From Lab to Leadership: Scaling a Deep-Tech Business with Jack Nicholas of Qdot Technology

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Hello, and welcome to Owner’s Roundtable. Today at the table is Jack Nicholas, co-founder and current CTO of Qdot Technologies, a thermodynamics focused spinout from the University of Oxford. Today, we’re going to cover a lot of ground, from the future of fusion to the logistics of growing a deep tech startup. If you want to know how to go from getting your PhD to CEO of your own company, pull up a chair and let’s get the conversation going with Jack here at the Owner’s Roundtable.
All right. Welcome back to the Owner’s Roundtable. We’re here with Jack Nicholas of Qdot Technology. Welcome, Jack. Thanks for coming on the podcast.
Jack: 00:01:40 You’re welcome Jeff. No problem.
Jeff: 00:01:41 Well, for the benefit of the audience, why don’t you tell us a little bit about who Qdot is and who you are as well?
Jack: 00:01:46 Yeah of course. So maybe I’ll start with myself. So yeah, I’m Jack Nicholas, I’m the CTO and one of the Co-Founders of the company called Qdot Technology. My background, so I spent a lot of my life in academia, did mathematics and physics as an undergraduate. And then I always like to say I migrated into the dark arts of engineering. So I did a Master’s, and then I did a PhD at Oxford in engineering science. The kind of PhD I did at Oxford was in a lab that specializes in effectively aerospace engineering. And in particularly the hot end of a jet engine is where it specialized. And so I spent a lot of my PhD days looking at problems of how do you cool things? How do you cool very hot things? And in particular, the kind of topic of my thesis was, can we take some of the technologies and the methodologies from the aerospace industry and use them to tackle some of the thermal challenges in the world of nuclear fusion? So I ended up being a bit of a black sheep because I was the guinea pig for doing kind of nuclear fusion work in that lab. My thesis work was around cooling the inside of a nuclear reactor, and that was the base thesis for Qdot. And it comes in the name, the Q with the dot over the top is a symbol for those who, the geeky ones out there for heat transfer. And basically the company was really founded around the idea of taking that expertise in cooling hot things and applying it to tackle particularly some of the emerging challenges in clean aviation. How do you make batteries and fuel cells and things like that work in aviation? And actually, it turns out managing heat is one of the big problems for those types of systems. That’s where we are as a company. We focus a lot on thermal management components, and in particular, leveraging kind of advanced manufacturing strategies like metal additive technologies to build things like heat exchangers or cold plates or heat sinks for some of these components.
Jeff: 00:03:51 I think it’s not the simplest thing that you’re doing. Or building cooling for a nuclear reactor doesn’t seem like a simple thing to explain. You don’t glow in the dark after that work, do you? I’m assuming you turned it off before you.
Jack: 00:04:03 No, no, it’s fusion.
Jeff: 00:04:06 No, there’s no radiation.
Jack: 00:04:07 No radiation there that you have to worry about, but hopefully not as long lived if you do it right. That’s cool. Yeah. No, it’s an exciting, as PhD topics go, it was an exciting one. Gave me the opportunity to kind of work multinationally as well. So I spent a lot of time working with colleagues over And then in Europe on that as well as in the UK. And actually a bit with industry as well with Rolls-Royce were involved with the work. So yes. And obviously since then it’s been a, it’s been a quite a flourishing private um, number of private fusion companies have obviously cropped up since I did my PhD. And now this is nice to see a lot of investment going into that area because I think before then it was pretty chronically underinvested in. I remember they whenever I used to go to kind of meetings about fusion with some kind of representatives from the UK government, I think someone always used to bring up the point that Toyota between, I think about 1980s and early 2000s, the amount of funding that had been put into fusion was less than the yearly budget for Toyota’s R&D department. So, yeah, if you don’t put the money into it, you’re not really going to go anywhere very fast. So yeah, it’s nice. It’s nice to see it now being accelerated and hopefully one of these companies that are working on it will crack it.
Jeff: 00:05:30 I’ve been seeing a lot more articles in the paper and popular science about fusion. From an expert in the field, like how far away do you think we are from having viable fusion?
Jack: 00:05:40 What you’ll see is people are kind of split into two camps. There’s obviously the physicists and then there’s the engineers. I think we’re moving away from a point now where a lot of it is about the physicists coming up with new theories to say, describe the plasmas in the fusion reaction, and it’s moving more towards how do we build a device that will actually produce fusion power on a kind of economical scale? That’s nice to see, but I think the big caveat there is that people are still, I think, vastly underestimating how long it might take to solve some of these kind of engineering challenges. The one I think always gets very underrepresented and not talked about hugely because it’s not particularly sexy is actually the materials challenge. So even though in fusion, the fuel itself isn’t kind of highly radioactive like it is in fission, the energy that’s given off by the fusion reaction can actually make the components of the reactor radioactive themselves. And it also means that the components within the reactor have to be very resilient to very high energy particles. And so what you find is that actually, there is hardly any materials available that we would be confident would actually survive operating in a fusion reactor for kind of 20 years, 40 years, however long it kind of needs to be.
Jack: 00:07:10 So that is an area where it can take decades of research to develop a material that could work. So I think that’s the one area where I worry that there’s not enough consideration, there’s not enough investment going into developing those materials that actually would make a fusion power plant kind of viable. So yeah, we can make a research machine, probably, and I wouldn’t be surprised if within the next decade someone does that. But then, even then, going from that to mass producing these things and deploying fusion energy across the globe, I think is still probably another big step beyond that. But yeah, I’m optimistic when I see lots of money flowing into it, I’m optimistic. I think my biggest worry is investors inevitably get bored after a certain time period. And if someone hasn’t got far enough by that point, what happens then, I think is the big question in my mind.
Jeff: 00:08:06 It’s going to be raised before we get the Delorean with the Back to the Future on-board fusion reactor?
Jack: 00:08:12 Yeah, yeah. I think the other thing is just competition, right? I think realistically, fusion is going to be competing against probably by that point, saying a couple of decades, very cheap renewable energy, I suspect. And also maybe a resurgence in nuclear fission power plants as well. So that would obviously be my other concern is like, economically, does it work? Okay. I think it’s always going to be worth pursuing as a kind of scientific and engineering endeavour, because it is ultimately a better option than fission. And it is the type of, I guess, power system that might allow humanity to kind of go out and explore amongst the stars. But when it comes to kind of cold, hard numbers, I’m not sure, 100% sure it’s going to stack up against things like renewable power in the longer term.
Jeff: 00:09:05 That makes sense.
Jack: 00:09:06 So you might have to wait a bit, I’m afraid, Jeff, for that Delorean I think is the answer.
Jeff: 00:09:11 Or maybe they’ll bring it back from the future for us one day. Anyways, well, I appreciate you indulging me on the fusion question. I’m interested to ask you about… So you went from working on cooling for fusion systems and how did you end up running Qdot? Like what was the process transitioning from the work you were doing to building Qdot?
Jack: 00:09:34 There’s a few threads to that. One is that basically when I finished my PhD, I stayed on in the lab I was working in in Oxford, and I started doing a lot more work with Rolls-Royce in particular, but kind of other aerospace tier ones and OEMs. So I started getting exposed to that industry a bit more. I already had a kind of passion for aerospace engineering. I’d done that as my Master’s degree. The other part is that at that point in time, there was almost a surge of people and kind of other academics basically spinning out companies. I think there was… the bug had been caught, and I think the University had just started a big investment fund, and there was basically a renewed impetus to kind of think, can I actually commercialize some of the IP or the work I’d been doing? So there is those two parts to it, and I think effectively one of the other things was from the aerospace side, I’d been working with these large companies, as I said, and noticed that there wasn’t really any real desire or impetus to really do much about the climate impact of aviation. And so I think I’d always been fairly passionate about climate change, and that was one of the reasons, actually, I was very interested to do the PhD that I did, because the potential benefits from a clean energy perspective with nuclear fusion.
Jack: 00:11:04 And so it was kind of a melting pot of those three things that maybe had the drive and enthusiasm to kind of start up a company. I think that and also I’m a person who just enjoys the challenge and likes being my own boss, and I’m pretty sure every entrepreneur or person who started a company will probably say that, that they, rather than kind of someone else telling them what to do, they kind of went out and had a good idea and wanted to do it for themselves. So I think that was also part of it as well. So the kind of challenge really, to push myself to maybe be slightly out of my comfort zone, but also to try and take the knowledge and the skills I’d gained working in academia for so long and actually try and apply them to solve a really important problem. But also try and do it on a time scale that wasn’t the time scales of the Airbuses or Rolls-Royces of this world. It was the, on the time scale that was more fitting for a kind of small, agile, small company. So.
Jeff: 00:12:09 So what was step one? You thought you might want to commercialize this. And then what happened next?
Jack: 00:12:15 I was in the University at the time, so it was a bit more complicated because effectively to start a startup, we kind of had to spin it out of the University. The thought process was that I’d patented some of the work I’d done as a PhD student around some cooling technology. We thought that might have some applications outside of fusion. One of those potentially being battery cooling. And so we’d had a few conversations with some investors as well as some kind of government bodies, particularly around the battery thing. That was a positive. And so effectively it was, okay for us to potentially invest in you, you need to actually kind of spin out and form this company. And then we can actually put the money into the company and you can, you can go for it. Then was the very, very painful process of spinning out. So that for us went on for the better part of a year, maybe even a bit more. That really came down to the fact that it was a big negotiation between how much of the company the University wanted to take versus how much we wanted to give them. So effectively, it’s pretty much written into your contracts as a University employee that if you spin out a company, and particularly if it’s going to license some company from the University that it has to… the University has to have an ownership stake in it.
Jack: 00:13:44 If I’d do it all again, well, I would be very tempted potentially to kind of leave the University and then start up the company so there was an obvious clean break and they couldn’t take a share. Now, I believe from speaking to kind of people who’ve gone through the experience since us, that it’s now a lot smoother. Now, the University, I think, understands that taking a huge equity stake in a spin out company, as well as then also charging them to license any IP, is kind of very much hamstringing a very young company that won’t have much money anyway. So yeah, now I think they’ve massively reduced the equity stake that they take in companies when they spin out, which I think is the right approach. But yes, if I did it again and the terms were similar to what we were faced with, then yeah, I would have been much more tempted probably to just say, right, I’m going to quit and then I’ll do something else for three months and then I’ll start the company. The one benefit is obviously the name. So we still obviously get to put that we’re a Oxford University spin on media, and we can talk about it with investors and that still has a big attraction. So there is that tangible benefit from being associated with the University.
Jeff: 00:14:59 So when you started doing research at the University, was that something you even really thought about how that might affect you, or that was just something that kind of got on your radar when you started thinking about spinning out the company?
Jack: 00:15:10 Yeah. No. That wasn’t… yeah, I wasn’t thinking about that at all. I mean, I was probably more thinking of pursuing a career in academia at that point. So I don’t know whether you’re asking me that in a way of whether I think there should be more training around kind of entrepreneurship. I think that wouldn’t be a bad thing. I think that might even happen now, at least in some universities. But yeah, if you’re doing some postgraduate study of some kind that you are given some training to kind of think about, okay, always having the back of your mind, is there a way for me to kind of commercialize this work that I’m doing in some way? And I think that wouldn’t be a bad thing. It wouldn’t be a bad thing for people to have a bit of a mindset. Some people do academia just because they want to like, learn new knowledge or build the knowledge base of humanity. But a lot of people kind of do it as a, they’re not too sure whether they want to stay in academia or not. And I think it would be nice to give those people who are obviously very intelligent because they’re people doing postgraduate degrees, give them maybe this other outlet for their intelligence. In fact, they can they, can you be more creative with it and actually deploy some of your knowledge to generate solutions for humanity and to maybe make a bit of money for yourself at the same time?
Jeff: 00:16:38 One of the things I’ve always found interesting about universities not a lot of people are aware of outside of the academic community, is that they list, here’s all the technology that we’ve developed. If you’re interested in commercializing it, contact us. Like here’s a bunch of ideas. And like it’s a gold mine of business opportunities for the right person. And I actually, I love going through and reading through the listings of technology and thinking about how could I use this, how could this be deployed commercially? And I don’t think a lot of people are aware that that even exists.
Jack: 00:17:07 Yeah, yeah. No, it has that. Yeah. I mean, I’ve never even looked at the size of the patent portfolio for Oxford University, but I’m sure it’s ridiculously large. Who knows how much money they spend every year maintaining it. Yeah, you’re 100% right that that patent portfolio is there for people to come and say, we’d like to license this from you. The interesting thing, and I don’t know whether this is universal across other universities, is you can only generally license it. Universities generally don’t like selling the IP to someone. They generally tend to like to license it. I don’t know whether that’s Oxford in particular, but that’s maybe a little thing to be aware of if you do go down that route. I mean, that’s not necessarily a problem, but some investors might be more comfortable if the company owned the IP rather than they were licensing it.
Jeff: 00:17:55 It spun out from the University. And then what was the next stop? You had to start building a team to actually build out the company and develop? Like how did that go?
Jack: 00:18:05 I think at this point I’d probably stop and say, do not start the company the way that we started the company. So we kind of started the company on a “we think we’ve got some great technology and great capability and knowledge and know how. Let’s build a company around this.” In hindsight, if I was to do this all again, my kind of pearl of wisdom to myself would probably be stop and probably spend six months first finding out what is the problem, the commercial problem you are solving, and go and gather information from prospective customers about what they want in this solution. That for me is the… and I’m sure I’m not alone. I’m sure many, many university spin outs spin out on the idea of we’ve got this great technology, but we’re not quite sure where to apply it. But I would say it kind of was a mistake, but it’s kind of I think it’s just one that pretty much a lot of people make. And what that meant is we probably spent a few years bouncing around from things, trying to find a good fit for what we were doing and what we were good at. So yeah, we got some initial money and we spent some initial time actually working a little bit still in the fusion industry. So we worked for, worked together with a private company called Tokamak Energy, based in Oxfordshire. We helped them with some developing some of the kind of thermal systems for their, one of their prototype reactors.
Jack: 00:19:39 And then we also did some early work on battery cooling. So we started looking at battery cooling, particularly for lithium ion batteries, and particularly focused around fast charging. And then again, initially we were looking at that for applications in automotive, not initially aerospace. And it’s kind of, it’s only when we started looking at it in more detail and understanding that automotive is more driven by costs than kind of high performance. And a lot of our expertise and experience is always about pushing the boundaries of what’s possible that that didn’t really make a lot of sense as a market for us. So yeah, it took us a lot of wrong turns, a lot of soul searching to kind of slowly get ourselves going in the right direction. So I think that would be the big advice I would give anyone thinking about starting a company is always make sure it’s solving a commercial problem and do your research ahead of time before you actually decide to start the company and take some investment money to try and realize that solution. I mean, Jeff, you started plenty of companies. I suspect you’d probably say that that is 101 of doing it right. When you come from a technical background, it’s very easy to get kind of tunnel vision on the technology and not think about the surrounding kind of commercial picture.
Jeff: 00:21:09 And I think that’s like coming out of the tech scene, either deep tech like you or like computer or like AI, there’s lots of people starting up in AI right now, it’s easy to lose track of how this can be used in the marketplace versus how cool the technology is, because there’s pretty amazing stuff out there. I certainly don’t think you guys are the only one that’s had that challenge of, okay, we’ve got something amazing here, now we need to figure out who wants it. It’s been an interesting journey. So where are you at now? I think you’ve made some progress since we last talked. How’s it coming along?
Jack: 00:21:45 Yeah, so I think, so I started off as the CEO of the company, and I’ve only kind of recently moved to the CTO role. When you are a kind of deep tech type company, it makes a lot of sense, I guess, at least in the very early stages, maybe for seed funding that you are led by a technology person, because effectively at that point you’re really, you’re really selling mainly… there’s a prospective market you’ve got in mind, but you’re mainly selling the team and the kind of the amazing technology that’s going to basically help you win that market. So, that made sense short-term. I think, I guess another mistake I would try and tell people is that I probably stayed in that role too long and probably should have switched out to the CTO role a lot sooner. So what we have done in the last year as a company is that’s happened. We’ve basically brought in a more commercially focused CEO, and then I’ve gone into the CTO role, and that has helped us kind of be slightly more commercially focused as a company. And got us going in the right direction in terms of acquiring customers and beginning to bring in some reasonable revenue. That’s been good. You need to be grown up enough to realize where your own limitations are. So I was quite happy to accept that my skill set wasn’t really going out and trying to convince investors or analyzing markets and planning out kind of market strategies and market entry strategies. It was good to learn about those things, to have an appreciation for them, but it was never going to be something I was really passionate about, and never something where I felt I was going to excel and do it better than the next person, so that it made the company really great.
Jack: 00:23:32 So I think, yeah, another one is being willing to relinquish power when it makes sense. As I always say, put round pegs in round holes, not kind of square pegs in round holes. For me that was another big lesson. I think if anything, I was a bit frustrated in that endeavour in that I kind of wanted to do it a bit earlier, but the investors at the time were maybe a bit reticent to kind of change the CEO, which I kind of understand, but I think I should have pushed a bit harder to make that change a bit earlier. But no, so now things are going well for the company. As I said, starting to generate some early revenues. We’ve focused down on kind of one starting product around the heat exchangers, the manufactured heat exchangers, which seems to be getting a lot of interest, particularly in the aerospace industry. And yeah, things are going in the right direction. It’s definitely harder to come by investment now than it maybe was about three years ago or so, three or four years when we started the company. That’s one big change. And that has definitely been a switch as well, from a focus on investors willing to kind of bet on the technology, whereas now investors want to see early revenue. Or a lot of them do want to see early revenue to really get behind the company. If you want to raise kind of tens of millions of pounds, you need to have that to have any chance.
Jeff: 00:24:53 What advice would you give a company that needs to go and raise and start to look at VC capital? At what stage would you recommend somebody starts looking for that type of investment?
Jack: 00:25:03 It really depends on what you’re trying to do with your business. I’d always say to begin with, try and avoid VCs early on if you can, because once you start getting VCs involved, then they are going to be pretty pushy about… well, you can be lucky. And we were relatively lucky with the VCs we got, but you can end up with VCs that you get a lot of pressure to deliver certain things on certain timelines or go down certain directions with what you’re doing as a company. So I’d probably always recommend maybe looking more at, in the early stages, kind of angel investors or conglomerates of angels, like angel syndicates is a good starting point. Perhaps even family funds or family trust funds type things, they’re usually quite good to look at. But yeah, we’ve got VCs. So I think the key thing with the VCs is really making sure you identify VCs that are actually going to give you something more than just money. It probably goes generally for all investors, but VCs in particular, if you get the right one, they can be game-changing, not only in just the money side, but actually putting you in contact with the people that allow you to massively grow your business. So other investors, but also kind of relevant industry contacts that actually help you grow your customer base. So yeah, when you go for them, I’d probably say delay it if you can.
Jack: 00:26:36 You probably inevitably, by the time you get to series A or maybe even a bit before, you’re probably going to start having to look at VCs. Again, expect to kiss a lot of frogs before you find a princess. Yeah, like 10 or 20% success rate in terms of actually just converting an email to an initial conversation is pretty good. And then you’re probably looking again, like even after that, maybe another 10 to 20% success rate, that actually that first meeting turns into something that goes to like due diligence. And then hopefully you get it across the line and get a term sheet. So the other suggestion I would say is that you will change your pitch deck probably at least 3 or 4 times as you go through this process. So always, when you do your list, leave the ones you are kind of most excited about till towards the end. Always start with ones that are most speculative. Use them to kind of help tune your pitch. Maybe tweak bits of it. Work out what what they think is good about your pitch, what is maybe needs some work, and then basically build up so that when you get to the point of pitching to the ones you’re really interested in, you’ve got a really finely-tuned, honed pitch that you know is going to come across really well.
Jeff: 00:27:53 You mean the speculative VCs like not your speculative concepts, but speculative VCs?
Jack: 00:27:59 Yeah speculative VCs. The one you think that it’s very unlikely these guys are going to invest, but I can use them as a bit of a test guinea pig for my pitch deck to see how it comes across and get some feedback. It’s all about feedback, really. I think that’s the other big thing, I would say. I’m talking about feedback from VCs, but you can also go to other events where you can kind of practice the pitch or just go through, go through the pitch and colleagues just just get as much feedback on board as you possibly can to really hone that pitch.
Jeff: 00:28:27 How long do you think a pitch should be?
Jack: 00:28:29 Most of the VCs I’ve done, it’s probably like 8 to 10 slides is the kind of sweet spot. If you get to a point where they want a conversation with you, you probably want another short deck that’s like 3 slides or something that you can maybe send in an email that could quickly flip through and understand what you’re trying to do. And then in your data room, you probably have like a, I don’t know, a 20 to 40 page slide deck that’s basically got all the bits of information they could possibly want. And at that point they’re willing to spend the time to read through it. Go out prepared. Don’t go out half-cocked. It’s probably the other thing I would say. You probably get one shot. It’s very rarely I’ve ever seen a circumstance where you get to pitch twice to an investor. It’s kind of one, and you either catch their interest or they’re moving on to the next one because they probably have hundreds, hundreds of pitch decks a week that they get sent to them. So yeah.
Jeff: 00:29:23 For sure. All right. So what’s one piece of advice that you think you wish somebody would have told you when you were getting into this or starting a company?
Jack: 00:29:33 I think the one that we still struggle with and is probably still the hardest thing is people, is kind of getting the right people for your team. And we’ve tried lots of different ways of doing the recruitment. Do it through a recruiter, do it yourself. Use LinkedIn adverts, don’t use LinkedIn adverts, use a headhunter. It still to me seems a bit hit and miss about when you get whether you get a really good person or not. And I think what I’ve found is there’s lots of mediocre people. There’s very, very few like really high-grade, star-quality people out there. Which is surprising because the very generic things of someone who works really hard is quick to learn. Even that, I found, is quite hard to actually find in people. So I think my bit of advice would be to treat recruitment as as important a level as your technology or your or your commercial proposition, I think. Think really hard and put time and effort into how you’re going to make sure you get the right people. How are you going to retain those people? How are you going to motivate those people? Deserves as much time and attention as some of the other things that are more obvious for running a business.
Jeff: 00:30:46 I think that’s good advice. Appreciate that. I think we could wrap it up. I appreciate you coming on The Owner’s Roundtable and sharing your journey with us. And thanks, Jack. Appreciate you coming on. That’s all for us here at the Owner’s Roundtable. Thanks for joining us. Don’t forget to like and subscribe so you can join us next time for more success stories, misadventures, lessons, and advice from real owners just like you.