Matt Jaworski: Hi everyone. Welcome to a very special episode of scaling Green Tech, our first ever remote episode. Today I'm joined by Rami El Geneidy. Rami is a technical director at EnergyHub and the exited co-founder of Kapacity.io, a startup that focused on optimization of energy use and cost reduction of heat pumps in commercial buildings and residential settings.
Today we'll be looking together at the lessons from his journey that took him from PhD studies and Conception X Venture builder through Y Combinator to acquisition and all the other learnings for anyone building in the heat pump and energy efficiency space. Thank you very much for joining me today, Rami.
Rami El Geneidy: Thanks for having me.
Matt Jaworski: Now to start with the first classic question. How would you explain what Kapacity.io did to a five-year-old?
Rami El Geneidy: To a five? Yeah. Good question. We control heating in homes to basically reduce the price you pay for running that heating and. Reduce emissions that heating creates.
Matt Jaworski: Okay. And now maybe a version for the more technical audience. The five-year-old one was brilliant in its simplicity.
Explaining Kapacity.io and energy flexibility in buildings
Rami El Geneidy: Yeah. Kapacity. Yeah. Now part of EnergyHub does heat pump control and we focus on specifically energy flexibility. So we are trying, we're unlocking the flexibility in heat pumps.
We control them based on energy, prices and emissions and others. Such signals and basically we deliver building owners and homeowners reductions in energy costs and emissions.
Matt Jaworski: Before we dig in deeper into the tech side of things, tell us more about the journey. So it is in the introduction, Y Combinator?
I also know we started with Conception X, which means that you also started at some point as a PhD student and that led to where you are now. So how did it go? What's the story?
Rami El Geneidy: Yeah, I think the story is like, well before the PhD actually I attended Aalto University in, in, in Helsinki. And there I was in, involved in a lot of like student activity and that's already when I met my future co-founder Sonja and Jaakko.
But yeah, we all left off after university do our own things and I, I went into, actually, I worked in wind power a little while, and I saw what. Is it what it looks like? Kinda like the scale, big energy production building like wind parks and things like that. And, but then I felt like I needed to kinda dig deeper and I actually felt like the demand side is like really the thing like, like demand kinda drives the production.
So I. And that's why I like went to do a PhD and I went to do it. I got a place in UK in a great programme called it was called back then London Loughborough Centre for Energy Demand Studies. So it was like energy demand and things like that. And I really became interested in buildings and how buildings like consume.
Energy and did research on smart control algorithms of how to I did actually research on flexibility, how to use control algorithms to in buildings to unlock their flexibility for for example, price-based control or something like that. And I did experimental research, so that was.
That, those kind of like elements built up, kinda like then the skills to develop the, or ideas to develop the business idea which really came through conversations with then with my. Co-founders and then like Winding Road, then at some point also led to me taking part in Conception X and then us founding the business.
Matt Jaworski: And what was the thing that got you interested in joining Conception X in the first place? Because that feels like it might have been a bit of a leap of faith.
Conception X and formally founding the company
Rami El Geneidy: Yeah. I'm trying to think. I was really as a PhD student, you are kinda like figuring out what's your place in the world generally.
I was like a little bit set on maybe this idea that I will not become an academic. And then seeing Conception X and I wasn't, I didn't have a strong startup or business background. I'm personally very. Like technical. So I felt oh this could be something where I can really learn something new and see people who like might have adjacent skills or adjacent ideas.
And like I could develop my ideas to like further, to like a level where they actually make some meaningful change in like around me because that's kind that's ultimately my reason for. Doing what I do is to I would like to think that like when I'm, I don't know what it means to be old, but when I'm like old, I could look back and see okay, I at least try to do some positive change in the world with the time that I have.
Matt Jaworski: Yeah, that you made an impact, right?
Rami El Geneidy: Yeah. Some, something like that.
Matt Jaworski: Yeah, exactly. It's one of the common things that gets people into climate tech as a space. I remember that when Kaz, my co-founder and co-host who couldn't join us today, unfortunately, but when we were starting our business doctor, we.
We're building up on our marketing experience, but we didn't want to do, just any kind of marketing, selling people golden Laboo, CBD vapes or
Rami El Geneidy: Yeah.
Matt Jaworski: Any other thing that they wouldn't need or. Getting into a niche like let's say tobacco industry where you can make a lot of money and you could be the best marketer, but at the end of the day you would be contributing to thousands and thousands of people getting cancer.
And if you're very good at your work, then probably millions. So here with climate tech, we thought that. We can contribute to something that is objectively good and help some really amazing founders with some really amazing solutions succeed. And like you did make a mark on the world.
Rami El Geneidy: Yeah.
No that's like a very kind of like good point. And sometimes it is a little bit personally I don't kinda like thinking about what are people's motives. I don't think it really helps people have their motives to work on things. But I do think that we need more people to make those kinds of choices.
It, it would be, really important. I can't, of course, all, any, and at any time say, why does someone work in something? I, I would never, I don't, I can't say that someone working in, I don't know, with tobacco is doing anything particularly wrong as an individual. But it is like an, but it is an important thing to, at least when you're starting out, to think what motivates me?
What what makes me and I, coming, going back to the business thing. I did really think about that in the beginning, what could motivate me to work on an idea for potentially with low pay, which is like the,
Matt Jaworski: with risky pay low chances of success.
Rami El Geneidy: Exactly. If you don't have a strong motivation why would you do that?
Then you might as well, I don't know, go. Go become a salaried employee somewhere and that's it.
Matt Jaworski: Yeah. And okay. You did Conception X.
What happened next?
Rami El Geneidy: What happened next? I think it was during Conception X. We formally founded the company. And during Conception X already we just like talk to customers, potential customers who are trying to sell something.
And yeah, ma managed to, I think we, we got our first customers almost immediately and did, yeah delivered them the solutions we had at the time, which was like flexibility and like we did. We did a lot of also like things adjacent to the thing that we were trying to figure out what to build.
That was what was the whole point of the time.
Matt Jaworski: Okay. I hear that there is something super interesting here. Would you be open to getting into a bit more of a detail? Because it sounds very early on you had something that you were able to sell. What exactly was it? And you also say that it was not the, actually the final thing you were building, it was something adjacent.
So it just feels like a textbook case of a startup developing a minimum value product, doing validation through actual commercial means, not just interviews and using that to accelerate. Yeah.
Selling building surveys as early validation
Rami El Geneidy: Yeah, like basically it, it is it's so silly like now to kinda think about it, but what we were.
We were selling the idea that, hey, we will control your buildings and do unlock their flexibility and you will get savings or revenue even. And, but we didn't really we, we had the product. But we hadn't built it. And the very important part was like, could we implement it? And this actually this thing of could, can you implement it was a very important question for our early customers.
So we basically, sold them that we will give you an answer whether it is possible to implement this solution or not. And that's what we sold. We basically sold a sur We sold surveys of buildings to figure out can you implement like smart controls in them in such a way that it could actually generate value for the building owner And.
That's how we got going in a way. And it was like a, I guess it's like a example of that kind of like scrappy attitude of oh, you don't have the thing but just try to get something going so you can validate their interest in it, whether it is a meaningful problem for your potential customer that you're solving
Matt Jaworski: a hundred percent.
And then also you don't have to have the think ready to do some kind of readiness assessment like you described.
Rami El Geneidy: Yeah. Yeah, exactly. You don't have to, it. It's, it is, I think like the classic, and it was also something I didn't really understand about the whole starting out a business is that you just don't want to really, I always thought that you first build something like an engineer classic view.
You just build something and then you try to sell it. No. You have to turn it around. You kinda sell something and then once you someone, once someone says yes. That's when you're like, okay now I'll actually build and and I think that is like. Very important.
Even though your technical founder or technical person is to understand that you want to find, it's harder to find the need and the want than it is to build something.
Matt Jaworski: Oh, yeah, no. Obviously not anyone, but like almost anyone can log themselves in a garage or in a room and coat something together, especially these days, or put together some kind of a solution, but going out to people, speaking with them and seeing if this brilliant idea you have right actually survives contact with the market.
That's the real challenge and real taste.
Rami El Geneidy: Yeah. In exactly. It's like the acid test. And it that kinda like forces you to also, there's that book like the mom, like it forces you to like. Also explain your idea in a non-technical terms. For someone who doesn't really care about the implementation, they only create care about the value you generate.
So you have to articulate the value. I'm sure there are like a bunch of, I don't know, engineering technical founders who just build something and were managed to sell it, but I'm pretty sure it's not necessarily the fastest way to get stuck because that's what like in a way. Another important thing about startups and in general, like early business, is that speed is like actually quite important because like you just normally because of practicalities you don't necessarily have a tonne of time to validate your ideas or figure out what you want to do.
Then there's the last, like at the time when we were starting. There wasn't these tools that we have today. And building was expensive. Like building was time consuming. And like it wasn't so trivial. I have had to like a little bit adjust myself to this. I think at the moment, like when, especially if you're doing like a software product building an MVP, it is like with like new generation AI tools, it is.
It is different. It has like kinda changed a little bit part.
Matt Jaworski: Okay. So you did the surveys to the initial customers. You got paid for them. What came next?
Y Combinator and the two things a startup needs to do
Rami El Geneidy: What happened next? Yeah. At some actually yeah, one year, we got accepted to Y Combinator. That was like in 2021. And that. Going to Y Combinator.
I can't speak for Y Combinator, but as a, as someone who has gone through it, it's nothing. It's nothing like, really nothing. If you go there and you expect someone to tell you how to run a business like. That's not what's gonna happen really. No one can tell a founders no one's gonna solve your problems.
No one's gonna they will, you will get like similar Conception X, you will get some like support. But what Y Combinator forces you in a way to do is to like work very intensely on your business for a set period of time and focus on things that matter, which is like growth and also like speed.
So like valid, getting that loop going of validating your ideas, like going in front of customers, seeing how it affects and then building the product and doing that. I think it helps you in putting you in the right mindset of building a company, building a high growth business.
It was very intense. Like I, I don't know what else to say about that really. It's hard to go, have a little bit of peer pressure because you're surrounded by other good companies, good founders, and then look at your own business and how like all your problems are like laid bare and you have to like really face them.
Matt Jaworski: Yeah. I can imagine. And it was in person or was it remote because we mentioned, I think it was 2021, so it was COVID the times.
Rami El Geneidy: It was a remote batch. Yeah.
Matt Jaworski: Oh, okay. So it must have been definitely different experience from the in-person cohorts where you all actually get to be in the same room, but still works.
So from what I'm hearing, so what was the one most important thing that you learned from Y Combinator?
Rami El Geneidy: Basically a business needs to really only do two things, which are sell and. Build and improve the product. And maybe a little bit to expand on that is that there's quite a lot of, I think like maybe a little bit of like confusion about what startups are about.
There's this idea that, oh, there needs to be hype. There needs to be that. There needs to be that. But in the very early stage. It's really about talk to customers and like understanding who they are and what they need. That's the selling part. And then meeting those needs with something which is your product.
And that product can be like the MVP can be kinda like anything. It can be. It can be the survey like, which is like wasn't a cool product. It was a lot of manual work. It was like really not. It wasn't the vision that, you are building, but it was still something that they wanted and it was something you wanted to work on and you could see a path to your vision.
So I think it's important to kinda like focus on that and focus on the kind of like getting into the, somehow like getting to know your customers. If I like speak to someone who is. Working on a business and they can't, they don't, they can't explain to me who is their customer and what do they think.
I think that's then you have to know that. You have to understand that. Everyone in the company, all the founders have to know that it's not like it's not like a salesperson's job. It's also the CTO's job. It's also the I don't know, operating officer's job to know what customers want.
Matt Jaworski: Yeah. That's the only way to stay aligned with that and actually deliver value. Not to. Say the right things in sales conversations and then do something completely different.
Rami El Geneidy: Yeah. Yeah. And it is also incredibly hard to like really understand what two organisations and people need and want, because people might say one thing, but then, they do other things and like things like that.
I I think it's like it's very non-trivial.
Matt Jaworski: Yeah, absolutely. And then again, what you described right, with the initial survey, that's very much a problem validation. So do people care about this problem enough to put some money to at least try to solve it or have a hope of solving it?
If they don't, they probably don't care enough to buy the solution anyway.
Charging from day one and why free pilots are dangerous
Rami El Geneidy: Yeah, and I think that's actually a very important thing you said there, which is money. So money is like the proxy like rarely or this is what I think you. You rarely should give anything for free. If you want to validate something, you really should give it.
You need to ask money from it, from like day one, like immediately, because then you will see whether they're interested or not. It's very hard at the beginning because you also don't necessarily have the confidence to believe in your own idea, but it was, it is so much stronger when you frame the discussion.
Immediately that I am selling you something or I am like, I'm trying to look for a way to solve a problem you want to pay for. Like it, that is a very different tone because also then your counterparts are basically your hopefully future customer really they will kinda like. Expose what they're willing and capable of paying for.
Because kinda like the free thing is always a bit problematic because a lot of people, especially when they're entrepreneur people like entrepreneurs in some weird way, of course, because they're like people who are really putting themselves out there. They just wanna help. And if you're giving something for free, they'll almost immediately just say yeah, I'll try it, but.
Are they willing to pay for it? You don't get that signal from them. But once you ask for money, then all that kind of like niceness drops out and they start thinking, oh, I have to put my money where my mouth is, right? Like you have to deliver.
Matt Jaworski: Yeah. The vote, actually the vote actually matters and carries weight now.
So Conception X, YC. What happened next? I think when you joined YC, right? You get some small investment from them, but have you decided to rise investment or what again? What were your next steps after Conception X and YC?
Rami El Geneidy: Yeah, that happened. We, so we had like already raised a little bit, but then after Y Combinator, it's kinda like a natural point.
That's what Y Combinator helps with, of course, is like the. The raising. So we yeah raised around and started building so that, that gave us the means to kinda accelerate the building part of the business and build a product. But. You you always think that, oh yeah, like funding is gonna but the funding doesn't solve your problems.
It might even create new ones. And then it is it was also a time, an interesting time in a way was that was like peak startup funding. Like in retrospect, we didn't know that we were of course leaving that time. But it was and after that fundraising market how do you call it? Tanked more or less, at least in some relative terms. So we basically hired little bit of staff and started building. And we started building and built a product for commercial real estate, but. That wasn't growing fast enough. So we pivoted to residential energy and residential sector and we, our customer segment became el electricity and energy companies.
So they pay basically for our service and we deliver a service that controls residential heating and cooling. And that was a. Like a hard journey, but also a good one. And again, classic, I guess small business startup thing, which is you have an idea, you had validation.
We had built that validation with our, like surveying and things like that. But then we did kind end up in a space where we saw like severe impeded barriers for. Fast sustained growth and we decided to like change, change direction.
Pivoting from commercial real estate to residential heat pumps
Matt Jaworski: Okay. So what you're describing with the shift in the target customer of your pivot, what prompted it?
I'm guessing with the commercial real estate, you probably run into those classic B2B buying journey hurdles of many decision makers long buying journey and all that.
Rami El Geneidy: Yeah. There was of course of course that and then there was also like kinda like a technical slash stakeholder problem in a way that we were, I think it, it was, we were comfortable with the sales part.
And commercial real estate owners are very interested in generating savings or more revenue from their buildings. That's kinda a no brainer almost for. Real estate investors and real estate owners. However real estate as a sector is still to implement a technical solution in a building is quite complex.
And it is, there's like many reasons for it, but one reason is that buildings are like. Always like snowflakes like very, and by s snowflake analogy, this, they're always like individuals. It is hard to replicate single thing in multiple buildings. And then our product was a control product, so we would like control heating, ventilation, and cooling in the building.
And we wanted to do it with minimal if no hardware. So we were. Selling software product. And the other, that part was difficult because of basically integrations. Like there is, since buildings are snowflake. So all the kinda like setups that you might encounter rarely repeated. So you had like just every time you had to do kind a lot of engineering work to.
Know how to control that particular building and it had some particular needs that need to be met. And then the other thing was that the commercial real estate automation systems, like the things that control the buildings, like. All those systems are quite closed and they are not like internet.
They're not in the internet era, I would say.
Matt Jaworski: I can imagine.
Rami El Geneidy: Yeah. So they are like set up in, in ways where there are no common interfaces and in introducing solutions or building on top of them is not. At least at the time wasn't so fast. I know there are like good stuff going on and there is there are companies which are solving all sorts of problems re regarding these issues that I just mentioned, but we were seeing it as not.
There was nothing at that point in sight in the immediate term that would kinda fix those issues for us. And hence kinda like unlock that growth from our perspective. So yeah, those were the reasons we went to residential sector and specifically residential heat pumps. We just saw that.
Because of the work that we had done before, we had also looked at residential sector. We like maybe little bit shied away from it in the beginning because we thought that commercial real estate, like with and I think it still holds, is that you can get like bigger systems and a lot more kilowatts from energy perspective.
You can control more and you can with less integrations. But then I saw, like in the residential sector, we saw that. Oh, there's actually, they're more repeatable. The systems are kinda like more uniform and not as, there's no, not so much the snowflake effect there. Of course, homes are all different, but the systems in them aren't necessarily, they're more, more uniform.
So that was like why we took that journey and why we took that path. Yeah.
Matt Jaworski: The switch to residential. I think also a key distinction here is that you were targeting the sort of the consumers, the homeowners, from what you mentioned earlier, it sounded like you focused on the companies that already had client portfolios.
So you didn't have to do B2C sales. It'll still B2B and still targeting bigger companies just with. As you said, a portfolio of their own clients with the same kind of device or a narrow range of devices,
Rami El Geneidy: basically. Yeah. If I understood the Yeah. Question correctly, so like we. We did that then about the resi residential sector.
Like it was actually an interesting journey to launch that because we of course had put quite a lot of time and effort in the commercial part. But then we were and by the way, we still control commercial buildings. It's just not necessarily it's a capability we built. But then we decided to kinda build new capability and focus on in terms of growth into new opportunity.
Building credibility through a consumer product before selling to energy companies
But like we. We went for the residential, what we did was that we released a consumer product because we wanted to see that do homeowners like, do they care? Do heat pump owners care that about, for example, achieving savings. And that result was so good that then we decided that, okay, now we have to.
Like we've kinda tested the waters first yet again, like building something that works. And then with that learning, we built a product for energy companies so that they
Matt Jaworski: can, okay, so that sounds quite different than what I thought you did. So you actually had the step of consumers, and I'm guessing it was also easier to do something that.
At least a group of consumers would buy and you would have a proof of concept that it works there. Yeah. Before we approach the energy companies, instead of trying to make something for them from the get go.
Rami El Geneidy: Yeah. Yeah, exactly. Exactly. And it was like an important step because they also, it allowed us to, it was really about credibility.
I don't like energy companies. There's different kinds of energy companies. Modern energy companies are quite conservative and they have a very certain type of business that they run, which is, they just, yeah, like a very kind of like relatively low margin business selling energy. So they. Taking risks is not necessarily in their like DNA.
Matt Jaworski: Yeah.
Rami El Geneidy: So you have to build credibility and the best way to build credibility is to actually do it. So then. We controlled people's homes against we delivered them efficiency or electricity cost savings, and we were able to, we are able to show that, yeah, look, this is what we do.
Would you like to basically offer this service and become like the hero of the customer?
Matt Jaworski: So what happened next?
Rami El Geneidy: Yeah, I guess then we. We doubled down on the energy company path. And built built that out and yeah it really, that was like yeah, one of the, for me, one of the best times, like at capacity in a way.
I enjoyed most of the times, but it was really cool to kinda see kinda like a path to like big growth and. Then we got the EnergyHub opportunity came about at some point, and then we founders like had of course conversations about that and like really were thinking what is the gonna next best thing to do for the company at this point?
And decided to join EnergyHub.
The acquisition by EnergyHub and founder decision-making under uncertainty
Matt Jaworski: So with the EnergyHub opportunity that led to acquisition. It's a unique story. It's what most startups strive for, right? Acquisition and exit what their investors also want. So how did it come your way and what was your and your co-founders decision making when you were deciding whether you want to continue growing the business just by yourselves or whether you would like to pursue this acquisition opportunity?
Rami El Geneidy: Yeah.
Matt Jaworski: Yeah.
Rami El Geneidy: Basically the kinda like the opportunity more or less came about through this, like everyone says, ah, don't go to conferences. They don't make any sense, but it came through something like that Jaakko and Sonja, my co-founders who are very much driving sales at the time, they just had learned to know certain decision makers at EnergyHub and I, they like discussed directions.
Yeah. So at that time when we were like starting to like, we learned of this opportunity, we. It was first something that we weren't really, hadn't really thought of. But then once we like really played that kinda like scenario out together we really felt that it was at the time the best like route for us to take.
And that was kinda like. Some reasons that at the time led to that decision? Maybe primarily was that we had done it for quite a while now. Like we were, we had done it at that point for five years. And then there is like a, like once someone offers you that it. It is enticing from a personal perspective often.
So I can't discount that, but. Ultimately, it really came down to this thing that we felt like they, like our vision of energy, flexibility and like scale really aligned with what EnergyHub was bringing to the table. So I felt like we would've, not necessarily, we would've left some like potential to the table had we not taken it at the time.
Matt Jaworski: Yeah.
Rami El Geneidy: I don't know, there's, it's al it's hard to say because it's like path dependent. Like right now, had I, if had, I had a lot of other options on the table at the time, maybe decision would've been different, but that's not how the world works. You are offered. Things. And you're they're open for a certain amount of time and you either take them or you don't.
Matt Jaworski: Isn't it what's also the whole startup journey is about at every stage.
Rami El Geneidy: Yeah.
Matt Jaworski: You have opportunities. Each of them has a window of opportunity and you need to make decisions. You need to take risks and you need to assess trade offs. And that's what you and team did here.
Rami El Geneidy: Yeah, exactly. And then.
It's, and it's also like norm of decision making is that you don't know what's things are uncertain like most of the time. So you don't know what's gonna happen next. You don't know what the fundraising market is gonna be at the time. It is very blurry. You don't know you just fundamentally don't know. And then that those tho those elements of course factor into dec into the decision making when someone like actually presents you with an opportunity. But yeah, I wouldn't say it was an easy decision. I gotta say like it wasn't like a trivial thing as a founder to just oh yeah, of course we'll sell.
And like you said, of course, like an exit is like objectively, it's a good outcome. But. Of course everyone wants to build, the next Google where you never sell
Matt Jaworski: like the ultimate.
Yeah. Or, and I guess I can imagine it being quite a switch because you and your co-founders probably had a vision for the next, I know free five years of your life that you'll build it, that it'll go a roughly according to some business plan and then you might have some kind of an exit.
Here. It's the life had its own idea and the market had its own mysterious ways.
Rami El Geneidy: That's, but that's how life generally tends to play out. Like you don't really know what's coming your way. And, but that's in a way it's always important. This, I guess I, I don't know if I, I'm in any position to give any life advice, but you want to generally like.
Be out there so that good opportunities can come your way. If you categorically like you're not, you don't put yourself out there, then like then yeah, sure nothing will probably happen and
Matt Jaworski: yeah,
Rami El Geneidy: you'll have a very stable life, but also you're not exposed to the upside
Matt Jaworski: and you will not even know what you missed.
Rami El Geneidy: Yeah, exactly. You just dunno.
Barriers to heat pump adoption across Europe and the UK
Matt Jaworski: Okay, so we've talked about your journey and it's been impressive. Now let's talk about the broader industry that you've been in all this time. Heat pumps have been talked about on the news and everywhere for years, but they're still not getting as popular as maybe they should be.
So what's holding back the large scale adoption of heat pumps and this kind of tech across Europe and in the uk?
Rami El Geneidy: Yeah very good question. They have been taken up, right? It's not oh, there's none. There's quite a lot and they just don't get so much, I think coverage as like EVs and batteries, which are like EVs and batteries as technologies are like.
Kind like more recent, more new, and they have managed to gain this little bit of status. So like from consumer's perspective, it's like way cooler to own some new EV than it is to own like a new heat pump. So there's that's one thing,
Matt Jaworski: You cannot go, you cannot go on the right with your hitch pump and it doesn't go broom.
Broom.
Rami El Geneidy: Yeah. It might go broom. Broom, but yeah. In your yard. Like not,
Matt Jaworski: but yeah, it's there's no, for some reason it's not at cool.
Rami El Geneidy: Some reason it's not at cool. But yeah. But yeah, we can leave that. So there's that of course. But but heat pumps I kinda mentioned there's like generally in buildings are like hard tech in a sense that buildings require, like heat pump installation has quite high CapEx cost, so that is like one obvious thing that hinders their adoption.
And also the kind of like legacy or like the existing infrastructure for heating has been built out based on gas or or oil or something else. And of course stranded assets, stranded costs of abandoning, functioning like infrastructure. There's, you have to like factor that into, so those are like.
Macro level big impediments on a if you go from from there down like a little bit to the, like the micro level is that heat pumps, there's also this thing that, that like in a given market like Nordics are example, that heat pumps can scale and you can, there can be a lot of heat pumps per capita.
And because. Some of those drivers that I just mentioned, they never existed here. There isn't for example, a great natural gas network that you can rely on. So electric, electrical, heating and heat pumps are kinda like the natural thing to take. But then and, but that kind of has built also a base for maintenance servicing and installation businesses who can like.
Can run this kind of infrastructure very efficiently in, for example, UK in, for example, Germany and many other European countries where we hope that there will be more heat, but there isn't yet. That kind of, there isn't the industry is not there and skilled installers. Are not so easy to come by or there isn't that kind of yet like a market for it.
So it's a complex thing, but I think it really, like if you really boil it down, it is that like the kind of CapEx cost, plus the kind of like cost of the stranded assets and it's a tricky one. Like, when you think of like solutions what could it be like?
I guess the obvious one is regulation, especially to affect new builds, but new builds. What building stocks renew 1% every year or maybe two maximum. So all those existing buildings, it'll take, a hundred years theoretically to have the whole stock renewed. So maybe the silver bullet in a way is kinda like to affect the funding. If you can incentivize uptake. May maybe you can do it on government level, but from private perspective it's like smarter funding schemes for heat pumps. For example, leasing or things like that. Stuff they do for cars already. So the funding part to affect the CapEx cost.
And then I guess the second one would be like the current development in in AI is this like re-skilling and building technology that can help scale. For example, things like installation of heat pumps and servicing them. So I think maybe from those elements we can actually like move forward the energy transition in the heat pump and increase the uptake of heat pump technologies.
Matt Jaworski: And where would you say there are opportunities for startups and this kind of yeah. Emergent or frontier innovation in this space
Opportunities for AI and LLMs in the heat pump and installer space
Rami El Geneidy: to build like basically applied LLM solutions I think is quite an ob, kinda like an obvious one. I don't know. Examples could be like I guess everyone in tech is oh, ai, everyone uses ai.
I would encourage a tech person to go and see go and discuss with a heat pump installer and see what is their reality like and is there something that you could build for them? I have a little bit of personal experience here that because I am I'm a certified air to air heat pump installer in Finland.
There is the reality of an kinda like a normal installer is that they are, people don't really build much stuff for them like trades. Having, being a tradesperson, for example, electrician or a plumber is their like, I feel like there's quite a lot of probably like untapped potential there.
They have to work with kind of like the messy real world. So building solutions, LLMs are poten. They, I think they have potential to deal with the messiness of the real world because traditional software, like me as a programmer beforehand, trying to figure out every possible edge case that an installer might encounter is close to impossible.
But more general purpose, intelligence like driven technology, which I think like LLMs are they maybe have potential for that, especially multimodal models I think are especially interesting things that can process, image and text and maybe speech at the same time.
Because if you think of an installer. That's like their world.
Matt Jaworski: Oh, I can remember an example of when we did our company offsite. At one point we were all staying in a rented accommodation that had a heat pump.
Rami El Geneidy: Yeah.
Matt Jaworski: The problem was that the. Previous guests pressed some buttons on the heat pumps control in the basement, and the owner had to come in because the heating wasn't working.
It was, the cold days of autumn. And he was. Doing a video call with his heat pump installer. 'cause the heat pump installer didn't have a slot for the next couple of days to come and, do a repair while it was cold and the heating was off and the water heating was also off. That was the worst part.
So here something like you take a photo of the setup and you have a something that tells you what to do with it.
Rami El Geneidy: Yeah,
Matt Jaworski: that seems like what you describe and that would help in this case
Rami El Geneidy: a lot. Yeah, probably. Exactly. Other, the other interesting thing, is the, kinda like the finance part, and I know that a lot of companies are really thinking about this and have done things like that, but AI is already I know it's been already years before this, but AI and machine learning has transformed like how, for example, insurance is done and, but basically leasing, for example, a heat pump is quite similar to a.
You are like buying something upfront and then there's this management of risk aspect and what kind of package suits you and things like that. And I I do see it as an opportunity there that there is probably like automation to be done.
If you would look at the problem. With a new set of eyes and like maybe thinking a bit differently about about what tools do we actually have at our disposal right now?
Matt Jaworski: Okay, so this makes me no wonder what are the things that founders building hardware adjacent software often underestimate.
Hardware access as a bottleneck for software startups
Rami El Geneidy: I can tell you what I have underestimated.
Matt Jaworski: Amazing.
Rami El Geneidy: Yeah. I think one thing is kinda like access. I wouldn't, I don't like it, but we still live in a world where often hardware access requires you to contract with someone. For example, in our case would be a heat pump manufacturer.
So to get the access so that, that's a hurdle. Not necessarily always, but. In with some, especially some bigger brands, that is a hurdle. The other thing is just the fact that you have an interface to like, like the real world and hardware. Is quite it's a very different kind of world than kinda like maybe the software world, at least Modern software is.
So you are dealing with like generations of different kinds of devices often and they are, they can be very different from each other, even though you're so like you have some kind of like a way to communicate with them. Sure. But they're still all. Different.
And there are like a lot of different edge cases that, that you really have to be able to capture to deliver a good customer experience because you are in the end promising to the end user that oh yeah, we can control your heat pump. But then just because it is some heat pump brand X doesn't mean that heat pump Brand X sold the same product 10 years ago than it's selling today.
And they can be very different on, and you have to also account that in in software. But it's, I don't know what else. But I think the main is the access. Like really we are not yet there. Like where you can just go and, I don't know, put together like a business con. Unfortunately, I think but we are not there yet.
That, like you can't just go and go into some portal and generate yourself access for. The, all the biggest heat pump brands in the world, but they are behind, behind contracts. For example, compared to, I don't know, LLM access is relatively open, I would say. And it's kinda like actually started, consumers could access LLMs before big businesses could, which is like
Matt Jaworski: mind blowing,
Rami El Geneidy: Oh yeah, open AI did it like the whole other way around.
And, that worked.
Advice for PhD researchers considering the startup path
Matt Jaworski: We're wrapping up in a moment, but before we do, what would you advise to technical teams still at universities considering whether to take a step into the startup world, maybe applying to Conception X maybe for a different route?
Rami El Geneidy: I think from the researcher world coming, is that.
You don't have to really fundamentally change, I think the researcher mindset, which is to be curious and like build upon, like build tests. I think it's like to have that mentality to what is the, kinda like the minimal thing I can do to answer a specific question and narrow things down.
That is like a good, you don't have to change any of that, but I think one thing you do have to like. Change is kinda like little bit the pace of working. So you, you have to like, put your ideas out there a lot faster than you're comfortable with and build them in such a way that you can validate them.
And that's the kind of like the part I was like, like going out there and talking to potential customers who you think would want and then. Other thing, researchers and myself included, love to dig into the in implementation part, but it is the value part that is like important. So I think to focus on those and focus on like building like ability to understand what is the value and because that's the part that people buy, not the implementation, really
Matt Jaworski: the benefits, not the features.
Rami El Geneidy: In a way. Yeah, exactly. Like like most of the time no one cares how you code it in or what programming language you used or whatever. What optimiz what cool optimization technique you use. Like it's cool. Yeah. I don't get me wrong. I'm super psyched about that. But like your, their customers probably won't necessarily care as long as it does its job.
Maybe the other thing is to I know it's, I don't know it's hard to give maybe advice on it, but it's about think who you are co-founding with. I think solo being a solo founder is truly an option. Like not to shy away from, but maybe as a researcher, it like, especially if you are really into the implementation part, is to like.
Find people who have that like ability to, for example, talk to customers and tell stories and kinda find what is valuable and what is not. But then of course, o like op open mind and just do it. As I said, it's only two things you need to do kinda like talk to customers and build.
Build the product, like everything else is no noise. And you don't even need to think about the funding in the very early stages. You really shouldn't, you should just concentrate on the customer.
Matt Jaworski: Amazing. And then with yourself, with looking back at your journey, what would you do differently?
Rami El Geneidy: Yeah. Reflection is hard. I don't know. Sometimes I have looked a lot at my, what I've done before and you of course you do come up with oh, I could have realised that a little bit faster. Or I could have been, I. Being faster in, I don't know proposing that we pivot or something like that, because you would've wanted to get to the solution you're at faster than before.
But I don't know. It's hard to maybe pinpoint anything like that. Maybe I would say like really still, like I would've liked to ship faster. Like I really would've wanted to. And I'm reflecting a little bit as a CTO also that I think I think I had the means to ship a product faster for whatever segment I was working with before, but then I.
Maybe sometimes do have and I have learned that kinda like the hard way, which is that it is actually even as a CTO, it's like way more important to find the valuable thing and build that quickly than to build the perfect product. Beforehand. I think that was like, that was maybe.
That would maybe be my reflection about what I could have done faster and what I hopefully will do better. Better in the future.
Matt Jaworski: Absolutely. Before we finish, do you have any shout outs or calls to action? For the audience?
Rami El Geneidy: I just wanna say like to everyone who works in climate tech that let's.
Let's try to scale faster. I think there is like ur urgency, real urgency in deploying solutions. It hasn't really gone anywhere. Yeah. I don't really have, shout outs generally to everyone, and I really I would like to say to the kinda like the wider community thank you.
Thank you for. Doing all of that, and especially all the founders and entrepreneurs who have also taken personal risk and all the employees who started out in uncertain times in uncertain companies, building something that necessarily isn't, for example like the best paying industry, but like really doing something that I still do believe is of high value.
So I guess shout out to all of those people.
Matt Jaworski: Amazing. Amazing. Shout out. Thank you very much. Now, before we finish, something important that Rami mentioned today is understanding your customers and the actual needs and problems that they have. Not just those that they say they have or what they say they want.
For those of you, whoever you are, a founder at early stage or someone in the marketing team trying to align your content with what the customers require we have a checklist and we have a resource on doing effective customer interviews that don't lead the witness and don't bias the answers that will catch you there.
The link will be in the description. And thank you very much Rami. Thank you very much all for listening and we'll see each other in two weeks time in the next episode of scaling Green Tech.
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