Entrepreneurs for Impact (EFI) Podcast: Transcripts
#171:
Mike Hall, CEO of Anza Renewables — Smarter Solar and Battery Procurement. Private Equity Investment. 500x Solar Growth. Ultimate Frisbee Meets Buddhism. Founder Happiness Without Unicorns.
Podcast Introduction
Chris Wedding:
My guest today is Mike Hall, CEO of Anza Renewables. Anza is a solar module and battery storage procurement platform that helps developers and project owners see more options in less time to increase project profits and productivity.
Mike is a longtime solar industry veteran with 20 plus years of experience, including the former CEO of Borrego and board member of SEIA, the Solar Energy Industries Association. In this episode we talked about what he's learned as the solar sector has grown 500x since he got involved. How their platform is saving hundreds of customers, think developers, project owners, EPC et cetera. Saving these customers millions of dollars and moving gigawatts of product into high quality projects. Why Economies of scale procurement contracts don't always lead to cost savings. Despite comment, understanding the path to founder happiness without reaching unicorn status and how ultimate Frisbee and Buddhism keep him calm and centered as a leader. How about that for a combo? Anyway, please give Mike and Anza a shout out on LinkedIn, Slack or Twitter. I'm sorry X by sharing this podcast with your people.
Finally, one last request before we press record hop on over to Apple or Spotify to rate, review or follow this podcast. As you know, I don't take any sponsors for the podcast, so this little gesture of support means a lot to me and the guests. All right, thanks so much. Hope you enjoy it.
Podcast Interview
Chris Wedding:
Mike Hall, Co Founder and CEO of Anza Renewables welcome to the podcast.
Mike Hall:
Thanks Chris. Good to be here.
Chris Wedding:
So as we discussed earlier, some folks call it Anza, you call it Anza. As long as someone is saying your name and wanting to do business through you all, who cares, right?
Mike Hall:
That's right, yeah. Who cares? Even people at Anza, we have a distribution and we joke about whether it's Anza or Anza. Yeah, internally. But I think you're right. It's probably technically Anza. It comes from Anza Borrego, so the desert in eastern San Diego county. And so it probably is Anza. So it's continuing theme. Our, our first company was called Borrego and so this is Anza.
Chris Wedding:
Yeah, perfect. Maybe just sticking with that. Why pick names of a desert or from the desert for two solar companies, I can imagine, but help us out.
Mike Hall:
Yeah, so Borrego Solar was actually namely inherited. So it's a really interesting company. History, the history of Borrego, my history with it started in late 2002, but the company has history all the way back to the early 80s. So there's a gentleman named Jim Ricard who was a professor at San Diego State who started this part time business doing off grid solar and storage actually in the 80s for people who are moving to Borrego Springs when there was no grid infrastructure and the modern day Borrego was born out of that business. So we just kept the name and obviously it moved beyond Borrego Springs into something much bigger. But we kept the name and we had so much history with that name that when we started the new company we're like, oh, Anza. That sounds good.
And there's a continuity there that we want to keep. So.
Chris Wedding:
Yeah, I'm with you. So you mentioned 2002 being in solar. I think somewhere online I saw a reference to 20 plus years in solar and over the time seeing the industry grow by at least 500x. It's a big old number. And I wonder if maybe you could talk about at a couple of angles here, maybe milestones you've seen or maybe it's advice for going from nascent industry to, you know, trillion dollar industry. Because I think a lot of folks listening to the podcast, you know, they're working more on the innovation versus the deployment side of things. And so, you know, clearly more tech risk, clearly more nascent industries. But gosh, the hopes of course would be, let's flash forward 20 years.
Just like with solar, we've got very large industries employing, you know, tens or hundreds of thousands of folks, anyway, go back in time and then bring us to the present. And how may that translate to these earlier staged subsectors in the energy transition, if you will?
Mike Hall:
One of the things, I think that people who are working in solar today, or people who are even younger might not appreciate about what it was like back in the early 2000s was that were dealing with a new technology. This technology that was viewed as being quite risky. And it was really hard work to even get the early adopters to pick it up. So if you were driving around the suburbs In California in 2002, you could go for days and not see a single rooftop PV system. Now, if you drive a block, you're going to see five. And so what that meant for us, as were starting, and we started in, the only part of the industry that existed back then, which was residential rooftop solar, was everyone were pitching was new to solar and nobody even knew somebody else who had solar.
So that meant it was tough. And I remember going around, I was pitching in people's houses, probably trying to. We were pretty effective at marketing, so I could get three, four, five meetings a day. But I went for six months before we really got much of any traction, before were able to sell beyond, you know, our uncles and cousins and father's friends. So it took a long time and it took a couple years for the flywheel to get going. But I guess, like with any new technology or any new industry or anything where you're. You're fighting to disrupt the status quo, which was just to pay your utility bill and not think about alternatives. It takes time. And the way in which you have to sell that and communicate that to the customer changes.
Now, I don't do residential solar, but if you were to go to a homeowner, you can shortcut. So much of the communication that we used to have to do to just kind of try and prove to people that this stuff worked and that could actually save them money. Now, you know, homeowners just like, yeah, I'm going to get solar. Like, I know my neighbors have it. I know it makes sense. Everybody's got it. You know, it's like, it's probably time for me to do it. Back then, there was so much convincing we had to do. I mean, we had to get really into techy stuff. And so I think it's like that with any new thing in the beginning, you have to get. You're dealing with the early part of the adoption curve, and those early adopters are much more technical.
Buyers and they need a lot of information. And so that selling process is. And that communication process is really challenging. And then at once you get to the kind of meat of the adoption curve, it's very different. So you know, that was something we experienced and we're experiencing it a little bit now with our business where in Anza we're also really trying to disrupt the status quo around how large buyers are doing procurement. Like we're convinced we've got a better mousetrap and that we can typically companies can save millions of. But you know, we've got two decades of status quo that we're fighting against and so there's a lot of communication we have to do for sure.
Chris Wedding:
Yeah. I think listeners again who are working on more of the, let's say hard tech, deep tech, etc. Where there's clear tech risk can resonate a lot with everything you just said. I think they're all facing the same kind of, you know, conundrums around how to get around those things. I think what also may be true is that you know, as you know very well, one of the unlocks for mainstreaming solar was business model, not just tech. Right. Obviously going from hey, would you like to spend you know, whatever 80 grand today for 30 years of power versus hey, would you like to sign here either for loan lease, PPA and your cash flow positive month one.
And I do see more, I think more entrepreneurs looking on these kind of performance based or convert CapEx to OpEx type models to make the yes easier you know, for customers. I think the other thing in solar that we've benefited from is, you know, that's it's productized, right. You have a module and you obviously have balance the system and so forth. But a large piece of that being a module. It's like how can new tech productize, modularize versus every new installation being super customized right to the site which doesn't really allow for coming out of cost curve like solar is done, like wind is done, like battery storage is doing.
Mike Hall:
Yeah, you're hitting on a lot of important issues and I think you're right on both accounts in terms of what were some of the changes that made step changes in the solar adoption. So when Sunrun and then SolarCity quickly followed started offering residential PPAs that was game changing because you're exactly right. It made it moved it from okay, I got to write a $50,000 check or borrow $50,000 on my home equity line to okay, wait a minute, I just make a payment Each month that's less than my utility bill. That drove a lot of adoption. I think there's also cautionary tale there about the economics because SolarCity ended up doing okay, but that's just because they got bought by Tesla in a kind of related party transaction.
I mean, but I think if you go back and do the financial forensics, those PPA is, weren't necessarily profitable. I think I'm glad they did it. It was great for the industry. But I think you have to be careful and just prudent in how it is you're offering customer financing in whatever structure it is, because you have to think about as you're growing your business, you know, offering that customer financing, depending on the underlying economics of it, probably going to require some amount of investment. And what are you getting for that investment in your business? Like are you getting some, are you building some competitive moat or are you building some place in the market that's defendable?
I think that was less true in residential solar where there's kind of zero switching cost and if the neighbor wants to use a different provider, it's pretty easy. It may be more true in other technologies or other parts of the industry. Like if you're trying to develop a alternative battery chemistry and you're making those investments in customer financing in order to get to a manufacturing scale that you really believe is going to drive better unit economics, then okay, maybe it makes sense. But you just gotta be careful. It's pretty easy to lose or spend a lot in offering customer financing. The other thing you talked about was the product side. That's something else that changed a lot. I don't want to spend all the time talking about residential solar because it's not actually where I spend my time today, but.
Chris Wedding:
Right, let's switch to Anza. Yeah, yeah.
Mike Hall:
Well, I'll just say one last comment on it, which was that in the early days the products were really immature. I mean were like hardwiring J boxes and modules and the inverters didn't work that well and we didn't have microinverters or DC optimizers. And so every system really was like custom designed and that was put a lot of friction in there. And so as the products matured, as they became much easier to install, as the racking matured, as we got to microinverters in D.C. Optimizers and we kind of had infinite configuration flexibility, it really also accelerated and massively reduced costs. And so I'm sure there's definitely equivalence in Every other industry, we definitely see it in storage, too.
Chris Wedding:
Yeah. Well, let's switch back over to the real focus of our conversation today of Anza Renewables. And just looking at some of your stats online, I'm sure these are outdated by now, but over 150 companies procuring through your platform. I think almost two gigs or maybe more than two gigs of solar modules sold and 100% growth, I think, just this year. So maybe correct the numbers, but they're big numbers for sure.
Mike Hall:
Yeah, we've got over 200 companies in the platform about. I think we're around 80 companies who have actually worked with us on procurement, meaning we've worked with them on actual orders for solar storage. We're expecting to have booked about 2 gigawatts just in 2023, which will put us well over 3 gigawatts total. And we're over a gigawatt hour in storage just for 2023. That's on the storage side, it's like 400% growth. On the solar side, it's about 100% growth. So we're growing pretty quickly. We've got, you know, roughly 40 gigawatts of projects in the platform. So, yeah, it's been a wild ride. We started the business within the umbrella, corporate umbrella, Borrego, really in earnest in 2022. We were dabbling with it in 2021, but we've only been our own company since May. So, yeah, it's been really exciting.
And the fact that we can grow, that we've grown like we have in 2023, I'm really proud of. I actually just sent an email to the company with our stats and talking about how proud I am because it's been a tough year for solar and storage. I mean, it's. It's been tough. Like, orders are generally down. 2022 was bumpy, but ended up being pretty good for the industry once Biden waved his magic wand on the oxen petition. But 2023 has been tough. And for us to have grown, you know, triple digits this year, it's. I think it's. It's really incredible.
And I think it's a testament to, like, people, customers and potential clients as they engage with us, realizing just how much untapped potential there is in procurement and how really a lack of data and technology are causing them to waste a tremendous amount of time. Like, people are really valuable. They're wasting a ton of time, but also consistently leaving millions of dollars on the table because they just don't have the data. They don't have the data and they don't have the technology to analyze the data. And that's what we're bringing.
Chris Wedding:
So what does it mean to have 40 gigawatts of projects on the platform?
Mike Hall:
What it means is that we generally categorize them as buyers. Most of them are independent power producers, but in some cases they could be EPCs or pure play. Developers have registered for an account which you can do for free. They've put the basics of their project information like, okay, where is the project? How big is the project? When am I going to need modules? There's the option to put in some more advanced information about your project, like your PPA rate and any assumptions you want to make about the financials. They've input those projects into the platform and Anza has delivered to them what we call a ranking table, which is this is really the power of Anza, is we've aggregated all the data from over 90% of the US module supply.
We brought it all together and then we can serve it up to customers in seconds. So what you can do through Anza is you can put your project in and in a matter of seconds you can see tens of different solar module options and you can compare those options not just based on price, but with the Anza technology allows you to do is compare the modules holistically and take into account differences in production, see the revenue value of those differences in production. And then also we've got a really sophisticated engine that actually estimates total EPC or balance of system costs. And so you can compare like two different modules that might have different nameplate ratings, so you might have more or less number of pieces per megawatt, or modules that string differently, or modules that sit on a tracker differently.
We can look at all those differences and actually give you a quantitative value for what we expect you would be able to save from one module the another in terms of EPC and balance of system cost. So we boil that all into what we call the effective dollar per watt number, which is where we think the industry needs to go and to stop thinking about just how much am I paying, but start thinking about how much am I getting. And that's what the effective dollar per watt in a single metric. It allows you to take into account not just the price of the product, but also total lifetime production and expected differences in EPC costs. We don't see anyone else out there doing it. And so we're, we think that's part of the reason why we're growing so much.
Chris Wedding:
And when you say effective, I think dollar per watt or dollar per kilowatt hour, do you mean that you're factoring in like out like labor into that number as well?
Mike Hall:
I guess, yeah, we are. Yet. I mean we're obviously making estimates. But if you show the, to our engaged customers, the customers who are working with us under contract, we'll show you the math so that you can use it with your apc. But yeah, we have a model that, and it came from doing EEPC work for 20 years at Borrego where we can look at the module form factor, we could look at the module compatibility with the trackers, we can look at how actually how the modules string and we can put all that in and find differences in hardware and labor costs between the different modules. And for mid and large scale projects it can be hundreds of thousands or millions of dollars. And those differences right now are really difficult for buyers to see. It's really opaque.
It's even difficult for the sellers to see. The, the module producers themselves don't really understand how small differences in their product can lead to significant differences installation cost. And so that's a big part of the value we bring is a way to like rapidly make these comparisons.
Chris Wedding:
And what I thought you were going to say was that by seeing all of the demand for I think mostly, well, not mostly, but utility scale and DG distributed generation, solar project by single, the demand that you were going to be pulling the buying power to get a lower price from the vendors, is that part of the play or not so much?
Mike Hall:
It's a little bit, it's not a big part. So this is probably counterintuitive, but we don't think, and we actually think the industry's broadly backwards on this, that scale is your best tool to get a good deal. So we collect two types of pricing data. We're really careful with how we share this because we maintain confidentiality with our supplier partners. But we have what we call public pricing, which is what you're able to get through the platform. And it's probably valid if you're buying the 1:5 or 10 or 15 or 20 megawatt scale. And these are prices that our vendor partners supply to us on a more than once per month frequency. And so that's just always sitting there on the shelf and our users can see it.
And then the other thing we maintain is we think we have the most robust database on what we call private pricing for lack of A better term and that's actual real bids that vendors are offering to mid and utility scale, mid sized DG and utility scale buyers. So we have all that data and if you analyze it, what you see is that there's actually not a great correlation between scale the purchase. There's not zero correlation but it's not that strong an influencer on the price. So I think a lot of large ipps are like, look, I'm going to make a gigawatt or multi gigawatt buy in order to get the best deal. And we by and large are trying to counsel our clients to not do that. And there are a few reasons.
One is yeah, you might get a slightly better price but you're having to make a much longer term commitment. And in most cases the pace of technology development and price declines are such that it's are faster than the vendors realize they're going to be. And so you're not able to bake that into your long term contract. Like for example, we see a lot of customers today who signed, you know, gigawatt scale contracts in, you know, 2022 or even 2021 and they thought they got this amazing deal on mono perk and now there's this new cell technology, Topcon and our math shows that's worth several cents of value in addition to the prices having fallen. And so all those contracts are well out of the money.
The other thing is you're usually signing up to certain delivery times or certain procurement timelines and projects are unpredictable. And so we see a lot of inventory issues in the market which cost a lot. Usually that cost is more than whatever the savings you get for bulk. And then the last thing is every project, the optimal module for one project is not necessarily optimal module for another project. If you've got different PPA rates or you're in different locations in the US with different, you know, insulation profiles, we can usually show you that there might be a different module choice that's actually better. And so we generally don't believe in the hey, one big bulk buy and supply all your projects for the next couple years.
We know there's this want to like, hey, I want the biggest buy because I'll get the best deal or I want a hedge for everything and we usually can find there's a better way.
Chris Wedding:
Yeah, that's a great response. Each of those points I hadn't thought about often enough to say, well actually the multi gigawatt purchase is actually not in your economic interest to do so. So how do you all get Paid. How do you make money through Anza?
Mike Hall:
Yeah, so we sign, we call it a engagement and consulting agreement. And what our customers will do is commit to working with us on either all of their projects or some specific set of projects or some specific volume of procurement. And then with that they get full use of the technology beyond what you get for free online. They get access to our full data set and then they get all of our team there as technical consultants and we take the buyer through a process. Ultimately the buyer is going to, if you're in the mid and large scale, we're just going to put them in direct contract with the vendor and we take a fee, you know, it's a fixed per watt fee and we get paid some at transaction and some at delivery.
So yeah, so we're taking a small piece of the total procurement but we're on the buyer side of the table and that our fees, you know, we're aligned with them to get the best possible deal.
Chris Wedding:
So what portion of your, I don't know, business model or revenue or whatnot is let's say automated software, et cetera, versus consultative and requiring, you know, some expert in procurement to engage with a specific client on a one one basis.
Mike Hall:
So today customers pay one amount and they get everything on storage. I caveat, storage is a little different. We have two different offerings on storage. We have a procurement service and then we also for some subset of our customers who are not buying a full AC block solution but end up buying like a D.C. Block and kind of doing like light self integration with the DC block and an EMF energy management system with software and a PCs. We do like integration assistance which is a separate service but generally customers are paying us that fee and it covers everything. Today we make heavy use of the technology, we make very heavy use of the data, but there is a lot of people power behind it. We're moving more and more of it into the platform.
But every engagement we do today has a heavy dose of Anza people power, which is something else that even the made in large scale IPPs really appreciate in value because a lot of these companies even who are doing annual volume in the gigawatt scale have you know, procurement teams of one or two or three and they're tasked with not just solar modules but also storage and maybe even negotiating EPC contracts and switch gear is a big problem now. And they've got all these things to do and so going back and forth with each vendor to try and gather their pan file or their racking compatibility report or you know, do the diligence on the hail rating and you know, all those things and doing that one vendor at a time is so time consuming.
And we've like no, we have a team, we have a database, we have a platform where the vendors can interact with us directly. We gather all that data and just serve it up to you. But still, yes, in the end it comes with a heavy dose of people power. That's what we need to do today.
Chris Wedding:
Yeah, yeah. And is there given that there's kind of a fixed fee for getting access to the platform and all the kind of proprietary data and so forth. How do you talk about, you know, the kind of stage, let's say or the size of a developer or IPP etc. Where it makes sense to engage with you all versus if you're only developing X which is a small number, then it, you probably don't see the return on engaging with your expertise.
Mike Hall:
Yep. So we do have, and you know we're, we're early days but right now we have two basic offerings and for customers who are buying either over 15 megawatts in a single purchase or over finger cutoffs around, I can't, I shouldn't know the exact number but it's around 30 megawatts, 50 megawatts per year, annual buy. Then we are going with the model that I've been talking about for customers who are buying much smaller volume. You know, like we have EPC customers who buy 500 kilowatts or a megawatt for behind the meter projects. We actually do have a slightly simpler offering which is we'll just sell modules. So we have existing master supply agreements in place with 90% of the US supply. We have pricing sitting there on the shelf.
We have pre negotiated terms and so we'll basically be able to help that customer base. The value to them is that they can see all the options and they can step right into our contracts that we have so they can transact very quickly. So we do have an offering for the smaller part of the market. It's not the majority of what we do is for mid and large scale projects. But we are trying to help the smaller part of the market see all their options and navigate to the best deal and be able to transact quickly.
Chris Wedding:
I'm with you. Yep.
Mike Hall:
Yeah.
Chris Wedding:
And can you maybe talk about the investment to start and really grow a platform like Anza, I know you obviously you have some kind of big name institutional investors among others maybe. What, what convinced them that this was something to get behind.
Mike Hall:
So probably two different situations. So with Energy Capital Partners there was an existing relationship because we had actually spun out a different Borrego business that they'd bought our development business, which now called New Leaf Energy. So were already kind of in dialogue because we'd done that previous transaction. But they got really interested really quickly because ECP has a number of portfolio companies that are developers and ipps. And they, at the fund level even were starting to get involved in these procurement challenges. They saw that it was difficult for their portfolio companies to transact, period, but very difficult to get information, really difficult to have confidence that they were getting a good deal. And they were struggling with this question of, hey, do we do big bulk procurements? You know, either within companies or even across the fund.
And they didn't really want to do it. And we came and pitched them on what were doing with Anza and they saw the power of it. They're like, yeah, this is, we're asking all these questions, our portfolio companies are asking all these questions and not able to get the answers. And I can just log into Anza and get all these answers. And so they said, yeah, like our portfolio companies need this, which means the whole industry needs it. And then when we showed them it was before we actually had the effect of dollar per watt. But our approach to taking into account energy production and balance of system cost as an owner through their portfolio of projects, you know, they were instantly wowed and said, yeah, we need to be considering this. Like there's untapped value here.
You know, if you can increase the profit on a project by $2 million and that's something that we can't do without this data and technology, like we need to be doing it. And so that's what got them interested. Angeleno. I think they were really interested in the technology part and I think generally saw that the industry and there's also a relationship that they've been in the industry a long time. I've known them for probably 15 years. But they saw, I think the world similar to us in that, you know, we're this just in the US like a 30 plus billion dollar industry, but globally like a $300 billion industry and we're not utilizing modern data structures and technology to make better decisions broadly.
And so when we said, hey, we're going to try and apply that to the procurement landscape and here's the size of the market and they realized that this was a place where we had a lot of domain expertise. They got on board pretty quick.
Chris Wedding:
That's exciting. So you referenced two very big numbers just there. You know, us versus global. I think so far I've heard you talk about your focus on the US market. Is that the focus? Is there a plan to do this globally? How easy is it to transition from US to global?
Mike Hall:
Yeah, it's a great question. I think saying there's a plan would be like overstating it, but I think there's certainly a vision.
Chris Wedding:
Okay.
Mike Hall:
And a dream. And it's within, I guess you could say it's within the long term strategic plan. And we've played around with some numbers and we have gone to conferences and had people come from like Western Europe, Eastern Europe and Latin America and look at what we're doing and say, hey, we need this work in our home country. So I think the need exists everywhere and I think it can and will scale to other countries, but our share of the US market is still small. And so we still got more work to do here to kind of drive adoption and get people thinking about this new way of working. And you know, candidly, we've not done, you know, been an entrepreneur and business leader for 20 plus years and not done anything internationally besides a tiny bit of stuff in Canada.
So I have to be like humble about, you know, what we don't know about international expansion.
Chris Wedding:
Oh yeah.
Mike Hall:
But I think it's in our future. I think the two ways that we really want to grow the platform are internationally expanding our existing solar and storage offering, but also getting into other parts of the system, the inverters, PCs, the racking, which is actually an important problem, but a harder problem than the storage modules in some ways. And you can imagine even getting into balance of system and electrical components and eventually services and then, yeah, expanding into new countries and new markets. I mean, that's where we want to take it. I mean, the vision is for Anza to be the place the solar and storage industry go to rapidly make optimal design and procurement decisions. And right now we're tackling solar modules, storage products, us.
Chris Wedding:
Yeah, well, I mean, you've got to start with focus, but boy, what a huge total addressable market to go after just in the US for those three things.
Mike Hall:
Yeah, we think it's a good place to start. That's why we started there. Yeah, it's also the place that we know the best.
Chris Wedding:
And I'll ask you one more business, then we'll switch over to the mic portion of the podcast. Sure. Do you talk to prospective customers about like, oh, on average we save X percentage of, you know, of cost. However you just this new metric of cost really kind of. But do you give ranges or estimates?
Mike Hall:
We do, we do, yes. I mean the problem is it's so variable. So we had a 500 megawatt case study that we looked at where we found roughly $30 million of value compared to the trajectory they were on with the current supplier. I just actually was looking at this is not customer under contract with. But I was doing some analysis for potential customer. I found that it was pretty easy to get to $30 million of value versus the staying with the, a long term procurement contract that they had in place. So you see these big numbers, you know, our typical, I think the rule of thumb we use is like, you know, two and a half million dollars for like a 50 megawatt order. But you know, it's highly variable.
It's, it's, it depends on, you know, what this, what the current status quo is, what the current assumptions are, but also where the project is and when they're buying and what the market looks like at that point in time.
Chris Wedding:
Of course, yeah, of course. Lots of factors, but ballpark, those are very big numbers.
Mike Hall:
Yeah. For the utility scale, especially if you're talking about looking at an alternative to a deal that might have been done, you know, six months or probably not. Not a lot of deals were done six months ago. A deal that was done like a year ago. And I don't want to like take too much credit. The market has also moved. It's, it's a more of a buyer's market than it was a year ago. So some of that is, you know, the market's improved, but you are looking at tens of millions of dollars typically at these large scales. And what we can help is we can help making sure you're getting to exactly the right point.
Because the third best option compared to the first option, maybe the third best option still gets you 20, but the first best option might give you 27, you know, and $7 million. A lot of money. And that's what we can look at the whole market, you know, not just the five vendors who, you know, are really responsive to an RFP.
Chris Wedding:
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Let's switch over to the mic portion here. So Mike, if you're giving advice to, you know, either your younger self or say emerging professionals on how to build a more effective, impactful, happier, even career of impact, what is a piece or two of advice you'd give them?
Mike Hall:
Oh geez. Such a big question. I guess one thing I do often talk to entrepreneurs about is really thinking about what type of business you want to build. You don't have to build a unicorn billion dollar business to be happy. I remember I was doing some coaching for an entrepreneur who they had built this technology product but we're doing a whole lot of customization work in order to make it work for different customers. And they were generating value and I think they had this dream of like doing a series A and a series B and a series C and making it really big.
And I looked at, I'm like, I think this is a good business, but maybe it's just three, four, five of you and you own the whole thing and there's a big service component and you know, you make a good living and have a lot of fun. But I think you're trying to be something you're not if you're trying to grow this into a billion dollar business. So like I guess thinking really about, you know, what is the true potential of what you're doing, you know, how does it scale and realizing that not every business needs to scale to be successful or to be, to make the entrepreneurs happy. So I think that's one piece of advice.
Yeah, yeah, definitely be careful about raising the right type of capital and knowing when and for what purposes is it a good time to use debt versus equity. I see young entrepreneurs often getting confused about that and saying, hey, I, you know, debt is cheap, I don't want to give up my company. And well, okay, but equities got a lot of advantages. It might be expensive capital, but it's got a lot of advantages.
And I guess one of the advantages that come with having, you know, been an entrepreneur and business leader for 20 years is that you see the up and down cycles because when things are going up and the market's moving up and the company's growing and you know, rising tides, floating all boats, it's easy to get forget that things are going to turn at some point and you might wish that debt was equity. That's a lesson I've learned.
Chris Wedding:
Well, and although debt may look cheap, and I mean mathematically is cheaper than equity, if things don't work out, you can't repay your loan, you don't lose a little of the business, you lose all the business.
Mike Hall:
Yeah, yeah. I mean, more likely, I mean like banks hate to foreclose. So whether you lose all the business or you just, you know, lose your sleep and your sanity, you know, it's something you're going to lose a lot. Yeah, but that's exactly right. I mean, that's the problem is it's, you know, things go bad and all of a sudden you're out of covenant on your bank loan. That is real bad. It's not great when you have to tell your investors you're missing your numbers, but it's not nearly as bad as going to the bank and saying, we're out of Covenant, please don't foreclose. So yeah, I mean, yeah, that's a financial lesson. I mean there's lots of others, but those are two, that, those.
Chris Wedding:
Are, those are two good ones to start with. How about, different topic. What are some habits or routines, daily, weekly, etc that keep you healthy, sane and focused on the entrepreneur's journey for 20 plus years? Mike.
Mike Hall:
So personally, like I, I'm big into sports, I'm big into exercise. So I'm I, I just repaired my ACL, but I was a runner and hopefully I'll get back to it. I got into the road bike, big into team sports. I'm a big ultimate Frisbee player. And so I, I continue to compete competitively even in my 40s. Not even just playing team sports on the weekends, having a hobby, I guess, whatever it is, especially one, I think that keeps you fit and that helps you sleep at night. That's been important to me. I am a strong believer in meditation. I go in and out of being a consistent practitioner, but I always know I should be and I think it's tremendous. Like when I've done it consistently, you know, Five, six days a week. It's really helped.
But even if you're not always meditating every day, mindfulness and thoughtful pause, I think is really valuable. I'm a big believer in. I don't think I coined the term. I might have derived it from another term called leader standard work. But I'm a big believer in personal standard work, even for C level executives, which is that I'm a big. I studied lean. I've studied lean a lot, the Toyota production system. And standard work is a basis for improvement. I think a lot of people think that applies to like reoccurring, you know, manufacturing tasks, but that it doesn't apply to knowledge work and it doesn't apply to leadership. And I think it totally does. I think even as a leader, you should have your own personal process with what your reoccurring activities are, even if those activities are really creative.
And so I've been using this system called personal standard work for more than 10 years. And it's kind of just the anchor that keeps me sane. When, you know, everything's. When there's chaos around you and you're like, okay, what is it that I should be doing now? You know, it's anchor to go back to be like, okay, what did I say the most important things were? What did I commit to doing? Okay, let's make good on those commitments.
Chris Wedding:
And if folks were interested to learn more and they Google personal standard work, are they going to find something?
Mike Hall:
They might not find anything. If you, if you Google leader standard work, you'll find some. There's not a lot. I'm kind of surprised that more hasn't been done on it. There's a lot on OKRs and other, you know, other things like that which are related, but that's more at an organization level. But personally, as the leader, how do you manage your time? How do you manage your priorities? How do you use visual management to make sure you're on top of them? Which comes from lean. There's some literature and education and training on leader standard work. And personal standard work is just a derivation of that. Because I think it, I use the term personal standard work because I think it applies not just to leaders, but really anybody. I'm with you working in a knowledge role. Yeah.
Chris Wedding:
Okay, so folks could look up leaders standard work and then apply that to not an org necessarily, but to their own processes, let's say.
Mike Hall:
Yeah, yeah, I think it's, it. I think it's really valuable. It's one of the most valuable habits I developed, and I try and coach all my people on it.
Chris Wedding:
Great. Yeah. On the, on the ultimate Frisbee piece. I've got a friend who's a little older than me, so he's 50 and used to play it a lot. And then every time I talk to him, he's like, oh, I tore this muscle. I tore that muscle. I was like, maybe it's time for a different sport, my friend. But you avoided those tears, I guess it sounds like, huh?
Mike Hall:
No, no, I've done them all and I just keep going back to it. Yeah. I mean, I just did knee surgery. I've had shoulder surgery. My kids teach me. Like, why do you keep doing that? Because they're, they think I'm always hurt. My mom called me fragile, and I'm like, shut up. It's hard for. It's hard sport, you know.
Chris Wedding:
That's awesome. That's awesome. The meditation piece. Totally agree. You know, for longtime listeners of the podcast will know that I've been practicing, underscore practicing for 25 years. Love hanging out in monasteries, read other books. But yeah, it's. It comes and goes. Luckily, as the kids are. Are mostly teenagers now, it's much easier to have a regular practice. Yeah.
Mike Hall:
Yeah. I find even though if you're not, if you have practice and let's say you're going through a few weeks where you're not meditating, that, like, having done it gives you that, like, pause or that space between like, input and response, you know, like your ability to like, control or you're also your ability to be aware of, hey, I'm feeling this way right now, but this is probably just right now. And like, it might, it will pass. You know, like, I don't know, there's a certain self awareness that seems to. At least for me, it sticks with me even if I'm not meditating every day.
Chris Wedding:
No, it's, it's well said. What. One of the favorite quotes in our CEO peer group at Entrepreneurs for Impact is a Viktor Frankl quote, which. I thought you were going to quote it verbatim just now. It's something like in between stimulus and response, there's a space. And in that space is our power to choose essentially kind of who we are, our growth, et cetera. And my extrapolation to the, to our peer group members is I believe that meditation helps us increase that pause. Right. To be more conscious. Not every, not every single time. But anyway, that's my hope.
Mike Hall:
At least I've heard that quote. I didn't. Yeah, I've heard that quote. I think it's dead on. Yeah. And I think you're dead on with. That's what meditation does. Increasing that increases the size of that space. Yeah.
Chris Wedding:
Yeah. Let's go one last one and we'll. We'll call it a. We'll call it a pod. What are two or three books or podcasts or quotes or tools. Something else folks can pick up in addition to the leader standard work.
Mike Hall:
Yeah, I'm looking at my. I keep a list of books. I'm looking at them. I guess some old ones, oldies but goodies that I really like are 7 Habits of highly successful, highly effective people. Except 7 Habits is still a good book that holds up how to Make Friends and Influence People, I think is a good one. I like all the Jim Collins books. Good degrades a famous one. But I actually like how the Mighty Fall better, which is about. I really like reading about corporate failures. I think you can learn a lot. But also it's really fun. I mean, like a. From a voyeuristic perspective. There's actually a really cool Wall Street Journal one. It's only got two seasons called Bad Bets. And they the first season, I think is Enron and the second season was Nicola, the kind of.
Which maybe they're making a comeback. But you know the SPAC on the hydrogen vehicle that didn't actually exist. Those are some good ones. The. I like the culture code. I'm looking at that right now. And then I guess one other Kobe book, I think it's the sun because Kobe wrote the 7 Habits is the Speed of Trust. It's a great book. And it sounds cheesy cause it's about trust. But actually it talks about trust, cultural trust, the components of trust, and how trust is a business asset and a business accelerator when it exists within an organization and across organizations. But it really kind of gets into it and dissects it. And I use that framework like all the time.
Chris Wedding:
Well, and maybe it's from that book, but the expression, you know, business moves at the speed at the. What is the. It's not the speed of trust, but it's related to the level of trust, let's say.
Mike Hall:
Yeah, I mean it's. The book is called the Speed of Trust. It. That concept is in there whether that quote is from there or not. But the idea that this was actually in our development business was huge because we realized that the more authority that we could give to the frontline developers, the faster they develop projects. And in development it's all about speed. And so like that was one of our competitive advantages in that business was just that were able to build this framework that allowed for a high degree of trust. So we talk about that a lot.
Chris Wedding:
Well Mike, we should have made half of the podcast about culture and leadership versus just the last 15 minutes here. Anyway, great. Really strong ending here on Anza. I've already got Some names CEOs in our peer group that I think need to know but if they already know about the work you guys are doing, hey listen man, rooting for your all success cool that you've got, you know, repeat big name investors that continue to believe in back in the product you will create.
Mike Hall:
Thanks so much. It's great to talk to you. Appreciate it.
Chris Wedding:
Thanks for listening. And if you want more intel on climate tech, better habits and deep work and join the thousands of others who subscribe to our substack newsletter at entrepreneurs for impact.com or drop me a note on LinkedIn. All right, that's all y' all. Take care.