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Trying to find the right problem to solve is really key in an early-stage company that has limited resourcing. Food waste is a 1.6 billion ton problem, and 15% of that can be linked to failures in the cold chain. Inadequate cold chain monitoring can have even more dire consequences when it impacts the integrity of pharmaceutical products, including vaccines. Join us as we chat with Manik Suri about what he and his team at Therma are doing to drive safety and reduce waste with their remote temperature and humidity monitoring solutions.
What does it take to found a globally important company in these times? We’re interested in what happens before universally-acknowledged success.
Join Brett Kistler as he engages in deep conversations with business leaders from emerging markets, being vulnerable about their experience in the early- to median-stage moments of their founding journey.
Intro: I think one of the things that’s really hard about startups is getting attached to your priors, and then believing the very vision that you are trying to espouse and create. You have to do that in order to celebrate and sell the vision, but if you do that too much, you might miss the reality that’s staring you in the face.
Brett: Welcome to the Clearview podcast. Today I am speaking with Manik Suri, the CEO of Therma. How are you doing today, Manik?
Manik: I am great, Brett. How are you?
Brett: I’m doing all right, just getting over a really bad case of Norovirus, but it is finally coming out the other side. I think I’ll live.
Manik: That is not fun, not fun. Having worked in the food safety space for the last six years, we are very familiar, too familiar probably with Norovirus, not an easy one.
Brett: Yeah, I imagine. Tell us a little about Therma. What is it that you guys do exactly?
Manik: Therma is a technology startup that builds technology around the smart cold chain. We are building tools to monitor and improve performance of refrigeration assets, trying to help reduce waste around food product, energy and refrigerants. We are trying to reduce waste of perishables, energy spent, and refrigerant emissions, which are a greenhouse gas that goes into the cooling cycle.
Brett: Where did you come up with this idea? How did this become something you got into?
Manik: Sure, it was a journey, and it makes sense in the rearview mirror. At the time, it was kind of unfolding, the path was twisting and turning. I definitely didn’t know where we were headed as life seems to be. One of those journeys that makes sense when you look back on it. We started working in technology, myself and my co-founder, Aaron Cohen, building compliance and safety management tools for the food supply chain. We were working on our first product called Collaborative Inspector, CoInspect, hence my familiarity with Norovirus.
I had a background as a lawyer and had just come out of law school and wanted to work at the intersection of law and technology, trying to build compliance in regulatory tools to improve health and safety. The year we got started with CoInspect had this big set of food safety issues back in late 15, early 16. You might remember that.
Brett: I remember that.
Manik: We started working with food companies, food growers, manufacturers, distributors, restraint chains, helping them replace outdated tools, pen and paper based systems with digital tools. We started replacing log books and line check books with a mobile first workflow tool called CoInspect or Collaborative Inspect.
In the process of building CoInspect, we scaled that product to about 6,000 locations. It is still in use, and it is now part of our Therma platform. Three years into that journey, we discovered that a key part of food safety was around the holding conditions of the product, making sure the product was kept in the right temperature and humidity conditions. That’s actually a big part of food safety. What we learned is most companies are still doing that manually. They are having team members and employees check these temperatures using clipboards or in some cases using our mobile app, CoInspect. We realized there was a better way of solving that than just a mobile first approach. We realized we could build sensors to automate the collection of that information.
Historically, that had not been possible. The first generation of Internet of Thing sensors, IOT sensors, used Wi-Fi and Bluetooth. While they work really well in certain environments, they don’t work well in refrigeration interiors. The side of a refrigeration box is essentially like a Faraday cage that blocks signal from carrying out. Historically, companies had not been able to use wireless sensors to monitor refrigeration automatically. We were able to use a new type of IOT technology that has emerged recently called LORA based on long range radio that allows you to get signal out of environments, including refrigeration, that Wi-Fi___33 and Bluetooth sensors can’t.
That allowed us to start building a 24/7 monitoring solution that allowed us to monitor refrigeration assets and hence Therma was born. Therma is short for temperature, humidity, equipment remote monitoring application. Team of nerds over here.
Brett: It just happens to be an acronym as well. I didn’t even have to be. Therma already makes sense. You started by building a platform that allowed people to automate, not automate. You started by building a platform that made it easier for people to log the temperature data that they were manually recording, and then as the technology developed, for LORA, you started to implement this into automatic temperature checking Now what you provide, you have this platform and these sensors that are closing the loop on keeping track of temperatures in refrigerated environments for food storage through the whole chain.
Manik: Exactly. Recently we moved from food to pharma as well. In the last six months, we have gone from food to pharma supply chains. As the world learned last year, there is a lot of perishable product not just in the food supply but also in the pharma supply. Much of that inventory is also lost because of temperature excursions, because of human error, because of power outages and equipment failures. We are now building a smart cold chain platform across food and pharma supply chains. That was our origins. We started with food safety.
Brett: What are some of the challenges you have had kind of bringing this to market?
Manik: I think one of the biggest challenges, especially as we were getting started, was figuring out which problems to focus on. As an early stage company, there are so many problems in a given area, and one has limited resourcing. We bootstrapped the company for the first year and a half, and you don’t have a lot of product or engineering or sales and marketing. We were two people when we got started. We are now almost 60 now, but when we were two people, there weren’t that many things we could work on. One has to be super focused, and I think that was really hard. It is still really hard. We are still a small company. When you think about all of the different problems and all the different product features that need to be built, so try to find the right problem I think is one of the key challenges in early stage. My co-founder, Aaron, has worked in startups for 30 years. This is his fifth startup. He is 54.
We talk a lot about pattern recognition and the things you learn working in startups over a career. This is my first startup, so I made every possible mistake you could with CoInspect, as one does. One of the big challenges was not necessarily working on the problem in the right way or the right problem. When we first started, we were trying to help government agencies perform inspections more efficiently and with more accuracy. Our first customer was government, health departments. We signed a contract with the New York State Department of Health in Albany. That took almost a year in 2015, and it turns out that there is a very hard way to build a large and high growth business.
Part of it was figuring out okay, who should we be selling to and which problems should we be solving. Health and safety and managing compliance around health and safety codes is a big problem area. There are many ways to attack it and try to improve that problem, but finding the right alignment of incentives, finding the right go to market, figuring out who the champion and who the buyer with budget is is quite hard. We pivoted. We have pivoted three times. The first pivot was going from selling a regulatory tool to government to selling a compliance tool to industry. That was the first pivot. The second pivot was doing that in multiple verticals and shifting it to just one vertical. When we started the business, we were working on food, housing and manufacturing safety, all of which have huge areas of compliance in the field, all of which have lots of codes that require adherence and regulatory enforcement.
We ended up focusing on food kind of accidentally and kind of opportunistically because Chipotle had this big food safety crisis right when we were getting going, and we realized there is a huge problem and a huge need in the food supply chain mainly because companies started contacting us out of the blue. Restaurant chains, food trucks, food manufacturers started emailing and contacting us saying can we use your compliance tool for food safety compliance. We knew nothing about food safety at the time. That was the second focusing effort that we made. That was in year two.
The third pivot or shift has been going from solving that problem with a mobile first tool to solving that problem with a sensor based approach, and that was a huge shift in 2019, in late 2019 realizing that using sensors was a better way of solving the workflow than using a mobile app. Though the mobile workflow tool is still very sticky and still very much in use, it is much harder to get people to shift from pen and paper to a workflow tool when they still have to do the work themselves, whereas with a sensor it takes the work off of their plate and so it is much better aligned. Also, it is not just about compliance. It is also about spoilage prevention and margin improvement around food cost as well as labor, time saved, and energy costs. Those are much better to get a business to buy on than just compliance alone. It has taken years to figure those things out, but it comes back to working on the right problem in the right way.
Brett: It seems like with a sensor you can also trust the data more. I could imagine there being circumstances where people are just like it is a couple degrees off, but just write in what they are expecting or else we are just going to have a whole bunch more work on our plate replacing this thing. It's fine. I can imagine that kind of stuff happening if you don't have the exact temperature that actually occurred being logged directly from a sensor.
Manik: There is a lot of challenge around data accuracy with compliance and with checking these kinds of controls. We tried to solve some of that with CoInspect by adding geolocation, by adding timestamps, by adding photo uploads, all of these validations functions into the mobile workflow tool to make it more accurate, more reliable, more trustworthy, less likely to be what they call in the industry pencil whipped. Pencil whipped is when you go in at the end of the week or the end of the month and mark everything as fine through the paper log book. We were trying to solve for that, but doing that with a mobile workflow tool is hard because it requires people to then do this stuff every single day, multiple times a day. That’s not an easy friction to overcome, whereas a sensor eliminates that entirely. I think you are exactly right that it is hard to get accuracy out of manual workflow.
Not to mention with a manual approach, you can only really check this stuff when people are actually in the location. Over the last year, with COVID, one of the things that happened was a lot of these locations where we have Therma deployed had lighter and lighter staffing. Many people stopped going in, and many companies stopped having workforces in the box, in the location as often. Shifts are lighter. The staffing model is thinner, and as a result, there are fewer and fewer hours where these locations are as fully attended. That requires even more remote monitoring, and so a 24/7 tool for monitoring your assets and your inventory becomes even more valuable in that context whether that’s a convenience store or a restaurant or a pharmacy.
Brett: I imagine from what I saw on your website, one of the value propositions is that it can save a store a lot of money from lost inventory, but another thing it could do is it can assure customers. If I am showing up to a Chipotle, is there a way that I could check their Therma system to know that all of their refrigerators have been within the expected range for the past however amount of time?
Manik: Theoretically, yes. I mean theoretically one could go in and look at and validate all of the holding conditions of product, and we have customers that are surfacing that today to inspectors, to the health department, to the FDA and USDA regulators, generally, not to consumers directly but to many folks in the compliance and regulatory landscape who do care about that data and want to make sure it is accurate whether that is food or pharmaceuticals. Absolutely, that data record matters, and as I mentioned, Brett, I joke with my friends I am a recovering lawyer. Coming out of Harvard law school, I was working with Beth Noveck. She was herself a former lawyer and had been the deputy CTO of the US in the first Obama White House. Beth and I started a center at NYU together called the Governance Lab.
The focus was to bring technology into law and government work flows to try and improve outcomes, and so validation and compliance is a big part of that. Of course, profitability and improving margin by reducing waste and loss of product and energy is another part of that for businesses, but definitely having the accurate data as a stepping stone or starting point is key.
Brett: You mentioned having pivoted like three different times. Any time a company does a pivot, there is the business case realization of something shifting and then there is also something personal along with it. There is a personal attachment to the direction things were headed or certain outcomes. I am curious about what kind of personal challenges you had moving into those pivots. What attachments did you have to let go of to recognize the need to make those shifts?
Manik: Absolutely. You phrase the question really well. I think letting go of attachments is a big part of success in life and in early stage startups especially. So much of the challenge I think in pivoting is one gets attached to one’s ideas and also it is very hard not to take the lack of traction, the lack of momentum as a personal failure. It is very personal in startups because one feels, and I certainly felt, attached to every single twist and turn, every single up and down at a personal level. When you are feeling like you are putting your blood, sweat and tears into a product, into a sales motion, into a go to market, and discover that maybe we are working on the wrong problem or maybe we are working on this problem in the wrong way. That’s really painful, and it can be hard to accept what’s actually happening.
I think one of the really hard things for me with CoInspect and Therma was accepting that no one told me, no one said you are not working on this right way. No one said compliance or safety, it’s really not a top 1, 2 issue. We are probably not going to be able to move quickly on a budget decision. One could read that between the lines, and certainly we realized over time that safety and compliance were not enough to overcome a lot of the friction around changing out things that are done with some of these workflows. We needed more than that. We needed to offer more value to the customer. I certainly didn’t realize that at the time. It took me a longer time than I would have liked, certainly looking back on it to realize that that's what was going on even though no one said it that necessarily so explicitly.
I think one of the things that's really hard about startups is getting attached to your own priors and then believing the very vision that you are trying to espouse and create. You kind of have to do that in order to celebrate and sell the vision, but if you do that too much, you might miss the reality that´s staring you in the face.
Brett: What was standing in the way of you seeing that early? Having those realizations previously?
Manik: One thing was I think of myself as an idealist, an optimist and idealist, and I was very much idealist about compliance, about the fact that a better way of doing compliance, of managing compliance should be an obvious win, should be an obvious solution for companies to adopt. Just because there is a better way of doing something, whether it is a regulatory enforcement action or a compliance action, doesn’t mean businesses or government agencies are going to adopt that solution. There are a lot of factors at work, and I think I didn’t appreciate that, especially coming right out of grad school and with this kind of idealistic let’s bring technology into compliance and regulation. No one is doing that. That was my bent coming into tech.
Whereas a lot of my friends who were venture capitalists, private equity investors, tech entrepreneurs, a lot of them were telling me this is going to be a pretty hard problem to solve. There is not a lot of monetary upside, not a lot of incentive to change. Things are working mostly for companies to do it on pen and paper and have their logs filled whether the data is accurate or not. You are going to have a hard time upgrading that. I didn’t appreciate that, just the kind of fullness of that at the time.
Brett: It seems like a really common story. I remember having that same experience starting ClearView. I would be going to clients and be like look, everything is done on paper. We could do everything digitally. A lot of times that brought a lot of value. Other times it could have brought a lot of value or it just wasn’t seen, or it would have been an incremental increase in value, or people were just stuck in doing things the way they wanted to do and didn’t want to invest in changing the way they do things.
Manik: Absolutely. I think it can be hard when you are the change agent, and you can see the value and see the potential when you are believing that. It can be hard sometimes to face the reality. It is also, I think, Brett, hard to know when to keep going and when to let go. When is it tenacity to kind of keep going and resilience? When does that virtue become a limitation? When is it better to be agile and say this didn’t work? Let’s try something else. Knowing when to make that shift is, I think, a really hard thing.
Brett: Especially in something like regulatory and compliance, a lot of times people feel like they have a sense of safety in how inaccurate things can be. They can have a little bit of fudge factor. People are afraid of having something that is regulations or compliance-based actually one percent efficient.
Manik: Absolutely. I have spent hundreds of hours on topics around that with business owners, corporate decision makers, field staff across many, many companies. It is a hard nut to crack. It is not always easy to convince people that better and more accurate compliance is actually in the long term better for them, better for their guests or consumers, and better for the public. Oftentimes, people see it as a tax or an overhead on what they are doing. It is not an easy thing to do.
With Therma, what’s been really exciting is though Therma does improve compliance and does improve safety, it is not the main ROI driver. The main ROI driver is around product waste and energy waste and refrigeration asset lifetime optimization. It is about reducing waste on cost centers, on things that actually cost businesses money like food or pharmacologic or energy. That’s much easier to get people to take action on. It has the nice byproduct of also improving safety and compliance, a much better way to align incentives as we have learned, which is why we are getting a lot more traction in the past year.
Brett: Much better. An example that I just thought of from another industry is like in trucking, they require truck drivers to log their driving hours. They now do it electronically through connected to the engine, and now you have situations where a truck driver is parked for the 8 hours they are supposed to be sleeping. They need to be running the engine to keep their cab warm, and if they are running out of fuel, they might have to drive 30 feet to go fill up the tank. But then that resets their entire clock, and then they can’t drive for another period of time just because this thing was optimized for a certain reading. They are technically breaking that reading but not really breaking the rule. But then because it is all logged that way, then they are stuck.
I agree with you that moving in the direction of what people’s actual problem is, what their pain points are, solving the loss issues as well as actual health safety, which can become a loss for restaurants when Chipotle I am sure lost a lot of money in that whole situation.
Manik: They did. The company lost close to a third of their revenue for a number of years, and the market cap I think suffered a 42% loss from peak to trough. It was a major, major destroyer of brand value. I think hundreds of millions of dollars of brand value were destroyed in a short window of time. I think what has been exciting with food waste, and for those listeners who aren’t familiar and I was not, food waste and energy consumption in the refrigeration cold chain, as it is called, are huge drivers not just of business costs but also of global warming.
Food waste, if it were a country, would be the third largest source of emissions in the world after the US and China, and the cold chain as a whole, because of its significant use of greenhouse gases, refrigerants, to manage and in the cooling cycle, is a huge source of warming. Over 10% of warming comes off of cold chain related activities. The ability to improve that area of operations, reducing waste of not just food but also energy and refrigerants by catching downtime events, a lot of customers and a lot of our team members and investors are excited about the climate implications of that work in addition to the profitability. I think that’s been another major tailwind for us.
There is a lot more in the common understanding of problems around climate these days than there was. There’s a much more broad based understanding of the challenge around climate and global warming than there was 10 or 20 years ago. I think a lot of businesses are taking the commitments around sustainability much more seriously, and making a lot more significant commitments around that, whether it is carbon neutrality or carbon emissions reduction. We are getting a lot of interest from major corporates around Therma because it is both a way of improving compliance and a way of reducing waste but also a way of reducing emissions. It is kind of this triple win, and that’s I think one of the biggest tailwinds for the business today. I think we are trying compliance to things that are even larger than compliance, like climate, and another way of aligning with change.
Brett: Where do you see Therma heading? If you were imagining that there might be another pivot in the future, what would that be? Where might you expand? What kind of new areas do you imagine you might get into? You just touched on it a little bit right there.
Manik: I think the cold chain as we have learned about it the last couple of years, the cold chain, the refrigeration infrastructure layer around the world is massive. I had no idea how massive it was because I didn’t come from the refrigeration industry. There are hundreds of millions of units of refrigeration in the world, not including domestic, not including home fridges and freezers. There are hundreds of millions of refrigeration units in the business world. Most of these are not optimized and monitored in real time. Because the technology didn’t exist until recently for wireless monitoring, very, very few refrigeration units are optimized or monitored in real time. Only the largest refrigeration mainlines in places like hospitals and fertility clients and major superstores are being monitored with wired solutions, typically.
That means that there is a lot of opportunity for IOT enabled monitoring both to catch downtime or catch loss events, but also to optimize energy settings. When we talk to experts across the cold chain in food and pharma, the kinds of implications of the kind of waste that’s going on are just massive. Today thirty plus percent of food is wasted from production to consumption. Not all of that is because of cold chain and refrigeration issues, but about 15% of it is. That’s a huge number, just huge numbers. The Boston Celtic group had a well studied and well cited article about food waste a couple of years ago that called it a $1.6 billion ton problem with a trillion plus dollars of inventory thrown out. Even if 15% of that is because of storage and handling in the cold chain, that’s a big number every year. That’s an annual number of $150 billion dollars of waste that could be avoided.
When you think about pharma, when you replace food with pharma, pharmaceutical products are often a lot more expensive on a per pallet level. Combining the amount of loss across the cold chain with the fact that very little in the way of cold chain optimization is happening today is really the kind of opportunity that I think as a young, early stage technology company we are very excited about. That’s exactly where we want to be playing. What we have seen in the last 6 months with COVID vaccine delivery is not only is the cold chain really inefficient, there is a lot of downtime events and a lot of waste, there have been vaccine losses in the past couple of months in places like Maine, Michigan and Washington state because of refrigeration failures and human error, but also the cold chain is pretty underdeveloped.
The Associated Press had an article in October that said because of inadequate cold chain approximately 3 billion people will not have access to a COVID vaccine in the near future, 3 billion. That’s a lot of people who will not get a vaccine around the world because they just don’t have refrigeration available to them. The cold chain doesn’t extend far enough.
Brett: I see.
Manik: It is just kind of a problem area, and we have just raised a growth round focused on trying to extend our monitoring into new markets, both internationally. We are now in 13 countries. And going from food into health care as well. I think we are very much focused on this cold chain monitoring solution, and see it as a multi-year journey, maybe one that was unexpected and unlikely but definitely one that we have embraced.
Brett: Cold chain transparency also seems to be an issue, too. For example, what would stop me from being able to know if the COVID vaccine that I receive actually stayed within temperature limits for its entire life cycle, I guess?
Manik: Exactly, Brett. I think you are asking exactly the right question. Right now, it is very hard to get data integrity across production and consumption. It is very hard to know if what you are putting in your mouth or putting in your arm has had integrity in its holding conditions from the life cycle. The vaccine sensitives around temperature are significant. In some cases, just a few minutes outside of the temperature holding bans can make a vaccine ineffective.
The WHO, the World Health Organization, estimates that around 35% of vaccines get lost because of temperature issues every year. That’s a huge number. Over a third of vaccines are lost because of temperature issues.
Brett: We can’t afford that with the COVID 19 vaccine, 35% of the vaccines being lost and/or people thinking they are vaccinated when they are not.
Manik: Exactly. That’s why we are very much focused on the work these days. I think there are huge problems to be solved there.
Brett: This has been really stimulating. Thank you for talking about Therma. I am really excited for you guys and I’m excited to see you guys’ continued success and growth.
Manik: Appreciate it. Pleasure joining you. I appreciate you having us on, and if anyone is interested, please check us out. Hellotherma.com Feel free to contact me directly, manik@hellotherma.com. We are based in the Bay Area. I would love to chat and explore opportunities to partner. Thanks, Brett.