An exclusive Tech Tribune Q&A with Jeff Kostos, the co-founder and CEO of Spear Power Systems, which was honored in our:
Tell us the origin story of Spear Power Systems – what problem were you trying to solve and why?
Although Spear started in 2014, it has a legacy dating back to 2005 when the current founders started a lithium ion battery company that has evolved over time to what is now Spear Power Systems. Although the business model has evolved, the goal of the team has not. Spear’s focus is to design and manufacture safe, high-performance battery solutions for customers with some of the world’s most demanding applications. We do this such that we maximize the value to our customers who typically fall into the two e-mobility categories of industrial and defense applications.
First, we help transform our global infrastructure to something that is more efficient and sustainable so that future generations can enjoy the same beautiful places that we have enjoyed. Second, we help America and its allies maintain a technological advantage in the areas of security and defense to deter conflict and protect our way of life. There are many battery solutions available today, but the way to really drive value for an e-mobility application is to provide a solution that yields more energy per unit of weight or within a given volumetric envelope, thus making it more efficient and therefore providing increased range to the user. And if the user is a sub-sea platform, on a rocket, on a surface ship, or in an underground mine, then safety is paramount. Spear provides the highest combination of safety and energy efficiency in the markets we serve.
What was the biggest hurdle you encountered in your journey?
It is difficult to pick a single biggest hurdle, so I will say the biggest hurdle to overcome is maintaining fortitude during the many hurdles in order to not give up. We have had significant cash constraints; we had to fight through the 2008/2009 recession during a critical startup phase of the business; I’ve had to deal with a bad partner who did stupid things that put the company at risk; I’ve had to deal with problematic investors who tried to take advantage of other owners while compromising the complete operation. However, most of that happened prior to evolving the organization to Spear.
As Spear, the biggest challenge has been to smartly manage our growth – balancing cash needs and sources of capital with investment in people, products, and capabilities. Growing too quickly can kill a company, yet growing too slowly can choke a company and allow others to pass you up. Managing this growth so that we scale internal processes, product development, manufacturing, and geographic presence without doing either of these is not easy. A good analogy is that of the path of an airplane going from its origin to its destination. It is never a straight, efficient line. Adjustments to course are constantly needed, but adjusting too much or too slowly may mean you never make it.
What does the future hold for Spear Power Systems?
The future looks very promising. We have a talented team that is motivated and smart. Our products are innovative and offer differentiating value to our markets. The timing is right for smart, safe, and efficient energy storage solutions that can help accelerate the rise in electric and hybrid-electric mobility applications that didn’t exist just a few years ago. We expect to continue our growth rate even with the current global economic uncertainty we face today. We have hired close to 30 people since the beginning of the year, including 12 that have started with us since June 1st. We have secured additional capital to fund our growth and have increased our facility capability by almost 50% this summer. We have expanded our presence in 3 European countries. The future looks promising and we are moving forward confidently with the appropriate degree of prudence.
What are your thoughts on the local tech startup scene in Grandview?
In fairness, I do not have much exposure to the local tech startup scene in Grandview. All our customers are outside Missouri – in fact, half our business is outside the US. A large portion of our supply chain is also outside the U.S., so as a company, we are far more engaged in global organizations. I do see the cluster of industry that has developed around Botts Road and think that is great. Anchor groups like Honeywell, Sika, and Corbian help facilitate other small companies that, in turn, support the anchor groups’ supply chain needs.
What’s your best advice for aspiring entrepreneurs?
There are many key aspects of a successful startup, including the following:
- Having a high-performance team. It is hard to overestimate how important this is. Choosing the right partners, leaders, etc. can make such a difference.
- Having the right product/service/idea. Make sure your product, service, idea, etc. is differentiating in the markets you intend to play in. Offering a strong value proposition means you won’t need to win on price, and this means you can build your brand around quality, value, etc.
- Make sure you have the right business model (plan). If you have a good idea but do not have the right model to get your products or services to market in a way that maximize your objectives, you could easily fail, or at least leave a lot of opportunity on the table that could limit your growth down the road.
- Funding – all the above is great, but if you do not have the funding, you will never succeed. And it is very important that you find a way to get the appropriate funding without giving up your company or all its IP to someone else. This can be a very difficult path to navigate, but it is extremely important.
- And, if your plan involves widely scaling your idea, then possibly the most important thing of all is timing. If the market is not ready for your idea, then even with all the above, it will be very difficult (and costly) to succeed long term. Timing is so critical to success if you want to properly scale your idea.
Even if you have all the above, you will run into countless, unexpected challenges and therefore having the fortitude to move forward while leading the team so that they stay motivated is absolutely critical.