[Editor’s Note: Founder Forum, a weekly interview with a startup founder in Maine, is sponsored by the Maine Technology Institute. Read more about MSI’s sponsored-content strategy here.]

Ben Polito, president and co-founder of Pika Energy

Ben Polito and Joshua Kaufman, friends from their days studying engineering at the Massachusetts Institute of Technology, founded Pika Energy in 2010 in a basement in Gorham with a goal to make backyard, residential-scale wind turbines more affordable and accessible.

Seven years later, the company, now in its own facility in Westbrook, has widened its scope. As sometimes happens at startups, the market began dictating where Polito, now Pika’s president, and Kaufman, the company’s CTO, should be putting more energy. While residential wind turbines are still a major part of Pika’s business, the pair eventually realized the underlying platform technology they had developed to make backyard turbines more accessible could also be applied to more efficiently manage power grids and incorporate renewable energy sources. Last September, Pika announced it had won a $875,000 grant from the U.S. Department of Energy to do just that.

In this Founder Forum interview, I spoke with Ben about the company, which recently welcomed employee number 18; his entrepreneurial upbringing on a Maine island; and his philosophy for raising money. I hope you enjoy it.

What was your first entrepreneurial experience?

I grew up on a farm on an island on the coast of Maine, in a pretty remote spot—in fact we were off the grid until I was seven years old, which is probably why I’ve always been so interested in energy! But growing up like that I picked up a lot of practical skills, like welding and electronics. The coast of Maine also has a lot of pottery shops, and sometimes they need unusual equipment, so I ended up doing some custom metalworking between high school and college, getting the work by word of mouth.

And almost immediately after I graduated from engineering school I started working for startups, but I wasn’t initially that interested in the business side, I was looking for cool engineering problems. I wasn’t champing at the bit to start a business for its own sake. Now that there are reality shows and podcasts and sitcoms about startups, I’ve talked to a few folks who are excited to found a startup without actually having an idea yet, but that whole concept is pretty foreign to me—I think anybody who gets into this as an abstract concept or for the glamour of it is in for a rude surprise.

When you founded Pika Energy, did you feel prepared?

I guess I felt about as prepared as you could expect. I was at MIT in the late 90s, where I worked briefly on a Media Lab project to make ‘electronic ink’, and my roommates a year ahead became co-founders of a company that spun out of it (the technology became the low-power display technology in the Amazon Kindle), so I was involved in a lot of startup conversations. After graduating I steered pretty quickly toward energy technology but stayed in the startup sphere, so by that time we started Pika I had been working for tech startups for over ten years. I had talked to investors doing diligence on various companies, I had presented engineering results at board meetings, I had worked on proposals and projects funded by the U.S. Department of Energy, etc. so I at least felt that I knew the landscape. But I don’t think anything prepares a person for the total-immersion experience of being a startup founder.

Ultimately we made the leap, not because we wanted to be the founders of a startup, but because we believed there could be a better way to harvest, store, and use clean power, and we didn’t see anyone else attacking the problem at a fundamental level. For example, let’s say you have a home or business and you want to build a system with a solar array and maybe a wind turbine, and also a battery to store some of the energy, and you have your local loads like lighting and refrigeration, and then you have a connection to the grid. The conventional approach would be to build a system with at least three inverters, special wiring and protocols for communication, and custom software that has to be set up for each site, making the project very expensive and complex.

On the other hand, Pika’s technology handles the whole system with just one inverter, no extra cabling, and it’s truly plug and play, so any electrician can add a component in just a few minutes. We can do this because our core technology is a patented electronics platform (REbus) that automatically manages the flow of power on a network of different energy components. You could think of REbus as ‘USB for clean power’—a platform that makes building-scale clean energy more affordable, more efficient, and simpler to install.

What’s been the largest challenge you’ve faced in the startup?

There are acute challenges coming from every direction, but I would say the biggest persistent challenge is in recruiting. Not so much for folks who can handle the fundamentals that are common to many businesses, because Maine people are amazingly smart, hard-working, and adaptable. But more specifically it’s the challenge of finding experienced people with particular obscure skillsets like advanced power converter design, or deep knowledge and connections in a specific segment of a particular market. This isn’t Route 128 in Boston or Silicon Valley, so the market is thin at best—there simply may not be anyone in the area with a particular skill, and recruiting established professionals to move to an out-of-the-way place to work for an early-stage startup is tough. By that point in their career they have a mortgage and kids, and they are used to the comfort of knowing they can go across the street to another company that does the same thing.

How have you overcome that challenge?

It’s a work in progress; we have managed to recruit some really talented folks from out of state; we have one senior employee who works remotely, and we have some fantastic young folks from the University of Maine system who are coming up to speed quickly. But there’s more to do, and my co-founder, who is a truly amazing engineer, still carries a lot of weight. I think it’s an inevitable part of building a highly specialized technology company here.

You launched Pika hyperfocused on residential wind turbines. How has your business model and/or product evolved since your first go-to-market strategy? How did you incorporate industry feedback into your business?

We started the company to accelerate the transition to clean, homegrown power using our REbus platform, which enables different sources of energy to work seamlessly together. I built wind turbines on the farm as a kid, and my co-founder and I had worked in both wind and solar, so it was a natural fit that our first-generation product was a flexible platform that could harvest wind, solar, or both.

Since we founded the company, there has been an amazing virtuous cycle of cost reduction and growth in the solar industry, to the point where it’s getting more and more important to be able to store solar energy in batteries during the day, and then deliver it when it’s most valuable. We developed and launched our second-generation Energy Island product line in large part to solve that problem, since our REbus platform is exceptionally good at helping solar and batteries work smoothly together. But, we’re shipping our biggest wind turbine order ever right now. Wind is part of our identity, because our REbus platform can integrate solar, wind, and batteries in a truly unique way that’s never been brought to the market before.

Can you tell me how much capital the company has raised? Based on federal SEC filings, it looks like at least $6 million (not counting the MTI grants, awards, etc.).

The SEC has it about right; we have been very fortunate to have great partners including the eCoast Angels out of Portsmouth and the Maine Angels in Portland, as well as the Maine Venture Fund and Coastal Ventures. The Maine Technology Institute has been incredibly helpful to Pika, and in fact were a big part of why we felt comfortable building the company here in Maine, and the U.S. Department of Energy has supported our work through the SBIR programs, the Competitiveness Improvement Project, and most recently the SunShot program.

What’s your philosophy around selling equity in your company. Any advice for founders who are wondering if it’s a good idea to take VC money or try to avoid giving up equity and cashflow their startup if possible?

It depends entirely on the goals of the venture. We set ourselves a very ambitious plan to build an electronic platform that makes clean energy significantly more affordable, more efficient, and much easier to install. That implied significant core research spending, IP, manufacturing tooling, and certifications—each of which can be a major six-figure proposition, and at the same time we didn’t just want to be an R&D shop, and that means a robust business development team and real marketing, which is harder to do on non-dilutive funding. On the other hand, I have a lot of respect for a small team that can sharpen its focus down to something concise that can be built and sold quickly. But most people need an income to eat, and unless you really nail it on the first try, you may find yourself out of gas quickly. Then there is the approach of taking a consulting practice or a service business with a unique skillset and trying to systematize that expertise into a scalable product; which in principle seems like a good idea, but it seems that the mindset of a successful consultancy is sometimes in conflict with the demands of engineering a breakout product—I certainly haven’t studied it systematically.

As a general point about equity, I think folks who are new to the entrepreneurial scene have a tendency to want to hold tightly to 100% of the ownership. I have a different philosophy; when you are a small team and limited resources, having allies with a material interest in the success of the venture is a big advantage. So we’ve made a point of providing equity to our advisers and to every permanent full-time Pika Energy employee.

Have you benefited from mentors? If yes, what impact has mentorship meant to your career?

Yes, absolutely. I feel very strongly about mentorship; it was a major theme of both accelerator programs we did (MCED and Cleantech Open), and it’s high on my list of advice to anyone starting any kind of business. When you are new to entrepreneurship, the list of things you don’t know stretches off the bottom of the page (not to mention the things you don’t know you don’t know!), and having a personal relationship of trust with someone who has been there before makes all the difference in terms of avoiding pitfalls and talking you down from things that seem like crises—certainly it has in our case. And it seems like it can be pretty rewarding for the mentor as well—certainly it can be more exciting than a golf course! It’s also important to realize that no one person has all the answers, and as you grow your needs will evolve.

What are your long-term goals for the business?

We have ambitious plans—energy is 10% of the global economy, and it is at a really exciting point—in terms of the Diffusion of Innovation model, Distributed Generation of electricity is at the stage when the growth kicks in. So we have added a second contract manufacturer to help spin up new products faster, and are cultivating partnerships that will drive Pika through pretty exciting levels of growth. Of course we consider exit options in shaping our growth plans—there’s a good chance that at some point we’ll be better able to fulfill our mission as part of a first-tier global industrial giant, or by going public. But at this point our main focus is on building great products, providing the best support we can to our rapidly expanding customer base, and growing a strong, sustainable business.