A New Type of Semiconductor Company | Scott White

In this week’s podcast, Chris Reichhelm speaks with Scott White, the co-founder and former CEO of Pragmatic Semiconductor, one of the UK’s most exciting advanced materials companies.  Scott talks us through the 14-year journey, diving into everything from the dynamics of the founding team, technology and scale-up approach, engagement with potential partners & customers, raising over $400m and building a team of over 300.  He also talks through how he knew it was time to pass the baton of leadership.

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Transcript

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Scott White: 0:00

You can innovate on the market and product definition, and then you can innovate on business model. And all of those have huge value, particularly if you can do all of those, but you don't want to be doing all of those at the same time.

Chris Reichhelm: 0:13

Welcome to the Lab to Market Leadership Podcast. Too many advanced science and engineering companies fail to deliver their innovations from the lab to the market. We're on a mission to change that. My name is Chris Reichhelm, and I'm the founder and CEO of Deep Tech Leaders. Each week we speak with some of the world's leading entrepreneurs, investors, corporates, and policy makers about what it takes to succeed on the lab to market journey. Join us. I'm very excited about this week's podcast. We're talking to Scott White, the co founder and former CEO of Pragmatic Semiconductor. Now, for those of you who don't know, Pragmatic is one of the UK's leading advanced materials and semiconductor growth stage companies. Scott and his colleagues set out on this journey 14 years ago, and they're still making progress, having built up their operation to 300 people, having raised nearly $400 million in finance. The company goes from strength to strength and that's not just a cliche, they really do. They're commercializing, they're building out their operation, they're becoming a global organization. As usual, I'm looking forward to diving deep with Scott to understand how he and his team have made this work. Let's get to it. Scott White, thank you for joining me.

Scott White: 1:42

Great to be here.

Chris Reichhelm: 1:44

This series in many ways, Scott, was, was actually made for individuals like you, who have had the experience of taking a company from lab to market. And while I acknowledge that you have still some way to travel, you and Pragmatic still have some way to travel, You've gotten a fair long way down the track. And so I think a lot of people are going to be very interested in understanding about the journey that you and your team have been on. So thank you very much for joining us today. Where did the inspiration come from for ultra low cost semiconductors? So I got involved in the, the field of Semiconductors, specifically sort of non conventional semiconductors. About 16 years ago, I had just sold my previous business and was interested in what else was interesting to do. And the field of printed and organic electronics was, was sort of floating around and starting to gain some, some traction and awareness. And what became clear as I looked at that sector was that there were lots of companies focused on different pieces of the electronic solution, like how do you print conductive tracks, how do you make flexible displays, things like that. Nobody was solving the problem of how do you make the equivalent of the silicon chip thin and flexible and low cost enough to embed in printed or other type of material like that. And was that a problem you had just thought of? You were thinking, God, we need this for a variety of applications, or did it come from somewhere else?

Scott White: 3:35

No, it was, it was very much, uh, sort of something that was kind of known across the sector and being, being driven quite heavily by potential customers who are looking at this and saying, actually, without solving that bit, this, this doesn't actually do anything useful. So particularly driven by the smart packaging desire in fast moving consumer goods. So you think of, you know, big companies who make the stuff you buy in a supermarket every day, they were kind of looking at how do you embed electronic intelligence into that packaging to allow it to interact with you as a consumer and to allow it to interact with its environment so you can do better management across the entire supply chain and product life cycle. And for that, you really need to, to be able to have, , flexible chip to provide the brain of whatever intelligence you want to embed there. Yeah. So that was, that was very much the, uh, kind of key demand. And there was obviously massive potential for that. It was trillions of these items sold. Yeah. But everybody that had tried to approach that was coming up from the perspective of a. What I thought of a better term I would call the technology religion. They were starting with a technology, whether it was printing, whether it was organic semiconductors, you know, whatever it might be, and trying to figure out how you force fit that into, you know, doing a thing, flexible chip. And inevitably,

Chris Reichhelm: 4:56

okay, no, please carry on.

Scott White: 4:59

Inevitably, those solutions really didn't work very well. They could sort of get to a very early proof of concept and demonstrate something in a lab, but didn't have industrial scalability. And so the genesis of Pragmatic Semiconductor, and that the name was very intentional, was how do you do this in a way that is focusing on the business problem and then developing the technology you need to address that in the most effective way and in a way that is industrially scalable.

Chris Reichhelm: 5:26

So from the very beginning, you were technologically agnostic. You didn't care, really. Is that a fair assumption?

Scott White: 5:33

Yep. That's exactly right.

Chris Reichhelm: 5:35

And, and was it just you in the beginning?

Scott White: 5:38

Uh, no. So, uh, it was co founded by Richard Price, who's the CTO company. So, uh, he obviously drove a lot of the, um, you know, the technical roadmap, uh, and inventions for how we developed that. And then we recruited early on a team that sort of filled the key, the key pieces of expertise that we thought we needed to, to get to a proof of principle to say, well, how do you do this? But always guided by that principle of all of our technology decisions have to be things that we can see a very clear route to scalability of the material supply chain and the equipment supply chain for high volume manufacturing.

Chris Reichhelm: 6:16

Yes. And in the very early days then, who were the members of that core team? Just what kind of skills and capability did you have around the table?

Scott White: 6:25

So we had a few people that we brought in. One was what I would describe as a sort of jack of all trades. They're a really important person to have early on. Someone that can do a lot of different things and be very hands on in just making stuff happen.

Chris Reichhelm: 6:43

But with a foundation as an engineer?

Scott White: 6:45

Yes.

Chris Reichhelm: 6:46

Okay.

Scott White: 6:46

Yeah. Um, we brought in, so yeah, all of the early hires were technical. That's, that's what you need to get sorted first to, to prove that you've got something worth building a company on. Um, we, Richard, the co founder had great experience on material science. That's his background. So, you know, kind of understood that side of things very well. Um, but we brought in people from companies like Cambridge Display Technology and Plastic Logic as part of the reason for basing the company in Cambridge was to draw on that, that expertise. You know, expertise in the ecosystem of people that have done similar kinds of things before and had some of the basic understandings of, you know, how do you optimize the kind of processes we might need? What are the trade offs in how you engineer that solution? And so how do you actually get that to the point of having some basic building blocks proven.

Chris Reichhelm: 7:40

Yes. Can you describe for me a little how, the ways of working early on? Did you and your team just rock up and start, okay, let's start playing with some ideas here. You know, how did it work? What was governing you? And you know, were there systems and frameworks in place? You know, what was it?

Scott White: 8:01

We, in terms of the way the company was set up, we had effectively two physical locations, both of which were, were somewhat virtual shared. So we, we based, um, if you like, the management side of things. So myself and Richard in the, uh, in ideaSpace, which was sort of set up as an incubator, uh, in Cambridge for Small companies. So, you know, shared access to offices and things like that, and gave us a place to sit and have meetings. But then we basically developed a relationship with the, um, uh, the engineering department at the University of Cambridge to be able to embed our R& D team within their environment. So we didn't have any physical facilities. We didn't have the budget to do that. We essentially self funded for the first four, five years at the company. So everything was done in a way of sort of how do you, how do you minimize the cost of doing this? How do you leverage the ecosystem for facilities and services wherever possible? And so we, we managed to build a very good relationship with them. We, you know, did co working on sort of research in a couple of key areas, but we actually had a Our initial team of four or five people sitting in a room inside, you know, the university labs and able to access the, the clean room facilities to be able to do experiments. And in terms of the engagement, you said you were completely led by the market need. How, how did that work in terms of engagements, in terms of time spent? with potential customers or partners versus time spent in the office or in the lab? Yeah, they, I mean, the high level requirement from the market was pretty clear and you could frame it very simply as we want the equivalent of a silicon chip that is thin, flexible and an order of magnitude lower cost. So that provided really enough of a starting point for the initial stage was very much technology focused on, okay, how do we, how do we have the basic Basics of how do we do that? And for us, that's a combination of having the right material set and having the right basic processes for how you might pattern that material set in order to create transistors and diodes and the other, you know, key semiconductor building blocks that you need to build a complete integrated circuit. As we got to the point where we could make a transistor and start to think about doing something with it, that's when we, you know, ramped up our engagement with customers. Say, well, you know, what's the most simple thing you might be able to do with this that could be useful so that we can actually focus in our initial Demonstrators on something that could be translated into an example use case, even if it was something that may not have massive market potential, but at least it was something that the customer could envisage how that might fit into their use case and do something. And from a TRL perspective, where would that have been? Are you a four? Are you a five at that point? Ooh, that would have been still pretty early. So I would, I would probably have said that was sort of TRL three or four.

Speaker 4: 11:22

Okay.

Scott White: 11:22

So maybe, yeah, I mean, it was very much lab based.

Speaker 4: 11:26

Yeah.

Scott White: 11:26

Briefer concept. Yeah. But by the time you start

Chris Reichhelm: 11:29

to then take that out, sorry, by the time you start to take that out to potential customers, you've got a little prototype there, a little working prototype. And that's around TRL 3 or

Scott White: 11:40

4. Yes, so that was something that I wouldn't classify as being close to an MVP, Minimum Viable Product. So it was, it was very much a technology demonstrator. And it was something that, you know, you could. You could see it working in a lab environment, but was still some way from anything a customer could even think about, you know, putting on a product in the real world. So that was the first step of how do you get it to that point? And then, of course, beyond that, as we develop the technology platform further, uh, it was a combination of how do we expand the capability set to, towards what might be an MVP. As well as how do we evolve the, the implementation of that technology, the integration of it into something that looks more like a, a customer integrated product so that you can move that towards something that was sort of closer to a TRL 5 where you're, you know, you're, you're starting to validate it in a, in a customer environment.

Chris Reichhelm: 12:40

How many iterations did it take? What was it like for you to get to an approach that ultimately worked?

Scott White: 12:48

I probably couldn't even count the number of iterations. It's fair to say one of the, one of the things we've discovered about our technology platform that we developed that's really helped us is the fact that we could do very fast iterations. So challenging conventional semiconductor manufacturing is the process cycle time is very long in a, in a typical silicon manufacturing process. At a minimum, you're looking at three months of start to finish to produce a fabricated wafer. And in practice, it tends to be longer than that by the time you sort of schedule things in and so forth. With us. You know, we've got a process that is, you know, basically a couple of days, uh, now that it's optimized. And even earlier on when it wasn't optimized, we're doing cycles in, in a week or two. And that means you can run experiments very quickly, try things, change things, um, you know, converge towards something that, that makes sense much quicker. But yeah, so that's, I would say web iterations would be, would be probably in the hundreds. Okay. Okay. To something that was close to what customers actually need.

Chris Reichhelm: 13:54

Yeah. And the time it took to get to that point from the time you started, to get to the point where you have an approach and you, and you're developing the confidence now, and I want to come back and ask you, you know, what was it that the market said or did? That gave you that confidence. But let me ask the question on timing first. How long did it take you to get to an approach that you thought, okay, this is scalable, this might be commercializable too?

Scott White: 14:23

There was really two key stages, I think, to the sort of R& D phase of the company. The first five years where we were self funded was basically getting to proof of concept. So that had a certain level of confidence that this could work. And could work in a way that could be scaled, but still was some way from proving all of the elements of that. But that got us to the point where we had enough confidence to say, yes, there's something here we can build on. There's something here that, uh, we could understand well enough to look forward at what's the right business model for the company. And it was very clear that the way we capture the value from that was actually to scale manufacturing ourselves rather than to license it or try and fit it into an outsource manufacturing model. And that then drove the funding strategy for how we scale it. So that was the point where we brought in the first institutional funding to be able to say, now we need more money to be able to take it to that next stage and start investing in. And then that second stage of the process was, was roughly another five years of building our first pilot scale fabrication line, which took us from proof of concept to a full end to end process. And working through then the hard engineering of how do you stabilize and optimize that to the point where you can see that it can deliver yields that are in, in the 90 percent plus level where it needs to be, and that that's from a set of tools that could have a reliable supply chain to, to scale up.

Chris Reichhelm: 15:58

And so we're looking at 10 years. We're looking at 10 years for the journey. And the, the point at which you said, okay, now we need to start going for scale. Now we need to start seeing if we can build a fab ourselves. What, what was the, was there commercial validation at that point to say, we think we've identified this. This approach, we're getting a lot of positive feedback based on this. Now is the time to go. What was that?

Scott White: 16:28

Yeah, there was a lot of, a lot of commercial validation. We had customer revenues from year one. So we already had customers who are paying us relatively small amounts of money, but effectively to prototype those things that I talked about earlier that are, you know, the simple demonstrators of what we've done. This is so transformational to the customer base that they were prepared to do that. Yeah. Well before the technology was mature. Now there's obviously different levels of customer validation and probably the key, the key steps for us were actually linked to some of the funding milestones. So in our Series A round, which was that sort of first transition of saying, okay, the next step is we need to think about building our own fab. Um, our, we had Arm join as a strategic investor, and that was key validation of the technology that this had the. You know, the elements of scalability that were needed. And then our Series B, a couple of years later, was led by Avery Dennison, who is a key supplier into that packaging supply chain. And in particular are the global leader in radio frequency identification, which we've identified as the, the most interesting and scalable initial market for our technology. And so having the validation of the market leader in that sector being prepared to, to come and make a strategic investment work very closely with us. over the subsequent years to, to optimize it towards that application was, was a key validation.

Chris Reichhelm: 17:55

Okay. So it sounds so, I mean, a number of really interesting points there. One, you had revenues very early on. Uh, so this must have been one hell of a problem for them.

Speaker 3: 18:07

It was.

Chris Reichhelm: 18:07

Generally speaking at these early stages, that's not, that's not common. It's not common. I

Scott White: 18:12

mean, it's fair to say that getting early revenues is, Yeah, there's positives and negatives to that. So we, in one sense, we had to do that because we were self funding the business that actually, you know, generating some revenues to help focus what we're doing was important. And actually we use that intentionally as a means of filtering what were the most interesting things that people might want to see done with the technology because we had everybody wanted to talk to us and everybody would love to have samples and putting a price ticket on it is a great filtering function of, yes, we'd love to work with everybody, but we're never going to have the bandwidths to do that. So unless you're actually prepared, you know, to put a bit of a stake in the ground and say, yes, this has tangible value to you, then actually, this is just a, this is just a discussion. It's not a real customer demand. So that was important early on, both in terms of funding. the development of the business, but also actually helping provide some degree of focus, you know, of all the possible things you could do with the technology. How do you actually narrow that down and say, here are the things that are most likely to be the initial applications?

Chris Reichhelm: 19:19

Did, and did some of that take you in a direction you hadn't thought of? You know, did it distract a little bit from where you thought you might go? Because I know in some other cases where clients take on early customers, you I know this happens a lot with grant funding too. They need some of that early income and so they go for it and that's understandable, but at the same time it can often distract them from their core mission. Did you find that was the case?

Scott White: 19:44

Very much so. I mean, as I said, there's positives and negatives to having that early revenue. You know, one of, one of the negatives is that it's not really representative of scale revenue. So it's important with investors coming in that they don't sort of assume that whatever revenue you're generating now is. the starting point of the inflection curve, where it's going to go exponential, because actually it's not. It's, it's just a validation point. But yes, you're right. The other key problem was, you know, you get pulled potentially in multiple directions, because if someone's prepared to pay for something in this application, and then there's a different application, You sort of want to try and do both because, you know, that helps you fund some of the underlying core technology development. But, you know, there needs to be at times some rationalization of that. So we had a couple of key points where we, we had to take a hard look at what we were doing and actually say, we're actually going to sort of, you know, pull back from certain areas or try and wrap up some things and just say, actually, we don't really think this is going to go anywhere, even though it could generate further revenue.

Speaker 4: 20:45

Um,

Scott White: 20:46

so that, yeah, that was a, yeah, so we had to do that several times, you know, during the company's life to, to order to focus that down.

Chris Reichhelm: 20:55

But it sounds like a lot of the core validation would ultimately come from the arm investment as well as Avery Dennison in terms of the technology approach, the scale of the ultimate market. Opportunity, those things.

Scott White: 21:09

So it's certainly been very key supporters of the business, both in terms of internally providing honest feedback and having, you know, being on the inside track and having a more open discussion with them than you might with an arm's length customer or partner has been very valuable. And yes, it's certainly been valuable in terms of sort of the ongoing validation to new investors that have come in since, because, you know, they've remained committed, As always, these things take longer than you think they're going to do at the start. And, you know, the fact that they've, they've stayed, uh, kind of committed, uh, in particular, Avery Dennison as sort of that, you know, representative of the, the lead market we're addressing, um, that was important. And you, you kind of asked earlier about sort of, you know, did that pull us in surprising directions? And actually RFID is a good example. I kind of joke that I was on record. When we started the business saying the one thing we're not gonna do is RFID, because it doesn't use the full potential of technology. You can do it with silicon. You can make the silicon chip very small and optimize it well enough to fit into a lot of these kinds of applications. Yeah. But what became clear from discussions with AB Dennis and others was there was still a step change that we could enable. with our technology. And so even though it didn't actually leverage all of the potential of what our technology can do, it was a great starting point because it was an existing market. With a very clear need and the ecosystem around it that just needed the new type of chip in order to take advantage of it. So it was a, it was a, it was an interesting learning experience of sort of how do you balance the, the goal to develop the most exciting long term opportunities versus the, the practical approach of, yes, but there's a, there's a simple application that. Actually is big enough for us to, to build an early business on and we're getting, you know, very strong customer demand. So, you know, let's follow that demand. It

Chris Reichhelm: 23:05

comes back to being pragmatic.

Scott White: 23:07

It does.

Chris Reichhelm: 23:08

But you were, yeah, which is great. Um, the relationship between, let's say the, you know, exploring and developing the commercial opportunity. The developing the technology capability and then thinking of scale up. Those are the three big challenges which greet any advanced science and engineering company. How, what was the dynamic, if you think back to that time, between those groups within Pragmatic? How, Because you guys ultimately had success. So how did that come about? Was there a particular way of working? You've been involved in businesses for a long time. This is not your first rodeo. So you've been through this. So you can kind of look back and say, well, look, you know, it took us 10 years still to get to where we are today. And we'll come onto that later, but we still made it. We've got a big opportunity and you guys are going to make it. So what happened this time with that dynamic in the early years?

Scott White: 24:11

Yeah. And I mean, firstly, it's worth noting that it's taken us 14 years to get to where we are today. So we only talked about the first 10 of course getting to that point. But we can come back to that. Um, in terms of the, the dynamic, I think there is a, there's always an interesting balancing act, I think, in the earlier stages of how much do you listen to and follow customers? And we've talked about some of the aspects of this, that. If you look at most of the really successful tech businesses, there's always an element of believing their own view of how things will evolve, rather than what customers are telling them today. Because actually, by definition, what you're trying to do with a transformational technology is change the way things are done. So, Many of the customers you might speak to don't understand that yet. Um, so it's the classic, you know, thing of Henry Ford, you know, if he'd asked people what they wanted before the first car came out, they would have said they wanted a faster horse. Yes. It's that kind of analogy. So there's a, there's a balancing act there between, you know, you don't want to be off in your own little box, just developing technology, completely divorced from the market, but actually having a sense of belief that, you know, That what you're doing is going to deliver transformational value. It might take some time, but actually you need to, in some cases, drive that in directions that your customers aren't expecting to, because you, you believe you understand enough of how this could change the way they do things. And if you, if you deliver that and then show that it can be done, then you get a different set of discussions with the customers. And so that really leads to, I think, what I would think of as sort of iterative process of those customer relationships. So, so very early on, it's, you know, it's discussing things on a very, very high level, simplistic approach of, People would like some intelligence in smart packaging. Nobody kind of really knew exactly what form of that intelligence would take, so it's just, well, you know, what can you do that, that gives a glimmer of, of that, that potential that then evolves towards, you know, things like RFID, where you can say, okay, well, here's a real application that is, you know, On the simpler end of the spectrum, so we can envisage how the technology can deliver that. Let's focus on that. But at the same time, we want to drive the underlying technology platform to ensure it has applications that are broader than that. So we need to take our own view on what are the elements we need to develop and focus on there to, to be able to deliver that. And that, that long term view of the things we might need beyond the initial applications, I think has been key because they all take years to develop. And so as we've Gradually solve the challenges of how you translate the, the initial application into an industrializable solution. What you also then have is the platform underneath it has developed further and gradually opens up the opportunities to more and more things so you don't end up just being a longer pony.

Chris Reichhelm: 27:11

Did you guys divide and conquer? I mean, you must have done to a certain extent in those early years. Were you leading commercial?

Speaker 3: 27:20

Yeah,

Scott White: 27:20

there's, there's, I mean, there's obviously an element of that, but I'd say in the early years, to a certain extent, you want people who can cover multiple bases. I mean, that's true, even sort of within the, you know, within the technology area, you need people who aren't just specialists in one particular thing, but can work across different things and understand the interactions between. Different, different elements of what you need to do. And I'd say that applied on, on, you know, the cross functional areas as well. So yes, in early days, I was leading, you know, most of our commercial engagements, but I also get quite heavily involved in the technology. So of our 20, 250 patents or something that we've got now, some, something over 50 of those I'm a named inventor of. I like dabbling in that. It's one of the things I enjoy about. Early stage tech businesses is, you know, you, you actually. Are kind of, to some extent, influencing the technology development from the understanding of the market and what's important and hence how you drive that. But, of course, as the company matures that, you know, gradually becomes more and more specialized. So, you know, we started to bring in people who are You know, driving business development and then sort of other commercial and marketing activities. When did you do that?

Speaker 3: 28:36

That, I think we brought in first BizDev hire probably three or four years in company's life.

Scott White: 28:43

And then sort of ramped that up post, uh, post series B, I think it was, when we were starting to get close to having a, you know, an end to end process. Anahans wanted to engage on a much more, um, kind of structured and targeted basis with customers and including starting to think about marketing and so forth. So in the very early days, as, as many other stars, we, we intentionally didn't do a lot of marketing. You know, there's no point shouting about what you can do if you're still many years away from, from actually being able to, to do it at scale. So yeah, wrapping all those other areas, you know, and there's always a challenge thereof. The timing there, you never get the timing quite right. You know, you're either too late in doing that, um, or more commonly, you're a little bit too early, but actually you kind of want to be a little bit ahead of the curve usually on these things, you know, in building those functions. So you, you know, you learn how to develop that function as a business, how to integrate it with the other activities. Uh, and yeah, and use that as a means to help provide more input into the business in terms of its strategic direction.

Chris Reichhelm: 29:53

That early commercial function, safe to say it was much more strategic business development oriented. And, you know, partnership, exploring partnerships, sharing, sampling, qualifying, learning, refining the understanding of the problem within the customer.

Scott White: 30:12

So it evolved from kind of what I described before of almost using just willingness to pay as a filtering function for doing things. So, you know, sort of a big element of, you know, let's get, let's get some contracts and increase, gradually increase the size of those contracts with customers are prepared to pay to help fund our development. And that evolved then towards, uh, a more considered approach, particularly in the area of RFID, which identified of how do we build the right relationships with the right. ecosystem partners, you know, it's not just the customers, it's also the systems integrators or, you know, the people that might provide software or services around that and so forth. So how do you sort of start to pull that together into, you know, what's needed for the total product solution? And, yeah, and that then again is obviously something where there's a, there's a sort of commercial side to that, but it starts to reflect back into some of the technical aspects as well. How do you think about? This interacting with the other bits of the solution that are going to be needed by the end customer.

Chris Reichhelm: 31:13

Absolutely. On that topic of integration, looking at your scale up, um, can you talk through a little of the process that you, that would enable you ultimately to be able to scale this? And I've You know, I've read up, uh, I understand you have almost this fab as a service type, uh, processor offering that you've discussed in the past, um, is, you know, to get to that level of refinement takes a lot of time, generally more than 14 years too, especially within such an innovative area. So, was the scale up process based on. Other practices that are widely used, or was it novel?

Scott White: 31:58

So, so, it's an interesting question, and I guess what I've come to, to, to view as the right way to do this, which is partially in hindsight of sort of looking at what we did and what, what worked and perhaps what didn't work quite so well, is that you have As a company, as a tech company specifically, three degrees of freedom on which you innovate. You can innovate on the technology, which is usually a given. You can innovate on the market and product definition. And then you can innovate on business model. And all of those have huge value, particularly if you can do all of those. But you don't want to be doing all of those at the same time. So, you know, the, the sort of simplified view of what we did, if it wasn't quite this structured as we went through it, but, but kind of the way it played out was the starting point is get the innovative technology there. So, you know, you want to do that with a business model that is known and a product Opportunity that is known, because that reduces the risk. If you've got a new technology platform, actually, the more other risks you can take off the table, the better. So that's where delivering RFID and doing that as a, you know, we took that all the way through to the chip product. to deliver a, an RFID chip that could be used by companies like Avery Dennison as close as possible to a drop and replace for existing silicon chips. And so that was the starting point of focus on the technology innovation, but fix the other elements as much as possible.

Speaker 4: 33:30

But

Scott White: 33:30

then there was the opportunity to say, well, having done that, You can then start to think about innovating around the market opportunity and what else can you enable people to do that they might not have been able to do before that opens up even more opportunities. And so for us, that was starting to translate the technology platform into an open foundry. So in the same way that the silicon industry has over time evolved to not having fully integrated players like Intel who have their own fabs and design their own microprocessors and sell those. Most companies in the sector now are split between fabless companies who design and market the chips and the foundries like TSMC who manufacture them and focus on driving the process forward. And so what we saw was that if we could open up our process as a foundry to those same chip designers, then actually we could leverage the potential of the technology in a way that was well beyond our own capabilities and create interesting opportunities in areas that we might not be able to think of. And so that was sort of the second phase was as we were then, you know, still focusing on the underlying sort of scale up and industrialization of the initial RFID solutions, also starting to open up the foundry model and. Use that to get a better understanding of what are the broader opportunities for the technology. The final piece then is around the business model innovation. And you mentioned the Fab as a Service, that we do not do today. So we intentionally, as of where we are today, we are focused on having our own fabs, using those to manufacture our own RFID chips, as well as support our foundry customers, but the Fab as a Service is a potential business model innovation, which is. You know, step change for our customers because today, one of the key issues they have, and this was exacerbated during COVID is supply chain reliability and predictability. Um, this, the silicon manufacturing industry is spread across so many different geographies in terms of the different pieces of the puzzle. And a lot of those steps in the process are very concentrated in certain geographies. The most obvious one is the chip fabrication, where a huge proportion Uh, of it is done in Taiwan. So being able to offer this option where for our large strategic customers, they can see a route towards not just using our technology for interesting applications, but actually moving that towards having their own fab on their premises that we then run for them, guaranteed security of supply and local manufacturing. That's a really exciting model. It's very different to anything that's done before. We couldn't do that with Silicon Fabrication because of the, the cost and infrastructure requirements. So it's a new opportunity. We think there's massive potential in that, but it's, it's something we've intentionally said, let's not, let's not go that far until we've got a really solid business built around our Yeah.

Chris Reichhelm: 36:29

Yeah. How, how far along that journey are you today? Not necessarily the Fab as a service in terms of the overall commercialization.

Scott White: 36:38

Yes. So perhaps just to complete the picture of the sort of 10 years we've talked about before was that first phase of proof of concept, which, you know, we essentially self funded to then building our first pilot scale Fab, which showed you could put this in an end to end process, which was another five years. and roughly 50 million of funding to do that. In the last three years or so, we've raised another 350 million plus to scale up the business. So that's included transferring the technology to, from 200mm wafer sizes to 300mm, which is sort of global state of the art in high volume semiconductor manufacturing. for listening. We, uh, built our first fab on our new site where we control the entire environment to be able to deliver, you know, proper quality, reliable production. We've now installed that fab and it's in ramp up, uh, and are already starting to, um, you know, put in place the elements for our, our next fab on that site as well. So we are Now, in what I would term operational scale up, and that's both on the manufacturing side, which is the key enabler of taking the technology and actually, um, you know, ramping up the volume at which we can deliver that to customers, but alongside that is, of course, the sales conversion. We've got this massive latent demand in both RFID and beyond. We've got, you know, good traction at the moment, but, you know, continuing to, to translate that demand into, into actual sales contracts as we have the manufacturing capacity to support them is, you know, it goes alongside that. And of course there's the organizational scale up at the same time, which is, which is never to be underestimated as a challenge.

Chris Reichhelm: 38:18

And you're scaling up most of it in the UK. Is that right?

Scott White: 38:22

At the moment? Yes. So we, we have a global customer base. And, you know, as I mentioned before, one of the key attractions for our customers is actually having, uh, localized manufacturing wherever that might be in the world. So, in the medium to longer term, we will have multiple locations around the world that include manufacturing, um, on or close to our customer sites to be able to provide that. But, coming back to this point of sort of de risking the things you don't have to do at the moment, Actually keeping everything in the UK minimizes our risk. It keeps it close to where we've got our existing team and being able to scale that up. And actually there's also an element there of wanting to build this as a British business and solidifying that critical mass of the company in the UK. So we've put a lot of focus into that. How we ensure the cost structure works effectively. Yes, we can, uh, bring in the organizational skills we need in, in all functions to be able to scale the business here. And also on the funding side, being able to, um, mm-hmm bring in the funding from predominantly British investors to ensure that the, uh, the, the critical mass of the business and the value capture. Uh, MA is maximized in the uk.

Chris Reichhelm: 39:37

That sounds wonderful and I'm a strong proponent of that. What have the challenges been though? actually delivering on that because that's not easy. Building British funding with British, and I know you're very vocal in your views on this, Scott and the media and so on, so. You know, what have been some of the challenges you've, you know, you've faced either from, you know, operationalizing and scaling with talent on the funding side? Share with us.

Speaker 3: 40:04

So

Scott White: 40:05

I think there's, um, you know, there's a couple of sort of generics, which, you know, I've sort of seen in, in every company I've built, but, you know, you, you almost kind of relearn it every time, which sort of reinforces it. Yeah, it always costs more and takes longer. It doesn't matter how well you plan things and how much you try and factor that in. Um, the reality of building tech businesses is it, it costs more and takes longer than you. Especially these types of tech. Especially deep tech. Yeah. Um, and, and so the right investors are critical. Investors that, that understand, The potential, not just, not just in terms of intellectually understand it, but actually emotionally understand it that, you know, that they're as committed to the journey as you are, as much as possible and have a, an appropriate view on time scales. And that fits with the dynamics of. The way their fund is set up and so forth. So strategic investors are actually really key in that. But you know, having the right financial investors is, is important. And we spent a long time on our Series A before we ended up taking investment from CIC, we, we turned down investment from a number of other sources that we just didn't feel had the right perspective on the business to be able to, to stay the course. So, so sometimes sort of taking, taking longer, earlier on, you know, pays, pays a lot of dividends later. Second thing I'd say that has been a key learning at Pragmatic is the difference between deep tech and normal tech, and I would sort of categorize my previous business as being normal tech businesses. If you think about the three, the three aspects I've talked about before, most tech companies actually do a relatively limited amount of innovation on technology. Most tech businesses are using technology in a very clever way to deliver a new product or to deliver into a new market sector. And actually that's where the innovation is focused. So deep tech, the way I define it, is where your fundamental risk is around. Can you make a new technology work? If you do, there is a presumption that the market opportunity is huge. Otherwise, why bother? So, that drives a number of different aspects in the technology. It drives a difference in time horizon, because that definitely does take longer than a normal tech business. Um, it drives different perspectives around how you might fund it, because some of those Key technical challenges are just going to take time to work through. You can't actually throw more money at the problem to solve it quicker. So picking the key inflection points in when you raise more money actually is a lot more challenging than it might be in a normal tech business where, you know, you just raise as much as you can and that all helps you move quicker. Yeah. So, I think that, that kind of understanding of the type of business you are and, and, you know, where the value creation levers are, how you gradually de risk things for yourself and for your investors, I think it's, it's, it's been important, um, learning. And then I think the other bit, I guess, is the, the importance of purpose. Um, that's not something that sort of I'd really thought about it, you know, much in companies prior to programming, you know, you kind of, you know, you do interesting tech stuff and, you know, you're focused on how do you deliver that into a product and build business off it that will ultimately make money. But actually what, what we realized come about halfway through Pragmatics journey was the potential for this was so big that we had an opportunity to be somewhat selective about where we focused it on things that we thought would actually do good things for, for the world in general. And so even within RFID, we've seen that the biggest opportunities there around things like enabling a circular economy. How do you ensure that you can minimize waste and maximize recycling or reuse of packaging, for example? How do you enable health tech opportunities, you know, by having electronics that can be embedded into wearable smart patches, things like that. So that, that purpose, I think, is something that sort of really helped motivate the team in general, when everybody's coming to work every day, not just to do, you know, cool tech things that, that might at some point make everybody a lot of money. But actually, it's also being drawn towards things that people are proud about the technology being used for. And they're sort of, you know, really excited about telling their families and their friends about, you know, this is what our technology is enabling people to do that you can never think about doing in a different way.

Chris Reichhelm: 44:30

And you've noticed, and that's had an impact. On the performance of people at work, would you say?

Scott White: 44:38

Yeah, I think, I think particularly when the journey is so long as it is with a deep tech company. Yeah. I think it's, it's one of those things that helps provide that motivation. You go through patches where it's all difficult and you know, you feel like you're bashing your head against the wall on, on getting the technology to work the way you want it to or things like that. You know, one of the things that helps people carry through that is, you know, that they feel like they're doing something that is, is actually going to be good for the world.

Chris Reichhelm: 45:08

Yeah. That's true. Scott, you've recently, after your long journey, your four, well, your 13 year journey, you decided to, you decided to pass the baton on, uh, from a leadership perspective. And, uh, talk a little bit, if you wouldn't mind, about, about that process and about what occurred for you and how that happened.

Scott White: 45:33

Yeah, so it's probably worth turning the clock back slightly. My first, um, I mean, my first tech startup was when I was in my, uh, Early to mid twenties, but my first CEO role, I was still in my late twenties. So, you know, certainly looking back now, relatively young and, and inexperienced and sort of figuring things out as I went along.

Speaker 4: 45:56

But

Scott White: 45:57

one of the things I did was have a very open discussion with my investors there and said, well, you know, I haven't done the CEO thing before, so let's, you know, Let's see how this goes and let's continue to have an open dialogue about whether I'm the right CEO for the business. You know, let's have that discussion at least once a year and, and my motivation is to make the company successful, not to stand in the way of that if I'm not the right person. And so at Pragmatic, although that perhaps wasn't quite as an explicit and regular discussion, that was always sort of in my mind as well of my objective here is how do you maximize the, the growth and scale of the business? Uh, particularly with Pragmatic, you know, we talked a bit about the sort of UK angle and, and, you know, personal passion about how do you, how do you help companies in the UK scale more successfully here? Um, you know, when I look at that, it was very clear that we were getting to a point in Pragmatic where it was beyond what I really had. You know, deep expertise in, and also not what I kind of enjoyed and was good at. So, you know, we'd grown to a company that had 300 plus employees and, and a lot of the stuff you're dealing with day to day is how do you make that organization work effectively? Um, you know, that's, that's not something that is, I would say, something I'm particularly good at. I was having to leverage a lot of the team around me to, to help work through that. And equally having, you know, done,

Speaker 3: 47:24

you know,

Scott White: 47:25

most of the journey of sort of industrializing the technology, It's now about how do you scale that as a multi billion dollar, multi global business, which again is not something I've done before. So it came to that point where I was saying, actually, if I'm looking at this from the perspective of how do I, how do I maximize the opportunity for a pragmatic to be as big as it, and successful as it possibly can be, I may not be the right person to, to lead it forward. And actually I might not enjoy it, even if I could, even if I could do that and could figure it out and have the right team around me to support. If I'm not enjoying the process, that's probably gonna reflect on, on how good a job I, I do in it. So, um, so basically had a very open discussion with the board around that and, and we agreed to succession and, um, you know, I'm so far kind of delighted at how that's going. I think having the. The right person coming in is key. So it's, I think, relatively easy to find people that come from big companies and, and see this as an interesting challenge, but finding someone who understands the culture of business and is, is sort of sensitive to the differences. That we still have, you know, we aren't a big business yet. So, you know, yes, we know what good needs to look like in five or 10 years. We are a multi billion dollar business, but there's, there's some, some understanding of, you know, how do you actually take it on that journey? And, and, you know, still do that with the right understanding of where we are now and, and the trend, you know, the transitions that still need to happen.

Chris Reichhelm: 48:55

I got that. Um, one final question for you. If you were to. Look back at, meet yourself 14 years ago, maybe even a little longer, and give yourself some advice, uh, on how to make the journey easier, uh, or watch out for these challenges. What advice might you give?

Scott White: 49:22

I think it'd probably be fairly. Fairly high level in some sense, because actually, the specifics are always going to be different in any particular environment. But, you know, probably the things that I've come to understand the most important is firstly, work with people you like, you know, it is, it is going to be a long journey. So, you know, doing that with people you don't enjoy spending time with. is, is not going to be a good outcome for anybody. Uh, and so that obviously applies to, you know, your co founders and early hires, but equally it applies to your investors, for example. You've got to have investors that aren't just prepared to give you money and understand the business, but actually are people that you can socially get on with, you know, when you're chatting stuff around board meetings or, you know, things like that. So, you know, that's probably number one. Secondly, you know, be excited by the journey and not just the end goal. The end goal is going to be quite a long way away and will probably move and change. So actually enjoying the process you're going through, you've got to, you know, honestly, every day at work, that's probably an unrealistic aspiration. But most days you've got to actually be excited by getting up and getting stuck into this. It's going to be long years or very long days. So if you're not excited by that as you're going through it, and you're just doing it to. Because you think you might make a lot of money at the end of the day, that's, that's not going to take you through the tough times. Um, and then the final thing I'd say is celebrate success when it happens. It's very easy to always be focused on the next thing you need to do. You know, you kind of get one key milestone and, you know, you know, there's so much more you need to do and there's always more that you need to do. So I think just sort of actually taking a bit of a pause and celebrating saying, yeah, we've done something that was really hard. We know there's an awful lot more we need to do, but actually this was, this was something that was really tangible and difficult. And we've, we've done it and nobody else ever did. Yeah. How do we make sure we're actually having achieved that.

Chris Reichhelm: 51:25

Yeah. And some wonderful insight. Scott, thank you so much. Thank you. You've been listening to the Lab to Market Leadership podcast, brought to you by Deep Tech Leaders. This podcast has been produced by Bowhaus. You can find out more about us on LinkedIn, Spotify, Apple, or wherever you get your podcasts.