Digitizing Chemical Manufacturing in Silicon Bayou - Q&A with Alex Reed, CEO, Fluence Analytics

Is New Orleans too laid back to be entrepreneurial? Certainly not, says Alex Reed, the 32-year-old CEO & Co-founder of Fluence Analytics, an advanced manufacturing start-up based in the ‘Big Easy’ that spun out of Tulane University in 2013. Included in the 2016 ‘Forbes 30 under 30’ list of upcoming young entrepreneurs, Alex says he is now ageing, not quite in dog years, but certainly faster than his non-entrepreneur peers.

Is advanced manufacturing for the chemicals and pharmaceutical industries ever going to be seen as cool? Probably not, says Alex. But the pressure within these industries to innovate is no less than in any other major industry, and that’s what is driving Fluence Analytics’ growth (and Alex’s accelerated ageing).

The need for improved industrial processes and the development of novel materials requires new data-driven manufacturing processes in which Fluence Analytics specializes. In addition to serving customers in the United States, Alex is flying (Economy) to Europe and Asia to develop partnerships with some of the world’s leading chemicals businesses.

Fluence Analytics’ investors include Energy Innovation Capital, the Houston and San Francisco-based venture company set up by George Coyle (formerly of ConocoPhillips venture unit), Kevin Skillern (formerly of GE), and Jeff Clark in 2016.

Leif Capital is advising Fluence Analytics on its Series B. Alex will be at the GCV Symposium in London on May 22nd and 23rd.

In the Q&A below, Alex compares Fluence Analytics’ digital polymerization processes to baking a cake, reflects on his decision to not follow in the footsteps of his father, Wayne (a Tulane Professor of Physics), and expands on his plans to build the company’s installed base as an essential foundation to commercializing its IIoT (Industry 4.0) offering.

Alex, when you meet people for the first time and they ask you what you do for a living, what do you say? What’s the best layman’s introduction to what Fluence Analytics does?

I ask them to imagine what it would be like if they could turn the art of baking a cake into a perfectly executed, tasty cake every time. Sometimes the ingredient quality varies, the oven isn’t working reliably, you’re tired and didn’t measure right, basically variables are constantly changing every time you do it. So what if you could measure your most desirable cake properties in real-time like moisture, crispness, and eventually automatically adjust the baking and ingredient parameters to achieve the perfect amount of moisture and crispness regardless of those small variations in inputs? Perhaps you could even make new types of cake that have never been made before. That’s the type of insight and capability Fluence Analytics provides to manufacturing processes in the chemicals and pharma industries.

Tasty! That works. Explaining IoT-driven advanced manufacturing is tough. I wonder why 3D printing and maybe thin film printing are penetrating the public’s consciousness, but other manufacturing innovations are not.

More and more of modern life – new computers and smart phones, new cars and planes – require new and better materials. It’s always going to be a challenge to get consumers to contemplate the manufacturing processes behind the new functionality we all take for granted. In the board room it’s a very different story. Although chemicals and pharmaceuticals aren’t seen as ‘cool’ industries, they are moving fast under the hood. To survive and prosper, they’re working on new iterations of their products and new applications like stronger and lighter materials for buildings and transportation industries. What drives innovation are the actual properties of materials, which is what Fluence Analytics measures directly. This gives us and our customers a big opportunity today and an even bigger one in the future.

Ok. Please give us an ‘in the nutshell’ explanation of your technology and how it works.

We have a suite of patented and patent-pending technology spun out of Tulane University which analyses real-time data generated during polymerization processes so that our customers can produce materials at the lowest cost with the highest quality and yield.

You are digitizing what is still quite an analog industrial process.

That’s one way of putting it. We’re in a new era of data and sensors which creates opportunities to really use information to transform manufacturing processes. There’s a lot of excitement around this type of activity at the highest level of industry. The reality is that the opportunity is so vast that to apply it successfully and generate a return on investment, you have to really focus on the low hanging fruit and on the applications with the most commercial potential.

OK. So, where is the low hanging fruit been for you?

Our flagship product is called ACOMP, which stands for Automatic Continuous Online Monitoring of Polymerizations. We’ve had 14 paying customers since 2013, four of which are among the world’s top twenty chemicals businesses. What we’re doing for them is confidential. All I can say is that we’re helping them improve their research and manufacturing processes while saving them money. Our IP was initially developed at Tulane University, which has strong relationships with corporates. So, when it came to spinning out the technology, we already had solid commercial traction and, therefore, a good indication on how we should commercialize the technologies.

How does the company make money? What’s the business model?

Until quite recently, we simply sold equipment, engineering services and upgrades. Now, we’re being asked by our customers to also provide more of a service model. This will include a Process Analytics Services offering bundling our hardware, software and data analytics services, which we’re rolling out over the next year alongside a lot of improvements to our hardware and software. We’re confident creating several pathways for customers to work with us is the way to go. We can deliver very clear value to our growing customer base.

You’re backed by Energy Innovation Capital (EIC). How did you find them? Or did they find you?

We were introduced by a Tulane alumnus who had worked with Kevin [Skillern – one of EIC’s managing partners]. So, we met with him in San Francisco. At the same time, we had approached George [Coyle, another EIC managing partner] in Houston, which is within driving distance from New Orleans. We met George through a smart manufacturing coalition with which we’re involved. Their corporate venture capital backgrounds are a big plus. They understand large corporations and our client base. We clicked with them.

What are your current priorities? What type of partnerships are you looking for?

We need to raise capital to expand our installed product base. We need to get more ACOMPs out there so we can deliver the value that many of our customers are requesting. Additionally, we have a suite of next iterations of our technology that we will apply to the installed base to provide an even better offering. We’re keen to speak to investors interested in both the strategic value and financial returns we expect to create.

What’s it like living and working in New Orleans?

From a personal point of view, the food and the music are both great. From a business perspective, we’re really well-situated since we are in the U.S. Gulf Coast and a large number of customers. Our office is in the middle of New Orleans, and we’re just one of many companies building what we call Silicon Bayou. We have biotech and software start-ups. It’s a very collaborative environment. We are about two miles from the Tulane campus, where we still do joint R&D work.

And where your father is a professor of physics, were you not tempted by a life of academia?

I grew up with the technology I’m now commercializing. Literally, since I was 12, I started working in the lab and watching my dad work. He’s a physicist specialising in polymers, and it’s his IP upon which Fluence is founded. I took an interest in the science but was always most fascinated by the applications, about how could it have a broader impact through commercialization. I realized I didn’t want to be a scientist but an entrepreneur. It was a well-informed decision.

Outside of work, what do you do to relax?

We’re in a laid-back part of the world with a unique culture. I do stop and make sure I enjoy life. My wife and I go to listen to live music occasionally, and the food here is amazing. I’m probably biased. Last week I had the pleasure of taking a client to Jazz Fest, and he had a wonderful experience. Only in New Orleans!