#244 $1bn Pipeline for Solid State Transformers | Haroon Inam & Michael Wood III (DG Matrix)

Listen on: Apple Podcasts | Spotify | YouTube | Pocket Casts

In This Episode:* What is a Solid State Transformer * How Solid State Transformers are Reshaping the Energy Industry* How They Built a $1bn Pipeline

Sponsors:

Goodwin: The Law Firm of Choice for ClimateTech Entrepreneurs

ErthTech Talent: Affordable CleanTech Search Firm

What’s up, everyone!

Today, we have a great episode with Haroon Inam & Michael Wood III from DG Matrix. We’re talking about a simple technology that can fundamentally reshape the energy industry by transforming electricity more efficiently and with way less physical space than what’s been done traditionally.

Take an EV charger, for example. You need to get the exact electricity flow right. Usually, that would take a few parking spaces’ worth of transformers. With DG Matrix, you can do it with a simple power stand smaller than your refrigerator.

This is still the case even if you’ve got solar, batteries, or other distributed resources all mixed in together. They can handle all the streams of electricity in and out.

It’s clear the industry is loving this too. They have over $1bn of pipeline to date.

We got Haroon and Michael, so it’s a great episode.

_____
Want to access all our content? Upgrade to paid today. Act fast! Annual subscriptions increase to $100 on May 1st (currently $80).
_____

Topics
Free Version:
**03:21 The Journey to DG Matrix
**05:51 Understanding Solid State Transformers
**09:11 Market Position and Economic Impact
**10:00 Goodwin AD
**12:06 Solid State Transformer Advantages
**13:26 Company AD
**17:14 Building a Strong Advisory Network
**18:51 Call to Action
**21:10 Overcoming Challenges in Clean Tech
**24:54 The Future of DG Matrix and Market Fit
**26:29 Building from the Ground Up
**27:51 Transforming Energy Markets
**30:55 Streamlining Manufacturing and Supply Chain

Links
* Haroon Inam, Michael Wood III | DG Matrix
* Connect with Somil on LinkedIn | Connect with Silas on LinkedIn
* Follow CleanTechies on LinkedIn

This podcast is NOT investment advice. Do your homework and due diligence before investing in anything discussed on this podcast.

Transcript

Haroon Inam (00:00)
When you bring the cost down to be lower than the utility, significantly lower, and you add more power, it changes the total economics. That's why we have a multi-billion dollar pipeline. The total market is so huge. Just fleet electrification and building electrification combined, it will have a huge effect on those industries. If you don't love what you're doing, then go find something that you will, because you have to absolutely excel at it.

And I took his words to heart and I decided to fall in love with power electronics and controls and creating cool products.

Silas Mähner (00:35)
If you're hearing this now, it's because you are a paid subscriber to Clean Techies. Thank you so much for supporting our mission. Enjoy this ad-free listening experience. Hey, everyone. Welcome back to the Clean Techies podcast, the number one podcast for climate tech entrepreneurs. I'm Silas Manor, and today I will be your host. If you're not already, please go and subscribe to our YouTube channel. If you're fan of this work and are not already a paid supporter, this is also a really great way for you to help us out.

If you don't want to upgrade to pay it, least give us that 10 seconds of by subscribing to YouTube. It'll help us get one step closer to being monetized. OK, today we are speaking with Michael Wood and Haroon Enam from DG Matrix, and they are building the future of power with solid state transformers. Now, what does that mean? In essence, it's a smart software driven device that replaces old bulky grid hardware. And think of it this way, instead of using kind of this bulky transformers and coils of wire,

to power down or power up the voltage. They have a system that can regulate the flow of electricity in and out for many use cases. This is done using a computer chip and software. It also takes up way, way less space, which is a very huge advantage, especially when you're working in tight spaces, which is not always the case, but even if it doesn't, even if you have lots of space, who wants to take up three parking spaces of transformers just for a few EV chargers when you can use.

this kind of a little pedestal type thing that they have. It's very, very sleek, to be honest with you. So as we add more and more electronic devices to the grid, you can imagine this is a very, very good solution that fits any use case rather than having a transformer for a case by case basis. They are backed by ABB, Chevron, and Clean Energy Ventures, and they've already secured a billion dollar pipeline. Yes, you heard that right. They've already secured a billion dollar pipeline. And also shout out to our friends at Clean Energy Ventures as well. We've had them on the podcast as well.

So today we actually get a chance to walk through their story and a lot of the lessons that they have learned. Haroon has many, many things to bring to the table. They've achieved some amazing things in a very short time. So any clean tech entrepreneur is going to be able to find a lot of different takeaways in how that they can apply to how they're building. We're not going to go through topic by topic what we discussed because it's a lot, but I'm sure you will enjoy the episode. without any further delay, enjoy.

All right, everybody. Welcome to the show. How you doing today? Everyone.

Haroon Inam (02:57)
Excellent, very good, better now.

Silas Mähner (02:59)
Very good. Very good. We're also here with our good friend Michael Wood. How you doing today Michael? Good

Michael Wood III (03:03)
Good to see you, Silas. Good to be on the side of the mic for a change.

Silas Mähner (03:06)
Yeah, exactly. Yeah. Usually you're the one doing the interviewing. So you get to to answer a few questions today. all right, let's, let's get straight into it. So I guess, know, Haroon, you've got a very interesting long career doing many, different things, but can you kind of pack into a few sentences, the, the, the summer of your career right before you got to DG Matrix.

Haroon Inam (03:25)
Summary of my career has been developing complex systems and cool products for a variety of industries, mostly focused on clean tech, what is now called clean tech and power electronics.

Silas Mähner (03:37)
How did you get interested in clean tech in the first place? Cause if you've been doing this for a while, that means you were kind of ahead of the curve, it seems like.

Haroon Inam (03:43)
But you know, the interesting thing is it goes back to my days as an undergraduate at Duke. And I was thinking, man, these are tough days on how to find a job and how am going to get a job? So I decided I'll go to grad school. And I asked advice from my friends, what should I go to grad school in? And they said, well, if you've got a brain, go into software and digital logic. But if you just don't have any brain, can't think creatively, go into power electronics.

Because Duke has one of the best programs in the world, but nobody ever does anything new in it. So I love the professor. He's world famous guy, Dr. Wilson. And I talked with him and I just loved learning from him. And that's how I got a grad degree from Duke under Dr. Wilson. And I used to think, man, how did I get stuck in this? And then as time grew and my experience grew, I got lucky.

I was standing there with a 30, 35 year skill set right when the biggest change in the market came. And we're looking at a multi-generational opportunity where we're going through electrification now like we did through industrialization 150 years ago. So Silas in one word,

Silas Mähner (05:01)
Did it feel really boring in the power electronics space for many years until recently or what? What was it like at the beginning?

Haroon Inam (05:08)
I think I listened to what Dr. Wilson said. He basically said, Hey, if you don't love what you're doing, then go find something that you will, because you have to absolutely excel at it. And I took his words to heart one day during a feedback session. And I decided to fall in love with power electronics and controls and creating cool products. And you know what? I have never worked a day in my life. To me, it is an adventure every single day to get up and say, man,

I'm doing what I love.

Silas Mähner (05:38)
Yeah, that's amazing. think I just want to highlight this for people who I think especially people early on in their career, they want some action. They want to make a big impact, especially young people right now. But in a lot of cases, it takes a bit of compounding of your experience in a space to then be in the right place at the right time to really genuinely make an impact because now you have the kind of know-how to do so. And this is, I think, a really important case with your career in general is that you were there compounding your network.

and your understanding of the space until you can make a really big impact with– DG Matrix. So, before we get into the technology and stuff, I do wanna ask Michael to give a bit of an intro as well, kind of what you're working on and how did you get involved with DG Matrix.

Michael Wood III (06:18)
Absolutely. started off at Duke university and very key part of what I was doing there was building a platform called energy terminal, which started off as a podcast and how we met and how it kind of grew into helping companies with talent acquisition, the energy space. And through that, met Haroon and to make a long story very short, I was supposed to go do a different job and Haroon said, Hey, I'm starting this new thing. We're going to call it DG matrix. And why don't you come do this with me? So.

been at DG Matrix over a year and half now. I'm currently working as chief of staff and helping Harun on whatever needs to get done. And let me just tell you, it has been an exciting ride and I'm sure we'll get into all the reasons why it has been so exciting later in this episode.

Silas Mähner (07:01)
Absolutely. So for other people who didn't catch that, make sure you check out Michael's podcast as well. He says Energy Terminal, correct? Exactly. So go check it out if you want to hear some really good – he's got some great interviews on there so check that out. So all right, now let's talk about DG Matrix. What exactly is DG Matrix and what is the technology? think Haroon, if you want to take this one for us, give us a bit of a summary here.

Michael Wood III (07:07)
That's right.

Haroon Inam (07:22)
PGMatrix

is the first company to commercialize, develop, would say, and commercialize a solid-state transformer with multiple ports, where each one of these ports can be an input or output on the fly, and any port can be AC or DC or any combination thereof. So we're able to use this multi-port device to our advantage by mixing

AC and DC sources with a grid to alleviate grid constraints. And where that comes in very handy today is in the massive market of fleet and building electrification and the even larger market for GEN-AI data centers.

Silas Mähner (08:05)
Interesting, okay. So can you tell us what exactly is a solid state transformer? Tell it to me like I'm five. Sure.

Haroon Inam (08:12)
There are legacy devices that have been around for 100 plus years on the grid that take a voltage and convert it to a different level voltage, all AC. ⁓ solid state transformer, however that name comes, really means that a device with electronics around it and a very, very small high frequency transformer that does the same job.

And our addition to that is that we add ports. And so we make the transformer aspect of it very, very small. And by having electronic ports around it, we can chop up AC or DC to combine it in very unique ways and come up with a far better property set for this than with legacy transformers.

Silas Mähner (09:01)
So in, maybe if I got this right, that legacy transformers are kind of mechanically powering up or down the electricity. And then this is like almost like digital version where it's using different electronics to change that with a much smaller footprint. Is that accurate?

Haroon Inam (09:17)
You could say that, although I think maybe just a slight twist, I would call it electromagnetically powered up. And in this case, it's electronic plus very high frequency electromagnetic coupling.

Silas Mähner (09:30)
Okay, got it. Yeah, I am definitely not an electrical engineer. I work around this stuff a lot, but I always need a little bit of help figuring out the tech.

Haroon Inam (09:37)
You did really well. think you did fantastic better than I could have done. It's just that you want to make sure that the general audience is satisfied and the PhDs don't puke over it.

Silas Mähner (09:49)
Exactly. That's a good one. I need to use that line. I'm definitely going to steal that. Okay. So you guys are making this. can you explain, I guess, before we get into the problem you're solving, where is DG Matrix today in terms of scale, what you've been able to do in the market?

Michael Wood III (10:04)
Well.

Haroon Inam (10:05)
We just completed a few weeks ago, a seed round for $20 million led by Clean Energy Ventures with participation from ABB, which is one of the largest companies, if not the largest in global electrification. Chevron Technology Ventures, the oil and gas company behind it, and Cerberus, which is a $65 billion Wall Street investment firm.

and then our family office, Piedmont in North Carolina, Superwell Connected. So that $20 million round now gives us the firepower to put out pilots all over the United States, complete our certification, and start shipping product. So we are about two weeks away from shipping our first, second generation pilots, and we're about three to four months away from UL and safety certifications.

Silas Mähner (10:59)
Okay, got it. So that's helpful for where you guys are now. Now, can you go back up a little bit and explain what is the problem you're solving? Why is a solid-state transformer better than the alternative?

Haroon Inam (11:10)
a solid state, there have been many companies and you may ask this in your podcast as well, that have failed to deliver the promise of solid state transformers. One of the epiphanies that my co-founder taught me and realized early on that if you are just trying to duplicate the work of iron workhorse, the regular transformer, you're never going to be able to do as good a job in terms of reliability.

in terms of simplicity, in terms of the ubiquitous nature all around the world. But when you combine functionality and you do extra power processing, then nothing beats a solid state transformer. So that's why we say if it's AC to AC, sure we can do it, but where we excel is when there's multiple ACs and multiple DCs to combine. And the problem set that's a huge market to solve is wherever there is a shortage,

power on the distribution feeder or it's going to take a far longer time for the utility to get there or you have a cheaper cost with our combination of renewable energy including fuel cells, solar, batteries, etc. That's where it makes the most sense.

Michael Wood III (12:26)
Thanks

Silas Mähner (12:26)
Okay, interesting.

So in other words, if you're just powering up or powering down for one use case, it may not be the best because engineers are more comfortable using kind of conventional technology. But when you've got kind of, let's say multiple inputs or outputs in different types of frequencies, your solution is substantially like better.

Haroon Inam (12:45)
Hands down. mean, yeah, yeah, right. Frequencies or voltage levels or AC or DC combination and sources and loads. Exactly. Exactly like you said. So then, then we Excel. are 10. We eliminate about 11 to 20 different components in that infrastructure when you have those multiple sources and we combine it in one monolithic solution. That is an astounding improvement ⁓ in terms of installation cost, in terms of the footprint that we take up.

in terms of the commissioning, in terms of reliability. And sure enough, it is a significant cost savings in CapEx. It is a OpEx savings because the efficiency is higher. And it's far more reliable to have one device work well rather than 11 to 20.

Silas Mähner (13:32)
Interesting. I wasn't going to ask this right away, but I think it makes sense right now because you mentioned it. If there is such a capex savings, does this fundamentally change the economics for certain renewables projects?

Haroon Inam (13:43)
I think for us, when we look at it between 200 kilowatts and a handful of megawatts, it absolutely changes the economics because that has been an underserved segment in the commercial and industrial world. The engineering costs, procurement, commissioning, the installation costs have made the levelized cost of energy or the cost per kilowatt hour to be much higher than the utility in most cases. So people don't gravitate towards this.

It's a very small market, but when you bring the cost down to be lower than the utility, significantly lower, and you add more power, it changes the total economics. That's why we have a multi-billion dollar pipeline, a billion, a billion and a half dollar MOU for infrastructure, as well as significant interest from data centers. And it's all about economics. It is not driven by government incentives at all. It's driven by pure economics of supplying.

Silas Mähner (14:40)
That's amazing. mean, a billion dollar pipeline is definitely let's call it product market fit on steroids, right? It looks like that's working. Now tell us a little bit about how you make money. So you're not developing projects, correct? You're just primarily selling the hardware is the objective to sell the hardware to other project developers. that right?

Haroon Inam (14:58)
Yeah, I would say it is selling the hardware. However, it's not just the hardware, it's hardware with very, very detailed firmware and then machine software and then cloud-based software. So it's the entire tech stack. And yes, in the beginning, the price is more like selling a hardware piece with some software licensing. And over time, we hope to increase the software licensing mix.

and lower the upfront hardware cost.

Silas Mähner (15:29)
I see. ⁓ interesting. Okay, that's very helpful. So how did you end up, I guess, coming to found this company, co-found this company, I should say. What's the story there?

Haroon Inam (15:39)
One

day, Dr. Bhattacharya, my co-founder and I were on a car trip and it was a five hour car trip to the DC area. And we basically started thinking about what was happening in our careers. And he started to bring up a device that he was having some issues with on how to apply it in the market. And over that four or five hour trip, we went through some very high speed conversations.

And that's when the idea for DG Matrix was born, that we could take improvements upon things that he had done, add a significant IP to it, and hit potentially multiple markets with it at the same time. And on the way back the next day, after we had completed our visit, we started calling people and getting some metrics together and started to formulate a team. So yeah, it just came together very quickly in a couple of car trips.

Silas Mähner (16:36)
Interesting. So can you talk more about like the nuances there, like actually getting this thing going? So what were you doing at the time? Like, did you have to wind things down? What really made you say, listen, like, we're going to go do this and how did you fund it at the beginning, et cetera? ⁓

Haroon Inam (16:49)
We

basically, I helped fund the company from my ⁓ savings and I was an early investor, right? I was working at another place and so I had to transition out. But I was an investor and I helped pull this together for DG Matrix. And then later on, as I parted ways with my then employer, I became involved full-time in DG Matrix and was appointed CEO.

And that's how DG Matrix then started to go at a different pace.

Silas Mähner (17:22)
What is the process that you go through at the very beginning of something like this? it's an idea, you have an understanding as to this could work hypothetically and we have an idea, but how do you then take it forward enough to then be able to bring in outside investors? What are those key steps along the way to making it now that you have a billion dollar pipeline and you just raised a $20 million seed? ⁓

Haroon Inam (17:44)
say

it's a roller coaster ride. It's a multi-phase roller coaster ride because you're trying to figure out, I really get this to work? And is there a market? Probably the best simple book to read is the Lean Startup, which is, you know, 10, 15 years old, but it describes on the XY plane, the commercial and technical iterations you must go through to see if your product has a fit or not. So essentially we did that.

while simultaneously assessing the talent, the infrastructure, the money, the timelines, the intellectual property, the patents, the barriers we would have to overcome. And that's how we said, nope, let's stick with the lean startup methodology, but bake in what are traditional stage gates in corporate product development so we don't miss anything.

Silas Mähner (18:36)
Okay, got it. And I'm always curious in the early days, who are the, I guess say from, from, you know, looking back, who are the core people aside from your co-founder that really played an important role in helping DG Matrix to get to where it is today? You know, maybe some, some particular outside investors or some influence I was able to, to, to really elevate your, your, your profile on the market, if you will.

Haroon Inam (18:59)
Absolutely. We reached out to our mentors and our friends who had been CEOs of a billion plus dollar companies in the clean tech space before it was called Clean Tech. One of them was Jan. He came with a Siemens pedigree. He had been a partner at Kleiner Perkins. One was Mark. He had been CEO of Powerware before it was sold to Eaton. One was Alan. He was CEO of multiple ABB groups.

And, and we reached out to these guys. One was Dr. Wedding at Duke University, a professor in cleantech. And some were, one, one was a very high level partner in cleantech at McKinsey. So we put together this team of advisors and they helped us, they opened doors and they advised us on hundreds of strategy questions that we needed to answer. And that senior level CEO experience, multiple decades of it, that's what helped us formulate the ideas faster.

Silas Mähner (19:57)
Yeah, I just want to kind of like re-highlight what you just said there for the listeners that you were able to build an amazing book of advisors, if you will, that were probably able to accelerate you far past what you would have done on your own. Like if you were just doing this on your own, asking questions and failing along the way, it might have taken you two to three times longer to achieve the outcome, but people kind of guided you on what to look out for. And the other thing I'll highlight is that you had, like you said, people from Siemens, people from ABB.

people who had been in the conventional industry that you're kind of, I guess you could say competing with in some way or solving some of their problems, they had insights that could offer you and I think many climatic founders could take note of this to do themselves as well. So I wanted to highlight that for people.

Haroon Inam (20:40)
would, could I say something? Absolutely. I would say two things. Every single CEO we chose of the multi-billion dollar company or partner or professor had done both big companies and startups. Because if you only do one, you don't get the other perspective and you need to do both. So that was lucky that we had that sort of a Rolodex to go pull. The second thing I'll highlight is even more important.

And that is no matter how much passion and how much energy you have, humility must be your number one characteristic or you're not going to be able to listen to these high-powered people who are going to give you frank feedback. I mean, they have a hundred things to do with their time, so they're not going to sugarcoat everything. And if you take it personally, then you're not going to grow. So my suggestion is listen, learn to listen, learn to listen, and then you listen to learn. And that's what we did.

Silas Mähner (21:36)
No, that's amazing advice. love that. So my limited understanding of this market is that this, like the basic technology itself has kind of been around for a little bit of a while. You mentioned you guys have some iterations on it, but my question is, and there's been my understanding is there's several companies who have really failed at trying to achieve this. So why, like what makes DG Matrix different? What is the secret sauce here that's going to allow you to succeed compared to the others who have tried?

Haroon Inam (22:04)
That is an excellent question. I think the first thing I would say is it's the market fit. We're getting lucky on the market timing and the product market fit. The fact that we're doing multiple AC-DC inputs and outputs together with the right market timing, that's why. Number two, we have simplified the circuitry of this multi-port solid-state transformer.

way above what anybody else has done on previous SSTs. And number three, I think we have an incredible team of very talented people in their domains and it's a multidisciplinary product development team. We pretty much had to develop every single key thing ourselves from the circuitry, the minimized circuitry, from the packaging, the cooling, the controls, the firmware, the aerospace quality.

firmware that's running in nanoseconds, that level of work we had to do everything ourselves in order to have a very vertically integrated solution. And simultaneously, we developed the factory footprint and the supply chain so that when the product got ready, it was ready to hyperscale soon thereafter for very low capex. That's why I think we're going to be ready. We focused on the economics of the product.

and the lead times and we focus on the simplicity of the device.

Michael Wood III (23:30)
So

Silas Mähner (23:31)
Let me make

sure I recap this. So you're saying that it was a combination of market timing. There was kind of an appetite for it. Secondly, contrary to what other people have done, you developed everything from scratch, it sounds like. You kind of redeveloped the entire tech stack. You didn't just take as many white labeled parts from other people. You redid things yourself and you had an eye towards the unit economics once you were to go build a factory. Are those like the three buckets? I got that right?

Haroon Inam (23:56)
Those are the three buckets. And of course I'll add in the Dr. Bhattacharya, my co-founder, having him done a lot of background work for throughout his career for 30 years was absolutely instrumental in speeding up that product development roadmap and in de-risking a number of things. And then we are up to 175 engineers now. And without that global group where we did all this work, we did, we poured in before we raised around.

350,000 engineering hours at a cost of under $10 million. You couldn't do this work in the US, but now the US is the headquarters and we're growing our team here. So all of that, all of that contributed towards getting us to a point ready to scale.

Michael Wood III (24:41)
So.

Silas Mähner (24:42)
Okay, awesome.

Well, those are really great insights. think just again, not to constantly circle back and highlight these things, but I think founders should really take note of that kind of methodology that you guys followed there. with the product you have and that you're building, you know, now going to be scaling, what is the impact that you can make if, you know, if everybody transitions over to using this type of transformer?

Haroon Inam (25:06)
think the market applications are so massive. The total market is so huge. Just fleet electrification and building electrification combined, it will have a huge effect on those industries. You can make building power cheaper. You can kill demand charges. You can enable project finance type of models better. You can help enable FedEx and Amazon and school bus fleet electrification far faster because you can deliver lower

cheaper, bigger electricity at lower prices. That's one massive market. The other massive market is Gen. AI data centers, that we have the technology to not only aggregate sources, but also more importantly, to provide redundancy and to provide huge surges for learning engine cycles that are needed by the Nvidia or anybody else's processors. So our technology uniquely has that capability to route those surges to

either capacitors or super high cycle batteries. And I think that's another massive impact enabling, helping enable the next level of intelligence for the human species. Those two markets are big enough. Personally, I think this device enables a micro utility anywhere you put it. You could enable a micro utility in remote villages.

You could enable a micro utility where people don't have the money to put in a hundred million dollar transmission line. And you could change the lives of folks that are otherwise destined to live in energy poverty. Think of the impact you could have globally on those lives, right? At a ⁓ far lower economic cost. Think of how many more geniuses you could enable and how much, how many lives you could help uplift with this tech. So sure. Great for the developed world.

but also great for the developing world. That's the human side of where our passion comes from.

Silas Mähner (27:06)
Yeah, I mean, it makes sense because what you're effectively saying is that, if I understand this correctly, with right now we have a huge increasing demand on like, let's talk about the US grid, right? A huge increasing demand, especially with AI and data centers. But even though we're not going to be able to probably build out that energy as fast as we need to through this technology, we can still basically serve a lot of that demand without having built out all of the energy supply. Is that accurate?

Haroon Inam (27:34)
It's very accurate. Not only energy supply, you're not going to build 10 nuclear plants in the next five years. So certainly that and you can do it right where it's needed with incremental investment rather than a massive investment in something that might not work out.

Silas Mähner (27:49)
Yeah. Okay. And now one other thing I want to ask here is I don't know if this is accurate. maybe, you know, this question is for either of you guys, but my understanding is that the wait times for transformers is like very, very massive. Is the idea here that you can probably solve that a lot faster if once you guys get your manufacturing up in line, like this will not be the case anymore to, these wait times to be able to install these transformers? Yeah.

Haroon Inam (28:13)
think we are on that roadmap. We're on that path as well. We're trying to eliminate the next line transformer, the medium voltage transformer that connects to the grid. And we have done this sort of work for 10, 15 years in different places, both my co-founder and I. So it's not a matter of de-risking the technology. It's a matter of at what speed can we get there? ⁓ And certainly having standard product and standard building blocks that apply to a significant number of markets.

we can reduce that lead time, not only because we have done the supply chain engineering upfront, but because we use far, far less material than anybody else.

Silas Mähner (28:53)
What does it mean to do the supply chain engineering upfront?

Haroon Inam (28:56)
For example,

we started and I asked engineers, do you have a bill of material for the control board, one of the boards that goes in? So as we looked at it, we saw, wow, to get this part is a one year lead time. So how did you choose this part? Well, I don't know. It seemed like a good part. What's going to be a It's a year to get it if you want to get any volume. So can you engineer it out? They're like, oh yeah, that's pretty simple. Why didn't you ask before? So that sort of homework needs to go in.

when you're professionally designing a company to hyperscale. And so they brought down the lead time from a year down to a couple of weeks, four weeks, five weeks. And then we work with pertinent suppliers to keep it that way. What this does is it allows you to respond far quicker and it also allows you to have far less working capital needs when you wrap up, because you don't have to tie up that much inventory for that long. And that's supply chain engineering plus

looking at the finances of the right suppliers, make sure you're not going with some company that might not survive. There's a lot of considerations that go into developing and selecting and developing the supply chain. And we did a whole bunch of that homework up front.

Silas Mähner (30:10)
Yeah, those are definitely some golden nuggets there, I think. I don't think I've ever asked that question before, I should probably get more into the weeds like this more frequently on the show.

Haroon Inam (30:17)
It's not just the

lead time for the transformer, but the bigger thing is that the utility upgrade is the real lead time that we're compressing. A utility, if you install solar or you install batteries or you look for a utility upgrade on the feeder to get you more power, that's arguably two to five years per hour customer's feedback. So we can get in there in six months behind the meter.

with the simplest possible permitting and get you power that's far cheaper. That's the real reason that we're creating a huge pipe.

Silas Mähner (30:53)
Yeah, okay, that makes sense. So on that topic of pipeline then, what is the I guess you could say lessons or tactics people could use on their own products that they're doing something similar.

Haroon Inam (31:02)
Well, I've been through this multiple times and I'll go back to one of the Silicon Valley gurus that I had a chance to work with, Vinod Khosla. And his advice to us in some of the board meetings was, hey, you need to go talk directly with the large customers. Make sure you target two, three verticals simultaneously and then see what is the direct feedback you're getting. And that's how we started. So we started with people.

who might be placing 100, 200 half billion dollar orders over. Well, I've been through this multiple times and I'll go back to one of the Silicon Valley gurus that I had a chance to work with Vinod Khosla. And his advice to us in some of the board meetings was, hey, you need to go talk directly with the large customers. Make sure you target two, three verticals simultaneously.

and then see what is the direct feedback you're getting. And that's how we started. So we started with people who might be placing 100, 200 half billion dollar orders over X years. And as we explained to them what we did, we were astounded by how quickly they understood. And so we were able to go to the largest guys and then we worked the customers for ones who would be entrepreneurial.

and would understand the risk that it would take with a startup. so we helped, you know, that process helped us choose the right customers. And that's how we got the sales pipeline developed pretty fast. The bigger question was, you know, people were asking us, can you really do this? Or are you just adept at making slick PowerPoint slides? And unfortunately, there's more of us that make slick PowerPoint slides than can deliver.

Silas Mähner (32:42)
It just.

Haroon Inam (32:57)
And so we started with the premise, no, we will deliver. And now that we are, it's changing from that disbelief is changing to a, wow, this is something I

Silas Mähner (33:07)
Okay, interesting. that's really helpful. How did you... So you mentioned earlier that you fundraised, you funded the company kind of privately yourself, but then was this seed round the first public round that you guys took?

Haroon Inam (33:21)
Yeah, there were, there were, took, we took some very benign loans from friends and, and I would say arguably fools because we were a family. So, so, so, but they're nice people, but, but that's the only category to fall under and they trusted us and they trusted that we would be able to pay them back one day. And that's how we got to about $9 million of, of, of friends and, that category. And then we, the 20 million was the first outside money that we raised.

Silas Mähner (33:45)
Yeah.

What are the big lessons that you guys learned throughout this fundraising process? Why were people so interested? mean, $20 million is a pretty substantial seed round in today's market. So I'm just kind of curious if you have any lessons you can share there.

Haroon Inam (34:05)
A

dollars is a substantial seed round in any market, but especially today. And I think that the day when when Dr. B wanted to go out and look for funding for the first time, the next day Silicon Valley Bank went under. is wow. Right. I don't think you could have chosen worse timing if you if you wanted to. So we went through a really terrible time. Twenty three was the worst time in twenty five years to raise money period.

24 was no better. And now with the administration change, had we not focused on economics, we wouldn't have made it. But we've always focused on economics. So here's what I would say. It took us longer to raise money than we had planned. It took a lot more grit than we had assumed. And it took us about 206 no's to get to a point to where there's a yes. It's not always a no. It's like, well, it's too early.

Come back later. Well, we need this. So we went through that and yet we used every feedback to improve our pitch, to improve our business, to improve our thinking. And so the grit is what one word comes to mind in sharing with other entrepreneurs and founders. Don't ever, ever, if your idea is big enough and you've got a massive market, don't ever, ever, ever give up. If you got to sleep in a tent outside and eat grass,

Do it because that's what it might take for you to get to a point where you can get your company funded if you really believe in the idea that it's a massive.

Silas Mähner (35:43)
Did you have something to add, Michael?

Michael Wood III (35:44)
think

one other thing that I'll add that is very unique about DG Matrix in this regard is because we had, mean, despite the fundraising challenges and the market timing, that time that we were able to take to really get things right, execute pivots and understand where our focus is going to be most fruitful in this market ended up being a very positive experience for us. And now where we're at currently, one thing that's very differentiated is that you think of a deep tech.

like DG Matrix and that seed round is typically going to go toward de-risking the technology, developing the technology, developing the product. For us, this is really capital to accelerate commercialization. And we are weeks away from deploying our first commercial products. And that is something that is very unique. It's something that think we are definitely excited about that our investors are excited about too. We're not de-risking the technology anymore. We're going and deploying these with customers into the market.

Silas Mähner (36:44)
Yeah. At a seed stage, that's not usually the case. Usually you're still figuring out the tech by then. So that's a good point. I like this. You mentioned at the beginning of the conversation, some of your investors, shout out to Clean Energy Ventures, Peter Sover, he's been on the pod, but you also mentioned, believe ABB and you said that, was the other, the oil and gas firm? Chevron. Chevron. So I'm especially curious with ABB, how did you get them in the round? Like if you can share much about it, like were they hesitant to join until you had a lead?

Like what are the mechanics of getting a big corporate like that involved in your round, especially at a seed stage?

Haroon Inam (37:15)
ABB has a substantial presence in Raleigh Durham. In some of the folks that they have here, we were connected through our advisors. Multiple advisors knew these guys. So they approached those ABB folks and some of those folks attended a couple of conferences where we were presenting. That's where the initial contact was made. And they said, is this real? We said, absolutely, this is real. And they started to listen more.

And then they engaged some of their principal executive engineers from Italy. And it was a multi-month, it was a nine, 10 month diligence process. And they were very thorough. And some of their folks ended up saying this is the biggest disruption to the global microgrid business they've seen. And I think that's, and what an amazing set of products we could bring to the data center. So we think ABB was instrumental.

in giving us that credibility. think ABB looked at the overall team, called it the best and some of the people at ABB called it the best team they have seen in SSTs and the only ones that could possibly pull it off. I think that technical assessment and overall assessment helped us gain the other investors for sure.

Silas Mähner (38:35)
So in order of how this worked out, ABB eventually became interested after this whole process and understood the technology was good and they kind of said, hey, this is great. We won't be a lead, but we'll be interested. And then you were able to use that as leverage to help get the others interested. Is that correct?

Haroon Inam (38:52)
I think ABB I think was always interested. It was just a matter of passing due diligence rather than saying, well, yeah. So they said, really? And then they saw Dr. B and me. So they realized with our backgrounds and they know Dr. B pretty well. They said, if anybody can pull it off, these guys can with that team. So we had that credibility going in. But I think they convinced their investors in multiple funds. So I think they were able to work with one of the funds to say, no, this is real. You should really take a...

serious look at it. And that's how Clean Energy Ventures got involved. And then once they saw it themselves and they did the technical due diligence and the company due diligence, they became big fans.

Silas Mähner (39:34)
Okay, interesting. So this leads to my next question is, I've always been curious what the incumbents are doing in this space, right? And in this case, they are investing in the new technology rather than trying to develop it in-house. Is that like on the macro, what's usually happening is that these large corporates who have, they've got processes going on, are they just looking for other investments where the disruption is coming? Or are they trying to develop it in-house?

Haroon Inam (39:57)
both. I think if you look at the big guys, they're probably developing it in-house without informing us. And some of them are choosing to invest in us. And because we are a startup, we don't have those corporate processes that take a long time to arrange a meeting. Or there's a four-year development cycle. There's another Raleigh company we talked with. It's a four or five-year development cycle for them. For us, it's about a year.

So there's a big difference in speed and that's why I think the smarter corporate developers take a savvy two-pronged approach. Investing in the right company, but also trying it on their own in case we don't make it.

Silas Mähner (40:41)
Okay, interesting. And then you sort of mentioned this already, but I want to circle back to it. Are the buyers of the technology feeling pretty comfortable to adopt it pretty right away? Or are there a lot of like core hesitancies that they have?

Haroon Inam (40:55)
both that there are set of buyers that are willing to adopt it. They will have us pick up the warranty risk for the X number of months and whatnot or couple of years, which is pretty standard. And then there are some that say, well, I have to see more pilots or more units in the field. And they're the more conservative ones. Fortunately, the demand is so huge that we can get to break even with the first category and take our time hitting the

the ones that are really more conservative are the market laggards.

Silas Mähner (41:27)
Okay, got it. And as we kind of start to wrap things up, I'm ⁓ personally very, maybe I'm a little bit biased because I work in talent, but I believe that recruitment and talent is probably a huge reason why many companies succeed. So can you talk about your experience in building the DG Matrix team, some of the lessons you've learned around talent, and this can be including things that you've learned through the rest of your career as well that you've pulled through to use as principles as you built out the team.

Haroon Inam (41:53)
I look for three things. I look for three or arguably four things. First thing you look for is absolute technical competence. If you're not one of the top people in what you do, it's going to be tough to see how you act. The second thing we look for is excellent communication skills. Are you able to share your ideas?

in a ⁓ positive, constructive manner. Are you able to convince rooms of people about what you're doing and bring that technical excellence? Whether that technical excellence is in marketing or it's in finance or it's manufacturing or it's the multiple technical things, it's technical communications. The third one, probably the most important, and that's the cultural fit with the company. Are you able to work with others or are you such a

a genius gift to mankind that you can only work with yourself. right? But there are those people who always right and nobody else is smart enough to work with them. And so we weed out for that because we would rather have a team that works super well together than a toxic culture of geniuses that are fighting against each

Silas Mähner (42:53)
There's a lot, yeah.

No, those are great. Those are really, you know, obviously as a recruiter, it sounds like you've done this a few times. So that's good. guess. you want to, Michael, I don't know if you guys are hiring now, but if you are probably should shout out some of the roles maybe that people can, can reach out to you guys.

Haroon Inam (43:22)
Yeah, I will mention, Mr. Over, we're looking for top PhDs in power systems, power electronics, in mechanical packaging, in cooling, in micro grids, and we have a lot of incoming resumes. We're always looking for these sort of people, along with five, 10 years of experience in their respective field. We'll also take a master's degree with significant experience. Right now, we're looking for a CFO.

and then the finance staff may be summer onwards, a small staff, and we're looking for product management people as well to grow our small product management team.

Silas Mähner (44:03)
Yeah, I was going to say, know if you guys just raised 20 million, you're going to definitely be needing some talent. if you guys are, if anybody listening is looking for a role, reach out to these guys have quite a few options for you. I guess what one, let me, let me ask one last thing about talent here is are there any core throughout your career, any things that you had a perspective on how to hire that you eventually change? Cause you realize, Hey, this is like, you

Maybe it's a common thing that other people do, but you said, you know what? After I tried this, I realized this is not the way to go about hiring.

Haroon Inam (44:34)
focused too much on technical excellence and communication. wasn't focused enough on cultural fit or having the right mentality. And quite frankly, I went through my own development of much higher level of emotional intelligence now, which still needs to improve. But in the beginning, I was not very intelligent emotionally. And I think it helped me back and it took longer to attain some goals. So.

So my own personal development, interestingly enough, showed me how much more these soft skills matter. And especially in the time of the millennial generation in your time, You can't succeed without it. So yeah, it's my own development. It forced me to relook at the teams we put together. And I'm so glad I crossed that threshold. I wish I'd have done it earlier, but thank God I did it when I did it a decade ago.

Silas Mähner (45:32)
Yeah. No, I think this is a common mistake that early, like especially founders who are just straight out of college or something, right? They may be really, really smart, like you said, like some kind of genius, but there's just certain things that you do not have because you don't have the reps under your belt, right? Of time around the sun, basically. Times around the sun. So I think this has been amazing. Any other calls to action that you guys would offer before we wrap up here and where people can reach out?

Haroon Inam (45:56)
This

has been a very nice session with you. You've asked some excellent questions and the way you've done it. So really appreciate the opportunity to appear on your podcast.

Silas Mähner (46:08)
No, thanks. Thank you guys for coming on. I've heard, like I said, I really mean this. I've heard many, many people mention DG Matrix over the past, let's say about a year. And it's partially because I know about Michael, but I also, I've heard many people outside of Michael mention it. And I was like, man, I definitely got to get these guys on. And it's the perfect timing. And now that you guys just raised around. So I'm excited to see what comes of it in the next few months. And we'll have to have you guys on again, once you've taken over the world and done a whole bunch of really even more cool things. thanks so much for coming on.

Haroon Inam (46:34)
Thank you very much.

Michael Wood III (46:35)
Thanks,

Silas Mähner (46:36)
Hey everyone, thanks so much for listening today. If you enjoyed what you heard, give us five stars on Apple or Spotify or wherever you get your podcasts and let us know which episode is your favorite so far. If you're enjoying this content broadly, please share it with your friends. Share it on social media. We put out a lot of clips. You can share those, follow us on Instagram. We're pretty active with posting on LinkedIn and Instagram lately, the shorts. So if you find this valuable, follow us there, share it with your friends. Just tell everybody about it. It really helps us to grow the show because it is the only way to grow a podcast.

Very difficult to grow podcast except for through word of mouth and that's you guys. So thanks so much for tuning in. Thanks for sticking around to the end. Please share this with anybody that you think will find valuable. All right, all right. We'll see you next time on Clean Techies.