Herbert Pohl

This transcript was generated automatically (Spotify transcript) and then edited for readability: names and obvious mis-hearings corrected, filler words removed, speaker labels added where the speaker is clear. Passages that could not be understood are marked [unclear]; short omitted passages are marked [...]. Timestamps are approximate. The recording is the authoritative version.

Konstantin Girst 00:00:13

Hello and welcome back to a new episode of Campus To Capital. Today, Julius and I are joined by Herbert Pohl, who's a former senior partner at McKinsey and is the CEO and founder of Deutsche Erdwärme, which is the largest private contractor and developer for geothermal energy projects in Germany. So nice to have you here today, Herbert. Welcome.

Herbert Pohl

Well, thank you, thank you, Konstantin. Thank you, Julius, for being here. It's great to share some perspectives today.

Konstantin Girst

Awesome. Well, let's get started. And I think geothermal energy might be a little bit of an abstract context for most of our listeners. So could you maybe give us a brief introduction to Deutsche Erdwärme and what it means to amplify geothermal energy to decarbonize Germany's heat supply?

Herbert Pohl

Sure, you know, pleasure. So first of all, what is actually geothermal energy, right? Geothermal energy essentially harnesses the heat that is in the centre of the Earth, right? As we probably all know, we are living on a very thin crust, which is, in the inside, there's a big fireball, right? So there's tons of energy in the inside of the Earth, and geothermal energy is essentially trying to tap into some of that potential, right? The deeper we go, and some of you guys may have experienced that if you go deep into a mountain or deep under earth, the hotter it gets. And as you drill into the ground, as you drill deeper and deeper, you basically can tap into that energy.

00:01:44

And geothermal energy in all its variations is trying to use that energy for the use on the surface, for example for heating, for power production, and for all types of purposes.

Host

Interesting. And I mean, when we look at some of your projects, you actually dig quite deep. I mean, some of these holes are deeper than 1000 meters. So what is kind of the technical process behind starting up these projects and making decisions on these projects, from site selection over to drilling operations? For example, when we look at your largest project, the Graben-Neudorf project, where the hole is actually around 2000 meters, I think. So what...

Herbert Pohl

Actually, geologically, 4000 meters.

Host

Oh, 4000. OK, my bad. Apologies. It's even more complicated than that.

Herbert Pohl

Yeah, yeah.

Host

But so what are the most important geological and lithological features, and how does risk assessment and decision making work in these projects?

Herbert Pohl

Well, you're actually right. This is a pretty complicated project, right? And this is not like, you know, you walk around and you say, OK, let's drill a hole here and let's see what happens. In fact, actually, there's a pretty long planning and permitting process that precedes the real drilling of the well. So typically what you first start with is a general idea of how the geology in a certain area looks like, right?

00:03:15

And there are, you know, tons of studies, some go back literally 100 years, where people have tried to identify how generally the geology in certain areas is. But that's just really the very first step, right? Eventually what you're trying to understand is really what is almost the map below your feet, right? We try to draw a map, and understand exactly how the geology looks like at a certain place. And the data that you need for that is essentially two sets of data. One is existing wells. Existing wells, you know, already give you some indication on what the geology is below your feet, right? The second set of data is so-called seismic data. Seismic data is really, you know, when you send basically waves from the surface to the ground, they bounce back from the geology, are being picked up by so-called geophones. And then this data is processed to really ultimately gather a three-dimensional picture of the geology below the surface. And that is then the fact base, so to say, the fact base upon which you make your investment and your exploration decisions.

Host

And within that process, could you maybe give us an overview of a rough timeline from collecting data to making a decision and then actually starting up a project?

Herbert Pohl 00:04:48

Yeah. I mean, you know, when you start, you have typically a general idea how good the geology is, right? We have looked at Germany and we have in fact actually divided Germany into 663 hexagons, and about two thirds of those hexagons in Germany are generally promising for geothermal energy, right? So we start with this basic understanding and then you basically try to understand and gather all publicly available data. You try to understand existing data that has been sometimes, you know, evaluated decades ago. This process may take, you know, half a year to a year, really depending on the complexity. And then, you know, gathering new data like seismic data, etcetera, that's about a year, a year and a half that is required, because it requires extensive planning, it requires extensive permitting. And then the campaign itself. After you have gathered the data, you need to process the data. So it's, again, unfortunately a lengthy and time consuming process. And then based on the data, you really start the analysis of the geological potential of the reservoir, and that takes another, you know, at least half a year, and then you start with the permitting. So all in all, right, you know, before you actually start with drilling and the construction of the drill site, it's easily three to four years of planning and preparation.

Host 00:06:20

I can see that AI could actually be something that could be of huge assistance in this data processing process. Is that something that you're leveraging already?

Herbert Pohl

Yes, we are actually already using artificial intelligence in the interpretation. If you look at seismic data, seismic data is essentially, you know, gigabytes of data, and what you try to identify are patterns in this data. And this is not so dissimilar to, for example, understanding, you know, analysing [unclear] and identifying cancer in cells, etcetera. You know, so what you try to understand is patterns in, yeah, large volumes of data. And the artificial intelligence element is that you try to train your program to identify those patterns. And you know, as it happens with artificial intelligence, right, they learn. So you need to train it. Initially they're not very smart, but as you basically educate the program more and more, the better it becomes in helping you, at least in identifying reservoirs.

Julius Ambrosius

So I really like that technical component to these processes, but I could imagine that these projects are also very complex when it comes to logistics. So if we look at the geothermal development in Germany and across Europe, what are the main cost drivers and uncertainties? So for instance, how much of the total project risk comes from drilling depth, equipment costs, regulatory processes or, yeah, the availability of skilled labour, which is probably also not that easy to find?

Herbert Pohl 00:07:50

Yeah, unfortunately, Julius, it's almost like check all of the above, right? You know, if you look at risks, there's hardly a risk that you can exclude and say it's not relevant, right? Let me just name a few of them, which I think you've mentioned already. Permitting is obviously a risk, but fortunately, I think Germany is a fairly predictable regulatory environment. So you kind of know where you are at, right? And, you know, if you start a permitting process, you know the result. You don't know yet when you get the permit, but you're pretty confident that you will ultimately get it. Now, drilling. Drilling 4 kilometres deep is risky, right? That's a risky business, right? You know, if you just think about it, right, sometimes, you know, pick a point which is 4 kilometres away from where you are right now, and think that you are basically, without seeing what you're actually doing, drilling into that spot. You can understand that this is something which has a high risk, and you're doing that at temperatures of 150 [unclear] 170°, sometimes even more.

00:09:22

So you know, this is obviously a very challenging piece of work that actually needs to be delivered, where you need a lot of specialists that will support you, which brings you to the second point, right, resources. You're absolutely right. We need the right resources, and this is, you know, when you look at Germany right now. In Germany, we had a pretty extensive oil and gas industry. Now over the last decades, this industry has literally disappeared, right? When you were driving through northern Germany, you saw those little oil pumps everywhere. They're no longer there, right? You have no longer the oil and gas exploration in Germany. And the result of that is that all the resources have gone as well, right? So when we are launching new projects, we sometimes need to get people, specialists from Norway, from Scotland, from Romania, wherever those specialists really are, because these are the type of people we need for our wells. And unfortunately, you no longer find them in Germany.

Host

Yeah. So are these then the main factors that determine whether you bring in an external partner versus developing something in house?

Herbert Pohl

To some extent, right. I mean, you know, when you look at what we do in house versus what we procure, you know, one thing is, is this a capability we need on an ongoing basis?

00:10:53

If it's something we need on an ongoing basis, then, you know, it's a good argument that we build it internally, right? The second consideration is, do we actually get the right quality outside that we want? And sometimes we've actually built up resources because we felt that we can only trust our own analysis and our own resources. So this is another element where we will say, OK, we need it internally. Yeah. So we're looking at it really opportunistically. We're fine if we find it outside, but if we don't find it outside, obviously we need to build it in house.

Host

And when we talk about partnerships, when we look at Deutsche Erdwärme's capital structure, it says that you guys share responsibilities. Would that... you also choose to always directly invest into your own projects. And I'm sure that such infrastructure heavy projects are quite expensive to conduct. And as infrastructure, it's just a very, very expensive industry to invest in. So maybe next to having the incentive and objective to save the planet, what are some incentives for people to invest into these projects?

Herbert Pohl

Yeah, it's a great question. Look, if you invest in something like a geothermal project, you know, what you're investing in is a long and stable return, but you're not investing in some venture capital fund which will double or triple overnight, right?

00:12:23

You know, you have a fairly predictable revenue profile, because we enter into long term heat offtake agreements with our customers, typically utilities or industrial customers, and you have an upfront investment. That's really the cash profile that you're looking at, right? So, you know, who's interested in that? You know, typically it's people with a long term view, like pension funds, insurances, potentially strategic investors who say, you know, this is something that we find strategically interesting for our business, to be part of the heat turnaround in Germany. You will not find, you know, people who are looking for a venture capital type of return, right? This is not our game.

Host

Yeah. So if we now zoom out and look at the bigger picture, I mean, the past few years have been full of macroeconomic uncertainties, either from inflationary pressures or supply chain disruptions. So how have these developments affected Deutsche Erdwärme's project timelines and also your risk management?

Herbert Pohl

Well, we are obviously not isolated from macroeconomic trends, right?

00:13:53

I mean, what we had two, three years ago was a crisis starting with the war in Ukraine. And gas prices peaked at enormous price levels, right? At that point in time, for example, everybody was looking for geothermal energy because it was simply, you know, a much, much cheaper solution. Now prices have gone down and people suddenly say, well, we're actually quite happy with gas. So, you know, this is the first very immediate impact we see on discussions about the use of geothermal energy. But it goes well beyond that, right? I mean, you know, we had interest rates that were below 1% a couple of years ago. We are now, depending on which country you're talking about, at 3, 4, 5 percent. So basically the threshold for returns has increased by as much, right? Because people will ultimately compare us with other, you know, fixed income products like bonds. And they will say, I still want to get a margin on top of what I could get by investing in a German government bond or in a, you know, French government bond, if you'd like to take that risk. Yeah. So obviously another factor, right, the third one, is what we see right now is the impact of tariffs and potentially, you know, the disintegration of value chains.

00:15:27

When we procure products for our wells, like casing, some of them we procure from Asia. And we already see some supply chain disruptions here, price increases, problems with shipping, etcetera. So although this is a very local business in many ways, the macroeconomic impact obviously shows in every single aspect of our business case.

Host

I think given recent political events, that was very wise, to opt against French government bonds. But to move on from macroeconomic uncertainty and to have a look at future outlooks: Germany has very ambitious climate transition goals. I mean, on the agenda they have that they want to have a climate neutral economy by 2050, and I mean, your company is operating in the midst of this goal. So how do you think current government policies align with the opportunity to reach that goal? And if you don't think that they align, is there anything that you would like to have changed?

Herbert Pohl

First of all, I think it's great that Germany has set up this goal. And it seems also that this goal is almost irrespective of who is, you know, leading the government and which coalition is driving the agenda.

00:17:00

So that's already a great asset. I think the notion of affordability and the notion of competitiveness of energy prices has become much more relevant over the last couple of years. I think a couple of years ago it was like, you know, [unclear], we need renewables, we need green energy, and it doesn't really matter what it costs. I think that's [unclear] stage. I think, you know, what we need right now is both: it has to be cost effective and ideally it's green. But I think the willingness to compromise cost effectiveness for greenness has decreased significantly, right, in today's environment. And I do understand why that is. So I think you need to be cost competitive, which from our perspective is actually not a problem, because, you know, geothermal energy is a very competitive technology, and we see this for us actually as a great opportunity. Now, do we have all the regulation in place? Clearly no, clearly no. I think, you know, politics is always focused on laws and permitting processes, etcetera. And that's OK. I think the regulatory process in Germany is not bad, we can live with that.

00:18:31

But there's something very fundamental missing, and that is industrial policy. As I mentioned before, you know, we have lost the oil and gas industry. And what I mean by industry, this is not just, you know, people who provide drilling rigs. It's also, you know, specialized service companies who can help you with directional drilling, fluid management, liner hangers, cementing, and all those services that are actually required, right up to the disposal of drilling fluid that you need. And what I believe is we should really make a big effort in trying to attract this industry back to Germany and say, we have actually, as a government, not as a company, but as a government, we have a broad agenda to drive the heat turnaround. We need geothermal, and in order to deliver geothermal, we need you guys from the industry. And that is something which is always missing in the debate, that people focus too much on regulatory aspects and too little on the supporting industry that is required.

Host

Well, I think we actually just recently spoke about the industrial struggles within Germany with another guest. So I think we'll tap into that a little bit later as well. But when we speak about the climate goals of Germany, the economist Markus Brunnermeier from Princeton University recently addressed the German government and advocated for the idea that we should rather not drive all the pollution permits in Germany to 0, but that the German government should perhaps rather subsidize climate neutral innovations and allow them to expand across borders, as he believes that that would have a more meaningful and results driven impact. And I was curious, what is your view on this? Do you agree, or what do you think?

Herbert Pohl 00:20:02

Well, I think what we would like to see is that we see an even playing field between technologies. And what we still need to understand is that over decades, you know, the CO2 related industries, gas networks, etcetera, have received enormous subsidies. And it is just very difficult now to say, OK, we no longer subsidize anything and we need you guys to compete against an existing infrastructure and existing asset base that has been built with subsidies. So we somehow need to make sure that we create an even playing field. I think the next thing is, and I think this is also something people sometimes underestimate, is stability. You know, it's better to have not a perfect system, but something that investors can rely upon over a longer period of time, than changing the system every couple of years. You know, when I said earlier, our business cases are based on a couple of years of development and construction and then on 30 to 40 years of offtake.

00:21:35

You know, we need stability during that time period. We don't want to basically change our business case every two years, because that is the death for any long term investor. We need stability. So sometimes the second best system, which is established, works and is guaranteed over a longer period of time, is better than potentially the perfect system, which creates, you know, further confusion in the market.

Julius Ambrosius

So given the capital intensity and the long lead times of the geothermal projects you just described, have you ever also faced a moment where a project was at risk of failing or defaulting, and how do you personally navigate the company through such phases of uncertainty, also with the macroeconomic uncertainty we just talked about?

Herbert Pohl

Well, you see, Julius, the beauty about infrastructure is you start with a plan, right? You have a plan, you have a budget. And from then on, it's only bad news. Yeah, you rarely get good news in a sense of, oh yeah, we have achieved this milestone faster, oh yeah, we have actually delivered it below budget. You know, this happens very, very rarely, right? So in one sense you're constantly dealing with situations where you need to fight problems and you need to basically fix issues that appear, right?

00:23:08

And yes, absolutely. I mean, you know, when you have a portfolio of projects, we have had projects that we have pursued and have basically abandoned because at some point in time we saw no longer the potential, sometimes because the geology was too complicated, sometimes because we didn't see any potential for [unclear] offtake. So, you know, there are always projects that basically fail to materialise. And I think what you need to do is you basically need to incorporate it in your plan upfront. This is why we pursue a portfolio approach, that we say, you know, this is to some extent the nature of our business, that not every project will be successful. So you need to pursue a portfolio that allows for failure.

Host

And could you quantify this? So let's say you do 20 projects and one of them is at risk of defaulting, or is that very dependent on the other factors?

Herbert Pohl

Well, we try to quantify it. At least we try to anticipate it, and the way we deal with it is we say, let's try to keep failures at an early stage, where it didn't cost us a lot, right?

00:24:39

That's the way we're trying to do it. We're trying to identify the most critical questions that will ultimately decide upon the success or the failure of the project at a very early stage, and then force them, so that, you know, at that point in time, at an early stage, basically we're saying, OK, this is a project that is not going to work. And so we are abandoning it, right? And unfortunately at that early stage, the failure rate is higher than one out of 20. It's probably more like, what, [unclear] one out of five, in that range. Because, and that already assumes that, you know, when I talk about a project, I'm not talking about a loose discussion. I'm talking about something which has already materialized to a certain point. And then still you have failures.

Host

I mean, earlier we spoke about pattern recognition in your data, which potentially aids you to decide how to start a project or where to start a project. Is certain pattern recognition also useful from failures, to kind of hedge against future failures? Are there certain patterns between geographical regions or something like that?

Herbert Pohl

What we do have is a set of criteria, and we have a process. I think you already asked also about risk management, right? We have a process where projects move from one stage to another. And in every stage, you know, you have to fulfill certain criteria.

00:26:09

And those criteria are basically the result from this pattern recognition. So we say, you know, we know that certain things basically can derail a project later on, so let's try to clarify them early on in order to get them out of the way.

Julius Ambrosius

Makes a lot of sense. So, as Konstantin already said, in a recent episode we spoke with Laurits Bach Sørensen, who leads one of the largest industrial hard tech private equity funds in Europe, and we discussed how Europe struggles with the EV infrastructure despite strong, yeah, policy incentives. So from your perspective, what other types of projects besides geothermal projects could accelerate Europe's energy transition in a meaningful way?

Herbert Pohl

I mean, first let me, you know, focus the attention of the audience on the heat, because the heat turnaround is, I think, sometimes a neglected topic, right? We always talk about power. We talk about, you know, electricity, power, EV charging stations, networks, etcetera. It's actually more than 50% of the CO2 emissions due to the heat sector, right? So we urgently need to look at the heat sector, and one thing that is missing for the heat sector: bigger heat networks.

00:27:41

So, you know, we find it absolutely a fact of daily life that wherever we are, we are connected to the electricity grid, and wherever we are, we are connected to the water grid, increasingly to fibre, right? But we're not connected to a heat network. In fact, actually heat networks are rare, and they only exist in a few cities like Munich, Mannheim, to some extent in other cities like Potsdam, in some areas in Berlin, etcetera, right, in some areas in the [unclear] cities. But there is no broader heat network. So if we want to really drive the heat turnaround, we need to build out our heating networks, so that we can actually connect heat demand and heat supply, because we have actually quite a lot of heat supply in there, from industrial offtake, from geothermal, from any other sources, and we need to connect them with the demand. Yeah, but to do that we need those networks. So I think, you know, the equivalent to your charging infrastructure for EVs is probably the heating network and the build out of the heating network in Germany.

Host

And what is the reason to that? Why are we lagging behind? Is it because of capital intensity or politics, mainly?

Herbert Pohl

Yeah. I think it's again probably both, right? First of all, it is a capital intensive business, no doubt, right?

00:29:14

But so is any investment in a network. Any investment in a network is initially a capital intensive business and only pays off as those network effects materialize, right? I mean, that's the nature of a network. If you start an airline and you only have one route, you don't have a network, right? The moment you build a network, suddenly, you know, the network starts to pay off, right? Same with electricity and same with heating. So I think that is part of it. And in terms of politics, well, right now there is really no owner for this, right? We certainly have no national heating companies, we have no regional heating companies. We have basically local utilities who run the heating networks in their respective cities. But sometimes we even have competing networks in one city. So in order to connect that, I think there is a political element, a regulatory element as well.

Host

Yeah, interesting. I mean, I think everybody always notices their dependency on the power network. I think a great example is us going into this meeting room earlier today and being worried we wouldn't have enough plugs to plug all our MacBooks and iPhones and whatnot in. But maybe hopefully we can spark more public debate on energy with this podcast as well.

00:30:46

I mean, that would be a nice outcome. [...] [...] And a long time ago, before you started Deutsche Erdwärme, you started off your career as a lawyer at Freshfields, and then afterwards you moved into management consulting at McKinsey, which are objectively some of the most prestigious names in both big law and management consulting. And what led to this career change early on with you?

Herbert Pohl

Yeah, it's a bit of a funny story. I was studying in the United States actually. And at that point in time, McKinsey organized a great weekend for all the guys who had received a scholarship there in the United States. And I really enjoyed that weekend. And I thought, you know, it's actually great practice to apply for a job, in order to go through this whole application process, to be prepared when I want to do my real application for the law firms. So I applied, and for whatever reason actually got accepted at the end of it.

00:32:16

It's probably the best way, if you start a process without the, you know, absolute determination to get in there. That was probably the right prerequisite. Then I applied for the law firms and I did what I was, you know, supposed to do. I started with a law firm. After two weeks, I knew it was a mistake, and I had really enjoyed the whole process with McKinsey at that point in time. And so after basically a year, I called them up and said, you know, guys, do you still remember you once made me an offer, can I still come? And fortunately they said yes. And then I joined McKinsey.

Host

Great. And I mean, I think if you realize you don't like something, obviously that's a very good indicator to tell you that you should stop doing that. But in our environment, with more and more young people going into academia, obviously there is a very high market saturation. So people try to get a foot into the door as early as possible. And also, I mean, at good universities, people are very ambitious and try to secure internships. They want to go into that industry. They really try to get into it from day one, basically. But maybe next to realizing that you don't like something, from someone that has had multiple leadership experiences: what is a good indicator to know when it is the right time to take on a new project or a new challenge?

Herbert Pohl

Well, first of all, I fully sympathize with, you know, everybody who's now thinking about his career, etcetera.

00:33:48

And it's extremely complicated, right? I mean, the one thing which I sense sometimes, talking to, you know, I mean, my kids are in the age where they're currently thinking about, you know, the first career moves and sometimes what they are supposed to study or do. A master key is, first of all, really to understand what you really want. And you know, there's so much noise out there about, you know, X has done that, Y has done that and Z has done that, and I should do XYZ in combination in order to top them. Quite frankly, you know, let's really first try to understand what you really want. And I sometimes miss that piece when I talk to people and say, so, you know, I understand that this is a great career move, and I understand this is a great institution and a great internship or a great new first job. But what do you really want? And then the second thing, I think, which is also good, because, you know, if you're saying, I want to become a lion tamer, you know, you're not necessarily good at being a lion tamer. Maybe you are, you know, much better at something else. So, you know, you should also be very honest to yourself and say, what are you really good at? And I think that combination is, and it's difficult. I know it's somewhat generic, what I'm saying right now.

00:35:19

And I'm trying to be a bit more specific in a second, but it's too easy sometimes simply to look at, you know, all the great programs and look at the brand names and just go after them, rather than really trying to look at yourself and say, what is it that I'm good at? What is it that I want? And the combination of it is probably not a bad direction. And one thing which I find always interesting in my career is gut feel. You know, we are all so smart. We can tell ourselves, you know, endless stories. But, you know, our gut sometimes tells us something, when it's right or when it's wrong. And it's not bad sometimes to listen to that.

Host

Yeah. I mean, I think that is also something that we have heard before, especially when we spoke to LPs and venture capital funds, because they said, we could have so much data, but if our gut feeling is not right, we will never do the deal. I think that's what it comes down to at the end, essentially. But when we look at your whole career trajectory, how did your switch from being in consulting to becoming a founder and CEO alter your view on how you perceive business issues and business challenges?

Herbert Pohl

I think when you move from consulting to founding and building your own business, it's completely different.

00:36:50

It's completely different, right? I mean, when you've worked in the consulting business, I think you've ticked off one thing, which is you are reasonably smart, right? I mean, you know, typically people expect that you can run some basic analysis, that you can structure a problem, etcetera. So these are really the basics of consulting, right? But building a business is very different from that, right? I mean, you know, one element is simply, you know, I'm sometimes trying to make it tangible when I talk to former colleagues, and say: a consultant works in PowerPoint, right? You build a business, you work in Word, because very often you talk about term sheets, right, whether it's contractual financing arrangements, whatever it is. Or you work in Excel, because, you know, you're ultimately looking for cash flow and business cases. Yeah, so that's already a very superficial shift in the instruments you use daily, right? People: you know, in consulting, you work with highly motivated, super smart people. And actually, you know, it's already, you know, hard to not motivate them, right?

00:38:20

They're all intrinsically highly motivated. When you build a business, you need to work with a whole variety of people. And you not only work with them for three months, you work with them for years. Yeah. So you need to basically have a completely different attitude towards people management than there. You know, in building a business, you need to look at the nitty gritty stuff, right? I mean, you know, when you're building a business, you are the last defense. There is no associate to pick up the pieces, right? You need to pick up the pieces. Yeah, you know, you cannot just walk around and say, well, I had these, you know, three bullet points on the slide. No, you need to, you know, make it happen. And finally, I mean, that's one thing I would also always tell people before they start a business, and it might be different if you start a business... I was in my 40s when I started the business. It might be different when you're starting it right out of university, right? But the pressure you have as a consultant is nothing compared to the pressure you have when you run your own business and you're responsible for people.

Host

I mean, thank you. I think that's a very good insight. And to add some colour to this, because, I mean, you don't have an engineering background. So what essentially led you to going into the energy industry instead of, I don't know, doing something else?

Herbert Pohl 00:39:54

Yeah, I mean, you know, this is great for me, because I can always start discussions and say, you know, I'm allowed to ask the most stupid questions, because I'm not an engineer, I'm not a geologist. I basically have a wild card right now. I think, you know, what this is... I think where consulting is helpful, right? You try to identify what are the key issues that really need to be clarified, and you focus your attention on those issues. And I think that's, you know, the real challenge is to ask the right questions. Yeah. And then that comes to the people. Then you need to have the right people, and you need to have the people you trust, that they provide the right answers to those questions. And that's, I think, the combination you need to have in place. I think, you know, your background in consulting will help you identify issues and ask questions, and then you add on the people side and say, I need to have a group of people I trust and I can work with, that if they give me a certain answer, you know, I know I can live with it without being able to technically review those answers.

00:41:25

Yeah, I mean, that's different if you're in business or if it's legal questions. You may be able to review those answers and say, you know, was it right, right? I have no opportunity right now to review whether the answer that has been given on a geological or a drilling or a plant engineering question is the right one. I have to trust.

Host

I really like that authentic perspective. Thanks a lot for that. And yeah, maybe to close off this very interesting conversation we had today. [...] And at the end of every podcast, we try to provide some real value for them. So building and scaling a company like Deutsche Erdwärme requires an incredibly diverse team, because it's such an interdisciplinary environment. So you need engineers, you need geologists, you need people that understand strategy, to financial analysts and communicators. So what do you personally look for in young [unclear] talent? And yeah, how do you manage this interdisciplinary environment?

Herbert Pohl

Yeah, it's a great question. You know, you're asking for the secret sauce, exactly. So here is at least some elements of the secret sauce, right? We are in the business of renewable energy. So what I do want to see is some intrinsic motivation for climate change, renewable energy, etcetera, right?

00:42:59

I would at least like to see some evidence in the life that people are interested in, let's say, the broader good, right? And that the world we are trying to live in, in 20 or 40 years, has mattered to them before they applied with us, right? So that's one thing, that's motivation, and which we're trying to test in our interviews. The second one is, I like to see people who have dealt with challenges, and this is sometimes unfair to people who have, you know, a very streamlined CV. Yeah, you know, people who were great at school, you know, went on to do a fantastic BA and then went on to do masters and had fantastic internships, etcetera. That's great, right? And obviously these are, you know, wonderful candidates. But I like to try to understand where have people actually overcome hurdles, what was there in life they struggled with, right? Because, you know, this is a difficult business, right? Driving a business is difficult. And I want to understand, are they in a position that they can overcome obstacles and hurdles, and do they have the resilience basically to deal with those situations?

00:44:29

Then obviously there are some intrinsics, right, which is, I think, clear. We're trying to understand, you know, depending on the position we're hiring for, whether they are well fitted for the job. But I think that goes without saying. The last one, which I think is a highly subjective one, but I think it's also important for everybody to understand, in particular if the interview process does not lead to an offer, right? And that is cultural fit, and there is no value judgement in it, right? You know, we may sometimes say no to somebody who is a great candidate, right, who is absolutely... but he doesn't fit with us, and that's OK, right? And, you know, both sides should be happy with it. And I always [unclear] to people who are basically [unclear] and say, you know, the outcome of that process is not a judgement about you as a person or your capabilities. It's a judgement whether at this point in time you fit into that organization, right? That's the only judgement that is being passed in an interview process. You know, it's nothing about your personality, your character, your ethics, nothing about that.

00:46:00

It's just: does it fit? And sometimes, you know, this is what I'm saying, this is a very subjective notion. Sometimes we're saying great candidate, but, you know, not really fit for us.

Host

So I'm just curious, how do you sense that someone has like a real intrinsic motivation for the broader good or for sustainability?

Herbert Pohl

Well, very simple, right? I mean, you know, you look at the CV and you realize, well, maybe there was some internship already in the energy space. Maybe they have some activities, extracurricular activities, which have something to do with, you know, broadly saving the planet. Yeah, if I sense that, you know, it's all there, you know, fantastic CV, very streamlined, but I don't see any engagement for anything outside your, let's say, your personal objectives, it at least raises questions.

Julius Ambrosius

Great. Now, I don't have any questions left. How about you, Konstantin?

Konstantin Girst

Oh, same. I think we checked a lot of boxes.

Host

Exactly, right. So again, thanks a lot for the very interesting and engaging conversation we had today, Herbert. And yeah, to all the listeners, I hope you enjoyed this episode, and tune in two weeks from now for the next episode.

00:47:34

And yeah, see you from there.

Yeah. Well, thank you so much from my side as well. And to everybody else, hear you soon.

Herbert Pohl

Perfect. Thank you guys. Superb.