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Scott Orn

Scott Orn, CFA

Manik Suri explains how Therma prevents equipment issues by providing 24/7 monitoring for commercial refrigeration

Posted on: 11/08/2022

Manik Suri

Manik Suri

Founder and CEO - Therma


Manik Suri of Therma - Podcast Summary

Manik Suri, founder and CEO, explains how Therma helps prevent refrigeration issues by providing 24/7 equipment monitoring for companies that use refrigeration, like restaurants, schools, groceries, hospitals, and more.

Manik Suri of Therma - Podcast Transcript

Scott: Welcome to Founders and Friends podcast before we get to our guests special shout out to Kruze Consulting. We do all your startup accounting, startup taxes, and tons of consulting work, kind of whatever comes up like financial models, budget actuals, maybe some state registration, sales tax, VC, due diligence support, whatever comes up for your company, we’re there for you. 750 clients strong now, $10 billion in capital raised by our clients, I can’t believe it. 2 billion this year. It’s been a crazy awesome year. So, check us out at kruzeconsulting.com and now onto our guest.
Singer: So when your troubles are mounting, in tax or accounting, you go to Kruze, from founders and friends. It’s Kruze consulting, Founders and Friends with your host, Scotty Orn.
Scott: Only. Welcome to Founders or Friends podcast with Scott Orn, Kruze Consulting. And today my very special guest is Manik Suri of Therma. Welcome Manik.
Manik: Thanks so much Scott. Great to be here.
Scott: Yeah, thanks for coming on. But before we get into it, I should just disclose I’m a small personal investor in the company, so I’ve loved what you’re doing so much. I wanted to invest in the company, so just everyone is listening know that. But maybe we could start off just by you retracing your career a little bit and telling everyone how you had the idea for Therma.
Manik: Absolutely. It’s great to be on. Thanks for the support, Scott. I’ll try and not share all the dirty laundry, but I give you some of the inside [inaudible 00:01:31].
Scott: Hopefully there’s no dirty laundry to share though.
Manik: No.
Scott: So yeah, if we’re doing our job right.
Manik: I know. I think we’re… no, I think we’re good. We’re an early stage company building clean cooling technology, trying to reduce emissions and waste around refrigeration and cooling assets. And we’re trying to do that in ways that save businesses money and help reduce global warming. So that’s Therma’s mission. I didn’t expect I would run a refrigeration startup growing up. That wasn’t the ambition, but we kind of came into it as my dad jokes, the path in life is often, the journey is kind of a winding road. It all makes sense in the rear-view mirror, but you don’t necessarily know where it’s taking you at the time. So, I started out working as an investor. I’d gone to Harvard for college and law school, went to a big hedge fund called DE Shaw, was there for a few years, went back to law school, a joke, I’m a recovering attorney, The best kind. The plan wa to go into government and do policy work. I went to do a short stint in the Obama White House as a junior guy doing economic policy. That was 10 years ago, a little over 10 years ago. And I met the deputy CTO, she was also a recovering lawyer. She convinced me to leave government to start working in tech, building tech for good, Beth Noveck. And she started a center after she left government. And I joined her to help co-found that called the GovLab, governance lab. The idea was to build tech around big problems that weren’t being solved by the private sector. And so that’s how I got into sustainability. That was in 2012. Few years later, I got into the food supply chain building a startup that was a precursor to Therma. I had grown up in an ag town called Fresno in the Central Valley. Lot of problems around farm to fork. Thought we could help build tools to improve and replace pen and paper with better technology. So, we started using mobile apps and that was the first product we built because Coinspect, collaborative inspect. As we scaled that product, we discovered a lot of what people were doing was checking temperature. And that’s what led us to start thinking about sensors and temperature monitoring.
Scott: ‘Cause I remember Coinspect and then the name change. So, that led you into, you kind of got in the market and then the customers led you to an even bigger problem, it sounds like.
Manik: That’s exactly what happened. We were watching users using our first product Coinspect. We had about 5,000 locations on this app and we were in the field watching users trying to figure out how to improve the UX UI, how do we improve the user experience. And we realized that most of what they were checking was temperature of perishable product, but they were doing it on a digital clipboard that we’d built instead of a paper clipboard the way they done it for 30 years. And one of my colleagues looked at me and said, I don’t think we’re solving this the right way. They don’t want to do this work. They don’t want to do it because they’ve got other things to do and we’re just replacing a piece of paper with a clipboard that’s digital. That’s not that much better. What if we could automate it? What if we could just replace the work entirely with a sensor? And that’s how Therma was born.
Scott: And so instead of manually checking the temperature all the time or whatever they remembered, all of a sudden the temperature could be checked all the time and they could get alerts, right?
Manik: Exactly. It became like an alarm for your inventory and for your equipment. And so it’s a 24/7 remote monitoring tool and we started working on it in late 19 and we’re just commercializing it in early 20 when the pandemic hit.
Scott: That’s amazing. And then did the pandemic help or hurt? ‘Cause, I could also see how it could help in a weird way.
Manik: It actually was a big growth driver for us. Ironically, we grew three x in 20 and again in 21 we tripled in 20 and 21. Partly for reasons you might expect and for reasons we didn’t expect. One, people cared a lot more about safety and hygiene and second, a lot of locations were closed and so they weren’t as many people checking stuff. So, with all these lightly staffed locations, owners and operators wanted to know what was going on and not lose product. And so, we started seeing a lot of interest when we started selling Therma, we didn’t realize how much of an emissions reduction we could create. But what we discovered with early deployments was you were catching a lot of inventory loss and food waste. And so, we were actually able to create an emissions reduction story and impact around the product as well. And people got excited about that because there’s dollars, you don’t throw that product out. That’s real value for the customer.
Scott: Oh, big time. And so, the customers, your customers are what restaurants and maybe distribution companies or who do you sell to?
Manik: Yeah, so basically we sell to anyone who makes, distributes or sells food across the farm to fork. Most of our customers are closer to the fork than the farm. So, we’ve got restaurants, cafeterias, schools and universities, hospitals, amusement parks, casinos, hotels, basically places where food is sold. We also have some customers in the supply chain. So, we’ve got distribution centers, cold storage warehouses, and we have a few farms, breweries, wineries and growers. But 80% of our customers are operators of brands like McDonald’s, Pizza Hut, Dominoes, Taco Bell, Marriott, Windham, Hilton, 7-eleven, folks that you and I might experience as consumers.
Scott: Got it. So, I love the farm to fork by the way. I’ve never heard that, but I’m also not in industry. So, you’re hitting a lot of bigger and where are you in the kind of adoption curve? Are the big kind of chains are the 7-elevens or McDonald’s of the world starting to recognize what Therma does? Or are you still with more independent or smaller companies?
Manik: Yeah, I mean we’re growing nicely and growing rapidly, so that’s always exciting. We started selling Therma in early 20 and at that time we had a couple of customers, maybe a hundred sensors in the world. Now we’ve got over a thousand customers, over 10,000 sensors in the world. So still super early. There’s a lot of refrigeration out there, about 90 million, 90 million refrigeration units in the business world.
Scott: Oh my God.
Manik: So we’re in 10,000 of them, but we have… exactly, everyone eats and…
Scott: That’s amazing though. 10,000 is a lot. That’s really good progress, especially in two years from where you came from.
Manik: It’s exciting. Most of the big deployments we have are with franchisees of these big brands. So, we have franchisees of most of the major brands now using us. And what we’re trying to do is get people excited, show them value, get testimonials, and eventually go over to the corporate teams and say, hey look, your teams love this. It’s creating value, saving money, maybe we should make this a system wide or concept wide deployment. So, we’re working towards that.
Scott: That’s so smart. So smart. I was actually listening to the story about Ray Kroc and McDonald’s. Some of the best menu items actually came from franchisees having the idea, pushing it up to corporate and then corporate roll it out. That’s really amazing. Talk about, one of the main reasons I was so fired up about this was just like, you touched on it briefly, but the climate impact. And to me this is like, it’s like you are building this incredible network and you’re getting realtime data on all these different refrigeration units, but there’s just seems like so much potential in the ability to impact the climate positively.
Manik: Much more than we could have imagined when we started working on Therma. Therma is short by the way, for temperature, humidity, energy, remote monitory application. That’s team and nerds.
Scott: No way. I didn’t know that. Oh my god, that’s awesome.
Manik: We started working on this as a way of reducing inefficiency, improving safety. What we discovered was that by monitoring refrigeration 24/7, we could catch failure. We could catch downtime events early and often and we could create real savings for businesses. We could reduce spoilage, we could reduce inventory loss, what’s called shrink. And that actually helped businesses save money throughout the season, whether it’s middle of winter or middle of summer, there’s utility energy market failures, there’s sometimes human errors and there’s equipment failure, doors left open, wiring issues, coolant leaks. So, we started creating this food waste impact model and showing, hey, we’re saving thousands of dollars of inventory per location by monitoring it. And that was exciting. And that was the first climate impact vector in 20 and in 21. What got even more exciting was in late 2021, we realized that if we could monitor refrigeration 24/7, we could actually turn it off. And by bein able to monitor it, we could take advantage of the fact that the product can stay cold for a certain amount of time and that means that you can turn refrigeration into a battery. So, sounds kind of crazy, but we started turning refrigeration on and off dynamically in 21 in the late part of 2021. And by turning it on and off and timing that to when the energy prices are high or when the utility needs extra power, we can actually tap refrigeration as a battery source that’s sitting out there, 90 million stationary batteries. So, there’s a huge climate impact on the energy savings around that and that requires 24/7 monitoring because no one’s going to let you turn the refrigeration off commercially without real time monitoring. So that’s the second layer we’ve been building out. So now this food waste…
Scott: Just to catch on that for a second, that’s such a killer idea. When I worked at Venture Capital, we invested in this company that was turning down the lights in grocery stores and they had built a really, it wasn’t nationwide, but they were getting and it was amazing the impact they could do. So that analogy that you’re telling, it makes so much sense. Maybe the power costs are way cheaper at night, so you ramp it up at night, late at night and then in the air conditioning hours you don’t have to run the freezer or the refrigerator so hard and you can save a lot of energy. Right?
Manik: Exactly.
Scott: Something simple like that.
Manik: Exactly like that. And because refrigeration has this unique property, which is that the thermal mask can hold power, it can hold energy, right? If you ever had a freezer door open for a long time or left the fridge open, you know that stuff’s still cold for a while, even if the energy is leaking or the power goes out. So, the fact that product can stay cold for a while makes it a form of battery, it’s a thermal mass battery. So, we took advantage of that and by turning power off for short bursts, we’re talking about 15 to 30 minute bursts. You can time those bursts to when the utility is short on power. For example, a couple weeks ago, California had heatwaves, utilities need power, when that’s happening, they’re running out. And so, their options are to turn on backup power plants that are super dirty and super expensive or to get people to voluntarily curtail. And so, we’re essentially helping with voluntary curtailment. We’re cutting use when the grids need the power. And so, there’s a huge amount of savings there economically and for the planet. So yeah, we’re turning refrigeration into batteries now.
Scott: That’s amazing. And then also those peak time power fees are usually higher, right? I don’t know and I think it’s probably different in different states and it’s all regulated, but I would think running the air conditioner in the middle of the day in your house costs more than doing something late at night once the peak load isn’t required and the utility has plenty of power, right? So are you actually able to demonstrate to the store owner or the distributor like, hey, we actually saved you X number of dollars every month on that just by the battery approach.
Manik: Yes, that’s exactly what we’re doing. We’re creating energy savings on their bill and basically what they’re seeing is their energy bill goes down and we’re doing that by tapping their refrigeration as a battery. We’re calling it clean cooling, that’s kind of our motto. But the idea is, it’s a little bit, like you were saying, the example you mentioned, I was in Manhattan a few months ago, went down the street at night and there’s a bunch of skyscrapers with the lights on even though no one’s working in there in the middle of the night. And it’s like, why are the lights on in the middle of the night when no one’s working there? Because the 20th century power was cheap and the planet was paying for it. Now energy’s gotten quite expensive. It’s silly to run things all the time. So, we’re using a combination of methods. One is calld peak shaving and another is called load shifting. Shaving is basically cutting use when the location approaches its peak. So, by cutting it, by shaving it, you can save money. Load shifting is moving from an expensive time of use rate to a cheaper time of use rate. Classic would be going from daytime to nighttime because energy tends to be cheaper at night because most people are sleeping. So those are ways you can move the electrons around and save money. The third is called demand response. That’s when the utility will pay people to use less power because they’re running out of supply. So those are three ways we can create value, peak shaving, load shifting and demand response. And we’re doing all three on top of our monitoring of course.
Scott: I think that grocery store example I had was a demand res… they were actually getting checks back, the grocery chain was getting checks back and it was amazing. Good for you man. That is so ingenious. And the app and the visibility to the customer gets them comfortable with this, right? ‘Cause at any given time, if they’re nervous about it or something like that, they can actually look, I would think that there’s a little bit of, I don’t know how to articulate this, but in the old day, pre Therma, say California, we had this huge heat wave in California a couple weeks ago. All nervou about blackouts and taking down their system anyways, right? So, they’re looking, and they never had a real time monitoring. Now they’ve got real time monitoring and they all kind of collectively probably realize it’s better for us to shave and help and play ball and we can all avoid the rolling blackouts, right? Is that kind of, it’s almost the problem becomes more of a collective problem instead of this isolated, oh, there’s nothing I can do so I might as well run my refrigeration at full blast anyways.
Manik: I think that’s exactly right and the reality is people are doing it both because of self-interest, right? Everyone wants to save money and improve their margin, but they also realize people are realizing, hey, if we do this, we can save money and we can reduce the chance of a grid failure, which benefits everybody. So yeah, I think there’s a double win there. It’s a way of doing good and doing well. And to your point, it would be very hard to do this if you didn’t have a real time monitoring device in place because people are hesitant about spoilage and compliance issues. So that’s kind of the foundation of our house. But yeah, there’s a nice opportunity here to do something good for the community but also ultimately create real savings. And we’re trying to build a climate calculator. So, part of what we want to do is turn this into an emissions calculator that you can celebrate and say, hey, this actually reduced.
Scott: Well, also maybe you’ll start seeing companies promoting on social media like the calculator. Because actually my wife told me this, that Vanessa, that Gavin Newsom had sent out, the governor of California had sent out these texts and because the California was approaching the rolling blackout level and everyone in California got these texts or something like that and they saw power consumption go way down because of those text messages. Again, making it a collective problem. So, there’s a real sensitivity to this and people are willing to play ball. I could see this turning into a marketing exercise for all of your customers being like, oh my gosh, with the help of Therma, we actually all collectively avoid blackouts, here’s the McDonald’s or the Chili place or whatever customer you have. Almost promoting it as a badge of honor that they are thinking about this stuff. Hey, it’s cott Orn at Kruze Consulting, taking a quick pit stop to give some of the groups at Kruze a big shout out. First up, is our tax team. Amazing, they can do your federal and state income tax returns, R&D tax credits, sales tax help, anything you need for state registrations. They do it all. And we’re so grateful for all their awesome work. Also, our finance team is doing amazing work now. They build financial models, budget actuals, and help your company navigate the VC due diligence process. I guess our tax team does that too on the tax side. But the finance team is doing great work. And then I think everyone kind of knows our accounting team is pretty awesome, but want to give them a shout out to. Thanks and back to the guest.
Manik: We certainly hope so. I mean, we think that that’s going to happen more and more. And, sadly, it’s going to happen more and more because weather events are getting more extreme and more frequent and the grids can’t keep up with all the growing electrification of everything. So definitely we’re going to need more voluntary curtailment and grid flexibility and we’re hoping that our customers can celebrate this as a way of contributing, doing their part to reduce brownouts and reduce the chance of infrastructure going down and causing things like wildfires. So yeah, we want this to be a win.
Scott: For sure. And I’m sure you probably have done some studies on this or just kind of used some general stats, but isn’t the general population of the world and the United States, everyone’s just kind of waking up and realizing this is a problem. There must be some really cool sensitivity or some data you can give your clients to show this stuff matters to the everyday consumer nowadays, right?
Manik: Definitely. I think a lot of folks have been researching and writing about how consumer preferences are changing around sustainability, around climate. It’s not just a millennial thing, it’s not just a Gen Z thing. You see more and more people who are voting with their pocketbooks, voting with their choice in terms of where they spend their money to support businesses that are doing things that are more sustainable. And I think that that’s going to keep happening. It’s partlyjust a reaction to the world we live in. When I was growing up, we didn’t think, and certainly I didn’t think about climate change as an existential threat to our life. I mean it was one of those, okay, my grandkids are going to have to worry about this, but now I’ve got a one year old and I’m thinking, how are we going to go up and enjoy Yosemite in the mountains? How are we going to go and enjoy northern California if there’s a wildfire risk all the time and if the air quality keeps getting worse? So I think it’s become very top of mind because of the changes in the world and it’s going to keep being top of mind, which that’s why Therma’s here amongst other people.
Scott: Yeah. That’s amazing that you guys, and I forget, did you say there’s 10 million refrigeration units or a million, I forget that.
Manik: Yeah, there are 90 million commercial refrigeration units. They’re 1.4 billion residential. So there’s a lot of refrigeration in the world.
Scott: Oh my God.
Manik: We just work on business refrigeration, which is still 90 million units.
Scott: Yeah, yeah. Oh my gosh. So you can make just a huge, I mean, I don’t know how much time and energy you’re shaving in just those shaving examples, but saving an hour or two a day for a commercial freezer times up by 90 million. Oh my god. That’s like, talk about an impact.
Manik: And I think there’s some interesting use cases out there that we’re just starting to explore. So we’ve got 600 plus schools using our monitoring product across the country, K through 12. So one of my teammates reminded me a few months ago, well schools are closed for several months in the year.
Scott: Oh my gosh.
Manik: In the summer and in the winter, because of holidays. So we asked some of our customers, how many of you turn refrigeration off when the school’s out? You could guess.
Scott: Oh my gosh, I never thought about that.
Manik: So it’s not just McDonald’s and Pizza Hut and Domino’s, who we work with. Those are high utilization 365 day type operations. You’ve got environments where literally stuff is not utilized for huge parts of the year. So there’s really low hanging fruit out there. Talk about what we think about interesting opportunities for what we call clean cooling. There’s optimization that doesn’t require a data science team from Google, I mean these are low hanging fruit.
Scott: Yeah, and it’s so widespread though, and it’s across, and it’s just everywhere. The school example is such a good example. Yeah, no one would’ve ever thought to unplug that or turn it off, but now if they’re actually using the monitoring system, it’s very tangible how much energy they’re wasting. That is so cool. Are there any other great anecdotes like that, is there any, I could see hotels being similar too. Hotels that are very seasonal or things like that where, hey, maybe we’re at 25% occupancy this part of the year, so we don’t need to run all the freezers. I assume you can kind of do that too.
Manik: We can.
Scott: Not all of them need to run.
Manik: That’s so on point. We were working with an early or a partner that we just started working with. It’s a major top three hotel brand. One of their big properties in southern Florida. They have huge seasonality and they’ve got a hundred piece of refrigeration, but they have primary and secondary refrigeration. So when it’s full blast, like say Labor Day weekend or Christmas, every piece of refrigeration’s being used. But then you got huge parts of the year where you don’t need a hundred piece of refrigeration running. So what we can do is start thinking about creating a bank of primary and a bank of secondary shifting utilization to the primary and saving quite a bit. That’s the kind of stuff that you can start doing when the assets are connected to the cloud and remote control, which is what we’re doing. We’re connecting dumb refrigeration and making it smart by adding a cloud layer and then a data science brain. That’s the idea.
Scott: I’m sure that ROI is off the charts for that hotel chain too, right? They’ve got to be saving a crazy amount of money.
Manik: I think they’re excited about it because A, you’ve got rising energy costs everywhere and B, and especially in environments that are warm and then have a lot of weather events like a Florida or a Texas or a California. These things are big cost centers, massive cost centers.
Scott: Yeah. Also, again, circling back to that kind of customer marketing, a lot of hotels you check into these days do the, hey, we’re not washing your towels every day. That kind of stuff. I mean, this is another thing for them to talk about that they’re contributing to a better world. It’s really amazing. I mean, when you look back on it and you’re like, we started with this simple clipboard application to just, I know it’s hard to be like this when you’re a startup founder because you’re caught up in it every day. But you must be so proud looking back, being like, look at this journey we went on and look at the impact we’re going to have for our clients.
Manik: It definitely feels like a journey. I think journey’s the right word, Scott. It’s hard to know where the path is going to take you. I certainly, it’s been super humbling. I’ve never done anything as hard or as personally demanding. And I know you know as an entrepreneur yourself, when we started the company, it was just me and one other person. We had 150k, which at the time felt like a lot of money. But when you start a company in the Bay Area, that doesn’t get you very far. And now we’re like 70 plus people. It’s still super early, but we’re growing. The business feels like it’s having more and more impact and potential impact. So my favorite thing about it is that it’s always interesting and always challenging. Every day brings on new stuff. So it’s never boring.
Scott: I feel like also you’re, and you’re probably not doing a ton of sales now because you’re running the company, but probably in the early days you did a lot of sales. I feel like…
Manik: All the sales, I was the sales team and the support team.
Scott: Yeah. Exactly. Yeah, I know how that goes. Now you’re at this, I’m visualizing the Gartner adoption curve or something, right? And every day you and your sales team are talking to someone who’s never contemplated this probably, who’s never thought, Oh my gosh, I could turn off all my secondary cold storage on weekends that aren’t busy. This whole school district, we could save some. You must see the gleam in their eyes and their excitement and that’s like one of the things that probably keeps you going or keeps you fired up.
Manik: Well, definitely seeing people using the product and seeing that the products are creating value for them. I love that. Whenever someone actually sends in a testimonial or says something like, hey, this saved me thousands of dollars. I would’ve lost my week’s profit. Or we would’ve had to, we had a recent wedding photographer recently who would’ve lost 20,000 of inventory with the spoilage event they couldn’t have caught. Those kinds of moments or the school saying, hey, maybe I can turn my refrigeration off during the summer and save some money. And that school’s trying to create budget for other things. Those stories are very, very encouraging and I think the climate impact we’re starting to measure gives me a kind of personal sense of, hey, at least I’m doing something positive. I think of myself as an optimist. Whenever I read the news, it’s like, Oh my God, there’s so many problems in the world. But it’s nice to feel like, hey, we’re trying to do something here that might have some positive impact on stuff.
Scott: I love it. I love it. Well, this is incredible. I’m going to respect your time. We could talk about this all day. Maybe you could tell everyone how to find Therma, how to reach out if they want to work with you.
Manik: Love the opportunity to be on. Thank you so much. And thanks for listening. Yeah. We’re online at hellotherma.com. H-E-L-L-O, therma, T-H-E-R-M-A .com. Please feel free to reach out to me. I’m Manik, M-A-N-I-K, @hellotherma.com, Manik@hellotherma.com. Or you can check us out on Twitter, Insta or LinkedIn. We’re always hiring and we’re just about to announce a new fundraise, which Scott and Vanessa and others have pioneered. So yeah, looking forward to connecting.
Scott: Couldn’t be more excited. By the way, that grocery store company that I was talking about earlier, IPOed made a ton of money. And so I just know the future’s very bright for what you’re doing, and so you’re just so creative. This is just such an interesting problem and I’m so excited for you and I’m excited for all your customers who are going to not only save money, but also make a real positive impact. That’s progress. That just feels so good to me. So I’m excited for you Manik. This is so cool. So cool.
Manik: Thank you so much. Appreciate the support and we’re trying to make cooling cool. So if you want to learn more about refrigeration and the future of clean cooling, check us out. Again, thanks for having me on, Scott.
Scott: I love it. Clean cooling is a great phrase, all right buddy, take care. Thank you so much.
Manik: Thank you.
Singer: So when your troubles are mounting, in tax or accounting, you go to Kruze, from Founders and Friends. It’s Kruze consulting, Founders and Friends with your host, Scotty Orn.

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