How do you differentiate your product from competitors when the core technology driving it hasn’t changed since 1980? How do you win customers with alternative energy when they have been using gas and diesel for decades? And how do you pay your team when supply chain disturbances keep messing up your cash flow?
These are some of the questions that keep François Byrne up at night. François is the founder of Hybrid Power Solutions, a company that sells portable battery systems and customized energy solutions across a variety of industrial markets, from mining and railway to public transit and construction. If there was ever a story of the little guy taking on big industries, this is it.
“We started off in the mining industry, where we won some contracts because we were able to show there was a 79-second payback period on our product.”
Byrne showed the big mining companies, in other words, that his battery offset enough of their costs to pay for itself in under two minutes.
“Typically, mining companies will use a diesel engine to power their equipment down in the mine. But for every horsepower of diesel that goes down there, there’s a certain amount of breathable air that has to be pumped in too. And that costs money.”
The advantage of a portable battery, as Byrne tells it, is that there are no fumes, meaning you don’t need to pump in all that additional air—or absorb the cost of doing so.
“Our power pack is 4,000 watts, which is equivalent to about five or six diesel horsepower. If you do the math on the cost of pumping that extra air down a shaft that's 4km deep, it’s very, very expensive. That’s how we start saving mining companies money in as little as 79 seconds.”
After establishing a foothold in the mining industry, Byrne’s battery packs began servicing anywhere portable power was needed—from large-scale transit and construction operations to individual weddings, boats, and RVs. They then introduced an entirely new product for the consumer space, “a less-expensive alternative to the Tesla Powerwall.”
“For a small company, innovation is the way you stay competitive, because the speed at which we can move is twice as fast as these larger companies. Speed is really our only advantage, so we have to capitalize on it.”
That was no easy achievement. The thing about batteries, after all, is that over the past several decades there has been very little advancement in lithium-ion technology—that is, on the battery cells themselves.
“The industry is limited in how it can innovate at the cell level.”
So how were they able to make their battery pack less expensive than Tesla’s? Simple: by innovating on the product’s design.
“Simply put, we made our Power Tower expandable: it comes with one battery, but you can add up to 24. So it allows you to start off at a much lower price point and then work your way up based on your exact needs instead of having to buy a very expensive system and then having to double or triple the entire system each time you outgrow it, which is what Tesla does.”
The innovation, it seems, worked.
“I think a lot of people get into entrepreneurship and think that it's going to be money, money, money. And there will be money. But I don't think money is enough motivation to power through your business challenges on a day-to-day basis. You have to have a real interest in what you’re doing. If I can take somebody and say, ‘Hey, look, we don't need to be burning a diesel generator 24 hours a day, you can use this cheaper and more sustainable option instead and you're not going to have any kind of compromise,’ I mean, that sounds pretty awesome, right? So for me, it’s about cheaper and more sustainable energy. For others it might be something else.”
“Since we launched the consumer product a year and a half ago, it's accounted for about 60% of our business.”
There were other ways for Hybrid Power Solutions to compete, too.
“For a small company, innovation is the way you stay competitive, because the speed at which we can move is twice as fast as these larger companies. Speed is really our only advantage, so we have to capitalize on it.”
“It can’t be the cell itself, so how you stay ahead is with the rest of the components: how do you integrate the chargers, the battery management system, the actual mechanical enclosure based on how people want to actually use batteries? How do you innovate on that design and user experience front to make the batteries durable, rugged, weatherproof, and so on?”
A small team of 13, Hybrid Power Solutions has the luxury of being nimble, allowing them to try out new ideas, spin out product lines, and iterate fast.
“For a small company, innovation is the way you stay competitive, because the speed at which we can move is twice as fast as these larger companies. Speed is really our only advantage, so we have to capitalize on it.”
But to stay innovative, Byrne had more practical business matters to contend with.
“Because of how slow supply is moving these days, I need to purchase things four to six months down the road. And best case scenario is I’m getting paid in month seven. That's a huge amount of stress on our cash flow.”
“The pandemic really affected our supply chain: I used to be able to get things from overseas in five weeks at the absolute latest. Now the best case scenario is 16 weeks. So it's a huge difference in time.”
That wouldn’t be such a problem, were it not for how it affected his cash flow.
“Because of how slow supply is moving these days, I need to purchase things four to six months down the road. And best case scenario is I’m getting paid in month seven. That's a huge amount of stress on our cash flow.”
Fortunately, Driven is there to bridge the gap.
“That’s why we looked into alternative financing. We’ve got tons of booked sales, but we just can't complete the transaction because we don't have the equipment yet. And in the meantime I need to pay my team.”
“There’s a cost to borrowing the money for sure, but it’s worth it if you know that the sales are going to come in. Plus it was quick. We didn't have to fiddle around with paperwork for three or four weeks, we didn’t need guarantors. It was a simple process. The rate was straightforward, the program was straightforward. And I know it can cover us for the next short period of time to get us over the hump.”
Byrne was willing to take on the debt, in other words, because he was confident in his company’s future revenues.
“There’s a cost to borrowing the money for sure, but it’s worth it if you know that the sales are going to come in. Plus it was quick. We didn't have to fiddle around with paperwork for three or four weeks, we didn’t need guarantors. It was a simple process. The rate was straightforward, the program was straightforward. And I know it can cover us for the next short period of time to get us over the hump.”
Even when future sales weren’t a guarantee, Byrne reflected a confidence in what he was doing that made him willing to push through the hard times.
“I think a lot of people get into entrepreneurship and think that it's going to be money, money, money. And there will be money. But I don't think money is enough motivation to power through your business challenges on a day-to-day basis. You have to have a real interest in what you’re doing. If I can take somebody and say, ‘Hey, look, we don't need to be burning a diesel generator 24 hours a day, you can use this cheaper and more sustainable option instead and you're not going to have any kind of compromise,’ I mean, that sounds pretty awesome, right? So for me, it’s about cheaper and more sustainable energy. For others it might be something else.”
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