Entrepreneur Spotlight

Project Lead - "SOPHIE smart shower" at Leopold-Franzens Universität Innsbruck

by the p2i Network

ENTREPRENEUR SPOTLIGHT

Interview

Featuring

Pavel Sevela

Pavel's Journey

It would be great if initially, you could give us a snapshot of your entrepreneurial venture and what it brings to the world. What problem are you solving, and what solution are you providing?

“We call our project ‘SOPHIE smart shower’ and our vision is to produce the hot water systems of the future, today. We are driven by the fight for climate change and we are trying to improve the energy efficiency of buildings in Europe, because buildings are the main polluters of the environment in Europe. Although the heating requirements of buildings have decreased significantly over the years, the amount of energy needed to provide hot water has actually slightly increased. In our search for potential energy savings, we discovered a previously neglected aspect – the energy consumption of showers.

The problem is that 22 million cubic metres of hot water is landing in the sewage system daily without any further use, which is terrible. 70-80% of this wasted hot water comes from showers. So hot shower water is the biggest energy polluter in the household as a single application. The second part of the problem is the energy efficiency (or the energy losses) of the hot water preparation systems. About 50% of your energy bill goes on the hot water you use itself, and the other 50% goes on the preparation, storage and distribution (stand-by losses) of the hot water system. With this knowledge we decided to build our product to solve both of these issues.

Our competitors mostly focus on just recovering the heat from shower water, but not on solving the issue of the heat loss during the preparation of the hot water. Therefore, we made a hot water module through which warm waste water flows when showering, and it uses this heat to preheat the incoming fresh water. The heater is also placed in a location to avoid all circulation and storage losses. This hot water can then also be used in other hot water applications besides showers in the household.

We don't deliver a component; we deliver a compact hot water system that can be installed quickly and easily, which we believe is the key to a higher acceptance of such a technology. We also hope this will speed up the process of the product being adopted by craftsmen and also architects & developers, since the burden of decision making is as small as it can be with a design-flexible pre-installed system.

We conducted market research to figure out if we could be competitive in pricing, and we established we could produce the module and charge an end price below the market expectations which gives us a green light to continue.

If we were to capture just one percent of the German market, it would create a turnover of 45 million euros a year. We also believe that this market is going to grow even faster because of the motivation to go green and focus on renewable energy. SOPHIE smart shower would pay for itself in a normal household in about five years’ time. But of course, in applications where the device is used more intensively, such as fitness studios, it would take in less than a year.

We have finished the first funding round as a spin-off project financed by Austrian research promotion agency FFG by programme Spin-off Fellowships. We have invested 280k euros in two years, so now we have our prototype finished and we are looking for 50-150k euros further co-funding in order to develop a minimal viable product in cooperation with an industry partner.

An issue we are facing at the moment, is that the building industry is very old-fashioned regarding start-ups. They don't cooperate with start-ups if it's about hardware that they have to install and take responsibility for. They only tend to work with established companies because they are certain that they will not face any issues with their hardware and possible delivery of replacement parts in the future.

Our team consists of only two full-time people - Johannes and I. We have others supporting us, but we are waiting to be fully funded and for our project to gain a certain level of traction before we expand the team.

Just this year, we won the second place EUREGIO innovation prize, so there is obviously interest. At this stage, we are finding that many industry partners and companies are curious, however they want to wait a while until we finish the product and test it under real conditions. This is actually our struggle at present; how to finance this time. We are striving to generate 150k euros for the next funding round because that will cover our own resources. The additional 70% would come from the Austrian funding agency, so we are aiming for half a million in total. It may end up being multiple investors so we have set the minimum investment at 50k.”

How did you come up with your initial idea and has it changed compared to what your venture does now?

“As a child I used to wonder about heat and energy wastage. I remember asking my mum one day about how the old buildings and cars in the city made the air warmer. This was back in the 80’s when it wasn't mainstream to think about climate change or the effect of our actions. Both my co-founder Johannes and I actually dreamt of being inventors.

I spotted this issue with hot water during my master's studies at the Technical University of Denmark, whilst completing my thesis. We are in the 21st century now, so we feel we could do better than letting the hot water go to waste in the sewage. We figured out that some technology for heat recovery did exist. We tried to work with the local partners in Tyrol on various application projects and learned why they don’t like using separate components and have been overwhelmed by the uncertainties. The different components are not guaranteed to fit together, and work with each other. They prefer complete solutions, like a plug-and-play device where they don't have to take any responsibility regarding complaints of the users. Complaints such as how to integrate this new component into their common hot water scheme, possible legal issues, or simply the water pressure being too low and so on… so we decided to try to solve the pain of the customer by making an integrated, simple to install shower heating solution.

We had one major pivot in our project. We weren’t aware of one hygiene standard, and after we discovered this four months in, we had to pivot and work with a different type of heat recovery technology, essentially starting from scratch again.

As part of our journey, we tried to focus on talking to and interviewing our customers and stakeholders. We defined certain customer groups - from developers to architects, planners and customers like you and me - I think we have 7 in total. We tried to interview at least 10 individuals from each group. We wanted to understand their needs and what the design, technical and user requirements are for such a system. This helped us design our product to date and we’re still learning from our interviews.”

So you've obviously mentioned your co-founder. Who does your team consist of and how did you meet?

“It was in a very interesting way, actually. Initially, I decided to work with a friend. I wrote a project application with this friend, and the second revision was approved. However, in the meantime his life moved on somewhat. His girlfriend became pregnant and he wanted to have more security in a new job, so I quickly had to look for a new partner for the project. I found someone, but it soon turned out it was not the right person. After two or three months, we parted ways because he was not convinced about the project.

Once again, I started to urgently look for somebody else and a friend of mine told me that she had a friend who was “an engineer”. When Johannes and I first met, we also found out we share the same values. We met the others in our team through being active in the field. We talk to people, go to webinars and attend conferences. And at these events we manage to meet people who are interested in our project, so our support network has evolved quite naturally.”

How does your team complement your skills?

“My co-founder and I were a pretty good fit from the start, as he had a slightly different background in engineering. He was a do-it-yourself guy, being able to handle anything from electrical wiring, and reporting, to heavy duty jobs. It was a great fit because together we could work very quickly to make the first prototypes. It was going at a much faster rate than would be possible in any other university project, with this, let's say, old-fashioned procedure. We were moving quickly with trial and error.

I think our biggest support has been Professor Rainer Pfluger who is actually co-leading this department. He's this crazy professor (like from the movies!). Nobody knows how his brain works, but he brings together the most controversial ideas and he's a very inspiring person.

We're also super happy to be able to use the department space here. We are grateful to cooperate with Holger Bock on the legal issues and Christoph Drexel, who retired from his manufacturing company to be able to do things he feels more passionate about, and so he became our mentor. He pushes us and gives us the reality checks we need.”

Is there a recent achievement you are especially proud of?

“I’m really happy that we managed to get our first paying customer. That's the more difficult part because we don't have the product finished yet. In April 2022, we are supposed to be building two of our prototypes for a public sauna in Innsbruck. It’s great because we will be able to fulfil the main KPI that every investor wants, which is to apply it under real conditions. We’ll be able to measure, gather feedback and data from the operation and be able to say: “hey, these are the real savings we achieved with our product!”.

We will also learn more about the functionality. As it is a public facility we are able to approach it out of the opening times at any point, which is great. Whereas if it was installed at someone's home, it would be harder to approach regularly.

Our initial intention was to make it a pop-up shower in a public swimming pool for three months, for example, and then take it away. But they've been super motivated and want us to install fixed showers. Initially we weren’t sure if it was a good idea because we can't take any responsibility whilst it’s in development, but they want to be the first and to be the pioneers so they decided that they're going to pay for all the installation works. We have to pay for the material initially, and if it works after three months, they will cover the price for materials too. It’s a big milestone and it's something we have strived for, for a very long time.”

What has been the biggest challenge you faced and how have you or are you overcoming this challenge?

“It's definitely job security. At the end of our previous funding, we had to decide whether to continue, or get a regular job. Both of us had pretty decent job offers as well, and I was quite tempted to take the offer, but in the end we decided to remain unemployed for an uncertain period of time in order to progress the project further. It was quite a challenge.

We still have an office because of the support of the departments leader professor Wolfgang Streicher and we try to get some small consulting projects in order to cover the missing income, or at least partially. But it was quite a challenge to decide to go this way.

I think this is an issue for many entrepreneurs, because there is a lot of support at the very early stages, and then at the very end. To begin with, you have a great idea which everybody is excited about, however then you have to figure out if it works, create proof of concept, get your IP and your first paying customers, etc.

You need massive injections of funding to grow, which in the early stages is quite easy to attain. But at the point where you have already invested time and funding to create a functional prototype, however it's not quite working yet and you need more time, nobody really wants to invest. Everybody wants to say, “I’ll wait a little bit and see what happens and then jump in, but keep me up to date please”. So I think we are in this valley between the two mountains of funding.”

Did you always know that you wanted to start a venture?

“It was always somehow on my list. I grew up in a family where my parents have been self-employed in consulting, so it was always a dream to be able to realise an idea.”

In your opinion, what are the similarities and differences between researchers in Academia and researchers turned start up founders?

“Well there is a very big difference. I can't say how it works for everyone, but the typical way is that you secure your IP during the research time, and then you focus on marketing your research. This was not the case for us. We started our project on our own because every funding institution told us it was too risky to fund the actual development of so much different technology. We had to go in a start-up direction. We were told there was too high a risk that the product would not work or that somebody else was already creating the same thing somewhere else in the world. We wanted to do the research & development first in a typical way, apply patents and then move into a start-up, but that was not possible so we had to squeeze it all into one project.

That's probably why we have this gap in funding now, because we didn't have enough time to actually develop the technology until the very end.

I think the start-up approach is as everybody would expect. It was intense and focused. There were definitely less coffee breaks and less chit chat in the kitchen. It was more about trial and error. We tried dozens of things. It was not always possible to follow the typical scientific process where firstly, create the massive overview of everything, then you find pros and cons, then create simulations, etc. No - we went directly to build & measure. We did start with the simulation, but it was too slow and we knew that it would take us the whole project just to make a perfect computer model. So instead we decided to go straight to doing the prototype testing; measuring and revising and so on. We knew that if it worked, we could just optimise the last 20 percent using some simulation tools. In a typical research approach, it would take several years to achieve what we did in half a year with our approach.”

What were the skills you already had as a researcher that helped you with your journey and what skills did you/do you need to learn?

“I can't really say how it works for everyone but I think it's largely about the technical skills, having a holistic understanding of the problem and recognizing a market gap.

As researchers, we tend to have very little understanding about the market requirements. I think the biggest difference is that most university projects are written with partners you are familiar with, through connections, without looking at the hard truth. A lot of people have their favourite topics that they like to research.

It was also quite disturbing working on big projects with dozens of industry partners; I was never sure who was going to read the material I sent and that was very frustrating. So in contrast, developing a product with a certain function and a big vision of it being applied on a great scale, was much more satisfying.”

You’ve participated in the Ignite programme in Cambridge. Can you list a few aspects (mindset, skills and competencies) you have observed in yourself after participating, and how has this has helped you in your entrepreneurial ventures?

“Yes, p2i sponsored me to participate in the Ignite course in Cambridge. It was actually really eye opening. Before the p2i event, I felt a bit awkward having thoughts about spin-offs, because I felt like I was betraying the university fundaments and felt as a misfit at my home university. I was thinking about doing something to profit my own future; to become independent. During the training in Cambridge, I learned that actually, applying the research is what it’s all about. And who else can do it better than the researcher themselves? Because if it’s not them, things get lost in translation; there’s too many steps between the idea and the application.

I learned that it’s not a ‘bad thing’ to start a venture whilst at university; it can be a great synergy for the university and for researchers with the aspirations to start a venture based on their research. The university actually owns the IP rights so they should promote spin-offs even more. The training gave me the feeling of a community and the confidence to set the goal, and go out and make it happen.

I stayed in touch with the mentors from the Ignite programme training. We had several one-two-one meetings even afterwards, which was great.

For me, it was not just about one week of training; it was about changing my mind set and becoming an entrepreneurial ambassador for our university. The idea is getting widely accepted that we need to encourage more start-ups in Austria and it's definitely a movement which is evolving and growing. It’s as though Austria is trying to catch up, but the inspiration is Cambridge.

Additionally, before the training, I thought it was just about the technology. I believed that if the technology was working, everyone would want it. However, that’s not true. You have to know:

how much the customers are ready to pay, so how “fancy” you´re allowed to build your technology
who is actually making the decisions
what the size of the market is
who you should be presenting the product to
what the pitch is

So, it gave me insight in all aspects of creating a start-up. Since then, I have had to pitch a lot, in several languages, spanning from 30 seconds to 30 minutes, so the training really helped.”

Would you recommend engaging in entrepreneurial activities to other researchers? Can you explain why? What would you say to postdocs who want to pursue an academic career and perceive entrepreneurial activities as a shift away from their academic goals?

“I think it should stay a matter of a choice, as everyone has different priorities, however I would recommend it to everyone. I think universities should be interested in making more spin-offs, and in encouraging training that makes their researchers more focused and more connected to reality.

I have an example from my own experience. During my studies we completed a big project building a real full-scale energy efficient building for a student competition. I was in the building services team. We completed some simulations and then we took some measurements, and my colleague was saying “the measurements destroyed my simulation”. For me, this was the most scary thing ever. He didn't want to face the reality because it could destroy all our hard simulation work. This is exactly the mindset that needs to be destroyed in academia.

So I feel that it might be described as a disruptive approach to teach researchers about start-ups and the whole entrepreneurial approach, but we as researchers should be able to handle the facts so that public funding is used more efficiently.”

Did you have a supportive PI while you were starting your venture or did they need to be convinced that this would be a great opportunity for you, them and the research team? If they were hesitant, how did you convince them?

“Yes. However, at the beginning - it sounds ridiculous - there was a crisis meeting called out by another colleague of mine. He is a senior researcher and he wanted to stop our project because he didn’t believe it was possible to reach the target we set, and he wanted to avoid shaming the department for not delivering feasible results. We proved him wrong in the end, so that was a nice moment. I appreciate this colleague - we still discuss the topic and he never changed his opinion.

But on the other hand, we also receive the greatest support from our department. For example, right now I am employed one hour a week in order to be able to use the office for the start-up. It's just a gentleman's agreement between my boss Wolfgang and I. So you get the best and also the worst in terms of support. But I know it would not be possible without the university.”

What do you consider as key messages or takeaways from the p2i course for postdocs wishing to start their own venture?

“You need to like, cooperate with and trust your co-founder. It’s all about people. We think we are operating in a modern fact-based world, but in the end you figure out that it is all about whether a person likes you. If the right person likes you and your idea, you will get funded. If the right person likes you, you will get an offer of employment. If the right person likes you, you will get a room to work in. The human factor is so important, and most of all, you've got to get on with your co-founder.”

Is there anything that you would have done differently in hindsight?

“With what I know now, yes! With what I knew back then… no.

Perhaps I should have worked less because I think the time spent in the office and holding many meetings a day is overrated. Because we are actually living in a place where it's worth spending some time outside. We have mountains and snow on our doorstep!”

What are the top skills you would encourage a new founder to develop?

“Resilience. And secondly, the ‘get things done’ approach. This approach is really important. If you don’t have time to write a long email, don’t leave it until tomorrow. Write a two line email. Cut anything that is unnecessary! The more time you spend on one task, which is often unnecessary, the less time you have for another task.

Also, be able to say no. We spent too much too much time in meetings and on calls that simply weren’t necessary. We also spent too long on incubators. This may sound strange but when you are at the very early stages and you receive a lot of offers of help it's really difficult to say no. They pay the consultants for their participation in the meetings which are mandatory for you. I am obviously grateful for the help we have been offered and realise it sounds bad to complain about too much help but at the end of the day nobody besides your team can go that deep into the problem to help you in making decisions - only you and your team-mates can. You really have to learn to prioritise and be able to say no a lot of the time.”

What learning or skills did you feel were missing in your entrepreneurial training, and what (if anything) would you suggest we do differently or add to our offerings to support future postdocs?

“I wouldn’t say it was exactly missing, but I think everybody wants to know how to apply the knowledge to their own project. You learn about presenting, marketing, IP strategies, etc (which is great). These are important lessons which apply to everyone, but often researchers want someone to look at their business plan closely and give their opinion too.

The reason I say this wasn’t missing was because I was proactive and sought out advice from four mentors during and after the program, which was great. But as mentioned, you have to be proactive in reaching out to them. I think the one-to-one sessions have been the most valuable to me, because I was able to prepare my own questions, and transform the knowledge from the general presentations into real future action steps.”

Is there any advice / parting pearls of wisdom you would give to someone at the beginning of their journey?

“Think about why you want to do it before you start. Money is not the right answer. And get a strong team. Be sure that you have the right people. I know there are some start-ups which are composed of a single person, but I would never advise you take this on alone. You need to have somebody on your side who has the same passion, to the extent that they are willing to become unemployed with you if it's necessary. Your partner needs to join you for more than just the prospect of making money, so they don’t leave you during hard times. I think the importance of the team is very neglected. A team itself is really the most important first page of the book.”

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