Cleantech Startups 101 – Simon Pickup, CEO Hydra Energy
As part of our ongoing “Cleantech Startups 101” blog series, this week we interview Simon Pickup. Simon is Co-founder and CEO of Hydra Energy, a Vancouver-based company that converts commercial vehicle fleets to dual-fuel systems that can run on both hydrogen fuel and gasoline.
What led you to develop the idea for Hydra?
In 2006, I put together a proposal for a hydrogen fueling station for the City of North Vancouver. When the sponsor didn’t win re-election, I took the idea to SPUD, the online grocery chain. The idea crystallized in one day – literally – in 2010: I was watching a presentation about third-party financing for solar roofs and realized that we were dealing with the exact same challenges and opportunities: high capital costs but an enormous benefit if we could make it work. That was the light bulb moment for me.
My next step was to use the Business Model Canvas template by Alexander Osterwalder and identify our three biggest challenges: Could we get the hydrogen cheap enough to compete with conventional fuels like diesel and gasoline? Could we come up with a vehicle conversion kit that is inexpensive enough to subsidize on the basis of a long-term fuel contract? Could we generate enough demand on the basis of our offer to grow Hydra?
What is the best thing about being a cleantech innovator in Canada?
Counterintuitively, it can be a real benefit to be out of the echo chamber of Silicon Valley. Only a handful of cleantech companies have truly made it, and the majority of investors don’t like long timelines on their returns. In Canada, we have a more supportive climate for producing these types of companies – it would have been much harder for us to develop our model anywhere else but here. In BC, we have a regulatory scheme – the carbon tax, incentives – that support what we’re doing, and there’s institutional memory associated with hydrogen technology.
What is the hardest thing about being a cleantech innovator in Canada?
The perception that, if you’re not in Silicon Valley, you’re not worth paying attention to. Securing enough capital is another challenge, as is finding high-quality, long-term talent once you start to scale. Programs like SDTC and Foresight are working on overcoming these challenges, but until Toronto, Vancouver, or Waterloo has a deca-billion dollar success story that acts as a magnet for more capital and talent, we’re likely going to have to look outside of Canada.
How did you go about building a market?
We believe that the best way to spread an idea is to make it profitable to do so, and the best way to get maximum adoption is to make it free. The trick is figuring out how to reconcile these two things.
We have to do what no hydrogen company has ever done: we need to convince institutional investors that “hydrogen-as-a-service” is worth investing billions of dollars in. To do that, we need to learn from those who came before us. One of the most powerful lessons comes from the solar market: the solar-as-a-service “free to switch” model transformed it from a $5 to a $90 billion market in about a decade.
We know that we need to offer environmental benefits and better performance for less than what it costs to fuel fleets with diesel or gas. We have to provide more for less, not the other way around. Our offer to commercial fleets is that it’s free to switch to our service in exchange for five-year fuel contracts. We then have those commitments – a market – in advance of seeking out financing. What we need to prove is that we can deliver sustainable, high-level returns on the long-term contracts.
What is the most surprising thing you’ve learned so far about starting up a cleantech business?
Because the incentives for the various players are not quite in alignment, no one has integrated the various pieces on the technology chain. And no one has cracked the opportunity associated with making hydrogen cheaper – even though, in Canada alone, enough hydrogen is thrown away to power hundreds of thousands of vehicles.
A solution to our energy problems is right in front of us, it’s just been too hard to see.
What has been the most important contributor to your success so far?
Trust – the fact that there are a handful of people that took a chance on me, on the team, on the idea.
I also think that chance favours the prepared…we always try to put ourselves in position for high-quality collisions with potential funders and supporters. You can’t necessarily control the collisions, but you can put yourself in the position to have them.
What do you wish someone had told you when you were first starting out?
A few things. It’s important to seek out the best mentor and the person who will take you on as an apprentice – and to never stop doing this.
Make sure that there are ways of testing performance between co-founders – especially if they’re friends – and make sure that stock is vested.
Trust your gut in the face of expert advice. Outside perspectives can be valuable to test assumptions, but if they’re based on an existing worldview they may have limited utility -especially if you’re doing something that has never been done before. The physics of every situation are different so previous learnings don’t always apply.
Remember that your story is your strategy. When you’re first starting out it’s easy to be overwhelmed by the sheer amount and diversity of work – marketing, sales, HR, share splits, etc., etc. But really, there are usually only a couple of points of leverage that actually matter to the strategy. Focus on these and make them central tenets of your strategy and story.
What advice would you give to a cleantech entrepreneur?
It’s easy to get caught up in the idea that it’s glamorous…but it’s not. There are easier ways to make money and be happy. Ask yourself: if you weren’t paid anything, would you still want to do this? Do you feel called to do this?
If your answer is “yes” to those questions, is it worth it? A thousand percent. I wouldn’t want to be anywhere else.
For more information on Hydra Energy: http://www.hydra-energy.ca/
For more information on the services and support that Foresight offers cleantech startups: foresightcac.com/services