Carl Stjernfeldt standing in his office.
Carl Stjernfeldt is North America Venture Manager at Shell Technology Ventures. He splits his time between Houston and Boston

What’s the role of innovation for an energy company like Shell?

The world and its energy needs are changing. We know that the only way Shell will thrive for another 100 years is through continuous innovation and human ingenuity. 

That doesn’t mean giving up what we do today. It means adapting so that we can give customers what they need. 

Take a simple question: what will a refuelling station look like in 100 years? 

Shell has around 43,000 branded refuelling stations worldwide. What if every car were electric, or shared, in the future? That would have huge implications for our company. 

We can’t sit around and wait for the answer. We have to keep innovating in every area of our business. 

We could adapt those refuelling stations and create new opportunities.  

That’s why, for example, we have just opened the UK’s first branded hydrogen fuel filling station, after successful trials in Germany. We are also under consideration for the installation of seven hydrogen refuelling stations in the US state of California. 

We have seen a flurry of digital disrupters such as Airbnb for hoteliers, Uber for taxi drivers or Stripe for online payments. Is there an equivalent in the energy industry? 

Those companies have one great benefit: they don’t have to move a physical commodity. They are simply bridging supply and demand.  

Much of the energy system is still hydrocarbon and electron-based. 

These are commodities that have to be moved around, requiring large investments in physical infrastructure. So it’s difficult to see today how that model would be disrupted digitally in the same way.

That said, at Shell we can identify future possibilities based on trends. 

For example, imagine what would happen if cities like London or Kuala Lumpur decided that delivery companies needed to connect to a wider network in order to have a license. 

You could have Uber drivers picking up packages or lorries picking up passengers – provided they met safety standards. 

It would be a fundamental urban disruption and is ultimately based on the same concept: matching demand and supply.

More widely, what is the role for digital technology?

Digital technology is changing how Shell operates, from maintenance and repair of our deep-water facilities to finding new energy sources.   

We have invested, for example, in a US firm called Veros Systems. 

Their technology predicts potential mechanical failures of engines powering pumps and turbines weeks before they might happen. That drives significant cost savings. 

At the end of 2016, we also invested in a Finnish company called Rocsole which specialises in producing three-dimensional scans of pipelines. 

We have just invested in a German same-day delivery company called tirimazoo. This digital service connects retailers with customers in order to coordinate delivery of products on the same day to over 150 cities across Germany, Austria, Sweden and the Netherlands.

It will help us explore new digital business models to improve the transport of goods and services.

What do you look for when investing in companies? 

Shell Technology Ventures (STV) is Shell’s venture capital arm and we look for ideas in three areas: oil and gas technologies, renewables and information technology. For me, an idea has to meet five core criteria. 

The first is linked to the market. Are entrepreneurs targeting a market that is growing rapidly with little competition? If so, that’s generally attractive.

The second is technology. Does the start-up have intellectual property and knowledge that could not be replicated easily elsewhere?

The third is staffing. Who is the team behind this idea? Do they have the right blend of people to work around the clock for the next three years? 

The fourth is the start-up’s financial metrics. How much capital does this start-up need to get to the first set of milestones that new investors will take seriously? 

Those milestones are not buying the first office football table or throwing a launch party. It’s signing the first customer or the first partnership agreement. 

The fifth is what I call the “special sauce”. We have to be clear why this team, in this market, with this technology and this amount of capital could be successful. 

That is down to an investor’s gut sense. 

Carl Stjernfeldt

Carl Stjernfeldt working on his laptop

North America Venture Manager at Shell Technology Ventures

Born: Stockholm, Sweden.

Education: KTH Royal Institute of Technology (Stockholm); Northeastern University (Boston); Massachusetts Institute of Technology.

Career: Summa Four; Cambridge Technology Partners; Battery Ventures; Castile Ventures; Shell Technology Ventures.

Favourite book: Outliers by Malcolm Gladwell.

Favourite recent film: Manchester by the Sea.

Item I can’t live without: Outlook.

Four people (living or dead) I’d invite to dinner: Former Swedish monarch, King Gustav Wasa; Former British Prime Minister Sir Winston Churchill; Former US President Barack Obama; Olympic ski champion Lindsey Vonn.

How do you define that gut sense?

It is an investor’s idea of where they believe the world is heading and how the company fits into their world view.

The success of an idea can often depend on timing. 

The best example of this is in social networks. Long before Facebook there was a social network called Friendster. 

The company launched in 2002 and promised to connect groups of people in a way email could never do. 

It had a robust offering and a strong team. Yet they toiled away for years trying to sell the virtues of what they did.

Then Facebook came along at a time when there was an appetite for digital photo sharing. What happened next, of course, is history.

This case is not unique. You see similar ones in our business regularly. 

You have worked as a venture capitalist around the world. Where is a good place to start a business?

Silicon Valley is a unique place. But other parts of the world have their own innovative culture. 

You can ask someone to move to London and their response would be, “Hey it’s extremely expensive but if the start-up fails, I can most likely find a job at another one”. 

That wasn’t always the case.

You’re also seeing that in parts of Sweden, such as Stockholm, and to varying degrees, Amsterdam in the Netherlands as well as the German cities of Berlin and Munich. 

Make no mistake though. Ultimately it relies on the strength of the idea. 

People can sometimes think, “As long as I go to Silicon Valley, I’m going to be rich and famous. I just have to show up.” 

That couldn’t be further from the truth…

South by Southwest, better known as SXSW, is a 10-day festival of ideas that takes place in Austin, Texas from March 10th. Why is Shell there?

It comes back to what I said at the start. We must continue to think about where Shell is and where we want to be as a business in the future. 

We have to listen to people in other markets and industries, and identify where they think the world is going – not where it is now. 

SXSW is a unique convergence of original thinking, creativity and emerging technologies. It’s one of the world’s great forums where that debate happens.

On Saturday March 11 Shell will be a hosting a panel discussing what it takes to keep innovation alive, from the perspective of a start-up or a global energy company. 

We’ll be convening experts from sectors that include film and entertainment.

Ultimately I see our role as two-fold. Firstly, to tap into the ideas and influence from outside the energy business.

Secondly, to show how Shell thinks at the very highest level about where we are headed and what it will take to remain one of the world’s top companies as well as make a positive social contribution for the next 100 years. 

 

Carl Stjernfeldt spoke to Kunal Dutta

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