Lab to Market Leadership with Chris Reichhelm

Deep Tech Start-Ups & Industrial Giants | Paul Mascarenas OBE, Ex-CTO of Ford Motor Company

• Deep Tech Leaders • Season 1 • Episode 16

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In this episode, Lab to Market Leadership host Chris Reichhelm interviews the former CTO of the Ford Motor Company, Paul Mascarenas OBE. Paul discusses his experiences driving innovation at one of the world’s largest automakers and shares his insights into the complex relationship between startups and large industrial players. 

Join us to learn about the innovation process within major companies like Ford, and how startups can better position themselves for success. With over 30 years of experience in the automotive industry, his work on the boards of
ON Semiconductor, US Steel and Borg Warner, plus his current work as an investor, Paul offers invaluable advice for deep tech founders navigating the path from lab to market.

Tune in to learn what it takes for startups to succeed in the automotive and industrial sectors.

Let us know what you think...

Learn more about Lab to Market Leadership: https://www.deeptechleaders.com

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Podcast Production: Beauxhaus


Paul Mascarenas OBE:

How do you improve your odds? Um, a lot of technology comes in through the supply base. Um, you know, whether it's tier one, whether it's tier two, whether it's tier three, those companies already have access, uh, to the engineering teams, to the purchasing teams, to the marketing teams at the larger OEMs. Um, they're always looking, um, to bring feature and technology to their OEM customers for the benefit of their own business. Um, sometimes they're just more accessible, you know, sometimes they're more open to working with a smaller partner, to working with a startup. Um, you know, another way is to leverage advisors, to leverage investors, um, you know, venture funds for example, you will often have, uh, venture partners or advisors that have got access to the OEMs. You know, it's about, it's about opening the door. It's about being able to demonstrate in a very compelling and efficient pitch that you've really got something that this OEM wants to bring to their customer.

Chris Reichhelm:

Welcome to the Lab to Market Leadership Podcast. Too many advanced science and engineering companies fail to deliver their innovations. From the lab to the market,, we're on a mission to change that. My name is Chris Reichhelm, and I'm the founder and CEO of Deep Tech Leaders. Each week we speak with some of the world's leading entrepreneurs, investors, corporates, and policy makers about what it takes to succeed on the lab to market journey. Join us. For those of you who are targeting automotive or industrial domains, you need to listen to this week's podcast. I have none other than Paul Mascarenas. Paul Mascarenas, for those of you who don't know, was the CTO, Chief Technical Officer, of the Ford Motor Company. Prior to that, he was the global head of engineering for Ford. And, uh, as CTO and global head of engineering, Paul was responsible for all things innovation, advanced engineering, research. The number of different transformations that went on under Paul's leadership and guidance was significant. Part of that was as a result of time and the new technology developments of the day. And part of that was down to Paul without question. So, I really want to understand from Paul. While he was there, of course, what made for a really successful startup engagements? When startups were involved in those innovation programs, and that's not to say startups were always involved, but when they were, what was it about those startups that gave them access to those programs? Were, are there any patterns he can pick out? Did the management teams of those companies behave in particular ways? Were there other things? that we can find out that can help individuals like you who are running these companies trying to get access to these domains. Now, Paul has subsequently gone on to be an investor with Fontinalis Partners, a Detroit based early stage VC investing in startups that target mobility and transportation solutions. And he's also sat on a number of big boards, U. S. Steel, ON Semiconductor, to name two. So Paul's views about startups and about the innovation ecosystem have probably changed over time. And I'd love to get his view on what he sees now as some of the critical elements for success within startups. This is going to be a great conversation. I hope you enjoy. Let's get into it. Paul Mascarenas, thank you so much for joining me.

Paul Mascarenas OBE:

Hey, thanks for the opportunity to talk, Chris.

Chris Reichhelm:

We are, um, I'm delighted to have you on the show. Uh, you, uh, you know, as, uh, as the chief technical officer of Ford Motor Company. You were responsible for, uh, research, advanced engineering, and a lot of innovation. And as this is a program that, that looks carefully at the innovation journey, or at least tries to, uh, I would love to get your take on what that innovation journey is like for big companies like Ford, and also the role that you've seen startups play within that. Now, I want to start with a, I want to start with a slightly different question and I want to ask you about, you know, in your time there, and again, your best estimate. What, how many startups would try to engage with Ford in a typical year?

Paul Mascarenas OBE:

Yeah, that's a huge question to start with. And I'm not sure that we ever track the numbers and, you know, my, my data point is somewhat out of date now, but if I think about my time at Ford and also subsequent experience working with other OEMs, larger tier ones, technology companies, and the like, it's probably hundreds of companies, hundreds of. Not necessarily startups, but early stage, um, mid stage companies looking to scale, um, companies that are, that are not typically a part of the normal supply base. They will approach with a multitude of different ideas, different business opportunities. In reality, you know, in terms of serious engagement, it's kind of a handful. It's a very small number of companies that get through that. initial filter and move into the subsequent proof of concept type of phase. So, you know, it's a difficult place to be that intersection between startup early stage and mature OEM tier one supplier.

Chris Reichhelm:

So we're, so even just to get to prototype stage, we're talking about single digit percentages.

Paul Mascarenas OBE:

I'm guessing that's the number, you know, I'm guessing it probably is. Um, But, uh, yeah, let's not give up right now, there's a lot of opportunity.

Chris Reichhelm:

Exactly, exactly. We've only just started the program.

Paul Mascarenas OBE:

We're not going to do that.

Chris Reichhelm:

Exactly. We need a bit more hope. Um, Walk, if you can, Walk, you know, I would love to know more about the innovation process at, um, at large companies, at large industrial companies, and in your case at Ford. Are, you know, could you walk me through what that was like? Obviously while you were there, acknowledging it may have changed. It's been, I think, something like a decade since you've been out, more or less. Um, but while you were there, what was the innovation process like? Where did it start? What was the catalyst typically for an innovation program?

Paul Mascarenas OBE:

Yeah. So look, most, um, most of the large OEMs, tier one suppliers for Ford is absolutely typical here. We'll, we'll have a technology. development process or technology development system. And that really is a, a kind of a pre validation of a new technology, a new feature, a new innovation prior to implementation in a production program. Um, how long it is depends on the maturity of the idea. It depends on the type of technology, software, hardware, It depends on the risk. You know, I think about a simple mechanical innovation at one end versus something like a battery chemistry or a battery management technology at the other for electric vehicle. So it's really a process which is put in place to do the front end work, which takes either an internal innovation or an external innovation, puts it through a concept readiness type guide. And then matures it over a period of time. And it could be anything from a few weeks to maybe a year or 18 months to the point where it's actually declared to be implementation ready. And what I mean by implementation ready is, is ready to incorporate in a production program in a way that from an engineering perspective is robust and high confidence. And of course, from a business perspective, makes sense for the company. And for the end customer.

Chris Reichhelm:

What is the, is there a typical starting point for these programs? Does it always come from technology, for example, or could it come from another part of the business or even from outside?

Paul Mascarenas OBE:

Well, you know, I'm a kind of a tech guy. So the way I think about the world and the business we're talking about here is that ultimately technology underpins just about every innovation, you know, in some way. Um, so it is a technology story. Um, you know, I would say, well, I don't know. I mean, we were looking at both internal innovation, um, you know, kind of blue sky research, things that came out of our own labs, um, as much as we were looking at external innovation. We were, and I think even now, looking more to bring some of that consumer and other industrial experience into the automotive industry. And you'll see that's a continuing trend. Um, so that has really been, um, a great opportunity for the auto industry to work with the, the tech industry, again, whether it's consumer or industrial, and bring that experience into the vehicle. Um, you know, as we think about the vehicle as more of a platform. as more of an experience for the customer. Um, but therein lies the challenge, you know, and that challenge is those innovations, those technologies have been born in a different environment and bringing them into that automotive environment with the automotive expectations around quality, um, you know, total life cycle, total customer life cycle. Um, Manufacturing, uh, Dealer, Parts, Accessories, Service, you know, there's a whole chain there which is somewhat unique to the auto industry. So again, that intersection is a difficult intersection, but one that can be navigated and one that can be managed, but it requires some patience and it requires a set of disciplined processes.

Chris Reichhelm:

The, um, are there particular programs that you can recall involving startups that you would identify or single out as exemplars, really good examples of how startups can engage with a company like Ford, partner with us? and go through the journey with a positive outcome on the other side.

Paul Mascarenas OBE:

Yeah, there's a couple of examples I would think of. One was the internal work that we were doing at Ford. Um, the other is a kind of a third party or an external example. Um, if I start with the internal example at Ford, and this goes back, as you said earlier, probably about 10 years now. Um, we're spending a lot of time thinking about the kind of megatrends that we're seeing in the world. So things like population growth, urbanization, um, more awareness and pressure on environmental um, concerns, sustainability, congestion, uh, urbanization, um, you know, the need for a more sustainable mobility solution. And again, you know, building off of my earlier comment, the role that technology could play in solving those societal problems. So what that led us to, Chris, was working with a number of tech companies, whether they were larger, um, in fact, huge, uh, established companies like Microsoft, when we bought the the SYNC system into the forward vehicles, uh, or smaller early stage, mid stage companies, or either entrepreneurial individuals, um, here in the US, you know, in the, in the Bay Area, Silicon Valley type companies, in Israel, um, huge number of startups, particularly software based startups in Israel, uh, Europe and Asia. And it was great. You know, we were doing a lot of proof of concept work, um, Forming some partnerships, as I mentioned, with Microsoft, a production program with a very mature, established partner, but we really weren't feeling like we were part of that community. You know, we weren't, we were the outsiders coming in, we were the auto industry. We'd fly in, we'd meet, we'd come back to home, so.

Chris Reichhelm:

Of the technology community, of that technology community.

Paul Mascarenas OBE:

Yeah, of the tech community you know, and we felt that we really needed to, to be a part of that tech community, to be the best partner that we could, uh, to find the best partners, really to find the best opportunities for us. And what that led us to do was to establish the, uh, innovation centers as we called them. So we established an innovation center in Palo Alto, for example, uh, right in the middle of Silicon Valley. Started off really small. I remember it was, uh, You know, kind of an office space above a bank building, um, downtown Palo Alto, you know, maybe half a dozen people to just start with. Um, but ultimately grew to, to an innovation center, which, um, you know, I'm not sure how many people are there now, but probably three, four, 500 people in the Palo Alto area. Um, same in Israel, you know, start small and grow the team there in Europe. Um, so that was our way of, of integrating ourselves with that community. Um, you know, we staffed those centers with a combination of, um. New hires, people coming into the company, working in the auto industry for the first time. We also saw some experienced, um, people that we brought in from our established facilities. So that kind of blended team, which helped advance the technology. Um, great, great initiative and, um, you know, a big commitment for a company that traditionally was you know, quite internally focused in terms of technology development and implementation. So that would be one example. Other companies, other larger companies have tried things like, you know, internal venture funds, small innovation teams, skunk work teams, you know, a lot of different ideas to bring that innovation in. The second example that I was going to give was, um, it actually started while I was at Ford in the last year or so when I was there, um, and continued after it was a program called Techstars. Um, which you may have heard of, the concept, it's, it's an accelerator, um, it's a program which is between, um, I think 90 and 180 days, so sort of three to six month type program, um, with corporate sponsors, um, you know, large companies like Ford, like Magna, Verizon will sponsor these programs. Uh, they will select a number of startup companies, um, startup of very early stage, uh, bring them in and put them through a structured program, um, where they're mentored through that time period, given the opportunity to build a business plan, uh, given the opportunity to talk to potential customers, uh, to forge those early partnerships to really mature their thinking. And in some cases, even pivot. You know, they come in with one idea and, you know, building off of the program, they come out with a completely different idea. But the idea is that you, you come in at the beginning with, uh, with that sort of vision, uh, that entrepreneurial spirit. You come out the other side with a plan and something you can really start to grow and scale a business with. Um, I, I actually, uh, served as a mentor, uh, for two of those programs. And it was a really rewarding experience, you know, it's something I really enjoyed doing. Yeah. Just taking my, my big company experience and kind of imparting it in that, you know, much more fast moving, risk, risk oriented, entrepreneurial type startup environment.

Chris Reichhelm:

What were the, the difference in scale and expertise and systems and resources is enormous between these young companies and a company like Ford. The, what are the, in your view, what were the typical, you know, what were the biggest challenges these young companies had when trying to engage with Ford on the programs that you guys are doing?

Paul Mascarenas OBE:

Well, I'd even generalize it, I don't think it's just Ford, it's any, any potential large mature company that they're looking to, to partnership. And, um, you know, I kind of say this a little bit tongue in cheek, but, you know, frustration and lack of patience, uh, or I said the other way, you know, patience is a virtue. Um, these things typically don't happen very quickly and it can be a very frustrating experience for a, you know, an innovator, an entrepreneur. a visionary, um, to keep running in, in, into roadblocks, you know, in some cases they're not invented here type syndrome. Um, but as I said earlier, there, there is a way through. So, um, you know, there's this, this whole, I think just understanding the customer and understanding that the customer in a, A large organization is at many levels, um, and ultimately they're serving a customer. Uh, you know, and if we think about the automotive industry, um, you know, even there it's bifurcated. There's two types of customer. There's the The retail customer, you know, the everyday person like ourselves that buys and owns and operates a vehicle, and there's a commercial customer, um, you know, inside of a large customer, inside of a large company, there's the engineering customer, there's the marketing, there's the purchasing, there's the finance. You've just got to understand those organizational dynamics and find a way to work it through. And, you know, my advice was always you need a strong champion. And typically that strong champion is somebody in engineering, you know, for a startup type company. Um, and again, there you need to understand that engineering hierarchy. It needs to be a champion at a level that can actually move the rest of the organization forward. Otherwise you get lost in the noise.

Chris Reichhelm:

Is that where the power lies in engineering, in some of these large industrial organizations?

Paul Mascarenas OBE:

I wouldn't say the power, but at that, at that early point in a technology's development, clearly it's going to be engineering led. Um, you know, it's, it's unlikely you're going to get a purchasing person, a buyer, put their hand up and say, here's something we must buy, you know, or a finance person say, here's something we must incorporate in our program. You might be able to sell it through marketing. You know, if it's a really innovative feature or technology, um, you know, something that offers the opportunity for true competitive differentiation, um, you might also be able to sell it through styling. I've seen a lot of, a lot of good innovation come through the design studio. Um, you know, material technologies, for example. Um, just think how the interior finishes in, in cars have evolved over the years and, you know, the very high quality appliques and materials that are used in seats and interior trim. Think of paint finishes, for example.

Chris Reichhelm:

Yes.

Paul Mascarenas OBE:

Or wheel technologies. You know, a lot of, a lot of those things which help the stylist differentiate the vehicle are great opportunities. And you know, on the risks, uh, um, a lot of those can be implemented with relatively low risk. Yes. At the other end of the scale, I mentioned earlier. You know, I think a very high risk technology like battery chemistry or battery management system, power electronics for the electric vehicles, a huge opportunity as the OEMs are looking to improve the margins, to improve the affordability for the customers, to take away the range anxiety, to improve the charging performance, end of life recyclability and so on. Huge opportunity, you know, huge problems, challenges to solve. But at the same time, the level of technical risk is very high. And, you know, I, I, in my, in my current role, I talk to a lot of start ups that, you know, believe they've got the, the battery technology, for example, that's the solution to, to mankind's problems. You know, maybe it is. But you're going to have to be patient because it's not going to go in a vehicle in the next three months, you know, in the next six months. It's going to go through a very structured, very robust and disciplined, um, technology development, product development, vehicle validation process. And I think once you kind of internalize that and you understand not just the way these companies work, but why they work like that and what's at stake, um, you know, every day we read headlines about large OEM recalling, you know, 100, vehicles, you know, and, and other kind of catastrophic type events. That's what's at stake here. And the automotive customers, again, whether it's a retail customer or a commercial customer, you know, very unforgiving, very high expectations in terms of what they expect from their vehicle, safety, reliability, quality, affordability, um, you know, end of life, residual value, and rightly so. Um, you know, after our homes, second most expensive purchase we make, we should have high expectations. And, and to meet high expectations requires robust processes. And that often requires time. Um, and I come back to patience is a virtue.

Chris Reichhelm:

Yeah. So given that patience is such a virtue here, and obviously this is not the first time we're hearing this, but at what point do you think companies, innovative companies, should start approaching large industrial corporates? How early on in their development?

Paul Mascarenas OBE:

Difficult question. Um, and again, I, I don't think there's a one size fits all answer here. Look, you know, one person working out of their garage at home with an idea. That's going to be a hard sell. It's going to be a really, a really hard sell. But I think something which is, you know, reasonably advanced in terms of, well, let's, let's back up a little bit. I mean, the first thing is, you know, what, what, what is. What is the innovation or technology? What does it have in terms of the potential to bring value to the customer that you're talking to? Um, and again, that, that customer as an OEM or a tier one supplier is a surrogate for the end customer. So, you know, is it helping solve an unmet need? You know, talk topically now about electric vehicles, as I previously mentioned. Does it help improve the affordability? Does it help improve the driving range? Does it help improve the charging performance of the vehicle? You know, here are some, some big questions. Or is there a, um, you know, an identified, but as, you know, as, as, um, current state and unmet need, you know, big, big opportunity. Or is this white space, you know, is this something that. has never been done before. And we're moving into new charter technology. How big is the opportunity, you know, on a risk reward scale? You know, is it a marginal improvement or is it the opportunity to really be transformational? Disruptive, you know, is the word that's often used. Um, you know, in terms of implementation risk, um, is this an optional feature? You know, which has got some, some true upside potential, but hey, if it doesn't work out, you know, we just don't offer it. Um, you know, I think of, um, yeah, sitting here in the U. S., I think of pickup trucks and I think of tailgate innovation, you know, different, different ways of folding the tailgate and steps that come out and so on. Really, really great, innovative, you know, high value add features. But hey, if it doesn't work out, you just put a conventional tailgate, or you just stay with what you've got, versus something which is really absolutely on the critical path to delivering that vehicle to production. If it doesn't work, you haven't got a vehicle. You know, you haven't got a plan B. That's really high stakes. That's really high stakes. So what, what these companies are going to find is that the earlier they are in the technology maturation curve, the less likely it is that they're going to find themselves on the critical path to program delivery, despite whatever they think, despite whatever they believe. You know, despite whatever level of confidence they've got in their own technology, people are just not going to commit that without a backup plan being in place. And then at some point in the process, there's going to be a switch over or there's going to be an adoption, but you're going to have to accept that you're working, you know, in a backup type scenario.

Chris Reichhelm:

For a lot of companies, they're not, you know, part of their, I think of companies that have got early prototypes, TRL 4, 5, typically. And they're, they're at the end of the, you know, they're still trying to define their solution. And they need to work with industrial partners to help them do that. So they're not completely aware of the entire offering yet, just how good it's going to be and whether it's going to be able to operate as it does in their, in their lab, whether it's going to be able to operate in, uh, in your facilities and for, you know, on the floor in a, in a vehicle. And so there's that crucial development time together with an industrial partner that helps to flesh out the rest of that offering. That helps to further define the. The performance envelope, if you like, the range of performance for a particular platform. Um, how does a company such as this, and there are a lot of companies that sit within that, that sit within that space. How do they, how do they engage with a company like a Ford? Do they just have to accept that they're probably, you know, they may not get there, the odds are stacked against them, or is there a way that they can improve their odds?

Paul Mascarenas OBE:

Yeah, so firstly, to come back to the TRL levels that you mentioned, um, you know, if you think about that TRL hierarchy, the kind of nine points on the scale, um, you know, one, one to three is really in the kind of research phase. Um, and if you come back to what I mentioned at the earlier about, earlier about the large OEMs, tier ones having their own internal development system, technology development system. That one to three is probably pre concept ready, so you're still in demonstration phase. Um, you know, if I think of maybe four through six, um, that's right in the heart of that technology development. So, you've done enough to prove that you've got a viable concept, but you haven't done enough to prove that you're implementation ready. And then 7, 8, 9, you really, you know, early, early 7, you're kind of saying, Hey, I'm implementation ready. By the time you get to 9, you know, it's time to go. You press the button and you're really, you're really there. So that's how I think about that. Now, how do you improve your odds? Um, a lot of technology comes in through the supply base. Um, you know, whether it's tier one, whether it's tier two, whether it's tier three. Those companies already have access, uh, to the engineering teams, to the purchasing teams, to the marketing teams at the larger OEMs. Um, they're always looking, um, to bring feature and technology to their OEM customers for the benefit of their own business. Um, sometimes they're just more accessible. You know, sometimes they're more open to working with a smaller partner, to working with a startup. Um, you know, another way is to leverage advisors, to leverage investors, um, you know, venture funds, for example. You will often have, uh, venture partners or advisors that have got access to the OEMs. You know, it's about, it's about opening the door. It's about being able to demonstrate in a very compelling and efficient pitch that you've really got something that this OEM wants to bring to their customer. And again, you know, where did we start? They're going to see hundreds of these things potentially in a year. You know, how do you become that handful? You know, that, that very small number. that actually get through that initial pitch and make it to that technology development system or technology development process that precedes getting into a production program. It's a little bit like going for venture funding. Yeah. You know, how many pitches does a VC see in a year? Hundreds. Yeah.

Chris Reichhelm:

exactly.

Paul Mascarenas OBE:

How many, how many cheques does a VC write.

Chris Reichhelm:

Yeah. The odds are the same.

Paul Mascarenas OBE:

Yeah. Odds are the same.

Chris Reichhelm:

And your experience over the last 10 years, I'm guessing, I mean, you know, you've been engaging with a lot, a lot of startups now through Fontinalis Partners and, uh, and perhaps also outside of that. But because of your other engagements and so on, as you, as your perspective shifted at all, in terms of the skills and qualities that are required to have, to have a chance?

Paul Mascarenas OBE:

Oh, absolutely. Um, you know, and I, and I think anytime that you see something through, um, a different lens, you know, and in my case, that lens changed significantly as I went from You know, a 30 plus year career with, with one company in one industry to what I've been doing over the last 10 years where I've experienced, you know, a number of different companies in a number of different industries and a number of different companies at different levels of maturity from, you know, single person startups to, to very large tech companies. So, you know, that lens, that perspective changes. And I think it's helped me appreciate, um, a lot more of those. sort of frustrations that I talked about earlier. You don't see them when you're on the inside of the OEM. You don't get to, you don't get to see them. But when you're on the outside, not knocking on the door, please let me in. You know, it's a, it's a very different feeling. Um, it's also given me a lot of insight into how the leadership needs to evolve in a startup company. Um, you know, it's, it's, It's very rare that you'll find the, the innovator or the entrepreneur that can take it all the way through to, you know, a large scale, successful company. We can give some huge examples, you know, Zuckerberg and Meta, for example, you know, he's a one in a myriad.

Chris Reichhelm:

He is.

Paul Mascarenas OBE:

He was able to do it, right. But there are very few, there are very few.

Chris Reichhelm:

Sheryl Sandberg, helped him a lot.

Paul Mascarenas OBE:

And you know, part of his leadership journey, and I'm not going to speak for Mark Zuckerberg, but you know, part of his leadership journey has been recognizing the people that he needed to put around him. You know, and Sheryl Sandberg was a great example there. So you know, as that, that leadership evolves from, hey, the lightbulbs come on, right? I'm an innovator. I've got a great idea. I'm entrepreneurial enough to take it into a startup environment. You know, you start to need different skills and you know, it's part of it is recognizing what can I do myself, but the bigger part of it is recognizing what help do I need and bringing good people in and putting them around me. So that maturation of both the individual and the leadership team is really critical to the success of any of these companies. And whether I'm looking from a VC, from, you mentioned Fontinalis, whether I'm looking from a Fontinalis perspective. But a potential add to our portfolio, potential investment opportunity for us, or whether I'm looking at it through the customer lens from Ford, you're really evaluating leadership, you know, almost as much as you're evaluating the technology. And I said, technology is developed, technology and pivot, um, but are you working with good people and a good people that can really. bring this thing through and be great partners with it.

Chris Reichhelm:

What are the skills or qualities that give you assurance that this is, this is a team you can work with?

Paul Mascarenas OBE:

You know, I think it's, um, it's a blend of things. And, you know, when you think about leadership in that early stage environment, um, you know, clearly it starts with some degree of subject matter expertise. you know, confidence, communication abilities, um, but also there's a level of humility. Um, you know, there's a level of business acumen in a reality. Um, there's the ability to be able to, as we were just discussing, um, recognize and build a team around you, right? It's not just about one person, um, you know, it's about initially a small group of vehicles, a small group of people, um, but do all of those people share the same, the same kind of leadership qualities? You know, are they interacting well together, are they complementary in terms of the background and experience that they bring? Um, do they have prior startup experience, have they scaled a business before? Or is this first time through? You know, do they bring OEM or tier one experience so they know the customer that they're going into, but now coming in from, from the outside. So there's a lot of things and there's also that intuition as well. You know, how you connect with people and then at the end of the day, a people business is a people business, right? You make that connection, um, but you also know it when you don't see it, you know, and that's probably more difficult to talk about it, but you know it when you don't see it as well.

Chris Reichhelm:

What are the things that jump out, like immediately jump out at you as, as no's when we're not going to go here?

Paul Mascarenas OBE:

Um, arrogance is probably the biggest that I would say. Um, you know, I think it's almost the opposite of that humility, you know, it's, it's, it's the blend of having the subject matter expertise and the confidence in the technology or the innovation. You're bringing forward, um, you know, the ar the arrogance would say, you know, how can you be so stupid not to adopt my idea, not in an extreme case. Yeah. This humility would be, you know, pitching the idea, um, doing it in a compelling, um, you know, an effective, um, way. Um, but letting the idea sell itself, really selling the idea on its merits. As opposed to trying, trying to bully it through the system, you know, bullying something through will never work. It will never work. Just, it just comes back again to, you know, understanding the organizational dynamics, understanding you've got to get it through the engineering process. You've got to get it through the purchasing and finance process. You've got to get it out to the customer through the marketing teams. You might have to work with the design studio. You know, there's a, there's a lot of, a lot of people that you're going to have to interact with here and, and being able to build those relationships, being able to build that as a partnership is, is critically important and requires a certain type of personality. It's not just a salesman. It's not just an engineer, you know, it's not just a business pitch. It's a, it's a blend of all of those things.

Chris Reichhelm:

Out of interest, Paul, how long does it take for an innovation to get through a platform that's considered critical to the performance of the vehicle, from start to finish? Is that a decade? Longer?

Paul Mascarenas OBE:

It's an it depends type answer, but um, you know, I would, I would say it is an it depends type answer. I mean, I would, I would be looking at a, A technology proof of technology type process or technology development, you know, maybe in that year to 18 month type range. Um, at that point, you go into a production program, you know, as you're looking at another 24 to 36 months, so you could be on a four, a four year journey, um, realistically four to four and a half years. Um, now, you know, I can scale that, right? I could come, I could come in with something which is a much lower risk, much easier to implement and, you know, maybe you, you just hit, you just hit home runs all the way. You could be in production and. 18 months to two years. That would be an extreme. And I've seen that. I've absolutely seen that. And, um, you know, where I've seen that is when a technology has come in through a tier one supplier, um, you know, there's already been some validation work done, you know, it's probably been taken to the TRL 6 plus, TRL 7 type level. You know, it's ready to go. You hit all the buttons and, and you're there. Um, and it's, it's optional, you know, it's not on the critical path. Um, why not? Let's do it. You know, the other extreme, um, you know, you go, you go back to some of the propulsion technologies, um, safety technologies, for example, much longer development times, um, just because the risk is higher. Um, you know, both in terms of implementation and, and being on the, the critical path to the program. Yeah. But, um, you know, I, I'd say, think, think about it generally as a kind of three to four year type journey.

Chris Reichhelm:

But that is on the condition that the innovator has also gone through a similar program of development and partnership with the tier one. Exactly. And the situations.

Paul Mascarenas OBE:

Yeah, and, and you know, if you come back to the, um, the lifecycle of a, of a startup company, it's great to be in production and, and get revenue, but what you really need to be able to scale your company, to be able to go and talk to potential investors, to be able to get funding, to, to scale. What you really need is purchase orders. You know, you need, you need a commitment from an OEM or a tier one supplier, um, that you've got revenue. It might be in the future, but it's, it's a commitment. You know, it might be conditional upon quality of execution, is conditional on delivery, you know, everything is, but, but assuming that you've got that level of technical confidence that you can eventually get this to production. You want to be able to see POs because then you can start to build a revenue profile. You can start to build a growth profile over time. Um, you know, and that, and that could come quicker, right? That could be in that sort of 12, 13 month time for the, the other piece of advice as well is don't put all your eggs in one basket. You know, you know, maybe you do, and maybe it works out just fine, but you, you really want to have quite a few irons in the fire. Yeah, that's right. Because you're not, to get a home run on every one of them. And that starts to become an issue in itself where you've got to be careful that you don't stretch yourself so thin, you know, you don't dilute your efforts so much that you're just not effective in working with those larger customers. And that's a fine balancing act. And again, you know, part of the role of a good leader is to understand the resource constraints and to prioritize and manage accordingly.

Chris Reichhelm:

That, that final integration piece strikes me as one of the most challenging for a new innovation that's been demonstrated to a certain scale, um, TRL 6, I suppose, and, but then the chances of getting to TRL 9 and actually in the marketplace, in production, on models There's a whole level of transformation that needs to happen in terms of, I don't know, maybe there isn't, but in terms of the performance of the platform itself, but then also the systems and the operations behind that, the ways of working. Ford needs to know it can, and any other industrial company needs to know, it can rely on this company to produce at the same size, the same price point, the same level of performance with all the quality and safety and, EHS, um, uh, factors worked into that. Is that, is that your finding too? Do you observe that similar type of challenge?

Paul Mascarenas OBE:

Yeah, no, here's, here's, here's the point of real differentiation between software and hardware. And we mentioned that earlier, you know, if you're selling or developing a software solution, it is to some extent easier because you can sell into an OEM, uh, software stack, a software license. And that OEM will then integrate that into their own software releases. And, and do that integration, validation and the like. Um, and that's what you're selling. That's what your revenue is based on. It's a, it's a license type model. Very different if it's a hardware solution, because hardware requires supply chain, it requires manufacturing. You know, there's a whole bunch of stuff. That's where I've mentioned a couple of times the potential of a partnership with an established tier one, tier two, or tier three supplier. Um, really comes into play. Um, you know, and there's different models there, right? There's contract manufacturing, there's IP licensing, um, there's even, even acquisition, right? At times, you know, it might be better just to get acquired. Just get acquired and integrated and, you know, let, let that be your path, path to market. But, um, that really is a, a very important differentiation, um, at that point in the program.

Chris Reichhelm:

You, you have sat on a number of boards over your career, and, uh, I think you continue to do so now. We've talked about such appointments in the past. Um, When I speak with entrepreneurs about the efficacy of their boards, I tend to get a mixed reaction. Um, I get, uh, quite a little, a lot of frustration that they're not as supportive as they might be. And that, uh, the amount of preparation for board meetings is way too much given the, given the, uh, support they get back or the value they get. Um, uh, have you found that in your experience. Obviously on the other side of the table, on the other side of the table, not as an entrepreneur, but have you observed?

Paul Mascarenas OBE:

Speaking as a director, I like to think that we add a lot of value all the time, but it's a great, it's a really a great question. And, um, you know, I've been fortunate enough to have, you know, as you say, a decade of board experience now, and that's been from joint venture type boards to small startup boards to very large publicly traded companies. And, um, yeah, I mean, I can see a lot of the error states, right in terms of management's frustration with the board, preparation time, non value add, and so on and so on. But look, let's, let's think about what a board can really bring. Um, You know, if, if it, if it's working in a, in an effective way, as you just described, I think it starts with being deliberate. It starts with being very deliberate in terms of thinking about board composition. Um, you know, what, what kind of background and experience do you need on that board versatility that each individual board member brings in terms of, you know, they bring you sub subject matter expertise. Um. You know, fiduciary oversight responsibilities. Would they be a good coach, a mentor, um, you know, help with the development of the leadership team? Um, you know, at times, investors, um, will look for a board position just to protect their own interests. But, you know, within that, for example, a venture capital firm. You know, there'll be a number of different people that could serve on that board. It doesn't have to be just one, one individual. So talk to your investor about what you're looking for from that person. So again, be very deliberate in, in thinking about the makeup of the board and the type of background and experience that will bring the most value to, to you as An entrepreneur, which I recognize what I said earlier, that it will evolve over time. It will change over time. Yeah. Um, and then the other thing I, you know, if, if you really can't make it with your formal board of directors, um, and, and you feel that that board is there more to fulfill the fiduciary responsibilities of a board rather than help you develop business, then think about an advisory panel, you know, thinking about putting a, putting together a team of of trusted advisors outside of the, the formal board, which again, you can be just as deliberate, just as purposeful in terms of thinking about the background and experience that. will be helpful to you at any given point in time.

Chris Reichhelm:

But it's, it's, it's interesting to get your advice on this because you see it as the responsibility of the entrepreneur or the CEO, in this case, that they must be deliberate in building their board. And I think for, for many, in my experience, it's generally the investors who are pushing the board, uh, and its composition in a particular way. With a founder or a CEO, especially a first time CEO, unsure of, you know, at a high level, aware of the purpose of the board. But beyond that, unsure how to play it.

Paul Mascarenas OBE:

Well, maybe Chris, you know, that, that's, and I think you're right. And then what you said, but my, maybe that's one of those kind of leadership differentiators. You know, one of the things that helps differentiate a successful entrepreneur from, you know, a frustrated or less successful, um, you know, it's, it's, it's something that experience brings, right? You have to see it, you have to experience it, you have to understand that at the end. And it depends as well. I mean, is the, is the entrepreneur also the chair, you know, in control of the board or, you know, are they just a minority party? But I think Having that strength of leadership to be able to talk to the chair or the lead director or the lead investor and say, look, this is what I need from the board. This is what I expect from the board to help me scale and deliver this business is a very important conversation to be had. And it's a skill that that entrepreneur needs to, to develop.

Chris Reichhelm:

Paul, I have thoroughly enjoyed our hour together. Now, uh, I could keep going, but uh, we're pushed for time, so I want to thank you so much for joining me today. I always enjoy our conversations. By the way, I've really enjoyed it.

Paul Mascarenas OBE:

Terrific. So thank you. Really enjoyed it too. Thanks for the opportunity.

Chris Reichhelm:

You've been listening to the Lab to Market Leadership Podcast, brought to you by Deep Tech Leaders. This podcast has been produced by Beauxhaus. You can find out more about us on LinkedIn, Spotify, Apple, or wherever you get your podcasts.

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Chris Reichhelm

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Paul Mascarenas OBE

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