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Toward Zero-Energy Buildings: Kevin Surace, Serious Materials (Part 7)

Posted on Tuesday, Jun 2nd 2009

SM: How did you fix your sales issues after you fired your first VP of Sales?

KS: I went and got a new VP from the semiconductor industry. She had built $300 million businesses and knew solution sales.

SM: The skill set to sell solution-oriented, high-margin products exists in very few industries.

KS: It exists in tech. I have been pulling my entire team from tech. My general manager of windows came from tech. He had run a manufacturing line at Sun and was a COO at a couple of software companies. The day he came in he knew nothing about windows. The second day he was there, he went on the production line and stayed there until he knew how to build a window.

SM: The other advantage of tech people is that they are smart.

KS: At the end of the day he came to me and said, “This thing has 12 parts, how can you not possibly yield 99.99%?” That’s thinking I like! Generally speaking, the construction materials space, for the past 100 years, has not attracted the best and brightest in the country. I am sure there are some bright folks in the industry who have spent their careers there, though, so I am not being fair to them.

The long and short of it is that hiring tech people is great because of the management skills, people skills, the aggressiveness, and speed. All the things learned in tech, when applied to construction materials, allow us to just knock it out of the park. We don’t have anyone to compete with.

SM: What is the next phase? It sounds as though all of your products have huge TAMs.

KS: We have to focus on scale. The TAM for windows in this country is $22 billion every year. We are the only people who have high IR values of windows, not 40% better but 400% better, than the incumbents.

SM: What percentage of that $22 billion falls into your sweet spot?

KS: If you go into green building, which is the sweetest area, it is $3 billion this year with no competition. People do not use us because they do not know about us.

SM: How do you change that?

KS: The new administration is a huge boon to what we are doing. The White House issued a press release specifically thanking Serious Materials a few weeks ago. We had a 22-minute press conference with the President. In a national address [on successful green businesses], he opened with Serious Materials. I don’t think we can ask for better coverage. We are very close to the White House and the Department of Energy (DOE). We have 30 patents pending in window technology, and the DOE loves what we are doing.

This is the first company I have been involved in that can be as big as I want it to be. The largest construction materials company in the world is Saint-Gobain with $53 billion in revenues. This company can certainly be north of $1 billion and south of $58 billion. We have developed a next- generation window technology that has the possibility of having such an impact from a price and technology standpoint that all $4-$5 trillion dollars of windows in the world should probably be replaced because the payback is just a year and a half. It starts to turn the world’s $100 billion window market into something that becomes much bigger. We are getting to technologies that can truly change the economics of the game.

SM: At what point do you see yourselves going public?

KS: I would like to wait as long as possible. The bigger and better you get, the more demand there is for you in the public market. It is a pain in the ass. I have been in the public markets and taken those calls. I am in no hurry to return. I bet it will happen in 3-5 years. You have to time it right so that you do not miss a reasonable window with the public.

SM: Is there anything I should have asked you that I didn’t?

KS: The executive staff runs the company more than I do today. I am a big believer in team. A company is not a democracy, but everyone gets to be heard. As you get older, your listening skills get better. I have tremendous experts around the table who have great ideas, and I can’t execute without them. I have shed a lot of responsibilities yet I find myself busier than I ever have been in my life. It is a lot of fun.

SM: I wish you all the best.

This segment is part 7 in the series : Toward Zero-Energy Buildings: Kevin Surace, Serious Materials
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