Name and Current Occupation: John Strauss, VP of Business Development, Metal Oxygen Separation Technologies, Inc. (MOxST)
What is your start-up story?
In 1971, my family helped start a summer theater out of our house (Andy’s Summer Playhouse – it just celebrated its 40th season). Just after my 16th birthday, I became the first technical director. The next summer I worked as a cameraman and soundman for a Corporation for Public Broadcasting documentary.
At the same time, my father was working with a company that had a device that was used to detect open water oil spills. In 1975, as an outgrowth of what my dad had been working on, we started a company in our basement – my dad, me, another guy and two investors. We made a device for cleaning up oil off the surface of water.
We thought we were making something for open water (like cleaning up Boston Harbor) – but it turned out that, in beta testing, the product was better suited to cleaning up leaked gasoline and hydrocarbons underground. This had applications in gas stations, in airports, at factory sites, etc. In the early 1980s, JFK airport in New York had six feet of jet fuel underneath it. The product we invented not only cleaned up the hazard that those fuels created, it also allowed for direct recycling of the fuel.
At the beginning, the model was to sell the equipment at a $0.05/gallon rate for the total gasoline recovered. (Yup, a nickel for gas wholesale!) The consulting services, measuring, etc. were free. In the middle of this, we realized that Ground Water Technology, the consulting service, was actually the area of the business with the most growth opportunity – the equipment was only 10% of the value of the business, if we really valued our expertise correctly. We became a turn-key consulting and equipment business, and became very successful. Ground Water went public in 1986, hit a market cap peak of ~$300 million the following year, and, was later sold to Fluor Daniel and is still in business. I had just left Groundwater to start several companies in Europe – doing the same thing there – but loved the feeling of accomplishment I got from seeing the company go public. I was hooked on start-ups.
Tell us about one of your most challenging entrepreneurial experiences:
I was brought in to help a struggling company (Ocean Design) that was the world leader in producing connectors that could be plugged in and unplugged underwater – not just waterproof but totally water-impervious so that you could lay fiber-optics on the ocean floor. If you want to develop an oil and gas field on the sea floor, you have to be able to wire everything up and plug it in underwater.
The company had found great success because their equipment was required for submarines, for Japan’s tsunami detection system, for most of the world’s undersea oil and gas exploration – for making lots of things even possible to do. On the other hand, they were having trouble scaling up – quality of the product was so incredibly important. They were making great quality parts but they couldn’t keep quantities up. They had a large order backlog, which had a huge impact on mission-critical projects for customers around the world.
The culture was to always make every decision with 99.999% certainty, but certain decisions that were critical to success couldn’t be made with that level of certainty. The gridlock had also trickled down into back office and infrastructure systems. After digging out to the hole, we put in one of the most complicated ERP systems – the average order was for five pieces – we would have product documentation that rivaled nuclear material quality control or medical device documentation.
So much of the solution there was operational blocking and tackling – the biggest change for the company was to clarify the line between the decisions that were critical for product quality and safety and the decisions that were important but that could be made with a 60-80% confidence level as opposed to 99.999%.
Being able to bring in an outside perspective for the team, and having the entrepreneurial mindset actually helped me help the company break out of the perfectionism-equals-failure cycle, and I was very proud to get the company to a position where its success matched the quality of its products. (Ocean Design was later sold to Teledyne and is now Teledyne Oil and Gas.)
What advice would you give to a new entrepreneur?
“Trust the Force” – be persistent in recognizing your vision, because the only one who knows where you are going is you. To misquote Einstein, if the idea isn’t perfectly outrageous, it probably isn’t very good.
Steve Jobs believed in what he wanted to do no matter what, even if it cost him employment at the company he founded. You can be maniacally focused in pushing yourself forward while still listening to what the customers want. Showing the customer a product – it’s all about getting an opportunity to get in front of a customer and ask them what they need.
You also have to be openly skeptical – you have to make sure it works, even as you believe in what it is you are doing. If someone is trying to sell you on something, make them show you – don’t take someone’s word for it. Show me that it actually works, in the context in which it would be used.
In the clean energy world, my advice is: always look for the extension cord under the rug.
Speaking of what you’re doing now, tell us a bit about how you became involved with MOxST:
MOxST was founded by Steve Derezinski and Adam Powell in 2008 to commercialize a novel and important technology for refining metal. Right now, we are focusing on refining magnesium and producing rare earth metals. We make magnesium from magnesium oxide by extracting the oxygen, in a resalable form, through a ceramic membrane using very little energy. The alternative is extracting the oxygen by burning carbon, generating CO2 and a huge energy bill. We are also scaling up – using the same process for rare earth metals and recycling.
The challenge is finding the right partners and finding the quality team members we need to scale up smart, not just scale up big. We are in the process of producing magnesium to replace aluminum in cars. The goal is to replace 340 lbs of steel and aluminum in a given car with 250 lbs of magnesium by 2020. This would translate into a huge cost savings, and because it’s lighter in the frame/chassis the drive train is more efficient and uses less energy (~2 mpg).
I met Steve as part of the New England Clean Energy Council’s Clean Energy Fellowship program. I was working on a different start-up, and I rented space in MOxST’s basement for it. The startup didn’t look like it was going to have legs, and we had often chatted about challenges over coffee – and Steve then offered me the job at MOxST. It’s a really great team to work with – it’s been hard because it’s the first time I’ve had a boss in years, but it’s such a great team and it’s a lot of fun.
What other resources would you recommend to new start-up founders?
Any opportunity to get feedback from your peers. I run a cool group of CEOs that grew out of the MIT Forum LeadSmart program. It’s a confidential group where we bounce ideas off each other and give unvarnished advice. Where else can you find out how you are really doing? I am a big fan of such groups – join one or start one.
This post was authored by Founders Workbench.