Mateo Jaramillo is the co-founder and CEO of Form Energy which develops and commercializes a low-cost battery system that can store wind and solar energy for a long duration. The company has raised $125 million from top-tier investors, including Temasek Holdings, Coatue, Prelude Ventures, Capricorn Investment Group, Macquarie Capital, and Energy Impact Partners to name a few.
In this episode, you will learn:
- How to spot big markets
- Working with Elon Musk
- The entrepreneurial journey
- Insights on fundraising
For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash.
Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).
Remember to unlock for free the pitch deck template that is being used by founders around the world to raise millions below.
About Mateo Jaramillo:
Mateo Jaramillo is co-founder and CEO of Form Energy.
Form Energy is working to develop breakthrough low cost, long duration energy storage solutions that will enable the electric system to be 100% renewably powered.
Mateo Jaramillo was formerly Vice President of Products and Programs for Tesla’s stationary energy storage program, an effort he started. In that role, he was responsible for Tesla Energy’s product line and business model definition, as well as global policy and business development.
Mateo Jaramillo joined Tesla in 2009 as the Director of Powertrain Business Development, serving as commercial lead and primary negotiator on over $100M in new development and $500M in production contracts signed for electric powertrain sales.
Prior to Tesla, Mateo Jaramillo was Chief Operating Officer and part of the founding team at Gaia Power Technologies, a pioneering distributed energy storage firm. Mateo Jaramillo earned his A.B. in Economics from Harvard and a Masters in Theology from Yale Divinity School.
Connect with Mateo Jaramillo:
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FULL TRANSCRIPTION OF THE INTERVIEW:
Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today’s guest is going to be super, super interesting, and we’re going to be learning about going from corporate to startups, working with the likes of Elan Musk. I mean, you name it. I think that it’s going to be super exciting, so without further ado, let’s welcome our guest today. Mateo Jaramillo, welcome to the show.
Mateo Jaramillo: Thank you, Alejandro.
Alejandro: Originally born in California in Salinas, an agricultural town where there’s a lot of lettuce, so tell us about life growing up.
Mateo Jaramillo: Yeah, indeed. It’s the salad capital of the country, as we like to call it. Salinas is historically an agricultural center. John Steinbeck is from there. If people know Salinas, it’s usually because of either one of those two things: Steinbeck or lettuce. It was, in many ways for me, a great place to grow up. I had great parents and really great friends, and it gave me a chance to understand how that part of the world works. My parents were both public servants. My mom, a public school teacher, and my father, a lawyer for farmworkers, which is why we grew up in Salinas. For me, it was a great experience. We had very modest means, but that wasn’t obvious to me. It was, in many ways, a charmed upbringing because things just went my way, I guess. But Salinas has gone through huge periods of growth and certainly some struggles along the way. Being from there means that I never really lose sight of the broader connection to the world out there. I worked in the fields as a kid, in fact. Spending time doing that means that I always carry a lifelong connection to labor and to working hard, frankly.
Alejandro: Tell us about the emphasis around education early on.
Mateo Jaramillo: As for most folks, it comes from my parents. My parents were educators. Many of my family are educators or academics. For them, education was very important, and they imparted that both to my brother and me. I was always an ambitious kid anyway, and obviously, competing in academics is a clear path to be ambitious. So, for me, it was also fun. I enjoyed it. I also had great friends who challenged me on academics, and we had fun doing it. In many ways, that was just pure luck to have those kinds of friends.
Alejandro: I’m sure that they were very proud when you got into Harvard.
Mateo Jaramillo: They were. Yeah. Not many people from Salinas go to Harvard, that’s for sure, but I wanted to do something different and leave the state and go across the country where I didn’t know anybody. For me, it was a challenge that I was eager to take on, and so, that was my decision for college. But it was a big change, to be sure. Being from Salinas and going over to that world was quite a change, and it certainly took me some time to adjust, but the nice thing is that I learned that I could adjust. And raising the standard for what is considered excellence is always an interesting path to go down. In many ways, it’s something that I’ve tried to do ever since is understand how high you can raise the standard both in the professional world and the academic world, whatever it is. If you think you’ve reached the limit, you’re probably wrong, and my first real experience with that was going to Harvard.
Alejandro: And transitioning from farmland to lettuce to software. That’s quite a change.
Mateo Jaramillo: Yeah. Well, coming out of Harvard, I had a degree in economics and graduated in 1999. This was smack-dab in the middle of the very first tech boom, and Boston was one of the hubs there. Many of the companies that were making waves were from the area, and, of course, from the Bay Area, too, but in Boston as well. Immediately out of college, I joined up with a software company there and was doing product manager and that kind of thing, and I definitely saw the froth of the bubble. The amount of money that the company raised – I forget the total, but well north of $100 million. Even to me, a 22-year-old, fresh-faced kid out of college, it was shocking to me that level of diligence that was done and the expectations of the product, which, to me, was pretty ephemeral. But I got to see it up close and upfront. It was a very formative experience for me as well. I learned that I don’t really have a passion for software, per se. I prefer hardware, and working on it the way that I did, didn’t grab me. In the end, I realized that was not the path for me.
Alejandro: I also have to admit that you are the very first guest in hundreds of episodes that I’ve done already for DealMakers that realized that becoming a minister was not for you.
Mateo Jaramillo: Well, Alejandro, many of the folks that I talk to, when they find out that I did go to Divinity School, they say, “You’re the first person I’ve met that has done that.” I was the ranking theologian at Tesla the entire time I was there; you may be surprised to learn. After my experience in software, looking for a deeper meaning, really, and so I considered the ministry. I’m a practicing Christian. The denominations have shifted over the years, but I grew up Catholic and take my faith seriously, and I wanted to do exactly that and really investigate it. I guess it’s just part of my personality that is to try and dig deep on things to understand them. For me, that was going to Divinity School and certainly being open to the path of ordination by digging in academically and intellectually, and spiritually, and Yale was a great place for me to go do that.
Alejandro: Then, how do you transition from this too, all of a sudden, deciding that energy and solar wind was something that you needed to go after?
Mateo Jaramillo: As you pointed out, I realized early on, or Yale Divinity School helped me realize very early on that I was not cut out for the ministry. That requires a certain passion and a certain, you might even say, obsession in order for that to work, and I just didn’t have that. I saw a lot of people who did, but that just was not me. So I took those skills that I have that they teach you there for what they call vocational discernment and apply them to find out what I did want to go work on. The way that is done is simply paying attention to yourself in terms of what is really of interest and what you gravitate toward, and what you have worked on in your spare time and over the course of your life. I said I studied economics, but the particular angle for me was energy economics, and in particular, environmental justice was the area that captured most of my imagination. Some of the internships I did were around that here in San Francisco pioneering [8:42] part of the environment. That grows out of my upbringing as well. My dad, being a lawyer for farmworkers, and those issues, and the issues of the environment and the ways in which they impact very specific communities, the disadvantaged communities, and those communities bearing an unequal burden of environmental depredation. For me, it was easy once I started to reflect on it to understand that that was an area of passion of mine that, broadly speaking, the environment, because of the ability to have such an impact out there on people’s lives, and specifically, disadvantaged communities. But I’m not a public advocate. That’s another thing I learned about myself. Although I did not like the software, per se, I did really enjoy working in technology and seeing how quickly you can change goalposts with technology. That was what I pieced together and said, “I want to work in the environmental field and on the technology side of things.” As I pieced together the landscape, as I understood it at the time – this was 2003. It was early days, but you could still see what was happening with solar and wind that those prices were coming down, and it seemed like those would come down for some time. If that was going to be true, then it made logical sense to me that we collectively would want a good way to store that energy given the [10:11] associated with it. I made a sector bet. That really was the logic that I stepped through and where it led me was energy storage to work in that field for my career. So, that’s what I chose to do in 2003, 2004.
Alejandro: And the first step there was with Gaia Power Technologies, and that ended up with an outcome that you were not hoping that would be the case, but that was a really nice segue that got you into a 200-employee company called Tesla.
Mateo Jaramillo: That’s right. So a few years there in New York and working with Gaia and doing some pioneering things on the distributed energy storage side of it, for me, proving that this was going to be a durable market. As I said, I sort of took a bet, and I saw that bet paying off even if the technology wasn’t quite ready for it. Very clearly, lithium-ion was going to be the technology that led in the energy storage sector, the grid-connected energy storage sector. Tesla, very clearly, was the leader in that space. When I was introduced to JB Straube, who was the co-founder and CTO of Tesla, that’s what we talked about: what do you do with batteries on the grid? JD is an energy savant in many ways, and he thinks about energy in all different ways, certainly in the car. That’s what he’s best known for, but he has thought exhaustively about all sorts of angles in energy. Storage on the grid was certainly something that he has been kicking around in his head. We just hit it off in terms of the conversation there and what was possible. I ended up joining Tesla primarily to be the business leader on the powertrain business, which was just getting started with Dahmer, and that was going to grow, but also so we could start the efforts in a skunk-works way for grid-connected energy stored systems in 2009. That’s really why I went there. I didn’t grow up working on cars. Roadster was interesting, of course, it’s fun to drive, but I’m not magnetically drawn to them like many people who ended up working at Tesla. I went to cars, in many ways, because Tesla was the company that had all the pieces that I could see were going to be required to succeed in putting energy storage on the grid. That’s why I went there.
Alejandro: And at Tesla, you got to experience being part of a rocket ship because now, it has over 30,000 employees. When you started there, it was just a couple of hundred. What did you learn? What was the biggest lesson about being in a rocket ship like that and that you knew one day you would apply to your own business?
Mateo Jaramillo: There are so many great lessons to be learned being in a place like Tesla over the arch that I was there. I reference my experience transitioning from Salinas to Harvard. I would say the experience was similar, going from Gaia to Tesla. The standard and the ambition at Tesla were eye-opening to me. And that, of course, was largely set in terms of the tone by Elon, but the people that were there snapped into it right away, and certainly JB was on par with Elon in terms of the drive and the ambition, and the scope. It was fantastic. I drank it in and adapted to the way Tesla liked to do business, which was fast and hard and with limitless ambition, as I said. There is one time that I remember that I think captures a lot of what Elon really goes for. I heard this secondhand from somebody who was there. We were relatively a small company at the time, and there was somebody working on the audio system for the Roadster. The Roadster is noisy, and it’s a little two-seater with a ragtop, and it’s hard to get great audio in that car. Somebody made some comment that they were doing a review of the auto and Elon. He was very unhappy with what was going on. Somebody made some comment like, “Oh, it’s just sound.” And Elon stopped everybody in their tracks, and he said, “You don’t understand. I don’t want to just make the best car in the world; I want to make the best car in the world by f***ing far.” It was about the sound in a Roadster. Who would think that was the area to put your foot down and establish a standard? But that’s true how Elon thought and thinks, and that’s why Tesla is where it is today is because he exacts that kind of standard. So it’s hard to be around that and not absorb the lessons of it and not really imbue that in the way you think about the standard of work and the way that you go about attending the level of excellence for anything you do, frankly, but especially in your own professional life, and certainly as I am now running my own company applying the same mentality. Maybe not in the same way, but the same mentality.
Alejandro: I’m sure that working with someone like Elon Musk, for anyone that is listening to this episode, they are probably looking up to Elon Musk as one of the top figures right now of our generation. If you had to take the three top things from your experience with Elon, what are those three things that make him who he is today, and perhaps three things that inspire you to follow that course and execute the way that you need to for your business?
Mateo Jaramillo: I think there are two that I’ve already mentioned that are the standard of excellence that he demands and the scope of the ambition and how that’s applied, of course, for all of us building a car company. The mentality is certainly there. Then, I think the other, you hear a lot about Turbulence Philosophy from First Principles. I would state that a little bit differently. Elon is better than anybody I’ve ever seen to blow away assumptions or really get to the root of what you truly are assuming about something. That is true whether it’s a project plan or it’s a technical design, or it’s an esthetic design; it doesn’t matter. He has an ability to reach down into an assumption and put his finger on the true heart of what that is, and that is enlightening to be able to do that. Even for people who didn’t realize it, that’s what the assumption was. He challenges people to do that. Elon can be profane, dismissive, and belittling, but he can also be funny and charming. He’s a complicated person like everybody is, but he has that unique ability to combine all three of those things and drive what a company can be and the people within it. So there’s a ton to learn, of course, watching him operate and being a part of that – being on both ends of his output. Those are the three main things I would point to.
Alejandro: After seven years of being in this incredible journey with Tesla, at one point, you decide that it’s time to part ways and go at it for the first time and create your own baby. What was that like, and how was that process to bringing Form Energy to life, which was unique via [17:48].
Mateo Jaramillo: It was two discrete steps leaving Tesla and then starting my own company. I did not leave Tesla to start a company. I left Tesla because I needed a break to tell you the truth; as you said, 7+ years there. I married; I’m happily married. I would like to stay happily married. My wife and I have three kids, all school-age kids. There’s just a lot. Additionally, the company was a very different company from when I started going from 300 to 30,000 people. That’s a big change. I had been promoted and started to do things that were not that exciting for me to do, frankly, at that level of that size of a company. And also, trying to be self-aware about my comparative advantage in the workspace and operationalizing something to the nth degree is not what I’m best at compared to what a lot of people can do, frankly. All of that led to my decision to leave Tesla on good terms with the company and having no regrets. We had launched Tesla Energy at that point. It had been going for about a year-and-a-half, and things were in a great place, and the trajectory was phenomenal, but it was clear to me that it was also time for me to take a break and to move on. So, I parted ways the end of 2016, and for the first time in 7+ years, I had time to think. For me, as I said, being committed to energy storage, that was, for me, what does come back as strategy storage? What does it look like? What are the remaining frontiers? If lithium-ion gets as cheap as we think it will and Tesla is as successful as we think it will be with lithium-ion, then what’s left, if anything? And it was a thought experiment that I started with, not the intention to start a company. But it also was clear, as I got into it, I was hearing whispers of it from folks I was talking to while at Tesla, of course, was primarily the utility executives was, “Lithium-ion is great, but it doesn’t solve the biggest problem, which is how do I get rid of the coal and the natural gas, the high capacity factor in natural gas that’s running all the time, that steps in when it rains for a week in California in winter, or when the polar vortex comes down, and we don’t have any wind in the Upper Midwest – those kinds of questions. And absent, some new technology, lithium-ion is simply too expensive by a factor of 50 almost to address those problems on the grid. So, for me, it really was a thought experiment of, “What kind of energy storage would it take to be able to replace those kinds of generation facilities with renewables? And not so much compete with lithium-ion grid, but complement it. What are the two kinds of assets that we would likely want? I thought maybe the answer would be, “Nothing. Nothing works. It’s simply too expensive.” In which case, I’d shift my focus, and I can go work on fusion or carbon capture or something else, but at least I would know that I had done the work to answer the real question of whether or not there was any form of energy storage that would work to do what was most needed to be done on the grid. So running through a few months of process and I started to refine what actually the specifications were for a battery that might be able to do that. And somewhat, to my own surprise, after three or four months of investigation on paper, I had something that looked like it would work. And thanks to some good advice that I got from friends, my wife, and others, they encouraged me to start a company at that point. At the age of 40, I became a first-time founder, somewhat to my own surprise, but also without any hesitation in the end. It was very clear as to what it would take. I had done these kinds of development cycles before. I knew I had all the connections that I needed to raise money, but also to have success in the market armed with that standard from Tesla and the drive to be ambitious here. It was also not something I ever really questioned. It came very naturally; I would say – more naturally than I would have guessed, certainly, before having actually done it. So, I started the company.
Alejandro: Why merging two companies like pre-funding, pre-anything? Why merging two companies as the starting point?at
Mateo Jaramillo: Yeah. After that thought experiment, I ended up starting my own company, which I called Verse Energy, and was just starting to work on that. I had just gotten term sheets for funding, in fact. Right then, I got a call. It was literally the day after, I think, that I got my first term sheet. I got a call from a professor at MIT, a man named Yung Min Chang. I had known him through the industry, and he’s a real luminary in the academic space for a lot of lithium-ion work that he’s done in his career. He’s also a veteran entrepreneur. He has started six or seven companies out of his lab at MIT. He said, “Hey, Mateo. I heard through the grapevine that you’re working on long-duration storage. So am I. Why don’t we do it together?” He had already recruited a couple of other folks to join his early effort through other guys: Ted Wiley, Marco Ferrara, and Billy Woodford. They had an idea for a longer-duration storage cheaper than what lithium-ion would ever be, and I had my idea. We kicked off sort of a speed-dating experiment, if you will, over the course of a couple of months. I got to know them, and they got to know me. None of us is first-time through on energy storage. My experience at Gaia and Tesla – it’s always harder than you think it’s going to be to do something new and in the field of energy storage, in particular, if you’re trying to develop a new chemistry. One, we really liked each other, and it turned out. We had very similar views on how to go build this kind of venture, and we thought it would make the most amount of sense, it would reduce the most amount of risk, and give us the highest chance of success – or said another way: give us the least chance of failure if we combined forces. We had two technical shots on goal, and we had the best possible people that we could bring together to go after that goal, and it just made a lot of sense. So, we did. We combined the two companies and put it together. We also had investors who were encouraging us in that move as well. They said, “If you guys find a way to put it together, we will invest in the company.” Not, “We’ll let you come pitch or think about issuing a term sheet,” but said, “We will invest.” True to their word, we had three co-lead investors in the newly-formed company, and it was extremely linear and really kicked off a culture, if you will, for us as a company, sort of put in ego side in pursuit of the best possible thing for the company and having investors who are right there committed to the path.
Alejandro: What ended up being the business model? How do you guys make money with Form Energy?
Mateo Jaramillo: Well, it’s relatively new for us. When we started out, we didn’t even know what the chemistry would be. We essentially had a well-defined problem statement, and then we’re going to go find the best possible solution for it. We had the two chemistries in hand that we had to prove out, but there were lots of other ideas on the table, as well. We have since, of course, down-selected. That was right when we started 3+ years ago, but now we have a chemistry that we are commercializing; we’re going forward. We’ve now raised $127 million or so. The commercialization path is pretty clear. The business model itself is very much evolving as we figure out the right transaction modes in the market. We know what the versions of it can be, but the exact right combination of that is still to be determined, and that’s because the way that entities procure these kinds of assets in the market vary depending on what kind of market it is. The utility market is highly regulated and subject to all sorts of stakeholder interests. The way that we would transact in California, for example, will look quite different from the way that we would transact, let’s say, in the Southeast of the United States, or in the United Kingdom, or in mainland Europe. So our business model has to be flexible to be able to transact large-scale infrastructure projects, which is what this battery is in each of those markets. But the long and short of it is, we are creating a very valuable battery, and we will sell it.
Alejandro: Very cool. Where do you think that the market, as a whole, is going? There’s a lot going on now around energy with climate change and all this stuff, so where do you think that everything is heading as a whole?
Mateo Jaramillo: The transition is well underway, as the energy refers to it, energy transition. And that is broadly away from the utility side of things, away from burning fossil fuels and into renewables. Renewables are just the cheapest marginal form of energy and electricity that’s out there. So, taking advantage of that is in everybody’s interest. As a result, you have a lot of people that are coming into the space and saying, “We’ve come up with new ways to use it.” In particular, the energy storage space has a lot of interest because there are some very clear gaps in the market right now and lithium-ion, as I said, doing what it’s going to go do. And yeah, there’s still room for new entrance. So you hear this term increasingly in the industry of critical long-duration storage, but that covers a very wide spectrum of solutions, everything from 6 hours of lithium-ion as opposed to 2 or 4; that’s what some people consider long-duration to 8 hours or 10 hours of, say, a flow battery or other mechanical forms of storage or thermal storage. But what Form is really targeting is multi-day storage, so the kind of energy storage that is cost-effective over, let’s say 100+ hours. That’s where you need to be cost-effective in that regime to be able to replace a function of those coal plans or those high-capacity factor natural gas plants because that’s how they run. That’s when they step in, and they’re running flat-out for hundreds of hours. That is the most valuable function to go replace. That’s where a lot of energy into the grid comes from. So being able to store the cheap renewable but intermittent sources of energy cost-effectively over those periods is a big challenge, and that’s what we’re going after. For us, we don’t really compete with a lot of the sub-24-hour-type energy storage assets that are out there, whether it’s lithium-ion or any other type of chemistry or mechanical storage or whatever. We’re really competing with [29:09] to run the thermal plans. We’re using hydrogen for storage, or potentially carbon-capture, or building more transmission, but it’s a very different category of things, and as far as we know, we’re the only approach on the energy-storage space that really does offer a viable solution for that multi-day storage problem.
Alejandro: And your space is changing very quickly, so if I asked you – let’s say if you were to go to sleep tonight and you wake up in a world where the vision of Form Energy is fully realized, what does that world look like?
Mateo Jaramillo: It’s 100% decarbonized grid by using renewable energy and enabled by our batteries. When water and solar are going to be the cheapest form of energy in the future, and we need to be able to store that type of energy over different time periods, and we will have short-duration storage and we have multi-day storage. Ours is the multi-day storage. You look at a lot of the projections over the next 30-40 years from Bloomberg, or you name it. They all still expect that in that timeframe, we’re still using a lot of coal and natural gas. Why? Because they can’t imagine any other technical intervention coming and replacing those assets. Back to my early days thinking about environmental justice and how technology can intervene in dramatic ways in people’s lives. That’s exactly what we’re after. My dream would be that, in fact, we do commercialize the chemistry that we have, and I sincerely believe we’re going to go do that. And it means that we are enabling a completely renewable grid, and the transfer to electrification broadly-speaking means that that’s a transition to clean energy broadly enabled by our technology.
Alejandro: Let me ask you a question that I typically ask the guests that come on the show, and that is, imagine that we have the opportunity here to put you in a time machine and you go back, and you are now back in 2016, that moment when you’re living Tesla, that moment where you are about to launch your first business, you’re 40 years old. If you had the opportunity to give one piece of advice to that younger self before launching a business, what would that be and why based on what you know now?
Mateo Jaramillo: I would love to say I’m a lot wiser over the course of a few years. I guess one thing I would say is that whatever soft doubts that I did have, they were not justified. That’s because I had spent my whole career preparing for that moment. If I could go back even further in time and talk to an even earlier version of myself, I would say be patient and invest in being an expert in the sector and at your job, which is developing technologies and bringing those to market. For me, that’s energy storage. But I never considered myself to be the type of an entrepreneur that’s charismatic and selling everybody everything, and from the age of nine-years-old starting my own business. That was never me. But by the time I was 40, I found out that there’s one thing in particular that I know a lot about and that I was very prepared to lead a company around. I felt sure, but there are still some doubts the first time you do anything. So maybe the message would be: trust in the preparation that you’ve put in – all the hard work and the time spent.
Alejandro: Mateo, I love it. For the folks that are listening, what is the best way for them to reach out and say hi?
Mateo Jaramillo: You can reach me over LinkedIn, of course: Mateo Jaramillo – give a search there, and feel free to shoot me a note. I’m always interested to hear from folks.
Alejandro: Amazing. Mateo, thank you so much for being on the DealMakers show today.
Mateo Jaramillo: Alejandro, thanks for having me. It’s been a pleasure.
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