Thursday the 15th of May, co-working space Entry 29 hosted the fourth talk, of the third season of their ‘Young Guns’ talks series. The interviewees were Reposit Power co-founders, Dean Spaccavento and Dr Lachlan Blackhall; the interviewer, as with previous talks was CEO of ANU Connect Ventures, Nick McNaughton.
For those unfamiliar with Reposit Power, the following is a brief overview of the company and its impressive achievements:
Reposit Power is a locally based company that has delivered innovation with new-found promise in solar energy. The company developed GridCredits, a software package which allows those with solar batteries, to optimise their energy consumption and to enter the wholesale energy market. Usually households and businesses with solar panels are subject to weather conditions, being that they are forced to fall back on the electrical grid during periods of poor weather. In doing so they buy electricity from the grid at premium prices, which are subject to fluctuation. The energy generated during peak sunlight hours, also peak work hours, having already been feed back into the grid, before consumers can make use of it. The obvious solution to the consumer ‘pain’ of losing what is already generated and buying it back at a premium, is to store the excess energy generated for future use. Reposit Power have created software which allows those who buy and install compatible solar power systems to do that efficiently, and also much more. With a compatible solar power system and GridCredits software installed, individual households and business effectively become energy suppliers, allowing them to sell energy on the wholesale market, in turn allowing for both savings and profit.
Reposit Power’s GridCredits software is contained within a small box which is either installed or sold already integrated into compatible solar power systems. The software collects relevant details about market prices, tariffs, weather patterns and consumption patterns. The information gathered is then used to optimise energy storage and efficiency, through either storing the electricity generated, or if the market-price of electricity is high, selling it to the wholesale energy market at a profit.
The idea of turning individual households and small businesses into energy suppliers is disruptive to the energy industry, an industry that has much more to do with financial markets and systems than many readers may realise. Electricity retailers buy electricity from generators and applicable load balancing infrastructure. The generators obviously produce the electricity, through various means, be it a renewable source or the traditional gas and coal-fired methods. Those who own the generators are usually responsible for the costs of building, running and maintaining electricity power stations. The middle men, the distributors, own the infrastructure and networks, performing maintenance when and where required. Financial markets and systems overlap this chain of production, given that the price of electricity fluctuates and can do so very quickly. Retailers need to find efficient and cost effective ways of purchasing electricity and selling it on at a profit.
The National Energy Market (NEM), is the wholesale market through which the energy used to power ten million households, including those in the ACT, is bought and sold. Much like the stock market, it is subject to fluctuating prices. There is a price cap but it is only occasionally reached and dispatch prices are calculated every five minutes. The addition of a mass of small suppliers is sure to affect the market and its fluctuations in price. Previously, entry into the NEM was open only to select companies. Small suppliers disrupting the price of resources and electricity will create the need for affected companies to innovate, in order to meet the changes in supply and demand.
The GridCredits software succeeds where similar software programs and packages have failed, due to a number of reasons, including market conditions and the cost of necessary technologies. Canberra’s burgeoning ‘innovation eco-system’ now has another flagship example of the capabilities of both resident entrepreneurs and relevant support structures. Located in Fyshwick, the Reposit Power offices have a communal feel, built on the interactions of a small, locally sourced and able team.
Reposit Power’s software has recently been integrated into Tesla Motors Powerall, a solar power storage solution, launched at the beginning of May in California. Reposit Power’s software integrates with the products of many solar power systems and battery manufacturers, Tesla Motors’ being the latest.
Reposit Power’s GridCredits software is of obvious benefit. The software delivers information to customers in an easy to understand fashion and its automated controls generate savings with minimal need for interference and interaction. Reposit Power are also, of course, helping the environment through promoting the use of renewable energies.
More information about Reposit Power’s products and benefits can be found here.
The following are excerpts from ‘The Young Guns Founders Series 2015, Lachlan & Dean, Reposit Power’ talk. Mr Spaccavento and Dr Blackhall are highly intelligent entrepreneurs with a wealth of knowledge and advice to impart:
Mr McNaughton began the proceedings punctually as always and detailed the new parameters of the talk “this series, this year, we’ve changed the focus a little bit, it’s just not any entrepreneur, it’s focused on young guns. The young guns are our city’s most successful young people and we classify young as under forty.” Moving on to introducing the guests Mr McNaughton said “I am extremely excited tonight, to have two incredible young people who have decided to live and base their start-up here in Canberra,” Having introduced, entrepreneurs and engineers, Dean Spaccavento and Dr Lachlan Blackhall, Mr McNaughton outlined the structure of the talk before moving on to asking about the youth, schooling and creative beginnings of his guests.
We’re always interested in this entrepreneurial journey, how does it start? First of all can you talk about your backgrounds, your youth and high school? When did you start to think about creating things?
Dr Blackhall responded first, explaining that as his mother was an engineer “I suppose I never really anticipated being anything other than an engineer; she was an electrical engineer and until I was probably mid-teens, I was going to be an electrical engineer… I thought I’m going to be a mechatronic engineer and then, because of the huge number of jobs, I decided to be an aero engineer.” Having saved money, at the age of fifteen Dr Blackhall started a small computer business, selling parts, writing software and designing websites. “I made every mistake in the book but it was a really good age to make a lot of mistakes because the penalties were pretty low.”
Having graduated university Dr Blackhall chose not to pursue the typical career opportunities of an aero engineer “I graduated, and I was well qualified to work with bombs and missiles and that really wasn’t my cup of tea.” Having worked for a venture capitalist firm during his undergraduate studies, Dr Blackhall moved to Canberra while completing his PhD and made connections with local venture capitalists, including Mr McNaughton. “I got to Canberra and actually Nick was probably one of the first people I met when I got here, I really wanted to continue the VC side of things while I was doing my PhD. One thing sort of lead to another and we managed to get a bunch of us together and we started running InnovationACT while we were doing our PhDs.”
Having detailed Dr Blackhall’s beginnings in entrepreneurship, Mr McNaughton posed the same question to Mr Spaccavento. “So remarkably similar to Lachlan, except inverted. My mother is a teacher and my father is the electrical engineer, Lachlan is the other way around. So I grew up an immigrant child of four kids and I was the eldest. I was always told ‘Study hard, get a good job, live a great life’ and so I was pushed to study hard and get good marks. I got good marks and ended up getting a scholarship to university during high school,” said Mr Spaccavento. Having initially thought he would become an electrical engineer, Mr Spaccavento spoke to a careers advisor who informed him of a scholarship available for a Bachelors of Information Technology, through UNSW. “It turned out to be kind of half computer engineering, half finance, weird. I got picked up out of that by BT Financial Group when I was about nineteen, before I finished my degree and I started working for BT as an engineer in a bank,” said Mr Spaccavento. In answering Mr McNaughton’s question of “What kind of engineer works in a bank.” Mr Spaccavento replied “I was a systems engineer and so my job, at the beginning, was to make all the enterprise infrastructure work together and then eventually the rest of the business worked out that I was useful at certain things, so I started supporting online trading systems and helping the traders out.”
After having left BT Financial Group, Mr Spaccavento followed his then girlfriend, now wife, to Canberra. On arriving in Canberra Mr Spaccavento began consulting work for Professor Robin Eckerman, the Chief Architect of TransACT. Professor Eckerman is now part of Reposit Power’s Industry and Technical Advisory Panel. Mr Spaccavento then found his way into the Canberra start-up scene through attempting to build his own start-up, a small, open source office server based on Linux. On deciding to pursue entrepreneurship full-time Mr Spaccavento said “I’d gotten to the point where I got good marks, I got an awesome job where I was being paid through the bum and I kind of went well, I’m twenty-two, surely that’s not it.”
Clearly you had an interest in entrepreneurship, tell us a little bit about that, where did that come from? * Directed to Dr Blackhall
Returning to Dr Blackhall, Mr McNaughton asked where his interest in entrepreneurship had come from. “I suppose to me entrepreneurship actually is a combination of engineering and making it economically viable, so maybe that’s how I see it coming together. I was really passionate about engineering and creating stuff and I realised; could run business and they weren’t ridiculously hard, you could start them overnight. There were a few simple rules you had to follow from an accounting perspective, but that was kind of it. It seemed like this ideal combination where it could be technical and then you could also go and do something that has real world impact and maybe make some money along the way.”
What’s the similarity between financial markets and the electric grid? * Directed to Mr Spaccavento
Turning to Mr Spaccavento, Mr McNaughton asked about similarities between financial systems and the electric grid. “So the way the electricity systems work, in most developed countries, is that they need to buy resources from generators and increasingly from loads. They need to find an economically efficient way to do that. It’s an electrical thing that demand must always equal supply at all times; pretty much the fundamental of things. Finding an efficient way to make sure demand is always equal to supply is what the financial markets, on top of the electricity system, are all about. So they get bankers in to find ways of making efficient purchases of electricity system resources, on instructions from the actual power engineers, whose job it is to keep the electricity system running. Really they don’t need this part, this is just about economic efficiency … it come through the Productivity Commission effort in 1998… this weird interaction between bankers and electrical engineering is awesome and fun, it kind of works for me because I’ve seen both sides of it.”
Returning again to Dr Blackhall, Mr McNaughton asked how he came to be interested in grids and electrical markets. “My PhD was ephemerally related to networks, to electricity networks, and so I really wanted to look at that. We were theoretical engineers, we didn’t do a lot of practical stuff so I was really keen to do something there. My specific technical skills as controls engineer; controls engineering really overlaps pretty nicely between power engineering and finances, that was the connection there I suppose. When Dean and I started chatting about this it was a really good match.” Following Dr Blackhall’s response Mr Spaccavento made mention that it was actually Mr McNaughton who introduced the two men to each other. Mr McNaughton acknowledged this and commented light heartedly, that the two were exhausting, in that they are both highly intelligent and speak at a fast rate. “I thought they’d be perfect, if they would both let the other one speak. I just thought it would be a perfect match.”
When asked about a previous joint venture with Professor Eckerman, Mr Spaccavento said “It taught me that timing and luck are such a big thing in start-ups. People come up with these magic fairy tale stories; even now, even with Reposit, we saw it coming; there is a lot of timing and luck involved in being able to see it coming.” Mr McNaughton then asked Dr Blackhall about his previous ventures and their timing “The previous start-up I was running was called Simply Show Me…it wasn’t a timing issue that we got wrong, it was just a bad product market fit. At the end of the day we just couldn’t make the product work, because we ended up competing inadvertently with YouTube and that’s never a good position to be in. It wasn’t what we intended to do. The main lesson from that was that you make a lot of mistakes as you go along the journey and you need to make them, you need to learn those lessons somehow. Entrepreneurship is a blood sport, you learn it by doing and for me, I learnt a bunch of valuable lessons about running businesses, meeting customers and raising money,” said Dr Blackhall.
When did you start talking about working together, what ideas did you kick around?
Drawing the conversation back to Reposit Power, Mr McNaughton asked the interviewees about when they started to work together and what ideas they first kicked around. “We’ve only ever discussed one idea to work on and that was Reposit, basically straight out. We met in 2008 when Nick first introduced us and at that point we were keen to do something electrically based. Dean went off and did something, I did my PhD, so when we got back we just started talking about opportunities there. Dean had an idea about what could be done with storage, he was basically looking for a controls engineer, I suppose at the time.” Adding to the story Mr Spaccavento said “I didn’t know that at the time that I was looking for that. I was the CIO, CTO of a company called Energy Response… I came away going, there’s all this value out there and their way of getting there wasn’t going to work… I was in the middle of a bunch of stuff and saw it wasn’t a great product market fit and there would be a better one, if we could just sort out the economics and control aspects.” After replying to a LinkedIn notice posted by Dr Blackhall the two entrepreneurs met for a coffee “it went quite literally from that coffee,” said Mr Spaccavento.
It’s quite a disruptive idea, you’re almost the anti-Christ of the energy system, aren’t you?
Speaking of the possible effect of GridCredits on the energy sector Mr McNaughton said “It’s quite a disruptive idea, you’re almost the anti-Christ of the energy system, aren’t you?” After the audience’s laughter subsided, Mr Spaccavento quickly responded “No, we’re not the anti-Christ, no one say that. We are solving a problem. There’s a disruption in it, it was going to come anyway, we maybe hurried it along a little bit and made it actually real and tangible. Obviously the relationship with Tesla is Tesla recognising that we’re just a little bit ahead of the curve. We’re the anti-Christ for coal fired generators, put it that way, if you’re a coal fired generator you’ve got a problem at this point.” Responding to Mr McNaughton’s comment “…and they know it.” Mr Spaccavento said “Yeah and look, they’ve had their time in the sun.”
“To me a good idea is one which other people think you’re crazy on, early on.”
Speaking of the initial hesitation the entrepreneurs encountered when floating their ideas, Dr Blackhall said “To me a good idea is one which other people think you’re crazy on, early on. It’s counterintuitive because you need to be solving real problems, for real people. There’s something satisfying early on about people telling you that it’s crazy, because to me it makes it more enticing. You feel you can prove something there.” Following this line of thought Mr Spaccavento said “I wasted good chunks of my life on things that didn’t go anywhere, but I did it young enough that the penalties weren’t that high and I learnt heaps. Four failed start-ups behind me or something like that, not all are mine, some were working with others, but you learn heaps from the failed ones. The ones that work you don’t learn as much from.”
When did the market catch up with you?
Further on in the conversation Mr McNaughton asked the interviewees “When did the market catch up with you?” Mr Spaccavento answered “Seriously without being facetious, it was not very long ago. We made a launch on December 15th at the end of last year and people went ‘oh, not sure if that’s happening’ and then we’ve noticed that it’s picked up in pace significantly, sort of from February to the Telsa launch and now it’s crazy.” Mr McNaughton asked about the pair’s involvement with Tesla Motors and who reached out to who. “…Tesla had come to Australia, they were building a super charged network out of Canberra, so the head guy was based here and we caught up for a coffee; that was early December last year. Tesla obviously have a real interest in battery systems, they were building the Giga factory at that stage; it was just an opportunistic thing,” said Dr Blackhall. “I love Tesla, ever since before the Roadster, I love electric cars, so when Lachlan said ‘we have this Tesla thing’ I went (raps knuckles on table for effect) done. It started from there; we found out there was common ground; we didn’t actually try to reach into Tesla, we thought they were going to come and compete with us and kill us,” said Mr Spaccavento. Audience laughter was generated when Mr McNaughton commented that he had thought Reposit Power would not survive interaction with Tesla. Dr Blackhall said that following his interactions with Tesla, he received emails from colleagues “… the first twenty four hours were people like ‘you guys seem screwed’ through to the next part, when our press started coming out, saying ‘ah, that’s quite a good idea’.”
After asking questions covering: the relationship between Reposit Power and Telsa Motors; Reposit Power’s effect on the Australian energy market and Reposit Power’s interactions with Australian energy retailers, Mr McNaughton opened the floor to questions from the audience. The first question put to the interviewees was whether Reposit Power’s business model centred on a subscription fee for the use of the software or a percentage fee of the savings generated. Mr Spaccavento answered “Both, we charge an amount of money for the software to go on the battery and then we take a cut of everything outbound the battery earns, not saves, earns, whatever it saves you get to keep all that.” Asked whether they would accept a large sum of money for the company or continue out of passion Dr Blackhall responded first “I’ve never got a start-up to this point before, where it actually gets past the first round of funding and actually looks like there’s a business there. That aside, this is probably the best job I’ve ever had, I’m doing tech work primarily and it’s some of the hardest stuff I’ve ever worked on in my life, it’s fantastic. I personally don’t have a real desire to flip it anytime soon because then I won’t have my job. If someone puts a cheque down you talk about it, but we’ll wait until someone puts a cheque down, I suppose.” Mr Spaccavento answered the question as well “Mine is sort of similar, this is a pretty cool job, I probably make the mistake of starting start-ups because I don’t like working for other people. You end up working for yourself a lot and it’s great when it does this, but when it does this (gestures hand downward) it’s a hell of a lot of work, for no reason. My exit criteria would be, I would need it to be big enough that I never ever have to worry about money again, no matter what I did ever did. I could start the next start-up without having to worry about money or anything like that, it’s a very big number and I’m having a lot of fun.”
Give us your observations; the ACT Government is doing a great job; Canberra Innovation Network, Entry 29, the whole eco-system is firing. A lot of people in the audience won’t realise that the ACT Government is doing a great job on energy as well. Could you just talk a little about some of the things that you’re seeing around town, around energy and sustainability for the city?
Mr McNaughton, having opened the floor to the audience, returned to questioning the interviewees. Pointing to the work of the ACT Government and associated groups in promoting innovation in Canberra, Mr McNaughton asked the pair to talk about the ACT Government’s involvement in energy and sustainability in Canberra. “The ACT Government is pretty progressive in terms of being able to encourage renewables and new energy tech. Money where the mouth is, quite a lot of money where the mouth is. They just bought two hundred megawatts of wind, which is a complicated thing to buy. Basically financed the build and development of two hundred megawatts of new wind generation, no one else is building wind generation due to the uncertainty of the rep; carbon tax is disappearing and a whole bunch of other things. What they’ve done is, they’ve turned these purchasing bid rounds into a way of getting money and momentum into the local energy industry. They’ve always got these awesome little local development hooks inside the bid and that forces these big wind and solar developers to come and give us money and do things with us. It’s a really, really clever way to do it. There’s another one which is for fifty megawatts of next generation solar which opens up, I think is open now, that’s pretty clever because it has storage in there… ACT Government has directly worked out that there’s storage stuff happening in Canberra and it’s a valuable thing; we’ve got to encourage it by having other people’s money come in and help. Really clever, good work guys, a better way of doing it than other ways.”
As the company grows, let’s say don’t sell it this and you grow to become a massive global powerhouse, did you still see yourselves based here in the ACT? Do you still see doing research and development here?
Asked whether the company would continue to be based in Canberra Dr Blackhall answered “We came to Canberra for a couple of reasons, there’s a lot less hype in Canberra start-ups, there’s heaps of cool start-ups… There was the ICon funding program and things like that which were good kick-starter funds and there were smart people… probably a third of our staff are graduates of ANU, we’ve built a good team here… I can’t really see a reason why we’d move out of Canberra anytime in the near future.” Mr Spaccavento echoed Dr Blackhall’s comments, after detailing the support structures available in Canberra and his pre-existing contacts in the city, he said “it just felt natural to come back and do it… Canberra is a great place.”
Mr McNaughton opened the floor to questions once more, the interviewees answered a question from an audience member about where and how they obtained funding, during the early critical stages of Reposit Power’s development. Both detailed a series of colourful meetings they had with potential investors, before stating they enjoy working with their current investor and enjoy the access he allows them. Answering a question as to how the two entrepreneurs met and how their skills complement each other, Dr Blackhall said of Mr Spaccavento “Dean has a lot of contacts in the industry, it took me a long time to get up to speed on the specifics and the complexity of rules and things like that. Deep industry experience is really important and often a really good way to start businesses, you come out knowing what’s actually going on. You can use that as a way to improve upon what the industry is doing, so you’re building relevant solutions.”
We’re getting to the end of the night; one tip from each of you, lessons learnt? For our entrepreneurs in the audience, what would you say is your key, number one lesson, knowing what you’ve done and what you’ve learnt?
As the evening drew to a close Mr McNaughton asked his guests whether they had any advice they would like to impart to the audience. Mr Spaccavento answered first “Have failed start-ups but don’t let them run forever, don’t be afraid to shoot them. If you get the feeling of this isn’t working and no matter what you do it just doesn’t get better and there’s no sign of it getting better, shoot it. Get a job in between and go and do the next one.” Dr Blackhall then answered with “I’d go back to what I said earlier. Entrepreneurship is a contact sport, it’s great to think about, to study and read about it and all the rest, but if you want to be an entrepreneur go out and have a crack. What you learn by doing will take you a hell of a lot further than just thinking about it.”
Following the conclusion of the talk both Mr Spaccavento and Dr Blackhall stayed behind to answer questions from members of the audience individually. Both men are highly capable, skilled and sure to bring a wealth of innovation to Canberra.