One business making money out of hot water
Given the business backlash towards the Gillard Government’s carbon tax, you might mistakenly believe that the cons so outweigh the pros that most businesses and entrepreneurs don’t want the country to go down the low carbon road. Bob van Aken from MicroHeat Technologies is certainly not one of these people.
“I think it's a definite step in the right direction, as it will enable Australia to develop a world leading ‘clean-tech’ industry to create wealth and jobs, as well as a sustainable future”, he insists. “Some input costs may increase but we are yet to fully scope the impact of the tax.
“We hope that the carbon tax will bring in new investment capital and funding required to further develop and commercialise solutions, using MicroHeat Technology.”
Van Aken’s business has been evolving over the past 10 years, with MicroHeat Technologies working on an innovative system and control method for rapidly heating fluids. The patented technology aims to eliminate inefficiencies that currently exist within water heating technology to reduce the associated energy and water wastage in both residential and commercial installations.
What we are talking about in a nutshell is continuous flow electric water heaters, and it’s the kind of technology that has win-win written all over it.
The idea came out of van Aken’s initial assumption that traditional methodologies for heating fluids rely on a heat exchanger or element, which is regarded as inefficient leading to energy loss and water wastage. This led him to ask what can be improved, eliminated or modified and what has been taken for granted by industry for so long that could produce a better energy and water outcome?
What the company wants to achieve is to become the new benchmark for government hot water standards, establishing a new manufacturing industry in Australia and overseas that will create hundreds of jobs and satisfy society’s need for industries that have a positive effect on the environment and conservation of natural resources.
With a background in the army and civil aviation, van Aken adopted a very militaristic method in recruiting his team to make the business dream become a reality. He says his entrepreneurial management team was hand-selected and individually are considered experts in their field. Their goal was to drive the business to commercial reality covering the crucial areas of technical, marketing, strategy, engineering, operations and finance.
“Entrepreneurial ventures require a different mindset than traditional corporate life,” he says. “People need to understand there is no comfort zone, no security and no freeloaders – just plenty of guts, determination and a willingness to succeed. They all have several traits in common.”
He describes his key people as passionate about what they’re doing, they understand the risks and manage the process better than others. The business started with two employees and now has 14 but it is a business that works with others in related activities such as manufacturing.
“Companies don’t need more risk takers — they need people who understand how to de-risk big aspirations,” van Aken explains. “They have a knack of seeing commercial opportunities, seeing through operational problems and creating value where there doesn’t seem to be any obvious path, than most other people”.
And while the above selection process is critical to creating a winning business, it’s also essential to attract the crucial support that technology companies can’t do without during the commercialisation phase — government funding and support from sophisticated investors.
MicroHeat’s route to market is through exclusive licensing arrangements with well-established global manufacturers/distributors, which already have the capacity to facilitate a rapid entry strategy. These Australian Made water heating products are regarded as extremely efficient, having virtually no energy losses and facilitate the conservation of water.
“The global interest has surpassed all our expectations” van Aken admits. “Exclusive distribution negotiations are currently underway in key global regions including Middle East, North Africa, United States, Canada, Brazil and Asia”.
Meanwhile a local firm, Hills Technology Solutions Group, has secured the exclusive distribution rights for MicroHeat products in Australia, New Zealand and Papua New Guinea.
At this stage the revenue growth of this venture all lies ahead but there has been sensational development from the research and development phase through to where the company is now in the commercialisation phase.
“‘Growth’ is a relative term, which depends on where your business is positioned on the innovation path,” van Aken says. “In our case, we are considered a successful entrepreneurial firm about to leap from research and development phase to commercialisation.
“In this context, ‘growth’ has increased substantially by the number of organisations providing specialist services, support and advice during this transition period known as the MicroHeat Family.”
Given so many tech companies try and fail, I asked van Aken what have been the challenges so far that he and his team have managed to overcome? And it’s not just creating the innovative products.
“As the initial innovator, along with my partner, Cedric Israelsohn, entry into an industry and a market involves sunk costs in intellectual property registration, product development, acquiring industry-specific knowledge and communicating MicroHeat’s attributes to its potential global distributors” he says. “There is little value in intellectual property that covers the secrets of making an unsaleable product or brand equity of a business that is no longer in business. Therefore, the challenge is to invest in a marketing strategy, as much as research and development.”
Asked how he met and conquered those challenges, van Aken listed a three-pronged approach that is a blueprint for any budding entrepreneur where planning and risk management has to be always uppermost in mind:
- “It is vitally important that each strategy and tactic must be carefully planned, assessed, funded and re-evaluated, as part of the risk mitigation process.”
- “Ensure you have sufficient funds in equity or debt to see your plan through to conclusion.”
- “Intellectual property claims should be seen as an ongoing process. As we discover new applications/opportunities we continually lodge new patent applications to ensure that we create value and opportunities for shareholders long term.”
Reflecting on his entrepreneurial journey van Aken believes it is important to start with a collective vision and exit strategy and then plan the strategic path to achieve the ultimate goal. But there is something even more crucial and like most successful business builders it’s all about the people thing.
“Ensure you have an excellent board that adds value to the business, above investments and hire the best people money can buy – it will save you time and money in the long run,” he counsels. “Finally, invest in the protection of your intellectual property.”
Van Aken says they went looking for and found the country’s best patent protection company and that was a mission critical issue for the company.
“We have five patent families and work with international and Australian suppliers to make OEM components for our systems,” he says. “Our annual patent costs remain high.”
Of course, technology companies have always understood the need to protect their creations with patents, as it is this intellectual property that ultimately is the real valuable asset of the business, even over and above the brilliant people who might have made it happen and helped develop its reputation.
“The overarching corporate strategy is to remain nimble, resourceful and custodians of our intellectual property, knowledge and brand,” van Aken points out. “Therefore, we choose to invest in or align ourselves with ‘best of breed’ strategic partners across the value chain spectrum from research, design, manufacturing and certification, to ensure we focus on our core strengths and maximise use of our valued limited resources.”
MicroHeat Technologies is the kind of business that stands to benefit in a world that escalates its commitment to a smaller footprint and consequently it is a company rooting for the carbon tax.
“Our value proposition to global manufacturers is simple — we assist their reputation in environmental conservation, more time to devote on their core business and to alleviate the burden of research and development and production through the use of our professional expertise,” van Aken says.
Our New Age, carbon warrior entrepreneur says he has been inspired by the likes of David Suzuki, Chuck Yeager and Fred Hollows, all of whom he observed were people who had mindsets outside the square. And on keeping himself motivated he described himself as being a “change agent who gets excited by research and development, keeping the brain and body active”.
On his role as the leader and his leadership style, he says he changes or adapts it to suit the situation.
“I find great people, put a fence around them and if they don’t love coming to work then I suggest they leave — no one has left yet,” he boasts. “We work with one another, and not for one another. Every person in the organisation is important to the well being of the business.”
On that point, van Aken wanted to underline an important philosophy that he has about his business.
“MicroHeat Technologies is not a one-man band, but consists of many people in and outside MHT that have put in very long hours with a belief that our technology is special,” he maintains. “And we’ve proven the most sceptical people wrong.”
First business: TV/Radio/Audio repair service in Sydney while waiting to get out of the Army 1968.
Career highlight: Completing a five-year project in 2000, Transitioning of The Advanced Australian Air Traffic System, in the Southern District, a complete change in Air Traffic and Airspace Management in Australia.
Best piece of business advice you ever got: See a legal attorney prior to entering into any business arrangement.
Most frustrating part of doing business: Working with a dysfunctional board of directors.
Favourite marketing technique: Seeking out companies with the largest market share and physically demonstrating our products. It works.
Business leader you most admire: There are many and varied, my admiration goes to business leaders that share their wealth with the less fortunate.
If you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching.
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.