The following interview is a conversation we had with Marc Borrett, CEO of Reactive Technologies, on our podcast Category Visionaries. You can view the full episode here: $80M Raised to Build the Future of Grid Measurement
Brett
Welcome to Category Visionaries, the show dedicated to exploring exciting visions for the future from the founders who are on the front lines building it. In each episode, we’ll speak with a visionary Founder who’s building a new category or reimagining an existing one. We’ll learn about the problem they solve, how their technology works, and unpack their vision for the future. I’m your host, Brett Stapper, CEO of Front Lines Media. Now let’s dive right in today’s episode. Hey, everyone, and welcome back to Category Visionaries. Today we’re speaking with Mark Borrett, CEO and Co-Founder of Reactive Technologies, a grid measurement platform that’s raised over 80 million in funding. Mark, welcome to the show.
Marc Borrett
Thank you, Brett. Delighted to be here.
Brett
No problem. Super excited. Let’s go ahead and just jump right in, talk to us about what you’re building there. At Reactive Technologies
Marc Borrett
Business that fills the gaps that we see in the energy transition. So power grids not only have to have more renewable power built and it has to be connected onto the grids, but actually the grids have got to run, and it’s not a small feat to change how a power system runs. And data is going to be at the core of making that happen successfully.
Brett
Take us back to the early days, the founding of the company. What was the AHA that you had back in 2009 to say, yep, this is an idea that I want to pursue?
Marc Borrett
Well, I guess the AHA moment was prior to getting into the energy sector. The first company I co-founded was in semiconductors, and were developing technology for near field communication. So if you can use your phone to contactlessly pay for anything or a ticket on a subway or metro, that is using near field communication. And we saw the energy transition as being very similar to the kind of transition that the telecom sector went through from fixed line telephony to effectively voice over ip the energy sector was going from big power stations, pumping power down the wires into homes and businesses to now power being generated in homes and businesses and flowing the other way.
Marc Borrett
So we saw that there were many similarities with the telecom sector, and if we brought that skillset to the energy sector, we might just be able to do things a bit differently and have better results.
Brett
Trey now, we talked to a lot of companies in Silicon Valley, and whenever I have founders on who were building companies in the mid nineties, the late nineties, kind of in that.com bubble and then burst, I like to learn about that because personally, I was pretty young at that point. In time and a lot of our listeners, they weren’t building companies at that stage. So we know a lot about it from the Silicon Valley perspective. I’d love to learn about it from the UK perspective. What was it like to be building a company in the UK in the nineties and then to take a company public in 2001? What was that like for you?
Marc Borrett
Yeah, well, very interesting. I know that’s a terrible euphemism to use, but I would say the UK was sort of following in the footsteps of what was happening in Silicon Valley. You know, we didn’t have as perhaps sophisticated VC industry, certainly we didn’t have a VC industry that had this big vision. It was still very much an industry that really you were working yourself from the VC community to the pension fund community. And that was sort of like night and day. You were going from growing revenues and scaling to then becoming a very stable and mature business for pension funds to really invest in. And that was a big jump to make in a very short period of time, relatively speaking. I mean we had access to capital.
Marc Borrett
But I remember on the first day of marketing, so you highlighted nineties to 2001 on the very first day of marketing the company for the IPO, I bought a paper on the train on the way into London and on the headline was billions lost as stock market tumbles. I mean, it could not have been the worst day to start going out to try and raise funds and float on the UK aim stock market, which is what we did in the end, but it took longer. But we got there in the end. But it was a very different, it was a very, I would say, british experience compared to the kind of things that were happening on the other side of the pond.
Brett
Now lets compare the founding of your current company today and the founding of that first company. What do you think has been the biggest difference between those two?
Marc Borrett
I think what we’ve seen is, yeah, I would say again, we’ve seen more of an evolution in the VC community rather than in the more institutional investors. But that is also changing. I think we’ve seen in the last sort of five plus years that actually VC’s want to invest in climate based technology, not just out of a sort of a sense of moral purpose, but because they can see that if they can get businesses that have business models that can become profitable but can also provide a carbon saving benefit or an energy transition benefit, that is the kind of things that they should be investing in. And it has gone from the sort of the almost philanthropic start of a VC fund to becoming the entirety of a VC fund.
Marc Borrett
And for me, the tipping point was when these new funds came out, where VC’s and private equity are actually incentivized, not just on the investment growth that they make from their investment, but also on the amount of CO2 that they actually save from making those investments. And that, for me, is a fundamental shift and an increase in sophistication and commitment to net zero.
Brett
Now, when I introduced you as a grid measurement platform. A lot of the people listening probably have no idea what that means. Can you explain to us what a grid measurement platform does?
Marc Borrett
Yes. Okay, so the short version is, the energy industry has really grown up over the last 120 years. And the joke would be, if you compared, as I did earlier, the energy industry to the mobile communication industry, if you brought back from the depths of history Alexander Graham Bell, who obviously invented foam, and let’s say, Nikolai Tesla, and you gave Alexander Graham Bell a mobile phone, and you showed Nikolay Tesla the power industry, Alexander Granville would not recognize what you’ve given him as a phone, but obviously, Nikolai Tesla would have a fairly good understanding of what was actually still going on in the power industry. So the power industry has been very stable for a very long time. And that’s because we’ve had very stable generation.
Marc Borrett
You’ve been able to burn coal and gas, and you’ve had nuclear, and those ways of producing energy are very stable. Now, when you look at the energy transition, those kind of stable generation sources are being replaced by things that are much more intermittent. A solar farm only produces power when the sun’s out. A wind farm only produces power when it’s windy. And fundamentally that changes how the power system actually behaves. And someone, an organization, typically in the US, it would be like an independent system operator, has got to keep everything functioning to keep the lights on and powering homes and businesses. And the toolkit that exists is based on the old world, where everything is entirely stable, so very little is measured, but lots of things are modeled.
Marc Borrett
And now, as this transition takes hold, those models are no longer keeping up with the reality of how the power system is behaving. So there is a need for measurement to go in real time measurement to give grid operators the best chance of keeping the lights on, but also changing from coal or gas or fossil fuel power stations to 100% renewable green energy sources. So that’s really the need for this measurement capability to really come into the industry and help them make better decisions more quickly so more green power can be used.
Brett
Now, when it comes to the organizations that you’re selling to, is grid measurement software, is that an existing line item, or do you have to go out there and convince them to create a line item to measure their grid? And two, do grid measurement?
Marc Borrett
Yeah, that’s a very good question, Brett. Basically, we are having to create, in some cases, an entirely new category. So when we talk about measuring the grid, actually, we’re talking about measuring a particular phenomena that has never been measured before. And we only arrived at that, really by accident. So I sort of alluded earlier on that my background was in semiconductors, and were working in the telecom sector to start with. And when we set up the company, the engineering team that we built were all from the telecom sector. So when you have a group of engineers and you put them from the telecom sector and you put them into the energy sector, they want to do things like, can we use the power grid as a communications channel?
Marc Borrett
Can we send data through the power grid rather than over the air, through mobile masks, etcetera? So we did a first project with a power grid operator in the UK, where we said we would send data through the entirety of the UK grid. And to do that, we had to build something to create that data signal. And then we had to create some devices to hear and decode that signal out of all of the noise of all of the generation assets on the grid. But we did it. But when we looked at our data that we found that our signal didn’t travel and get received by each of the measurement or receiver devices as they were then at exactly the same time. And that bothered our engineers.
Marc Borrett
And when they looked into it, they found that there was something that was inhibiting our signal getting through the grid. And that thing that was inhibiting it was the stability of the grid. So, basically, we found that the more stable the grid was, it was harder for us to get our message through where the grid was weaker and less stable. It was easier for us to get our message through. So went back to the grid operator, and we said, look, we could turn this on its head and we could measure stability in real time. Would that be of interest? And that was really where we actually got started with measuring grid stability.
Brett
I don’t personally know any grid operators, but I have to imagine that they’re not quick to make decisions. What’s that sales process like?
Marc Borrett
Well, yes, you’re a very insightful. So, you know, again, it’s a conservative industry. It’s keeping the lights on for homes, businesses up and down the length and breadth of a country. So it is not about taking risks, because at the end of the day, what is most important to people is a stable, secure power system. So that is the starting point. And when you come along with something that is innovative, that has a degree of skepticism applied to it. And really the first kind of conversations we had in the very early days were all about, are you sure you’re not going to black out the power grid if we allow you to do this, we don’t want to have any problems.
Marc Borrett
So how can you prove to us if we allow you to do this measurement, you’re not going to upset damage temporarily or permanently destroy the power system? So it did take a high degree of technical persuasion, justification, explanation just to be able to get a first small scale pilot started for obviously the right reasons. But as a startup, that’s very challenging. If you can’t actually get to go and start to prove what you’ve got because someone else is holding the playing field, that’s pretty tough going. And it was tough going, and the level of technical scrutiny were put under was very tough.
Marc Borrett
But as long as you’ve got enough gas in the tank to ride that through and come out on the other end and you’ve got a genuinely helpful, positive technology, it does mean that there’s another, those same barriers apply to anyone else. So even if you’re the first one encountering those barriers, as long as you can get over them, that means those barriers are still going to be there for others. So, yeah, it was definitely tough going, Brett.
Brett
And that probably makes me as a consumer, happy that, you know, they’re not quick to adopt these new ideas. Like you said, it’s high stakes there. This isn’t, you know, it’s something that you’re selling to an e commerce company that’s a little chat bot that’s going to sit on the side and help them convert more customers. This is serious stuff and it has serious consequences. It sounds like if it goes wrong, what do you think you got right when it comes to building trust with customers to really get those opportunities in the first place.
Marc Borrett
Yeah, I think you’re exactly right to hit on that word trust because, you know, when you’re selling into a relatively conservative set of customers, as we said rightly risk averse, trust is the thing you have to build. And the only way that we, I think we’re able to do it is really from having a very credible technical team. You know, we have a very, I would say, high calibre engineering capability and at some point that quality starts to become evident because, you know, you’re able to back it up, you’re able to share data, you’re able to show the physics of what you’re trying to do.
Marc Borrett
And as long as the customer is able to understand the methods you’re applying, then you start to get them to understand that this could work and that they can see in the context of things it shouldn’t have any kind of negative effect to the grid, but it does take time and you’ve got to have the staying power to keep those conversations going, to keep that interest going. So you’ve got to also be addressing a problem and that problem has got to be getting bigger. And when we first started, the scale of the problem before our first customer was about 16 million pounds they were spending each year, call it 20 something million dollars. And so that felt like a good enough sum.
Marc Borrett
But over the next five years, as were working with them and were going from a small scale pilot to a bigger scale to then a national scale, that problem grew fivefold. So 16 million turned into 32 million and eventually got to somewhere north of 250 million in that time period. So the platform that were saying was going to start burning actually took hold and caught a light. And I think that momentum of problem carried us through those difficult engineering discussions to get them comfortable with what were trying to do.
Brett
Technically, how long from when you founded the company until you were able to start generating revenue? How long was that period? Im guessing it wasn’t months.
Marc Borrett
It was a month. No. Well, in terms of revenue that we could really ascribe to as being core to our future growth and business plan because we did go down a few alleys at the same time. But as we made more progress in some areas than others, we narrowed our focus back to the ones where we could see the most traction in the order of five and a half years.
Brett
Where do you learn that level of patience? And then more importantly I think how do you get investors on board with that? I’m guessing it helps. From probably the start they were aware it was going to take time, right? I’m sure they didn’t come into it with expectations. But just for you personally, how do you stay so patient? Five and a half years is a long time.
Marc Borrett
Yeah it is a long time and it’s not easy. I think I have to say I owe a significant debt of gratitude to the patient investors that we’ve got. Some of them had invested in my first company in the semiconductor company that became a publicly listed business. So I hope that they felt I could deliver this. The energy sector is a big market and its a big market that was going through a huge amount of transition. So the prize at the end of the day is big enough. It is big enough to have a long term view, but its easy when you’re a long established company that you can set up these separate potential areas, you can incubate new ideas.
Marc Borrett
When you’re a startup and you’re on your own and you don’t have that big company infrastructure, you don’t have that wide industry contact network. It is tough and it is bleak and it is lonely. You know, I’m not going to start crying but it is genuinely difficult. But you have to believe and as long as you know you’ve got the right solution to the right problem then that is the fire that you’ve got to keep alight and that’s the fire that you got to stoke.
Marc Borrett
And as that problem gets bigger for the customer, the momentum comes through in the sales process, it comes through in the marketing, it comes through in your awareness as a company in the industry and then you’re able to recruit and build the team that will really then be able to deliver it, not just in one country but in multiple countries.
Brett
What does the marketing strategy look like today? How would you summarize your general approach to marketing?
Marc Borrett
General approach for us is really to achieve sort of the best practice solution. So you know, again going back to the customer type, again for all the right reasons, being conservative, we need to make sure that the solutions we offer, you know, if you imagine a risk dial for a customer, we need to move that dial from. We’re not the risky innovative solution that might cost your job. If you go with us with a proven technology solution that delivers the measurements that you need to run your grid so you don’t have either increased cost or increased risk that you can’t manage. And that really comes down to working with standards bodies, technical bodies that really help set what good looks like from a technical engineering perspective across the industry.
Marc Borrett
Marketing focus is to be part of that and to make sure that we explain very clearly why our solution works and why there is not, in our view, a better way to do it.
Brett
As I mentioned there in the intro, you’ve raised over 80 million to date. What have you learned about fundraising this time around?
Marc Borrett
Well, it is, the old adages, only raise money when you don’t need it. It’s got to be that. And also expect that it will take you twice as long. When I speak to other startups and they say, you know, we’ve added 30, 40, 50% to, I think you’ve got to be more conservative, you’ve got to go early and have enough in the tank where you don’t believe you will actually have to go to. But still, the challenge of making payroll whilst you’re heading towards, as your cash is going down and you’re trying to raise funds, that is a very sobering environment to be in. As you see your cash drop month after month and the conversations, you got to talk to more people generally these days, you’ve got to find the right sweet spot for not just the investors perspective, but your perspective.
Marc Borrett
And you do need to think strategically about your cap table. You need to have always, I think, a little bit of a balance between having some strategic investors who can help you with that go to market, maybe in countries or regions that you don’t then necessarily need to staff for yourself. But you need to counterbalance those with strong financial investors who will want to ensure that if you have a strategic or strategics on board, that they’re kept honest and that it’s a fair playing field at some point for either an IPO or an exit to maybe them or to maybe their competitors.
Brett
Now, you had a lot of success with your first company. You’re having a lot of success here. I don’t want to say what’s your secret, but what’s unique about your approach? How have you had back to back successes?
Marc Borrett
I mean, I would say I am unfortunately just very tenacious. And that can be a good thing or it can be a bad thing, but then it comes back to that belief point, I think, Brett, you have to believe in what you’re doing, even in the very, very darkest moments when everyone is telling you’re wrong, you may well be, and sometimes that can be a negative. But equally sometimes, if you are close enough to every part of your business, if you’re close enough to the product side, you’re close enough to the sales side, you’re close enough to the marketing side, the customer side, the team side, you are the one that actually has got the best view of what it takes to actually get to the next milestone or get the funding closed or get the next customer over the line.
Marc Borrett
And you’ve got to believe in yourself to do that, even though when it does get dark, you obviously doubt whether you’re doing the right thing. But I think that’s the only thing I sort of draw and investing in the best people you can get. You know, as long as you are holding that quality bar as high as possible in the organization, those are the things and the people around you and the things that are then able to be built around you, is that quality that ultimately will make the difference between achieving your goals or, unfortunately, falling short? I think.
Brett
Final question for you. Let’s zoom out three to five years into the future. What’s the big picture vision look like? What’s next?
Marc Borrett
Well, we’ve talked about a measurement system, and I think as we go forward, and when you and I were just talking just before we started, you asked me what kind of books do I read, and I gave you a very sad answer, which was, I like, you know, reading about scientific history and the thing that I, you know, which is obviously very evident. But you sort of chronicle how we’ve evolved our scientific understanding based on how well we are at building tools to understand science. So, you know, whether that’s a telescope to look at the universe or whether it’s a microscope to look at organisms or other particles, the better the microscope or the better the telescope, the more you can understand and the more you can evolve your approaches to challenges.
Marc Borrett
And so we very much now look at our measurement system as more like that kind of telescope. We want to understand how the power grid actually works in a way that conventionally hasn’t been able to be understood before. We’re seeing levels of change on the power system that haven’t been seen before, and we want to try and evolve our telescope to look deeper and further into the power grid and to really see things that others haven’t seen before. And that will, in turn, we believe, open up further opportunities for better services, to make better decisions, to enable more renewable energy to run safely on the power grid.
Brett
Amazing. I love the vision, and I really love this conversation. I know it’s evening time in London on a Friday, so I’m not going to keep you any longer. We’re going to wrap here. Before we do, if there’s any founders that are listening in, they feel inspired and they just want to follow along with your journey. Where should we send them?
Marc Borrett
I have a LinkedIn profile, so happily connect up. So my name is Mark Borrett or via our website, which is reactive and then dash symbol and then technologies which is plural reactive-technologies.com
Brett
Amazing, Mark, thank you so much.
Marc Borrett
Pleasure, Brett, thank you for having me.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io podcast and for the latest episodes, search for Category Visionaries on your podcast platform of choice. Thanks for listening and we’ll catch you on the next episode.
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