Philipp Man – terralayr

David Hunt (00:02.087)
Hello Philip, great to have you on the podcast.

Philipp Man (00:04.994)
Good morning David and thank you for inviting me.

David Hunt (00:07.729)
So we’ve got so much to try and pack into the conversation today. So much of really exciting stuff that Terra Leia are doing at the moment. But let’s start a little bit, as I always do, with the backstory, Philip. Perhaps you can tell us a little bit of your entrepreneurial journey and perhaps the moment of insight when you decided to found Terra Leia.

Philipp Man (00:27.712)
First of all, again, thanks for inviting me. It’s a very short background on myself. My name is Philipp Mann. I’m one of the two founders of Terra Layer and the CEO. I’ve now been an entrepreneur for 13 years. I briefly started my career prior to this at Glencore in the jet fuel team. Then left Glencore to start a B2C luxury watch company called Chronext.

David Hunt (00:53.991)
I was intrigued by this.

Philipp Man (00:55.56)
Yeah, mean, it has a relationship to energy, actually. It was inspired by the spot market for oil. I can get into that a bit later. And then after doing that for about 10 years, we realized we wanted to do something that had real impact for profit for society, the planet. But fundamentally, working on the largest issue that mankind

has arguably ever faced, which is climate change. yeah, that’s essentially how we came to the desire to work back in energy again. And ultimately we looked at different things. We being my old co-founder at Chronext Ludwig Wollitzer and again, my new co-founder at Terra Lair. So we’ve been a couple for 13 years essentially now. And we wanted to work on something in energy and we realized, you know, there’s this massive…

David Hunt (01:45.191)
together well.

Philipp Man (01:54.264)
kind of exponential growth and capital deployment already on the generation side in solar, in wind. know, nobody really waited for us to go there. But something that back in 22 was arguably completely under indexed in terms of talking about it was flexibility and the massive flexibility gap that we’re running into. And so we looked at different things. We looked at mini pumped hydro. We looked at cranes lifting weights, but very quickly came to the conclusion that

batteries are the technology that will enable renewable integration, but that it will not be practical for everyone who needs flexibility to own and operate these assets themselves. And so what we said is we want to build something akin to the AWS for power. And so that’s essentially what Terra Layer is. So we started that in late 22 on the side of selling our old company.

April 16th, 23, we sold our old business April 17th, 23. We were working full-time on Terra layer and yeah, here we are.

David Hunt (02:57.873)
didn’t take too much rubber breathing.

Philipp Man (02:59.886)
One night, one night. Sorry, I’m just switching off my phone here.

David Hunt (03:01.191)
Okay, yeah, I how it is. You may have seen we touched on it briefly that I stepped down this week from my executive role at Hyperion and again my wife saying let’s take some time out, but I’m like, let’s get on to the next thing. So I guess it’s par for the course. let’s, last week.

Philipp Man (03:19.448)
Congrats on that. And I mean, to be honest, I wanted to take a year off, once, you know, if there’s an opportunity in front of you, know, you can take a year off and that’s all nice, but the opportunity is passed by the time you’re back from vacation. So in the town or in the city where I’m from in Germany, you say, you got to take the parties as they come, you know, when the music is on, got to dance.

David Hunt (03:40.423)
Right. Yeah, yeah. And keep dancing. So I was last week speaking at the Future of Utilities event in Amsterdam, which was dominated by flexibility. Obviously, the clues are cracking. lot of the various entities who are in this flexibility space were there. Where does Terra layer say? You touched on this about AWS sort of analogy, if you like, but perhaps you can share a little more in simple terms exactly where Terra layer fits into the transition.

Philipp Man (04:09.71)
Sure. So we are a integrated energy flexibility platform currently 100 % focused on Germany. What that specifically means is we have two parts of the business. On the one side, we develop, finance and operate grid scale batteries currently 100 % focused on Germany, typically 10 to 30 megawatts in size and then kind of 100 megawatts plus. I would say in the medium voltage space, which is the 10 to 30 megawatts,

We are probably one of the largest, if not the largest players in Germany by number of projects, by number of megawatts under development and in operation. We currently have four assets operating. have 13 assets in construction. have over 200 assets across the pipeline of eight gigawatts in development in Germany. So that’s kind of the call it IPP or IFP model in Germany. And on the other side, we have our layer route to market software platform.

which essentially enables us to commercialize these assets for ourselves. And increasingly so, we also sell the software to other infrastructure investors. And what that does is we don’t trade, we’re not a trader, we’re not an optimizer, but our platform essentially aggregates battery fleets, bundles them, virtualizes them, and then can rent out or toll out virtual battery slices to different off-takers.

David Hunt (05:22.513)
Okay.

Philipp Man (05:36.398)
between essentially 15 minutes and 15 years. That’s the marketing slogan. In reality, how that works is you typically take, let’s say, a portfolio of assets, you bundle it, you do a toll for 50 % of it for, let’s say, five, seven years, and then 50%, you run merchant, but the merchant slice you auction off on a daily basis. And if somebody bids above the hurdle price that we set, then that capacity goes to them between a day, a week or a month, or

David Hunt (05:56.519)
Mm-hmm.

Philipp Man (06:05.024)
it falls back to the designated optimizer partners that we have that trade the asset in a conventional way in the intraday, day head and ancillary services markets. That’s one of the functions that our software does. The other thing that it can also do, or it can do a lot of things, but the other prevalent use case is you take very large assets and you can split them across multiple off-takers without actually physically splitting the metering point at the asset. So that’s essentially what we do. So we have two parts of the business, asset development and operation.

David Hunt (06:28.359)
Right.

Philipp Man (06:34.102)
and software commercialization platform called Lair and currently a hundred percent focused on Germany.

David Hunt (06:40.647)
Okay, so you’ve clearly had a really busy year. You took a fairly significant equity investment earlier in the year. I think you acquired a JV partner on the development side in Germany. going back to that point, I see where that sits, but you see yourselves or when you’re looking for investment as a software business, as a developer business, how do you sort of…

Philipp Man (06:42.638)
you

Philipp Man (06:52.707)
Yes.

David Hunt (07:07.847)
I guess refer to yourselves in that sense. So are you creating something entirely new?

Philipp Man (07:14.264)
mean, look, I think we are a flexibility company and we essentially enable customers to get flexibility on demand. We happen to develop and own a lot of assets. So that’s the infrastructure angle. At the same time, we have software that has real IP, that is a real mode that we own and that I believe is unique to us, certainly in Europe, probably even globally.

I would struggle to kind of say this is infra or this is tech. I mean, you could be cheesy and call it infrastructure tech or infratech. I think ultimately the new generation of infrastructure businesses will increasingly have some sort of differentiation. You see that in the data center space with guys like CoreWeave or Cruzo in the US. And I think we will see this in the flexibility space globally as well.

That’s why I don’t think we need to make this distinction because we both have a lot of assets. The majority of our capital is going into assets. that kind of means that our capital providers, our equity partners now with Euraseo, infrastructure investors. But at the same time, we have software that is making us unique and enabling us to also serve other customers. I think it’s mutually beneficial and both businesses kind of cross pollinate one another.

David Hunt (08:40.859)
Yeah, Actually, you touched on there, obviously, developing assets, storage assets is quite capital intensive. Is your platform, does it enable smaller developers to participate or have access to customers slightly easier? Is that a sort of, in terms of who are your partners on the development side, firstly?

Philipp Man (09:04.3)
Yeah. So on the asset development side, have, I believe it’s 16 co-development partnerships as of today with different developers where we have essentially forward exclusive deals on a certain quantum of their pipeline for a certain timeframe in Germany. We then have the option to acquire these projects. We also have an in-house development team. And then we recently acquired BBD Big Battery Deutschland.

which we are currently in the process of fully integrating. These are different developer teams from, I would say, different backgrounds. A lot of them used to do solar or wind. Some of them have worked for other battery developers in other geographies. But I would say these tend to be smaller to medium-sized players, not exclusively, but often. And we essentially give them the comfort of focusing on what they do best.

which is developing rather than managing the liquidity continuously. And so with us, they have a captive demand for the projects at a predetermined price with a price formula. And they know once they hit a milestone, they just get paid. So that’s our value proposition for developers. And I’m not sure if I interpreted your question right. On the software side, smaller asset owners, which may also develop their own project, can use us to get access to tolling.

which smaller assets typically don’t get. So usually if you have a sub 50 megawatt assets and currently 95 % of assets by number in Germany are under 20 megawatts, you basically with very few exceptions cannot get fixed price revenues. You may get some floor price from an optimizer, but it’s not really going to help you get contracted revenues in the way that a bank would want to usually see. So fundamentally what we do is we enable you to virtualize your asset

and or potentially pull it with other assets and get access to tolling from bankable blue chip credible counterparts like a button file like an RWE, which already work with us.

David Hunt (11:12.059)
Yeah. Yeah. Yeah. So that leads on a little bit to the flip side then in terms of the customers on the other side of the equation, you have obviously the assets as a platform. Who are the customers and how are you interacting with those?

Philipp Man (11:25.014)
The off takers, I mean. Yeah. I mean, look, these are, we always say these are large power consumers, producers, that tends to fall into kind of utilities, traders, a lot of CNI, like data centers increasingly so. And also we get a lot of amount from TSOs and DSOs, which are currently, know, increasingly discovering that best can be a great

asset for them to avoid redispatch, cetera. I would say the majority of customers that we see right now are large utilities that have exposure to pay as produced PPAs, cetera, and or want to create profile shaping products. And that are looking how to manage their PPA exposures and kind of balancing cost risks across the portfolio. And the beauty of our product is

Once they’re on boarded on our system with our API and we have a standard framework agreement in place, in theory, it scales infinitely. So when you have a physical tolling deal, you know, they need to go out, they need to the asset, they need to attach a box, they need to do a contract. It’s a new thing every single time. Once someone like Vattenfall or RWE is on the platform, they did a 55 and 50 megawatt deal with us respectively. You know, you can easily upsize that, you know,

Instantly, essentially 200 megawatts, 200 megawatts, 500 megawatts, cetera. Technologically speaking, you only need to make sure that the capacity is on the platform. And our customers love that. It’s easy to manage. It has a lot of operational benefits depending on how they account. It can also be balanced light. yeah, that’s the value proposition when we see a lot of demand from utilities, but also more and more from data centers.

David Hunt (13:13.873)
Okay, okay. So you’ve jumped back a little bit to your experience because you say you’re not necessarily, you’re not actually trading on the platform. I said is yourselves, but clearly you have a background in trading and energy. How instrumental has that been in your understanding of, being able to create the entity that is TeraLair at the moment?

Philipp Man (13:29.314)
I mean, look, I think the reality is I spent just under eight months, I believe, at Glencore. I was interning there, then I signed to become a junior trader in the Jet Fuel team. And then I essentially already quit to start my own company. So, you know, I would, I would grossly over exaggerate that I would say that that helps me today because it’s a very long time ago. But I think my time at Glencore, the summer before I spent

at BCG on the merger of AXPOR and EGL, their gas trading business now, as well. think rather than teaching me how to trade or anything like that, it enables you to understand that power markets are dynamic and they’re fundamentally volatile. I think electricity historically has been something that has been seen as something quite static, which is, you know,

quite ironic because a electricity by the physical definition of it is, well, not static at all, or, you know, static if you get a shock from wearing a wool pullover or something. But um, is ironic because it’s, you know, it’s the most volatile thing now that we see. And kind of going through that experience. And if you look at what Mark Rich, the founder of Glencore did, you know, historically, crude had been traded with long term fixed price contracts.

And he took essentially the monopoly of the seven sisters, which was kind of the broken down Rockefeller cartel and started creating what we see today effectively as the spot market for oil. And we in our old company, the luxury watch business wanted to emulate that for consumer products, luxury consumer products, and did that for watches. And we felt that, you know, this idea that there needs to be a marketplace where you can transact spots.

for electricity or physical power like Bess has ultimately led us to Terra layer. I would say while the stations of my career don’t obviously connect with one another, if you just look at it at LinkedIn on a kind of CV, the common denominator is that I’m a marketplace guy, if you will, and I like physical assets and physical infrastructure. And this is maybe just the…

Philipp Man (15:51.458)
know, development of that in now the best sector.

David Hunt (15:56.36)
Okay, zooming out a little bit, Philippe, to obviously you’re very focused on Germany at the present time. We will touch on how long that might remain the case, but looking more broadly at the European storage market, where do you think we are in that sort of development cycle? There’s clearly a lot of talk, a of focus on batteries and flexibility at the moment, but where do you see the, I guess, the growth of the sector more broadly at the moment?

Philipp Man (16:21.016)
Yeah. mean, look, we are obviously kind of focused on Germany. Germany is our home turf. That being said, we are a Swiss business, so we will also continue to expanding into other markets. But, you know, I think you have to look at it and you have to slice it. So if you look at the German market, for instance, we’re really just at the beginning. have around two and a half gigawatts of operating best assets. Home storage is quite mature with roughly

20 gigawatt hours. BESS is just in the five gigawatt hours right now. So two and a half gigs. And if you look at the different studies, whether that’s an Aurora or an A3, but if you actually look at the Fraunhofer Institute, which is like them, public research grant driven body in Germany, they say that you need 104 gigawatt hours by 2030 of BESS.

So if you look at where we are today at 4.6, just under five gigawatt hours, you need to add 40 to 50 gigawatt hours. So what that basically means is we have a roughly 78 gigawatt hour flexibility gap today. So you need to grow over 10X in the next four years. So I think while there’s a lot of talk and a lot of focus, if you actually look at the deployment speeds,

right now, this is massively falling short of what we need and what people want. Just to give you a data point, Modo last year in summer predicted that batteries would go from, I believe roughly one and a half gigawatts to just over 3.5 gigawatts in Germany end of year last year. And we finished the year for roughly 2.5, 2.8 gigawatts. So it’s just taking much longer. So I think

David Hunt (18:16.999)
Yeah.

Philipp Man (18:19.394)
Germany specifically, which is the market we best know, in terms of the evolution of the market, I would say we’re really at the beginning. The UK is obviously much more mature. That being said, I think there’s still a lot of growth there as well. And the reason I say that is when we started the business in 22, UK was just kind of exiting the hype phase and it started going into this decline. And for the first two years of building TerraLayer,

We kind of heard UK is over UK is dead, know, batteries don’t work there. It’s a terrible business. But what didn’t make sense to me is all the while people were saying that you kept seeing transactions. You kept seeing, you know, EQTs to Terra. you saw there’s a no we deal with KKR, you know, they’re not strictly a best business, but nonetheless, and you kept seeing asset deals as well. And now I was at a conference in January and, I heard, you know, the best market is again, UK, which I don’t agree with, but

It shows how this can change. And so I would say, you know, the UK is probably kind of in the early to mid transitionary period. Germany is very much at the beginning. If you look at the Eastern Europe, there’s a lot of deployment going on right now. But if you look at the assets that are there in Poland, in Bulgaria, et cetera, it’s just at the beginning and it’s similar in Southern Europe. you know, I would say with different pockets, having slightly different maturities, I think this is really just starting to become.

David Hunt (19:17.894)
Yeah.

David Hunt (19:34.737)
because it’s small, yeah.

Philipp Man (19:45.846)
what I believe will be one of the most dominant, if not the most dominant assets in the energy system of the future and becoming a key asset class in infrastructure.

David Hunt (19:59.912)
Some of the challenges obviously in development are not necessarily the obvious things if you’re not inside the sector. So clearly everyone knows that grid connections are a major issue that’s holding back a lot of development. You’ve also got things like just basic things like transformers are really hard to get hold of these days. going to your point of the gap from where we need to be and where we are in Germany and elsewhere across Europe. How do you see that we can unlock something? Obviously flexibility plays a big part in that. But how do we unlock and accelerate?

Philipp Man (20:09.794)
Yeah.

Philipp Man (20:13.848)
Yep.

David Hunt (20:27.943)
development in your mind to overcome some of these issues.

Philipp Man (20:31.458)
I mean, the sad but honest truth is it’s just bureaucracy. It’s bureaucracy. It’s, I would say a shielding attitude, especially by DSOs and TSOs who partially for the right reasons are concerned about how this changes their system, but completely wrongly go about how to manage the influx of grid connections. And I think the only way to accelerate

best currently in Germany. And I think it will happen, but is you almost need to make a war time statement. We are at war right now, quite literally, there is war in the Middle East. all the LNG exposure that Germany has right now is again becoming much more expensive. Germany is a importer of over 90 % of us fossil fuels. You know, you need to finally understand that this meandering between

I want to go into fossil, want to go into renewables, I want to go into fossil, I want to go into renewables. It’s not going to lead you anywhere. And the time is now to kind of quote Laurence Segalon from redefining energy. You are either a petrol state or you are an electrostate. We don’t have anything to extract in the ground in Germany right now, other than some fracking potential in Turinga, which there’s no political consensus on.

So let’s park that if we’re not moving on for it and let’s go hard quite electrifying. But let’s not just focus on the generation. We need a lot more flexibility and there is nothing better than grid scale best. In the moment, the CDU led government in Germany and the minister of the economy, Katharina Reiche, fully embrace that. And I think they will because they will have to. I think it’s just difficult to continue having a public discourse on gas when quite literally

straight off Hormoz is currently closed. I think we will see these things accelerating with faster permitting times with clearer goals on how DSOs and TSOs need to treat grid connection requests. And I’m optimistic because when we had the first energy crisis, which is only a couple years back, right, three years with Ukraine, suddenly LNG terminal in Germany was was built in in light speed speeds by German standards.

David Hunt (22:43.963)
Yeah.

Philipp Man (22:53.71)
And that was unthinkable before. And if there’s a political will and there’s consensus around that, it will accelerate. Everything else, long lead items, transformers, cells from battery, et cetera. Yes, some items take longer, substations take longer, et cetera. But ultimately, if you have the framework relationships with the OEMs, you can accelerate that to a certain degree. But that’s not the key bottleneck. The key bottleneck is the grid operator and the unfortunately

beta level exposure that you have to bureaucracy.

David Hunt (23:27.035)
Yeah, I think it’s a charge that get too much into the political situation. Of course, obviously what’s going on in firstly in Ukraine and now in Iran highlights to people exactly the of the shortcomings of a fossil fuel dominated world energy source. Yet still in the UK, we have people like reform, which I guess is like the AFD in its kind of settings talking about no.

cancelling everything the next zero that’s been positive in the UK for the last number of years, even in the light of what’s going on at the moment. And so I’m not quite so familiar with the German situation, but as you say, do you have a personal optimism that there will be that political change of opinion that goes into that? I agree, you need that kind of war state of saying everything else is off the table, we just need to get this thing done.

Philipp Man (23:57.123)
Yeah.

Philipp Man (24:15.277)
Yeah.

Philipp Man (24:18.658)
Yeah, I mean, without, you know, going too much into politics. Now, I think there is the issue that conservative parties and conservative, right leaning parties, which are currently gaining a lot of traction in Europe and different countries, associate energy transition with quote unquote, and consciously, this is not my opinion, I’m just paraphrasing what they’re saying, with kind of the woke bug.

So anything that is green and energy transition gets put into this kind of pigeonhole, greater Tumberg. And look at her her flotilla. And so it gets ultimately shot down as negative. think the reality is, and that’s why I’m optimistic, that it’s physics. There is no other way to run an economy like Germany.

other than electrifying everything and anything in the long term. And the quicker you do it, the quicker the pain is over. Now, I’m optimistic that it will happen. I am not optimistic or pessimistic. I don’t have a view yet on it how quickly it’s going to accelerate again the way it should. But I think at the end of the day, you can strike the whole net zero and energy transition slogan.

because it’s really about two trends now. And this is what it is. It’s energy sovereignty and it’s energy abundance. And renewables by the very definition are abundant. And so I think what is important is, you know, I think that a lot of the energy transition goals and ESG goals, et cetera, they’re right. But I think to reappear to the kind of electorate in many countries, you need to start talking about sovereignty.

and you need to start talking about abundance. The moment you do that, I think it will be easier to gain traction. I mean, again, I’m not an expert on reform, but in Germany, for instance, IFT, which is the very right party said, you know, before the last election, we’re going to tear down every single wind park. And then actually, Alice Weidel was in an interview on television, she said, well, obviously, I’m not going to tear down every wind farm.

Philipp Man (26:42.2)
But there is this one very ugly farm and we want to stop that. think they also like what you’ve seen this and you’ve seen this with the Maloney government as well. They say a lot of things, but once they run the country and I very much hope that the AFD will not run Germany. The reality is that they tend to have to do stuff that just makes sense because you need to run the country. And ultimately, well, renewables are the only way forward for Germany. And this has nothing to do with you believing

in the climate change or not, it’s just the best way forward. And it’s the only way forward, by the way, I think, to actually preserve the living standard and the way of life that we currently have. Because unless you want to start, you know, reducing your air condition consumption and not having two fridges or whatever it is you have, you just need energy abundance. And that’s what it is. And I think that discourse needs to change.

David Hunt (27:28.967)
See you in development.

David Hunt (27:38.664)
Yeah, I think it has done. I I started my sort of the solar business in the UK in 2007. So again, everything at that point, you were converting or you sort trying to preach to the the green and to those who could obviously afford these things at that time. I think it’s the same with electric vehicles now with with fuel is talking about the technology and the solution and almost ignoring the sort of the green or the climate issues around it to just.

Philipp Man (28:03.384)
Yeah. Which is a shame, right? mean, you know, climate change is obviously happening. You don’t need to be a scientist to see that. But people kind of have this negative association because, you know, as everything, things always have these pendulums, right? They always go from one extreme to the other. We went from a world of going hardcore and cold to, you know, everything needs to be green and you can’t use straws and etc.

And now it’s going the other way around, it’s going to always land in equilibrium at some point. again, I’m optimistic that governments will do the right thing just because it’s the only thing to do. But I think you need to change the discourse a little bit as well.

David Hunt (28:46.875)
Yeah, absolutely. Well, let’s move on back to your story, Philip. So how big is Tarell now in terms of people? How many on the team?

Philipp Man (28:55.886)
So we’re just shy of 60 based between Zug in Switzerland, Berlin, London, and we now also have a small offshoot in Hamburg because we acquired BBD. And yeah, we are growing. We’re probably going to add 10 to 20 people by year end. We try to remain small from a headcount perspective, as good as it gets.

But the reality is there’s a lot of work to do. So we do have to increase the team size as well. That being said, you know, I do think there’s a lot of stuff that can be automated. think without wanting to use buzzwords, you know, you can automate a lot with AI right now. And we’re trying to invest a lot of time into that because I think especially development is such a manual process. you know, if you look at Claude Copilot, et cetera, you can do massive things then.

for our business, fortunately or unfortunately, it’s also more than anything a people’s business. You got to meet people you explain to them you have to show a face. You can’t use AI for that.

David Hunt (30:03.655)
How have you found that sort of growth journey? I’m not sure how big ChronoNext was in terms of headcount, but for you personally to go from founding with yourself and a co-founder, obviously a very small team, and over a relatively short period of time, now you go from five people, 10, 20, and now towards 50 plus. It’s much more, I think, challenging than many people realize. So how have you experienced that from maintaining the culture and the vibe that you wanted in the company as you…

Philipp Man (30:19.491)
Yep.

Philipp Man (30:26.156)
Yep.

David Hunt (30:32.453)
very quickly add new people and suddenly someone who’s been here six months is the old guy in the room or the old girl in the room. So how have you personally managed and dealt with that sort of growth path?

Philipp Man (30:38.413)
Yeah.

Philipp Man (30:44.622)
Yeah. mean, our old company at peak was just shy of under 300 people. So I think it was like 280, 270. So we have gone through this kind of ramp phase before, but in that business, we actually, it was a lot of, you have to hire now and you can go faster if you don’t hire. And we made a lot of, and I mean a lot of hiring mistakes there. And so we’ve been

David Hunt (30:51.547)
Okay.

Philipp Man (31:13.462)
a lot more cognizant this time around to ultimately, you know, have a very clear understanding of what we want. And I think, you know, without wanting to be self complimentary too much, I think the one thing we did very well is that we were hyper pedantic on the first three hires. Then we were very pedantic on the first five hires. Then we were extremely pedantic on the next five hires.

And then kind of by the time we were 12, 13 people, I would say, you know, really every single person was truly outstanding. And that actually makes things pretty easy at that point onwards, because it sounds a little bit like a truism, but the reality is really good. People don’t want to work with mediocre people, let alone bad people. And even if I brought somebody forward that was not good, the other 12 would go, Philip, there’s no way I want to hire him or her.

David Hunt (32:02.373)
So,

Philipp Man (32:11.764)
And that enabled us to get to a point where we kept that discipline up until now. so, for instance, every single hire we hire does a final interview with one of the founders, even including interns and working students. Because we say, you know, the intern is already in the door then. And I know this whole debate, well, they’re here, they’re doing a good job. Can we now make them full time? So you need to do the interview process the right way the first time.

And I always saw that in banking or Glencore or in consulting as well, they treat a process for an internship at BCG or McKinsey. You’re going to speak to a partner at some point in the process. And we said the same thing. If you want to build a good culture, the first and most important thing you can control is who comes through the door. So I think we’ve been very good in that regard. And to give you kind of one empirical data point for that is in three years, we had three people leave the company only.

And two of them went on to start their own company, one energy AI business and the other one, a data center business. One of them we actually invested in and personally, some of us, and they still come to our pub nights and Christmas nights. And the other guy left to trade power because that was his dream and we don’t trade. Other than that, have had no one leave. We didn’t let anyone go and people didn’t leave us either.

David Hunt (33:30.087)
Yeah.

Philipp Man (33:37.294)
I’m not sure if that’s a perfect data point because I think fluctuations are also important. But so far, I think at least, we’ve been maintaining a very good culture. As for hiring speed, I think it’s been easier in some roles than others, which I guess has surprised me. I think on the project engineering, EPC side, et cetera, it has been slightly easier than we thought, which is a bit counterintuitive. It has been…

David Hunt (34:01.767)
Yeah. Okay.

Philipp Man (34:06.158)
fairly easy for us on our tech side because we have a great tech team and it just worked. I think where it has been harder is to find very good people in finance. And it has been harder, especially in kind of generalist role. So looking for a head of people almost took us two years. We now hired somebody and we’re very happy, but took us two years. We probably went for over 120, 130 candidates. I’m not exaggerating.

David Hunt (34:12.935)
I work people.

Philipp Man (34:34.316)
until we found someone who felt like that’s a fit.

David Hunt (34:38.567)
Yeah, I think that’s testimony to if I look at people not just clients that we’ve worked with in the past but people that stand out podcast guests for example David Trinessevis from PVcase the guys for Andreas from from InstaGrid really set a high bar something Steve Jobs obviously talked about and you touched on there setting a high bar that makes hiring and retention much easier in the long term even though it makes it quite difficult in the the short term to find those talents

Philipp Man (35:05.538)
For sure. For sure. I mean, the problem is, When you want to hire, an accountant or a software engineer or project engineer, whatever it is, there’s always an urgency to it typically. And so you very quickly resort to, well, but the company needs it, et cetera. And to have the institutional discipline to instill this in everyone to say, but the pain is going to be so much harder to hire the wrong person.

to manage them out, to let them go, to hire a new person, all the knowledge, all the time waste. That’s the most important thing. you know, to be fair, very often we have the conversation, somebody wants to hire someone and then somebody else in the process will go, not good enough. And it creates frustration. Of course it does. But the reality is that you as a business are much better off for it and you just have to force yourself. I can’t say, you know, I think it’s been a bit of a ping pong, you

David Hunt (35:51.473)
Yeah.

Philipp Man (36:05.068)
The beginning it was me saying not good and then my team was saying often to me, well, he or she is not good enough. And you need to create a culture where everyone challenges everyone. For instance, we do these radical candor workshops. not sure if you’re familiar with the framework, but we do this once or twice a year to really make sure that we are radically candid in our hiring, in our day-to-day operations. Certainly not perfect, but that’s something we very firmly believe in.

David Hunt (36:13.019)
Yeah. Yeah. But that’s just it.

David Hunt (36:33.447)
Yeah, and you touched on a point there, you know, A players want to play with A players, they want to play with second division players and that’s the reality of things in terms of how you attract and how you maintain the key.

Philipp Man (36:43.062)
A hundred percent, a hundred percent. mean, you know, not to jinx it, but we have a software engineering team of I think 15 people or so, and we haven’t had a single software engineer leave us. I’ve never heard that in over two years. and I mean, it makes, it gives me anxiety to think about all the LinkedIn inbounds they’re getting and probably after the podcast even more, but, please don’t steal my people. I, and I think it’s just, you know,

David Hunt (36:56.711)
They’ll be getting plenty of calls, that’s for sure.

Philipp Man (37:12.586)
If you pay people well, and you make sure everyone is incentivized, everyone in the company has options in the business, every single person, without exception, except interns. And when they become full-time, they do. And you pay them well. And they work on a meaningful thing with real purpose in a high integrity, high agency, high autarky environment. It’s really tough to leave because

David Hunt (37:20.689)
Okay.

Philipp Man (37:41.038)
The one thing, and sorry, I’m going on a long monologue rant here, but we feel very strongly about this is, you know, the, I very often say internally, I don’t think we will ever get the chance to work on something so meaningful again, in the sense that it has massive impact on the planet in the sense that we can build a foundational generational business and that we can do well individually in the process ourselves as well.

both financially and for our careers and working on cool stuff and developing our skills. And if you don’t just say that, but the environment truly reflects that, people don’t want to leave. And then they also don’t want to bring their neighbor who they think is like subpar.

David Hunt (38:14.927)
Leave it. No.

David Hunt (38:20.551)
That’s very true. It’s very true. They become the gatekeepers themselves. Everybody becomes a gatekeeper to a degree. Let’s move on a little bit from talent and perhaps also to your journey. The journey of every entrepreneur, no matter how successful, is never linear, right? So perhaps you can share maybe one or two of the highlights and the lowlights of so far with Terleio.

Philipp Man (38:25.004)
Yep.

Philipp Man (38:36.418)
No.

Philipp Man (38:44.258)
I mean, look, think highlights for Terra Layer, two things that we are very proud of, the first virtual multi-asset capacity tolling deal, I think globally, certainly in Europe with Vattenfall and then the second one with RWE. These are really lighthouse deals, both from a tech perspective, from a contractual complexity perspective, and also having these brands.

these blue chip utilities trust us so early in our lifetime life cycle has been amazing. And then, would say, probably the highlights of, I would say just because it was such a huge amount of work was last year we raised both equity, which was a minority deal by Eurasio last year.

192 million in equity, and then a 60 million plus 100 million. So 160 million with accordion facility, portfolio financing with ABN Amro and commerce bank. And these processes were independent of one another, but they ended up signing within two hours on the day of our Christmas party last year. It’s genuine coincidence. And the vibe and the mood there, I mean, we were in this bar.

David Hunt (40:06.757)
It was a good party.

Philipp Man (40:08.236)
Yeah, it was amazing. We had, you know, our CFO was from, I he will not be too angry with me from a walking zombie to dancing on a table within seconds. And that was a great moment. And like, look, lowlights, I mean, it’s a hard cooperation of business. We have them every day, right? I think people have a vastly false understanding of how the best business is run.

David Hunt (40:17.703)
Hahaha

Philipp Man (40:37.402)
frankly myself included when we started the business, it is a hardcore operating business. The AC unit is broken, you have noise issues, cells break, all this stuff delays. It’s a hardcore operations heavy business. I think that’s why it’s so important to build a platform that can manage this, not just from an asset perspective, also from a tech perspective. And I would say the low lights are…

I couldn’t pinpoint any individual one, I can say is you have great connections that are changed moments before you connect essentially like days before you have essentially COD ramp rates are introduced and you need to manage these things. But our attitude there is, and I’m a fan of the Ayrton Senna quote, I’m not sure if you know it, but you can’t overtake 17 cars when it’s sunny, but you can when it’s raining. And I really believe that

Give us more problems. Give us FCA’s, give us grid fees, give us delays, know, throw them at us every day because I think we have a outstanding team of people that are super motivated intrinsically and that are very well equipped to solve these problems. Every single problem that is thrown at us will transcend into IP and a mode, either operationally or actual real IP in the form of software. And, know, FCA’s incredibly painful.

Well, look, we run portfolios of assets and we virtualize them. If we have an FCA on one asset, we can trade around it with the rest of the fleet. If you just have one large, one megawatt asset, you can’t do it. And so we are building all this capacity and capability to solve complex problems and to drive real equity value in the top core and build a business that can become very large and work on something meaningful, very meaningful.

David Hunt (42:15.975)
Yeah.

Philipp Man (42:34.566)
That’s kind of how we look at it. So we almost don’t use the word problem internally. We always try to say challenge or opportunity, and it’s very cheesy, I know, and people will roll their eyes. But I think that’s the only way to look at this in a playful way and then come out of it stronger every day.

David Hunt (42:49.979)
Yeah, I think that’s the other adage of, know, necessity is the mother of invention. Sometimes it’s the challenges where the creative things are spurred. Philip, it’s been great to spend quite a lot of time with you. There’s always more that we could discuss, but I do like to ask you, as we touched on before, look at some of the books or learnings that you’ve had. touched on a framework which has come from one famous book, but again, over this course of your career, have there been one or two books that have been particularly useful or inspirational or supportive of your journey?

Philipp Man (42:57.688)
for sure.

Philipp Man (43:04.547)
Sure.

Philipp Man (43:18.254)
Yeah. So one book I always gift internally here is Anti-Fragile from Nicolas Slim-Talib. I think it’s very important. You know, the whole notion that the opposite of fragile is not robust, but it’s anti-fragile, things that gain from disorder. know, Bess, I think, is the very embodiment of that as a business. I think Zero to One by Peter Thiel is great.

I think if you are building a business, an outstanding book is The Hard Thing about hard things by Ben Horowitz, the Andreessen Horowitz co-founder. And then, you know, if you’re an energy, need to reel the world for sale and how the world really works by Vaclav Smil, which is actually what got me into flexibility in the first place. But I could throw out another 10 books.

The book that I’m currently reading is 1929 by Sorkin, 1930, 1929. I always forget if it was 29 or 30. I’m not quite through with it. And I’m also reading Gambling Man about Masayoshi San, the founder of Softbank. But yeah, think these are the books. But if I had to pick one, I would say it’s Anti-Fragile.

David Hunt (44:16.839)
Okay, yeah, yeah, 29, yeah,

David Hunt (44:37.127)
Okay, yeah, I that’s a good series of books, obviously, from Taleb. okay, well, we’ll put some links into the episode notes so people can follow up on that. Smil obviously comes up a lot in conversation. Asta’s The Hard Thing About Hard Things, which is a great book. thanks for sharing thoughts, comments on those. But more importantly, thanks for the work that you’re doing, obviously, with Terrell Aaron for sharing your journey so far. Great to see where we are in two or three years’ time. But for now, Phillip, thanks very much for your time.

Philipp Man (44:46.638)
Yep.

David Hunt (45:05.991)
We look forward to seeing how things explore.

Philipp Man (45:08.77)
Thank you very much for inviting me David and also congrats on your entrepreneurial journey. And I do very much hope for you and also your wife that you will take this one year off for vacation. But in any case, thanks a lot for inviting me.

David Hunt (45:20.625)
Maybe a little time, but thanks so much for the-

Philipp Man (45:22.766)
Thank you.