Ben (00:06):
Uh, so, this is a panel discussion amongst, uh, young entrepreneurs, um, Michael being one of them, and I'm going introduce the others, uh, for you in a minute. Uh, here they are. So, Michael is there. Uh, Paris Small is co-founder and CEO of Eden Geotech, and we'll talk a minute what that is. Uh, Steph Speirs is co-founder and CEO of Solstice, and we'll talk about that, too. And our moderator, delighted to have Barbara Clarke again, back here also, a graduate of our master's program in 1991, uh, and a, and a terrific moderator. So, thank you, all, uh, for joining us here, and let me give a little bit more of an introduction, then, to each of you, and then I will turn it over to, to Barbara to, uh, to carry on the conversation.
Ben (00:49):
And so, Barbara, yourself, I would say, uh, I think I... you founded, or... not founded... invested in about 60 companies and 12 funds all over the world, uh, and you have been doing, um, basically investing in emerging technology that is part off your, uh, work, and, and it's part of what you founded, the Impact Seat, uh, which is a, a, a, a, a fund, a focus for your, for your work in creating opportunities for underrepresented entrepreneurs in particular, before this was sort of a fashionable thing to do.
Ben (01:19):
Uh, and before that you worked as a managing consultant for, uh, KPMG, PWC. Uh, so, I can tell the audience that, uh, every conversation I have with Barbara on anything, uh, is interesting and, uh, insightful. So, Barbara, thank you for, uh, taking on the, the task today of, of moderating this panel. We will hear more from you in a minute. Um, thank you.
Ben (01:41):
I'll, I'll, I'll introduce Steph Speirs, who is co-founder of Solstice, uh, and Solstice is a community, uh, solar farm, um, uh, sort of, uh, activity. She will tell you more about it. Uh, but basically, solar energy, uh, needs to be everywhere, and, and I think part of what I see Solstice do is to bring it to many communities and to enable... that communities all over the United States, uh, are able to, uh, to do that. Uh, and, and she has a background not in engineering, but a masters in public affairs, um, in international economics and development, so, uh, some of what our students are taking is probably what, uh, Steph took in her graduate years.
Ben (02:22):
Uh, but then she worked, also, quite a bit, in, all over the world: in, in Pakistan, in the Middle East, uh, in, in India, and she managed, actually, the field operations in seven states for the first Obama presidential campaign. so, Steph, you've certainly earned your spurs there, uh, and we're delighted to see you apply it now to the field of, uh, climate tech.
Ben (02:44):
Uh, and Paris Smalls is a, currently a student, a PhD student, uh, at MIT, in geophysics. So, if you think this stuff is complicated, Paris will figure it out for you. It, it's all about, uh, geophysics, and especially the heat and the pressures that, that occur deep in the earth. Uh, so, Paris, uh, uh, founded, uh, co-founded the Eden Geodeck, which is a, uh, geothermal, uh, company. He'll tell you more about it.
Ben (03:12):
Uh, and from what I understand, it's gone through some pivoting and some evolution in terms of how it addresses climate tech, uh, and, and Paris will, will certainly talk more about that. Uh, but he comes from a, a deep knowledge, uh, and research base, uh, in the PhD work that he's doing at MIT, uh, and I'm sure he's got a bunch, bunch of patents to his name, too.
Ben (03:32):
So, uh, so, thank you, all. I'm going to retreat into the background again. Uh, Barbara, uh, you have the mic, and, uh, please carry it on, uh, the discussion. And I'll remind the audience, for once, that, um, we will run this until 11:30, uh, and if you have questions now is the time. You can put it into the question tab at the bottom of your, uh, webinar screen. I will see those questions. The, uh, panelists don't see them right away, but I will see the questions and I will come on in the last 10 or 15 minutes and share some of the audience questions with the panel and, and have further discussion about that. Uh, and then we break on time at 11:30.
Ben (04:11):
Uh, all right. Thank you.
Barbara Clarke (04:16):
All right, we can jump right in. Um, are we gonna take the slide down so, that we can all see all of our faces? Um, great. Um, we had a long pre-call, so, I'm, I'm anxious about, like, getting through a lot of content here, um, because everybody had a lot of good ideas. so, um, jump in. Also, Ben, you run a really tight ship. We are one minute ahead of schedule. Um, so, jumping right in, my first question is for Paris.
Barbara Clarke (04:45):
Um, you know, what were you like as a student? You're still a student, so, maybe as an undergrad; and sort of, did you see yourself as an entrepreneur, and what message would you say you have to current students? I know Michael had some nice messages for, uh, for the stud-... but I'd like to hear what you have to say and how you would... what, were there encouraging things that were said to you that you would want to, um, have said to others?
Paris Smalls (05:12):
Yeah, I can quickly go through, like, my life as a student, not just undergrad. Um, so, as a kid I was really studious, uh, used to love reading. My mom used to make sure that I read books. Uh, I had to report to her on what the books said and she was very, um, serious about that. If, outside of school, where it's just like, "Hey, Paris. You're gonna read these books." A lot of it was because, um, I was a bit disobedient, so, a lot of books were, like, obedience books on how to be a good child. (Laughing) so, it was pretty, uh, pretty funny. I was a little bit of a rebel.
Paris Smalls (05:43):
Um, as I got a little bit older I stopped working so, much and learning, you know. I, I lost my curiosity. Started doing athletics, I, I, uh, played football in high school. I went to the University of Carolina, where I ran track with a scholarship, and I did that at undergraduate for, um, for about two years. Um, I actually got into geophysics because, um, I'm from Georgia, and so,uth Carolina being a border state, it allowed me to get in-state tuition to, to study geophysics, so, I saved $10,000 a year and I was like, "Okay. Well, I'll never be as smart as a kid." Um, math is very natural to me. I'll just do this geophysics thing. Didn't really know what it was.
Paris Smalls (06:17):
Um, so, really started liking it a lot more than I liked track, and just spent the last, um, three years of my undergraduate getting really into, um, math again, getting really into physics again, and, uh, had this crazy idea that I'm gonna go to MIT. You know, "I, I think I can do it." So, um, studied hard, did pretty well on the tests, and, and got into MIT. Um, I got into entrepreneurship because... M- MIT has a super big, like, sort of ecosystem.
Paris Smalls (06:47):
Um, all of my friends were starting companies. I didn't want to be that guy that was like, "Oh, I, I knew this guy back then, now he's a millionaire," you know. I wanted to be right there in the ship, and I wasn't invited. They were starting these companies and a- asking me to co-found it with them, so, I said, "You know what? I'm gonna co-found Eden," um, and it's, it's based on my background in geophysics, and, and now we're here.
Paris Smalls (07:04):
Um, to any students who are looking to start their own companies, I would say the, like... I think if I can go back and, and do my journey again I would have waited towards the end of my PhD, and at the beginning. I started literally, um, you know, my, my, my second year of graduate school. I'm, I'm a fifth year now, and I kind of caused a lot of troubles regarding, um, the work I needed to get done, but you know, I pushed through and we're here now. But, wait until the end of, of your schooling if you want to do it. Um, there are many opportunities to go up there, and, um, start your company, get early-stage funding... Uh, pitch competitions are a good way to, to start... and, and see what traction you can get before you fully commit.
Barbara Clarke (07:46):
Great. Um, turning to Steph, um, you know, inequality is pervasive and systemic. I'd love to hear how you have, you're sort of battling it, both in all of the elements of your business.
Steph Speirs (08:05):
I think that's one of probably our greatest lessons from the last year, as a society, is that... You know, there's a Warren Buffet quote, that "Only when the tide goes out do you see who's swimming naked", and the pandemic was the tide going out, and we saw what structures and systems had deep cracks in its foundations and were fundamentally broken.
Steph Speirs (08:26):
In the climate space that we work in the people that need energy savings the most, low-moderate income Americans, people who are black and brown, who are disproportionately affected by climate change, they're currently the least likely to get access to clean energy. They're also, the ones that suffer the most from our environmental problems. They live closer to fossil fuels, statistically. Studies show they have higher burdens of... energy burdens, which means they pay a bigger portion of their salary on energy. They have higher incidences of asthma and air pollution, which is leading to COVID morbidity, and they're the least likely to get access to clean energy and energy savings.
Steph Speirs (09:08):
And what's cool about this moment in history is that the way we've gotten our electricity hasn't changed in over 100 years, but it's changing so, rapidly right now. Climate is, uh, one of the hottest topics in the country, and climate innovations are badly needed. So, it's not a question of whether we're gonna switch to green energy in the next decade. It will happen. It's a question of whether the benefits will be equitable, whether they will be shared by everyone.
Steph Speirs (09:36):
And so, we have seen that a rising tide did not lift all boats organically. some of us are in boats, some of us are yachts, some of us are in leaky, leaky dinghies, and the more people that are in leaky dinghies, structurally, the worse all of our healths are. And so, if we want to make sure that our, our, this planet exists for our grandchildren, if we want to make sure that everyone gets a shot, a fair shot at a healthy life, we need to make sure that our climate transition to green power is equitable.
Steph Speirs (10:07):
And so, that's the work that Solstice does. We put solar in the hands of people who have not had access before, and there's a new type of solar that allows for that, called community solar. I'll stop there for now, though.
Barbara Clarke (10:19):
But actually, so, I'll ask you a little followup, too, because... so, it's not just your company and the market that you're serving. It's also, how you structured your company, um, also, how you take capital for your company, so, just give a little bit on that, too.
Steph Speirs (10:33):
Yeah. So, Solstice is one of the only companies that has been founded by women of color and run by women of color in the entire country. And so, our team is, I think, a little more diverse than you'll see a typical clean energy company be. In clean energy, only 25% of people working in clean energy are women. And then, when you look at people of color working in clean energy, it's much, much lower than that, so, we put a lot of effort to making sure that our organization is inclusive, and that means doing things like offering parental leave.
Steph Speirs (11:03):
As a startup that can be difficult. Um, but doing that, offering pay, uh, health benefits... we have five weeks of vacation a year. If you, if, uh, if anyone wants to look, we have job openings on our website. And also, just making sure that we're paying a, a, a living wage. Our minimum wage for interns is $15, which is better than the country's minimum wage, and our living wage, um, is, is, is priced per geography where people are living in. so, by supporting our employees we are trying to make a, a company that is more thoughtful and more equitable than just our work to create equity in the solar industry.
Barbara Clarke (11:46):
One thing that we all, uh, discussed in our sort of pre-meeting was how broken venture capital is. Um, and that, to me it, it's quite a broken system. There's, uh, the obvious things that a lot of people know, is that, you know, less than 3% of venture capital goes to women, and most of them are white women. Um, they essentially don't fund women of color. Um, black and Latino men do not get, you know, they're basically a rounding error, as well. Um, so, the, just the lack of funding.
Barbara Clarke (12:21):
And then, the other thing that is annoying to me is the control that they have, that venture capital has, of the narrative of, like, who's an entrepreneur, what do they look like. And also, it can also, distort w-, the way we think about company formation. So, Michael, I know you have, um, you've done a lot of different kinds of companies and raised a lot of different kind of capital.
Barbara Clarke (12:48):
I would love you just to walk through, um, some of the capital that you've raised, maybe give some examples of it, and then the rest of us will raise our hands if we've also, participated in that way, because I would love for the takeaway from, for folks to know, like, there's more than just talking to VCs out there. There's, there's a lot of different sources of capital, and I think, Michael, you have probably accessed all of it at some point in time, maybe.
Michael Burtov (13:14):
Uh, most of it. I've definitely been after all of it. Um, so, I... First of all, thank you for bringing up those statistics about disparities that exist in the venture capital world. It's something that I write extensively about. I spend half my book talking about it, and solutions for that. So, I'm really happy that it's part of the narrative. Um, it's, it's great. It's great that people are just talking about it.
Michael Burtov (13:36):
That is the first step, and I think it's important to know, when you say that, you know, like, less than 3% of founders are black, less than 10% are women, we're not talking about the 1950s. We're talking about 2020. I mean, that's pretty screwed up. I mean, if Google was hiring 3% black people and one with, 10% women, we'd be boycotting Google in a heartbeat. However, the venture capitalism industry's here to stay, and they control the narrative, and I don't want to sound conspiratorial, but I am super happy that we're discussing this in an open forum and it's not a taboo discussion in some progressive circles, um, in the corner... because this is a real issue.
Michael Burtov (14:09):
Before I talk about how I raise money, um, I'm gonna, I'm gonna take, like, two minutes... just a lit-, a little liberty, if you don't mind, and talk about some of the fundamental reasons that the most popular source of capital being venture capital and angel capital, um, has kind of become skewed in this way.
Michael Burtov (14:28):
So, I'm going to take us back to the 1920s. I know this seems like a huge deviation, but about the 1920s, there was a lot of fraud in the investment world. Uh, so, there was snake-oil salesmen saying, "Invest in my company. I'm gonna make you millions of dollars. You're gonna be rich." And they were lying. So, Congress noticed, and Congress said, "Well, we gotta protect investors. Uh, so, we're gonna say, we're gonna do this. We're gonna make a rule. We're gonna make a rule that if it's a private company," as in a company that's not audited, that's not publicly listed, that's not peer-reviewed, if you're a private company like a startup you can only raise money from what they termed "accredited investors".
Michael Burtov (15:05):
Now, accredited investors has evolved, that term, to present day, but it's still present. An "accredited investor" basically means a millionaire. So, you have to make over $250,000 a year for a few years, you have to have a value of over a million dollars, things like that. I'll just call them millionaires. So, Congress thought, at the time, that it was a really great idea, in the 1920s, to say that, "If you're a millionaire, you're sophisticated enough to invest, you're sophisticated enough to not get swindled, and you're sophisticated enough to do your diligence on this opportunity."
Michael Burtov (15:33):
Great idea, as far as protecting consumers, regular Joe-Schmoes. The problem is that, to this day and currently, 2020, about 86% of the millionaires in this country are white men over the age of 60. So, white men over the age of 60 are institutionally the only ones allowed to invest in startups to this day. Here comes the exception. So, this leads to a lot. I can, I can rattle of some statistics... some of them will be shocking, some of them will be understandable... but there's a lot of legacy attached to why this happens, and it's been studied extensively, and I'm, like I said, I'm super happy that we're finally talking about this in a public forum.
Michael Burtov (16:13):
The fascinating thing is, in 2008, after, uh, after we had the big stock market crash, they required derivatives, liquidity crunch, all that kind of stuff, venture capitalists, angels, stopped investing money into early-stage companies, into startups. Uh, so Congress said, "Well, there's gotta be a different way. We gotta reform that industry." That industry has a track record of not representing all types of ideas, not representing all types of founders. It's just not a really good source of capital, and now they're just not active.
Michael Burtov (16:41):
So, they introduced a series of reforms as part of the JOBS Act. Um, so in 2008 they introduced something called, that they called equity crowdfunding. Equity crowdfunding, they were kind of playing off the popular verbiage at the time, with the Kickstarter being very popular, and basically what they mean by equity crowdfunding is that regular, unaccredited investors... non-millionaires... are now allowed to invest in startups. The startup just has to go through a pretty basic disclosure saying, "This is how much money we make, these are the risk factors associated with the business," describe the business to customers, things like that. Nothing like a public company. Really very straightforward things to educate the investor.
Michael Burtov (17:17):
And in turn Congress said, "Well, the investor can only invest X% of their wealth," and, uh, put some other restrictions on it. But it's a great compromise. So, basically what they said: regular people can now invest in Facebook, before Facebook became public. Regular people, if they see the value in Twitter they can invest in Twitter before it became public. Giving power, economic power, to people across the spectrum, um, demographically, geographically, in every single way... and you see participation in the equity crowdfunding world with people, regular Joe Schmoes investing into crowdfunding, equity crowdfunding, buying stocks and securities from these companies, at an all-time high as far as diversification of the investor. Uh, so no more dominating white, older white males.
Michael Burtov (18:00):
That's, that's the industry I'm very passionate about. It's called equity crowdfunding. Like I mentioned, that's... I, I spend most of my book talking about that, uh, and how we as a society evolve, need to evolve from the venture capital and angel capital model to the equity crowdfunding model. It's just much more inclusive.
Michael Burtov (18:16):
So my company, GeoOrbital, is the first company to raise, uh, over a million dollars in rewards crowdfunding... in our case, on Kickstarter... and over a million dollars in equity crowdfunding. That is a main source of capital for GeoOrbital, and I like it because it represents the mission and the impact that I want to have in the world, as well as capitalize my company to the point that I need it to be. Uh, we also raised angel and venture capital funding. So, these things are not necessarily competitive, although there is, there's definitely... we're in the rink, we're fighting. It's, boxing is happening. Uh, so there's def-, it's still a very young industry.
Michael Burtov (18:49):
Again, it was made legal in 2008, but it only became available in 2016, so the whole equity crowdfunding space is about four years old. It's, it's minute compared to venture capital. But it is an emerging field. So yeah [crosstalk 00:19:03]... [inaudible 00:19:04], mm-hmm (affirmative).
Barbara Clarke (19:06):
... I like, um, crowdfunding, whether they be rewards or equity, but, uh, as... I like them as, like, a good indicator of, like, your connection to the... your, your customer, 'cause it's sort of... like, it's a vote of support in many cases. Um, have you ever gotten SBIR funding?
Michael Burtov (19:25):
I have applied for it.
Barbara Clarke (19:26):
Okay.
Michael Burtov (19:27):
I have never received the grants, but I do know plenty of people who have.
Barbara Clarke (19:31):
And, um, Paris, I believe you've received... Have, Paris and Steph, have you received SBIR funding? So ju-... I'll just give a clarification, and if each, each of you want to just maybe say a couple words about it.
Barbara Clarke (19:42):
SBIR is sort of an umbre- umbrella organization of the government. They fund private companies $ 4 billion worth a year, um, into innovations that the different departments, like the Defense Department, National Institute for Health, um, uh, National Science Foundation, etc., um, Department of Energy and so forth... um, things that they're looking for and then they give it... they, they fund grants. You don't have to pay it back, not a loan. Um, and they don't own any of your company.So I'd love to hear, Steph and, and Paris, what have been your experiences with SBIR? And, and I think it's incredibly important early money for companies.
Steph Speirs (20:23):
I think it's important to talk about some failures that we've had with, with students and, present in the audience. And actually, we won an SBIR grant and we got to the point where the day they were supposed to issue the money to our bank account we rec-, we realized that we had checked the wrong box in the application. Uh, we are actually of a, both a hy-... we're a hybrid organization, so we have a 501C3 nonprofit and a for-profit, and we checked the box for hybrid, and SBIR grants can only go to the for-profit. So, it was a very technical mistake that I made, that meant that we lost out on the $1.5 million grant that we had spent a year applying for. And so, that's all to say that with government grants, please make sure that you check every one of your 60 pages on your application.
Barbara Clarke (21:10):
That could be a top-, this could be a topic for another time. There are a lot of companies doing these hybrids of they have the 501C3 and a for-profit, as well.
Steph Speirs (21:17):
Yeah. And I will say that, on the grant side, from the department of energy, we've won over a million dollar in grants, just straight-up grant funding from the department of energy, too.
Barbara Clarke (21:25):
Yeah. Paris, have you gotten an SBIR or other non-dilutive is, which, you know, for folks at home (laughing).
Paris Smalls (21:32):
Yeah. We - we, we got a SBIR phase one and phase two. Uh, this is before they went to 1.5, so it was only one million, um, and not a load of total... maybe another $300,000. So like, 1.3. Not, not a little money for a hardware company is necessary. Um, you know, we take... we have really long timelines. We're gonna take us, you know, three or four years before we really commercialize. Like, we're just now getting to the point where we're going to go first contract, and we've been around since 2017, um, 'cause we have to literally build everything from the ground up, and every product that we make costs around a million dollars.
Paris Smalls (22:05):
Um, and, and, you know, I could quickly talk about what the company does. We're, we're pretty much a, um, a, a reservoir stimulation... or you can call it a fracking company, but it's not fracking like when you think of it. We're, we're, we're trying to replace hydraulic fracking with a new electrical fracking method. Um, so you know, you have all the, the, the same benefits of being able to break up in a rock. It could be applied also to the geothermal industry, but you don't consume so much water. And that's, and that's what the SBIR grant, uh, was funded for.
Paris Smalls (22:31):
It, it is, uh, without a doubt, the company wouldn't be here without, without government support at the early stages, um, and they also... uh, they have, like, this thing called SBRI phase 2B, through with the NSF, to where, um, they match you, uh, 50 cents on a dollar, up to one million dollars in ac-, in diluted funding that you raise, and we're gonna be applying for that pretty soon. Um, it's, it's a really good partner to have, you know, to, you know, go after these SBIR grants while you're, while you're really early.
Barbara Clarke (22:57):
Yeah, and it takes some detective work, because I, I find it's not super organized centrally, but you know, if you were... you have a company in education technology, healthcare... I mean, there's so many different areas that, you know, there's probably some SBIR focused on that. Did you have something to say, Michael?
Michael Burtov (23:14):
I just wanted to add, like, a really quick note: one of... a lot of people think that grant funding is free money, and it's actually not. Uh, one of the big advantages that a startup has over a large company is the ability to pivot, to move into some new thing. Hire new people, change their presence in the market... pivot, in any way you want to define that term. Taking a grant eliminates that. You can't not do what you take the money for. Um, you are committing yourself. You're obligating yourself to that.
Michael Burtov (23:40):
So, for some companies that's not really an issue, but for many it is, and I've actually, honestly, just, you know, advising companies and writing my own, I've advised people to not accept money, uh, because there is a real attached cost to it, and one of... like I said, one of the only, one of the biggest advantages you have ag- against, you know, established competitors, you know, the big guys, is that you can pivot and you don't really have a crazy amount of cost associated with it normally, to pivot. But, if you take a grant you now do. So that's something to keep in mind.
Paris Smalls (24:08):
Yeah. I want to follow up on that, um, 'cause I think... with, with every single thing that you do, there's always ways around things. So, like for instance, with our company, you're right. Um, you know, when we took on the grant that core team had to focus on our grant, right? You have maybe two, you know, two people dedicating, you know, 34 hours, 30-40 hours a week to that grant, other 10 hours could be used for other things. You could also build a separate team, um, and that's one thing that we've done.
Paris Smalls (24:30):
So, we kept a core team on the grant, hired new people, and had them going out there with our different technologies so that we could pivot, um, 'cause you want to study, you want to be flexible. You don't want to over-commit, but there are ways around it, where you can use the grant process, um, to your advantage without getting sucked into a hole. Um, so I also want to say to anybody that was kind of on the fence, you know, thinking about, um, as for your perspectives, um, there are ways around it if you, if you think through how you can use these things to your advantage.
Barbara Clarke (24:56):
Yeah, and I think... and it's also taking any kind of capital too early is really... you know, outside capital... too early can be really detrimental, because you're right, maybe it locks you into a certain pathway that you're not, you know, interested in, um, ultimately, and, and restricts your ability to pivot. Um, so let's see. So, we've got a few more minutes before we do the Q&A, so I'm going to do some rapid-fire ones. Um, so, uh, let's do this one. So, if you had a magic wand and could make one big change, whether it be policy, or market, or cultural, um, you know, to catapult your, your company and your innovation, what would it be? And why don't we go... 'Cause on my screen it goes... I'll go Michael, Steph, Paris.
Michael Burtov (25:48):
Uh, from, I... I mean, there's, there's so many things that I think can be improved. Uh, one: access to capital. I think my industry, my company, my, uh, the cohort that I'm taking my startup journey with would really benefit from a much more diverse group of investors with a much more diverse focus on what they fund. Those, um... I forgot what you called them, the Blink diagrams that you showed earlier in the report, are a great example of that.
Michael Burtov (26:16):
The things that interest investors are not the things that interest people at large. Uh, people, regular folks, see the future very differently than a group of select experts, and I, and I would quote the word "experts", because there's actually plenty of studies saying that experts aren't actually really good at predicting things. So I, I would like a cultural change where regular people agree and it's a consensus algorithm, kind of like the blockchain, uh, and we all kind of agree on what the future is, because that type of thing is much more predictive of success and impact.
Steph Speirs (26:49):
On my end, I think that sometimes we hear businesses say, "Oh, we can't hire diverse talent because there is a pipeline problem. There's not enough people out there." And, that is factually incorrect. We don't have a pipeline problem, we have a network problem, and when it comes to access to capital, I believe there is enough capital out there. That's one of the greatest lessons I have learned as an entrepreneur.
Michael Burtov (27:09):
Oh, l-, think of all the money they dumped into WeWork. There is plenty of money arou-, to go around for-
Steph Speirs (27:14):
(Laughing) Exactly. There's a lot of capital out there. We just need to learn to channel it to, peo- people and populations that don't have access to those networks. And so, I think in the beginning, when you're starting your company, there's an over-emphasis on financial capital: "I need to get money in the door", 'cause that's how you do your job, to be sure. But what I've learned is that emphasizing social capital has led much, to much more sustainable and successful outcomes for our company, and by that I mean when you're just starting out talk to as many people as possible about your idea.
Steph Speirs (27:48):
And the ones that continue to listen to you drone on about your idea, those are your advisors, and build out that network of advisors, and the more that you build out that network, the more the capital will come in, and you won't have to take capital from people whose values you don't align with. And so, I think there needs to be more effort to teaching people how do you build your network, how do you, um, do the process of fundraising, not just how do you pitch your company.
Paris Smalls (28:18):
Yeah. If I had a magical wand, um, what I would wish for is a little bit more education on geothermal. Um, a lot of people don't-
Barbara Clarke (28:27):
Yes, because I didn't e-... I thought you were, you know, it was all, like, these geothermal, like, units for your house, so yes. I was completely uninformed.
Paris Smalls (28:36):
Yeah, yeah. A lot of people don't really understand. Like, every time I say I do geothermal they're like, "Oh, I have a geothermal house." They're like... it's, everybody says that. Everybody says that, and it's, um, there's a difference. You have geothermal heat, you have geothermal power. Most people don't even know how, how the earth can generate power, right, so a steam cycle. So it's like, it, it, it's relatively simple once people get it, but most people don't get it. A lot of people don't even know that earth has a core. They think it's just a rock, you know? So there's a lot of, um-
Barbara Clarke (28:59):
I thought it was hot marshmallow.
Paris Smalls (29:03):
... not as popular as, like, solar and wind, which you see every single day. You just, like, have a really strong intuition for it, right? Like, a lot of stuff that's going on in geothermal and geophysics is pretty under our feet. We don't really get to see it and there's a lot of, um, misinformation or no information at all. So, I think education will get a lot more people excited: "Oh yeah, this, I get it now. We should be doing this." You know, it's base load, it's renewable, it's all of these great things. You know, this, you don't have to worry about storage with geothermal because it's always there. Um, so there's a lot of, a lot of that, that I think, um, needs to happen within my industry to really make it take off.
Barbara Clarke (29:34):
Great. Now, I think we're at, we're at nine minutes past the hour and we're supposed to switch at 10 minutes past the hour to questions. So, keeping with Ben's, you know, tight ship, I will turn it over to Ben to sort of get the questions going.
Ben (29:50):
Barbara, thank you. You, you're, you're acting as if you were still my student and, and, and following the class time, but-
Barbara Clarke (29:58):
If I had my my magic wand, I should have said too, was I would like an instant carbon tax. As an economist, we know that that would work. So, anyway.
Ben (30:04):
A- absolutely. Um, anyway, this, this is a great conversation and, and I, I, I hate to be standing now in the middle of it, but, uh, I want to just, uh, channel some of the questions that have come online, um, and I think, uh, Paris, you saw one of them. It is from Louisa Reyes, one of our, um, master students, uh, in, in social impact, uh, and she asks Paris specifically: "What could improve or grow the entrepreneurship, uh, ecosystem in the southeast of the United States?"
Paris Smalls (30:37):
Yeah, and I think that's a great question. Um, something I think about all the time, as well. Like, why is it that we have this super-big concentration of, like, you know, clean tech, you know, engineering in general at, at, in, in Massachusetts/Boston area, right? It's because we have these awesome universities where, where these young innovators are coming out with these really cool ideas, right? And they have a place to where they can congregate and know there's... whether it's at university, at Greentown, it's all these resources for them to be able to, uh, grow their teams, and because of that the, the VCs come in and, and they put their money here. You know, same thing happens in Silicon Valley.
Paris Smalls (31:11):
Um, so I, I think, uh, "if you build it they will come" mentality will probably work for the southeast, to where you, you create these places, you know, similar to, like, an incubator where you help people grow, learn. You have, like, a target on what the mission of this place is gonna be, and then from there you can have more investors come there, and you get more investors, you get more innovation, and it can keep growing itself. Um, but so, so many people just wanna focus on these hotspots, and they go, "Oh, this is where it's hot, this is where it's hot," and they don't really want to put the investment in these other places, and they don't understand, you know, why it's important.
Paris Smalls (31:44):
You know, if we're talking about diversity, honestly, you're not going to get much diversity i- if all, if you're only invested in, you know, the northeast, right? Or, or, or the west coast. The southeast actually has a lot more diverse people. If you really want to attack those kind of issues, well this is where you need to go. So you gotta step out of your comfort zone and maybe take a little bit more time, and, and, and build it, put in the infrastructure in place first, making sure that the people who wanna innovate have the resources, and then, and then go up from there.
Paris Smalls (32:10):
If, if I would have do this, from, from the, like, a purely product perspective like, "Paris, do this tomorrow. Where would you go?" Um, I'm from Georgia. I know Georgia Tech's a great engineering school. Southeast, you know, right in the heart of Atlanta, I think that would be a really good place to start, right? In, in places like that, where, where you know you're gonna have really good talent. Um, so there are ways to do it. It's gonna take effort, it's gonna take a little bit of outside-the-box thinking, um, but I think we start with putting together the infrastructure, um, and then from there the, the, the capital will go into it.
Ben (32:38):
Okay.
Barbara Clarke (32:38):
And I just want to add, uh, you know, 'cause I, I, uh, inve- invest across the United States, so I, I have invested in companies from all different parts, um, and it is this sort of obnoxious stranglehold narrative that the venture capitalists will say that... they'll say, "I'm not going to invest in some company that's more than the two-hour drive from where I work," and I think that's absurd. Um, and, and just, yeah. And so, it's just completely ridiculous. Um, first of all, I don't want to spend two hours in my car, anyway. Um, and so, and now with the pandemic, I mean, at least, you know, in theory folks have been making more investments, uh, into companies where they haven't actually forced them to meet in person. So...
Ben (33:21):
Interesting. Uh, there, there's a whole set of questions there about, uh, as we get more distance communication and, uh, work from home post-COVID, whatever you're gonna call it, uh, will some of these, uh, patterns that we see, uh, change and maybe break the, the deadlock of, uh of, you know, geography? Um, do you have, anybody have a thought about that? Is that something that you see, or?
Steph Speirs (33:47):
I agree. I raised a, a small convertible note last year entirely on Zoom. I'm about to raise a series A. We'll be entirely on Zoom, and can you imagine raising $5-10 million before, not... without meeting a single person in-person?
Ben (34:02):
Mm-hmm (affirmative).
Steph Speirs (34:02):
And, because we live in a new world where talent is demanding more flexibility in their work schedule, and people don't want to be tied to an office five days a week, I think we're gonna see fundamental shifts away from geographic proximity to let's just get best talent, let's motivate beset talent, let's reinvent the ways to build culture in this new remote world.
Ben (34:24):
Yeah. Thank you. Steph, in fact, there's a question here, Steph, uh, uh, maybe in this line, uh, for you: uh, "How did your team secure financial support for Solstice employee benefits and the pay equity that you mentioned?" Uh, this student is curious, uh, what framing you used to s-, get supports from investors. Uh, you know, how do they read that, uh, that policy of yours?
Steph Speirs (34:49):
Yeah. So, two things. One is, when you're picking your investors, you are basically picking partners for life. Uh, you are basically picking spouses, if you can imagine. That requires a higher level of diligence. It has to be a two-way street, there has to be mutual love there, and you should vet people based on having alignment with your own values. And for us, treating our customers well, treating our employees well, and treating our investors well, are all goals of our organization.
Steph Speirs (35:17):
And so, we need investors who support that. So that's very much on the table. If you know anything about Solstice you know that we're fighting for access for underserved communities, and there are VCs out there where the scariest thing to them is to say, "I want to serve low-income customers." They will run in the opposite direction. But, we've managed to find incredible investors who are mission-driven, who recognize that a return on investment means also having a planet for your grandchildren to be around; that maybe return on investment just doesn't mean your quarterly returns.
Steph Speirs (35:49):
And then, the second part of this answer in this question is also that the world that we live in doesn't incentivize companies and company leadership to do extra steps to, um, like pay equity. It doesn't incentivize com- companies to pay more than the minimum wage. That's just the world we live in. And so, if you're gonna do it as a company, you have to be sure that you're still financially successful as a company. If we were financially a failure co-, investors wouldn't allow us to do all these things like pay equity, provide five weeks of vacation a year, and things like that. You have to be financially successful in order to do these, um, these benefits.
Steph Speirs (36:31):
And the, the, the thing is, we've realized, is those are not always mutually exclusive. It's assumed they are, but they're not, and it takes some kind of moral leadership to go outside the bounds, and also hopefully good policy that forces companies to pay a living wage someday.
Barbara Clarke (36:47):
And I would just reiterate: I think, you know, investors, uh, you know, entrepreneurs need to really vet their investors, because if you explain, like, "This is how we treat our employees. This is, this is what we do," and they give you pushback, um... You know, there are folks that think you shouldn't be paying anybody until you've raised your series A, and that's just insane, 'cause people have to eat and pay their rent. Um, you know, they don't all get to live in their mother's basement. Um, so I, I think it's really important to push back early and, and realize, like, "Oh, maybe this investor's not for us."
Ben (37:16):
Mm-hmm (affirmative).
Steph Speirs (37:17):
Can I say one thing about, um, hiring diversity with, with... and it's related to how much you pay people? 'Cause, like, if we live in a world where all startups assume we have to not offer people benefits and we can't pay them a living wage we will continue to perpetuate a world in which only affluent folks work in entrepreneurship, and you know, in this world, money, if you're an oppressed, marginalized black and brown person of color, money is liberation in this world, and who are we to say that the only people that can access the startup world are people who don't require societal liberation? And that's, that's just not the world we should be creating.
Ben (37:57):
Thank you, Steph. That, that's awesome. I mean, when we think about the amount of money awash in the world in, in an aggregate sense, uh, and that people are writing blank checks, uh, that end up acquiring companies, and then we talk about the, the difficulty for, uh, you know, entrepreneurs to, to get that either for their project or because of their background, uh, there, there's a disconnect there. And, and, Steph, I hear what you say about the social network being, uh, really the key part rather than the aggregate amount.
Ben (38:29):
Um, uh, let me see if we have a, another question here. Um, how, how can you help, uh, across countries, uh, to build co-investments? Uh, to forge global collaborations to solve some of these challenges, when obviously we know there's a lot of talk between governments and, you know... and we have a session of that, uh, tomorrow, with the United Nations and, and others, to talk about clo- cross-national collaborations at the sort of macro level. What about at the, at the firm level? And that, too, we have another session, uh, tomorrow about, uh, specifically collaboration between American firms and Israeli firms. Uh, ha-, have you, have you all, uh, uh, worked on this collaboratively across borders, can can you comment on that?
Michael Burtov (39:18):
So, I have accept-... I've, I've taken money from other countries for my companies, uh, from the, from angel investors. Uh, even venture capitalists. But I think, like I said, I think that's kind of a dinosaur of a model, and I think it's evolving or dying... I, I'm not sure which one. But one of those two. I think currently... again, in the, in the reforms that kind of the whole world adopted, uh, you can form what are called angel syndicates, uh, which is a way to syndicate investments. So, it's to make a special-purpose vehicle, like an LLC, a bunch of people from all ove the world put money into the LLC, and the LLC invests.
Michael Burtov (39:52):
Um, and then there's other stages for private equity for later-stage companies. So. I think the things that you're gonna be talking about are for later-stage companies. Uh, the biggest problem is the top-of-the-funnel stuff. It's the early stage, right? It's the, it's the entrepreneur that has this great revolutionary idea that's going to change the world, and they need 50 grand to get it off the ground. They need 50 grand to prototype something. I mean, we're talking about micro capital in the grand scheme of things, and that's where most ideas die. It really is, and that's the unfortunate truth, and that ties back to what we're talking about: diversity of founders, access to capital. But, it's those small checks.
Michael Burtov (40:26):
So, let's say under a million dollars. Under a million dollars, if you want to raise that you can do that through equity crowdfunding from regular investors all over the world that believe in your idea. That is why this space is revolutionary, because you're not talking about, you know, these millionaires that look at their prototypical large companies, and look at balance sheets, and look at all that stuff.
Michael Burtov (40:48):
You're talking to visionaries, you're talking to people who think this should be the future, and they're willing to put in $100 to support that, and you get $100 from a lot of people, and you can prove your idea. And then you can get the VC money, and then you can get the private equity money, and then you can do the collaborations with Israel and the United Nations.
Michael Burtov (41:05):
But you gotta start somewhere, and, and I honestly think the the biggest challenge is that first capital, and most of the companies I've worked with, that's the challenge. Um, and for that, our government - Congress -bipartisanly, uh, shockingly, but in a bipartisan effort, they approved this. Our... believe it or not, our government loves small businesses. They love innovation, and in 2008... and became legal in 2016... they finally allowed that to happen. So, yes, my practical advice for early-stage companies, equity crowdfunding. That's probably the most, the easiest way... not for every sector, but for most sectors to get their first round, maybe a first couple rounds of funding.
Barbara Clarke (41:43):
I'm, I'm probably in about, through my funds, um, I'm probably in about 30 or 40 deals outside the United States. Um, so I, you know, there is a different mentality, because obviously if you are, um, a company in Norway, um, Norway has a particular kind of capital market. And so you are... it's, it's, you're already thinking about raising capital from other places, and you're also thinking "Norway's not my only market." So, you know, you have a different mentality. It's kind of like if you're in Massachusetts and you're like, "Well, yeah. I want customers in Texas, so I want investors in Texas
Barbara Clarke (42:22):
So, I actually find that those cross-collaborations are very common. I mean, I have lots of companies that I've invested in really early, like the first round... um, you know, whether it's Israeli companies or European companies and whatever. So, I think that it's, the, the issue is who's on the ground and what's the network that you can bring to bear? Um, because, you know, I've had lots of companies that were in Spain and they were really looking to expand into Germany, and so German investors were really important for their capital and their network. And it goes a little bit to what Steph was talking about, is, you know, social capital is just as important as financial capital.
Paris Smalls (43:05):
Yeah. Um, I can comment as the startup perspective, 'cause, 'cause we're actually heavily involved in, um, projects in Saudi Arabia, and, and it's mainly because my co-founder is Saudi Arabian. Um, so what we've done is we've reached a startup subsidiary there and we've got a support from, um, uh, a, a research institution, by support of the government, to help them do some of their first geothermal, um, studies in, in the entire country. Um, and we put together a consortium between, uh, our company in the company in the United States, a couple of other US companies, and I reached a university to do this.
Paris Smalls (43:39):
So, from the startup perspective, um, yeah. It makes a lot of sense to, to rely on the, uh, the background of the people in your team. Uh, you know, he, he's Saudi, we have an Iranian guy. We have people who really understand the culture, and kind of using that as an in, uh, both for getting the project and also getting the capital we need to execute the project. Uh, I, I don't think we could have done it just with me as an American going there and saying, "Hey, I wa-, I think Saudi Arabia's a great place to do geothermal. Let me go there," you know.
Ben (44:05):
Yeah, great. Steph, you've been all over the world. Uh, what's the, what's your, uh, sense for this, uh, cross-, across-border collaboration on, on actual, uh, entrepreneurship projects?
Steph Speirs (44:17):
Well, it's the same as solving climate change, right? We need to get everyone across the world to co- collaborate and cooperate in coming up with solutions, because the more parochial we are, uh, the more we're self-sabotaging ourselves.
Ben (44:30):
Mm-hmm (affirmative).
Steph Speirs (44:31):
So, I, I don't want to take up too much time, 'cause I know there's other questions, but we have found that collaborating with investors that come from abroad has been really key for us, as well as partnering with companies that are energy companies that are headquartered abroad. So, two of our biggest investors are a French energy company and one, uh, one of our, um, a French solar development company. So that's powering ourselves through the best practices from abroad is key to moving forward faster.
Ben (45:01):
Terrific, terrific, thank you. So the, uh, uh, another question is on the, on that front end of the pipeline question, the, the sort of the early ideas, Mike, that you were just talking about. This is from Sonali Anderson, one of our, uh, great undergraduate students. They are interested in social impact, too. Uh, "For young entrepreneurs, do you think startup accelerators, programs, and competitions, uh, like, for example, the CleanTech Open that, uh, Alistair mentioned, uh, or Mass Challenge, etc., uh, are great... are these great ways to seek funding for innovative ideas, or maybe more generally, what, what is the value that one gets from these various accelerators and mentor networks that we know, uh, in the Boston area, New York area, uh, are very strong?" Um-
Michael Burtov (45:47):
Now, let me answer that. That's a great question. I actually think it's, it's a complicated answer, which I'll, I'll make really short. So, there's two types of accelerator incubator structures: there's for-profit and not-for-profit. So, Mass Challenge is a not-for-profit. CleanTech Open, which I went through, by the way, is a not-for-profit. Uh, and then there's for-profit, like Techstars, Y Combinator, 500 Startups. I went, I went, I went, actually, I went through Techstars, as well.
Michael Burtov (46:10):
So, they, um, there's a big difference between those two. The nonprofit ones, I think, are worth it. Uh, straight up, there are some caveats, but yes, do it. It's awesome. Uh, you don't have to agree with everything you're saying, and just the one thing you remember is you're the boss, you're the one staying up at night making all the decisions about your company, but it's a great i-, it's a great, to get that diversity of ideas.
Michael Burtov (46:32):
The for-profit ones are more like farms for venture capitalists. So, if you go to Techstars, you go to Y Combinator, you go to 500 Startups or any of those brand name ones that advertise everywhere... like, you've seen them, they sponsor events, they put their logos everywhere... the reason they do that is because they make a to of money doing it. It's a business. And it, generally, the people who fund them are VC. So, if you're entering those accelerators you're effectively being trained to be good at getting VC money, to be very VC-compliant.
Michael Burtov (47:00):
Now, that is great for some organizations, for some startups, but it's actually a pretty decent hurdle for others to overcome. So, I would say in a, in a, without going very much into it, 'cause this is kind of a big topic-
Barbara Clarke (47:13):
I've got another question-
Michael Burtov (47:14):
... [crosstalk 00:47:14] nonprofits, good; for-profits, me.
Barbara Clarke (47:16):
I would add there's also another kind of accelerator which is, um, a corporate, um, strategic partner startup. You've got the Chobanis, you've got Constant Contact, things like that. Um, and I think that, and those typically won't take any capital from you. Um, they, they're a little bit more like the nonprofit model, and I think, you know, Salesforce... one of my companies just did a Salesforce one... um, and I think that going into any accelerator, like, "Well, what do I want to get out of this?" You know, do I want to just, like, have a incubator where my idea's nurtured, or... I'm going, for example, into the Salesforce one because I want to really hone my enterprise sales strategy.
Paris Smalls (48:00):
Yeah. Uh, I, I get Michael's point. I've done the whole gambit, from the, um, MIT Clean Energy Prize... which is how we, our first pitch competition... um, multiple pitch competitions. So, one at AOTYO, uh, incubators at Greentown Labs, accelerators with ATEL Capital, um, tried the Techstars twice. Uh, got to the finals recently, but didn't make it. Um, tried at Y Combinator before. So, like, uh, so applied to really get us into those, got into one that wasn't as good.
Paris Smalls (48:32):
Um, and I guess, overall, my experience is definitely do pitch competitions, without a doubt, because, you know, you, you can really hone your pitch skills. You don't have to give up any equity, you can't really lose, right? A lot of it, a lot of reason to do this is to make, like, really good networks. You get those same networks at pitch competitions, where you have the VCs in the audience. They might follow up with you later, or they might not, you know. But it's a way to get exposure.
Paris Smalls (48:53):
I kind of agree with Michael, um, with the, with the accelerator thing. Like, the ones that are kind of, do the most benefit, um, have been non-dilutive. Like, I'm, I 'm in one right now with [inaudible 00:49:04] you know, completely free, and the, the guy, he's passionate. He really sits back and he works with me. I call him, he's there. He, he's doing it for the right reasons, right?
Paris Smalls (49:12):
The one, I went through a corporate one, uh, Ameren, Fortune 500 energy company based in Saint Louis. Sat there for, for 12 meetings. It took, you know, X% equity in my company. Worked with me when I was there, but then was just so busy I haven't heard from them in the past year and a half. Um, and now, like, now you have a big chip in my company and won't even talk. This really sucks, you know. And you don't want to get into that hole of being, like, a accelerator person, right? Like, oh, you're in all these accelerators, all you do is accelerators. Then... and you, you've lost that edge about you of, of being a real startup.
Paris Smalls (49:39):
And, I want for you to be focused on, as a startup, isn't raising the money, isn't accelerators and all that. That's great, it's part of it, but if you could do anything, and do anything well, it's making money. You know, making money, selling your product, bringing in revenue. And, uh, they kind of teach you this a little bit, but you know, not really well enough. And I'm starting to see, as I grow as an entrepreneur, I spent so much time thinking about how to raise money and what's the best way to pitch investors, I didn't really spend enough time really thinking about how to make money, how to sell the product, and because of that I, you know, it, it's been hard to raise money at times, you know?
Paris Smalls (50:11):
But when I was kind of transitioned to going back to square one I'd be like, "How do I make a really good product? How do I focus on building something that can sell?" The money, people just throw out money at you and it's a lot different. Um, so don't be an accelerator person. Uh, do pitch competitions, without a doubt, and if you can do the ones that don't take equity, uh, do those, you know. They, they're overrated, in my opinion. I think they're overrated.
Ben (50:33):
That's awesome. I mean, this is a classic case of we're gonna leave them wanting more, uh, because, uh, this conversation, I can see, is, is not only really interesting, but very useful, uh, to our students. So, we are out of time, uh, and I know that some of you have a hard stop at 11:30. So, uh, let's, uh, uh, everybody... there are about 87 of us... let's give us a r-, a shout, a round of applause to, to this great panel and to... wonderful seeing Alistair again, and Dean Graddy, thank you for, uh, for your part in the program today; Alistair, for your partnership.