Michelle Fraser interviews CEO of Verlume, Richard Knox, in the latest episode of her Energy Sector Heroes podcast. In this podcast, Michelle speaks to incredible people every week, discussing lessons, experiences and stories from their time in the sector. Read a partial transcription below or listen in full via the link here.

Richard – At Verlume, we provide temporary power on the seabed using lithium-ion battery systems and we also provide permanent energy storage solutions which interface with offshore renewables. We help stabilise the power and remove the intermittency that you get with renewables. 

Michelle – OK, excellent. How did you get started off in the energy sector?  

Richard – I originally studied mechanical/electrical engineering at university, I was always interested in engineering from a really young age. I didn’t start out originally in the energy sector, I spent my first couple of years working with pumps.  

In the early noughties things started to grow quite significantly in the energy sector so I was really attracted to the growth of the sector and a lot of the engineering challenges that came with it.  

I had originally worked in Glasgow for a couple of years, I’m from the northeast of Scotland, so I moved back up to Aberdeen. My first job within the energy sector was with ABB Vecro Gray at the time, which is now Baker Hughes.  

I worked in everything from drilling equipment through to well heads and subsea trees, to give me a wide exposure to the to the subsea industry.  

Michelle – OK, excellent. What made you go into business by yourself, cause you’re the founder of Verlume, aren’t you?  

Richard – Yes. I think some of them might have been blinding minutes at the time – if I knew some statistics of failure rates, but it’s always an opportunity.  

The company started operating in 2013 and at the time, there was a real split between renewables and oil and gas, and they were seen as two separate things. Through all my experience working in the subsea industry, I recognised a lot of the challenges we were facing through working in harsh environments and that we were having to overcome in oil and gas at the time, were very similar to a lot of the challenges that people were trying to overcome in relation to developing marine renewables.  

Everyone was trying to go from zero to grid power, in one big leap. And I really identified that would have been the first time any kind of technology has managed to achieve that without some incremental steps. I did quite a lot of research and found that no one had looked at using offshore energy for anything other than grid power for quite some time other than originally back in the 90s. At that time, it was not possible to integrate marine renewables with energy storage because the technology wasn’t there.  

Come 2010, this is when you have lithium-ion batteries, you have high energy density systems, I spotted a gap in the market to commercialise marine renewable energy and I felt that if no one else was doing it, which I couldn’t find, then it was an opportunity. I really enjoyed working in product development and innovation. I took the opportunity to go and set up the business.  

One of the key bits to that was, I heard an advert on the radio, of all things these days, for Scottish Enterprise, saying that if you’ve got a good idea, or you’re looking for support taking it to reality, then they had a grant system for smart feasibility studies. I spent a lot of time applying for that and was successful. That first Smart Scotland Grant with Scottish Enterprise was effectively the seed of the company and we just started working through the steps of that grant. 

And a key part of it was to try and create a good customer base. When we started the company, we did a lot of work for various oil and gas operators and firstly OEMs to generate the cash that we needed to support the grant. The grant at the time was 75% and then later, larger scale grants, were around 50% intervention, and we always needed a way of funding and balancing that. I was just keen to do it. I didn’t find anybody that was doing anything similar. I thought, there is only one opportunity when these sorts of things happen. So, I spent a lot of time planning.  

Michelle – OK. How long did you take to plan it then?  

Richard – The initial grant process was at least about six months, a lot of that was because they needed to do things like; build the business plan and do financial models all sorts of things that I hadn’t done in my engineering role before.  

I’m familiar with a lot of the commercial side of the subsea industry, but I wasn’t so familiar with creating a business, so it took quite a bit of time, especially the business plan, the technical side of it, I found – I don’t like to say easy, since it hasn’t been – but I was much more familiar from my previous role, working in engineering, on how to create technology development plans. I wasn’t so familiar with creating business plans. Scottish Enterprise were really helpful throughout the whole process, and we stuck at it and we got awarded the first grant.  

Michelle – Is it challenging having your own business?  

Richard – Yes. I like to say I’m responsible for nothing and accountable for everything, all the time.  

We’re not just building a business, in the space that we’re working in, we’re creating a new market segment effectively. It’s got all the potential reward at the other side, but it’s the timing of it. It’s something that’s critical. I think we suffered a little bit in the early days of being a little bit ahead of our time. We used to joke that; we were doing the energy transition before the energy transition was a thing.  

We’re benefiting from that head start, but that wasn’t always the case. It’s great to see things come to fruition now, it’s not easy when you’re building a small business. We started in 2013 just over a year after that there was a big energy market crash and that was quite a difficult time to manage cash etc. But, we got some really good support from Scottish Enterprise with investment funding and also Ultra ventures came in and so we moved away some venture capital as the years went by. We also secured investment from higher equity and more recently as well just over a year ago from the Scottish National Investment Bank. We’ve had great support, but you know it was never guaranteed. It was a lot of hard work to secure that and at the same time there’s the products and services to our customers, so it’s always a balancing act.  

Michelle – What is the most challenging thing about having your own business then?  

Richard – I’d say some of it is the unpredictability of it. In terms of having a business plan back in the beginning, it was one of our biggest risks – because the majority of the revenue at the time was coming from some independent operators that were looking for additional engineering support and then the risk register.  

Then we had the oil price crash and at the time I think there hadn’t been a dip in the oil price for about 10 years and people were talking about it. It was over $100 that could even go to $200, I thought that it is cyclical, and it will possibly happen. Hopefully not for our 3-4 years, but within just over 12 months it happened. So that was something that we had planned for, luckily, and were able to manage, but there’s always unexpected events to come in.  

I think probably the biggest ones are the geopolitical ones because there’s only so much you can do, you’ve got to keep your business as robust as you possibly can. Whenever anything does occur, you’re able to manage it. 

The things like the pandemic – that definitely wasn’t on our radar, that’s for sure. When the whole COVID-19 outbreak happened and we had lockdown, we had managed through other challenges in the past. For us, that one in particular worked out in terms of our business in that we had just secured investment from Par Equity at that time. A lot of the commercial contracts that we’ve been working on, got delayed but allowed us to move on and develop, then became our Halo product that launched so we were able to really focus on R&D things. Things started to open and so the commercial world started going back to normal, for lack of a better word, and we were really well positioned for that. I guess it’s a bit of luck, but we do spend a lot of time planning and understanding exactly how to make sure this is all as robust as we possibly can. But yes, you never know what’s coming around the corner.  

Michelle – OK, so what is the biggest difference between working for someone else and working for yourself then?  

Richard – I think it’s the level of autonomy and we do have a number of shareholders and stakeholders. You maybe don’t like working in an organisation where you’ve got direct managers, so you’ve got a lot more autonomy.  

What I do like about it is that you’ve got the ability to make a difference and effectively create your own path, so your success is much more defined by your own actions, so that’s what things are really like.  

To be honest, in previous roles before working for myself, I did get quite a lot of autonomy, but not to the same extent, in terms of being able to influence the direction of the business. Really, I just really enjoy that level of freedom. 

I can be a bit of a workaholic as well. That’s unfortunately a weakness, that old ruby. I’ve got in my head I don’t want to stop until it’s done, whatever it is, I need to get to get it done. I really enjoy that.  

I really enjoy working with the people that we have. We’ve got a really, really good team. I think we’ve got a really good culture. Great employee retention and something we’ve been trying to build; is a company I would have liked to have worked for. Some of the system engineers that work with us and a lot of the engineers that work in our business have the sorts of roles I would’ve loved to have done as an engineer 10 years ago, so that was part of the drive as well. It’s great seeing all the innovation, but a key part of it is, for me, it’s really easy to design, the easy bit is coming up with a new innovation, but it’s making sure that it’s commercial and it’s cost effective and it’s something that customers want. So yes, there’s nothing I don’t enjoy about it. I never, even with hindsight, would have changed the decision of starting a business. 

Michelle – OK, so is it easy to create your own path then?  

Richard – It’s not necessarily easy because there’s always external factors, and mentioning about time in the market, you can have the best product in the world, and they can make the best commercial sense, but it needs to be at the right time.  

We were a little bit ahead of time. For a couple of years, it did affect us. Had we been 20 years ahead of time. You know, we could have made a start and never really got anywhere, not because there’s anything wrong with what we’re doing. It was just the wrong time. You have to add in consideration, but no, I don’t think that makes it easy, but it’s definitely very rewarding.  

Michelle – OK, so do you have any tips for anybody that’s wanting to start their own business then?  

Richard – Yes, I would say whatever your business is doing, only do it if you’re really passionate about it. You need to really enjoy what you’re doing. Don’t just start a business for the sake of starting a business. You need to really want to. Whatever product or whatever service, whatever sector it is that you’re working in, you need to be really passionate about it and be really enthusiastic in the way that it doesn’t feel like work. 

I can’t remember the phrase, but if you do what you enjoy, you’ll never have to work a day in your life. It needs to be something along those lines. 

Do a lot of research. I mean, I spent a lot of time before I started the business, trying to see if anyone else was doing what we were planning to do. A lot of the time you think you’ve got the best idea, but the likelihood of it not been invented or someone not trying it in the past is usually pretty low. You might find someone trying to do something similar and if you can identify what it was and why it didn’t work? If you’ve got a way of potentially improving in what that technically and commercially does then yes, go for that. You have to be prepared for a lot of hard work. But like I said before it’s very rewarding.  

Listen to the full interview here – https://podcasts.captivate.fm/media/99cc6377-e1b7-47e7-83f1-341fec7312be/Richard-Knox.mp3