The following interview is a conversation we had with Joshua Riedy, CEO and Founder of Thread, on our podcast Category Visionaries. You can view the full episode here: $20 Million Raised to Power the Future of Energy Grid Maintenance
Josh Riedy
Thanks for having me, Brett.
Brett
Not a problem. Super excited for this conversation. So to kick things off, we just start with a quick summary of who you are and a bit more about your background.
Josh Riedy
Yeah, absolutely. My name is Dr. Josh Reedy. I founded Thread with co-founders Dr. Jim Higgins, who’s an aviator, Dr. Travis Desel, who’s a computer scientist, and we met, of all places, at the University of North Dakota while creating software for FedEx that they use to this day. Building on that experience, we focused our efforts on digitizing energy assets such as wind turbines, power lines, working with a large utility in the midwest, XL energy. That combination really was enabled through Microsoft’s Tech Spark program, which is the spark technology innovation away from the coast. And we got our start. I got my 1st $100,000 in from none other than Brad Smith, the president of Microsoft, which has propelled us to where we’re at, which is North Dakota’s second series a company.
Brett
How’d you get Brad Smith to give you 100k?
Josh Riedy
You know, it’s a funny story, Brett. I mentioned the tech spark program a moment ago, and Brad Smith, to kick that off, came to Fargo, North Dakota, and provided a TED talk. And afterward, I got a call if I wanted to meet Brad after the TED talk. And almost one of those situations where you think it’s a prank call, but lo and behold, Brad took almost 90 minutes of his time, went through deeply into the business plan, and believe it or not, that was a shot of courage that I needed, especially having recently quit my day job and focused all my effort in making this company come to fruition.
Brett
What do you think Brad saw on you and your.
Josh Riedy
You know, I’d like to believe he saw the very best, but the guidance he gave me is that it is a space worthy of occupying and not to be afraid to dream big, even if that big idea comes from North Dakota, of all places. And that’s really stuck with me to this day. That don’t be afraid to dream big. Don’t be afraid to go for it, because great companies come from all places.
Brett
Who was your inspiration that led to the idea to think, to start a tech company? Myself, I spent a lot of time in Michigan when I was younger and then Wisconsin, and I didn’t even know that Silicon Valley existed in the idea venture backed game, I had no idea that world even existed until I was probably, like 23 or 24 years old. So I don’t know if it was similar for you, but that’s my question, is that where did you learn about this tech ecosystem and the idea that you should start a tech company?
Josh Riedy
Yeah, that’s a great question, Brett. And that has two sides to the equation. One is my late paternal grandfather and my father’s older brother, whom I knew as grown men, that had visible scars. And those scars came from my grandfather working on a power generator because they didn’t have electricity delivered to their ranch. And while working on that, it exploded and burnt he and my father and my uncle very badly. And so in turn, he took the effort to start the area’s first power cooperative and was the first and only board chairman for 40 years. And so growing up with a man that had that type of passion to make something that went terribly wrong right through life experience really just drove me. But later in life, if you’re from the region, then you know the name Doug Bergam.
Josh Riedy
Doug happens to be running for president as well. Doug is a governor. Doug is an incredible success story. But what most people knew Doug from was his business acumen with his company, Great Plain Software, being acquired by Microsoft. I’ll get the year wrong, but roughly 2000, and I believe at the time, it was Microsoft’s largest acquisition. So having a billion dollar exit in the state of North Dakota to Microsoft, of all places, and then Microsoft investing a lot of time and effort in Fargo, North Dakota. That just left an indelible mark on me as an aspiring technician and someone that eventually knew they were enough of a black sheep to take this journey. But as that time approached, reading more about him, getting to meet him as an individual, that had a profound impact on me.
Brett
What’s the tech ecosystem like right now in North Dakota? How would you summarize?
Josh Riedy
Know? I would say that North Dakota is a well kept secret that others are learning about having a governor like Bergam and having a state sovereign wealth fund that is largely modeled after Norway’s sovereign wealth fund, having those oil dollars put to good use, moving away from a commodity driven economy. It’s a great place, and there are many entrepreneurs that are getting their start in North Dakota today because it’s a very friendly environment. Happy to talk more about that. But it is a markedly different place from where I began in 2018. And if it weren’t for Brad Smith’s blessing, I’m not sure I’d be here today. But those that have followed in my footsteps that are founders in North Dakota today have a vastly different environment that is hugely supportive, and it’s going to be fun to watch that mature.
Brett
That’s amazing. I look forward to hopefully chatting with a lot more founders from North Dakota. I would have to. I think we’re like 400 something.
Josh Riedy
We are rare right now.
Brett
This one. You are the first Founder from North Dakota. I believe we’ve had a few from Omaha. I’m trying to think where else, but, yeah, I think you’re the first from North Dakota.
Josh Riedy
Glad to be the first.
Brett
Now, another question we like to ask is about books, and we got this from an author named Brian Holiday, and he calls them Quickbooks. So a quickbook is a book that rocks it to your core, really influences how you think about the world and how you approach life. Do any quickbooks come to mind?
Josh Riedy
Absolutely. And it’s a quick movie, too, Brett. If you think about Leonardo DiCaprio, who is only seven days younger than me, the movie that he got his Academy Award for was called the Revenant. And actually in that movie, he is attacked by a bear. And where that attack happened is miles away from where I grew up. So that movie became popular to the rest of the world. But as a child growing up, there’s the book, the Revenant, and another book that’s on the same topic called Lord Grizzly. And those were books that as children were made to read. And that book and then the movie always inspired, never giving up, never succumbing to the ods, doing what others might think is almost superhuman. And so that book is my go to for inspiration.
Josh Riedy
You can watch the movie, but coming from that area and watching that all come together, even since a young child, that was a huge motivator.
Brett
Have you had any encounters with bears?
Josh Riedy
I have never seen a bear. I don’t think they exist where we’re at any longer.
Brett
All right, that’s good to know. Then you’re not in danger every day when you walk outside of a bear attack because, yeah, I watched that movie, and it’s pretty gnarly. Isn’t it like the first hour, he doesn’t even speak a word. It’s just him basically, right?
Josh Riedy
And they embellished a little bit in that movie. But if you read the book and know the true story and know what the terrain is like, the fact that was based upon a true story is just incredible. It shows what the human will can overcome.
Brett
That’s amazing. And I’ll definitely have to check out the book. The books are always just so much better than the movies. So excited.
Josh Riedy
Yes, for sure.
Brett
Let’s switch gears now. Let’s dive a bit deeper into Thread and what you’re doing there and how we like to start. This is really focusing on the problem. So what problem does Thread solve?
Josh Riedy
Another experience that I had with the electrical cooperative my grandfather founded. I believe the year was 2013 and there was an October ice storm that literally broke every power pole in that region. And people were out of power not for days, not for weeks, but for months. It was catastrophic. That just led me to believe that, how sorry my grandfather would have seen to see that, but that industry of all industries, needed modern tooling to make their jobs safer. But frankly, to allow you to manage that vast array of assets far more efficiently.
Josh Riedy
And when that was applied at a greater scale, when I had the opportunity, due to the very small network effect of the region, to work with Excel energy, that was something I jumped at because it was refreshing to hear a forward thinking utility like Excel express a problem that I had seen individually. And it just struck a chord with me to want to help them create a set of tools that could serve their customers better, especially at times of need, like natural disasters or outages and very cold stretches of the year, such as the winter in North Dakota.
Brett
And then what are some of those broader use cases that you offer with the platform?
Josh Riedy
Yeah, if you don’t mind, I’ll use analogy. There’s a company that, with your Wisconsin roots, you may well be familiar with epic. And Epic really created the electronic medical records industry and digitized healthcare as we know it today. If you think about that, the record of your health is a combination of many different inputs. Your x rays, your MRI results, your blood work, any other diagnostic tests, the prescriptions that you have, the physician notes that you have that comes together and represents your health. If you think about it in that term, swap a human out for a large asset, like a power line, or a wind turbine, or solar panel, or even a nuclear plant for that matter. There is a much better way for our nation and our world. To maintain the criticality of resources like utility and energy.
Josh Riedy
And the best way to do that is to bring digitization. So what that means is first, being able to create a record that lives outside of a human’s mind and is in a place that can be easily referenced. And if you think about the analogy of an electronic medical record, instead of a physician, you have engineers. But those engineers are most often hundreds of thousands of miles away from a site. What you have on the site is management, and you have frontline workers. And so enabling those frontline workers to perform some of the diagnostic tests, like gathering imagery specific to an asset or a particular component of an asset, is very helpful when the engineers are trying to diagnose problems from afar. And having a common repository for that information is vital.
Josh Riedy
And so if you think about Thread, it is a new product category that’s really a mashup of ERP solutions, asset performance management solutions in particular, like SAP mashed up with robotics. And it’s a very unique combination, but it’s an enabling combination that allow our customers to use their existing workforce and bring that tool into the way that they do business now, to perform work that has been conducted since post World War II, but to do it far more safer, far more efficiently, and to know more information about their assets than ever before, which comes at a wonderful time when the energy grid is modernizing.
Brett
Wow, super fascinating. On the topic of epic, I do know that just from a talk I recently watched. Have you seen the all in talk from Bill Gurley?
Josh Riedy
I have not. I would love to do that, though. I’ve heard of it.
Brett
Yeah, I’ll shoot it over to you. It’s like a pretty brutal takedown on regulatory capture. And he calls out epic specifically, and some of the moves that they had made with, I believe it was Obamacare, and how they’re able to basically structure in a way that they were the best option in the market to buy, which was a very savvy move. But I think you said that you would give them the award for the best regulatory capture history.
Josh Riedy
Well, you know what? I hope we follow in their footsteps with the inflation Reduction act. Because for those that are insiders, the order of magnitude change within utilities as they move from largely a fossil fuel driven, hugely operating intensive business model, to a renewables predominant model that has hugely capex. It’s a profound shift, dare I say a generational shift, that those utilities need better tools than they have right now. And I feel like Thread is in a perfect position to make that a reality.
Brett
This show is brought to you by Front Lines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a Founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we’ve built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit frontlines.io podcast. Now back today’s episode. When it comes to the actual data collection piece, how is that typically done? So for us who are from this industry, we don’t know how this world works. What’s the status quo?
Josh Riedy
Look, you know, it’s a great place to start and a great question to ask if you would come to this area, and we’ll start with wind sites. If you would drive along the interstate from Sioux Falls, South Dakota, to the canadian border, you would see a number of wind turbines. You would find Thread being operated at most of those wind turbines as just another tool in those wind technicians, trucks, or service vehicles that they can use. And so we have streamlined the use of data capture, be it cell phones or predominantly drones, to be something that literally anyone can use.
Josh Riedy
And we do that because it’s very important that they have that tool to use when they need to use it, which sometimes is very inconvenient, but it’s what the situation calls for to ensure that small problems don’t become large problems and large problems don’t become catastrophic problems. And so it’s another tool that they can operate with the push of a button. And it’s not just capturing data, but the ability to interface that data with an existing network. Sometimes in very desolate areas, that cellular communication is nonexistent is equally important, because these people are really harvesting data at scale about these asset types and able to relay that and transfer that to stakeholders like engineers and managers in a very seamless fashion that practically anyone can do.
Josh Riedy
And that’s a secret sauce that Threads offer of really empowering those frontline workers, because if you don’t do that, you lose timeliness. The industry is dominated by third party services that show up once a year. And while I applaud them for the work that they do, that is not the solution the business needs. They’d need tools to use when duty calls. An analogy I love to give is your car. If you took your automobile into the shop once a year and the very next day you had a problem, you certainly wouldn’t drive 364 more days and hope for the best. Now, apply that to these large assets that our well being, our civilization relies upon. And we don’t want to take those chances. And neither of those utilities who stands.
Brett
To be disrupted here? If and when bread is a wild success, is there a legacy industry that’s going to be completely just annihilated when this technology becomes adopted? Or what does that look know?
Josh Riedy
That’s the beauty, Brett, that if anyone’s going to be displaced, I think service companies are displaced. But the beauty is we are setting a standard of how inspections and data should be captured, meaning that once that standard is established through automation, anyone can use that. So I don’t believe we have to displace anyone for large scale operations once a year third party services. That’s their core value, their core job, and they do it really well. But having the same tooling left behind that a technician can use on an as needed basis is a perfect scenario. And what we’re able to do is really empower those frontline workers, many of which are unionized as a force multiplier and making their job drastically safer.
Josh Riedy
As an example, in wind turbines, what used to be necessary to inspect a turbine was a three person crew repelling down turbines that are 80 meters in height. That is unconscionable anymore. And what that job was, let’s say, three or four years ago today, with a Thread solution on demand, is a one person job in roughly 20 minutes, huge increase in efficiency, but also huge increase in safety for those individuals.
Brett
That makes a lot of sense. What about your first paying customers? How did you pull that off? Obviously, that’s all startup founders struggle with, but especially with what you’re dealing with. It’s not a little widget they just add to the website. It’s not an email marketing tool. This is deep tech. This is serious stuff. So how do you get those first customers to say, yep, I trust Josh, he can pull it off? How’d you make that?
Josh Riedy
I love the way you phrased that, Brett, because you touched on something really important. It is deep tech, but it’s critical. We cannot make mistakes. Mistakes lead to lives, and I take that seriously. Maybe it’s the midwesterner in me, but a novel approach. We were the first startup to build a co development arrangement with Excel Energy, who takes great pride in our relationship being another form of rural economic development. But what that meant, Brett, is we had to earn the business. Xl Energy did not retain any intellectual property, but they also didn’t give us money to do it. We worked with them to understand their problems in a way that I don’t know of any other company that has done. And we invested a tremendous amount of time, and then we had to prove it. We identified the problem.
Josh Riedy
We identified a path to a solution, and we didn’t get paid until we proved it, Brett. But we did that, and it didn’t come overnight. It came from many years of hard work. But by earning that business with Excel, energy utilities are a very unique market. It is a fast follower, close knit, heavy influence market. And so all of that work for Excel isn’t just for one company. It’s for a company that spans five states, ranging from the canadian border to the mexican border. And so really we had the opportunity to establish strong product market fits to make sure our products were spot on with one customer, but one very large customer. That allows us to pivot and sell into the market as a whole with far more velocity than our peers would have due to that deep relationship.
Brett
If we look at the market just like an understanding of what that looks like, how many utility providers are there in the states?
Josh Riedy
Oh, that’s a good question. So there’s two sides to a coin, Brett. There are the nonprofits or the cooperatives similar to my grandfather founded, and those represent roughly half of the market. From a user perspective, the rest of the market and where we currently place our focus is generally investor owned utilities that comprise the Edison Electrical Institute. And if I’m not mistaken, those institute members number, I believe, in the 60s. But the market as a whole is roughly 800 entities in the United States.
Brett
Got it. Super interesting. How have you seen your messaging evolve over time? Has it been the same since you started?
Josh Riedy
Yeah, I laugh a little bit, because that has been a journey as a Founder. All the things that we don’t know, we rebranded recently from airtonomy to Thread. And the reason we did that, to answer your question, Brett, is to more comprehensively and more easily tell our story. We are the Thread that spans an entire organization, or an entire utility, in this case, across all their assets. We are that common Thread across their organization in the aim of building a comprehensive digital representation of their physical assets. And we really had to start with the customer and what the customer needed. But we’ve learned over time to be less deliberate in explaining exactly what our customer need and to relate more to the market, relate more to the prospects of what bread can mean from an investment perspective. And what that is really.
Josh Riedy
I’ll go back to the mashup between robotics and ERP. That really leaves us in no man’s land. Speaking frankly, we do not have competition. There is a space to void. To your earlier question, that is a huge market opportunity. But what that means is it’s also difficult to describe that because you’re really speaking to two sides of a coin. And so that’s still a work in progress, Brett. But the best thing that we can do is share the results of what our customers are finding through case studies. And through that, we are developing a vernacular that is specific to the market, but yet relatable to investors.
Brett
Something else I want to ask about is funding. And I saw on your website, I think it was earlier today, or I don’t know when it was actually announced, but I saw that Kevin O’Leary had invested. So anyone listening in probably knows who he is or thinks. So take us behind the scenes. What was that deal like? And what’s it like engaging with Kevin O’Leary? Yeah.
Josh Riedy
Well, I’m glad you asked. And it’s been great to meet Kevin and his team, Paul and Matt and David. As I mentioned earlier, North Dakota is becoming a thriving ecosystem for entrepreneurs, even though it’s overlooked and it’s little known. That changes with people like Kevin O’Leary taking notice and coming to the state. And I won’t pretend to know the origins of that, but Kevin was able to meet the governor and meet members of the state and took an interest in the entrepreneurial spirit that resides within this ecosystem. And so as a startup, one of our challenges was being from the Midwest during a pandemic. You can function in relative stealth without trying. And so people like Kevin O’Leary taking notice, which one of his best investments on Shark Tank is a company that was from Fargo. Maybe that’s where the tie came in.
Josh Riedy
But when they stated their intention, they wanted to begin working with North Dakota companies. We got an introduction early on. We were able to work with Paul and Matt and David and his team. And then I had the luxury of meeting Kevin and talk about a stand up guy. It’s when we had our first retreat where we brought our entire team to Fargo, North Dakota, in March of all times, the dead of winter. But it was really entertaining to be able to cross paths with Kevin and the team in the same hotel for the better part of two days. And that’s what really solidified the investment soon after. And Kevin and his team have great faith in where we’re going.
Josh Riedy
And it really, again, similar to Brad Smith, been another step forward in us as a team and myself as a Founder, gaining confidence and momentum within a unique market position.
Brett
Who else is on the cap table that’s famous? You got Brad Smith, you got Kevin O’Leary. Are you just master here at getting these celebrity investors to join us?
Josh Riedy
Yeah, that’s about it. I wish I’d say any others, but those two have really left a mark on me in particular as a Founder. But our company, it sounds like you.
Brett
Have some ties there to Leonardo DiCaprio, the movie. So maybe he’ll.
Josh Riedy
Yeah, and if Leonardo’s. I hope he’s listening. I hope he wants to invest in the namesake of the revanant and for a great cause, which is renewables and utilities. So we’re all ears if Leonardo wants to give us a call.
Brett
Yeah, he’s one of our most engaged listeners, so he’s definitely listening in now. Josh, let’s imagine you were starting the company again today from scratch. What would be the number one piece of advice you’d give yourself?
Josh Riedy
When I pause and I reflect, it’s almost embarrassing, Brett, how little I knew. As a Founder, I better appreciate today than ever before why investors like second time founders. And I read something that was unique, that one of the best prospects is the second time Founder who didn’t succeed the first time. And while I hope I don’t fit into that category, I can very much appreciate that. Specifically to your question, coming from the part of a country that did not have much vc activity, especially at the time, I believe circa 2018, less than one half of 1% of domestic vc came to the midwest. If you can imagine how small that number was in North Dakota, it was virtually nonexistent. And so having an ecosystem that would support us at that time was great.
Josh Riedy
But yet what I really needed to do at that time was branch out and widen my network. Unfortunately, that is about when the pandemic occurred. And so it was really driving a startup forward in a bubble, if you will. And so I’m trying to make up for lost time by understanding the industry. But for me, it would be developing a network faster and more robust and something that Microsoft and Techspark have been great in helping. I call it the exchange program for geographically disadvantaged founders. But being able to connect with the Seattle area has been wonderful to make up for lost time. So I would say the network effect, if I could do that all over without a pandemic, would very much put a lot of effort into that to learn the things more quickly versus the hard way.
Josh Riedy
And I think the second piece of very simple advice I give to founders is when you are young, make the most and best use out of Y combinator and techstars and all of the documents they have that if you can’t use one of their templates, you’re probably involved in a legal situation or an agreement situation that is too complex for your stage of development.
Brett
Love that advice. Now, final question for you. Let’s zoom out three to five years into the future. What’s the big picture vision that you’re building here?
Josh Riedy
If I step back? There is a generational opportunity, Brett, and what that’s brought by is utilities making the pivot into renewables and making a pivot away from large opex, which was fossil fuels and uranium, to produce power. The huge capital investments that are being done over a span of 20 to 30 years with power purchase agreements with the likes of everyone from utilities to brands like gap to the Walmarts of the world. So they’re front selling that energy to be able to fund those projects. A very long way of saying that industry is going through a change that is profound and will drive us as a society forward for the next 50 years. Being at the precipice of that change and having digitization occur in a way that only another utility could create, which is Excel.
Josh Riedy
I didn’t mention something about them, but I think it’s something that’s worthy and not a coincidence. Excel CEO at the time sat on the Bloomberg stage in 2018 and that was the first utility to declare carbon free by 2050. That is the same year I quit my day job to begin working with them to create this maintenance strategy. What we’ve coiled on since 2018 is coming to fruition. And when it comes to fruition, Brett, what epic is to electronic medical records, I do believe Thread will be to the digitization of our nation’s utilities and energy, and perhaps even DoD to follow. So that space being occupied by Thread with a new product category is where I intend for us to be in that time frame.
Brett
Amazing. I love the vision. I really enjoyed this conversation. We are up on time, so we’ll have to wrap here before we do. If there’s any founders that are listening in and they just want to follow along with your company building journey, where should they know?
Josh Riedy
Check us out on Thread one. I am not a prolific poster, but feel free to reach out on LinkedIn and connect with me. Happy to spend the time that I can sharing with founders and a huge supporter of those that are trying to make a go of things.
Brett
Amazing. I love it. Josh, thank you so much for taking the time. This has been a lot of fun. Thank you Brett.
Josh Riedy
Take care.
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 episode, 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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