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CleanTechies
Redefining Waste through 3D Printed Clay Containers | Earth to Earth w/ Sanjeev Mankotia (GaeaStar)
In this episode, Silas Mahner (@silasmahner) speaks w/ Sanjeev Mankotia, the Founder and CEO of GaeaStar. They are on their way to solving the issue of single-use plastic pollution with their 3D printed, clay-cup solution. You might think it sounds crazy, but once you hear the episode, you can understand how this is very much within reach.
It's a fascinating episode with a lot of value for companies building hardware ClimateTech startups.
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Topics:
**2:02 Introduction
**6:26 What they do
**13:01 Financial feasibility of their product
**20:48 How to develop a 3D printed product co
**26:21 Refining their mfg process for a specific use case
**32:22 Where this tech can be used
**34:58 The evolution of the biz model
**39:47 The funding process
**53:52 Price in the future
**58:48 Closeout
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Links:
**Sanjeev on LinkedIn: https://www.linkedin.com/in/sanjeev-mankotia/
**GaeaStar: https://gaeastar.com/
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**HMU on Twitter: @silasmahner
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Welcome back to the Clean Techies podcast, where we interview climate tech founders and VCs to discuss all things building and investing to solve the biggest challenge of our generation climate change. Today, we have a very organic conversation in more ways than one. First off, I barely used any of the questions I had prepared, and when that happens, it's usually a very good episode. Secondly, we are speaking with Sanjeev Mankotia, the founder and CEO of GaeaStar. When you look into them at first, you might think, like me, wow, they're just a company 3D printing clay cups. What's so special about that? Well, there's a lot of interesting things and a lot more to it than that. So first off, as I learned through this conversation, they are really an engineering firm and they are on their way to making a disposable clay cup that can be on-site printed and can likely reach cost parity single-use traditional plastics. There are a lot of great parts in this conversation, from how they looked at iteration and making some money and how they had to think about trade-offs during the design process of their manufacturing process. That, to me, was pretty fascinating. I think there's a lot of insight for other hardware climate tech companies out there. So hopefully you find value there.
Silas Mahner:Sanjeev likely has a lot more insight than was shared here, so I hope we can have them on again in the future, but in the meantime, this is a good start. Enjoy the episode. All right, welcome to the show, sanjeev. How's it going?
Sanjeev Makotia:I'm doing well, how are you? Thanks for having me.
Silas Mahner:Yeah, I can't complain. Life is good. I live in the dream. I live in New York City. The weather's been pretty good lately, so I'm in a great mood. Let's put it that way. I'm really keen to have you on. So can you tell us? Let's just jump right in, tell us a little bit about yourself, what you're doing and how did you end up getting into climate?
Sanjeev Makotia:Sure, so my name is Sanjeev Menkodiyev. I'm based out of San Francisco. I started my career, or education as being a mechanical engineer. I worked in the bicycle industry first, followed by the automotive industry, but then I got involved in finance and sort of switched tracks a little bit when I went to graduate school, for that In the past I want to say 20 years I've been working in banking and also management consulting for banks, right. So kind of switched sides a little bit there, but the topic was always the same. I started in corporate finance but then followed with pure risk management.
Sanjeev Makotia:What we're building here is or I should start with, really the mission of GaeaStar's is to eliminate plastic waste, and we're doing that by using a technology we've developed. Plastic waste, for example, or incorporated into paper and plastic vessels or coffee cup generally, is lined with plastic, very difficult and expensive to recycle. So the idea was like, how do we solve that problem? And we've done that by using a very ancient technique of pottery but combining it with 21st century additive manufacturing technology and brought it together, which we feel is a higher user experience, lower cost and, of course, a very sustainable solution.
Silas Mahner:Yeah, interesting. We've had somebody on with a kind of similar technology but it wasn't focused on this use case at all. But I think they mentioned maybe we'll get to this but the impetus for the technology was in India specifically. She had seen people use cups and they kind of throw them to the ground to get crushed and used again. So I'm assuming that's kind of where we're going. Maybe correct me as we go. Before we get there I'm kind of curious how did you end up getting into climate and specifically starting this company? Going from banking and risk to building a clay cups company is a very different race. How'd you go from there to there?
Sanjeev Makotia:Yeah. So first I don't want to say we're a clay cups company, we're really an engineering, robotics technology company trying to solve a specific problem. The way it started was really I wasn't looking to become an entrepreneur. I want to say, over 10, 12 years, almost maybe 15 years ago, I was visiting Indian by heritage, visiting extended family One evening with one of my cousins who was taking an evening stroll, was walking on and she wanted to get that chai which is Indian word for tea from a street vendor.
Sanjeev Makotia:She approached one of these guys, coming from their usually pretty humble background. They have a little rickshaw, a little pot of tea, and they served the tea in these crudely made terracotta cups. I think you mentioned earlier your other entrepreneur. She drank this tea and then smashed the cup on the ground and I was a little bit like wait, I know we're a developing country, but this is the issue people throwing things on the ground, smashing it and her reaction to that was well, I'm made out of dirt. Why do you care? The street is made out of dirt and I'm putting dirt back dirt. They just didn't have a witty enough quick response to that. Matt stuck with me.
Silas Mahner:Hey there, quick break to remind any founders or VCs listening. If you are looking for deal flow, seeking to raise funding, looking for partners to help service your needs, or perhaps you're looking for corporate investment partners, feel free to reach out to us through our Slack channel, which can be found in the description. Because we meet a lot of people in this space, we set aside time each week to make introductions to the various people that we encounter. This is something we do free of charge in order to help these incredible companies solving climate change to scale. Looking forward to hearing from you in the Slack channel.
Sanjeev Makotia:When I thought about it more, it was interesting to see that there's people who actually make this by hand on a daily basis. That's their living. Again, humble beginnings, but they're making a living off of this. They get the clay from the riverbeds. They don't use any electricity. They use this huge flywheel, a throwing wheel, quickly make them to dry these clay objects in the sun, maybe fire them with some wood, ultimately creating what's known as an earthenware. This has been done for centuries throughout civilization, everywhere. Then they sell these vessels to the tea vendor and the tea vendor drinks this sorry, sells the tea to you and I, the average customer, for maybe 25 US cents, which is maybe 15 to 20 rupees, which is the Indian currency. I thought that was very interesting. That's a true entrepreneur. Both of these people are making a living off of that. Yeah, it's humble, but that's what they're doing. They're surviving. Then Hali was like well, that is truly the original, disposable, eco-friendly cup.
Sanjeev Makotia:Indian history has ever complained that there's clay pollution out there, at least in India, 1.4 billion people. You could talk to pretty much any Indian. They will know exactly what this is because they've probably experienced this. So I was like yeah, so then fast forward a little bit. It's like, well, why can't we? I have this in the Western world, and of course, the Western world won't be accepting of the way these things are made from a hygienic perspective. But the whole idea was like, yeah, why can't we use this very natural material, which you're not synthesizing, and create something beautiful out of it? And that's where my engineering experience background came, because I had used 3D printers a while back. I wanted to really make these cups or vessels egg shell thin, because the whole point is that you're only using this thing for 15 minutes or so, so how can I make a make shell thin? A little bit of inspiration from Mother Nature of an actual egg, right? Super thin, really great packaging, really strong when you really think about it.
Sanjeev Makotia:So, replicating that, learning from that aspect and the way to do it was in my mind was using additive manufacturing, commonly known as 3D printing, which is really adding material where it's needing to create a form, versus subtracting material, which is more the traditional way of manufacturing. If you take a metal block and you want to make a part, you're chipping away at it. So I wanted to use those principles. It wasn't an idea of let's make a 3D printing company. It was about how do I solve this plastic waste problem and keeping my boundaries within packaging which is used for very little time and it creates a last for a long time.
Sanjeev Makotia:So when you really think about your conventional incumbent paper cup which is lined with a plastic lining to keep it waterproof and this includes any bioplastics or anything like that, right, putting them all in a similar category You're first synthesizing the papers extremely energy intensive and very dirty when you really think about it. Then you are synthesizing plastic yeah, it's a byproduct of a refining process, but still a lot of energy used for that. Then you're laminating the two. Then this material is going to a cup manufacturer. It's fabricating the cup, sending it to distribution, to sub-distribution. Ultimately it reaches a coffee shop. You and I, as customers, get the coffee, drink it 15, 20 minutes right, and then it's tossed and we believe, or we've been led to believe, that it's getting into a waste stream where it's getting recycled.
Sanjeev Makotia:But the reality is and we researched this was 99% of all of these things are ending up in landfills. Not because they can't be recycled. They can be technically recycled. It's just it's too expensive to do it, to separate the plastic lining from the paper and recycling, and I think that's part of the key issue is that used plastic is not worth anything. It's cheaper to make new one than to that and all your audience probably super familiar with that. So it was that aspect.
Sanjeev Makotia:If I were to draw a box around this process, it's hundreds of years, if not thousands years, from start some cradle to really crave. It's thousands of years purely for 15 minutes of convenience. I was like well, how can we do this in a shorter period of time? I think old tradition has had it already. They were using clay. You're not synthesizing clay. Yeah, you're digging it, but you just form it. You use a little bit of energy to cure it and then when you throw it away, it's ultimately sand and even if you're throwing it back into the landfill, you're really throwing dirt back into a landfill. So it's really, when you look at it holistically, in our opinion or my opinion is a true earth to earth solution.
Silas Mahner:Hey, there. Are you building a climate tech business and looking for very specialized talent? Consider reaching out to our sponsors, next Wave Partners. Next Wave are experts in talent acquisition, recruitment and retention across the climate tech, renewables and ESG spaces globally. So if your team is growing or you're looking to make a career change yourself, feel free to reach out to Next Wave at Next-WavePartnerscom or reach out to one of their consultants directly via their LinkedIn page. Yeah, so I guess this is pretty fascinating to me and I guess when I was doing my research, the first thing I think when I hear 3D printed clay single use containers is how in the world can that be financially feasible? So can you talk to us, I guess, a bit about the, I'm assuming maybe helpful to know where you're at with the development of this, but at least in principle, how is this financially feasible? And we'll be really keen to go in that route for now, initially.
Sanjeev Makotia:Yeah. So one thing is we feel we have developed a new category. So currently out there in the market you have your single use vessels and then you have your can I say, $29 ceramic mug. We feel we're and there's nothing in between. We feel we're in the middle, actually closer to your single use product. Our product can be used multiple times.
Sanjeev Makotia:It's super thin but it's an earthenware. You could keep using it. The only way it stops being functional is if you actually break it physically. It's not going to disintegrate, nothing. It's earthenware. It'll stay there for as long as you want it to. You can wash it. It should be OK.
Sanjeev Makotia:But the idea is like everything gets thrown away at some point. So if I'm throwing away a little bit of clay which can turn into sand, I know host use it's going to be OK. That's really the goal because it's not harmful. It's an inert material. It's not getting into our food supply and causing all kinds of issues there.
Sanjeev Makotia:So from a cost perspective, the reason why 3D printed parts are expensive is because they can't produce them fast enough. The power of 3D printing, or additive manufacturing in its current state, is that you have a lot of flexibility on the design aspect of it. Ok, I could quickly make something. I don't need to make many of these same replicas, but I can make something quickly. From one perspective, it's very cheap to make a prototype, but from a mass manufacturing perspective, you can't get the volume out of that. And, as I mentioned before, our objective was not to make a 3D printer. Our objective was to solve this plastic issue. We're just using additive manufacturing techniques to do that, so we can pump out a lot of volume. So when we first started developing our product, it was a very conventional way of printing and it took four hours to make, and I'm holding up a little cup to this. Today. We could print this in less than 30 seconds, and that's where the cost advantage comes into play. But the way we do it is we limit some of the degrees of freedom in our process, because when you look at a restaurant or a food and beverage which is where our problem lies and the problem we're showing they're using containers and they're using mostly cylindrical containers. So don't ask me to print a square box for you. You know we just that's off our plate. We don't do that. It's designed to do cylinders and do cylinders very, very fast Could alter the shape of the cylinder, height and all of that. So those are in the ability. But it's not like, hey, I could print you a little toy or a dragon or a Pokemon. Other 2D printers can do that. We were not focused on that. We were using this additive technique to solve this problem and give us a next shelf in vessel. So there's a lot of advantages that.
Sanjeev Makotia:The other aspect from the cost perspective and answer your question is every step we're taking in our process, which is not just the printing you have to mix the clay, you have to print it, fire it, you have to brand it, you have to packaging. We are being very stingy in every step. Another reason to print them really thin is the energy usage is not that great. I mean, energy usage is very efficient. I should say so. You're not. We're using very little water when we brand it. We use no inks. It's branded using very little amount of stuff or energy. We weren't looking to create a silver bullet or find a silver bullet. That gives us everything. We're like hey, every step we're taking can we be stingy and more efficient? But when you add all of those things up, that gives you a lot of advantages and economics and time and whatnot.
Sanjeev Makotia:The other aspect is we don't want to ship anything. We want to source things locally. We want to use the clay that's available everywhere. Yes, there's different clays in different regions, but our technology allows for flexibility to tune. Our machine can be tuned for the local clay. It's used locally, it's using local labor, fabricated locally, consumed locally and disposed of locally, so that eliminates the whole aspect of shipping. And when we look at cost, we are not looking at it purely because of economics or dollars. We're looking at what we call and we just made this up is true cost. That's also the externalities that are associated with that, because we are ultimately trying to solve a climate tech type problem. And when you look at that and we did that analysis we saw that there was a lot of a lot of efficiencies and benefits from that. So not traditional 3D printing, it's our own way of doing things. We're using additive tech technique to get great cost benefits.
Silas Mahner:Hey, there are you building a climate tech business and looking for very specialized talent? Consider reaching out to our sponsors, next Wave Partners. Next Wave are experts in talent acquisition, recruitment and retention across the climate tech, renewables and ESG spaces globally. So if your team is growing or you're looking to make a career change yourself, feel free to reach out to Next Wave at next-wavepartnerscom or reach out to one of their consultants directly via their LinkedIn page. It's actually honestly, it seems so simple, but it's such a probably something, not a lot. I mean, maybe I don't know much about the 3D printing industry, but I would assume not a lot of companies have thought, hey, why not we just like you said, the whole purpose of this is that you have flexibility. That's why 3D printing was valuable initially, but in our case, we don't actually need that right, so let's do something else, more of a specific use case. It's very simple, but I think very cool.
Sanjeev Makotia:And can I add to a comment to that? Actually, the additive manufacturing industries is really pushing right now on specific applications. Right, they're still saying, hey, we have a 3D printer, but there's 3D printers that just print rockets. That's what they're meant for versus hey, that 3D printer cannot make a dental implant.
Silas Mahner:Yeah, exactly.
Sanjeev Makotia:So it is OK. Yeah, because that's what that company does. So this idea that originally was like, hey, a 3D printer, everybody will have one at home, it can make anything. That's not what it is right, Because they gave a lot of flexibility and yeah, but you weren't getting any true applications out of it. So now people are focused on that, Like, yeah, it's meant for this sort of thing, yeah, there's some things we could alter for our purposes and it completely serves that purpose. But for us, we made our own machine, our own printer that uses additive techniques.
Silas Mahner:Yeah, that seems interesting. I guess we're not going to go from here. I had a couple of questions that came up while you were talking about this and I guess one of the questions I should maybe ask is for other people who are working on something similar, where it has to do with 3D printing. Do you have any advice on that process of once you came up with this idea? I'm assuming you went to the MVP, which is probably you mentioned at the beginning it took four hours to print a cup. You probably used what it was there, but talk to us about the process of actually coming up with your own 3D printer and how did that work. Are there suppliers that literally this is what they do they come up and they make these specific use case machines, and what advice do you have to people doing something similar?
Sanjeev Makotia:Yeah, and, as I mentioned earlier, I wasn't looking to make a 3D printer. I was looking, if you make, find a solution to the plastic waste problem in this specific area, and it came about. One of my solutions was hey, can I use additive or 3D printing to do this? And really understanding the problem, that goes our vision ultimately one day, really our North Star there's a lot of development to do, a lot of engineering to do is that one day it could be a countertop machine that sits in the restaurant that prints a cup on demand? And we're starting to see technologies with material science where they use a near infrared to cure things very quickly and so on and so forth. Whether we use that or not, but it's happening right. So maybe that's the North Star to have that. But right now we could fabricate these in what we call our micro factories. But the problem solving process was understanding the problem first. What am I really focused on? In some ways, if you were just looking at a 3D printer, that's a really incredible tool. Looking for a problem to solve, we looked at it a little bit different, like how do I get rid of plastic? Hey, there's a very ancient Indian tradition of using these ceramic cups, ok, then I want to make them super thin because I don't want to use a lot of energy, because ceramics, if you're firing something really thick, takes a lot of energy. Blah, blah, blah. And then it started formulating and then you're started pulling on different technologies out there. So we're not creating something new. We pulled from things that are existing. I mean, you visit your dentist and they put a ceramic tooth in your mouth, like how are they doing that? And there's some of that and, believe it or not, there was a point where I actually borrowed or got some materials from my personal dentist, because I told him about the idea and he kind of used some of your equipment, which is some of the gypsum they used to make molds, like they have very special technologies. They have these vibrating tables that take the air bubbles out, and all of this was pulling from things. People have solved a lot of things, like taking a lot of pieces to solve my problem, right. So that was how it came about.
Sanjeev Makotia:Now I will also say this idea has been percolating in my head for well over a decade. It's like kind of thinking through it, thinking through it, like it becomes more and more convincing, right. You're like, yeah, like I don't know why I can't do it, yes, there's things to solve, but it gives you that conviction that, yeah, I've thought through this, thought through this. Yeah, it's going to take money, yes, there's a lot of engineering to do this, but, yeah, it could be really, really powerful and it is a revolutionary idea, potentially right. So you have to convince yourself that.
Sanjeev Makotia:You know, with the same mind, you know, it's not about just building air castles. It's about taking time and really convincing yourselves, looking in the mirror and saying, yeah, do you want to do this and have you thought about it long enough to do that? And there is a point where you get to. You know, and you got to try it At some point. You have to try it. Maybe you try it in an earlier stage and, you know, get answers from that. I started this in my garage in the evenings, after hours, you know, after doing my real job. I was fooling around with things and something led to another. And you talk to some friends, you get some ideas, you get a little bit of more conviction, you move that it is organic. It was organic for me, but what was clear was the problem I was trying to solve.
Silas Mahner:Yeah, that is that's really helpful, I think. Just to kind of reiterate that it sounds like that the only thing that the most important thing was that you knew the problem to solve. So you kind of were trying to find the parameters where sometimes I think this is true a lot of times of climate technologies that people are kind of kicking around in a in an R&D lab and like, oh, here's a cool technology, like where can it be used? Right, which is obviously there's a lot of really cool things that come out of that. But it's nice to have a particular problem in mind, because usually the clarity of on that journey is much, much better if you know, if you know what that is.
Silas Mahner:One thing that I also think you could offer some in some insight for would be you talked about, you said you were more, you were very stingy is the word I think you used around each part of the process and trying to basically get it more efficient along the way. So could you talk about, maybe, the methodology and how you decide on trade offs or just any? Any company that's in the climate x-rays, involved in manufacturing of anything, whether it's through a 3d printer or something else, how do you think through that. What's your advice to, to companies doing that part of the process?
Sanjeev Makotia:Yeah, and I'll use the example. For us that comes to mind here was, you know, branding, so we could custom brand our vessels for our individual customers. And we wanted to right away say we only utilize this on a daily basis for 15 minutes. It's like, why do you overengineer the things? Because when you overengineer and going back to the paper, plastic thing like, but synthesizing things, there's a lot of steps to that. How do I get rid of steps but yet still get something that's very, very beautiful and and and simple? And you're right, it's a very simple idea. The engineering is very difficult, but that's where the fun is right. So we wanted to brand and you know customers ask for that. They love the fact that they could put their little logo on there, and you know so. One of the things was well, we want to use the least amount of, you know, ink or energy or whatever it is to be able to do that. So we researched all the different possibilities that are embossing it using bio inks or you know, the eco friendly inks, and and to be able to get some level of positive results. And there's a threshold where you want to say like this is this is acceptable to my bar. It's not just good enough, it's it's aligning with my ethos, right? And so we experimented with a lot to do a lot of research, and it's it's a time based sprint. I'm going to give myself two weeks to come up with a first iteration. I'm not looking for perfection, I'm giving myself two weeks to get a solution that works. I can always change it in the future, right? But in this two weeks I want to try all these different things, and coming out of that was oh, we wanted to actually use lasers because one, we wanted to limit our branding scape, to be just surface, to be only, you know, two centimeters by two centimeters, because why do you want to brand more than that? You're giving homage to the company. But hey, this is a criteria we're going to have for all our customers. Like, you could put anything you want, but as long as it's two centimeters to create. Creating these parameters because we want to keep the energy low. Yes, can we, can we totally cover the the vessel? Yeah, but you know we're coming up with this for a particular purpose. That's the stingy part of it.
Sanjeev Makotia:And we tried different things. We didn't, like, you know, any kind of toxic things. They looked really nice but it wasn't. You know, adhering to this many different dimensions of qualifying that works, but it's time bound, like in this two, two weeks. What can I do?
Sanjeev Makotia:And the first thing, you know, when we were playing around with lasers, was we had a piece of clay that was sitting on the floor and we're trying to brand it on the floor and we created a little jig on the floor and, you know, a little piece to see and actually the results were incredible. And we use different types of clay, experimenting, and we got the best results using terracotta. And what was happening was when, you know, excite terracotta with the laser, it changes color and it gives a really nice true brand that turns darker because there's some carbonization going on and it gives a really nice crisp line and it's that's it. That was our two week experiment. But then we had to, of course, build the machine. You know, lasering something is not a new thing, but we, for us to produce many a firm, we have to build some level of automation to be able to do that. So we had concluded we're going to laser these things and then we decide to spend another two weeks to build a machine that could do, you know, hundreds of these together.
Silas Mahner:Yeah, yeah, I love this. I think it's I like the sprint mentality, especially when it comes to hardware. Right, A lot of people think it only applies to software, but you can definitely do it in other things A lot of duct tape, a lot of a lot of 3d printed parts to do this kind of work.
Silas Mahner:Yeah, yeah, interesting. So the thing you know, I'd like to talk about fundraising a second, but I think there's something that we wouldn't have a chance to speak with with most founders, so I want to ask you about this, which is? You know, you mentioned that fundamentally, essentially, you're an engineering company, right? What's what it comes down?
Silas Mahner:to there's obviously this is one use case, but there's many other use cases, potential, and we haven't talked really about, at least in too much detail, about the actual materials. Is the objective ideally you know that these materials can be used to create many different types of vessels and or is this going to be an additive material that could maybe help solve other problems in the single use plastics space, like, how do you see the future of this? I guess what I'm trying to ask really deep down is fundamentally this technology, where else can it be used?
Sanjeev Makotia:Yeah, and I think they could be an infinite amount of usage. And you know, kind of say, packaging. I think we're learning new things pretty regularly. We started with our sort of a food and beverage to go. That was our sort of area, and customers come up with creative ways to utilize it. You know, we've gotten customers who are catering companies and they love it because they can, you know, brand their customers logos and stuff on it. But we've gotten interest from cosmetic companies. We've gotten interest from pharmaceuticals like hey, can we use this sort of thing? Of course you have to develop further for that particular purpose.
Sanjeev Makotia:But the material is nothing new. It's humanity has known it since humanity has been around. It's clay, it's clay. With water we use a little bit of a salt for as a de-foculate, but that's it. Our proprietary aspect is how we mix it, because that specific mixture only works in our machine, you know. So it's a symbiotic relationship with our printer. That has to be certain viscosity and certain properties to it when they're ready to work properly and get the desired results. And that's where the IP resides, is in the way we mix it and how we, you know, our printer works and so many different uses.
Sanjeev Makotia:We're learning more and more every day and how potentially we could adapt to potential customers. But we are currently focused on having partners who are really in the food and beverage aspect creating this. Hey, it's a multi-use new category. You could use this in this fashion, ideally. People don't throw things away in the future, right, just generally. We need to get away from that. But if you're throwing something because everything has an end of life, it's going up back into sort of natural state without much damage. Yeah, this is pretty fascinating.
Silas Mahner:So I guess the business model to me seems pretty interesting. Right, so you're manufacturing things, but really the business model isn't selling cups, right? It's essentially selling machines and like subscription to a machine. I'm assuming there's a yes there. So could you? I would like to know. Obviously you had a pretty interesting experience before this, but could you walk through the journey of Once you had the idea I started working on the technology and then how your view of the business model change and maybe some of the iterations you went through, and just talk to us and like really kind of expound upon the business model now as it is today and how you look at it going forward?
Sanjeev Makotia:Yeah, so the vision is always correct. You're absolutely right that it's a subscription thing, right? So you either lease or buy the machine eventually and then we just provide you the in cartridge. And at some point the in cartridge can come directly from the clay mining or manufacturing companies, because you give them the formulation packages. All you do is you click it into your, into your, into the machine.
Sanjeev Makotia:But we're not there yet. You know there's a lot of engineering to be do that. But we can make up. So we have, we can have taken to strategic direction. We could have stayed in R&D for a long time until we had this like sort of countertop thing that could you know was acceptable to customers.
Sanjeev Makotia:But the path we took was we wanted to engage our customers right away. So when we were engineering our process and our technology and our printer, we were coming up with results or product that was really nice. And you know we started showing it to potential customers and they're like when can we buy these? And she's like, okay, I have 100 of these you want to buy on there? Like yes, and it just started that way and we got tremendous amount of feedback and we've developed it along. You know that process and it's not just about handing them a cup, it's about all ecosystem. You know, you got to and it's humbling to understand this. And we I had to do this to say, yeah, I'm working at a school technology, but the real business is how do you satisfy your customer, how do you make their business more successful? Because if they're successful, then you're going to be successful. So it was getting to a point where I'm not just giving you, you know, swapping one cup out for the other. It's it's really educating your employees, educating your customers. It's about hey, this is a nicer user experience, is more luxury. I call it the fine China experience with the convenience of disposability. These are all value ads, you know. Especially, look at a specialty coffee shop. They spend so much energy and time and passion for their beverage. You know they go select the beans from Africa or you know all of that takes a lot of energy and time and it needs to be able to honor that food that they're making right. So it's bringing all these together and if they could, they could serve their customer in a better way than they have.
Sanjeev Makotia:More business and that's part of the ethos is like hey, how do we collectively get into enhancing your business, right. So all of these things come in play. It's not, you know, we don't want to be seen as a commodity, at least not at this stage. It's like look, it's higher user and experiences, it's new category, you could use it multiple times. This true cost in not only the economics but also the reduction in true cost economics and also the your footprint, you know, waste footprint or by sustainability footprint. Then it's also a virtue, signaling that people who want to, you know, express themselves like hey, we are doing things the right way for the next generation. That's all enhancing your brand, right. So it's aligning with your customer and your partners to give them a full white glove service. That's, that's the business model. Yeah, that makes sense.
Silas Mahner:But yeah, it makes a lot of sense. I was so just to make sure I've got this like I'm trying to think. There's a lot of things you're saying I'm trying to get, I'm trying to understand the takeaways from, because there's some pretty interesting things here. But in terms of the model, right, currently you know you had something and maybe you weren't even planning to start shipping product but you're like, well, we've got potential buyers, so let's ship product. Right, ship the product Eventually.
Silas Mahner:You know the model will change at some point. You're not just going to be selling them, you know items, you'll be selling them a subscription and whatnot, and that's okay. Right, to have like iterations on the business model, right, that's interesting to see. I think this would be a good point to ask about the funding because, especially in a company where there's heavy R&D, this is something I'd be curious to hear. If you have opinions on maybe other companies that have done similar things and just spent the whole time getting it perfect before they ship, could you talk about the process of so once you went away from you know, you know messing around with this in your garage, just saying you know what going to work on this really like had hardcore full time. What was the process like from from just doing your own thing to having something, and what was that thing, to then getting your first round of funding, and then walk us through as it went from there.
Sanjeev Makotia:Yeah, and I want to address that. We are. Those are the partners we want. Are the subscription partners? Right, it's not about just selling a commodity. Here's, like you know, 5000 cops. It's really, look, there's a tremendous value around this. That's where we're, is our product. It's not just it's centered around the vessel, but there's a lot more to it.
Sanjeev Makotia:So, going from messing around in the garage, it's engaging the customer, you know, initially, and then also, on the same side, other stakeholders, like potential investors. It's it's it's talking to people who are entrepreneurs or business people about the idea. You know, this is my network, right, just talking, not that they were going to invest or not that they were going to buy, but there were business people who have been successful and you're sharing this and bouncing this ideas off of them and they're challenging you on things. What are you going to do distribution? How are you going to scale this? What's the unit economics? Then you have to go back and like, think through those things, like, okay, yeah, you know, and it helps you refine your thinking. These are your allies. They're challenging you on things because that's what an external customer, investor, will go to do.
Sanjeev Makotia:So, going from that stage to my first check. I wrote the first check myself and that's also a litmus test for you if you're trying to be an entrepreneur. Do you believe in enough that you know you better take the risk and that actually shows really well to investors like, oh, this person put in a significant part of their you know capital into this and to each their own. You know everybody can scale that up and down, but it's a real confidence, a show of confidence when you are actually writing cash checks to pay for another engineer or to buy a bunch of hardware that's, you know, could be boat anchored within a few months. So I wrote the first check and myself and you know we hired our first engineer. We rented some space and started experimenting until we needed to raise more capital to get more engineers or another engineer. And you know, really buy equipment and go use machine shops and you know it's servo motors and all of a sudden you're starting to need more money and and that's when you have to make your pitch deck and create the value proposition and have something to show.
Sanjeev Makotia:I think it benefited us that at a very early stage we had a product that people wanted and it was. You know I could show this. I put this in somebody's hand. They know exactly what I'm talking about. Like, oh yeah, this is nice. So for us, that was our precede stage to be able to do that. You know, we think we did really well to be able to build something and show and put it in an investor's hand or a customer's hand. And they have a lot more questions for that.
Sanjeev Makotia:It's not just something that is pie in the sky, right? Yeah, it's describing something verbally. Yeah, it makes a huge difference, even though it's ugly or it's not perfect. I mean the first cup that we printed. I, one of the investors who eventually did invest in us and I showed it to them like look, be really careful. Like, and it was, you know, to a firm, two partners in the firm and one of them like, oh, this is so cool and it's nature to try and crush it. And he crushed it and it's like this is my only prototype. You know you crushed it, but that made a huge impression. You could feel it and see touching it was a big deal. They did invest. So you know.
Silas Mahner:Good thing you busted your cup, you know, yeah, but we made a lot more after that, but, yes, that was.
Sanjeev Makotia:I think it makes a big difference by, you know, having a 10 page deck versus actually meeting somebody and showing them what this is and, you know, have some videos or whatever, and at that time we were all going through our patenting process so we weren't able to show the actual physical machine, but we could actually show the physical product to show him some videos, and that, you know, went a long way.
Silas Mahner:Now I think it's interesting. I mean, it's a particularly interesting model If you're building a company that involves 3D printing and all right, like you, you have the resources to start with an MVP. That yeah, of course efficiency is not there, but it does have that physical product to it, and that's that's pretty fascinating. So I wanted to go back just to clarify. One thing is the reason why you were able to raise the pre seed was because you had already kind of like really low efficiency product. You had a product of some sort and you had either buyers who were purchasing from you or who expressed interest to purchase. Is that correct?
Sanjeev Makotia:We had POs. We had POs. We had a lot of letters of intense where we had actually had POs that were like, yeah, we'll take whatever you make, you know, even if it's at a small scale. And, mind you, the first first working the machine that could print at least one cup. You know it was like we'd spend maybe $1,200 on it. So everything was off the shelf like motors and servos and things.
Sanjeev Makotia:You know Pieces on that machine were 3d printed using a sl, a printer. You know it wasn't meant to like. It was the concept to be able to show physically. This is what it is and look, this is what's coming out of it. Don't ask me to make a hundred print it cups right now. It barely made it's all wobbly. It fell apart after it ran. You know all of that stuff. But it's like, hey, there's something here, okay.
Sanjeev Makotia:And then you know we, we raised the, the, the pre seed. You had a number of VCs invested, we had a lot of angel investors invested and From there, within I want to say six, seven months, we actually had a Proper printer that could print things quite fast. It's a real machine. You know we call that our test bed and you know then we worked on that test bed further, further. Now we have two, and these are still test beds. So everything we're producing is what we call pre-pilot production, and there we were able to have actual customers. They're getting, you know, a few thousand cups on a regular basis. They're paying for them. That showed enough to go to a seed round, and with the seed round we're coming up with pilot production. You know we're now going to have 20 printers, you know. So things like that, it's, it's the progression. Don't look for perfection.
Sanjeev Makotia:You're looking at you need to show progress in some way and it Could be very dirty, it's fine, and the right partners and understand that there's a lot of people it's like I don't get it. It's fine, it's like dating. You know, I actually have another idea to the software guys out there maybe listening is that could be an app that's Combined, you know, like similar to Like a bumble or something that's, but it matches founders with with VCs. It's like, hey, just the pitch that you swipe left or right. Yeah, I think there's a lot of, there's a lot of room for finding ways to match, because the issue is I've noticed a lot of- startups do not, at least maybe they're not.
Silas Mahner:They don't understand the need to only pitch to qualified VCs, or rather like the VCs that are going to be good partners, rather than just any, because otherwise, you know, you learn. I don't think anybody could advise and you, founder, to say this is how you do it, you have to just do it, yeah, and your first.
Sanjeev Makotia:Look the first thing. I you know, and I've been in finance for a long time. I've been in finance for a long time. I've been in finance for a long time. I've been in finance for a long time. And your first look, the first thing. I you know, and I've been in finance for a long time, but I've never built a company. Somebody told me oh, you have to have a private placement memo. That was my first Thing that I went, which is, in banking, very common. I had this thing and went to VCs. Never heard back. You know it's like what are you guys doing? You need to have a 10 slide deck, not a 40 page legal document. That's this is. I learned from that right and I'm experienced in finance, so it's, it's a way to do it. There's a, you know, a standard norm that's in the. It's not nothing's written down. There's a lot of resources out there, but yeah, unless you do it and you like Get the raised eyebrow a few times, you're not gonna fix this though.
Silas Mahner:Yeah, well, what was your thought process when you were selling you call them pre pilot products? What was your process or thought process on pricing those? Were you like, hey, we're gonna sell them for costs or because we're we're we're still working on, you know, venture funding, we're just gonna sell them for this much because it's palatable, like, how did you think about that process?
Sanjeev Makotia:Yeah, so that our initial products, we were like, hey, let's see people like them, let's give them away for free, right? So we had a customer in Europe and we were gonna do a little little, you know pop-up launch type of thing, and they're very first customer that came. They looked at it. They're like, hey, how can I buy this? Because we weren't even set up yet and ever since then we never gave anything for free because we saw that people wanted to pay money for it. And we did a small study where we had different stores that had the product. And one day we said, hey, let's try. You know, 10 cents, that's another day. We tried 25 cents another day, at different locations, and then we gathered all that data. And Because it wasn't about trying to be profitable right away, it's in, you know, that our investors were not like, hey, be profitable, it would be nice. But also reality is like, yeah, you know, engineers are making this and so it's it was about can you demonstrate some level of revenue coming in? Are people willing to pay? Do they want it? And and because our demand far exceeds our supply, nice place to be. We could be a little bit more choosy. We could work with the, the partners. But we just experimented, like what makes sense? Put yourself in the shoes of the customer.
Sanjeev Makotia:Some of these are, you know, ice cream shops, and we're not selling to individual ice cream shops. These are businesses that have 10 retail outlets or 30 retail outlets, you know. So they're, they're a proper business. It's not your mom and pop and, but they're in. Customer is coming in there to paying, you know, six bucks for a bowl of ice cream or a coffee. There's, there's some level of price sensitivity we're actually seeing, you know, things related to Recession talk and stuff. There is people just are frequenting less, coming less frequently to the stores.
Sanjeev Makotia:So, taking all that into consideration, you take up the amount of money that you're making, you take a bogey and you try it and and you go plus or minus, and then you also see that maybe some customers are not ideal in this. Your current state of business right so, but you want to get to the. You want to work with the partners that are Can work with you, and it's nothing personal, right? They? They're, they're trying to run a business too. So some people like, yeah, they love the product, they just can't Bring it into their ecosystem in in the right way. So that's you know some, some sort of insight into that. Yeah, we're learning to still still learning, yeah.
Silas Mahner:I think that's interesting. This has been really, really fascinating. I don't think we. I think I barely asked any of the questions I had prepped, to be honest. But that's okay, that's a good show. One last thing I just be curious about is I'm assuming you're not there yet, but do you have kind of price forecasts on what you expect that hey, once we get to like pretty like this thing is knocked down. We've got this right, what? What is the like anticipated price per unit that you think you can get to, and could you also help compare for people who are? I have no idea, how much is the regular coffee cup cost? You know I could you, yeah, we want.
Sanjeev Makotia:What are you want to be at, we want to be, and we we are. We think we could get there Absolutely, if not cheaper, to price parity to the incumbents out there. Um, and a good proxy is the guys in India, where this idea came from. They're doing it Right. They make these cups, they're selling it for, with the tea in it for a quarter. Like, why can't we do that here with all this automation in this technology?
Sanjeev Makotia:You know it's, it's a way to think about it, right, it's like, okay, yeah, you know their labor in India is cheaper, blah, blah, blah. But we have automation, they're doing it all by hand, so, so, so that's the idea is like Target. That like, yeah, because ultimately it is important that you're showing value. At the same time, I don't want to say that I want to sell my cup at 10, 10 cents of it because it's a nicer product, it's reusable. So you know, then I could say, hey, look, the cost per use is much cheaper than you know, you're incumbent out there. So there's a lot of ways to look at it. You just have to be able to Work with your partner to show them tremendous value. Um, and there's many ways to look at it right. It can't, it just doesn't have to be a commodity. We are looking at it because we don't feel we are commodity mm-hmm.
Silas Mahner:I've got one more thing that I think I should definitely ask here before we run off is um, when, in terms of so this business is is like pseudo hardware business, is more of like an engineering firm plus software, right? Um, how have vcs who are only software have you approached any vcs that are just like software oriented only? Have they been open to something like this, like what is your experience on a hardware versus software oriented investors? Because I think this is yeah it's like between them.
Sanjeev Makotia:So we never approached software. You know SaaS people. That was just not, you know, in our, in our scope, it didn't make any sense. We got introduced to a lot of generalists who have done software, who've Done healthcare, you know they've done all kinds of things and, um, you know the, the, the investor that is willing to invest in something that requires, you know, hardware capital. Um, they're less, you know there's not that many relative to the, the, the software, but they have a lot more experience. They know Um kind of what it takes. They tend to be longer term thinkers Right there, like this is this, is it? Um, there's aspects of, at least for us, people who are Focus. Also, it's not just purely, uh, hey, I'm a hardware guy, but it's I'm a climate tech person. Is this associated with Other kinds of metrics, right? So there's an impact associated with that. So, um, we didn't approach any software people. Uh, we talked to a lot of generalists. Uh, the generalists. Sometimes there were smaller funds, let's say, 50 million, 100 million fund.
Sanjeev Makotia:This is just my learning right? Just my view on this. Their risk tolerance is only for two to three years. It feels like just rubric I'm using here. If something's going to take five years. They're much more cautious about that. It's not fitting their thesis. They're very frank in sharing that, so that's really good.
Sanjeev Makotia:You learn a lot from that. I was like, yeah, they love the product, but they can't do it because it's not fitting what they're trying to do or what their commitments are to their LPs. You just got to keep talking. And then you find people who everything aligns there's no formula to this. A lot of my pitches they haven't seen anything, it's purely 10 slides, and they're like, yeah, we want to talk to you again and oh, this is interesting. And then it has a lot of emotion to it too. Some people connect with it. A lot of people don't. And you have to keep talking to people and every conversation you're learning something Like why did that person just kind of give me exactly only 30 minutes? Those are the ones who are not going to invest in you as soon as they have another call. You could write them off almost, but the ones who you're connecting to, they will always give you more time.
Silas Mahner:I think that's really a good place to close things. Maybe just a good reminder this is something a lot of people have said on the show is that it's frustrating sometimes to raise money. But they all talk about how you must have value aligned capital. And just try to remember that, even though it kind of you believe in your idea and you're like, hey, this is great, Just remember that they're also. They have a mandate to their LPs. They may not be able to invest in you, right? Or maybe it's a really terrible idea if they did, because perhaps you could find a better partner, right? You only have so much money and so much space in the cap table anyways. Right, Maybe see it as more of a scarce asset instead of that kind of begging for the money, right, Even though it might feel like that sometimes because you need to make the wheels turn. But any final thoughts or things you want to leave us with and calls to action and where people can reach you.
Sanjeev Makotia:Yeah, so certainly you can reach us at gaeastar. com. We're looking for partners to work with, we're not looking for any investors and really value user experience and multi-use. We have low true cost aspects of it and also great brand alignment, and exposure to our partners' brands to really ultimately focus on their business and how to make their businesses grow and be profitable.
Silas Mahner:Yeah, absolutely. This has been really cool. Do you have any of these things in New York? I need to check this out.
Sanjeev Makotia:We don't have anything. I've sent them to quite a few people in New York. It's just that our model is to try and not ship things. I could send you some samples. Just send me your address and I'll send you some.
Silas Mahner:Well, definitely, I'm going to talk to my favorite coffee shops and see if they can get these things here, because this sounds just so cool. I mean just the fact that you're talking about it, right, I can understand why people would want to buy this, right, it's really cool. There's this Mexican restaurant back where I'm from in Wisconsin that would have these. They were not the same, but they were kind of like a Margarita Clay Cup, right, and it was just awesome. They were like oh, we used them and eventually they break, and that's fine, right, and there's just something about it for some reason that it's very attractive, and I can imagine there being lines out the door if there's scarcity, if there's only one or two in the neighborhood, right. So I'm really fascinated by this. But it's been a pleasure to have you on. I look forward to seeing your continued journey and success.
Sanjeev Makotia:Thanks a lot for having me, and you know, closing comment is you never drink fine wine out of a paper cup. Why do you drink fine coffee out of a paper cup? So thanks again, silas.
Silas Mahner:That really breaks against my, my, my. I am a bit of a coffee snob, so that does make me think a little.
Sanjeev Makotia:You know All right, thanks, silas, good to chat. Thanks again.
