#159 Slashing Trucking Emissions by 90% TODAY, Biodiesel, Scaling up Manufacturing, & more w/ Lori Dunn (Optimus Technologies)

 If you LOVE technology that allows for decarbonization TODAY, then Somil & Silas' conversation today with Lori Dunn from Optimus Technologies will interest you.

Discover how Optimus is revolutionizing the transport sector by producing bolt-on systems that allow truck drivers to utilize 100% biodiesel and reduce their overall emissions by up to 90%.

Learn from Lori how they are navigating the challenges of funding, team alignment, and strategic planning for the future.

Join us as we explore the journey from seed to series A, and the transition from small to big company energy.

Enjoy the episode! 🌱🌎

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Topics:
**1:43 Small vs Big Energy Company
**4:37 Decarbonizing Diesel Engines
**7:00 Challenges to Decarb the Diesel Industry
**9:39 Understanding Fleet Managers' Problems
**11:37 Previous Attempts
**14:33 The Long Game of Hardware Innovation
**19:25 Joining Optimus
**25:36 The Technology of Optimus
**29:07 Communicating Value to Investors
**33:16 Revenue Model and Cost Structure
**37:42 Scaling Manufacturing and Funding
**42:33 Metrics and Partnerships
**44:30 Early Stage Manufacturing
**46:34 Manufacturing In-house vs Outsourcing

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Links:
**Lori Dunn | Optimus Technologies
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**Follow CleanTechies on LinkedIn
**@Silas & @Somil_Agg on X

Transcript

Somil Aggarwal (00:01)
Alright, welcome to the show, Lori. Thanks for coming on. How are you?

Lori Dunn - Optimus (00:05)
I'm good, thanks for having me guys.

Somil Aggarwal (00:07)
Really glad to have you here. I think we had a lot of fun right before this in our pre-call, but let's dive straight into it. You mentioned something that was really interesting that I think a lot of founders need to hear. So I want to start off hot. What is a small energy company and what is big energy company?

Lori Dunn - Optimus (00:24)
Ooh, that yeah, that's a good one. So a small energy company is focused on the here and then now the acute need that big pain that is really it keeps us up at night. And that for us it for many of us in that stage that seed to series a stage is what am I doing with funding, how am I getting the right people on the boat. Once you pass into that big company energy when you start

It's just a shift internally. It's the team really getting aligned, getting really strategic and understanding. I'm not, while I have day-to-day tasks, I'm actually planning and thinking of the next quarter, the next year. And my body is physically processing this here and now, but I'm actually looking forward and ahead, which is a really fun transition. It's super scary.

because you're kind of in the same place, right? People is the most important thing for my organization. I need the right people on the right bus, in the right seat. And I have a lot of amazing humans and I need more to build that capacity. But what I'm thinking about is not my current head count, but that head count in December. And I'm thinking what that looks like when all those people are built on and how to move through that process. That also means things like changes on the website, changes on the persona, you know, all the PR that kind of aligns.

Somil Aggarwal (01:24)
Right.

Lori Dunn - Optimus (01:41)
with us talking about ourselves, not in the, look how awesome we won a regional award, but rather like, wow, can you, this customer did something amazing. And that's because we enabled them. And that it's just the energy of when you struggle so long. I just love early stage founders because they're in a struggle mode so long. And usually they don't really realize the power of what they've built. And that's where this unique stage small company

Somil Aggarwal (01:46)
Yeah.

Yeah.

Mm-hmm.

Lori Dunn - Optimus (02:07)
energy.

was, God, we beg, borrow, and steal for what we can have. Just don't really steal, that's illegal. And don't lie, that's illegal. But then big company energy is, okay, I actually have a little bit of security right now, and I actually wanna start planning that future because I've done so much so far that my body's just kinda going through the motions in the present because I'm really looking really far ahead. Yeah.

Somil Aggarwal (02:30)
Yeah, no, definitely. And I think to set the scene a little bit, you can talk about this especially, and I think you're interacting with this a lot because you are operating within a space, decarbonizing diesel and decarbonizing heavy duty engines and vehicles in a way that a lot of other people haven't commercialized. So with that context in mind, what are you doing today?

Lori Dunn - Optimus (02:37)
Bye.

I'm doing people wish they could. That's what I'm doing. I am decarbonizing the heavy duty diesel engine and that there's a lot of different ways to go about it. You're gonna see a lot of people in the space and a lot of different ways to go to market. We're talking, some folks are going really heavy with lobbies, hitting the US government, pulling funding in massive ways, good ways. Like we're all clean techies. Like this is what we want. We want everybody running at it.

Somil Aggarwal (02:52)
Hahaha

Lori Dunn - Optimus (03:18)
What I am most interested in, what keeps me up most at night, is we actually have all the solutions globally to combat that 1.5 or unfortunately, maybe a 2.2 degree Celsius that will happen. We have all the solutions today, we just need it adopted. And then we allow people with these big dreams of what the world might become in 10, 20, 30, 40 years. And we need to make it run. So what that means for us At Optimus,

 we allow people, I'm just going to talk about trucking here today, I allow fleet managers to keep the trucks they love with the mechanics and the drivers, everything they love that is the same, and I enable them to decarbonize 90% instantly by utilizing readily available fuel you can find all across North America, globally too, but again I'm trying to stick to Elaine, let's stick to North America, let's stick to trucking. We can use these things that already exist, make it safer.

for our communities, for our mechanics, for frankly our loads as we're driving it around. We don't have to worry about things stopping because it's something that's real reliable today. And 90% is a really good percentage of decarbonization to be able to

do now.

Somil Aggarwal (04:29)
Right. I think the moniker 80-90 has popped up in a couple of different ways. Chamath from All-in put out a new studio called 80-90, which is I think essentially 80% of the effort, 90% of the difference. So that definitely, definitely popular there. So the real benefit here, if I'm understanding correctly, it's also the ability to go and do this in place and not necessarily disrupt the whole system. Can you talk a bit more about that? What are the main concerns behind decarbonizing diesel engines in the diesel industry?

Lori Dunn - Optimus (04:35)
it.

Yeah!

Sure. Cost, if you know anything about folks with costs, that is a huge one, because I'm gonna tell you right now, I will pay an additional $100 to go on a girls trip to fly to France. I won't really notice that addition on my plane ticket, but if you try to tell me my Cheetos are gonna cost me a dollar more, I'm not paying it. I'm not paying it. And that's the world of the truckers. In the middle of a snowstorm, if I can't get the snow cloud,

and get those streets clean. And Ms. Smith falls down the stairs and needs an ambulance to come get her. I don't care if something is not charged or it's too cold, it can't operate. That doesn't matter to me. What matters to me is that I'm safe and I'm able to operate. So the biggest issue is that I need the cost there and I need the safety aspect there. So this is where a lot of our customers, we work with both municipalities and with private sector. Municipalities come to us because they say, hey, like snow needs to be plowed.

and trash needs to be picked up. This is a big public health and safety concern. And then on top of that, like the private sector folks, they're saying, I need something that I can know gets 400 miles over the road. I need my goods there on time. I can't have a random shutdown because who's gonna come drag one of those big hunk in vehicles that broke down. I can't have my beverages or my food products go to waste. I need that reliability.

And the reliability piece is what makes a lot of folks fearful about taking in new technology. And that's where having something real and reliable bolt-on upgrade that enables us to keep running makes our customers say, okay, this is safe. I can run this. And when I'm going to bring it back to cost, because for a fleet manager, can you imagine if you utilize your capital effectively, you decarbonize 90% instantly.

When you want to try out that shiny new EV, that hydrogen, that other, you've already proven to your board or your, I don't know, your constituents, whichever one it is, hey, I already know how to utilize my capital effectively. Can I have, it's a big chunk of change, but I'm gonna go try this new thing because I think it's the future. So we're really enabling the fleet manager to kind of be the hero of that story and say like, I can get you what you need, please let me try out the shiny, but in a reasonable, practical way.

Somil Aggarwal (07:21)
Let's talk about the fleet managers for a little bit. You set the scene as this is a technology that you can communicate a lot more easily as someone in that position. So let's shine a bit of light on that. I think a lot of people indirectly, whether it's through mobile charging, different types of onsite or offsite, energy sourcing, grid interactions, fleet managers are dealing with a lot of different constraints. So in your experience, what are their main problems and what about what you do really resonates with?

Lori Dunn - Optimus (07:23)
Yeah!

Yep.

fleet manager's big problems, probably us, the three of us, we're their biggest problem. It is people, you know, they're not getting more money, they're not getting more support, but they are expected to do even more today. There are a myriad of different solutions that they could and should use in a fleet. But the world was built on the heavy duty diesel engine, planes, trains, automobiles, trucks, all of it. And everyone is acting as if in a...

blink of an eye that's going away. At Optimus, we really don't believe that. We just believe that you're going to replace, when we think diesel, you're actually going to be thinking of an alternative fuel, not a petroleum diesel. And that's because folks like the fleet manager, they have to get their drivers in order. They have to get their goods delivered, or, you know, if that's people, right, a circulator bus, that the people are the goods that need to be moving. And they're not getting any extra support.

If I'm in a city and I'm jumping on a bus and it's on time, great, it should be on time. I paid for a service, we're wrong. If it's one minute late, I'm frustrated. We all blame what's happening with transit. These poor fleet managers are really working hard to make that happen. They're getting our goods to us. And when they are talking to different people about building the infrastructure for an EV, building the infrastructure for hydrogen, for Nat gas, I have a few competitors in different alternative fuels as well.

They have to talk to so many different people and that is a heavy load. It is a different level of infrastructure that has to be built and they're not getting additional money. They have enough money for ULSD and their current asset. They don't really have money for the rest.

Silas Mähner (09:29)
Nice. I saw what you did there with the pun. Nice one. In terms of the things that have not worked out, how have people tried to decarbonize this space and why? You've kind of alluded to it, but can you explain why it hasn't worked?

Lori Dunn - Optimus (09:44)
Sure, so I mean, there's just a lot of vehicles on the road. That's why it hasn't worked. There's a lot and something to be as good as a diesel engine in terms of reliability and practicality, that's just not gonna happen overnight. That's why nothing's worked, right? Nat gas definitely had its heyday. It's still there, but I mean, where they were like the one that everyone was charging for, it's a lot of money. And those vehicles are heavy and it's a big lift.

So people are looking at, oh, what about some other options? And now our eyes, right? Everyone's really shiny on an EV, the science experiment that is the hydrogen option. Like how fun that can be in the future when I'm actually thinking about, let's say class eight tractor trailers, 4 million roughly on the road, OEM capacity to build is 300,000 a year. So let's assume that we have a full infrastructure built.

that the energy source, I'm just going to use EV, full infrastructure built, energy source is fully renewable, the OEMs are all on board, they know how to build it and they can build it at the same capacity, and the cost is something that I can actually stomach, and my mechanics, my drivers, everyone, all five things, everyone is trained, ready, on board. At $4,300,000, we're talking 13 years for a full adoption, and that's perfect.

And we are nowhere near close on any of those five. So the reason things have failed, quote unquote, is that innovation takes

time. It takes time and there's a lot of players in the space. And that's where Optimus enters. We enable people to keep what they have while you're still exploring the others and you can reliably have a way to decarbonize while frankly, helping out your local farmer, helping out your farmer, you're helping out build local jobs and building these refineries. We're using a waste.

Silas Mähner (11:18)
Mm-hmm.

Lori Dunn - Optimus (11:39)
This is not the food for fuel game that you're finding with some other fuels. We're taking waste and we're repurposing it and getting that back out there. I mean, the way the vector system itself works is we grab the waste heat off the engine and we're bringing it back to start condition that bio, which is a waste product. So it's keeping things that we already have that exists running and running again and getting those goods and those people as goods to where they need to be.

Silas Mähner (12:05)
Yeah, I think it's just generally interesting. I mean, this is kind of the whole... When I think of you, this is what I think of, right, is taking whatever is there and making it happen rather than going for some moonshot initially, doing something initially to start reducing. Yeah, of course, we can make more efficiency, greater efficiency later, but let's at least go for the initial stuff. So this is helpful.

I really appreciate that.

Lori Dunn - Optimus (12:27)
Yeah!

Silas Mähner (12:29)
Did you have any other examples of the technologies that they tried aside from building whole new tractor trailers, for example, or tractor trucks to pull things? Did they try drop in fuels? What did they try?

Lori Dunn - Optimus (12:39)
Um, so in the world, yeah, like in the space, it's definitely a lot of, I'm rebuilding this full thing. You definitely have folks like Cummins doing some really innovative stuff, really innovative building some new decarbonization ways of like a newer engine. And people are building much more power performing diesel engines. They're building that. Everyone's testing out the EV solution. We have the LNG. There's some cool startups.

that we're trying to do a multi-fuel, there's one like an engine that's supposed to do like different kinds of fuels and it works seamlessly. And it's like, what? So then if people are trying an LNG and then they don't use that anymore, they're trying a bio and they don't, and they're trying multiple options, this one engine can just use all of the infrastructure that was built everywhere. Now that company actually decided to pull away from the class eight sector completely, and they're looking at backup generators. So ultimately, I mean,

This podcast in particular talks to like entrepreneurs and investors, right? Investors expect a certain limit and then they want their return back. It needs to be commercialized. The problem with this is that it takes a long time. This takes time. Optimus was founded in 2010. We hit commercialization in 2018. If they had taken VC investment in 2010, we wouldn't be around. But the founders very smartly were saying, Hey, here's how we're going to build this, we're going to make it work. It's going to suck.

Silas Mähner (13:45)
Yeah.

Yeah.

Lori Dunn - Optimus (14:08)
They worked very hard and they built something really amazing, hit commercialization, made sure they had a few good customers running, and then the fundraise hit. Then those pieces hit because now we're at a stage where we're really lucky, where we can kind of see a hockey stick motion. That's because of the 13 plus years that were put in before we hit that. And so the, the quote unquote failure of other things in the space aren't necessarily product self didn't work.

Silas Mähner (14:16)
Mm-hmm.

Lori Dunn - Optimus (14:37)
people didn't want it, it's that this is a long game. And like many sectors, trucking in particular, folks are slow to adapt. They've adapted not necessarily, let's say, like to adopt this technology full out because they need that reliability there.

Silas Mähner (14:54)
This is good. So I appreciate the context. I think just a comment there is I think it's, I don't know how people can navigate this in a kind of standardized way, but it does seem as though a lot of the hardware innovation does take at least a decade usually in order for it to work. And it just won't. I mean, maybe depending on the fund that's investing, like they invest a little bit early on and then they use grants to continue. But it's really, you know, if you commercialize too soon, like you said,

Lori Dunn - Optimus (14:58)
Yeah.

It does!

Silas Mähner (15:22)
lot of companies are just going to die because they can't make the model work. And then they're going to say, you know, this is not worth us continuing funding.

Lori Dunn - Optimus (15:28)
They can't do it. I mean, even think of that. Like, first of all, climate's a hardware problem. We need hardware solutions. We just need that. That, to me, is a table stakes conversation. There's always room for SAS and other products to add help. But there is a massive hardware issue. And you think of, like, we're using this. A few weeks ago, you had my friend Trevor on. He found something that had already been built and designed, right? And he did the research to find people who had built something magic.

and how long is it taking to get that commercialization? It's big, it's real, but the hardware play is, it's a long game. This is not a quick, I jumped in, I had a cool idea, I get a dev shop running, and all of a sudden a year later, I'm going up to 10 million ARR, and then the next game. But when you see that hockey stick, when it hits, and it sits in you and it's a real thing, it's amazing how fast then it can go, because when that...

Silas Mähner (16:11)
Yeah.

Mm-hmm.

Lori Dunn - Optimus (16:23)
reliability when that durability, the team we're building is getting so cohesive, so smart together, watching everyone help each other and go faster. It's like, this is why because that relationship, you can always have those fun moments with each other when you first meet. But when I'm seeing folks who are in their second, third year talking, and then a newer person comes on that, that experience that stays there is what makes it's what makes things real.

And it unfortunately is why so many do fail in the hardware space because it takes a long time. And that's when you got to find entrepreneurs of endurance.

Silas Mähner (17:00)
Yeah. Okay. I like this. So speaking of this kind of the growth and everything, can you kind of tell us in the two parts, I guess, a little bit

more about the founding and how they came across the technology of Optimus? And then I want to understand, you know, what led you to joining?

Lori Dunn - Optimus (17:09)
Thanks.

Founding was a man who just really believed there was a better way to do this. If we go deep, he's had an idea when he was 16 And he just started focusing on that. He was like, I think I can do it differently. Okay, someone has awaited I can do cooking oil and I'll use it in a diesel car. And then founded one company and was like, I'm going to try this out. Split with that founder. I was like, I think it's big trucks. And founded Optimus in March of 2010.

And it's like, this is officially, I'm running this. And there was no other technology. This is a punk kid, a very smart man who put his head down and did the work. And he was scrappy and he focused and he got the necessary degrees to talk to investors and the necessary certifications to prove that he can lead this team and build it. And he talked to his customers.

He's an engineer who knows how to talk to a customer first and understand exactly what they need. And he built a team around him that had the same drive and built the company that way. The technology is absolutely amazing. Anytime I'm on a call with a prospect or someone in the industry and they try to punch holes through it and they say, what about this? It's covered. Well, the EPA would never approve. We've had EPA authorization for years.

But, well, then CARB. And I'm like, we actually have three CARB executive orders. We've been authorized to work there. And it'd be 100 Blend. And they go, what? I'm like, I know. I know. We're partnering with OEMs now, getting these new trucks off the line, kitted with our system. There's a lot of groundwork that takes place. So when I found him, I was like, oh, look at this little diamond in the rough. Look at this guy. Because no one knows about him. I adore.

technical founders. That is how I found him. I found him through a climate community that I was on one of those chat roulette bot things and I just met a woman who happened to have been talking to him and she said, you know, you got to talk to Colin. I was like, okay. And we started chatting and what I saw in him, which is what I was looking for, is a technical founder who had this amazing idea, who has put the work in and who is...

is thinking for me appropriately about how to build the team. And what that means for me is it's people first. You lift them up, you build them, and the company will fit in. And some of our team have deep climate or trucking experience, and some do not, but they have that passion, that drive. And we wanted to build this group and keep everything as openly transparent as we possibly can.

and keep everyone driving, open office, everyone's equal, we keep things flat. And when I saw what he had and the lack of market growth in terms of like wide scale, obviously because it was a very small team and it's very hard to do that in a small shop. But what I really noticed was he thought through all the pieces and what he needed was me to come in. I'm kind of like his bodyguard.

And I get stuff out of his way to make it move in.

Somil Aggarwal (20:26)
Thanks for watching!

Lori Dunn - Optimus (20:30)
You know, so if I need a customer coming in and someone is a little prickly, I come in and I try to ease that out. If he needs help in another area, like I don't know if we're necessarily a common CEO, COO blend. But what we do together is make sure that what where that vision is where he's going. I'm writing mock steps and we're moving it together. And that's exactly what I was looking for.

And I found him and now we're building. I mean, I joined, we were at 13 people when we closed the round. I joined to help close the round and build the team and that. So I joined in 22. We closed the round about six ish months later in 23. And since then we've now tripled the head count and we did a 435% growth. Last year from the year prior. Yeah. Thank you. It was really hard work. We worked hard together on that.

Somil Aggarwal (21:19)
Amazing.

Lori Dunn - Optimus (21:24)
This team is doing some really amazing stuff together. And now this year, what we're looking at is how do you build all the necessary documentation and process things, not overdoing it. Please don't anyone think I'm overdoing it. But getting those baby steps in place as we're growing pretty heavily. So by next year, we're going to see another massive growth. We're going to see big growth this year. I'm not going to deny that.

Somil Aggarwal (21:35)
with her.

Lori Dunn - Optimus (21:52)
But instead of us talking in about 1,000 units, we did like 50 units one year, about 300 last year, about 1,000 this year, we're actually going to be hitting the multi-thousand very quickly. And it's because of all the hard work we're doing this year. Yeah.

Somil Aggarwal (22:05)
Very cool. And specifically on that now, I think what you described is, again, like you said, perhaps not a normal founder, CEO and CEO dynamic, but it is one that has to be done, which is, and I'm excited, so I kind of go through this sometimes, which is you have a vision, you have something you're aiming towards, and there will be distractions and things along the way, and you need to coordinate to get through all of it. Yeah.

Lori Dunn - Optimus (22:30)
Yeah. Yeah, I'm distracted right now. What are you talking about? It happens. It's really easy. And that's where the visionary operator, that duo coming into play and understanding where, who you are, where you fit in the organization, and how it drives through. I've got a lot of opinions. I think that's clear based on this conversation. I know specifically where I fit.

Somil Aggarwal (22:41)
Exactly.

Lori Dunn - Optimus (22:58)
I know where I fit, how to fit, and when that opinion matters, and when my skill as an operator needs to come into play.

Somil Aggarwal (23:04)
And so let's break down, you described for, in great detail, which was fantastic, how the idea kind of came to

be and what put it all together. Now can you talk through what the technology actually is, still at a very high level, but breaking it down in terms of how does this interact with diesel and energy today?

Lori Dunn - Optimus (23:12)
Mm.

You bet. So the vector system bolts on, it's an advanced fuel technology. And what it does is it enables a hundred percent biodiesel to behave as a petroleum diesel with the diesel engine. So biodiesel right now, B5 to a B20 blend, that's 5% to 20% blended into a petroleum diesel. That is fine to run through a standard engine, but you should not do anymore. What we do is we unlock that limit.

Any limitation is gone, 100% can run through. But we do not inhibit the use of the dirty diesel. I know it's technically petroleum, but I like to call it dirty diesel. So we don't inhibit that. So if you can't find it for some reason, if you are doing a really heavy load and you can't quite find it over the road, you can just pump in the petroleum, that dirty diesel, and you can keep running.

Somil Aggarwal (24:14)
Mm-hmm.

Lori Dunn - Optimus (24:17)
offering that operational reliability. Now I'm obviously a climate junkie, so I don't want people to do that. I want them to find the B100. But there's a whole world out there. There's a whole infrastructure ecosystem out there. If you are in any of the travel centers across America, there are three 20,000 gallon petroleum diesel tanks underground, and there's also a 20,000 gallon biodiesel tank.

because they're blending it underground to get their credit. There's usually like 1% of bio in most, so you can get access to what's called a RINZ credit. And it's a cost reduction, right? They're blended right there. Once I get enough trucks, we're no longer playing the chicken or egg game with how many trucks do you have? How much bio do you have? We're gonna be able to get that bio straight over the road. And some fun announcements are gonna be coming out later this year about some over the road fueling.

Somil Aggarwal (24:57)
Hehe.

Lori Dunn - Optimus (25:09)
So there's things in motion there. It just takes a little bit. Because we can access with the vector system, we're removing that limitation and creating a world where biodiesel can be used more fully. Now on top of that, there's a smart fuel system enabling us to track and tell people, here's the carbon reduction, here's where it's running. If I'm talking, let's say a private carrier that wants to run, I was just eating Cheetos with you all beforehand. If someone, I need my Cheetos to get moved across.

but the company who owns it isn't going to be running it. I'm going to hire someone else. That company, if they are tracking their climate goals and they say, hey, I need my scope free providers to do something, I can show them with the combination of the vector system and the smart fuel system, I can show them here's the impact, here's what part of that run was actually decarbonized. And then they can report to their customer and they say, here's how much of those Cheetos were decarbed. And so there's a...

Somil Aggarwal (25:58)
Right.

Lori Dunn - Optimus (26:06)
There's a software aspect, there's a hardware, there's part of the fuel, and there's the part that sits on the truck. That high level enough?

Somil Aggarwal (26:12)
Yeah, you talked about some pretty cool things. No, high level enough of many, many cool things. So you're breaking down essentially an IoT system, right? There's the tracking of it. You're breaking down almost like a hybrid approach if you think about what the RAV4 does, for example, which is enable you to do both do electric and gas, right, whenever you need. This is probably something similar where you could phase it in. And also what I think is a big hack for a lot of climate companies

is...

finding a credit, right, a credit within this gargantuan new legislation to help what you're doing, right? When you were looking at the different now, where you are now, you've scaled, tripled in size, Forexed in revenue, of these different features, your base is the core product, which is, you know, are we allowing biodiesel to be used? But after that, which one do you think was the biggest unlock? I'm curious to hear if there was something that surprised you.

Lori Dunn - Optimus (26:43)
at it.

Somil Aggarwal (27:09)
or what really led to this growth and success.

Lori Dunn - Optimus (27:14)
The biggest unlock, that is a good question. Biggest unlock would be that the work that we do, the way we enable fleets to operate, is simple in its complexity. I could walk you through the deep details and all the drawings of everything and why this technology works, like into that IP.

when people just ask you a thoughtful, smart question, when they're actually considering the technology, right? Not just walk in a trade show floor and like, okay, tell me what you got, but like really actually assessing the technology and they go, oh, you've thought of that. Like you've thought of that piece. It's like, yes, this is how it works. Your drivers don't notice a difference in the cab. That's really important because all of our customers need more drivers.

And they need them happy and healthy and excited to get in our trucks. And they're not even our trucks. They're their trucks, right? We just build, we just add to the fuel system, but we need them excited. So the fact that each piece is there, biodiesel is less toxic than table salt. Tell me a mechanic that doesn't want something that minimally toxic when they're working on a vehicle. All of those pieces are there. And when you start talking to the OEMs and the modification centers and they start installing our kits.

And they say, oh, this is how it works? I say, yeah. You know, I started, I created internally with the team. I call it warm pluzzies every week during our team meeting. Anyone who hears something awesome added in, because you know, we're a startup, so you're used to hearing all the problems, right? If something breaks, people call you in here. So at some point you're just like down for it because you're like, no, I swear it works. And it does, but when you hear these stories, it can hurt. So I created warm pluzzies as a way for.

We hear amazing things every week. And so we report out to the team. I don't care who hears it, if it's an engineer out there, if it's one of my field ops folks, if it's anyone on the CS or the sales side. And I've got to tell you, almost every week, I could fill more buzzies with stuff that people are saying about, they're shocked at how reliable it is. They're shocked at how quickly they're able to see that reduction. You know, we report out weekly on

client updates, you know, like who's doing what. And we almost have a little scorecard about which customers pump in the most bio and who's running like we almost have like little race cars as it were internally where we're mapping who's doing what. And the biggest thing for us is like how magical it is to be working with people you care about and you're actually decarbonizing. So we're not talking about it. We're watching that ticker go. It's really meaningful.

Silas Mähner (29:59)
That's great. I always like you talking about these things. It's great to see it happen. I also like the culture pieces there. I want to just kind of drill down a couple more things in the tech. So in terms of the way you make money, so you manufacture these bolt-on systems, and then you're doing two things, it sounds like. One, you're selling to fleet managers and they are installing them, and then you're working directly with OEMs on the production lines. Is that correct?

Lori Dunn - Optimus (30:17)
Thank you.

Yeah, yeah, most folks start with assets they currently own. You know, they want to trust the kit first before they move on. And then folks who say, you know, I've got another five, 10, 15 years of this asset, but I already owned it. Can you do this here? And we'll come out and install. We have some install partners as well. And then once people usually after the first round, they say, hey, can we get all the new trucks? We're like, yeah. So we wait for that intro and we go straight to the OEM or the modification centers and we install directly off the line.

Silas Mähner (30:55)
Okay. And then what is the cost structure for them? Are you... Because I want to understand the benefit. Are they actually saving money on fuel? Is it just that they want to hit their sustainability goals? Is there credits available? I want to understand, like you mentioned cost, but why would people buy it if they don't need it?

Lori Dunn - Optimus (31:09)
Column A, Column B.

Why would people buy it? Because it's the lowest cost for carbon reduced. You can't beat our cost, truly. I was talking to someone the other day and they said, oh, you know, I got a million for this one EV. And we're just talking one truck, not even the infrastructure, nothing. It's a million. For that, I could get you a, if you're return to base operation, you're not trying to fill up over the road. I can get you a 12,000 gallon refueling tank and about 25 of our kits. So you have 25 assets decarbonized and the tank and you're done.

Whereas you'd be spending a million dollars for one EV truck without the infrastructure. It is ludicrous how fast and how cost-effectively folks can be carbonized. Now when you're talking about ROI versus CO2 reductions, that depends on where you are. In places like out on the west coast with LCFS credits, you're seeing a massive ROI immediately. Within a few months, frankly, one of our customers is seeing 90 cents less a gallon.

on bio. I talk about your ROI right there. Folks that don't have that where bio is maybe more cost comparable to diesel, couple cents over, couple cents under, that's definitely a heavier ESG play. And someone who's frankly forward thinking and realizing incentives and credits are coming their way anyway, so they want to get ahead of it. There are credits all over. We help our customers get access to half off a new refueling station tank or

They have a really old asset that's going out of service and they want to get a brand new one and we can get them access through federal funding programs. We can get them a reduced cost. There's a myriad of SOI organizations, clean cities, organizations across the US that have access to funding dollars that we utilize those on top of. I did mention LCFS credits out West. Access, 20 cents a gallon, cheaper, right? Go there.

There's places all over North America where there are incentives that you either get off the fuel itself or can help you reduce the cost.

Silas Mähner (33:17)
Got it. So they either buy... There's various reasons why they would buy. And one of those could be that in the state they have, the fuel purchase is actually cheaper at the pump because of the subsidies or the credit. And in maybe some cases, by decarbonizing their fleet, they're also applying for other credits because of the hardware and the usage. But also, some people might buy because of the kind of ESG goals they have. So if a corporate wants to hit their ESG target, they're probably going to install these because...

Lori Dunn - Optimus (33:29)
Yeah. Yep.

You bet.

Silas Mähner (33:45)
Yes, it adds maybe a slight cost here, but overall, that helps them with their overall goal. So that's...

Lori Dunn - Optimus (33:51)
Well, and that last piece is so key because that's where we're seeing a lot of shift in the market. That talk about some corporates and some governments that are thinking of those goals, we are so, so close to 2025 and some people do have goals for that. Tell me another solution that can help them get there. Right? When we're even thinking forward to 2030, what is a reliable way to do that in the next six years? So...

Some people are deeply focused on that ESG and a minimal cost is actually worth it to hit those targets. So sometimes I'm talking ROI, sometimes the CO2 reduction, and most of the times I'm talking both.

Somil Aggarwal (34:32)
I think the way you talk about this is really impressive, especially because for people who are trying to work at the cusp of energy, one thing that they don't really communicate is that we are a better alternative than what exists, not just we're great, but we are actually a better alternative. And part of that is because they're not deployed, right? Which probably what you're seeing a lot of amongst your competitors. But when it comes to communicating these to the broader market, not just your fleet managers and your customers, but now to investors, I think there's a lot of really interesting work happening with

Lori Dunn - Optimus (34:51)
Thank you.

Somil Aggarwal (35:02)
learning-based, science-based target initiatives, which is basically a way that people quantify how much carbon you're reducing and how much embedded carbon you're reducing. And a lot of analysis that I do with that for the Climate BC work that I do is understanding which areas to invest in will reduce the most, like you said, carbon per dollar input, dollar invested. So I'm curious, how has, you clearly have a good understanding of that metric. How have you been able to communicate that?

Lori Dunn - Optimus (35:21)
Yeah.

Somil Aggarwal (35:31)
to investors and other people who aren't directly your customers, and what is the value of that really been?

Lori Dunn - Optimus (35:37)
The value is great in that when you talk investors, I think there's a generic talk track that people say we invest in 10 expecting one of them to succeed. Right, like that's a general joke that we all have about that with jokes based in reality. What's better than something that's reliable? And the way that I'm talking about it's reliable for my customers, that means it's reliable for my investors. And we did choose, we have a lot of

strategic investors were really grateful, led by Mitsui and co out of Tokyo, followed on by Chevron renewable energy group and a few other private investors. And these stakeholders, right, are strategic investors, they're also stakeholders, they're looking at the market in a way and saying, what, what can we actually prove? Like, what can we help bring to market? Because they care, they care about the ESG goals of that, and they know, financially.

where their organizations need to be and ESG is a big part of that. And they say, okay, what are the few options? And they're invested in EV, they're invested in battery, they're invested in hydrogen, as they should be. I want all of these solutions to succeed. My fleet managers, God bless them, are going to have all these solutions. We need these investors to come in with these big bucks and take a chance on all of these other solutions. But for an investor to continue their work, they do need a few wins.

What's better than something that's reliable with actually readily available work? Yeah.

Silas Mähner (37:04)
Poof, nice.

That's great. That's a really good point. That's a great question, by the way, Samuel. That's a good one. I think this is interesting. I want to ask, in terms of where if you're at a point where you can create these products at scale, you have no real objections to the market that you can overcome. I mean, maybe some that are very silly, but we'll ignore those. What is the bottleneck next? Because I'm assuming you have to scale up manufacturing, perhaps.

Lori Dunn - Optimus (37:31)
Thanks.

Silas Mähner (37:35)
Are you just going to use equity to do that? Are you going to raise debt because it's relatively straightforward? I want to understand the bottleneck and generally, are you planning to continue raising equity or can you continue going on just selling your equipment and kind of, quote unquote, bootstrapping it the rest of the way? Like, what's the plan there?

Lori Dunn - Optimus (37:55)
Yeah, you know, we're definitely talking about what an x-rays would look like. An opportunistic raise is what that looks like more or less, because we are already, um, we are already earning profits on the kits we sell. We're not at even, not at breakeven yet. We're not there because I mean, we just got the money. I think that would be amazing if I could drop that bomb here. We're not there. Uh, so we might have to do like an opportunistic raise. We're thinking of that, uh, because it would enable us.

to skyrocket. That would be why we would do it. Because right now we have early indications right now these, some of these customers coming in really hot, really powerful and they're scaling pretty fast. And if we could get different space, different machines, additional humans, you know, like right now I have like one customer success manager. Like what if it goes crazy? If all of a sudden, I just mentioned we did.

How many units last year? We shipped our 500th unit total of Optimus History in November. And so those are all getting installed right now and they're building up. We have like, maybe close to like 750 units active by the end of the quarter with one CSM. Are you kidding me? So that kind of scale, getting additional human capacity to make sure our customers are happy and working well would be great. Additional designs, we discussed earlier, I mentioned, hey, I'm focused on this one lane.

right now of trucking to really make that win, what happens when I need a director of trucking and a director of marine and a director of mining? You know, both on the engineering side, both on the sales side and really running that. So the beauty of the vector system is that it is for a heavy duty diesel engine. And the beauty of growth is that once you really hone that lane, then you can start moving out. And if we become the solution that is

Silas Mähner (39:33)
Hmm.

Lori Dunn - Optimus (39:52)
reliable and can decarbonize and the market is agreeing with us. Yeah, let's take some more opportunistic money and let's run with it. But the way it was built very smartly, very frugally, I'll say that. I know there's not a lot of frugality when you talk about investment, but it was built that way. If there's a world where that's what needs to happen, we're going to make it happen.

Silas Mähner (40:14)
Okay, I like this. I guess that I want to understand if you would take equity then to go to the next step, do you know already what the metrics are in order to get that big step up basis? Because usually when technology is being figured out, the process of figuring it out is when there's kind of minimal raises, but once they get a big kind of understanding that, hey, this works, so the quality of the technology is high, you can put guarantees on it, blah,

usually have a big step up in terms of how much money you can raise. You see these huge rounds that go around. Are you at that point yet? And is it just about because you're selling kind of a modular thing, is it just about partnerships? Or does it actually have to do with purely the technology working?

Lori Dunn - Optimus (41:00)
All of the above. Yes, we definitely do have metrics and that target of what we're looking for. Yes, the partnerships are extremely real and valuable. Right now, we're just talking the vector system, smart fuel system and tracking. There's a lot more inside of that. There's a lot more different deployments that we could be talking about with different OEMs, different other partners. There's a myriad of customers that have those.

I mentioned four million class eight units on the road. Like I just mentioned a number 500 shipped, you know, 750 running by the end of just Q1. That's a real thing. That's a very real thing when you divide 750 into that four million, where you see that growth. So I have metrics both for my production capacity, for my engineer design capacity, for my revenue side, and my happy customer side, that will tell us this key point.

this key integration, this key piece is what tells us we are, we're not only cooking with gas, like you, you need to jump on board right now because we're, we're about to be, we're about to not have room for that extra money you're trying

to bring our way. Yeah.

Silas Mähner (42:14)
Okay, I like that. So, and then based on where you are now, I think it'd be quite interesting. I have a feeling there's a good nugget here. When you started, when they were getting things going, they had the system kind of working. I'm assuming it was mostly they built the systems themselves, but then you can talk about what you did then for manufacturing. Did you contract it out? Did you do just kind of a small thing? And then what would the next step be?

Lori Dunn - Optimus (42:20)
Mm-hmm. Yeah.

Yeah, so early stage startups in hardware, you're just in a place where you're, you're horrible to all your manufacturing partners. You just have to be, you say, I don't, I can't promise you anything. I can promise you 10 units. And then the next month a customer comes in and surprises you and says, I need a hundred next month. Can you get it? And you go back to your partner. And you're like, can you do that? And they say, no, I need three to six months. You're like, sorry, make it happen. Please. You're just like,

pray and you beg. And so we diversify our suppliers. And some of the pieces that we can, we learn how to kit them in-house ourselves. We're already cuing the products. So what pieces can we do here? We talk about our facility, we're light manufacturing and assembly. That's kind of what we do. So it's figuring out, A, how to handle supply chains, what pieces are coming from what parts of the world, which partners are reliable. We try any heavy manufacturing, we make sure that that's USA.

preferably within your driving distance of us. We're a climate company, we really wanna keep that carbon footprint down and we're also a made in America company. We like to have things as best we can, made right here and keep that load here. So it's what other suppliers are there? Are we at a scale that everyone we talked to previously would, they would talk to us because we did one or two. And now if we're talking thousands, we can talk to some bigger players and do that in a similar area. So it really is a spread of how we've done it.

And we still keep things here and ship them out together. And everyone, you know, the last day of 2023, we did a big shipment out and everyone was waiting around. And I made sure we ran out, we got champagne and we sat here together as that last shipment went. And we just cheered each other and, you know, teared up like, oh my God, we did it. We still, as much as we're moving into big company energy, we still got that small energy load.

Silas Mähner (44:25)
Yeah. And what, at what point will you get to the point where you say, okay, we're going to manufacture everything ourselves because of efficiencies, etc. I mean, like obviously that having read recently Elon Musk, the

Elon Musk biography, like the process of building manufacturing is a pain in the ass, right? So I want to understand when you think that you want to go to that point.

Lori Dunn - Optimus (44:36)
world.

Yeah!

I mean, do we need to? Maybe we do. And that would be if I have five suppliers for one part and we're a year, a two year in, three years in, and nothing is coming to us, nothing is reliable. We are constantly behind because of someone else. Maybe that's where that money comes in. Maybe that's the opportunistic money to get me a big machine that enables me to start building some of those pieces, right?

me being optimist, right? Making sure that we can do that ourselves. But if we don't need it, if they're reliable right down the street, there's a world we don't need to, to do the full kit. We're not the full truck, right? We are that kit. And as much as I love talking about future world, I don't know what that looks like. Because right now that's not my reality. In a few years, though, like

Silas Mähner (45:37)
Mm-hmm.

Lori Dunn - Optimus (45:42)
Maybe we do need to own that whole process because it's happening so fast. We can't even wait for something to hit the dock

because it needs to happen in house so we can ship it right out.

Silas Mähner (45:50)
Yeah. Okay. Well, I sure hope that happens because I would love to be able to be a fly on the wall as you build this. I am super fascinated by manufacturing. So if you get to that point, maybe I'll just move there and watch you guys build this thing for a bit.

Lori Dunn - Optimus (45:58)
Oh, yeah.

I should have done this in the manufacturing shop. Why am I in this room? I didn't realize how much you loved it. I could have just posted up in there.

Somil Aggarwal (46:09)
Hahaha.

Silas Mähner (46:09)
I love mechanical things. I took things apart when I was like eight, nine years old. I always take things apart. Never put them back together, but I like to see how they worked on the inside.

Lori Dunn - Optimus (46:19)
That's other people can put it together. You got to come by man. If you're ever in Pittsburgh, come, come toward the shop. There's cool stuff happening.

Silas Mähner (46:22)
I will. I actually will. I 100% will take you up on that because I love this stuff. But we're very good. Well, I think we're at time here. This was really great. We've got a lot of great things

and it went by very quickly. What are your final thoughts and where people can reach you?

Lori Dunn - Optimus (46:32)
Okay.

Final thoughts, please do something. A lot of people willing to wait. I'm not, I really like trees and I like the ocean and I would like those to remain. So fleet managers, sustainability managers, there's something you can do today, do that. At a minimum, talk a B20 blend. The next minimum is talk to us and then keep trying your R&D on the other options. Ways to connect us, optimist.

PEC.com is a great place. I talk too much on LinkedIn, so you can always find me talking about Optimus there. Come hang out with Optimus, come to Pittsburgh, come see the shop if you want to poke and prod at it. There's usually a truck or two downstairs getting an install, so you can come see how it really works.

Silas Mähner (47:20)
Very great. I'm going to try to make this happen soon within this year. So I appreciate the invite. And yeah, it is recorded. I'll make a plan. I've got plenty of friends in Pennsylvania anyway, so it's worth the trip. But very good. Well, thanks so much for coming on. This is a pleasure. I've been looking forward to this for a while and glad we're able to make it happen.

Lori Dunn - Optimus (47:28)
Oh, I heard that. Samil, record this. It's happening.

Somil Aggarwal (47:31)
Yeah, I'll write it down.

Lori Dunn - Optimus (47:37)
Good.

Somil Aggarwal (47:44)
Thank you.

Lori Dunn - Optimus (47:44)
Agreed. Thanks for having me, everyone.