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TRANSCRIPTION WITH SPEAKERS
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[00:00] SPEAKER_00: Welcome to Countless Podcast.
[00:06] SPEAKER_00: Hello and welcome to Calgary's podcast with Mario Tonoguzzi on Canada's podcast network.
[00:12] SPEAKER_00: Joining me today is Alex McGregor, who is CEO of Cube Technologies in Calgary.
[00:18] SPEAKER_00: Thanks for joining us today, Alex.
[00:21] SPEAKER_03: Thanks for having me, Mario.
[00:23] SPEAKER_00: Well, let me just start by asking you what is Cube Technologies? What do you guys do?
[00:29] SPEAKER_03: Yeah, for sure.
[00:30] SPEAKER_03: So we're a technology company and we've built a low cost surveillance platform that uses the Internet of Things and artificial intelligence for a emissions monitoring.
[00:42] SPEAKER_03: And we're really focused on methane, but we also measure other gases.
[00:47] SPEAKER_03: And the Internet of Things is kind of a strange word, so I'll give a better description of it.
[00:54] SPEAKER_03: So you can check our product is an industrial smoke alarm with a with a brain and an LTE modem.
[01:02] SPEAKER_03: So we're typically installing these devices at oil and gas facilities.
[01:09] SPEAKER_03: And we're helping oil and gas companies measure, manage and reduce methane emissions.
[01:18] SPEAKER_03: How did you, as well, when did the company start for small?
[01:23] SPEAKER_03: So we got started in 2018.
[01:27] SPEAKER_03: Okay.
[01:27] SPEAKER_03: And so the company was founded by a new immigrant from India who had an electrical engineering degree, but moved to Canada to do further schooling.
[01:41] SPEAKER_03: That's sort of your typical tech story, genius, and I garage in this case, it was a,
[01:47] SPEAKER_03: Tej in in Chester, mirror, and he had an abandoned well by his grandparents house and he decided to make an early prototype to monitor this abandoned well.
[02:01] SPEAKER_03: And so from there, I'm through an industry night at that, that's say he became connected to Carol Elliott, who was a long term shell operations employee.
[02:13] SPEAKER_03: She saw a use for the technology within industry and then kind of through a series of connections.
[02:22] SPEAKER_03: Tej began working to develop the technology at the company I was working at the time, which was called the ambient, which is another Calgary phase startup that makes a similar type of solution.
[02:35] SPEAKER_03: And I kind of saw what they were doing and became interested. So decided to get involved with it in my spare time, essentially.
[02:44] SPEAKER_03: So what is the name cube signify?
[02:49] SPEAKER_03: So the name, like our piece of hardware is just shaped like a cube.
[02:55] SPEAKER_03: So we decided to call the company cube.
[02:58] SPEAKER_03: Okay, not a crazy backstreet or anything else, it's kind of like the way it's sounded.
[03:05] SPEAKER_00: All right, super. So obviously that you guys entering the market at a time where this is extremely important, right?
[03:15] SPEAKER_00: And you know, you can't go a day in the news without hearing something about emissions, right?
[03:24] SPEAKER_03: Yeah, yeah, for sure. And you know, you know, methane is a particularly important greenhouse gas, because it has 85 times the warming potential of CO2 over a 20 year period, but it also has a shorter half life than CO2.
[03:43] SPEAKER_03: So if it never enters the atmosphere, then you can reduce global warming and, you know, a lot of the sources of methane emissions are known and they can be, you know, addressed within Canada, the oil and gas industry is a really large emitter of methane.
[04:06] SPEAKER_03: So they be emit about 40 to 45% to methane emissions in Canada.
[04:13] SPEAKER_03: And in order to reduce emissions, the federal government implemented new regulations, the start of 2020, which are targeting a 45% reduction in methane emissions.
[04:30] SPEAKER_03: And the way they want to achieve that reduction is through one to three visits prior to operating facilities above a certain size.
[04:44] SPEAKER_03: And they would inspect these facilities using an optical gas imaging camera, which kind of looks like a camcorder from the 90s and you inspect the facility using this camera.
[04:58] SPEAKER_03: If you find a leak, you have to fix it.
[05:01] SPEAKER_03: But, you know, there's a couple problems with the camera. It's pretty expensive, cost about 150,000 dollars for a camera plus the operator's time and some of the other deficiencies is you only get a snap shot in time.
[05:17] SPEAKER_03: So the analogy we like to use, I mean, it kind of takes it back to that, that smoke alarm analogy is that we like to think of the optical gas imaging camera is as the fire department.
[05:32] SPEAKER_03: And, you know, going to every house in Western Canada, looking for fires, one to three times per year, you know, if they find a fire, they can put it out.
[05:45] SPEAKER_03: If they don't find a fire, you know, one might start the next day and they won't know until the next visit.
[05:51] SPEAKER_03: Whereas if you install our continuous monitoring system, you'll get a notification when you have a fire, then you can send the fire department and put the fire out.
[06:00] SPEAKER_03: And we just see that as a better operating model. And because we're low cost, you know, we can help these oil companies save money in addition to reducing more emissions.
[06:13] SPEAKER_03: So, are you across North America?
[06:16] SPEAKER_03: I'm we're primarily focused in Canada right now. We have had a little bit of interest from the states.
[06:25] SPEAKER_03: And so we are going to be looking to expand into the US probably towards the end of this year.
[06:34] SPEAKER_03: But, you know, we're really focused in Alberta right now and we're, you know, we have a really good market here.
[06:42] SPEAKER_03: And the regulator here, the Alberta Energy Regulator has introduced a kind of progressive framework for forgetting alternative technologies like you approve for use for emissions reduction.
[06:57] SPEAKER_00: Okay.
[07:00] SPEAKER_00: Roughly how many sites are you at?
[07:04] SPEAKER_03: Yeah, good questions. So we're at about 50 site right now.
[07:12] SPEAKER_03: But we're just starting to scale out. So we had some initial customers and kind of based off of that success.
[07:21] SPEAKER_03: We've been able to find up a much larger number of customers. So we're working with about 10 companies now.
[07:32] SPEAKER_03: And we're just feeling up kind of manufacturing and we're going to be deploying about 1500 of these devices over the next year and a year and a half, but primarily across Alberta.
[07:44] SPEAKER_00: Wow. I'm just curious.
[07:50] SPEAKER_00: What's the size of say the device? Like how big is it?
[07:54] SPEAKER_03: Yeah. So it's pretty small like it would be probably, you know, it's kind of give shape as I mentioned.
[08:03] SPEAKER_03: And it'd be about 8 to 10 inches in each dimension.
[08:07] SPEAKER_03: And so the device itself is a battery and has a solar recharge capability.
[08:16] SPEAKER_03: So that makes it kind of really easy to install at a facility and non-intrusive.
[08:22] SPEAKER_03: So it takes about 20 to 30 minutes to set up our system.
[08:27] SPEAKER_03: It begins collecting data and then transmits that data using the cellular learning network to our software.
[08:36] SPEAKER_00: So on a particular site is only one device necessary?
[08:44] SPEAKER_03: Yeah, good question. So it depends on the site.
[08:48] SPEAKER_03: So you know, these sites kind of range and complexity.
[08:54] SPEAKER_03: So it can be everything from, you know, a pump jack with a tank all the way up to a large gas plant.
[09:02] SPEAKER_03: So yeah, this is simpler facilities were typically installing one device.
[09:08] SPEAKER_03: And then for a complex facility, we're usually looking at four to six devices.
[09:17] SPEAKER_03: And if we were to think of the device in terms of the area, if you can monitor a single single device can monitor about a hundred meters squared.
[09:29] SPEAKER_03: So pretty sizable area.
[09:32] SPEAKER_00: Let's talk a little bit about yourself.
[09:34] SPEAKER_00: Like what's your background that would have gotten you into doing something like this?
[09:40] SPEAKER_03: Yeah, yeah, for sure.
[09:41] SPEAKER_03: So I'm an engineer by background.
[09:45] SPEAKER_03: I started my career in the oil and gas industry working for a small producer.
[09:51] SPEAKER_03: I was working as a production operations engineer in the scatual and not a university.
[09:59] SPEAKER_03: One of my friends Eric who is now my business partner moved to a technology company called the inner site of few years out of university.
[10:10] SPEAKER_03: And he convinced me to join that company.
[10:14] SPEAKER_03: I mean, the hook was that, you know, well, I didn't you know that I like small town Saskatchewan, but this enter play was crying and they were opening up in Australia and office.
[10:25] SPEAKER_03: And he was able to recruit me on the basis of that.
[10:29] SPEAKER_03: So really good experience.
[10:32] SPEAKER_03: I got to kind of travel all over the world with with enter site and they had a management team that you know, put up a lot of trust and responsibility.
[10:41] SPEAKER_03: and some people that were fairly young and new out of school.
[10:47] SPEAKER_03: So I really enjoyed that experience.
[10:49] SPEAKER_03: I went to another startup,
[10:52] SPEAKER_03: kind of after that called Ambient and other technology company
[10:55] SPEAKER_03: in the oil and gas space.
[10:58] SPEAKER_03: And so I thought I had some kind of good experience in terms
[11:01] SPEAKER_03: of working a variety of roles at software companies
[11:06] SPEAKER_03: in the tech space and also understood some of the customer mindset
[11:11] SPEAKER_03: from having worked at an oil and gas company.
[11:14] SPEAKER_00: So you've been involved in a number of startups.
[11:21] SPEAKER_00: What have you learned from being involved in startups
[11:27] SPEAKER_00: that you can share with people?
[11:31] SPEAKER_03: Good question.
[11:32] SPEAKER_03: I guess, you know,
[11:34] SPEAKER_03: I think whenever you have a job like I think,
[11:37] SPEAKER_03: you know, me personally, I've always, you know,
[11:40] SPEAKER_03: there's always little things that kind of that bother you
[11:44] SPEAKER_03: about the job or the way it's run.
[11:46] SPEAKER_03: But when you have your own company,
[11:49] SPEAKER_03: you're kind of responsible for all those complaints.
[11:52] SPEAKER_03: But if you have a complaint,
[11:54] SPEAKER_03: you just kind of have to fix it yourself.
[11:58] SPEAKER_03: And that's been, you know, one of the really rewarding parts
[12:01] SPEAKER_03: of starting a company.
[12:03] SPEAKER_00: Oh, okay.
[12:05] SPEAKER_00: What have been, what about the challenges?
[12:06] SPEAKER_00: Like, of starting a company?
[12:10] SPEAKER_03: Yeah, for sure.
[12:11] SPEAKER_03: So, you know, we've been lucky in a lot of sense
[12:15] SPEAKER_03: as we've received really good support from the federal
[12:20] SPEAKER_03: and provincial government in terms of some of the grand funding success.
[12:24] SPEAKER_03: We have in terms of the challenges,
[12:27] SPEAKER_03: like, you know, a pretty obvious one is that we're manufacturing
[12:34] SPEAKER_03: electronics.
[12:36] SPEAKER_03: And there's a fairly large global chip shortage right now.
[12:40] SPEAKER_03: So that's affecting everyone from Apple to Ford,
[12:47] SPEAKER_03: you know, much larger companies,
[12:49] SPEAKER_03: so just trying to take your convoyance so he can,
[12:53] SPEAKER_03: you know, manufacture these the meter customer commitment.
[12:58] SPEAKER_03: That's been a bit of a challenge.
[13:01] SPEAKER_03: And kind of, you know, we've, we've also grown a lot recently.
[13:05] SPEAKER_03: And so, you know, last year we were at four full-time employees.
[13:09] SPEAKER_03: And we've, we've grown to about 15.
[13:15] SPEAKER_03: Now, and just kind of culturally when you're,
[13:18] SPEAKER_03: you're starting a new company.
[13:19] SPEAKER_03: It's nice to spend time with, with your employees,
[13:22] SPEAKER_03: but, you know, with some of the restrictions around COVID,
[13:26] SPEAKER_03: obviously, it's tougher to kind of develop that.
[13:29] SPEAKER_03: That corporate culture over over,
[13:32] SPEAKER_03: see the meetings like this.
[13:34] SPEAKER_00: Yeah. And you obviously sound like, you know,
[13:37] SPEAKER_00: you know, what you mentioned earlier that the company is going to continue to grow.
[13:42] SPEAKER_00: You know, so, you know, in terms of this scalability of it,
[13:48] SPEAKER_00: that presents obviously challenges as well, right?
[13:52] SPEAKER_00: It's, it's no longer a small company, right?
[13:56] SPEAKER_03: Yeah, yeah, for sure.
[13:58] SPEAKER_03: I mean, we've been,
[14:00] SPEAKER_03: we've been hiring like a variety of, of different roles.
[14:06] SPEAKER_03: And it keeps it pretty interesting, you know,
[14:08] SPEAKER_03: or hiring some of our developers, hardware developers,
[14:12] SPEAKER_03: data scientists, and then, you know, like a lot of our customer facing people,
[14:17] SPEAKER_03: we want them to understand our customers, you know, well.
[14:21] SPEAKER_03: So we've hired a couple engineers and operations people from all
[14:27] SPEAKER_03: and gas companies who are kind of looking to reskill and get in the pack.
[14:32] SPEAKER_03: But, but overall, like we've, you know,
[14:34] SPEAKER_03: we've developed this technology over, you know,
[14:36] SPEAKER_03: three years now.
[14:38] SPEAKER_03: It's very reliable and we've kind of built it so that,
[14:41] SPEAKER_03: that it is ready to scale.
[14:44] SPEAKER_00: I'm kind of curious.
[14:46] SPEAKER_00: You know, I, you know, we're in Calgary and,
[14:50] SPEAKER_00: you know, we're, we're overwhelmed sometimes by the old patch
[14:56] SPEAKER_00: because everything's about the oil patch in Calgary, right?
[14:59] SPEAKER_01: Yeah.
[14:59] SPEAKER_00: So as the old patch goes, so does Calgary type, type thing.
[15:03] SPEAKER_00: How is that?
[15:04] SPEAKER_00: Everything, you know, been for you guys,
[15:08] SPEAKER_00: dealing with the downturn.
[15:10] SPEAKER_00: You know, we started in late 2014, you know, oil prices started to go down.
[15:17] SPEAKER_00: And, and that took, took down a lot of jobs.
[15:22] SPEAKER_00: It took on the economy for a number of years, you know, seven years later.
[15:26] SPEAKER_00: And, you know, we're actually, it's kind of amazing when you think about it.
[15:29] SPEAKER_00: We're actually approaching seven years here.
[15:32] SPEAKER_00: Seven years later, we're still not out over that hump of coming back.
[15:37] SPEAKER_00: What has been all that impact for you guys over the last couple of years?
[15:44] SPEAKER_03: Yeah, yeah, for sure.
[15:46] SPEAKER_03: I mean, I think we're lucky in a certain sense just because, you know,
[15:53] SPEAKER_03: the new regulations did create a need for the product.
[15:59] SPEAKER_03: So, yeah, the current time, you know, is, you know,
[16:01] SPEAKER_03: these companies are going to spend money to reduce methane to meet their regulatory compliance obligations.
[16:12] SPEAKER_03: So, as long as we're low cost, we feel like, you know, there's a good opportunity to dig it into oil companies kind of based off of that.
[16:23] SPEAKER_03: But there's also a bit of a pull for a product.
[16:27] SPEAKER_03: So, at the same time as the new regulations, there's kind of more demands from investors,
[16:34] SPEAKER_03: capital markets and kind of end users of oil and gas that have responsibly sourced products.
[16:40] SPEAKER_03: So, you know, we're helping these companies meet their regulatory obligations at a lower cost,
[16:46] SPEAKER_03: but also providing them with better data to support initiatives like ESG recordings.
[16:54] SPEAKER_03: So, you know, we've actually seen a pretty warm kind of response from government.
[17:01] SPEAKER_00: I'm also curious about when you go back in time.
[17:07] SPEAKER_00: When did we start to see the introduction of technology in this field for monitoring emissions?
[17:17] SPEAKER_00: When did that sort of start to come in?
[17:21] SPEAKER_03: Yeah, so the term people use within the industry is leak detection and repair or elder.
[17:30] SPEAKER_03: And people have been using optical gas imaging cameras for a long time, probably since the, you know, maybe the 80s or 90s to affect the abilities.
[17:44] SPEAKER_03: It's what's really changed is the number of facilities that require elder inspections.
[17:50] SPEAKER_03: So, that's kind of increased significantly.
[17:53] SPEAKER_03: And it's more of an impact on the upstream industry.
[17:57] SPEAKER_03: And then I would say within the last I don't know, five years, there's been a host of alternative technologies being introduced to the market.
[18:08] SPEAKER_03: And, you know, we're one more continuous monitoring technology that gets installed at a facility, but there's a host of other technologies that are being used to solve the problems.
[18:19] SPEAKER_03: So people are installing sensors on satellites, airplanes.
[18:25] SPEAKER_03: And I think there's room for a bunch of different technologies in this market and they all have their own unique strengths and weaknesses.
[18:34] SPEAKER_00: Okay, super.
[18:36] SPEAKER_00: Obviously, you know, running a company is busy.
[18:40] SPEAKER_00: It's busy, you know, running start startups are busy. What do you do outside of work to give you that code of, you know, that pooled on full work, life balance.
[18:53] SPEAKER_03: Yeah, for sure. So when I started working at Cuba is doing a master's degree in analytics.
[19:02] SPEAKER_03: Eventually got busy enough that I had to stop doing that because of, you know, wanting some sort of work life balance.
[19:13] SPEAKER_03: But kind of in my spare time, I'm a pretty active outdoors person.
[19:18] SPEAKER_03: So I take advantage of all of the nice things Calgary has to offer. So I like to be mountain by.
[19:25] SPEAKER_03: I'm a golf place, soccer.
[19:28] SPEAKER_03: Kind of bright as sports.
[19:31] SPEAKER_00: Yeah, I guess is CEO's companies are presidents or whatever.
[19:36] SPEAKER_00: You really need to take that time, right?
[19:40] SPEAKER_00: In many ways, because you know, I know people that don't, you know, they get run down. Don't they?
[19:47] SPEAKER_03: Yeah, yeah, for sure. And I mean, we're kind of lucky, you know, if the light we get in the summer, can start work early and then, you know, you can get out after work and drive to break free and go for a bike ride.
[20:03] SPEAKER_00: Super that. All right. Well, thanks very much Alex for joining us today.
[20:09] SPEAKER_03: No problem. Thanks for having me, Mario.
[20:11] SPEAKER_00: All right, super that was Alex McGregor CEO of Cube Technologies in Calgary.
[20:17] SPEAKER_00: This has been Calgary's podcast with Mario Tonoguzzi on Canada's podcast network. Thanks for joining us today.
