Episode 70: Shreya Dave, Via Separations
Today's guest is Shreya Dave, co-founder and CEO of Via Separations.
Via Separations has pioneered a new membrane based on graphene oxide for fine liquid filtration in harsh environments, with applications in food and beverage, pharmaceuticals and bulk and specialty chemicals. Shreya graduated from MIT with a PhD in Mechanical Engineering. Her PhD research focused on the design and manufacture of graphene oxide membranes for water desalination, including fundamental characterization methods of graphene oxide, membrane synthesis, and economic analysis of the role of membranes in cost constraints of desalination plants. Via Separations is scaling up and commercializing the material platform for use in industrial separation processes such as food ingredient production and chemical manufacturing. She also holds bachelor’s and master’s degrees from MIT in mechanical engineering and technology & policy.
Great inside look into the process of scaling a potential breakthrough technology out of the lab, and into a real, promising, rapidly scaling company. A must listen.
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 and origin story of Via Separations
Discussion about industrial processes and their emissions footprint
Why and when sustainability became important to Shreya
How she came to be doing the PhD research that led to the company formation
The importance of doing customer discovery, and how the I-Corps program helped them
Comparison between I-Corps and Cyclotron Road / Activate
Similarities between customer discovery and fundraising
The key phases of company building so far
Business model
Discussion about project finance, and how accessible it is to early stage hard tech companies
Discussion about project insurance
Discussion about when and how to engage strategics
Discussion about where, as a new founder, Shreya turns for help navigating the different phases of growth
What some of the more impactful things are that could change to accelerate progress
Role model companies
Advice for other PhDs in the lab thinking of following a similar path
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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.
Jason Jacobs: Today's guest is Shreya Dave, co-founder and CEO of Via Separations. Via Separations has pioneered a new membrane based on graphene oxide for fine liquid filtration in harsh environments, with applications in food and beverage, pharmaceuticals and bulk and specialty chemicals. She believes that widespread adoption of Via's filtration material could eliminate anywhere from 50% to 90% of the energy used in such industrial processes. We talk a lot in this episode about Shreya's transition from PhD research in the lab to a company. What motivated that transition, how her and her team went about it, some mistakes they made along the way, what they learned and how those learnings could be applied for other PhD students in the lab who are thinking of heading down a similar path. We also talk about Via Separations technology, where it is in its life cycle, what's coming next, how the company is capitalized, some barriers to adoption and also what the impact could be of this technology if they're successful in deploying it at scale. Shreya Dave, welcome to the show.
Shreya Dave: Thank you for having me. I'm excited to be here.
Jason Jacobs: I'm excited for you to be here too. It's funny, I've been spending way more time in hard tech than I thought I ever would, but given that I'm concerned about climate change and coming at it from a de-carbonization perspective, there's certainly a role for software, but there's a bunch of other innovation that needs to happen that is not software and thus it's led me down the path of learning more about what that is. So here we are.
Shreya Dave: Here we are. I come at it from a climate perspective too, and went into university, went to college saying, "Hey, what can I do to make the world more sustainable?" And did not expect that would lead me to a PhD, a startup company and everything that is left to come.
Jason Jacobs: Well, I definitely want to get into some of that history, but maybe before we do, tell me a little bit about Via Separations. What is it? What do you do?
Shreya Dave: Absolutely. Via Separations is a technology startup coming out of MIT, and we're commercializing a technology that helps us slash the amount of energy used in manufacturing things that we use every day. So think fertilizer or plastics or paper or food ingredients. And how we do it is, by changing the way we separate and purify different ingredients in the manufacturing process. So the analogy I like to use as a pasta pot, think of boiling off all the water to get at the pasta at a bottom of the pot instead of pouring it through a strainer in your sink. Obviously that strainer is faster. And at the industrial scale it's 50% less capital costs, 90% less energy. But those materials for those strainers don't exist. And so what we do in manufacturing today is a lot of boiling off the water to get to different components where we could be developing those strainers. And that's exactly what we're doing at Via Separations.
Jason Jacobs: I've read that industrial processes are actually a big source of emissions. Is that true?
Shreya Dave: Huge source of emissions. So industrial processes are roughly 30% of energy used in the United States, but actually a full 12% of U.S. energy consumption is dedicated to separations, so the purification and separation of different chemical compounds, and making things like silicone or rubber in your shoes or whatever you might have. 12% is roughly equivalent to all the gasoline used in all the cars and trucks in the United States every year. So we're talking a really large consumption but distributed similar to cars and trucks across a lot of different processes.
Jason Jacobs: And there's so many different things that we make. Are the industrial processes, take that analogy with the pasta and boiling versus a strainer. I mean, is it directly applicable across all different categories of things we make or is it like a totally different process and recipe and way to fix it in each one as you go down the line?
Shreya Dave: A little bit of both. There are definitely buckets of different types of separations that can all be addressed with say the same type of membrane, or the same type of separation process. But there are probably hundreds of thousands of different processes to make a huge variety of different products. And so the things needed for the pharmaceutical industry might be different from the things needed for the semiconductor industry, but at the core of it, there is a thermodynamic process, the separation process that is kind of there for all of them.
Jason Jacobs: So I have lots more questions about Via Separations, but maybe just a good chance just to switch gears and talk a little bit about what led you down the path that ultimately had you sitting in the seat and building this company.
Shreya Dave: Yeah, that's a longer story. I won't go too far back, but-
Jason Jacobs: Start wherever like. If you want to take us all the way back you can. It's up to you.
Shreya Dave: We'll start right around starting my PhD. So going into a PhD program, what was really important to me was two things. Well, actually three things. The first was impact on sustainability. That could be energy. That could be climate, that could be water, that could be recycling. It didn't matter to me, but I wanted to have an impact on sustainability.
Jason Jacobs: Why?
Shreya Dave: I learned about ... well, now we're going backwards but-
Jason Jacobs: One way or another we're going to get there.
Shreya Dave: You tricked me into it, but I've been motivated by sustainability. I took a class in high school that connected science to the world around us, and there's an assignment we had to do called, it was AP Environmental Science APES, and it was called APES in the news. And APES in the news had us look in the science section of the Boston Globe. There was a lot less access to digital media, and the science section came out once a week. So I had to wait for Tuesdays to read the science section, and there was always one article, maybe two about either a species that was going instinct because of the human reasons or climate change. This is pre Inconvenient Truth, climate change was happening. And then we'd have to talk about like how that relates to the science, and we had to write a little piece about it.
Shreya Dave: And for that, for me, that just contextualized the things that I was good at, the science and math that I was pretty good at in school to an impact and to like a higher purpose. And so pretty much everything I've done since then professionally and also personally has been motivated by being as gentle on the planet or as sustainably both economically or environmentally as possible for the larger globe. So I eventually studied mechanical engineering because I wanted to design technologies that were energy efficient or renewable energy focused. I did a degree in policy because I wanted to learn about the policy levers that could maybe generate more impact.
Jason Jacobs: Major undergrad?
Shreya Dave: No, I studied mechanical engineering for my undergrad and policy for a master's, before going back into engineering and not leaving school for about 12 years.
Jason Jacobs: What a powerful combination though. I mean, that's one thing I've been finding is that given the systems nature of this problem, it's not just innovation or just policy, you need both, and you need them to be intertwined and so often they're siloed.
Shreya Dave: Agreed. And I can't claim to be an expert in policy, but understanding the implications of let's say a tax on carbon or how a regulation around a certain water supply changes the terms of a business. I think there's room for both. I think there's room for market driven technologies, and I think there's room for policy to enable or give a nudge to market driven technologies that will ultimately improve kind of everybody's global wellbeing. I think the role for policy is to fill the gap where perhaps the market may not see it yet and kind of get you over that little bit of a hump.
Jason Jacobs: Well, it seems like now we can come back around here intended starting point, which is, so when you were thinking about your PhD.
Shreya Dave: Thinking about my PhD, and our focus on impact. The second thing I wanted was something where I was building something. I was creating something with my hands. And so that to me translated into something experimental, something where I was either designing and fabricating or something where I was doing experiments from a more scientific perspective. And then the third thing that was really important to me was who I was working with, the advisor and the group that I was working with. And I am so motivated by the people around me. I'm so inspired by, inspired, and I work harder when I'm excited about who I'm working with and things like that. And I had discovered this about myself, so I was looking for somebody like that. So long story short, I happened upon a professor in the material science department. Now, I'm a mechanical engineer and don't have any experience in chemistry or material science or anything like that.
Shreya Dave: And had this conversation with professor Jeff Grossman, and we were talking about undergraduate energy education, and a completely separate to research. And I walked out of his office saying, how do I work for him? What does he do for research and how can I work for him? And I went and read some of his papers and there were a few that were really interesting, but they were all theoretical. Jeff is a computational material scientist, and so you model molecules and see what they do, and you design things through simulation. And I wanted to work with my hands. So now I'm back to those three things, and I said, "Hey, I found this really cool project you're working on. You're working on new membranes for water desalination, and you've done theoretical work. Have you thought about turning that into practical reality, and can I help you do that?"
Shreya Dave: And after a few more meetings, the back and forth, the answer was yes. And we were able to start this project. So my PhD research was all on developing new membranes to make access to water from the sea, you're fresh water from the ocean more economically affordable.
Jason Jacobs: That work was also the basis for the company.
Shreya Dave: So that work turned into the basis of the company. It looks totally different now and it's taken a whole life of its own under new management, I like to say, with the technical team at Via Separations, but what we had done at MIT was developed, a membrane that had higher flux so you could run more water through it faster. It also had higher stability, so physical and chemical stability to things like chlorine or other contaminants that get into the water, but what I also learned during that PhD project was that those things, those things have an ideal membrane really have very little to do with the economic, the dollars per meter cubed of water generated.
Shreya Dave: So we designed something that really had no economic impact, and I like to joke that I was sort of in an ivory tower solving a problem nobody had. And when I defended, I told everybody that. I said I have solved a problem nobody has ever had. I have done some new work, I've contributed to the field and I have acknowledged that this is not going to be commercialized. And so thank you for my PhD. I'm going to go spend three months at the beach before figuring out what to do with the rest of my life, which flipped on its head a week later when I read an article about chemical separations and if we were able to take the pasta pot and turn it into the strainer, and if only we had better membranes to do so we could really change the landscape of energy used in the United States, and then also globally.
Shreya Dave: And launched directly into, spent no time at the beach, still waiting to go to the beach, but launch directly into a investigation of product market fit for that membrane that we had developed. In other words, is there a place, is there a way we can generate impact with the technology that we had developed?
Jason Jacobs: And I know I've read some articles where you talk about the importance of getting out of the lab and getting in front of those customers or potential customers in that discovery process. So maybe talk a bit about that and also just in the context of how these technologies typically come out of the lab.
Shreya Dave: Yeah, that's a personal passion of mine, so thank you for asking.
Jason Jacobs: Softball to start.
Shreya Dave: So we were introduced to customer discovery in a couple of different ways. While I was a student at MIT and I had the opportunity to spend some time in desalination plants. That's how I started to learn about the economics and do that analysis from the get go, but in a more formal way through a program called iCore. And I think I heard someone else say this, so I won't take credit, but I think I-Corps like Peace Corps, but Innovation Corps is one of the most important things to happen to science in the last decade or two decades.
Jason Jacobs: I've never heard of I-Corps. Where is it? How long has it been around?
Shreya Dave: I don't know the full history. I think it's somewhere in the last 10-ish years, and it's a government run program. I think NIH does it. I know NSF does it. And we were fortunate enough to be part of the NSF iCore program where we spent, we basically did a bootcamp. We did a six week bootcamp.
Jason Jacobs: So there's a "we" at this point.
Shreya Dave: So there's a "we" at this point. Yep. So taking one step backwards before we kind of launched into, is there a good fit here? We collected this little team of people to work on this and this was my professor Jeff Grossman at MIT and then my colleague Brent Keller, who was also finishing his PhD in [inaudible 00:13:55]. And Brent and I were very good friends from grad school. We knew we work together well. We both joked about how we would never find a better boss than Jeff. And so we were spoiled for life. And so the three of us kind of banded together to investigate whether there was a fit here. So we get into the ... or we applied and we were accepted into the I-Corps program. And that I-Corps program is a six week boot camp where there is a curriculum about learning about business model and things like that. But the biggest value was getting us up off our butts, and getting us out into the world and speaking to customers. And so we spoke to 104 customers in six weeks. During that summer right after I graduated.
Jason Jacobs: Was this something that happened remotely or was it an in-person bootcamp?
Shreya Dave: It was a webinar based bootcamp. There were a couple of in person meetings, but then we were encouraged to go meet the customers face to face. So we traveled to Europe, we traveled to Iowa, we traveled, I think it was Illinois. We traveled to the Midwest, we traveled to California. We traveled as much as we could in order to speak to people. We did a lot of Skype calls and then where we couldn't kind of get the Skype to work or actually be there in person, we did phone calls. But the goal was not to do this over email and to do this as in person as possible because you learn things when you talk to a human being. You see their body language.
Shreya Dave: You understand when their eyes light up and say, "Oh my gosh, this is the thing we've been waiting for." And what we wanted to make sure we did, and this is also the goal of I-Corps, is that we weren't pushing a technology onto the market that nobody wanted, that we were actually developing something that somebody would pay for at the end of the day and for us would generate impact. So we had the two criteria there. And so, we talked to about 15 different industries, so everything from pharmaceuticals, to upstream oil and gas, to downstream refineries, to food and beverage production. And many of them we said no thank you to. We said this was a really great investigation, and what we were doing was not pitching our technology. In fact, we were trying hard not to pitch our technology and we were understanding the customer's perspective. What is the hardest part in the process? Where is your bottleneck?
Shreya Dave: If you needed to produce more, what is the first thing that would need to change in your plant? Or how do you think about operating costs versus upfront costs? And so those were the sorts of questions we were asking. Not saying, "Hey, we've got this really cool new technology. Do you want it?" Because we know that people generally say yes until they have to pay for it, and then suddenly it's not as exciting as it used to be. And so we're really trying to understand the customer's perspective and not pitch what we were trying to do.
Jason Jacobs: Other than the kick in the butt to get out the door, was there any training or how did you know what questions to ask?
Shreya Dave: There was. There was some good training. We had to come up with the questions because of course, we are the experts in the industries or in rather, the technology in what we were trying to solve for. Other people in our cohort were looking at mobility or accessibility questions or they were looking at runoff and how do you control runoff in an urban design setting. And so there were a lot of different things that were happening and so it was up to us to be very content specific. But the instructors at iCore helped us form hypotheses that would then we use the scientific method. We form hypotheses saying, "Okay, we hypothesize that this customer is nervous about losing their job because X." And then we'd go ask and say, "Well, what makes you nervous. How do you think about taking a risk on a new technology?" And that X starts to become validated or invalidated. So we validated many hypotheses, we invalidated many more hypotheses and it's something we continue to do today as we continue to work with customers.
Jason Jacobs: So are you familiar with the Cyclotron Road program?
Shreya Dave: I am very familiar.
Jason Jacobs: Now Activate, the parent organization, but the types of companies that would go through this I-Corps program, where are they stage wise relative to the types of companies that would be in say a Cyclotron Road?
Shreya Dave: I think almost 100% overlap. We were fortunate enough to go through I-Corps right at the beginning, and we already had some hypotheses formed from my baseline hypothesis that I defended with, was that this technology was not going to be commercialized because of cost reasons. And so we got to start with some hypotheses. I think until you've thought about the markets a little bit, it's hard to even talk to folks about what they may or may not want. And depending on where one is in a PhD trajectory, a lot of them tend to be 100% technical. And so, starting a program like Cyclotron Road allows you to think about the market and then go investigate those hypotheses.
Jason Jacobs: And your team at this time, was it purely technical?
Shreya Dave: It was purely technical. We did have an industry mentor who we worked very close with, who had spent a lot of time in sales, and so we had her perspective as well. And she's actually, I give her full credit for getting us into the early markets that we're starting in.
Jason Jacobs: And do you think that when these potentially breakthrough technologies are coming out of the lab, is purely technical the right composition for a team at that stage?
Shreya Dave: I definitely think it can be, but I think it takes a lot of discipline to walk away from the lab until you have a market. I think there is a ... and I know it because I experienced it, a huge desire to say, "Oh, so-and-so said, if only we could do this," and then go try to do it and try to solve it before you ever go back to anybody else. And getting multiple opinions because that one person may or may not have been correct. Getting multiple opinions, understanding the full set of specifications that would be required for the next level or next generation of the technology, and really having the scientific, kind of turn off that scientific I want to solve that problem side of your brain. And looking and trying to define the problem very clearly. Turning that side of the brain back on is I think the discipline that it requires.
Shreya Dave: I do think that it's hugely valuable to have the scientific perspective because especially in many of our cases, we're not talking to the sales person or to a purchasing person. We're talking to the process engineer. So we have to be able to communicate about the chemistry of their process in order to have any idea what we can or cannot solve. And we have to be able to communicate with highly technical R&D people, who may not even open the door if we weren't coming to it with a technical perspective.
Jason Jacobs: Okay. So you went through the I-Corps program and then what?
Shreya Dave: And then we went back to work for a year. My co-founder, Brent and I decided that we would spend one year working at MIT and working on the market side of things kind of on the side while we paid the bills and were gainfully employed. And we did that. I used to teach, I was teaching and I would teach on Wednesdays and Brett used to love Wednesdays because I wouldn't schedule any meetings, so he would get to work all day. And we've tried to maintain that culture throughout, have a few days or a few blocks of time where we get to just get deep into the work.
Shreya Dave: But we spent that year validating the market, applying to grants, also fundraising and doing other related activities. And we had decided that if we could finish out the year and we had a way to pay our own salaries, we would start this company. And if we didn't then we may not walk away completely, but we would probably look for longer term full time opportunities.
Jason Jacobs: So that initial fundraising period and grant writing period, how are you navigating through that and what assistance did you have, if any?
Shreya Dave: Oh, we leaned on people all the time. We got a lot of great feedback. We actually approach fundraising just like customer discovery and started asking investors what they looked for in technologies or people or teams and things like that. And our first pitch deck when we started asking for advice looked totally different from the pitch deck that we had when we realized all of a sudden we weren't asking for advice and we were accidentally fundraising, but we were totally new to this. So we had opportunities. There was a grant we had applied to that required us to do an in person pitch. That was our very first pitch deck. So I remember working on that while being in Europe on a customer discovery tour and working on that in the evenings. And then I remember taking into a now trusted advisor of ours and having it totally ripped apart and told us that it was absolutely nothing that he would ever invest in. And being able to learn from that and turn that into something new was something that we learned a lot.
Jason Jacobs: And so what was the first break that you had as you were navigating through that process? What was the first pin that fell into place?
Shreya Dave: So I think what was important was that we took every meeting we could get, not knowing if we would ever get another meeting. And so even when an investor was likely not going to invest in us, if you look at their portfolio and it's a whole bunch of AI companies or it's a whole bunch of consumer products or a whole bunch of other things, we said, okay, well, maybe we'll just at least learn something from pitching to this individual. If they're willing to take this meeting, let's not waste their time, but let's try to learn something from them.
Shreya Dave: And that actually led us to an investor who introduced us to our now investor, and so introduced us to The Engine. And The Engine was a brand new fund at the time. MIT started this fund specifically focused on hard tech. And they didn't have an office, they didn't have a full team yet. And the introduction led us to a meeting, a very productive meeting, which we didn't use the pitch deck at all. I remember very clearly, with the managing partner at the engine that ultimately months later led to an investment. So I think taking the chances and putting ourselves out there was a really important aspect to that.
Jason Jacobs: And so when did you raise that initial round of finance?
Shreya Dave: So that was in July of 2017, we wrapped up our appointments at MIT in the end of May. We went off payroll in June because we didn't have enough money yet. And then we went back on payroll in July when we closed the fundraise.
Jason Jacobs: And then what did phase one look like as a company? Well, what was the initial kind of entry point, exit point, transition from research to private sector, right? Big difference.
Shreya Dave: Yeah. I think the big shift there was going from something that worked once or sometimes to something that worked every single time we tested it.
Jason Jacobs: And did you have clear markets in mind at this time?
Shreya Dave: We did have a clear market in mind. We are very much focused and still are to this day on the food and beverage industry, where we can concentrate food ingredients from waste streams and turn them into valuable products, either to go back into human food or go into things like infant formula or other products like that. So we were focused, we had a market, we had a clear set of specifications. So we have a target now. We know what form factor it needs to be, we know exactly what it needs to accomplish, and we hired a chemist.
Shreya Dave: And that was a huge breakthrough for us and Brent and I, neither of us are chemists and we realized that what we were doing was less so material science and increasingly chemistry. And we brought on a rock star chemist who took us from the science project to something that you could envision being scaled up. And that transition was a very important, probably about eight month timeframe before we put in place processes to get statistical data or ways to tell if things were just a fluke or were actually a result of the chemistry changes we were making.
Jason Jacobs: And just ballpark, about how many markets did you look at before you landed on food and beverage?
Shreya Dave: I would guess in that initial phase we looked at about 15. I would guess we added maybe five or seven more, so more than 20 markets in total.
Jason Jacobs: And what were the characteristics of the food and beverage industry that made it the right market to start in?
Shreya Dave: Great question. That was a couple of different things. The first was openness to innovation, so we actually learned from the pharmaceutical industry that we should be talking to the dairy industry in particular because they are very innovative in the separation space. They're very innovative in the separation space because they have to be. They have to use membranes because you can't boil off different food ingredients without denaturing them. And so they've already been using membranes and they are also trying to push the boundaries on it because it's a relatively low margin business. So that's the other thing. The second thing is that we are developing a plug and play replacement for the dairy industry, and so we're not completely changing the way people talk about the separation. It's a better, faster, cheaper solution where the calculus is already known. The value is already understood.
Jason Jacobs: So you talked about the value of customer development when you're choosing a market, once the market's chosen though, and you're switching from having it work sometimes to having it work every time, which it sounds like was the phase one, can you talk a bit about where the customer fits into that process in that phase and what that rhythm looks like between customer development lab, customer development lab, just how that plays out or at least how it has for you thus far?
Shreya Dave: Yeah, I definitely think that there are many different models for this. I think that we went in thinking that what we would do was ship a sample, get feedback, ship another sample, get feedback, ship a fourth sample, the fifth sample, a 10th sample, and by the 15th iteration we would have a product that everybody was happy with. And I think that was a little bit naive. I think that while it's incredibly important to ship something and get customer feedback on it and show that customers are willing to pay for things, I think that we were actually a little bit too early, we were shipping samples that were a little bit too small and a little bit too far from the generation that would actually go live. And so we did that. We did get customers to pay us for our early samples. So we did demonstrate that traction and I think that was important for our morale.
Shreya Dave: But what we didn't get is the really critical, awesome feedback that we were hoping for. We were hoping that somebody would try this, like they might try a chair and say, "It's not really comfortable in this way, or it's not really doing exactly what we want in that way." And we didn't necessarily get that feedback. And so I don't think it's the fault of the customer. I think it's just a prioritization thing. And I don't think it's a fault of the customer because I think we're so new that it was hard to say what we actually really wanted. What was possible is not necessarily clear. I think we're at a point now where we look and we feel and we taste more like a membrane. And so a field pilot is much more palatable and it's much more easily extrapolatable if that's the word, into something that is already understood.
Jason Jacobs: So you mentioned that phase was essentially transitioning once you're a private company into getting it to work every time for a given market. Where are you on that journey now? Is that still the phase that you're in?
Shreya Dave: I think we've actually entered phase three where phase two is getting at work at a postage stamp scale to getting it work in a scale that is commercially relevant. And I differentiate that from using large volume manufacturing techniques because we are still at the bench scale and we're at currently what I think phase three is getting to large scale manufacturing methods. But what we're able to do in phase two was go from something that was roughly the size of, I don't know, a cup, let's say, like a drinking water cup, and get that to the size of a whiteboard or so, roughly, and getting to our a table. And so demonstrating that things like defects didn't scale nonlinearly where you have more defects, the larger area you have or showing that the processes we're using could generate larger areas was I think the most important part of phase two.
Jason Jacobs: So what is the biggest difference? It sounds like between phase two and three is size but then making it ready for commercial scale. What's the difference between size and commercial scale? What else does commercial scale entail that is not present in phase two?
Shreya Dave: Great question, two things. The first is at the bench scale, you're limited by certain methods. You're limited by space, you're limited by speed. Your speed of, I'm saying speed of manufacturer, you're limited by maybe personnel because we don't want necessarily our senior chemists doing production in the lab because that's not a good use of time. Whereas the manufacturing scale is more of a process that goes faster and has higher volumes as well. So not just area but larger volumes. So in this example, we do a batch, semi-continuous process, we call it, where we make large areas, like I said, the size of a table. Whereas when we go to manufacturing scale, we'll make that much in about a second. It's a completely different order of magnitude.
Shreya Dave: And at the manufacturing scale, it's a roll to roll process. And it's a process where we're not using grams of material, we're using gallons of material, and so it's a completely different order of magnitude. I think the second thing about it is that we're testing real feed streams. We're testing real things from dairy companies and from paper companies and from chemical companies in our lab, but we're not necessarily doing that at the plant. And so the other part, other important part of phase three is demonstrating the same operation, the same results in the field. And so some people like to call it TRL levels, where you're going from lab environment with real stuff to field environment, with real stuff to commercial scale. And those are all different stages, TRL scale,
Jason Jacobs: And from the cheap seats over here, it seems like there's kind of three things that you need to prove out. And I'm saying it as a statement, but I'm meaning as a question, and really just a test whether I understand it. One, is does it work? So does it do what you say it's going to do? So that's kind of one piece. The second piece is does it actually drive the efficiency that you're promising? And then the third piece is, can you do it in a way that is cost effective and makes good business sense? Or are those the right few things?
Shreya Dave: That's exactly right. Yep.
Jason Jacobs: Okay. And what's the state of the state today?
Shreya Dave: Yep. So we are currently in this very exciting-
Jason Jacobs: And then there's a fourth, which is can you do it at scale?
Shreya Dave: Can you do it at scale? Exactly. Exactly. So we're in this exciting place right now where we are scaling up towards those field trials. So we'll be putting field trials in next year, next calendar year, 2020, big year for us. And we will be doing it using at scale manufacturing methods, but maybe not at scale manufacturing costs. We haven't necessarily achieved the economies of scale of making huge volumes, but we're using it, we're making things using the methods that we will use to make it huge volumes, because then you know that that technology risk part of it has been de-risked. And so does it work, and I qualify that by saying, does it work for how long it needs to work in the environments it needs to work?
Shreya Dave: So that means in the field and doing some lifetime studies. Does it work, and demonstrate the economic benefit to the customer. And so that's about extrapolating the economics. And you have a large enough scale to be able to see the impact on the balance of plant. And then the third thing is you mentioned is can you do this at scale? And so I think being able to say, yes we made these five modules in the way we're going to make the next 500 modules, and the cost is going to go down over the next 500 modules. That's a pathway I can see as being legitimate. Saying that we've made this one module in this artisanal way and of course we're going to be able to make 500 modules is a bigger jump. And so bridging that gap is what phase three is about.
Jason Jacobs: When you think about this kind of breakthrough innovation, there is impact and then there is profit. In your view, are they directly aligned? Like if you want to achieve great impact, you need to do something that can be a great business as well? Or are there times when those diverge?
Shreya Dave: I think that they can overlap, but don't necessarily overlap. So in the example of the paper industry, the pulp and paper industry accounts for about 3% of all U.S. energy consumption, and we can cut that in half. So that is a huge impact. That's percentage points off of total U.S. energy consumption. That's what gets me up every morning. But it also happens to be a terrific business for the paper company and for us. And so it improves the margins for the paper company. It allows us to get to the volumes that we need to get to. And so in that case, I think it overlaps. I think there are other applications where it may not be so perfectly overlapping. And I think that those are applications that as a company and as with the values that we have, that we ultimately want to work on, but see the dollar overlapping with impact applications as great places to start.
Jason Jacobs: Some people have told me that come from this world that if you want to have the greatest impact, you should focus on business first and go to the market where it can be most successful from a business standpoint without factoring in impact. And then it's easier to move adjacently into the impact areas over time. As you get more established, how do you feel about that statement?
Shreya Dave: I definitely don't disagree with that statement. I think we are lucky that it does overlap, and that we can see large impacts in both of our two first markets being paper industry and food and beverage. And the impacts are slightly different, and the value proposition is slightly different, but the technology behind it is the same. And so we don't have to give up impact for good business model in this scenario. I do think that if we started with something that I care very deeply about, but I find it hard to build a business around in treating wastewater for water reuse or being able to close resource loops in the water industry.
Shreya Dave: I think that is a hugely important thing and I think it's something that ultimately we would love to work on. But right now the customers are telling me, "Hey, can you treat my wastewater for free or can you pay me to treat my wastewater?" And that doesn't make sense for us. That's not a way that we can scale up.We can't get to a place where we can be cost effective for treating wastewater until we can get to the economies of scale in a different market.
Jason Jacobs: So what is the business model for a company like Via Separations? Are there a lot of different potential ones to explore or is it very clear cut?
Shreya Dave: It definitely wasn't clear cut at the time. In hindsight, I hope I can explain it pretty logically, but I think there are two main business models that we will operate under. The first is selling modules. This is in the plug and play replacement applications. We're not trying to reinvent the wheel. We are just improving the resource allocation and improving the resource efficiency for our customers. So we'll sell you the modules, you'll spend less time cleaning your membranes, you'll waste less water, you'll be able to have higher value products coming out the back end and be able to use more of your waste product.
Jason Jacobs: And we talk a bit about what the technology does, but what is, I mean, just help me visualize what is a module?
Shreya Dave: A module is a cartridge that slots into a filtration system. So you can think of pumps and pipes and flows going through tanks and flows going through cartridge, or pressure vessel that you put in one stream and out the other end you get two streams. And the goal of course, is to put in a stream that's lower value and get out a stream that is higher value. And so if that's a concentration, if that's removing a contaminant or not even a contaminant, but say a compound that is less desirable. So in some examples you may be reducing the water content, you may be reducing the salt content, you may be increasing the protein content. So these are ways that you increase the value by pushing it through the cartridge. And the goal is to be able to create two streams that can then both be reused in some other capacity, thereby closing those resource loops.
Jason Jacobs: Okay. So selling models is the first thing.
Shreya Dave: So selling modules is the first thing. And then in a lot of industries, in the majority of them I'll say, the modules, the pumps, the pipes, they don't already exist. It's not like we're coming in and saying, "Hey, replace best membrane with our membrane." It's a whole different process change. And so in these scenarios we actually find that customers are more open to a service model, a model where we take care of everything within the black box that is the Via separations shipping container, let's say, that is sitting out back in the plant that's solving their problem. So customer has a problem with a stream that is bottle-necking their plant and they can't get enough water out of the stream. And we say, no problem, tell us about your flows, tell us about your requirements and we can design the system and we will build, own, operate and maintain that system for the customer. And what they're paying for is the more valuable stream coming out the back end.
Jason Jacobs: And is that the model that you've landed in?
Shreya Dave: And that's a model that we've landed in almost all applications that don't currently use membranes today. So all of those pasta pots that are turning into strainers are the service model for us.
Jason Jacobs: And these pilots that you've got going on today are paid versions of that with that model.
Shreya Dave: So to be clear, we don't have pilots today. Next year we'll have pilots, and yes they will be paid.
Jason Jacobs: Okay. So it sounds like the next step then is to get these pilots going and to prove out that it works and work out the kinks before you're ready to really scale up both within these organizations and across?
Shreya Dave: That's exactly right. And so working with the right organization to pilot is my top priority. So industry agnostic, a good partner for us is one, that believes in us and wants to try it. Two, has a lot to gain, because implementing our technology will be a change for their business. And three, has the attention span to see not only through the pilot, but also to a commercial installation. One of the really cool things about membranes is that it's modular, so we can put in a pilot and then just start adding to it. And then adding to it changes the economics for the customer. And so the best pilot for us is one that we don't have to drive away at the end of the pilot, but one that we can add to and actually install at the plant.
Jason Jacobs: So does a company like Via Separations as you're turning the corner and getting these pilots, and then if I fast forward from the pilots and really starting to scale, will it be very capital intensive that next phase of the process? And what does that look like?
Shreya Dave: That is an excellent question that I spend quite a bit of time thinking about. It is a relatively capital intensive business, and I don't say that to say we're doing it right or wrong or anything like that, but just to show how we're thinking about it. And I think that there is a large motivation for investors to invest in low capital intensive businesses, because they get higher returns on the capital. And I completely understand that. So instead we're looking at how can we finance plants or multiple plants in a way that is sustainable for us as a venture backed company. But it is also sustainable for our investors as venture investors. And so that sometimes looks like project finance, that sometimes looks as like partnering with state or federal governments who are looking to improve the economic wellbeing of a certain area or that sometimes could look like customer funded installations as well.
Shreya Dave: And so there is a number of different models that we can see for the first, let's say 10 plants that we've maybe first $50 million of capital that we outlay for capital infrastructure and then ultimately, it would be more of a project finance, more traditional debt situation.
Jason Jacobs: And so let me try to ask this. I guess my caveat when I'm asking this question is that I'm still piecing together and trying to understand exactly what's going on in this area. But I think I know enough to ask, if I don't ask it quite right though, that's my disclaimer before I ask the question. But project finance has been around for a while, but historically, it's tended to invest in product where there's not a lot of science risk. And a company like this is a company that still has the same kind of physical infrastructure costs and requirements for project finance, but there's more risk, first of all, do you agree with that assessment and then second of all, what are the implications of that in terms of what does that landscape look like for companies that fall into that category? Is project finance the best source of that capital? Is there another source? If so, what does that look like? And if project finance is the best source, like how they get comfortable.
Shreya Dave: Great question. So your assessment is absolutely correct, and that is exactly the goal of our field pilots is to de-risk the technological side of things as much as physically possible. And have the data to show a project financier, this work's already, it's just about installing it and having the to install it. On the plus side or one of the things we have working for us is that the capital outlay for a significant financial return is relatively small. And so a project finance deal for us would look like probably about five or six or 10 different customers because each one of those capital outlays is relatively small. And that actually reduces the risk in some ways because you're not hedging on one single customer. And it also in some cases increases the risk because you obviously have to manage more construction projects at the same time.
Shreya Dave: So I think that there are pros and cons for that and I do think that in a perfect world we construct a pilot, maybe two pilots and all the risk is gone and all of a sudden we're an attractive investment for project finance. I think in reality we are going to operate pilots for months instead of weeks, to show this is a continuous operation. A pilot serves two purposes. It shows a future financier that we can do what we say we can do. It also shows the customer that we aren't going to shut down their operations by interfering in any capacity, but I also think that we could think of creative solutions to install that very first commercial installation. And we can work with the right partner who wants to see us install that first commercial installation for an economic break down the road or in that longer term service contract.
Jason Jacobs: Is there a gap as it relates to the types of capital that exist or are the existing capital sources sufficient?
Shreya Dave: I honestly don't know. Come to me in 12 months then I might have a better idea. My hypothesis is that there is a gap there. I think that financing a $5 million plant with venture money might be very tricky for us and getting project finance for our very first $5 million plant is going to be also very tricky for us. And so I do think that there is a gap there that we are hoping we can fill with maybe some combination, maybe some customer contribution, maybe some grant contribution, but I don't know and I don't know if that's possible.
Jason Jacobs: Have you heard about or looked into at all the different types of insurance vehicles that are emerging that can help de-risk some of these early technology innovations to make them more palatable for project finance?
Shreya Dave: I have, but very high level. I am extremely intrigued but I cannot claim to know anything worth sharing about it.
Jason Jacobs: Yeah, that's kind of where I am as well. I have some episodes scheduled actually, so I can report back after. I've done them and dug deeper into that area.
Shreya Dave: I have some episode recommendations so we can work together.
Jason Jacobs: Awesome. Do you want to share them publicly or should we speak offline?
Shreya Dave: We can talk offline.
Jason Jacobs: Cool. So what other question did I have about that topic? I think it's an important one, so ... Oh, I remember. So what about you, because you mentioned governments and you mentioned project finance, but where do strategics fit into all of this in terms of their role of potential funder, if at all?
Shreya Dave: Very well. I think the short answer is very well. I think that we've been careful to avoid strategics in our first early financing rounds because we don't necessarily want to get married to a longterm market or a short term market because we are a platform technology, and so we want to make sure that we have the flexibility, we have the optionality to go after the market that is going to be, again, the most impactful and the best business for us. So we have so far not worked with any strategics. I'm very interested in working with strategics, and some of them out there know this already because I've already spoken with them. As we dig deeper into some of the chemical or petrochemical or other markets that often have the strategic investment arms or strategic partnerships in other capacities. So I think that that's a very important element.
Shreya Dave: I think though it's easy to get confused between what and how we're raising money for. So, for example, if we're commercializing in the paper space and in the food and beverage industry, then a strategic from the chemical industry isn't necessarily going to want to fund our first plant in the paper industry because it's going to look different from what it might look like in the chemical industry. And so we also want to be careful of making sure that we have the resources to focus on all the different avenues that we're pursuing without taking bandwidth away from any one of them. And so conventional entrepreneurship wisdom, which I believe in very strongly, is to focus on one market and commercialize in one market before trying to go into many different markets. I do think there are opportunities for synergies buzzword there between the different markets and parallel development across the different markets. But I want to do, make sure that we're not spreading our resources too thin.
Jason Jacobs: And when it comes to navigating the right options for insurance, the right options for project finance, et cetera, is I guess how ... I mean, it seems like that's blazing a new trail. And so where does that guidance come from and is that a very inefficient process or are there resources that are available to figure out the right fit and make that match in more efficient ways?
Shreya Dave: That's a great question. I haven't sought out a bunch of resources yet. So I don't know the answer. I will say that I am ruthless about asking for advice from people around me, whether I know them from going to college with them, maybe I went to preschool with them, maybe I know them because I met them on the train this morning. And I do think that I'm fortunate to have a lot of people who are willing to give advice, but I'm also kind of creative in how we get that advice. And I think the same goes for customer discovery. So I'll say that I haven't launched my full customer discovery over the insurance project finance or other vehicles that could kind of lead us into the next thing. But when I do, and as I've started to maybe a little more ad hoc, people have been very helpful.
Jason Jacobs: Yeah. I'm wondering if there's an opportunity for someone to kind of build a marketplace.
Shreya Dave: I think that's very likely.
Jason Jacobs: Yeah. Cool. See, I'm doing customer development. So one other question. When it comes to actually scaling, I know in the traditional software world, when you take the companies that, for lack of a better term, catch tiger by the tail on the consumer site, let's say, and they have very viral rapid growth and strong brands and great metrics and things like that, right? Then there's certain executives that are kind of the ones that the VCs would parachute into companies like that as key operating executives to help them navigate through, I think what Reid Hoffman calls that blitzscaling period, right? What does that landscape look like on this side of the world? So assuming the pilots go well and you continue to make headway and you find those sorts of capital to build those plants out and start manufacturing at greater scale and selling more, doing all the things, right? What does that landscape look like when it comes to scaling operating talent?
Shreya Dave: That is a wonderful question. I don't have a perfect answer. I think that I have the wherewithal as the CEO to know that I may or may not be the right person at that scale. I think I've seen it happen with let's say, consumer products or folks that you see in the news. I also have surprised myself on the other side, I didn't think I would like selling pilots and I've loved selling pilots. And I don't know if I'd love scaling revenue from 10 million to 100 million, but who knows? Maybe I'm going to love doing that too. And so I think it's about ... So I don't know who those folks are that get parachuted in. I don't know that there's enough good examples of hard tech companies that have hit that blitz scaling phase to say that there are folks who are very good at that. I'm sure there are. I just don't necessarily know them.
Shreya Dave: But I also think that it's important for me and for Brent as the leaders of this organization, to be very introspective and look at it objectively. At every stage of the company and say, are we still the best people to be leading this company? And so right now I think the answer is yes, and I really hope it is for the next 10 years, but I don't want to pretend that I know it is.
Jason Jacobs: Yeah. I mean, the only thing I'll say there is in my experience, I mean one thing I've learned about myself and I've only built one company, and it's not like we made it all the way to the promised land either. But it would be a mistake I think to hire me for any functional leader position as the company scales because there will be people better at every functional position. But my job as CEO, is actually to make sure that there's the strongest functional leaders in each, and that they have good alignment and a clear north star and are set up for success and things like that. So I wouldn't ... Yeah, anyways, as long as you keep managing to the index of getting the right people around you at every phase, then you should take it as far as it can go.
Shreya Dave: I appreciate that. I appreciate that vote of confidence. I do think of myself as the snowplow kind of digging out the way for the rest of the team to do amazing things with the technology, with the pilots, with the development scale or the research scale, whatever it is and the manufacturing. And so I do think of myself as that role and that sort of leader. I hope the team would agree, but I do also, I also think that I haven't scaled something before and I'm looking forward to finding out what the challenges are, and the things that worry me today probably will look like not worries in a year. And the things that worried me a year ago don't look like anything to me right now. And so I think just maintaining that perspective has helped me enjoy the ride and ride the wave as it's come.
Jason Jacobs: Yeah. Well, I think that makes sense. And that's what I told myself too along the way. Is if I ever became convinced as a shareholder that the company would have a higher probability of success with someone else at the helm, then let's put that person at the helm. And that my biggest success will be growing the pie as big as it can get and having the base impact.
Shreya Dave: Agree completely. I agree completely. And something that I think sounds really mundane but has been part of the most fun of building this company is that I don't know what my job is going to be in three months because I don't know what problems or what things we're going to be facing or what things we'll have already solved. And so I get to reinvent the role every three months. Not intentionally, but just by virtue of where we are at the stage of the company.
Jason Jacobs: So for the stage that you are now, how important is policy, if at all?
Shreya Dave: I think about it, I am not very active or proactive about it, but I do think about how do we make sure companies like ours get funded in the future? How do we continue research funding for universities so that technologies like ours can even exist before they start companies. So where I have experience, I do like to think and contribute wherever I can. Looking forward or looking into kind of policy levers that would enable our technology, I think that we're a little ways away from it in understanding the importance of the manufacturing sector. I think the global manufacturing kind of ecosystem is one that isn't very well understood from a policy perspective, at least from my perspective. I don't want to claim that people aren't thinking about it, but I do think that things as simple as a price on carbon, whether that's a cap in trade or a price for carbon or whatever, a tax on carbon. I think those would be hugely instrumental in driving innovation that ultimately leads to a more sustainable planet. But I don't get into the details of it or I don't pretend to get into the details of it.
Jason Jacobs: So as you think about your path forwards then, what are the biggest things inhibiting your progress, and if you could change one thing to help you move faster, what would it be?
Shreya Dave: That's a very big question.
Jason Jacobs: For some reason I always [crosstalk 00:55:37] ask two at a time too. Why don't I just one question and then follow up with the next one. I always have to like bundle two in there. I must be inpatient or something.
Shreya Dave: I think that, not to have a cop out answer, but I do think that more capital in the space would help companies like ours grow faster. And I think that folks who have scaled hard tech companies before participating in the investment community, in order to help us see around those corners or say, Hey, you know this is worth spending money on. Like what if you double your burn and to get to this place faster. I think those sorts of things would be really valuable, and are valuable. And I just think I'd love to hear more voices and more dollars there. But I think that if there's anything I could do today, like actually today it would probably be reducing the barriers or the technology risk averseness of the manufacturing industry at large, which I totally understand. And a plant operator or plant manager is not going to get fired for doing things the same way that had been done for the last 10, 20 or 100 years.
Shreya Dave: They're going to get fired if they try something new and it doesn't work. And so I totally understand the need for the risk aversion, but if there were more leaders from the top saying energy efficiency is a priority, embodied energy and the products we make is a priority. And there were metrics and there were goals around those sorts of things. There would be a reason to take a risk on a new technology that could change that. And so having some of those policies in place at a corporate level would make a huge difference for companies like us, and other companies trying to improve the de-carbonization of the industrial sector.
Jason Jacobs: Do you have role model companies? Yeah. Do you have role model companies that exist in terms of companies that have seen the movie before or built the kind of thing that you're doing that have made it all the way to scale? Or are you really treading new ground?
Shreya Dave: I am learning more and more about companies as the days go on. We just spent a week at the Chobani headquarters in Soho, New York. And I was incredibly inspired by the way they've built the organization, by the focus on the impact while also building a profitable business, and by the kind of passion and grounded-ness of their CEO and founder. And so while I'm not talking about a manufacturing company that's changing industrial scale manufacturing, I am talking about a brand that we all know and love in our day to day lives that is I think represents similar values to the ones that we want to and has been able to scale while doing so.
Jason Jacobs: I guess my last question is just for anyone who is listening that maybe is a PhD sitting in the lab doing research that they're about and they want to have its biggest impact on the world, what advice do you have for them as they start to think through if and how to navigate that transition?
Shreya Dave: I'm coming back right to customer discovery. Talk to the people who would use your technology. Don't pitch that technology to them and understand, try to really understand, put yourself outside of your researcher perspective for a moment and try to understand the pain points of the users of that technology, whether it's a solar cell or a new battery or a piece of heavy construction equipment. I think that any of those is a very interesting journey. I think we'll learn something one way or another, and I also think that the answer that there isn't a market there is a great answer too. I think that's just as much of an answer as yes, there's a market there.
Jason Jacobs: Awesome. Well, I learned a ton in this episode and that means that I'm sure listeners will as well, so thank you so much Shreya, for coming on the show.
Shreya Dave: Thank you, and thank you for having Via Separations.
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. No, that is .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 made me say that. Thank you.
