Smokestack industries: how GlassPoint is disrupting the world's largest market for renewables
Smokestack industries: how GlassPoint is disrupting the world's largest market for renewables
From getting fired by investors, to rebooting the company after it went bust, to a pipeline representing 4.4 million CO2 tons per year, this is GlassPoint founder Rod MacGregor's remarkable story
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Rod MacGregor, Founder of GlassPoint, is a lifelong serial entrepreneur whose career trajectory changed after he read ‘An Inconvenient Truth’ by Al Gore.
“I read ‘An Inconvenient Truth’, as did one of my co-founders, and I thought, ‘We are engineers, we can help with the problem.’ We were inspired to make a difference at scale. That’s how we entered the industrial heat market because that’s where you can make the biggest difference the fastest.”
In the mid-1980s he entered the startup game as a young Scottish entrepreneur, and went on to build 5 venture-backed high-tech companies, resulting in an IPO on Nasdaq and some trade sales. But from 2009, he turned his attention to the climate crisis, tackling the tough-to-disrupt industrial heat market which is the largest end-use of energy, responsible for more CO2 emissions than electricity and transport combined.
The beauty of GlassPoint’s breakthrough solution lies in its simplicity: a wilderness survival technique involves using a magnifying glass to concentrate the sun’s heat to light a fire. GlassPoint amplifies the magnifying glass technique to dimensions never before seen. It captures and magnifies the sun’s heat in giant purpose-built greenhouses, using large, curved mirrors that concentrate sunlight onto pipes, causing the water inside them to heat til they reach boiling point and generate steam.
“We built GlassPoint up from just my living room to about $100 million in revenue, $400 million in enterprise value, and 300 employees worldwide. We have manufacturing in China and projects around the world,” says MacGregor.
From barely evading bankruptcy when struggling to secure investment in GlassPoint’s early days, to reaching $100 million in revenue, to being fired from the business by investors to being asked to come back as CEO to restart the company and redesign the business model after it went bankrupt during the pandemic, MacGregor has had both a rock and roll green techpreneur journey and an outsized impact on combatting climate change.
Today, GlassPoint is the only industrial solar thermal solution proven at scale critical to help the massive and underserved $444 billion industrial heat market meet net-zero goals. It recently closed an 8 million Series A round which it will use to develop the world's largest solar thermal project with Saudi Arabia's national binding champion, Ma’aden. The scale of the project is unlike anything the world has seen before, with GlassPoint greenhouses that span 6 kilometres in length and width.
“We set out intentionally to help with climate change,” says MacGregor. “That was the goal. The goal wasn’t to make money, it was to make a difference to climate change. And the fact we're able to do that and make a measurable difference – the Ma’aden project is going to reduce emissions by 600,000 tonnes a year – that says a lot. That’s a lot of carbon.
“And that's just one of our projects. If we were to converge all projects in our pipeline it would represent 4.4 million CO2 tons a year, that’s like taking more than a million cars off the road. It's not every day you get to be a part of something that can make that kind of difference. That's what gets me out of bed in the morning, going to work on that.”
What was finding investors like?
It's always tough, especially when you're doing something that no one's done before. Of course, the venture community prides itself on investing in innovation, but it usually acts as a group; ‘we're all interested in regenerative AI, we're all interested in renewable energy, we're all interested in test drives,’ whatever the movement of the moment turns out to be.
Industrial heat was not the movement of the moment in 2009, we were very much going against it, so it was very difficult to get money in the early days to get the company going.
What was a make-or-break moment for GlassPoint?
In 2010 we were heading toward running out of money. Our initial funding had come from friends, family, and my co-founder and me. We were broke. We were about to get our first institutional money payment, we had an investor who had given us a term sheet, but he repeatedly delayed sending the promised funds. We kept waiting for the check, and I resorted to using my credit cards to cover our payroll. All my cards and my co-founder’s cards were maxed out, and at that moment, I thought, ‘if the money doesn't come in this month, we're in big trouble, I can’t do this again." Then, that month, the check finally arrived. It was both exhilarating and terrifying at the same time.
How big is the industrial heat market and why has it been difficult to decarbonise?
Heat is the largest end-use of energy. It’s bigger than electricity and transport combined. So even if the entire grid came to be decarbonised and all of our transport was running on renewable fuels, you still couldn't solve the fossil fuel problem unless you do something about heat. Industrial processed heat is used in most manufacturing processes, everything from a brewery to a dairy pasteurising milk, to a drywall factory, an aluminum refinery, processing bauxite, and a petroleum refinery.
We call them smokestack industries because they're burning something to make electricity and heat: it's the largest market for renewable energy in the world – it's bigger than the entire electricity market. And you’d think it would be decarbonising, but industrial heat hasn’t changed in the last 10 years. Why hasn’t it decarbonised? The first reason is very simple, it’s cost. Decarbonising could multiply energy costs by 10, that’s a huge impediment.
The second is that you wouldn’t decarbonise. If you look at the amount of emissions that come from a kilowatt hour of electricity, about 400 grams of CO2 per kilowatt hour, and where does that come from? Even in places with lots of renewables you still have coal, gas, and diesel plants in your network. Combine these two things: it costs 10 times as much, and you don’t decarbonise, and it's not a shock that it's not happening.
That's where we come in. We provide industrial decarbonisation using solar, at half the cost of traditional heat, using three times as much steam per square kilometre of land, enabling double the decarbonisation.
How does the GlassPoint innovation work?
We deliver heat in the formula that industrial players currently use, normally that’s steam. Today, they'll get that steam from a boiler. So we provide them with a flow of steam that is identical in temperature, pressure and quality to the steam they would have gotten from the boiler. In many cases, they keep the boiler in place and plug the solar field alongside, so they have two sources of steam they can easily switch between.
A plug-and-play zero-carbon solution to industrial heat
Without having to change anything, customers get renewable steam with zero carbon footprint, instead of steam that was produced by burning fossil fuels. It's one of the keys to adoption; they don’t have to completely abandon all the investment they’ve made so far, and change the way they do everything.
GlassPoint went bankrupt in 2020. What happened and how did you make a comeback?
Getting fired
When we had reached $100 million in revenue, investors came to me and said; ‘Rod, you’re the startup guy, you’ve done a great job taking us from zero to $100 million, but we think it needs some professional management now and we're bringing in somebody from outside.’ I did not agree and didn’t think that it was a smart idea at that point. But there’s no choice if your board decides it's time for you to go. So I cashed in some chips and moved to Lake Como and I was expecting a nice big fat check at the IPO, unfortunately, that didn't happen.
The pandemic disruption resulted in bankruptcy
Our initial focus was oil and gas. We were providing energy for oil and gas because they were the biggest user of industrial processed heat.
It’s a cyclical industry, it has ups and downs, and the business model was one where we were selling our solar thermal greenhouse equipment. So when we built and sold our product we were creating revenue, but when we finished building we would hand the keys to the customer, and he would own and operate it, so there was no recurring revenue. If you bring those two things together you have a risk if there's a down cycle. And then COVID comes along, prices plummet, and all the customers say ‘Well, let's stop.’
We were right in between building phases of the project so there was no revenue coming in, but the burn rate was scaled to building mega projects. The company's major investors were related to oil and gas, Shell, and a sovereign wealth fund, both of them stopped investing, so the company ran out of cash. It should never have happened, Glasspoint had orders, customers, and technology that worked, but it became insolvent.
Rehired to bring GlassPoint back from bankruptcy
Three years ago, the original institutional investors contacted me and said, ‘We're doing a restart, we'd like you to come back and run it,’ and as I was not enjoying retirement I jumped at the chance and came back to manage the restart.
GlassPoint is now growing much faster than ever before. The Saudi Ma’aden project will be by far the largest in the world, it’s five times bigger than any other processed heat. It's a testament to the fact that the current environment is very different than it was back in 2009.
Redesigning the business model for recurring revenue
The previous business model had this problem in that the cash came in big lumps, and there could be large gaps, so we wanted something that would be smoother.
From a customer's point of view, if you say, ‘We're building a solar array, please invest $600 million.’ He'll say, ‘What else could I do with $600 million?’ You are competing with his main business for capital. So if he’s a refinery, he could expand his refinery, he could develop another mine; there are a lot of things he could do with $600 million, and the renewable energy project will rarely have a higher return.
Selling steam as a service
Today you pay for your energy in the form of fuel and you pay-as-you-go for gas and oil. With us, you will now pay as per pound of steam delivered and that means we’re not competing for capital with the customer’s main business. We're asking for probably less than what they’re currently paying for fuel and we haven't changed their model so adoption can happen much faster.
One of the differences is that we now have to fund the construction which can be hundreds of millions of not billions of dollars of project finance that we have to raise so that they can now buy steam as a service. It made our business more robust; these agreements are typically 20 or 25 years of contracted predictable revenue. That change to the business model was not without its own issues, but it accelerated adoption.
What are your top tips for green techpreneurs?
Watch the cash
Cash is more important than your Mother. Even if the company is doing great, watch the cash. Cash is like breathing and your profits are like eating. You can go a long time without eating but you can't go very long without breathing – cash is the single most important thing.
Stay in touch with investors about succession planning
Founders don’t like to think about this, but the chance that the founder CEO will still be the exit CEO is extremely low. Most founding CEOs are not the CEO at the IPO, so be upfront, discuss it with your board, stay in touch with your investors. Make sure that when it happens, it happens in a controlled way that everybody has planned for, so it’s not like it was for me – a bolt from the blue that you weren't expecting.
What’s ahead for GlassPoint?
Industrial heat is a huge market and we can’t target everything, so we have to go segment by segment. Our initial target segment is metals and mining, especially the metals involved in the energy transition, things like copper, lithium, aluminium, where the energy input is very large during the mining and processing phase.
We have 42 projects in our pipeline, representing about $12 billion of CapEx, the vast majority of which are in the metals and mining segment. Most of our projects have been inbound enquiries, people contacting us saying, ‘I have this steam need, can you help me decarbonise?’
In industrial heat, there's everything from hydrogen production to automotive applications, making rubber for tires, soda ash, which is a precursor for glass – these industries are keen to decarbonise, which we'll get to, but for now, we're focused on metals and mining.
Is there a life philosophy you follow?
Never give in! – given that I’ve managed a restart I think that's appropriate.
If you look at founding management versus professional management, you'll see a very different approach to companies. The founder believes fundamentally that his business will be successful, he does everything in his power to make it so. Professional management starts with the basics and says, ‘will the business be successful?’
Those are very different approaches and that comes back again to the ‘never give in’ because the founder will meet obstacles, many of which will appear insurmountable, but he will just keep going. For a founder or entrepreneur hope is what it’s all made of, if you're not hopeful kind of individual, you would never start a company.
What advice would you give to your younger self?
As a boy I lived in a council house tenement and my Dad looked out the window at the grass, and there was all this litter. He said, ‘if you could pick that up, I'll give you six pennies.’ I realised that if I could give the little boy next door three pennies to pick up the litter, I could buy a bag of crisps, and everybody would be a winner.
We did this for a few weekends until my dad spotted the boy and said ‘what’s that wee boy doing picking up the garbage?’ I said, ‘well, I gave him 3 pence and he’s doing it.’ My Dad said, ‘I see, well that's obviously the price for the job, from now on I’ll pay you 3 pence as well.
I thought he'd be pleased that I was an entrepreneur, but the lesson there is, if you don't add value, you'll be eliminated from the supply chain. I learned that really early on.
……………….…if Rod could teleport himself into the future, and be anywhere, doing anything, he’d “retire in Lake Como and figure out how to enjoy it this time, after we’ve saved the planet. There's nothing that makes me more humble than looking at the beauty of nature and the scale and realising that you're insignificant compared to all of this outside the window.”
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