52 - Trading Flexibility with Jürgen Mayerhofer (CEO & Co-Founder @ Enspired)

So who's making the money? And what was going to win in this model?

That's the idea, right? I mean, you're coming from data heaven in the UK. Everything is transparent.

QUENTIN DRAPER-SCRIMSHIRE: Data heaven?

Yeah.

Love it. What's the thing that you believe--

10 years later from the aggregator model, what's new?

These are the people that don't want to sit in front of screens and trade the same signal or the same asset 24/7 because they don't see it as a challenge.

I like the idea of asset owners taking responsibility and being part of the conversation and being informed operators.

Hello, everybody, Quentin here. And this week, we've got Jurgen from Enspired on. Now, if anybody knows anything about power trading, it's Jurgen and his team. They're based in Austria.

And they're pretty much trying to disrupt the whole world of power trading. So big job, big mission, how hard can it be? Let's find out. And do let us know if you like this in the comments.

And hit that Subscribe button. Thanks.

[MUSIC PLAYING]

All right, this is going to be fun. Let's do this. Let's just do it. So all right, we got Jurgen on the phone?

On the podcast. This is the first Austrian we've had in the office. We've found that out today. Jurgen, tell me about who you are and what you do in energy and why you're here.

I'm a father of four kids, married.

And I'm actually a trained software engineer.

So I started 20-ish years ago when the energy market was liberalized in Europe and then moved on through my career via consulting jobs to algorithmic trading, especially algorithmic short-term power trading--

so since 2015. And this is how I ended up founding Enspired with a larger founding team and trading batteries meanwhile.

Enspired is based in Austria, right? And you do things all over the place. Tell me about what Enspired does. And what's the vision for the company?

The vision, or actually why we founded Enspired was that we've seen that most of the big players are incumbent players focused on renewables, five, 10 years ago. And nobody focused on trading flexible assets, especially when it comes to decentralized and smaller assets. So of course, the big players are good at optimizing CCGTs and coal plants and all that stuff, which you typically can handle manually.

And we thought that there was two important points. One is focusing on flexibility. And the second one is enabling it with technology. So we're actually a route to market provider, a principal trader.

So we have the market access. We have the balancing group agreements and everything. But we don't have any humans to trade. So we have former traders from EDF, from Centrica,

[? Nias, ?]

et cetera. But we're actually a software company.

The market access bit, we'll talk about it later, but it's painful, isn't it?

That is a big barrier to break down in general, I think, in energy. But maybe it's getting easier. I know there's a lot of things happening with [INAUDIBLE]

and whatnot on data flows. But yeah, that is a big part of what route-to-market providers do. And it's very difficult to get right. There's a lot of interfaces.

But coming back to it, so Enspired Trading, you've got the word trading in the name. So does that mean you have a focus on--

compared to an aggregator, for example, is your focus more on the market bit than the controls and instrumentation, or do you do all of it?

Exactly, so aggregators would be typically partners or customers of ours. So we don't do the technical stuff of mounting boxes and dispatching the assets or taking care of protocols and connectivity stuff.

We're on the commercial side, so just the route-to-market and commercial optimization-- . How we call it so we decide how much capacity to put into wholesales and to ancillary services, et cetera.

And we execute the wholesales part. And the ancillary services or the dispatch of the asset could be handled by an aggregator, or if our customer is a utility, dispatched by themselves.

OK, and how old is the company? How long have you been going been?

We founded the company in January 2020. So we're actually exactly three years old.

Wow, so when's your birthday?

It was on the 31st of January.

Oh, congrats, you made it this far.

Yeah, of course. And which markets do you guys operate in?

So actually, even that we're Austrians, we started trading in Germany because when it comes to wholesales liquidity and how dynamic the market is and how volatile, Germany is just still the place to be. Then we moved on trading or getting market access in the UK, the second biggest market, then Austria.

We've just taken live, our first client in France, Netherlands. And then the next ones that will follow are Belgium, Spain, Portugal, Italy, Nordics.

So actually, I forgot Nordics. We have already a customer in Denmark. We will have one in Finland--

so rather the two bigger, interesting wholesales markets.

What do you guys believe? What's the thing that you guys--

because there's a few companies. There was the aggregators of 10 years ago, right? And their belief was that demand side response and flexibility should be ranked equal. I think I worked at one.

We believed that it should be ranked equal with CCGTs and other more conventional assets. What's the thing that you believe--

10 years later from the aggregator model, what's new?

I think--

so what we believe is that first of all, wholesale markets is the place to be because I think the old aggregate models were based on ancillary services--

so offering the service or the flexibility to the TSO, which, first of all, starts to saturate. We also see that there is no clear correlation between increasing share of renewables and demand from TSOs, right? But you see that very clearly on spot markets.

So spot markets are actually the markets which help actively integrating renewables before ancillary services have to jump in. So we have this view of actively managing the balance. And ideally, the TSO has no work to do afterwards in a theoretical world.

So that's why our focus is on wholesales because we believe it will grow with the share of renewables, if we want to reach our climate goals, et cetera. And ancillary services will saturate. And 10 years ago, that was different. And trading wholesales is a different story, right?

It's real-time, 24/7--

milliseconds. We do some 10,000 trades per day. That's a different story than bidding into a frequency regulation or something.

That's interesting. And what about operating all these different countries, right? So different TSOs, different reporting requirements, different credit cover requirements, it's kind of what I was referring to at the start.

The overhead of a business to operate in all those different markets must be huge. So how do you manage that?

First of all, I think when we switched from the belief of the markets to the scalable business model, wholesales is 100 times easier to scale than ancillary services because ancillary services has very local requirements. So UK is a totally different ancillary service than Germany, right? Wholesales-wise, it's not that bad, right? You have four hour products and one hour and half hour, balancing granularity, et cetera.

But the mechanism of the market works--

the market access, so the route-to-market via [INAUDIBLE]

spot or an outpool is basically the same.

And you get it for free if you're qualified for the other exchanges. So in terms of scalability, it's not that bad. So transferring a battery optimization from Germany to France is maybe initial two to four weeks of work.

But after you have done that, it's basically the same. You take different wind forecasts, different load forecasts. But you know the data structure, the sources you get it from is basically the same. So I think there is also, from a business model perspective, advantage. The only pain, to not only talk the good stuff is, of course, when you talk route-to-market, is collateral requirements.

QUENTIN DRAPER-SCRIMSHIRE: Yes.

So coming out of software business, you actually never have this in mind. You say, OK, I charge my license fee. And I have my infrastructure costs. But--

To be clear, what we're talking about here is you have to pay--

you have to post margin or pay to play. You have to put capital money with the exchange so you can trade. And that's getting very expensive, right? Well, it has been a lot more expensive this winter than previous periods.

Yes, let's call it like this because actually, when you think back three years ago where the average power price was, in Germany, 37 euros per megawatt hour, the collaterals were also really low. But since the energy crisis, not only the price level increased but in the same dimension, so basically linear, also, the collateral requirements increased, which is not that bad because we are only trading short term. So we're trading on the [INAUDIBLE]

auction, intraday auction, continuous intraday, which is typically settled daily or over the weekend. So it's not like in futures markets or forwards where you accumulate huge positions and get liquidity problems. It's not that bad.

QUENTIN DRAPER-SCRIMSHIRE: It's not that bad.

It's no fun. But it's not that bad.

Yeah, as bad as it gets, it's probably a day or two's worth of power rather than long term monthly or quarterly contracts.

Exactly, exactly.

I want to come back to the physical world that you guys are controlling and optimizing, right? Do you like the word "optimize," by the way? Because that's a very popular word in the UK.

So you're controlling and optimizing assets in the market.

What type of assets are these? And how many of them are there? And let's do number of assets and number of megawatts, that kind of thing.

OK, so when we founded the company, there was no energy crisis, right? And the low price level--

so we started with targeting utilities because that's super smart, right? You have assets. And you could add the last mile with algorithmic trading and earned some 30, 40, 50, or 20% on top.

So we started trading pump storages, thermal plants, like bigger CHPs or gas turbines and actually then moved on to smart charging because I'm an EV driver since six years. And we thought, why don't we use this stuff to charge an EV, right?

What EVs were around six years ago?

JURGEN MAYERHOFER: A Tesla.

A Tesla!

Of course, the problem was I have to commute to Vienna, like 100 kilometers one direction. And there was no other car back then than a Tesla Model S that could do both, when it's dark and when it's cold during winter and get back without charging, right? So the option was very limited. It was actually one car, that--

We're going off record here, off the train of thought, but is there a lot of charging infrastructure in Vienna? What's the EV uptake like in Austria?

It's getting better. So especially with [? Smartrix ?]

rolling out a lot of charging stations. But also back then, that was another reason for Tesla. The only serious charging infrastructure was provided by Tesla. So I was taking the car to Prague, to Budapest, to Italy.

And it worked with Tesla but with no other car.

QUENTIN DRAPER-SCRIMSHIRE: Yeah, I mean, those guys killed it--

absolutely smashed it with that network. All right, so you guys now control charging infrastructure as well.

We were actually too early in 2020. So we did a technical proof of concept. Everything worked in Austria. But at that point in time, I think the whole industry was rather busy with charging infrastructure, roaming between countries and all these back end operations.

But we see this demand picking up a lot. And further down the road, we believe that smart charging portfolios will convert into vehicle to grid into the future.

By the way, who gets paid in that world, right?

So all right, where to even start with here? There's two models, right?

Someone is making some money somewhere in this world, right?

Yeah, so it's either the charger, it's the person who owns the charger, or it's the person who owns the car.

So who's making the money? And what's going to win in this model?

I think it's not decided yet.

To be honest, I think the OEMs did a bad job so far because they would be the guy selling a car if you would buy a new car. And you would just tick the box and say, yes. And I take the green electricity from you. And yes, you can take my battery from vehicle to grid. And yes, I take the bidirectional charger from you. They could own the customer. What happened so far is that, especially for the charging stations, all these smart charging applications have been developed.

I don't know if that will be the case in three, four years. So I think the game is not decided yet.

We're also working with utilities. And they could, for example, offer a cheaper tariff, right? That's, for example, what Octopus Energy does in the UK. There is also other players in other markets that have the same idea of saying, hey, if I get access to your car, you'll get a better tariff, for example.

But the world moves really slow in that sense because there is a lot of suppliers, especially in continental Europe as everything is liberalized. There is not big 10, 15 ones like in the UK.

So it's like hundreds of them and with different tariffs and no smart meter roll-outs. Sometimes also, the regulatory and the infrastructure is just missing to do that fancy stuff that would benefit EV owners.

Interesting. I hope it's the car owners that end up winning, right? Because they--

They'll get a better tariff, ideally.

Yeah.

But I think it's not 100%--

Or the service provider--

or the service provider. OK, so we talked about the assets. So thermal assets, some CHPs--

you guys control all sorts, and pump storage. Now, we're talking about electric vehicle chargers. Is that all of it? And if you add all that together, what are we talking about here?

No, it's not all of it.

Let's go more, more, more, more.

Yeah, yeah, so then we actually signed our first battery in March 2021. And--

Signed as in, you guys control the battery.

We signed the contract to theoretically control the battery. The problem back then was, no energy crisis. And the ancillary services were always like, 30%, 40% above wholesales. So we had a battery and the model that works and the platform. And we were for months, not allowed to trade the battery because it was commercially just a stupid idea, right?

OK, yeah.

So we were, again, ahead of our time. We had the solution ready. And--

So the battery was built. But they were just [INAUDIBLE]..

Yeah, it was in Germany in FCR, Frequency Containment Reserve, right? And still, it was for, I guess a decade, the most profitable revenue stream for batteries. And then October 2021 came. And suddenly, wholesales price levels increased by five, six, seven--

partially, volatility increased. And ta-da, we had the solution.

And it took us like half a year to convince people that this really works now and that the higher price levels will be going to stay here for quite some time. And this is where the timing really worked out.

And since then, we trade standalone batteries, co-located with PB. We work on behind-the-meter batteries to aggregate them to a virtual battery. But this was only possible because of the higher price levels of wholesales, which we anticipated for like, three, four years in the future because I said in the beginning, right? Higher renewable penetration will have impact on the wholesale market. And we expected higher spreads, even between morning peak and noon based on a higher renewable penetration not because out of an energy crisis.

The same thing happened in the UK, which is that we had some new business models. Optimizers turned up and had some systems, platforms, algorithms that could trade in the wholesale market. And then frequency response prices were just really high because of dynamic containment. And it was a bit stupid to be in anything else.

So it kind of delayed the whole bit of innovation. There was innovation happening behind the scenes, no doubt. And some optimizers were killing it. But you know, it was a bit frustrating, just watching all this technology ready to go.

But the market made it basically prohibitive to do anything else other than DC.

It's the same story, right? We showed up in the UK and said, hey, we have this cool wholesale optimization which yields super high profits in Germany.

And they said no, ancillary services is the big thing in UK. We don't need wholesales optimization, right? Half a year later, we have been at an event in London. And everybody says, I think ancillary services are going to be saturated. And we have to look at wholesales, right? And so we see the same story in several countries across Europe. It's just a matter of when does the renewable penetration exceed their certain limits and offer you that opportunity for wholesales?

And so who's the customer for you guys? Who do you contract with? And what's the value proposition?

We typically contract with the asset owner. So it could be directly the asset owners or the battery owner or--

of any other type of asset.

Meanwhile, we also work a lot with virtual power plants, especially when it comes to smaller CHP electric vehicles.

Thousands of them would be a virtual power plant.

Behind-the-meter battery assets are typically--

we work with virtual power plants. So everything that's too small needs to be aggregated and dis-aggregated. So we contract with the VPPP, who holds the contract with the asset owner. And for larger assets, we directly contract with the asset owner.

All right, I want to talk to you about what it's like, taking people out of other energy companies. So you said you've got folks from [INAUDIBLE]

and EDF and all these big trading organizations.

And these are real people with real skills in the world of trading. And what you've done is you've put them in an organization which is pure software. And there's a whole different worldview that's implicit in that movement. And what's that been like for you as a founder and also as the organization, helping people make that jump across? And what's some of the challenges along the way?

Actually, it's a good question, right? I would say out of the big companies--

QUENTIN DRAPER-SCRIMSHIRE: Thank you.

You're welcome.

There is just a small set of people that have this mindset, right? And they've known it before, right? These are the people that don't want to sit in front of screens and trade the same signal or the same asset 24/7 because they don't see it as a challenge. A lot of them worked on signals or with quantitative information and believed that the future, especially with asset optimization, only works like that.

If you consider battery, there is nobody out there who has wholesales battery optimization experience as a human trait, all right?

Think of Germany. You have 96 quarterly products coupled with other markets in [INAUDIBLE], local products. You have [INAUDIBLE]

products. Half of ours are not liquids. You have to consider efficiency losses, your state of charge, the maximum capacity, maybe a thermal profile, et cetera. That's just not a job for a human, right?

And that's what I said before. You can do it with a gigawatt [? core ?]

block, where you ramp up on 400 megs. And you do that manually. But for the very decentralized, granular flexibilities, you cannot do that manually. So the people who join us, they have the same view of the world.

They say, when I want to work on battery storage, there is certainly no room for me to trade manually, right? These are the people that say, I found the signal to improve our price prediction that we integrate into the asset optimization. And I don't want to execute it manually, right?

I want to have a platform where I found a signal. It's daily back-tested. There is a good simulation.

There is a standard model. And I go on to the next topic, right?

So once we have on-boarded the client, have found a signal to improve our trading strategies, we move on. So we free up our capacity. So we don't have to scale with people, right? Others go to France.

And they have to hire a lot of people in France, right? And we just transfer our models. And as soon as they run in France, we go on to whatever, right? It's not that they are maintenance free.

But it's--

All right, to that last bit there, I've heard a lot of businesses say that, which is that we're Europe-wide. We don't need loads of people in each geography, in each country or each TSO, however you split it up.

And so we're a pure software company. And then years down the road, I've seen that not happen.

So I guess I'm just wondering, have you got any insight as to why that has happened that way? And how you set up an organization to not fall into that trap of throwing people at the problem?

I think it's a basic business model decision, right? So we have focused on wholesales where we know it's scalable. If you show up now, I would say, we do ancillary services. And I would say, it's everywhere, the same.

It's just bullshit, right? It will not work.

It only works in our world where we do asset-backed optimization. If you would be a prop shop, it wouldn't work either. So--

What's a prop shop?

Speculative trading. So there is a lot of smaller companies, five to 10 people. There is also large organizations that look for signals to just arbitrage in the market or whatever.

That's certainly different because you need to know all the nitty gritty details of a market and the loopholes and whatever.

We don't need it, right? A battery behaves exactly the same in France and in Germany, for example.

So what is that? How do you describe how a battery--

in this world, how does a battery behave? What's the model?

So the model is--

and when I talk about model, it's basically a piece of source code, I would say, with a lot of parameters. We optimize that parameters with eight, nine billion data points at the moment--

so full [? auto ?]

book depth historically forecasts. So when we train that model, we basically run it fast forward.

And it's not a perfect foresight. It has the same information, 2 March 2020, 3:00 PM--

12 minutes, 58 seconds, the platform knows, this was the wind forecast, the PV forecast, the load, the last 10 traded megawatts, the order book structure and all that stuff.

So we train that model. And what it does is it looks for the biggest opportunities for a battery it spreads on wholesales, right?

And we place in basically all products at the same time, one or several orders and try to get the biggest spreads, right? And that's the same behavior in the essence, right? You have to retrain it for different markets.

But it's the same behavior in a super liquid market, in a less liquid market. You always try to get the biggest spreads because it's about getting opportunities, right? You're not forced to trade a position.

And this is what we do, right? We have an expectation of tomorrow's wholesales value and ancillary service value. And we bid, for example, into FCR. And if we don't get it there, we trade the bid of flexibility on wholesales.

So you are entering ancillary services markets as well?

We have actually built an ecosystem of partners for different countries. So we take the role of commercially optimizing.

But we execute route-to-market for wholesales. And route-to-market for ancillary services, that is done by somebody else because in some markets, you need to have a pool [? and n ?]

minus one backup capacity and all that stuff.

And things like the contracting and the metering and all of that ends up being a bit of a headache, right? So you leave that in the ancillary [INAUDIBLE].. This is really interesting because when we started Modo almost four years ago, we believed--

it's kind of similar, actually. We believed that asset owners would have a lot more power in how they're optimizing their own assets.

And we believed a few things. Asset owners would have a lot more power, that the balancing mechanism or balancing markets, if you like would, have a much bigger role to play with batteries and wholesale, but particularly the BM, and that software would beat humans. And if you put those things together, we wanted to build software and sell it directly to asset owners. So they were in control of their own destiny, if you like.

And it sounds like we actually have the same belief, although you went through and built the company. And we went and did something completely different, right? But the belief feels the same.

And I like the idea of asset owners taking responsibility and being part of the conversation and being informed operators rather than just handing the keys over to an optimizer. It happens a lot, right?

That's a big issue, actually, that we see. I mean, you have a way more mature market in the UK. But we see on the continent that a lot of companies maybe built one battery, other than the asset or the battery developers. They have built hundreds of megawatts. But a typical utility or other company, they have built one or two batteries to test it out to the EPC stuff and then put it just into FCR, so into ancillary services.

And we see that the market is not mature enough yet. So we have a lot of different commercial discussions about profit shares and floors and fixed fees, et cetera. If you talk to people in the UK, they would say, OK, that's the discussions we had four years ago, right? So we see that asset owners are way more mature in the UK, which makes discussions very straight to the point, I would say, and which makes it tricky in other continental [INAUDIBLE].

The floor price thing--

I don't know. Maybe I'm biased. But I don't understand why a asset owner would go through all of the pain of learning about the industry and why flexibility matters and why batteries have got a future and how the wholesale market works and the whole business case, and then give away so much upside to a third party.

If you've gone through all of that pain and you really believe in the macro for why batteries make sense, just giving away the upside in the floor price contract doesn't make sense to me. Now, I understand some people need it for debt financing and that stuff. But I feel like in the UK, there's been of attraction back to asset owners being willing to take the risk now, which is nice.

I think it will go down the same route, like with PPAs, et cetera. So first of all, it's, as you said, a financing instrument. And we also talk to funds that say, OK, my customer or my partner is a pension fund. And they actually don't care about upside, right?

So it's just not a requirement of the stakeholder or shareholder to say, I don't want an upset. Give me x percent. And I'm totally fine. We also see that a lot of renewable asset developers enter [INAUDIBLE]

space.

And they think in different durations, right? They think in 15 year terms. And their goal is to have a similar or better ROI than a renewable asset, maybe with a small terminal value of a battery, right?

But we see that very, very differently. We see utilities that want to have it just to manage the risk better in the portfolio. But I think it still boils down to missing experience, right?

If you would have a five year track record like in the UK, it would be more tangible for them, how the ups and downs are because after 2022, actually, you don't want to give an upside, right?

If we would enter a year like 2020 with super low volatility, you may not be happy. And I think it's rather the risk appetite of the companies. But we ourselves, we would be like you, not taking a floor [INAUDIBLE].

That is definitely a bias in my reflection of the last couple of years in there that I need to identify. And yeah, it's probably a factor of how mature the technology class is and the asset class because while it's still an alternative investment and when it becomes a almost generic style investment, like other thermal assets, then of course, the kind of money that the investor needs, it doesn't care so much about upside. And it's a different game. But right now, yeah, I just don't get it. So coming back to building your company, so did you say there's 50 or so of you in the company right now?

53.

53, and a lot of computers.

And a lot of computers--

20 nationalities, which we're really proud of, distributed over five countries. So Vienna--

Vienna is not a country. [LAUGHS]

That's cool for Austria. But it's actually two million of the eight, is Vienna--

Germany, Belgium, France, and Slovakia. Yes, and a lot of computers--

no trading floor, no back office, no portfolio management--

what you would expect from a typically--

And so you guys have gone from 0 to 50 or so employees in three years, right?

Yeah, so in the first year, we have been around 12-ish, I would say. So there was an initial founding team of people who have worked together and joined the company over the course of the first half a year-ish, funded by public grants and bootstrapping, the typical startup things where I didn't earn a euro for the first year. And backed by grants, we were pretty transparent and said, hey, guys, this may work out within one year.

Or we all have to look for another job. And that's what we all also said to our new colleagues.

And here we are. It worked out. We have been breakeven in 2021--

raised a series A of 7 and 1/2 million euros--

have grown to 53.

Congrats. When did you raise your series A?

In October 2021.

QUENTIN DRAPER-SCRIMSHIRE: And who came in? Who was the investor?

We have two lead investors, which is Emerald Technology Ventures based in Zurich, with offices in Toronto and Singapore. And we have 360 Capital, based in Paris and Milan in Italy, and two VC arms, for us, rather strategic partners, which is EnBW New Ventures and Helen Ventures from Finland to support us with our geographical expansion. And we also looked at the limited partners of the VCs. So for example, we have one large limited partner we work in Italy for the market entry there.

So it was a mix of not only money, but also having some strategic value. And--

Congrats, man, that's huge! 7 and 1/2 mil series A?

Yeah, it was just--

the timing is really bad that we have in with our company. So we founded in January, right? And in February, I was evacuated from my vacation because of COVID.

And then we did the whole series E planning for growth, et cetera, [INAUDIBLE]

around. And a month later, the energy crisis started. And everything was different. So let's see what comes.

Well, whatever is in the business plan isn't--

whatever that Excel spreadsheet says is not going to happen.

No, because like I said in the beginning, we had these [? thermal ?]

clients and all that stuff. And meanwhile, we took like 60%, 70% of our batteries. Our pipeline is batteries in all forms, colors, and shapes.

So how have you found going from 0 to 50 employees in three years? That is a--

I'd imagine everything breaks.

Culture is a big issue to solve.

I mean, hiring that fast, you must make hiring mistakes that--

you have to fix those. That's unpleasant for everybody. What's all that been like?

So there is a small unfair advantage. So some of us have worked together in our previous company, which we've sold to Trade Parts. So I would say all of the leadership team has company building experience. And we have started, a year before raising the series A, working on our future organization, on the cultural pieces.

So there is a lot of supporting stuff. So we knew what is going to break and what we will need with 50 people compared to 13. And I think up until some weeks ago, nobody quit.

QUENTIN DRAPER-SCRIMSHIRE: Wow.

So we did a really good job on this one. And I think it's also about being transparent in recruiting. We even developed a model for quantifying our gut feeling. In the beginning, you say, I think he or she is a good fit.

We have supported that by external people. We don't get the details of the result. But it's kind of an image of the company.

So how does that work, right? Because--

You can go through it if you want, right? [INAUDIBLE]

the interview. And then it's a mix of behavioral analysis and what's your personal beliefs, right? And we've mapped out what's important in our company culture.

We don't--

as I said, we don't get the results. It's feedback to you.

And if you're striving for stability and routine processes, et cetera, the consultant would say to us, it's not a problem. But please be aware that this person requires a very stable environment. And whatever happens at a conference, we may come back and say, we have a new client.

And we changed the priorities, right? So we're very fast-paced, which brought us where we are now. But we try to check that upfront. And it's supported by, for example, there is a mandatory on-site day, where we spend time together working half a day on a real life work problem, coding some stuff, discussing a new trading strategy. There is the chance to meet colleagues from other communities in our organization. So we are really picky on that one so that both sides can make sure that it works out.

I mean, if you manage to do it--

I almost don't believe it. If you've managed to do it, that's incredible. We make so many decisions on gut still.

But it doesn't scale past a certain amount of people. And we're probably at that point right now.

JURGEN MAYERHOFER: Yes.

And we're starting to notice. So--

We can have a chat afterwards. I will tell you it. It will be a long story because there's a lot of stuff to do to quantify your gut feeling, actually. And there is also some discussion around if that's good or not, to really align everybody very closely to your values because it makes you very fast because everybody has the same expectation. But you may lose out on diversity. So we're still having regular discussions about it. But so far, it's a very good and successful model.

And where are you guys headed?

What's the vision? How big are you guys going? What's the future look like if you guys deliver all the stuff you want to deliver?

So actually, our vision from the beginning was being global. So we're trying--

for example, there's a lot of European companies at Texas or California. We have quite some chats about Japan, et cetera. So our mindset is global, first of all. Regarding size, we're maybe the opposite of other companies.

We want to do it with the least people as possible, right? We scale with tech, right? Of course, if we go to the US, we will have to have people on-site.

There is certain things. We're humans. You want to talk to each other and have some local presence. But other than that, I think we need, gut feeling, around 80 to 100 people to cover the biggest European markets and also keep up the speed with new products, et cetera. And then for the new markets or global markets, we will have to have also some additional people. But I think that we can nicely operate on a global scale below 200 people. That would be the ideal.

Because yeah, we're expanding to the US right now. And I have been blown away by the differences in the market structure--

everything about it. Forget everything from running a business, culture, hiring, pay, organizations, forget all of that, which, by the way, is completely different. Just the market design and the data and how prices are calculated--

everything about it is so different.

We are spoiled in Europe. And everything feels the same. And then you look at ERCOT Texas. And then you go elsewhere in the US.

And you think, oh, I've got to learn all this again, right? So that's a tricky one. You do need some people to do that. But if you guys can do it at less than 200, that'd be awesome.

That's the idea, right? I mean, you're coming from data heaven in the UK. Everything is transparent.

Data heaven?

Love it.

I mean, you don't get anything, right? There I think there is Elia in Belgium. You could [? read some TSO ?]

data. Other than that, all the stuff is delayed and not transparent. It's a GDPR issue. And--

So we were supposed to be expanding into Europe. I'm going off on a tangent now. But we were supposed to be expanding into Europe last year. And the amount of delays in every pan-European program is, it's made us just go West.

JURGEN MAYERHOFER: Yes, totally understand it, really.

And then when there is data, it is awful quality.

JURGEN MAYERHOFER: Yeah.

I mean, if you ask Alex and our data team about it, they've got some scars. So yeah, it's tricky. For you guys to integrate with all that stuff, get the right price signals and forecasts, there's a lot of work there.

That's the plan, right? We don't go there because we can just repeat.

I mean, we also have, in the company, colleagues who have built businesses in the US--

not in the energy space, but still experience in building businesses.

Yeah, we're up for the challenge, right? We didn't expect it to be easy.

Well, we'll have to grab a beer when we're over in Texas sometime. And then I want to ask you a couple more questions. So what's your contrarian view?

I don't know if it's as contrarian as you expect it. But in our view, in our world, we think there is no humans needed, especially for short-term trading. Everything can be automated.

I remember myself giving a presentation in 2017 with an empty trading floor. And everybody was super shocked. And it's the software vendor pitch. And it will never work. I can tell five years later, 5 and 1/2 years later, everything we do is automated in the short-term space, in the ancillary services space.

And I think there is nothing other than egos holding us back from doing it in the forwards and futures, where there is certain automation already. So I think the incumbent players will have real issues in the next two or three or four years to win new clients, new assets, other than buying them for themselves and operating them. But I think for third party optimization, they hopefully will really struggle.

Servers beat humans. That's the play. These utilities or whoever the incumbents are, I don't know, I've put a word in there, but aren't they moving to a technology model anyway?

I don't think so. So from our background delivering algo trading software to a lot of companies in Europe, we know that these tools are seen as a support for the human traders, right?

But I've rarely seen utilities who have not an IT department, right? I'm not talking about setting up your computer or whatever stuff. I'm talking about a software unit that thinks in GitHub and smoke tests and continuous integration of that stuff. I haven't seen that, right? And it's also a shift in culture.

And I imagine you have built two decades.

You invested time and sweat and blood and tears in building your trading floor with a lot of humans with a certain incentive structure, book structures, ETRM systems, all that stuff.

I think it would be easier to tear it down and found a new company before you can make that cultural move. I mean, tell somebody who did a very good job, actually, right? I'm not saying that's bad, right?

They did a job for 20 years. And then you say, hey guys, you have to learn programming and work with this quant and get this model done and extract your knowledge. And by the way, the incentive structure is changed. It's not on your own.

It's not your own bonus it's not a team bonus and all that stuff, right? So I think it's not about technology. I think the cultural barrier is so high that nobody will allow it in the big utilities, that this will ever happen--

but in my very subjective take on this topic.

Well, let's see.

I will bet a lot of money on this one that this will not happen in the next 10 years.

I mean, if it happens, that is good. It's a good outcome for the majority of people, right? Because it should bring down costs. It should reduce barriers to entry, bring down costs, eventually increase participation by lots more assets. It's all the normal stuff that technology does when you replace humans with technology.

But let's see. How much money is on it?

Whatever you want. It's like--

What a [INAUDIBLE]

answer.

JURGEN MAYERHOFER: Yeah?

Right, we'll have to come back to you on that.

JURGEN MAYERHOFER: Later.

Yeah, later. All right, so what do you guys--

what's the thing you want to plug?

So Maxie, do you want me to drop the new website?

MAN: Yeah.

For those listening, there's more than two of us in the room, right? It's a bit of a party in here.

Yeah, we've got Max in the room as well. Say hi!

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