholders you've committed to and stuff, and you could be doing anything in the world to maximize your impact on the climate fight that wasn't this, what would it be and why?
Shawn Murphy: So one thing that is abundantly clear right now comes back to that capital gap. And the reason why I say it's the capital gap, because going through raising series A, it took us about eight months. And in that, I probably pitched to over 140 different organizations. And what I came to realize is that there is very, very few companies or VCs, traditional or strategic, that have that mandate, that have that understanding of that long term, and that aspect.
Shawn Murphy: If I would have a thought or a thing to do, let's say that we exit nicely, is to create a VC or could be a B corp, or whatever it is, that supports these type of hard problems that can be addressed and funded, even at the seed stage, or angel stage, and a series A stage. And that's what I would be doing, because it's how to capture those minds. How to capture those, that we're going to sit there and not everything is about that 10X return or 5X return. It's more of, this is what we need to do. This is how we need to move forward. And that's what I would do.
Jason Jacobs: If you think about those sources of capital, where's the best place for those to come from? And also, if you look at the upside, if you look at the time horizons, if you look at the risk or something else that I'm not even thinking about, do you have to concede on anything in order to chase the mission, or can you have your cake and eat it too?
Shawn Murphy: It's a two prong thing. I think, where you want to go is first, you want to go to the family offices. I think that's one of them. Because the family offices around the world, they want to do something good for the world. So you have to find the right ones. That would be number one. Number two is you have to find some companies that have this long term vision, and you just align yourself. So between those two groups, I think there's plenty.
Jason Jacobs: Okay. So we just talked about what you'd be doing with your time. Now let's take you out of the equation. So if you had 100 billion dollars, and you could put it towards anything to maximize its impact on the climate fight, where would it go? How would you allocate it, and why?
Shawn Murphy: A third of it would go to advocacy. A third of it would go to probably making incubators, like Green-town labs around the world. It doesn't have to look like Green-town. It would definitely be a version of this. And then you think about it, in Eastern Europe, which you're dealing with almost 150 million people. And there's not a single thing like this.
Jason Jacobs: So that was a third, and a third. Where'd the last third go?
Shawn Murphy: Well, advocacy, Green-town, which is accelerators. And the third one will be investments, because one of them is educating, another one is implementing, another one is supporting. So all three worked with each other and moved the needle forward.
Jason Jacobs: And last question. I guess people have all different reasons for listening to this podcast, but a large chunk of them listen because they are concerned about climate change, and they're trying to figure out how they can be helpful. So talk to them for a minute. What advice do you have? How should they go about finding their spot?
Shawn Murphy: Well, the most important thing is to get educated. And I'm not talking about the naysayers, or the climate deniers and all the rest of stuff. But there are complexities in the climate change. Because you can go from heliophysics, and understand the cycles of the sun, which affects the atmosphere, which affects how much of that energy is absorbed, and that goes into the oceans and out of that.
Shawn Murphy: In that sometimes it's in weather patterns, but sometimes it affects the climate as well. Because you can see that we have been going waxing and waning between small and large ice ages, before we ever created any type of carbon footprint. So read the history, really get into it. Educate yourself, not only for debates with your friends over coffee, but educate yourself that you can have to make life choices.
Shawn Murphy: Because ultimately, everything is about a life choice. Who do you vote for? What car do you buy? What product do you buy? It all kind of wraps around that, what we do here in the United States affects people in Africa, and what people in Africa do affects people in China, and what people in China do affects us. This is a system. You have to think about it as a system. And the more knowledge you have, the better choices you can make. And when you make better choices...
Shawn Murphy: Think about it in terms of society, and environment. And it's a very important thing to do. A friend of mine told me something very nice the other day. She said, "It's not that we inherit the earth from our friends, but we are...," I can't even remember exactly what it was, but basically, we need to set up the future for the future generations. And so we, right now, have to think about, how do we do this thing for the future?
Shawn Murphy: And if we behave the same way as the Victorian England did, which was basically, exploit everything in front of your site, or how the 20th century happened, there will be no future for our offspring. It will be a bleak, ugly place. So, make right decisions, educate yourself, be proactive and think about our earth as a living, breathing system.
Jason Jacobs: I think that's a great point to end on. So Shawn Murphy, thanks so much for coming on the show.
Shawn Murphy: Well, thank you, Jason.
Jason Jacobs: Hey, everyone, Jason here. Thanks again for joining me on my climate journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note that it's .co, not .com. Someday we'll get the .com, but right now, .co. You can also find me on Twitter @jjacobs22, where I would encourage you to share your feedback on the episode, or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers maybe say that, thank you.
