Investor Value is Rarely Correlated with Check Size

Building a Company Is Taking the Ultimate Test

Show Notes

Most people don’t realize it, but businesses in several industries waste massive amounts of food and money because of inefficient refrigeration practices. On top of that, poor refrigeration practices waste energy and add to our carbon footprint. Fortunately, tech startup Therma is working to address both of those problems at the same time.

Therma has already made a small dent in making the refrigeration supply chain more efficient and is on its way toward doing so much more. Therma founder and CEO Manik Suri joined Roland Siebelink on the Midstage Startup Momentum Podcast this week to talk about how Therma helps customers and the environment at the same time, among other topics pertinent to his startup.

  • How Therma is able to sell to both large corporations and small businesses.
  • Why Therma chose to target growth on two different fronts.
  • The benefits of selling customers on both ROI potential and sustainability.
  • Why Therma prefers to partner with investors who care about what they care about.
  • The benefits that angel investors can bring to startups beyond money.
  • The massive potential that exists with mission-driven entrepreneurship.


Roland Siebelink: Hello and welcome to the Midstage Startup Momentum Podcast. My name is Roland Siebelink and I'm an ally and coach and helper for as many fast growing startups as possible in the world, one of which is with us today. It's Manik Suri, the founder and CEO of SF-based Therma. Hello, Manik, how are you today?

Manik Suri: I am terrific. It's great to be here and thanks so much for having me on, Roland. It's a pleasure. It's also a beautiful day in San Francisco, so I'm in an especially positive mood.

Roland Siebelink: That is so true. We were just saying that we should have just met on a sun-overflown terrace with a nice cup of coffee, but that wouldn't have produced the best sound experience for our listeners. We'll leave that for later. Manik, let's start with the typical startup question. What does Therma do? Who do you serve and what difference do you make for them in the world?

Manik Suri: Yeah. I spend a lot of my time on those topics. We are a smart, cold-chain startup. We work in the refrigeration supply chain, building technology to help reduce waste and loss across the refrigeration infrastructure layer. We help reduce the climate footprint of refrigeration while saving businesses money and making perishable products safer for consumers. Our technology platform includes IoT sensors, mobile workflow tools, and data analytics technology. We think of ourselves as trying to protect human health and advancing the planet's health at the same time.

Roland Siebelink: Wow. What an interesting proposition. I'm sure you often get the reaction that I'm going to say right now: I've never even thought about the cold-chain supply chains. Give us a little bit of an introduction to what is the set up, what are some of the typical problems people face, and what made you jump onto this opportunity?

Manik Suri: I was similarly surprised when I discovered how significant the refrigeration ecosystem and the cold-chain was, Roland. Refrigeration is everywhere. It's been around for over 100 years. But it's largely run the same way it was run decades ago. And that consists of millions of devices around the world - 90 million refrigerators in the business world, 1.4 billion in the consumer world - being plugged into the wall, turned on, have a set point set, and then hope that everything works from then until the unit goes down. That leaves a lot of opportunity for improvement. It turns out that there's a huge amount of product spoilage and product waste because refrigeration goes down and people don't know about it. That's one of the obvious sources of waste. That happens because of human error, stuff being left open, door jams being loose, inventory delivery, cleaning, things being unplugged. It also happens because of power failures, grid outages, brownouts, and blackouts, and because of mechanical failure, equipment going down due to compressors, wiring, coolant leak. In total, refrigeration down time causes massive amounts of waste on the order of billions of dollars in inventory loss that could be avoided. And that's really meaningful when you're an individual owner/operator doing 5% margin on your restaurant or your local coffee shop or your pizzeria, or for folks at large-scale, whether it's a huge supermarket chain with tens of thousands of inventory behind or a fertility clinic or a hospital that has millions of dollars worth of perishables and sometimes deals with loss events and lawsuits. Refrigeration failures and the product loss associated is a big problem. On top of that, refrigeration uses a lot of energy, more than it needs to. The whole world engages in essentially over cooling because we don't really optimize our refrigeration to run dynamically. It's a static set point that we typically maintain. And that means that the energy pole on these units is fairly untouched, whether energy prices go up or down, whether it's summer or winter, whether this freezer or fridge is full or empty. A lot of schools and universities have empty fridges and freezers during the summer months when they're closed. But we're still pulling power consistently at all times. And that's a huge source of electricity that is not being efficiently managed. There's an opportunity to reduce the energy draw of refrigeration by dynamically controlling it. Refrigeration is something I've learned a lot about. There's lots of opportunities. Protecting the product from being wasted and reducing the energy footprint are two obvious problems. And the third is a little less obvious, but the refrigeration uses coolants - they call them refrigerants. These are chemicals that are necessary to enable cooling to happen, but they get emitted, they get released during leakage events and end of life. And these are super warming, meaning they can be 1,000 to 11,000 times more warming than CO2. They have a really bad effect on the planet. As we think about the climate crisis, preventing or reducing refrigerant leak is a big single source opportunity. One of the single biggest drivers on a standalone basis that's preventable from global warming. That's really why Therma focuses on refrigeration. It sounds unsexy. It's everywhere and could use overhauling.

Roland Siebelink: I will say, I did an interview once with somebody who was working in a toilet paper factory that the most un-sexy businesses make you the most money. That aside, I love that you have both that direct incentive to the owner/operator of a restaurant or a wholesaler, as well as the direct energy impact, as well as the impact on the environment. What orders of magnitude are we talking about here? You already mentioned the billions of dollars in inventory lost every year. But are we talking about a 1% energy cost reduction or are we talking bigger? What numbers are we playing with?

Manik Suri: Briefly on the inventory loss and then on the energy side - Boston Consulting Group, BCG, had a long review of food waste roughly four years ago. It was one of the most cited summaries of the food waste problem; they did an analysis. They conclude that around 11% of food waste happens in the supply chain due to storage and handling. We think of the refrigeration problem and the preventable loss around storage and handling in that zip code. The problem at scale, globally, is that one-third of all food gets wasted, which is roughly 1.6 billion tons worth $1.2 trillion. If you think about 11% of $1.2 trillion, that's $125 billion of inventory in storage and handling. The energy layer - we think of energy optimization at the margin being something like 10 to 20% energy efficiency is possible. And refrigeration is using between 30 and 45% of the energy of the average restaurant or convenience store or coffee shop or bar. It's one of the single biggest sources of energy use in a business - especially a retail or hospitality or food service business - and we're trying to reduce between 10 and 20% of that energy on a day-to-day and month-to-month basis.

Roland Siebelink: Excellent. Okay. Very cool. Concretely, which customers have you found to be the most compelling target group for Therma at this point in time? I'm sure that in a huge industry like this, you could find hundreds of starting points.

Manik Suri: We ended up focusing very much on - when we think about the refrigeration cold chain, we decided to focus on the food supply chain. There's food and pharmaceuticals for the two big cold supply chains. We focused on food, and then within food, you could think of it as farm to fork. We focused on the fork, meaning the stuff that's close to consumption. Most of our customers - we have over a thousand customers now - most of our customers are restaurants, cafeterias, hotels, hospitality groups, and folks that are holding products before we eat it, before we purchase it and consume it. That's the logos that you and I might know. Brands like McDonald's, Pizza Hut, Domino's, Taco Bell, Burger King are all customers of ours. We have hotel groups like Marriott, Wyndham, and Hilton using our tools; 7-Eleven, some of their convenience stores are using our tools. Those are some of the logos that we would refer to. Then we also have a lot of small businesses, quite a few small businesses using the tool. And I love that because we built Therma so it would be available and accessible to every business, not just large corporations. And so the pricing model and the approach we took is very lightweight. It's 10 bucks a month per sensor on a monitoring fee, no hardware. And that means that you can buy it if you're a single location food truck or a local bodega or a pizzeria, you can spend 30 or 40 bucks a month and have Therma working in your location. And 70% of our customers are small businesses with less than 10 locations.

Roland Siebelink: Okay. Very cool. I'm guessing that showing the return on investment on that $10 a month is pretty easy.

Manik Suri: It is. I think business owners have been able to calculate the loss prevention across whatever products they're storing and conclude that this is an obvious loss prevention tool at 10 bucks a month or 100 bucks a year. If your typical fridge-freezer display case has anywhere between $500 and $5,000 of inventory, it's up to you as an owner to decide how often you think a spoilage event will happen. We see spoilage events that are preventable happen every month. That's one of the interesting things about this problem. A lot of times the owner doesn't understand or doesn't realize exactly how much loss is happening because it doesn't get reported. It's often internalized in the cost of doing business by the teams on the ground. But in reality, when you put monitoring in, you discover, "Oh, wow, there's all kinds of excursions happening every month. We could have reduced waste." I think when you have a business where food is roughly a third of your costs - like a typical restaurant - even small amounts of savings add up.

Roland Siebelink: You mentioned also that you were both targeting the larger chain restaurants, cafeterias, hotel brands and then also small businesses. As we often see, the technology may scale but the go to market doesn't. Those must be very different go-to markets. Does that mean you have two different sales and marketing departments targeting each of these?

Manik Suri: We do. Our approach to growth is in two channels. We have a true traditional direct sales team, which consists of sales development and account executives. They're spending time building relationships with larger companies. We attend conferences and trade shows. We do fly out and those conversations allow us to build relationships with larger organizations. But then we have e-commerce, a marketing driven growth team, which is focused online. A lot of our smaller customers come through web traffic and through search. We have a website where you can go learn more about Therma, purchase sensors, have them dropped right into your location without having to talk to a person; it's all via web chat and credit card. That allows you to be pretty frictionless and get started as a small business without having to spend a lot of time.

Roland Siebelink: Okay. Very cool. Manik, many of the founders we interview, say we really had to focus, we could only afford one channel for our growth. Do you feel that in this way, you have made a conscious choice to target both of these growth fronts at the same time? And why did you make that choice?

Manik Suri: I think we've been pulled into the market. When we started Therma two years ago, we had 100 sensors. We've had really nice growth over the last two years, coming up on 10,000 sensors in the world and trying to grow from there to 100,000 over the next couple of years. That's still a tiny fragment of the refrigeration market. As I mentioned, Roland, there's 90 million fridges freezers in the commercial world. And 10,000 or 100,000 is still a drop in the bucket in terms of global refrigeration. But we're seeing opportunities with different business types, sometimes larger corporations move slower, but they need proof points and they need the ability to say, "Hey, so and so is using it or I've tested it in so many markets." And we want to support that. We think that this - there's a win here in terms of profitability. And we sell the product as an ROI positive investment. But it's also a sustainability win. We measure the carbon impact reduction potential in each Therma sensor in terms of the amount of food product, food spoilage prevented, the amount of energy load reduced, and the number of leak events prevented. We're actually trying to create a carbon emissions calculator alongside every sensor. And a lot of businesses today want to do the right thing, especially if they can do it in a way that doesn't hurt their bottom line. We see this as profitability and sustainable both being combined in the ROI. And that's something we want to make available to SMBs as well.

Roland Siebelink: How big do you think Therma could become? What's your vision for 10 years out, Manik?

Manik Suri: Yeah, I think it's a huge opportunity, both for Therma and for the climate technology world. There's a ton of growth potential for technologies like Therma that are trying to combine IoT - Internet of things - monitoring with data science, analytics to improve and to optimize built environment functions in legacy industries that have been around for decades but have not improved their efficiency because they haven't needed to. And I think that opportunity in refrigeration is massive because refrigeration is growing, Roland, at 15% compound annual growth. Refrigeration is growing rapidly because many, many people around the world, particularly in developing economies, want the kinds of stuff that refrigeration makes possible. People in Latin America, Africa, China, and India want fruits and vegetables, protein, drugs, blood, plasma, and vaccines. All of those require refrigeration. And so the cold chain is booming. But if the cold chain continues to use power and waste resources in terms of product spoilage in the way that it has for the last several decades, that's a really significant problem for us, both from a business standpoint and a climate standpoint. I think Thermo's growth is as large as the opportunity is to overhaul the cold chain. One thing I've focused on recently is trying to combine a sense of purpose with the impact potential. I've always been ambitious about doing things at scale and doing things that matter. But I think in the last five years, I'm starting to think more about sustainability and safety. These are areas where we can build solutions at scale that could both make a lot of money and create a lot of commercial value but also have positive social impact and leave the world safer and cooler. That's getting to be the sweet spot for mission-driven entrepreneurship.

Roland Siebelink: You mentioned some impressive growth numbers, Manik, from just 100 sensors to over 10,000 now, I think you said, and thousands of customers. How have you organized to support all that growth? How big is your team and how have you divided it up between more product-engineering people, more go-to-market people.

Manik Suri: Just to keep it high level - cause I'm sure people don't want to get too in the weeds on our company structure - we're about 70 people, based in the Bay Area. It's still a small team, still early stage. But definitely more than when it was just me and one other person getting started. And I think there's a lot more opportunity for growth. We're raising another round of venture capital this spring. We have 12 open roles on our website and are looking to hire more. We're definitely in growth mode.

Roland Siebelink: Manik, you've talked about raising a new round in this first half year. What has been your investor strategy? What kind of investors have you typically preferred and what kind of people are you looking for to help fund Therma and this immediate growth path?

Manik Suri: Absolutely. We're focused very much on strategic partners and investors that care about the things we care about. We've been very focused on finding ways to improve business profitability while advancing sustainability, and doing that as a fundamental aspect of our growth strategy. We've identified and partnered with a number of venture capital firms at the seed stage and at the early stage of Series A. Funds that are interested in a combination of supply chain, built environment, hardware and software, climate, and food. Those are the kinds of folks that have generally partnered with us. We have several dozen investors outside the company that are part of the journey. We've been very fortunate to also have a couple of really, really thoughtful angel investors. A small group of not necessarily significant capital check writers - these are not huge funds - but people that are really connected and care about supply chain refrigeration, food, and the future of the planet. And they've made really powerful introductions, whether that's to new talent or to new capital or helping to think through business strategy. And I often say that the value we've gotten from our investors is rarely correlated with the check size. Of course we love raising from folks that can write large checks. That's always valuable because it makes the process faster, more efficient, and lets us access more resources to do more. But we're always looking to talk to investors regardless of their check size.

Roland Siebelink: If you would talk to founders that are a little bit behind you, that may just be thinking about raising their first round, would you typically recommend they start off with angels the traditional way or also talk with VCs?

Manik Suri: I think it really depends on what you're looking to do with your organization. I have a number of friends who are entrepreneurs who are bootstrapped; decided not to pursue third-party funding. They really felt they wanted to build a business on its fundamentals and they want it to scale. And then others who have raised huge amounts of capital and taken companies public. Several of my classmates from Harvard College have taken companies public now. And I've seen that journey as well as a friend. You really have to find the kind of investor that fits the stage in the journey that you're at and also the kind of growth and the kind of trajectory you want to take. There's no one right path. I think venture capital is definitely attractive, but not for every business. Some businesses are better capitalized using traditional capital or bootstrapped. Early stage angel investors are often a great starting point if you are trying to decide because they can add value, they can help make introductions, they can sometimes and often roll up their sleeves and do more than some of the later stage funds because they really care. They're in it for more than just the return. They really want to be helpful. I love that about angel investors.

Roland Siebelink: We always ask at the end how people can help - the 12 open roles and what functions are you looking for, in particular?

Manik Suri: Yeah, absolutely. If folks are interested in learning more, I'd love to chat. Our team would love to chat. I'm happy to share more details about the roles as well. You can check them out on our website, That's hello, Therma dot com. We're hiring across product design, product management, full stack software engineering, hardware engineering, sales, product marketing, and finance and operation. We've got roles across our company. It's definitely a busy time. You can always reach out to me directly. I'd love to get introduced and talk. We are raising capital. We are venture backed and we're trying to grow rapidly. [email protected]. That's M A N I [email protected]. We're on social, on LinkedIn and Twitter. We'd love to keep this conversation going.

Roland Siebelink: Is there anything else that listeners to this podcast could potentially help Therma with? What help would you need from them?

Manik Suri: Appreciate that very much. It's always a pleasure to join conversations like this, and to get to know entrepreneurs and executives and coaches who work in the ecosystem of innovation. We're looking for partners across many different functions. We're hiring, so if you're interested, please check out our open roles or reach out to me directly. We're raising capital, so if you know folks that are looking to invest in this space around climate technology, supply chain, food, refrigeration, smart homes, that's obviously an area we would love to talk to folks about. If you have suggestions for problems we should take on or product ideas or potential customers - we've actually had several customers come in through conversations I've done with other podcasts or on articles I've written. Sometimes people hear about the products and say, "Oh, I want that in my business or I know someone who could use that." Any and all of the above.

Roland Siebelink: Excellent. Very cool. And I'm always happy to provide an introduction as well. If people know me and want to get an introduction to Manik, please just reach out. I just want to say, thank you, Manik, this has been an amazing recording. And I'm very inspired by all the good you're bringing into the world with Therma. This is the one time I can literally say "very cool." This is also awesome, Manik Suri, the founder and CEO of Therma. Thank you so much for your time.

Manik Suri: Pleasure. Thank you so much for having me, Roland. Good luck to you. Thanks, everyone.

Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.