Energy and Industrial Tech Panel - 361Firm's NY Tech Summit Feb. 25, 2025

  Energy and Industrials Tech Pa...s NY Tech Summit Feb25, 2025 Sat, Mar 01, 2025 10:53PM • 26:59 SUMMARY KEYWORDS Automotive industry, automation, manufacturing jobs, human error, North American trade, energy transition, clean tech, renewable energy, low carbon gasoline, sustainable aviation fuel, methanol, nuclear power, electrical grid, AI in education, family offices. SPEAKERS Alex Zhuk, Eddy van der Paardt, Carl Pro, Matthew Friedman, Brian Neirby, Mark Sanor, Greg Licciardi   Mark Sanor  00:00 Now we're gonna second to last. Matthew's already on. He's transforming in the automotive industry. I've asked Eddie someone find Eddie Carl, so Industrial Tech, energy tech, Eddie ready. Always, always. I love that. We're gonna play ping pong. We're gonna put on a demo right now. Eddie was amazing. And I have to, like, say i We've yet to lose a match, and last night was just but like in life us, most important thing you can do is choose your partner. And I got Eddie. So why? Since you're on Zoom, Matthew, tell us how technology is transforming the automotive industry, if you could. And then we'll go on to the others,   Matthew Friedman  01:02 yeah, so, I mean, I'm a living, breathing example. With the work force becoming increasingly transient and particularly easy in manufacturing jobs, it's becoming very difficult to offer a very reasonable hourly wage and good benefit to get people that come in and want to establish a career in manufacturing. So automation is becoming all that much more important, not just from the you know, operational side, but from a quality and in Section side of things. So the visual in session component is critical. We are being not just asked, but effectively mandated, to invest more and more in capital so that there's as little human interaction with our process as possible, because as much individual human interaction as there is that still needs whatever minuscule percent of human error in place. And all you're doing is putting in 100% 200% 300% inspection to assure that bad parts are not getting out. It really doesn't make a difference, because especially with the important and huge critical parts that we're manufacturing, if there's one part that gets out, even if it's one part in a million, it creates a heck of a stir. So what I would say technology for us is finding a way to not just better design and engineer parts up front, but it's more derived at the process themselves. How can we eliminate as much of the human element out of the process?   Mark Sanor  02:39 So that begs lots of questions, but one of which, what about your competitors? What are you seeing on the competitive landscape and   Matthew Friedman  02:45 technology? So it's pretty much all the same. I mean, every time we go to a company to help provide us with a potential automation solution, we find out that our competitors on the same programs have already contacted us. So it's all the same. I mean, you know, the other thing that bears mentioning is that with what's going on, kind of, within the North American trade supply chain, is that other companies had gone down to Mexico to try and rely a little bit more upon the labor side of things, both from a pricing and you know, your standard hourly worker in Mexico tended to have a much better work ethic, tended to care a lot more about their job and take pride in their job and be more careful with with the, you know, the actions that are being contemplated by the current administration that bringing a big pressure in a lot of those companies that have moved down to next door are now looking to be short back   Mark Sanor  03:44 to the US. So who's providing the technology for you? You're talking about?   Matthew Friedman  03:49 We've got probably, you know, 10 to 15 different vendors in the Midwest. We're based here in Cleveland, Ohio. There's a number of companies here in Ohio. They're doing that. We have a number of companies in Michigan that are critical for that. The big impact on us we feel in very sophisticated, you know, heavy gage, very highly engineered products. When you see the Super Bowl commercial GM pick up that's pulling a space shut all up a rocky cliff, those are our parts that are very carefully designed to do that. But really, right now, the only company that's capable of doing that is a Canadian coup bill, and as a result of the contemplated tariffs that are going on right now, we're looking for alternative sources in the US to be able to provide that capability. We get to find it even, by the way, for this company's US based and Ohio based operations, just that are not equipped to do the same level of process.   Mark Sanor  04:48 Gotcha, maybe I'll turn it over to you. Ed, bigger picture, because you've been looking at this whole landscape. So yeah,   Eddy van der Paardt  04:57 maybe the own button. First of all, congratulations to Matt So, so just full circle, we visited his plant, I think, four years ago, and at the time, it was half the size and double the trouble. So, so you've come a long way, my friend and I wish you all the best. Is really interesting to see the company at the time, and it's really amazing to see how you've grown, how you've managed to escape all the problems and come out much better at agile and now on the way to become a massive success.   Mark Sanor  05:31 But unlike you, Eddie, he was my partner in pick up ball, and we couldn't beat Barbara, right? She's our champion over there, pickleball, silent   Eddy van der Paardt  05:39 kill her.   Mark Sanor  05:41 She did not cheat. She picked a better partner, apparently, better athlete.   Eddy van der Paardt  05:45 I think, I think she's a life long athlete, and we just pretend to   Mark Sanor  05:49 be one. That's over to you. Eddie,   Eddy van der Paardt  05:54 so what do you want me to talk about? Mark,   Mark Sanor  05:58 this is energy and Industrial Tech. This is what you live for, yeah. So I want an instance, an insight, or what scares it excites you, or both? Yeah.   Eddy van der Paardt  06:07 So, so here there's a couple what scares me in terms of, and let me first do, to do a two second background thing. So I'm sort of aware two hats with one hat I'm investing across the across the value chain, across the asset classes for a family office. And we're sort of agnostic the other hat, which is more relevant hat, is the the hat where we invest in, essentially clean tech, agri tech, and energy transition. And so in that space, we invest, typically in early stage break through technologies that could meaningfully contribute to the decarbonization of the world. And that's a super exciting arena for a number of reasons. One this will, this is not a one and done problem. This, unfortunately will for the next several decades at a minimum, before the so called AI solves all our problems, we we will have to sort of cope with the consequences of climate change, whether we believe it or not, and and have to mitigate and adapt. And in terms of energy, we have to create significantly more energy rather than less, because the way we set up, our world increasingly demands more energy and and that more energy, hopefully can be drawn from mostly renewable resources. We've come a long way, and that's the part where stuff excites me. There's a very significant percentage of that energy already in wind and solar who are now mature, respected, sort of EBITDA positive technologies. But as a venture investor, I'm not investing in these because they deliver sort of, you know, mid, low digit return. So that's not very interesting to me. So we, we are particularly interested in investing in sort of local carbon alternatives for technologies that are up and coming. So for example, low carbon gasoline, we know EVs are eventually, hopefully, what's, what saves our transport needs. But only 3% of the world is, is EV and over the next 25 years, it's a massive curve to climb, and therefore, there always be need for, you know, internal combustible engine cars. Luckily, otherwise, Matt will be out of a business park.   Mark Sanor  08:39 He he can, he can build   Eddy van der Paardt  08:43 for so, so low   Mark Sanor  08:46 carb fuel company going,   Eddy van der Paardt  08:50 yeah, so So with 361 or as a result of an introduction from 361 we invested in a company called Naro, which had two massive pivots, one, from low carbon gasoline to soft sustainable aviation fuel, and then from soft to methanol. Methanol is going to be preferred fuel for shipping. Going forward, there's massive amounts of CO two emissions by shippers, and they need particularly driven by European regulations, look for new alternatives that are lower emissions. And those are, you know, either LNG or methanol. Methanol is very big up and coming sort of fuel, transport fuel, and they're going to be the first large one point M, 1.9 M ton ethanol plant in the states that deliver sort of the CI score that you want.   Mark Sanor  09:53 When does it come online?   Eddy van der Paardt  09:57 There's, there's so. So what I'm excited about this if. Investing in those technologies. And the interesting thing in that space is that there's very few sort of, let's say, you know, Silicon Valley type venture firms investing in this, because it's all real assets, cap, ex, intensive stuff. And people, a lot of people, a lot of venture has to shy away from that   Mark Sanor  10:20 well, that segue to Carl. And I know you've also looked at paralysis,   Eddy van der Paardt  10:24 we have an investment in a paralysis company as well. Over to   Carl Pro  10:30 you, yeah, I'm probably the only non financial person around here. I'm a nuclear engineer, so I'm familiar with everything from new plants, from the Navy side, the small, what I call the Corvette plants, to the big, 1200 megawatt plants that we built. Also did the combustion turbines, wind mills, solar panels, and did a little stint as a power broker bought and sold electricity in California. And what scares me is the fact that everybody looks at power generation, and if you're looking at data centers, there's they're looking for a place to find some power, and now you're seeing they're starting up Three Mile Island. They're starting up another nuclear plant that was in Michigan, that was called that was closed down, and those are 600 mega watt plants. I mean, you're pulling a lot of power, and they're locating them there because they can't move it. When I was in California, I couldn't move power from the north of California to the south of California, because when you look at those transmission lines, you got to go through switch charts, and you got to buy space in that switch chart, and there is no space. So California can't move power from up north, where it's real cheap, down south, where it's real expensive. So that's the other thing is, you know, and then solar and wind. I didn't buy any solar wind power, because the risk mitigation of that is you have to back that up. If you have a sunny day and it's real hot and your windmill doesn't turn and you're supposed to put 100 megawatts on the grid, you got to go buy it on the spot market. You'll probably go bankrupt unless you've bought a contract. So everything that you buy in renewable energies, you have another back up power contract, a tape contract to cover that. So nobody is looking at the US transmission system really hard. The voltages are all different. Some interconnects don't work. Cross state lines. There are breakers that never have   Mark Sanor  12:49 all right. Carl, I'm giving you as much money as you want. You're, you're the equivalent of Doge, you can, you can, you can make this change. What will you do?   Carl Pro  12:58 I think there needs to be a national effort similar to the Federal Highway plans, where they did the interstates, that they go out and do that same thing with electrical distribution grid, standardize it around the country and upgrade it. So the one, it's EMP design, so you know, you don't get shut down by somebody putting off a small, inexpensive EMP weapon in the back of a van. The other thing I worry about is the gene pool, and I use this because we built a plant in Mississippi. In Mississippi, the smart kids go to the oil field who you have left are not the sharpest tools in the shed. So I always said this, this gene pool is very shallow. Our schools really suck, and we've got to lift those all up by their bootstraps and get them all better. Don't know how you do it. Yep. My wife was a school teacher. She retired, and she worked in a school where it was the school of last resort. Those kids had been thrown out of every public school in the Pittsburgh area and every private school, and they had, they were taking them on there.   Brian Neirby  14:14 Brian, so I appreciate the background on this. I been doing quite a bit of research in this space, and just recently invested in a direct to chip water cooled, containerized data, you know, mobile data center unit out of Vienna, Austria, and bringing it to North America and other parts of the world. I'm curious, in this research, you mentioned nuclear power, and in doing that work, I read a study that you're 19 years out before that really becomes life. I don't know if that's fact or fiction. You mentioned 600 megawatts, and from what I've understand, it takes 20 million in capital stand up one megawatt, and then two years of dealing with cities and. Land and blah, blah, blah, then you got hydro power. So you've got these huge demands on AI, got huge demands on the grid, like, how do we how do we account for all this with all these different delivery models to provide data center capacity to these technologies?   Carl Pro  15:19 I can tell you, the strategy that I looking at, because I'm trying to protect what we're doing, is that I'm looking at every coal mine and every steel mill that is shut down, and every coal fired power plant, because when they demolish them, they leave the switch yards there. Those properties are worth 10s of millions of dollars, and they're just sitting there, and I'm looking to pick up a couple of them just to hold on to.   Alex Zhuk  15:47 I have a lot of questions. So Ed, you have a question for you, but you just be so I'm gonna ask you first, with regards to the brown fields, which I'm assuming we refer to, I totally agree. I think that's the relatively low hanging fruit. Do you, from your experience, think that's already sat shrewd, meaning that's a strategy already. Of the big ones have gone out and bought up all the steel mills, coal plants, factories, etc.   Carl Pro  16:14 No, there's still a lot available. If you focus in on on the coal mine areas. That's why there's so many battery plants being built in the southern Panhandle of Ohio, in West Virginia, because the power is there. But in my neighborhood of Pittsburgh, there's four really sweet sites that had power plants on them that   Alex Zhuk  16:37 yeah, so completely. Thank you. And then Adi, so to give you just two minute context, the company I may have introduced previously as an a tech company, but we raise capital from Microsoft because we are turning agricultural soils into a carbon sink. And I completely agree with you, actually everything you said, including the capital stack and what many term as the value of death, which, for those who aren't aware, is essentially when a company has raised venture for equity, has de risk completely the technology, but needs to build a factory, or, first of a kind, physical facility, and it's very expensive to do so, and the two options they're left with is either raise so much venture capital that there's nothing left of the company or go to a bank, but not bankable yet, because it's the first of the client facility. And so what you seeing is many companies dying, even though they are building solutions that are needed for the world and also have been de risked. I've been also advising family offices on the climate side, because I believe families can play a very pivot role in this, because they're structurally more flexible. I'm just curious how you're thinking about this, and if you you know generally, what are your thoughts   Eddy van der Paardt  17:53 on this? Well, it's interesting you te this up, and we didn't, we didn't play ping pong yesterday, or did we compare notes? So we're actually looking at probably raising some type of platform or fund to from family office to provide that capital, because it's not coming from a venture world, and for the right reasons, it's not coming from the infrastructure world yet either, because it's, it's, it is bankable, but only if you have enough equity. And the equity is not coming from that piece of equity is not coming from the infrastructure guys, although   Mark Sanor  18:23 they they could cross over a little bit, they are. They   Eddy van der Paardt  18:25 can cross over a little bit for fid capital Right, right before you make the decision to put a billion dollars of steel into the into the ground. And we're looking at a number of investments where we invested in that are looking for either hundreds of millions of a bill or a billion plus more, and it's not coming from the IRA anymore, because that's not killed as well. So where do you go? Well, well, that little piece of capital, which is, no, it's not a little maybe 10 million, 40 million, something like that, right? Is a perfect sort of play for family officers who like to have the risk. Sort of risk sort of risk reward structure is very significant that can come in the form from of a convertible which we did, which we did number of times, where you basically, as a downside protection, have the ownership of the technology and the assets that are there as a collateral, and that can be a digital twin of the plant, etc, etc, etc. And a technology as down side protection, as upside you have, sort of a convertible into the equity round the moment infrastructure partner will invest, which comes with a significant upscaling of the value, plus a, you know, I would say market is now mid teen to high teen return on your on your money, and it's also short term duration, so it's typically 12 to 18 months time in between. Sort of a you have the value of death starting, and your fid starting, and there. And there are a number of of companies to your point, that are stuck in this position. Great technology. Good team raised a bunch of capital from well known investors and cannot move forward, which is obviously also from, like, an A from like, you know, a global perspective, a shame, right? Because these technologies are working, and they've been proven to work yet they just, you need capital to scale up. And so, so I think there's, a lot of work to be done. There's a lot of work to be done by by sort of somehow syndicating, even 361 can play a significant role there. Syndicating this with family offices. Number of them take the lead, fed it out, write the memo, and others join. And I think family office type capital, which is relatively more flexible always, than institutional capital, in many ways, can play a lead role there.   Greg Licciardi  20:53 I would just add that the your comments on education and the need for improving. I think AI will actually help that and is helping that greatly. I teach at Fordham and Seton Hall, and we're taking all types of master classes on how to elevate our teaching using AI, and it's pretty cool stuff, and it's making education more accessible and tutoring more accessible to more students. And Mike, my kids have tutors, but a lot of families can afford tutors. But now with AI, they can. It's it's pretty cool.   Mark Sanor  21:31 And we have another company blueprint for kids, which is doing this very   Carl Pro  21:34 interesting project years ago, and in this kind of dates myself, but it's probably 20 years ago. We did a AI training platform for the Air Force, and you basically put this little ball cap on your head, and it presented material to you, and when you understood it, your brain waves did a shift. And if you didn't understand it, it kept presenting it in a different manner. So it was,   Mark Sanor  21:58 why don't we bring that to our children? That's pretty cool. Seriously, why? I mean, I know that in war time and in defense, which is going to be the next panel, we come up with lots of innovations. But why is that not trickling down?   Carl Pro  22:14 It just cuts that on the shelf, and the Air Force now uses it. Well, why   Mark Sanor  22:19 don't you and I go find that? Let's get that too. Yeah, no, let's, let's buy it first, and then we'll figure out to do Matthew TED talk on that. Matthew Friedman, do any, any, any wrap up thoughts on your, your, your part of the world?   Matthew Friedman  22:39 Yeah? So sure. I mean, like, what I was saying is, there's great opportunity, there's great unknown. The opportunity excited. There's a lot of people that are going to, not going to make it through this shake out. I would say, you know, a testament to my staff and I that, as any graciously mentioned, we've, we've made it through the very interesting roller coaster ride over the last six, seven years of, you know, strikes and COVID and tariffs and whatever, and so it's going to remain to be seen with the shake of it, but I think companies like myself that are nibble and are able to adapt to the changing environment is going to be critical. I think automation, as we discussed earlier, is also going to be critical, the more we can do to rely less upon   Mark Sanor  23:34 the ele   Brian Neirby  23:36 no drink it over   Mark Sanor  23:41 there you can get now.   Matthew Friedman  23:43 Point, but you know that's gonna cook you a lot of jobs, but it was necessary in the current automation environment for auto mode.   Mark Sanor  23:54 Excellent. Any last comments from the crowd or panel? You know it's not about technology, but I know you've got plants in Canada, Mexico. We got tariffs going in, going out, turn on, turn off. How you managing that?   Matthew Friedman  24:18 Well, I mean, the answer is, we were looking at it both as a whole additional because we're looking can move production from one place to the other, we're doing it. The key is, you know, we're only in Canada. We're only in Mexico, not because we're bringing in parts from other places.   Alex Zhuk  24:40 I Hi, Don. So that's so what   24:49 happens in between on the slide then Austin morning?   Mark Sanor  25:14 Go, Yeah, how's it been going?   Matthew Friedman  25:22 All as definitely, line production, contact the US. It will adapt accordingly. Well, position new things on the tariff side of things. Again, what we're seeing is with the delays, right? Originally was supposed to be, you know, February, then it was going to be March, and now sometime in April that they're going to take effect. And it's definitely caused the leaders of both Canada and Mexico to respond and do things accordingly, mostly in the fight against alleged drug trafficking and importation in the US. So if those companies, I think rice occasion like that, while they shined them and done in particular Mexico, then I think they will see a little bit less of aggression on the terror front.   Mark Sanor  26:10 Fair enough. All right. Well, for a moment I didn't think we'd have our panelists for the last panel, but they suddenly appeared. Gator has invested in Dan's company, so it's a good they didn't even know that each other would be here today. So that's great. Sara, I don't think is going to make it, but I know the ELA has a a dual use fund as well. So let's just first. Thank Eddie, thank Carl. Thank Matthew, I'm joined our 361 firm community of investors and thought leaders. We have a lot of events created by the community as we collaborate on investments and philanthropic interests. Join us. You. 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