At the TEDGlobal 2012 conference in Edinburgh, Scotland, Tunisian entrepreneur Hassine Labaied presented Saphon Energy, a wind energy company that takes inspiration from his native country’s rich history. The key innovation it promotes is its zero blade technology, which harnesses wind with a design inspired by sailboats. His company calls it the ‘Saphonian’, named after the wind divinity that was worshipped in the Carthaginian Empire.
Contemporary Tunisian affairs was also on Labaied’s mind when he spoke to Arabic Knowledge@Wharton, discussing how the Arab Spring sparked his decision to leave an international banking career in Dubai to return to Tunisia to help reshape his country. He also credits his executive MBA education at the London School of Economics for influencing his entrepreneurial drive.
An edited transcript of the conversation follows.
Arabic Knowledge@Wharton: TEDGlobal calls you a "wind energy innovator." Can you tell me about the company you founded in Tunisia, Saphon Energy?
Hassine Labaied: First of all, I am not an innovator. I am more of an entrepreneur. My co-founder Anis Aouini is the inventor. He is the innovator. He’s an engineer. I’m an ex-banker. I worked for 12 years for Citibank in Tunis and Dubai. During my last assignment, I was a director covering top-tier local corporate accounts in Dubai and northern Emirates. I got an executive MBA a couple years ago from the London Business School. I think a MBA is always a transformational process, at least in my way of thinking. I decided to go for an entrepreneurial journey with my friend Anis. He is the inventor and my partner. We started with an energy efficient processor for the environmental sector. That quickly evolved into cleantech, specifically wind energy. We are also developing other kinds of green energy but Saphon Energy is now focused on wind.
I decided to quit everything. I quit Dubai. I quit my entire international banking career. My partner as well quit his career. He was a senior guy at Shell and Schlumberger — big oil companies. From there, we decided to believe in this dream and start this together.
Saphon is our second company together. The first one is a Tunisian-based company. My partner was still working as an engineer in Tunisia and I was still in Dubai, working as a banker. We were both doing this part time. Then we came up with this technology and we said, "OK, let’s build a second company dedicated to this technology." We had the first funding round to raise the money to take this company to the next level.
Arabic Knowledge@Wharton: Did you do that in Tunisia?
Labaied: No, in Dubai. Just after that, I quit and I came back to Tunis about six months ago to dedicate myself to this venture, to hire other team members, to articulate the PR and other strategies. We’ve been so passionate because the concept is so original and unique.
In terms of technology, this is our second patent. Our first patent was related to wave energy, converting it to electricity. We decided to need to focus on one because we don’t have enough resources and capital to develop both at the same time. So we decided to focus on wind.
In terms of wind, it’s completely different than what the world has been using for the last century. We always used wind-bladed turbines to convert to kinetic energy. We’ve always used two or three blades. Our bladeless turbine is a real technological leap. All our research and development has been focused on how to improve the efficiency of these wind turbines. Most turbines to date are poorly efficient. The simple reason is a physics law called the Betz limit, which means we can only capture 59% of the wind’s initial power. You have to factor in different kinds of losses, like mechanical, aerodynamic losses, electrical losses, so the efficiencies are really only 30 to 40%. You lose 70% of the wind’s initial power, which is too much. Since the 1960s, we have been able to have a man walk on the moon but we have not found better efficiencies.
Arabic Knowledge@Wharton: So how come no one has thought of this before? It looks almost like a satellite dish but it works like a sailboat, correct?
Labaied: Sailboat technology has been used for ages. It’s the only system we know of that has been capable of capturing and converting wind power. It is unbelievable because it is capturing most of the power. This is where the idea came from initially. We are not here to reinvent the wheel. We came up with a system that is inspired by the sailboat that captures the bulk of the initial wind power. Obviously, we are not the first ones to think about sails. The challenge is how can you have a sail and transform the kinetic power of wind into mechanical power? How can we use the same concept with a stationary device and transform the wind power into kinetic energy? How can we have a system that behaves like a sail and captures its energy? That was the challenge.
Arabic Knowledge@Wharton: Does the ‘Saphonian’ use rare earth elements, which are in short supply for conventional wind turbines?
Labaied: I’ll give you an easy answer for that. We don’t use them. That component is used for a gearbox and our system doesn’t have a gearbox.
Arabic Knowledge@Wharton: So do you sail? How did you come up with the idea?
Labaied: No, I don’t sail. My partner, Anis Aouini, said innovation is not just a question of cleverness. It is rather a deeper and different observation of the obvious.
Arabic Knowledge@Wharton: Can you tell me how you met Aouini?
Labaied: He has been my best friend for the last 20 years. I met him in high school. Here is the trick. In this kind of venture, especially an original one, he cannot do it himself. I cannot do it myself. So the great thing is we are complementary. He is an engineer and innovator. And I am the financial and business manager. You need all these things to innovate. You need a system for the inventor to be able to innovate. We’ve been struggling for the last couple of years to get this environment to be able to do this.
Innovation is an extremely important first step. The second step, which is just as important as the first step, is how you can take the innovation from the lab to the market. This is where many people fail. After having the innovation and securing the patent, you have to reach the market. We wanted to be kosher, pragmatic, strategic, and at the same time, evaluate technical issues to address any risks. Just after that, the financial crisis happened. Research and development requires a lot of time. It is very intense and we didn’t have any cash flow. We relied on ourselves. We didn’t receive any government support.
Arabic Knowledge@Wharton: Could you have asked for government support?
Labaied: We didn’t ask for any. We just put our own money and found seed investors. Once we secured the patent, we had to raise more funds to go to the next level.
The next level required [a degree of faith]. Who will believe in our technology that has been designed and developed by a Tunisian start-up? Tunisia is nowhere on the green energy map. This is a fact. The energy sector is very strategic sector. People have asked, "How come billions have been spent on research and development in the biggest companies, like GE, and they didn’t come up with something like this?" People need to have two things to believe in us: faith and guts to put their own money. Also we have to overstretch ourselves, not to sell the idea, but to have this desperate emotion and passion for this idea.
Our angel investor is now very happy. We had to convince him, not just mathematically. You have to connect emotionally so he believes in you, in your patent, in your idea and your passion. We had to give up our previous jobs so that investors have to stick with you. They say, "These guys gave up their international careers so for sure, they have something here." Many things were interrelated. We have to take the risks and our investors have to take other kinds of risks.
Arabic Knowledge@Wharton: Are you looking for more investments? What is your next step?
Labaied: For us, the idea is not to raise more money. We are at our second-generation prototype so we can demonstrate the aerodynamics. To take this venture further, we are rather looking for strategic partners who can take the technology to the next level and start the deployment to bring the technology to a wider reach. So we want things to happen rather than raise money for money. We can prove our technology rather than just using words. We are open and flexible to suggestions.
Arabic Knowledge@Wharton: So TEDGlobal conference is the first public unveiling of Saphon Energy and your wind turbine technology?
Labaied: What we’re disclosing at TED is how the system works. People can see the system doesn’t have blades and it doesn’t rotate. For them, they may ask, how does it work? It goes back and forth. I understand there may be much scepticism because we haven’t disclosed the technology yet. But we are confident that once people understand how the system works, they’ll be surprised at how easy and how simple the system is.
First of all, they may ask, "How come no one has thought of this kind of idea in centuries?" Instead of thinking two dimensions, we are thinking three dimensions. But this is the kind of thinking in ‘radical openness’ [the theme of this year's TEDGlobal conference].
Arabic Knowledge@Wharton: Is Tunisia known for wind energy?
Labaied: No. For us, we have a long history in our country. Tunisia is the homeland to Carthage, which was one of the great civilizations of the world. History is always written by the civilization that came after that. Carthage was destroyed by the Roman Empire. Rome wanted to erase Carthage from history. It was one of the great civilizations and now we don’t know much about it. For us, we wanted to contribute to this legacy. We are a very peaceful people. Our duty to try to revive something from this great civilization.
The name Saphon comes from Punic roots. Baal Saphon was the Carthagian god of wind. For us, it’s about symbolism. For us, we wanted to pay tribute to this civilization and we wanted to promote some of it symbols.
Arabic Knowledge@Wharton: During the uprising in Tunisia, I understand you were in Dubai but Aouini was in Tunis, is that right?
Labaied: My friend was in Tunis full time. I was in Dubai part time. Every month, I was coming to Tunis. On January 14, 2011, on the day of the revolution, I was on the last flight to land in Carthage and then they closed the airport. I wanted to come that day, to be part of the march in the capital.
Arabic Knowledge@Wharton: Did you march then?
Labaied: No, by the time I arrived, it was too late. My flight was delayed. Aouini came to pick me up and we wanted to march. But it was too late because the police closed all access.
I was there for a week just to work on this because the airport was closed. I had a chance to work on this in an intensive week. The next day, believe it or not, the country was on hold and we were in our workshop working on our prototype.
The revolution stimulated us further because it gave us our big push. At the same time, we had our own revolution, which is our new idea. We strongly believe it is our duty now, our responsibility, to do our best to back the Tunisian revolution is to organize our business and recruit staff and promote Tunisia even further. We have a potential revolution we are working on with very many mixed feelings and emotions.
Arabic Knowledge@Wharton: Has the post-revolution government affected how well a company can get started in Tunisia?
Labaied: We have to try to actualize this dream, and at the same time, to prove to the world and ourselves we can do this. We are not just consumers; we are innovators. We want to prove, especially to the world, that the Arab world is complex. People in the Arab world have developed this inferiority complex because we have been colonized. We are human beings, equal to other people. We have equal chance for a good education and innovation.
Arabic Knowledge@Wharton: It sounds like part of the reason you decided to do this start-up company was because of the revolution.
Labaied: Obviously. During that week after the revolution, I realized that now is the time to come back to Tunisia to help rebuild the country. Of course, we have even a bigger responsibility to the Tunisian people. We had the chance for education to gain international experience, which has helped and evolved and progressed our careers. And now we have to give back. We have to be involved in our country that has invested in our education. Since 1956, education to university has been free. After we gained independence from France, the government told the fathers that they had to put their kids in school or they will go to jail. It was a radical decision to educate kids and spread knowledge. It is something we are really proud of. We want to give back. If we hadn’t had the chance for an education, I would’ve never had the chance to go global. I would’ve never started this company. I got a great lifestyle in Dubai. We are trying to inspire other people as well to develop the entrepreneurial spirit. We have very smart people in Tunisia, highly educated people. The entrepreneurial spirit is still nascent.
Arabic Knowledge@Wharton: Do you plan to manufacture these wind turbines in Tunisia?
Labaied: No. This is where our strategy ends. We cannot do everything ourselves. We are an R&D company. We are not manufacturers. We don’t know how to manufacture and we don’t want to.
The best way is to find a partner who is equipped with the knowledge to take this to the next level. We would be very happy to partner in a joint venture, licensing or something like that. We know how to do our job. We don’t believe in overstretching ourselves and going into unexplored ground where the risk can be much, much higher.
Arabic Knowledge@Wharton: I understand that you were almost auditioning for this appearance at TEDGlobal in Edinburgh, Scotland, in a TEDTunis event. What was that experience like?
Labaied: That is a funny story. A couple months ago, I hadn’t heard of TEDGlobal. I believe at the last minute that they saw our idea was really, really good and worth spreading.
What happened was that some friends told us about TED. They said, "Why don’t you send in an application?" I sent in an application that got declined. We didn’t understand what they were asking for. They didn’t want us to talk about the company. They wanted us to promote the idea, which is why we got rejected. A friend of ours said, "For sure, there is a misunderstanding." He talked to someone at TED and they gave us another chance. We were welcomed on stage, and the following day we had a conference call. It was a talent search for the following year. [But they said,] "So we don’t waste another year, we want you to come next month to Edinburgh." We were overwhelmed. It’s great because of course, it was an acknowledgment. It was a great achievement for us.