Tackling Cold Chain Emissions with Artyc
Hannah Sieber is the CEO and Co-founder of Artyc, a refrigerant-free battery-powered cooling company. In this episode, we cover the cold chain. In short, the cold chain is how goods are transported if they need to be kept in certain guaranteed temperature ranges, with different logistics mechanisms that can maintain goods such as food or medicines, anywhere from room temperature to deep freeze.
There are a few reasons why the cold chain is important for climate change. First, you can imagine that all of the refrigerated trucks, warehouses, and storage lockers use a lot of energy. Second, the refrigerants that are used to power the air conditioning or freezers that the cold chain uses are very potent greenhouse gasses with global warming potential that can be many times greater than CO2. Dry ice itself, which is often used to keep things cool, is basically pure CO2.
Third, the cold chain today is pretty broken. A significant amount of food is wasted due to spoilage during transport, which itself can generate methane emissions if it's not properly disposed of. Not to mention the embedded emissions in our agricultural processes required to grow it in the first place.
Hannah is going to tell us about all of this and how her product at Artyc aims to address these challenges while improving the traceability and accountability of goods in the cold chain. MCJ is proud to be a multiple time investor in Artyc via our venture capital funds.
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Episode recorded on Sep 28, 2023 (Published on Nov 9, 2023)
In this episode, we cover:
[02:23]: Hannah's background living and working in China
[07:44]: Founding EcoFlow with team from DJI to improve drone battery life
[10:36]: Hannah's return to school for an earth science degree
[12:10]: Her thesis on California power shutoffs and intersection with cold chain
[16:06]: Overview of the cold chain, how it works, and where it breaks down
[19:29]: Four different cold chains: ambient, refrigerated, frozen, and deep freeze cryo
[22:29]: High global warming potential of refrigerants and tradeoff with ozone depleting refrigerants
[29:33]: Artyc's mission of building refrigerant-free battery-powered cooling devices
[31:26]: Their focus on durability, precise temperature control and stability
[33:43]: Imagining an "infrastructureless" cold chain
[41:38]: Use cases in healthcare and beyond
[43:51]: Artyc's funding journey from grants to recent Series A
[45:13]: Hiring and partnerships in developing new products
Resource mentioned: After Cooling: On Freon, Global Warming, and the Terrible Cost of Comfort by Eric Dean Wilson
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Cody Simms (00:00):
Today on My Climate Journey startup series, we have Hannah Sieber, CEO, and Co-founder of Artyc, and we're talking about the cold chain. What is the cold chain? You may ask, Hannah is going to tell us all about it. In short, it's how goods are transported if they need to be kept in certain guaranteed temperature ranges, with different logistics mechanisms that can maintain goods such as food or medicines, anywhere from room temperature to deep freeze. There are a few reasons why the cold chain is important for climate change. First, you can imagine that all of the refrigerated trucks, warehouses, storage lockers, et cetera, use a lot of energy. Second, the refrigerants that are used to power the air conditioning or freezers that the cold chain uses are very potent greenhouse gases with global warming potential that can be many times greater than CO2. Heck dry ice itself, which is often used to keep things cool, is basically pure CO2.
(01:03):
Third, the cold chain today is pretty broken. A significant amount of food is wasted due to spoilage during transport, which itself can generate methane emissions if it's not properly disposed of. Not to mention the embedded emissions in our agricultural processes required to grow it in the first place, but Hannah is the expert here and she's going to tell us more about all of this and about how her product at Artyc, which is a refrigerant free battery powered cooling system for long duration cold storage and shipping, aims to address these challenges while improving the traceability and accountability of goods in the cold chain. MCJ is proud to be a multiple time investor in Artyc via our venture capital funds. But before we start, I'm Cody Simms.
Yin Lu (01:53):
I'm Yin Lu.
Jason Jacobs (01:55):
I'm Jason Jacobs and welcome to My Climate Journey.
Yin Lu (02:01):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (02:06):
In this podcast, we traverse disciplines, industries, and opinions. To better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help. Hannah, welcome to the show.
Hannah Sieber (02:21):
Thanks, Cody. I'm thrilled to be here.
Cody Simms (02:23):
I am thrilled, first of all to get a chance to chat with you about some common random background that you and I both have in that not at the same time, but we both spent a formative part of our young adulthood in China, and I know that was a big part of your journey and I want to hear your whole story about how you went from there to building a climate tech startup focused on cold chain solutions.
Hannah Sieber (02:49):
For sure. Yeah, I remember when we first met and that was part of our initial conversation. So let's see. It goes all the way back to high school for me. I started studying Mandarin when I was a sophomore in high school. Absolutely love languages, so I was studying French and Spanish at the time. Lucky enough that I went to a public school in the Boston area and we had Mandarin offered as well, and there was an exchange program you could do senior year where we hosted a student from China, from Beijing specifically. Then at the same time I was able to go there and so I spent my senior spring in China living with a host family, and it was just one of the most formative experiences. I was very lucky. My host mother was thrilled to have a daughter. She had... Part of the one child policy, just had one child [inaudible 00:03:34] a son.
(03:35):
So with that, she spent a lot of time with me, helping drill my Mandarin, but also showing me and really providing all sorts of history and context. This was 2008, and so it was a really pivotal time in China. They had just hosted the Olympics. The Shanghai Expo was the following year. They had joined the World Trade Organization a few years prior, and so you were just starting to see this opening up. It was a generation in China that was highly educated, highly ambitious, had purchasing power and ability to change the world, and I very quickly became enamored by living there and that really propelled me. Then in college, one of the things I continued to do with study Mandarin and used every opportunity I could, I looked for every scholarship, everything to allow to fund, to travel there and travel globally. I love to travel, and so I was fortunate to go back twice in college for different experiences, and that's where I started to get not only an understanding educationally, politically, but then also from a work context.
(04:33):
A couple of things really led me to decide that I wanted to live there after college. So when I was looking for jobs, I only looked for jobs that would let me move to China, and while most US companies said that you had to work in the US for a few years prior to moving, I was lucky enough to find one firm called the Parthenon Group. It happened to be as kind of small boutique management consultant that said I could move to China immediately. So that was a little bit of how I ended up there. Full disclosure, actually, we had a little bit of a visa struggle, so I didn't get there right after college, but shortly after I moved to Shanghai.
Cody Simms (05:07):
I love the parallels. Yeah, I wasn't as intentional about it as you, but I fell into studying Chinese in college before you, in the mid-nineties. Then I lived in China twice in college and then after college I also was trying to get a job using my Chinese language skills, but I wasn't ready to move all the way back to China yet. So I moved to San Francisco and accidentally fell into tech and accidentally fell into the dot com boom era of the late nineties, and then my chapter was written, but you actually managed to go fully work leveraging your Chinese language skills. Then I think that also then I'm going to guess here, eventually led you also into tech.
Hannah Sieber (05:45):
Yeah, it's funny exactly you say that, Cody, because it was almost the reverse for me. I spent some time in Beijing when I was in high school and college for work. I started my original work in Shanghai, but very quickly I ended up in Shenzhen. For those who don't know, Shenzhen was the city right across from Hong Kong. It's a special economic zone that Deng Xiaoping deemed a special economic zone in the early nineties, and it went very quickly through those economic policies, from a small fishing village all the way to a city of 14 million.
(06:13):
So when I moved there, it was a booming city. I didn't know a single person there, but it was where everything was happening in my mind. So not only did you have big Chinese companies that were leading industries, you had Huawei, ZTE, DJI, but then you also had 90% of the world hardware being manufactured there. So you had companies like Apple and Amazon and any kind of laptop watch, anything you own that really has lithium-ion battery in it, which probably came out of Shenzhen at least for a period. So that's part of how I fell into tech. As I was living in Shenzhen, I would go to maker shops. I was actually teaching myself to 3D print, really enjoying just being immersed in this environment.
Cody Simms (06:54):
You were working in this management consulting firm, but you were starting to hang out at hackathons and things like that and moving into the maker culture, it sounds like.
Hannah Sieber (07:02):
Yeah, so I had actually left management consulting and did a short stint in economic development. That's actually where I had thought my career would start. I had done some work in Nicaragua and college and done some internships in that, but I was moved to Shenzhen as part of the economic development. It was actually through the Chamber of Commerce, so through San Francisco Chamber of Commerce and through that had the opportunity to just meet all sorts of really fascinating people and we're talking from around the world, so not only Chinese, not only American, but from... Shenzhen was attracting folks from all over the world and they would come there.
Cody Simms (07:34):
It's like an expat center of China, basically.
Hannah Sieber (07:37):
Yeah, you would come there to manufacture, you would come there to build. Proximity to Hong Kong, made it really easy for travel in and out. So it was just such a vibrant community and that's where I met my co-founders who we ultimately started EcoFlow together.
Cody Simms (07:51):
Tell us about EcoFlow. So this was your first startup and still a going concern as I understand it, very much so?
Hannah Sieber (07:57):
I met my three co-founders, Eli, Bruce and Frankie while I was living in Shenzhen. They were at a company called DJI, which at the time was really the leader in droning.
Cody Simms (08:06):
Huge drone company, the DJI store in Shenzhen by the way, anyone who visits Shenzhen, you've got to go. It's incredible.
Hannah Sieber (08:14):
Yeah, I think at the time, so in 2016 DJI had 90% market share in consumer droning. Wild. At the time, droning was one of those exponential growth industries, and if you were a consumer at the beach, you flow your drone for 15 minutes, that might be okay, but if you thought about commercial applications, you thought about agriculture, search and rescue, mapping, battery life was a huge constraint, right? You needed more than 15 minutes of flight time. So that was actually a lot of the genesis and a lot of that initial unique insight around EcoFlow was could we create a better product for drone pilots? But then very quickly we learned the market was much bigger in many ways. We were going after the portable generator market, so the Honda 2000, which is one of the bestselling generators. We wanted to create a fully lithium-ion product that could replace the need for that and you could do that in both a work setting but also in a personal and home setting.
(09:02):
We started EcoFlow in late 2016. We bootstrapped most of our way there. We did some crowdfunding. We were a consumer product, so we did direct to consumer using a platform called Indiegogo. Ended up finding some pretty early success in just strong product market fit there. It is pretty funny, we were doing a ton of digital marketing and our best converting segment actually happened to be people who liked The Walking Dead. So we found a niche among what you would call home preppers or survivalists. So I went to a lot of conferences. I actually went to a lot of conferences where the person next to me might have mace or some other survival kit tactic or survival kits need. Anyway, so yeah, EcoFlow ended up growing. We did raise venture funding for it multiple times, and then a combination of trade wars, US sign a relations, made some tough changes and one of them was that I took a step back along with my other US partner, Eli.
Cody Simms (09:56):
That point is when you decided to go back to school, is that right?
Hannah Sieber (10:00):
Yeah, so I was really on the fence. I loved building things, I wanted to jump right back in, but for a combination of reasons was really excited to learn more both on the energy side and kind of where the industry had matured, but then also sharpened some of my own skills and I was lucky enough to get into Stanford, so I ended up going back, getting my MBA and then my master's in earth science. So it was a three-year degree, and through that three years was able to explore all sorts of things, not only related to what I was doing at EcoFlow, but also just learn about new trends in DAC and hydrogen and these areas that I personally actually hadn't had a lot of experience with in Shenzhen.
Cody Simms (10:36):
So you had this background now building a startup that had seen strong growth trajectory and experience having to build integrations with batteries in these different form factors as part of EcoFlow. How did you decide to go get an earth science degree and say, I'm going to go focus on climate related stuff?
Hannah Sieber (10:55):
So I'd always been highly climate minded. I came from a family where early on we had conversations around recycling or composting or just what your individual practices could be, and I actually started eating a vegan diet right after college. Actually when I went to college, I started eating vegetarian. I took a class my first semester and they said the biggest thing as an individual you can do is become a vegetarian.
Cody Simms (11:18):
You were a vegan in China. Just make sure I understand that because that's hard.
Hannah Sieber (11:22):
I was a vegan in China. I ate a lot of rice, a lot of tofu, Oreos turns out there's actually no dairy in Oreos. It was not necessarily the best for my health option. I did persevere. I for a long time have been focused on just my personal impact and ways I can decrease my carbon footprint. Going back to school gave me the opportunity to really start thinking from a systems perspective and understanding what it means to make change at these levers. What does it mean to do it within the context of both the venture community, a project finance community at the individual level? I think that we can talk about climate across all these different backgrounds and of course mine coming from venture and starting what I would call fast growth companies, that's where I spent most of my time. So I did a couple of deep dives on some different topics.
(12:10):
I was interested in leveraging a lot of my knowledge. EcoFlow, which again was that small scale lithium-ion batteries. So we're talking half a kilowatt-hour to two kilowatt-hours in general and ended up becoming the cold chain for a couple different reasons. One was the IPCC report came out in 2020, refrigerants were top of the list. We can talk about this more, but when we think about the impact of refrigerants and the impact of the cold chain more broadly, we're talking about 4% of global emissions. That's the cold chain specifically. So that's the first order impacts of food spoilage that comes from lack of refrigeration, but then also electricity usage, refrigerant leakage, and then just broader second order effects. So part of it was reading that IPCC report, and part of it was actually I wrote my master's thesis on quantifying the economic and equity impacts of California's planned safety power shutoffs.
(13:01):
I was really interested in distributed energy resources because in some ways that was a really natural holdover from EcoFlow. As I thought about distributed energy resources more broadly, I was really interested in understanding what we were doing in California when we de-energize the grid, and as you well know, we've moved to a time when depending where you live and how close you are to the what's called the WUI, which is the wilderness urban interface, the grid can go out for 24, 48, as much as even 50 hours. So I spent some time really trying to understand actually from an equity impact, what it looks like if you're in a community that doesn't have access to a generator, doesn't have access to a battery or what we call a distributed energy resource. With that cold chain came up time and time again.
Cody Simms (13:40):
You were leaning back into your prepper community, it sounds like.
Hannah Sieber (13:44):
I was, yeah, no, and I was spending a lot of time having conversations, doing brief interviews. I actually worked with Cal Fire directly on a project related to this. The more we learned about it, the more I learned about it and I had a project team I was working with at Stanford, the more it became clear to me that food insecurity or just food access was also a part of this equation. So that combined with the IPCC report, combined with my background in batteries, started to say, huh, we have a problem and it's a problem in our backyard, not just we can talk about vaccine distribution or access across the globe.
Cody Simms (14:15):
Pulling on that thread, it would lead me to believe that you started into this path saying, hey, I know a little bit about or a lot about lithium-ion batteries. I'm leaning into grid instability in California and in particular these parts of the state that are dealing with power shutoffs and whatnot. Sure, I've learned that energy storage is a solution here, but there's also a specific use case around what do you do with food? Did you originally lean into this notion of, hey, maybe we should build some kind of portable food storage device, long-term cooler kind of thing?
Hannah Sieber (14:48):
Yeah, so it's interesting. So at the same time I met my now co-founder Mark. We met doing On Deck Climate Fellowship and at the time I was deep on my master's thesis, so I was deep on wildfires. So we actually started looking around asset tracking and understanding a little bit more just in general about how do you support whether it be evacuation, migration, all of that that happens during a wildfire and then at the same time had this aha moment, wait, there's this adaptation if you will, that what happens after a wildfire or before in the case of a land safety power shutoff where the grid has been de-energized. It turns out that kind of food storage aspect extends well beyond wildfires. It extends to just anytime there's a break in the cold chain. Then I at the same time had a family member that was in a clinical trial, and so I was learning a ton about clinical trials.
(15:35):
It's another place where you talk about cold chain and cold chain challenges, and then the macro was the COVID-19 pandemic. So in 2020, seeing ruptures as it related to vaccine rollout, everything just started to coalesce. Mark and I said, okay, there's something here. Let's spend some time working on this. To be honest, we didn't know we're starting out if we were going to start in food or medical. To us it just became clear that there was a huge market and turns out it's a 300 billion market. But when you think about cold chain logistics and really temperature sensitive logistics.
Cody Simms (16:06):
So the cold chain is this thing that we all rely on, but it's honestly relatively invisible until you start looking for it. When you and I first met and started talking and then all of a sudden I started noticing these Thermo King trucks all over the place and whatnot, I was like, oh wow. There is definitely an omnipresence. Obviously food's got to get places, medicine's got to get places, but why don't you take a step back and just describe what the cold chain is and what it powers in our modern economy.
Hannah Sieber (16:35):
That's so great, Cody. I always like to call it the invisible backbone, right? Because the cold chain is really the mechanism or the supply chain for how we transport anything temperature sensitive. So you can think of it as the way in which a product goes all the way from a manufacturing site on some type of cold transportation. That could be a boat, could be a truck to a warehouse or a co-packing site, to another truck or car, to potentially a distribution center, to an end user. That end user could be a restaurant, a grocery store, it could be your hospital, your lab, or it could be directly to your house in the case of a lot of grocery delivery or even precision medicine and direct to consumer medicine. So when you think about that, that whole process is part of the cold chain and what we see consistently is that a lot of what happens is the cold chain breaks down at the seams.
(17:29):
So by the seams, it's that handoff if you're going from the port of LA, let's say to a warehouse in LA, potentially it sits on the loading dock too long and thaws before it gets moved into the truck or perhaps there's a labor shortage and just someone doesn't get to it. Or if you go to step down the chain, perhaps it gets to the hospital or the lab at 4:00 PM but the receiving team's gone home so it sits outside for the day. Perhaps there's a natural disaster as we often see a nor'easter here in the northeast or hurricane. So with that, it ends up in transit too long or perhaps when customs, there were at the time, there were all sorts of supply chain delays and so you were seeing things sit in customs well longer than expected. So what we tend to see is at those fractures is where a lot of the spoilage happens.
(18:14):
Just to put this into context, in the medical field specifically, we're talking about two to 8% spoilage, so huge spoilage rates. We talk to someone in organ transplant, so in kidneys that lost 10% of kidneys. So if you think about that is really a direct one-to-one with human lives potentially, and then in the food space it's even that number's even higher. So we lose about 17% of post-production harvest to lack of poor refrigeration. So again, think about that as food that could be used to not only feed anyone across the globe, but also to move yields for farmers, to feed more people more quickly. All of that has strong ripple effects.
Cody Simms (18:53):
I remember a stat you shared with me one time, I think it was the Rockefeller Foundation or somebody that said that if we solve for food spoilage, we could feed an extra billion humans by, I don't know, the year 2050 or something like that, which is just pretty incredible stat. This is food that's already been produced, we're just not getting it from point A to B to C appropriately.
Hannah Sieber (19:11):
Right, exactly. When you think about population growth and carrying capacity and these other conversations, it's part of the food and kind of hunger conversation is actually around cold chain.
Cody Simms (19:20):
There's an emissions problem obviously to that food spoilage as well unrelated to the emissions problems of the cold chain itself. There's these second order effects. When it comes to the cold chain, I suppose somewhat obvious, but there are also different degrees of how cold certain things need to be. Some things just need to be refrigerated or chilled and some things need to be extremely cold. I assume these are separate cold chain logistics networks that have been built out to support each of these different use cases?
Hannah Sieber (19:48):
Yeah, exactly. So the industry tends to talk around four different cold chains. The first one is ambient. Ambient is 15 to 25 degrees Celsius, so that's about 59 to 77 Fahrenheit.
Cody Simms (20:01):
Basically you just can't get hot, keep it at room temperature.
Hannah Sieber (20:04):
Stable room temperature. There's refrigerated as the second one that's two to eight C, so that's 25 to 46 Fahrenheit. So again, think of that as your milk or anything that needs to stay refrigerated. The frozen is your third category, -25 to -10 C, -13 to 14 degrees Fahrenheit, so that might be your ice cream or frozen fish, frozen meat, and then there's deep freeze cryo and that can really extend to almost as cold as we can get. Thinking about the COVID-19, at least the Pfizer vaccine that was at -80 certainly fits in deep freeze. Most of the market, so about 70% of the market actually sits in those refrigerated, ambient to refrigerated, and that's because most of our products are stable enough to be at refrigerated temperatures. We do see actually some people want to heat, which is interesting, and cold chain doesn't technically account for that in the stats I'm giving you, but certainly at Artyc we do think about what happens if you're trying to maintain a hot temperature and actually can't have something cool. That's also part of what we do.
Yin Lu (21:05):
Hey everyone, I'm Yin a partner at MCJ Collective here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change. Some awesome initiatives have come out of the community.
(21:34):
A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made as well as ongoing events and programming like monthly women in climate meetups, idea jam sessions for early stage founders, climate book club, art workshops and more. Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to MCJcollective.com and click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (22:05):
Let's talk about the emissions side of this. So a big part of the cold chain is this often untalked about part of the emissions world, which is refrigerants, which as I understand it typically have actually quite high warming potential, maybe shorter lifespan than CO2, but significantly greater warming potential in the near term like methane does to some extent. Is that correct?
Hannah Sieber (22:29):
Yeah, so the way to think about refrigerants are, and there's actually a really great book on this I recommend called After Cooling, that really looks at the history of refrigerants all the way early 19 hundreds through where we are now, and actually traces from kind of the socio and economic impacts. You can think about early refrigerants as really the carrier, air conditioner that you might see or that we all might be familiar with, all the way up to where we are today, which is all sorts of different types of refrigerants, Freon being the common name, that's R 134A, but anything that's powering not only your supermarkets but your cold trucks and even the chemical-based gel packs that you might see in your grocery delivery. The Montreal protocol was one of the first global protocols to recognize at that time what was the ozone depleting effect of refrigerants.
Cody Simms (23:17):
That was 1987 I think, give or take.
Hannah Sieber (23:21):
Starting to curb what we call ozone depleting refrigerants. What happened though it was in reaction is that industry moved to say, okay, we will change the chemical makeup so that these are not ozone depleting, but they're going to be high GWP, so high global warming potential. So instead we've just moved to a set of refrigerants that has fairly high GWPs, although very low OZPs.
Cody Simms (23:43):
I suppose in 1987 there was almost general lack of even appreciation that was a significant trade-off to make, I don't even know. But global warming didn't really become a huge part of common scientific lexicon for some time thereafter.
Hannah Sieber (23:59):
So from this book and the history I've read, there were some scientists at that time sounding the alarm bell in particular to refrigerants, but again, I think you're right. I think the general consensus was this is great. We know that there's a problem with the ozone layer. We know we've created an ozone hole and we're going to focus on changes to correct that.
Cody Simms (24:15):
By the way, my childhood, the hole in the ozone, that was a big deal. That was a huge story when I was, 1987, I was 10 years old, scared the pants off of me. Much like I'm sure kids today are very concerned as they should be about climate change, and it's actually a good story that for the most part, the hole in the ozone is not a really huge deal today and yet our solution to it caused this other side effect.
Hannah Sieber (24:41):
I think in some ways it's a great testament that we were able to come together and pass that protocol, industry reacted in some ways, that's in itself a positive statement to bipartisan collaboration. One thing I did want to note that's really interesting is when you look at the history of refrigerants, the first commercial air conditioner was actually installed in the New York Stock Exchange and that summer you actually correlates with higher returns, higher productivity, and so there is some thesis around how much cooling to us has become not only around a way of life, but around a comfort, around an ultimate expectation, around productivity. More for true labor economists to spend time on to really track how does productivity and temperature track and what has that meant for our modern industrial economy.
Cody Simms (25:26):
That point is also a really good way to consider as well how not just access to air conditioning, but refrigeration in general also splits across economic development lines globally, right? I think I saw a stat that the cold chain might be somewhere around 1% of global emissions, but in certain developed countries it's actually a significantly higher percent of emissions, which I mean I guess makes sense if you think about it.
Hannah Sieber (25:51):
It really varies country by country. I think Britain is almost at 4%. Other countries, particularly across the African continent, are well under 1%. What we see is that cold chain tends to be higher emitting in developed countries, which is frankly not all that surprising, but also there's solutions that are working across a lot of these countries specifically to decrease emissions not only from refrigerants, but then also think about how do we extend the cold chain? So how do we increase access? Because I think a part of this conversation is not only around emissions, but it's around actually what does it mean to have increased access to these goods that we just talked about being so important for our comfort, for our productivity, for healthy food access, all of that.
Cody Simms (26:33):
When we think about that emission percentage that the cold chain is causing in different countries, I presume some of that is due to power you need to generate these colder environments, and then the refrigerants themselves are only an issue if they leak, right? If and when they're not disposed of properly or if they leak, that's when they create this significant warming potential. I suppose it's an interesting thing to consider that these refrigerants themselves actually are some of the things that if we can abate them quickly by either moving away from them or doing something else, these are actually very near-term solutions that can have a significant dent on short-term warming potential. Is that the right way to think about it?
Hannah Sieber (27:14):
Thanks for bringing that up, Cody. So it's super interesting. The Department of Energy actually put out a report on refrigerant leakage by what I would call category. What's interesting is transport as the highest leakage rates, so it's actually double-digit in transport just over 10%. Whereas when you think about other options which are commercial refrigeration or residential refrigeration, those leakage rates are much lower. Now, of course, the volume of install base is much higher, and part of why we've started with transport in particular is that's where you see the highest refrigerant leakage rates, partly because of the design. When you think about a refrigerated truck, we're talking about expensive O&M costs, operating and maintenance costs, as well as just mechanical failures that lead to leakage at a much higher rate than you see in commercially installed refrigerators.
Cody Simms (28:00):
So when you think about carbon emissions having a time value right by 2030, have a goal of reducing emissions and in order to prevent the worst case of warming, solving short-term, near-term emissions that also have higher short-term warming potential feels like a high priority area to focus on. That goes back to I think what you said, that the IPCC report in 2020 talked about refrigerants being a huge area that needs attention.
Hannah Sieber (28:27):
Yeah, exactly. If you think about time value of carbon, a lot of these common refrigerants, we're talking about R 134A, which is Freon, that GWP is over a thousand. We're talking not just 5X carbon or not just 10X but a 1,000X, and you see that across a lot of the common refrigerants, so much so actually that the US government has started buying back black market refrigerants because what happened was after the Kigali amendment, you did see a lot of people phase out refrigerants legally, but you saw a whole black market emerge. Simply because again, when you think about that coefficient of performance and you think about the effectiveness, a lot of these refrigerants that are no longer allowed to be manufactured are still highly effective. So there is a huge black market, and it's interesting that the government is buying it back to get it off market.
Cody Simms (29:15):
Let's go from this, which is a great backdrop to the space that you're working in at Artyc to talk about what it is you are building. You went back to school, you studied all these different things, and then you ultimately came out of it with your co-founder Mark and said, okay, here's the thing we're going to go do. What is that?
Hannah Sieber (29:33):
Artyc is building completely refrigerant free cooling for the cold chain. So everything we're doing was meant to transport products like we've talked about, food products, medical products from point A to point B and doing so completely battery powered. What we do is we use standard lithium-ion cells. We have our own proprietary cooling technology, and then on top of that, all sorts of sensors on board. So we provide all sorts of monitoring. Our biggest value proposition to the market is peace of mind, and you think about that across two things.
(30:03):
The first peace of mind is that we create higher stability products, so we're able to increase the longevity, but also that stability so there's no excursions, and then we're able to provide the live insight that goes with that. So the temperature, the location, if something's been dropped, tampered with all of that. So core to our thesis we build the actual hardware itself is that we're able to withstand those seams. So earlier on I talked about how it could be something gets left out, it could be the weather, disaster, whatever it is. What we do is auto adjust to ambient air temperature. We're able to maintain that temperature even when there's that unexpected seam that happens in the cold chain.
Cody Simms (30:40):
It essentially looks like a big fancy cooler. You would literally put soft drinks or beers in different shapes and sizes, but that's what you've got. It's battery powered, it's refrigerant free, and presumably because it's battery powered, you can build all these onboard sensors on it that enable it to track and check temperature and be able to generate reports on where this thing is and beacon out and all the good stuff you can do with an always on device. Is that a good way to describe it in basic terms?
Hannah Sieber (31:09):
Yeah, that was great. The other thing I would just mention is fully reusable core to our thesis is that there's reusability and that these aren't single use packaging or even single use cooling apparatuses. So with that in mind, we're creating products that are durable for the logistics industry and can be used time and time again.
Cody Simms (31:26):
Let's start with the physical characteristics and then get into the sort of software potential and all of that. On the physical characteristics, how do you get to extremely cool temperatures without refrigerants?
Hannah Sieber (31:36):
Yeah, so everything we do is a combination of using batteries, so lithium-ion cells with thermoelectric, so you can think of thermoelectrics almost like a mini heat pump. You're dispelling heat while you're maintaining cool inside the payload in this case. A customer in this case will set their specific temperature and we are auto adjusting directly to make sure that we're maintaining that temperature as ambient air temperature, so temperature outside the box changes, and then at the same time setting what we call excursion bands, recognition that if something needs to be five degrees C, it might spoil when it hits seven or eight if that's... Per product basis. So what we're able to do is understand exactly what that temperature band looks like and make sure that we maintain that precise temperature and that precise temperature is important for a couple of reasons. When you think on the food specifically, that's how we maintain shelf life.
(32:26):
So if something is maintained at the right temperature, it can last a lot longer, which means it lasts longer in the grocery store, you have more time for a consumer to buy it or it lasts longer at your house. On the medical side, depending on the product we're talking about, it can go from complete spoilage to the point where it's not a usable product to potentially actually problematic if it's a therapeutic or a vaccine and consumed by a patient at a wrong temperature. So for us, we're very focused on making sure we're the highest rigor and highest standard around that stability because we think that also starts to solve some of those second order effects of decreasing spoilage, not only because it doesn't spoil on transit, but it has a longer shelf life once it's outside of the temperature range.
Cody Simms (33:07):
We talked about the four different bands of cold chain from essentially room temperature, refrigerated, frozen, and really cold. Are you playing in all four of those?
Hannah Sieber (33:16):
Yeah, so right now we do predominantly refrigerated, so that two to eight degrees C and then ambient, we can go down to frozen, but we don't do a ton right now in the frozen space. Right now we've started predominantly in the medical space. That's partly because there's been inbound interest and it's been a great market to start in terms of really acute pain points quickly, easily to address. So a lot of that sits in those two temperature ranges.
Cody Simms (33:43):
You talked about one of the challenges of the cold chain or these handoff points from the ship to the truck or from the truck to the processing facility or whatnot. Do you envision that Artyc devices just sit inside these existing cold environments or do you think the logistics network around Artyc will ultimately look different than the cold chain looks today?
Hannah Sieber (34:07):
Yeah, it's a great question. So we want to create the opportunity for an infrastructureless cold chain. So by that, what I mean is you no longer need the refrigerated truck. You no longer need all the single use packaging, the insulation, the coolants that you see today, the cardboard boxes, the styrofoam. What we see is that you're able to take an Artyc package and put it in the back of a pickup truck, a pack of a gig economy car in the back of a box truck or in the back of eventually in a ship. As we think about it's setting really a new standard for cold chain that can be truly intermodal. That new standard then allows cold chain to be way more accessible to folks that aren't currently on what I would call a standard cold chain route.
Cody Simms (34:49):
So it removes the specialization from the network here, from the logistics network
Hannah Sieber (34:55):
All the infrastructure right now, there's a huge amount of infrastructure that goes in from cold rooms to cold trucks. I was just talking to one of the largest biopharma life science companies that said they do some snowmobile delivery in Canada because they aren't able to run trucks on certain parts. Obviously that's unique, but to the point where that could be solved with small batch packaging that's reusable, that could much more easily go on any mode of transit.
Cody Simms (35:20):
These devices will presumably need to be recharged, so they need access to power. There's some degree of logistics and operational capacity that these, even if it's a gig economy worker with a van, is ultimately going to need to be responsible for, I guess. How do you see that evolving?
Hannah Sieber (35:36):
Yeah, so right now everything charges the standard way you charge a laptop. It's all type C charging. So if you do have it in your car, it's really easy to charge. You could charge it through your 12V car charger or just any charger you have on you. At scale we're building out racking systems in ways to charge in bulk, but we do see electrification of the warehouse and also just electrification and transportation as part of the process of continuing to enable what we do and make that charging as seamless as possible.
Cody Simms (36:06):
So that's I think a decent overview of the hardware components of what you've built out. So you've got this always on powered device. What does that unlock in terms of information that these people in the transportation space or in the logistics space or the people who actually own or are sending the goods somewhere typically haven't had a lot of access to in the past?
Hannah Sieber (36:28):
Yeah, so right now the cold chain is a complete black box. There's just no information. Occasionally you'll see single use sensors, so they're called temp tails that monitor temperature or a single use GPS sensor attached, but by and large, those shipments are a total black box. So what we're providing is all sorts of live insight into what's happening. Like I mentioned, we have temperature GPS, we have an accelerometer on board. We have the ability to add more sensors around light, around tilt, around humidity that we may add to future products. But all of that to say is from that data, what we are is we're able to provide not only reporting and insight into what's happening, but also forward-looking. So understanding supply chain optimization, thinking about how you can move to lower carbon modalities.
(37:13):
So moving from overnight air shipping or air shipping in general to five day LTL shipping. Because we can marry in weather data, we can marry in various lane risk and lane validation to understand how things are moving through the supply chain and how to maintain temperature across however many days that are needed between point A and point B. We're also pretty excited about scope three emissions and ability to start adding additional tracking there. Particularly with California recent passage of SB 253, seeing increasing demand around Scope 3 across our industry more broadly.
Cody Simms (37:47):
What problems are you hearing from your customers. They hadn't even envisioned being able to track some of this stuff before, they believe they'll be able to solve going forward if they had access to this tracking?
Hannah Sieber (37:57):
Yeah, I think the biggest one is new markets and understanding what else could be shipped on the cold chain. So at least in the medical space, there's a big push right now towards decentralized care and creating care to be more accessible in home or shifting that site from hospital to home. A lot of tests right now can't be run at home, and that's because they are temperature sensitive. At least with our first set of customers, most of them are excited to work with us because we're enabling all sorts of new products for them.
(38:25):
In this case it's specifically running new tests at home, some blood tests, some other tests that currently can't be done because of cold chain. I think that's just a huge immediate win. Then there's a whole other conversation around optimization of what you're currently doing. Could you reach more customers if you could ship for longer? Could you do it in a more carbon friendly way? We certainly work with a lot of customers that have 23 targets, either on the waste reduction or on the emission side and are excited to partner with us to think about reducing supply chain emissions specifically.
Cody Simms (38:59):
Super interesting insight to hear that really the things that people are looking for are more on the logistics, tracking, peace of mind around temperature control. It sounds like at least to me, the refrigerant free better climate story is just almost an added benefit for them, but it's really the peace of mind and the tracking that is driving these early use cases you just talked about.
Hannah Sieber (39:22):
So for most of our customers, we sell on providing a better product and a better product experience. For many of them, climate is a nice to have. They're excited about it, but they're not buying. We are not a green premium company. We don't expect our customers to pay more. We've seen that really resonate across the market. Just to give you one anecdote, I mean, we talked to a large medical distributor that threw out 10 million pounds of styrofoam last year, and so for them, they were acutely aware of their waste because it was an operational friction. While our conversation didn't center around potential CO2e abatement, it did center around, hey, how can we reduce the amount of styrofoam we're throwing out? This is becoming a problem to our central lab. This is becoming a problem broadly to just our ethos as a company. So sometimes it's also around that language shift and how we think about working in the space because many of these companies are still aligned towards the same goal. It's just sometimes the language or conversation goes slightly differently.
Cody Simms (40:25):
It's not driving purchasing decisions even though they value it, it's nice to have. It's not actually driving the purchase decisions. What's interesting is you're a good use case for how as the world moves to electrification, technologies as opposed to chemistries and other solutions that we've maybe used for the last a hundred years, new use cases get unlocked as a result of it.
Hannah Sieber (40:46):
Exactly, and I'm only half joking. If Amazon could ship blood, they would. I think there's all sorts of ways in which unlocking cold chain would change the dynamics of who, how, and what we ship.
Cody Simms (40:57):
How are you currently, and maybe in the future, thinking of pricing this, offering it, what does the actual product offering look like to a big customer who's considering wanting to use your devices?
Hannah Sieber (41:10):
So right now we sell our units and then we have a fast subscription on top, and that's access to the data, the reporting, but also some of the predictive analytical work we're doing. We are looking at lease based models and thinking about what it could look like to offer in some sense a cooling as a service model that would unlock customers that either don't have reverse logistics or for whom financially that makes more sense. But as of now, we sell our units directly into the market.
Cody Simms (41:38):
You have a couple different product lines planned that solve different use cases that you've been exploring. Do you want to share a little bit about what you've announced in that regard?
Hannah Sieber (41:47):
Our first product, which we launched with a company called Tasso there, one of the leaders in home blood or mobile phlebotomy, that's a product specifically meant to support decentralized care more broadly, and in this case, one to four vials that need to be shipped. That's been a product that's been super well received and that's on the market today. We also have on our website some products that are larger scale up, and so you could think of those more as products designed to support different types of payloads. So that's an air-to-air cooling product. So we have a five liter, as well as a 25 liter. Both of those you can support all sorts of products or anything. On the healthcare side, we're talking about different vaccines, therapeutics, biologics, and as we move into food, we already have some LOIs there, but we're talking about not only specialty food, so chocolate, wine, vertical farmed greens, but then also into larger batch grocery delivery, larger batch grocery.
Cody Simms (42:44):
What things have surprised you all so far? Where have your early thesis been proven to be either invalidated or somewhere where you've been pleasantly surprised by feedback that you've been getting?
Hannah Sieber (42:57):
Yeah, so I'll say Mark and I really set out to build what we call a market aligned, climate aligned company. We felt like we didn't want to be selling to customers and expecting them to pay more, but we also didn't want to be somewhere that relied on government regulation or government subsidies. Obviously, since we've started this, the IRA passed and all sorts of wonderful windfalls have happened, but when we were starting out, that was key to how we thought about it. So I would just say pleasantly surprised by how well that thesis continues to resonate and how well that's allowed us to move in the market. I guess I would say, maybe not surprising. Hardware is hard, it's slow. What we do has really high quality standards and really rigorous quality standards. So it takes time and it takes patience. That's patience not only from our team, but from our investors, just from anyone, team Artyc in general. I think particularly in this market environment, you see that friction a little more than maybe you saw in 2021.
Cody Simms (43:51):
From what I've seen, you all have been really good at executing quickly. Maybe that's a good transition into what you've been able to do thus far from a funding perspective and where you find yourself today.
Hannah Sieber (44:02):
Sure, and thanks for that, Cody. We pride ourselves in execution. We started by taking some non-dilutive funding. We actually took funding from a center at Stanford called the TomKat Center, and used that to do some initial market development work. We raised our seed round, so a little over 3 million led by lower carbon about a year and a half ago, and used that to bring our first product to market, and we actually brought our first product to market with less than a million dollars. We were highly capital efficient, really focused on, again, proving out that willingness to pay hypothesis and then the unit economics. Since then, we've closed our series A, so we closed our series A in June and are now using that to really start productizing, not only our first two hardware products, but also the software, moving to offering what I call that multilayer stack, where the hardware starts to enable the software that ultimately enables a broader cooling as a service mission.
Cody Simms (44:54):
I could say at MCJ, we are honored to be in both that seed and series A round that you mentioned. So thanks for including us on your cold chain journey as you've been building it Hannah. Where do you need help right now? What are the areas that anyone who's listening, who's intrigued in any capacity could do to be an accelerant for you?
Hannah Sieber (45:13):
So as always, I'll say we're hiring the standard. If you're interested, certainly reach out. I think the biggest one for us right now is actually partnerships, right? There's some really interesting opportunities on non-dilutive funding on the grant side that we're looking at, some really interesting opportunities to partner on the life science side and also on the climate side. We're starting to conduct our first lifecycle assessment and really starting to understand full wheel to well LCA. So with that said, if you're interested in partnering or think you could partner, please reach out.
Cody Simms (45:42):
On the partnership side, how much do you like to engage partners in the co-development of product lines? What does that process tend to look like?
Hannah Sieber (45:51):
So we actually did co-develop our first product. It has been a great partnership. It's something we're open to. We're also open to looking at launch partners or partners who want to work with us on design features and then in return have really first access to the platform or first access to some of those features. We're always evaluating. I don't know that we have a company stance particularly, but very open to it. I think there's a lot of ways we can really accelerate wind growth through partnership.
Cody Simms (46:17):
Hannah, what should we have covered today that we haven't talked about?
Hannah Sieber (46:21):
This was great. Cody. You could have done some cold chain puns.
Cody Simms (46:24):
Go for it. Do you have a favorite?
Hannah Sieber (46:25):
I don't know. I have a lot of battery puns. I almost opened with the fact that I was amped to be on.
Cody Simms (46:30):
Maybe we should just leave it at that, Hannah.
Hannah Sieber (46:33):
I love it.
Cody Simms (46:34):
Thank you for joining us and thanks for all that you're building at Artyc. If you're driving around listening to this podcast on your morning commute, I promise you you're going to notice a big cold storage truck in a way you probably haven't noticed before. So Hannah, thanks for opening my eyes to just how pervasive the cold chain is and for the work you're doing to make it better for all of us.
Hannah Sieber (46:57):
Awesome. Thank you, Cody. Thanks to the entire MCJ team. This has been great.
Jason Jacobs (47:01):
Thanks again for joining us on My Climate Journey podcast.
Cody Simms (47:05):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs (47:14):
If you'd like to learn more about MCJ Collective, visit us at MCJcollective.com. If you have a guest suggestion, let us know that via Twitter at MCJ pod.
Yin Lu (47:27):
For weekly climate op-eds, jobs, community events, and investment announcements from our MCJ venture funds. Be sure to subscribe to our newsletter on our website.
Cody Simms (47:37):
Thanks, and see you next episode.
