(Shannon Mendes)
When Vancouver civil engineer James Dean started his greentech company, dPoint Technologies, in the early 2000s, he figured he could hitch his wagon to the promise of the hydrogen fuel cell sector. At the time, Burnaby, B.C.-based Ballard Technologies was leading the creation of the engine of the future—a clean, no-emission system that ran on water and hydrogen.
But like many other, overly optimistic hydrogen-based fuel entrepreneurs, Dean, whose company made a specialized membrane that was to be used in the fuel-cell modules, watched the ground open beneath his feet as the commercial take-up proved to be far slower than anyone anticipated.
And that moment of crisis teed up his aha! moment. “Out of desperation,” Dean recalls, he started doing Google searches and discovered that such membranes could be used in heating, ventilation and air-conditioning (HVAC) systems in airtight buildings. Suddenly, his company had a future.
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dPoint Technologies, which ranked 60th on the 2013 PROFIT 500, is the firm that grew out of Dean’s desperate search for Plan B. Using specialized membrane technology, the company manufactures modules that reduce the air-quality problems that tend to occur in highly energy-efficient buildings with poor circulation. In the winter, dPoint’s device helps to bring in fresh air but prevents heat and moisture from escaping. In the summer, the membrane does the opposite, holding in cool air and keeping out humidity. The result: lower energy bills and a more comfortable atmosphere, says Dean.
Download Now!dPoint’s models vary from shoebox-sized modules made for individual condo units to much larger ones that are installed on rooftop HVAC systems. What’s common to each unit, however, is that they’re mostly air, like car or furnace filters—bulky in size but light in weight.
For North American customers, dPoint didn’t have a problem shipping its modules. But as the company began to win clients in Europe and Asia in recent years, dPoint realized the freight costs for the entire module would be a price killer.
Dean admits the company’s next move didn’t come in the form of an aha moment. About two years ago, as dPoint’s sales team talked with European and Asian customers about problem of dealing with hefty shipping costs, one customer suggested that the firm should think about licensing the machines that manufacture the frames—in effect, outsourcing production to dPoint’s clients. dPoint would continue to sell its proprietary membranes, which are much more compact and inexpensive to ship.
The business model, Dean observes, is similar to the approach used to sell razors and printers. With these products, the manufacturers regard the handles or the printers as loss leaders because the long-term revenue comes from selling the razor blades and ink cartridges.
Dean says dPoint has negotiated three such licences so far, with customers in Switzerland, China and India. All are HVAC-system suppliers. In China, the customer is actually a joint venture, and one of the partners also is one of dPoint’s investors.
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To protect dPoint’s intellectual property, Dean says the company took care to file patents in all the countries in which the firm operates. Still, he says, he “always been worried” about licensing the machines [that make the frames], only to see the customer buy a rival firm’s membranes.
To address that risk, dPoint has negotiated restrictive licensing agreements with its customers, and has pushed itself to constantly improve its membrane technology so the product delivers the best performance. As it’s turned out, the company’s European and Asian partners have become de facto sales reps for dPoint in those markets. Because they’re licensing the production equipment for the modules, these firms have promoted dPoint’s technology to their other clients.
The moral of the story, Dean observes, is that export-minded companies should also think hard about their business model and whether it can be adapted to suit the demands of geographically distant regions. Yet, dPoint’s experience also speaks to the importance of finding reliable partners to help navigate those new markets. “For me,” Dean says, “it just comes down to a matter of trust.”
