[Editor's Note: Here, Dynamo Micropower co-founder Jason Ethier shares his vision for his company's micro-turbine and its role in the market, the factors that have contributed to his success to date, and advice for other early-stage companies. Dynamo Micropower, a Massachusetts start-up developing innovative, portable generators, has attracted attention from the cleantech community and investors over the past year. The company has won several business competitions and awards, including the U-Launch award through Fraunhofer CSE's TechBridge program. Dynamo has been featured in the Boston Business Journal, Xconomy, and other media outlets; Ethier was recently named one of Forbes' "30 Under 30."]
Portable Generator’s Role in the Market
To explain the role I see for Dynamo’s portable generator—our micro-turbine—in the market, I’d like to show you the path I took to develop our business model. When we first approached developing our product, I thought a lot about what markets we would go after.
At first I thought we would have a tough time selling our product because, at the end of the day, we just consume kilowatt-hours of electricity—and it’s hard to compete with the ubiquitous power grid. For the vast majority of us, consumption means plugging our laptops into the wall socket with little regard for where the power comes from or even how much it really costs.
It was here I realized that competing in a commoditized market was difficult, and I had to look for those places that need specialized solutions for their power needs. To that end, I began to uncover and develop our value proposition by looking at the cost and value structures of where non-grid connected users get power. I discovered that within distributed generation, our customers had very unique and diverse needs that contributed very differently to their cost of energy.
With this in mind, I was able to clarify what our engine offers to differentiate it. Our greatest strengths are:
- Nominal O&M costs and long life
- Fuel flexibility
The thing to notice here is that I don’t mention fuel efficiency. A common misconception is that we are significantly more fuel efficient than conventional technologies in this space (we want to do this in the future, we just don’t think it’s realistic today). We are, however, more cost effective where these features are needed. I believe if we think creatively about how to apply products in the right way, without focusing too much on just getting that last 0.1% efficiency out of our engine, we can find a way to increase energy efficiency by 10% for the whole world—and this, I believe is the core of what it means to be a disruptive technology.
As a simple example, consider using our engine as an Auxiliary Power Unit on a typical long haul truck. There is a trend towards implementing smaller secondary engines that truckers can flip on to power their cab units without having to idle their main engine. Adding such a system isn’t free—beyond the capital costs—the extra cost of shipping around 500 lbs of generator is roughly 3-4 gallons of fuel a day. By contrast, our Turbocore is so portable that truckers would only lose a 1/3 a gallon a day. To make up for the losses, the diesel generators currently employed by these companies would need to be 50% more efficient to compete with us from a systems level perspective.
We see our technology being adopted by many customers, from construction to first responders, who would value its portability. We see our fuel flexibility coming into play in parts of the world that don’t have reliable power grids—a fuel-flexible system will allow end users to buy and use whatever fuel is most accessible in there region.
Jet engines are kind of unique in that they are amazingly fuel flexible. We don’t have the timing and knock issues associated with reciprocating engines, and we can actually employ external combustion in the case of very extremely dirty or unrefined fuels. The design of our turbine currently allows us to reconfigure the combustion system by changing out three parts depending on whether the end user needs gaseous, liquid, or externally combusted fuels.
I see our nominal maintenance needs and long life a major selling point for our first customers—remote distributed generation—where the cost of maintenance can be very high. In these types of applications a lot of time, money, and fuel is spent bringing teams out to the field. Reducing their need to conduct a site visit is its own type of fuel efficiency.
Beyond bringing down costs, I also see our low operating needs as being a major selling point for having distributed generation in the home. Let’s face it, how many people change their oil on their own cars? I think the number is down to 25% and decreasing. Having a system that can run on its own for several years with little intervention is a major selling point towards getting a Combined Heat and Power system installed beyond early adopters. If we can reduce home energy consumption in half, we can reduce overall energy consumption in the US economy by 10%.
We are developing a technology that can find uses in many different places and have a broad impact on society. Starting a company is already hard enough, and although I will be overjoyed if Dynamo becomes a company that builds entire industries like Bell, or GE, I will be glad to have contributed to bringing a new generation of micro-power plants to each and every home on the planet.
From Founding to Funding: Interactions within the Venture and Clean Energy Community
Having come from Duke University, I had little idea of what to expect from the New England start-up community. Like most naive entrepreneurs, I came up here expecting others to see the brilliance of our technology and to throw support behind us, but I’ve learned that good ideas are a dime a dozen and that there is more to starting a business—and that is what I’ve been focusing on.
I initially started by talking to everyone about my ideas, my needs, and my goals.
In return I’ve received a lot of advice, a lot of it useful, some less so—but I spent a lot of time finding good people I could rely on. I now have an informal group of advisors I go to when I need advice. All of them are in the energy industry, but they are all involved in startups of different age, and are themselves at different stages of life. They all have one thing in common: they are somewhere ahead of me in experience, and I have the benefit of seeing what our company could be like in six months, a year, five years, etc. These advisors have helped me side-step common pitfalls and think through problems relating to running a business and a small, albeit growing, development team.
Speaking to those with experience is more than gathering advice; it’s an iterative process that refines your own world view of your business. By alloying the thoughts, ideas, and experiences of others with your own, you end up synthesizing a more perfect understanding of your business and its place in the world—that is why it’s important to keep communicating and making connections within the community.
More practically, these conversations with leaders in the community have also helped me reach out to those state, regional, and federal players who are going to be important to my business as we develop. I think this conceptual evolution and refinement of our business, coupled with my persistence over the last 11 months, is what eventually led to us gaining recognition we have today, which was inaugurated by the U-Launch award.
Beyond validation, the U-Launch prize we were awarded at Cleantech Open has really helped us move forward as a company. As I mentioned before, I am kind of a greenhorn in the community, and trying to figure out who to talk to and what to do to build my business is a bit like trying to cross a dark room you’ve never been to before—you can only navigate the furniture in the room by first bumping into it. In the real world, you could turn on the lights or use your cellphone flashlight, but that is like seeing the future in the venture world. Paul Sereiko, our entrepreneur-in-residence through U-Launch, has been in the “Venture” room before, and has an uncanny sense of what to avoid and where we need to go to get to the other side. To me, it might as well be prescience, but that is what experience is.
In more tangible terms, Paul has helped us by developing our market entry strategy. I thought our strategy was pretty sophisticated before, but now it will be coherent concrete. Paul has helped me in other ways, such as with our company’s first hire. In my 24 years around the sun, this too is a new experience for me. A first hire is, of course, one of the most important. With Paul’s help, I began to think deeply about what the new position would entail, matching a candidate’s skills to our needs, and what it means to be responsible for someone’s livelihood.
Incubation has also been invaluable to Dynamo. It is conventional wisdom that founders have a driving impact on a company—and this is true for any organization. Greentown Labs, part of the ACTION Incubator Network, was founded on the premise that tenant companies had similar needs and that these companies could share certain resources (brain power or otherwise) to grow our businesses. The community’s openness and willingness to collaborate is something I didn’t find in other incubator spaces—and I believe that is a credit to Greentown’s mission and its founders. I can honestly attribute Greentown as a factor leading to our recent receipt of our SBIR grant from the National Science Foundation.
Two other companies in Greentown had already won SBIRs, and the founders were willing to take the time to give me feedback on my proposal. Some of their assistance was mechanical, such as how I prepared my budget or presented my project plan. Other advice was more thematic, such as how to articulate our vision of our project for our customer, the NSF. Needless to say, the proposal was much better after getting feedback than before.
Although the Small Business Innovation Research grant is very much targeted at developing new technologies, half of the proposal is de facto a business plan competition. Many of the elements are the same: what is the market, how big is it, how do you enter it, who are your competitors, why would people buy your product? Do you have the right team to execute the project, what will you execute to achieve a significant milestone. Having been a part of the community, and participated in programs like Mass Challenge and the Cleantech Open, I’d already had the opportunity to formulate and refine many of these concepts. In essence writing a successful SBIR proposal was the culmination of this process.
Having received top honors at the Startup Open is also really a credit to the Cleantech Open; the rigorous mentor program and comprehensive feedback from judging really helped us with our application for the Startup Open.
Advice for Other Cleantech Entrepreneurs
Like most themes, these can be applied anywhere, but I believe it is important to create a vision, be humble and have the courage to be successful.
Having a vision is important, even if it’s not fully formed. If you have a vision for your company and what your product is, not only can you communicate it to someone else, but you can critique it, revise it, refine it. And your vision will change, which is why it is important to have one in the first place. Furthermore a vision, no matter how small and simple to start with, will grow, allowing you to fill in the details you didn’t know you needed to build a business.
One of the best aspects of the Cleantech Open is that you have access to more than one mentor to help you develop your business plan. There is also a comprehensive judging system and numerous practice sessions to participate in where you can receive feedback on your business and your presentation. While no one in the room is an expert on your company, and you may very well be the ultimate expert on your technology, many of those mentors and judges have seen a dozen companies like yours rise and fall in their careers, and they take the time to share their insights. I like to say that you can’t take yourself too seriously, and I find some would-be entrepreneurs enter these types of competitions only to blame the judges for “not getting it.” That’s the kind of attitude that prevents you from taking a real look at your vision and the way you communicate it and finding a better path.
That being said, being an entrepreneur is hard. Not only are you putting yourself out there financially and physically, but you are putting your heart and soul into a business that will be judged by the world. It is your company, and you can’t take everyone’s input, so you must take be the one who commits to a business model. By taking this act of faith, you close down certain aspects of your vision, but make others real. This goes for building a prototype, or taking on a customer, or a first employee. Sometimes you have to have faith that you will have the skills to deal with the unknown when it becomes manifest. That being said, you also need the courage to say “we are going to do something different” and create a Big Hairy Audacious Vision, because if you won’t, who will?