Starting all over, with Dr. Margaret Lumley

Speaker A: Hi, I'm Jay Goldstein. I'm the CEO and founder of Founder2Leader, an executive coaching firm that specializes in equipping early stage bio and climate tech leaders for scale. This podcast, From Founder to Leader, aims to demystify what it actually looks like to build hard tech startups. Too often founders share their stories when there are newsworthy successes, the big raises and the lucrative exits. We want you to hear the real human stories that drive innovation, the crossroads decisions, the messy middle and the practical know how. We hope that these conversations will help you as you take your ideas out of the lab and build scalable solutions to improve human health and our planet. Welcome to another episode of From Founder to the Human Stories Behind Bio and Climate Tech Startups. In this podcast episode, we're demystifying what it looks like to build a hard tech startup from the ground up by sharing the real human stories and behind the headlines from the people driving innovation. Today's guest is Margaret Lumley, CEO and founder of rokawater. The theme of today is Starting all over. Why Margaret shut down her startup and built it from scratch. All over. Thank you so much for joining us, Margaret.

Speaker B: Thank you so much for having me, Jay. It's so fun to be here and I'm so glad you're doing this podcast.

Speaker A: So Margaret, let's start with your background a little bit. Tell us a little bit about your educational background and any sort of work experience you had before starting Roka.

Speaker B: Yeah, um, I grew up originally in the Bay Area and I went to college at UC Santa Barbara where I studied chemistry. And I just kind of happenstance randomly joined a battery research lab when I was an undergrad and really fell in love with the field of electrochemistry and working in energy. And I ultimately decided to do my PhD in chemistry at the University of Wisconsin Madison. So I moved from Santa Barbara to Madison Wiscons and I joined a research group using electrochemistry to solve different environmental problems. And one of those was water desalination, which is something that was really near and dear to my heart growing up in California where we were always in a drought. I finished my PhD in 2020 and right after that I started a company. Um, so I've had no other work experience besides being a grad student and a startup founder. Yeah, I was. The Activate Fellowship is a two year fellowship program for climate tech and biotech startup founders. It was a really incredible transformative program. Really kind of teaches you everything you need to know about starting a company when you come from an academic or non entrepreneurial background, um, and they really focus on training you as an individual person and helping you figure out what kind of leader you want to be, what kind of startup you want to build and grow, um, all of those kinds of things. And I'm still really close with my Activate Fellowship network.

Speaker A: And one of the things that they did was provide you with funding to de risk this step. Right?

Speaker B: Yes, yes, I forgot about that part. Very important. Um, so Activate was actually our second source of funding when we started the company. So I officially left UW Madison, my postdoc position, and was working at the startup full time in February of 2022. And then I became an Activate Fellow in June of 2022. Pay your salary through a stipend for that two year period. And that's one of the hardest things when you're making that leap from grad student to founder, is how are you going to pay yourself in those early days. And a lot of that funding can come through grants, but Activate Fellowship is another great option. And then they also give you some funding for research and development and connect you with their investor network.

Speaker A: Looking back, let's talk about your journey to startup number one, um, which is Clovis. So we'll talk a little bit about that. But did you, like, early on, did you identify as being a founder or an entrepreneur or at what point did you start to realize like, hey, launching a company sounds like a reasonable game plan?

Speaker B: Yeah, I feel like a lot of startup founders will give you a hard yes when you ask this question. They had lemonade stands. They were coming up with new ideas when they were kids. And I did do some of those things. I was always a little entrepreneurial and working on different projects and finding unique, unique ways to make money. But my dad actually had a startup. He had a wind energy startup called Heirloom Energy. And I saw from him firsthand how difficult that startup journey was and how long it takes really to take that idea and turn it into something practical that is a real commercial innovation. I saw the highs and lows and he was in a very different life phase, you know, raising a family. Um, but I always thought that I didn't want to start a company because I saw how difficult it was for him. And then when I was in grad school, I was, you know, working full time in a research lab, doing a lot of hands on science, which I loved. But I started to get very interested in other things that I could do after grad school. And I looked at things like, uh, IP lawyers or, um, working at, ah, A consulting firm or things like that that would sort of get me out of the lab and do more bigger picture thinking. And one of the things that came up through that process was entrepreneurship and starting a company based on your PhD research. And UW Madison has a really great innovation ecosystem. And so I did some on campus customer discovery programs mostly just because I was curious. And I started talking to other grad students I knew that had gone on to start companies and learned about what their experience was like. And I did this entrepreneurial boot camp at uh, UW Madison. So one week program for, run through the business school for science PhD students and designed to sort of teach you everything you learn in an MBA in a really compressed week. Um, and that was really fun. And so the more I learned about it, the more I realized that it was a really good mix of my interests. You know, being close to the science, but a lot more focused on solving real world problems, engaging with external investors and customers and doing more of that big picture thinking. And so ultimately decided to take the leap around my fourth or last year of grad school is when I got pretty serious about it.

Speaker A: So tell me about the beginning of startup number one, uh, Clovis. What are, what were the early days like? And like what, what was that like?

Speaker B: Yeah, so oftentimes the way this process works is you're a uh, PhD student, you have a PhD advisor and one of the ideas that you're working on seems to have a lot of potential and you start talking about forming a company to continue to develop that innovation outside of your grad school lab. And in this situation, the PhD advisor, my PhD advisor specifically was still my boss. I hadn't defended my PhD yet. She was still very much managing my research projects and was very hands on. And so when we decided to start a company, um, it was an interesting conversation because now all of a sudden you're talking about this sort of power dynamic where one person is definitely in charge. She was my boss to now being partners where I was planning to leave grad school and be the CEO of this company. She was planning to stay@ Ah, UW Madison. And it's a very difficult transition for a lot of people. Um, there are a lot of professors who have made it work very well with their grad students and a lot of professors who haven't been able to make it work very well. And I think something that's really hard is, um, nobody is teaching you what to do. You know, I did get into the Activate fellowship, but after we had already started this company. And so when you're in a university setting, there's no rules about how you should split equity, how you should define your roles, what is the value of the initial research that was done in the academic setting compared to all the development work that is to come. And something um, that came up for us in the early stages was equity ownership in the company and what that should look like. And we decided on a structure that ultimately didn't feel fair to me once I was working at the company full time and she was not. Um, and that's, you know, a little further down the road after we started. Um, but in the initial days the first thing that we did was apply for grant funding. So we applied for an SBIR grant from nsf and that was kind of the initial funding that went to the company and allowed me to make the leap from grad student to full time founder and CEO. And a lot of what happens in that transition period is thinking about how could this technology actually be used in the world. And a lot of grad students have platform technologies where you have this foundational process that could be used in our case for water desalination or wastewater treatment or energy storage. And so part of the process is figuring out where your technology is the best fit and offers the biggest advantage compared to what's out there today. And that was I think the biggest transition from academic setting to founders starting to think more in that way. Um, so we had a small team. It was me and my PhD advisor and then a postdoc from my lab were all co founders of our startup Clovis Water. And then once we got a little bit of funding we hired another full time person. So it was me and then Nick was his name, working full time. And my co founders were still@ uh, UW Madison, sort of advising startup, mostly on scientific side.

Speaker A: So how far along did you get before you realized that this structure wasn't actually the right structure?

Speaker B: That's a great question. Um, so yeah, thinking back, I officially started at Clovis Water on February 1st of 2022. And then a couple months later I got into the Activate Fellowship. And that's when you really get this sort of very intense education around all aspects of, of running and growing a, uh, startup. And one of the things that comes up quite a lot is equity allocations. When you have a professor who is a co founder, this is a challenge. I know you've heard this a bunch of times too, Jay. A challenge for many grad students who start companies with their PhD advisors. And I'm very open about my story. And probably once, twice a month, sometimes I have another grad student reaching out to me who is navigating this situation with their advisors as well. Um, you know, usually the expectation is if somebody is not working full time at the company, they should own no more than 10% of the company. So depending on how long the idea was incubated in the research lab or how much funding or how involved the professor is, that number can really vary from maybe 1 or 2% all the way up to 9 or 10%. And sometimes it's more than that. If the professor takes a significant role or takes a sabbatical to work at the company or has previous startup experience. There are definitely exceptions to that rule. But in this case, sort of the advice that I was given was less than 10% equity should go to the professor who is a co founder not working full time. And we were very far from that number. There were three of us and we did an even equity split. And so at that time I started to think about what our cap table looked like and what it should look like for investors who might invest in the company in the future or other, uh, high level hires that we might want to make in the future, who would expect some kind of equity compensation. And so I, uh, was working with my main mentor in Activate Fellowship for a long time, trying to think about when to approach my advisor and how to talk to her about equity allocations and what sort of the expectation is in the real world and startup world outside of an academic setting. But at that point we were pretty far down the path of working together. About nine months of me officially being at the startup about a year or so after we'd legally incorporated, which was when I was still working for her at UW Madison.

Speaker A: How much capital did you have in house at that point from your grants?

Speaker B: We had a, uh, phase one SBIR grant which was about $250,000. And then we had ACTIVATE Fellowship which was supporting my salary and then also a hundred thousand dollar grant. And then we'd also taken $200,000 in investment at that time as well. So yeah, financially things were good. The technology was working well. Everything was progressing as planned. Um, but I decided to have a conversation with my advisor about equity and that's when things really started to fall apart for us because once we got to that point, I was asking her to give me something back. She had been awarded this equity, but now I was telling her that it should be used for something else or go to somewhere something else or Go to me. And that is a very different conversation than deciding equity allocations from day one. And we continued to work together for a couple months after we had those difficult conversations, but we never really found an outcome that both of us were happy with. And so ultimately, In April of 2023, about a year, a little over a year since I had been full time at Globus, we decided to separate. So to not work together anymore, to not be co founders, because something that happened in our relationship is the foundation of trust that you really need to be, uh, working on a business together had started to fracture. And it's really, really hard to repair that trust once those cracks emerge.

Speaker A: How was your mental health during that process? Like, was that really hard? What was going on for you? I can only imagine how it must have felt to have to ask your PI to divorce you, essentially.

Speaker B: Yeah, divorce is the best analogy, I think. Um, it was interesting because ultimately it was my decision to separate and I had my activate mentor who was my rock through this whole process. And without her, I wouldn't have been able to do it because, uh, looking back, I now know what the outcome is. But at the time, I had no idea what the future looked looked like. Like, could I start another company by myself? Is that something that I even wanted to do? What would I work on? And something that you start to feel, you know, when you're a grad student. So much of the foundational work that is done and the funding that you receive, it is the PI. The PI is the, you know, corresponding author on all the papers. The PI is the one invited to give talks. The PI is the face of your research group. And you're sort of like a cog in the machine in some ways. And so going from that experience to now being the CEO of this company, it's just such a huge leap and it's like such a big growth period. And then now to be in the position where I wanted to separate from my co founder, who had been my mentor for the last eight years, at that point, uh, it was really, really tough. And yeah, Hannah, my activate mentor, she talked me through it. She got on a call with my PhD advisor to try to figure out if we could find a compromise. And kind of the, the way it worked is I decided that I wanted to separate and that I thought that was the best thing for both of us and for the company. And my original goal was to try to buy back her shares or have her keep some small amount of equity, remain as a technical advisor, but not be that Involved anym. And it was her decision to say no to those options. And she decided that she wanted us to shut down the company. And at that time, our company had two board members, which was me and her. And so you're kind of in this position where you. You have to agree, you have to come to a compromise. And so ultimately, that's what we decided to do. We shut down our company, and it was crazy. Um, you know, you're basically just undoing everything that you did to start the company. But you have investors of grant money. We had an employee. The amount of responsibility you feel is really intense. And I think, Jay, you and I had, uh, this was just funny timing. Like, we had one or two executive coaching sessions, and then I told you that, okay, the thing I'm navigating now is shutting down this company. Also, I met my lawyer. I, uh, was hiring a new lawyer. Our second meeting, I was like, hey, we're shutting down this company, and I think I might start a new one. And he's like, okay, let me help you figure out how to do this. And so that support network was really essential. And something that helped me a lot is as I was more open about what I was going through and what happened with my advisor and the decision that we came to. I heard from so many other founders that they navigated something similar. They shut down a company that they'd started with an advisor. They'd had their relationship with their advisor completely fracture. And so that was really helpful and I think just validating that, like, this is not a normal transition to make from boss employee to business partners. And it's just, I think, in many cases, not the right decision for people to try to change their working relationship in that way. Um, and I took a long break after we officially shut down the company, before I started working full time again. And the only reason I could do that was because I was still an activate fellow. And so they were still paying my stipend, even when I was in this period of trying to figure out what's next. Um, but I think most of us have had times in our lives when you're dealing with some difficult interpersonal relationship, whether it's a, uh, boyfriend or a girlfriend or a parent or whatever. It is a, uh, breakup. And it just weighs on you so much, and it takes. Takes so much emotional energy to manage that relationship. And I think what I underestimated, even at the time, is how draining that was and how much it changed me. Like, I wasn't. I feel like I'm a Very energetic, outgoing, like generally pretty positive person. And I was just not feeling that way. You know, you're not sleeping well, it's hard to find the energy to exercise, to take care of yourself and it just like, like totally drains you. And then recovering from that, I underestimated how long that would take.

Speaker A: What made you feel like you wanted to start all over again and not uh, just call it quits?

Speaker B: That is a great question. My story is quite unique I think. Um, we had applied for this bigger follow on grant. So the first grant that we GoT was an NSF Phase 1 Small Business Innovation Research grant. And we had applied for a phase two Small Business Innovation Research grant. So it's a million dollar grant. Uh, we were about to hear back about whether or not we got this grant when we decided to shut down our company. And I think um, one of the things that made me want to start another company is I felt like I didn't really give it my best shot. Like there are a lot of reasons that companies can fail. It can be technology or funding or not finding the right market or competition, whatever it is. And none of those things happened. Like the technology still had a lot of potential. We didn't run out of money. I still was in this community of startup founders doing all these incredible things and I felt like I wanted to have a real chance to build a startup. That drive was still there. And that may not have been true if I'd been in this situation for two years instead of one year, five years instead of one year. But for me I just felt like I hadn't given it my best. And so because we were still waiting to hear back about this big NSF grant, I was able to get it transferred from my old company Clovis Water to my new company Rokawater. And my advisors research group at uh, UW Madison got a small sub award. So we continued to collaborate on this research project but the majority of the funding was moved from our old company to this new company. And that was like a little bit of a small miracle that that worked because if you've ever tried to do anything with the government, they do not like these weird anomalies. And um, it took from July. I started the process of transferring it and took until April of um, 2024. So July of 2023 to April of 2024. It took a really long time but my NSF program manager and the people at Activate really helped uh, to support me through it. And that was like a good catalyst I think. You know, I didn't have to start over. I was starting with $1 million in grant funding and that was really, really powerful. And I don't know if I would have been able to start from zero again, partly because the lead time is very long. And if you're going the grant funding route, which we are, it can take, you know, six months, 12 months to hear back about a grant. And so just being able to transfer this grant, start with my feet under me in some ways was huge. And in this, this period of time, I also moved from Madison, Wisconsin back to the Bay Area. And so that was a big transition as well. Is thinking about where do I want to live if I do start another company? Do I want to start it in Madison? Um, and ultimately came back to the Bay Area and I've been here almost two years now.

Speaker A: Thank you for sharing your story, Margaret. It's really helpful to other folks to hear what you've been through and to see how you were able to take a hard moment and turn it into what is now a thriving organization. Tell us quickly about what roca's up to right now and what's coming up.

Speaker B: Yeah, um, ROCA is developing a technology for nutrient recovery from wastewater. So we're trying to take nutrients out of wastewater, uh, because they cause algae blooms when they're discharged to our bay here in San Francisco, our lakes and rivers in the Midwest, and turn those nutrients into fertilizer. So we're very. Fertilizer are focused on circularity and water remediation. We have a team of four right now, so me and three other teammates, um, one of them has been with me for almost two years. We're all scientists and engineers by training and the most exciting things that we're working on right now, we have transitioned from testing synthetic wastewater samples to now screening real wastewater samples in our small scale lab prototype, which is really exciting and feels like a big leap on our way to pilot projects. We're still mostly grant funded, but we're planning to raise a, uh, seed round starting in the next couple of weeks and that will support deployment of our first pilot project, hopefully in the next 18ish months.

Speaker A: That's so exciting. Uh, let's wrap up with one concrete tip for our listeners. What is one thing that you wish you knew or you wish you had been thinking about, um, earlier on in your journey?

Speaker B: Yeah, one tip. Um, I think the biggest one for me, it took me a long time to learn this, but when I was going through the process of deciding whether or not to split up with my advisor for A long time I felt stuck. Like my only option was to figure out how to make it work in this environment. And I think something that I really took away from that experience is just remembering that you always, always have a choice. You can choose whether or not to keep working with people. You can choose whether or not to start another company. And that's been really, really powerful. And I think something that you can really only internalize through lived experience is just remembering that no matter how hard it might seem, no matter how difficult the conversations are, you can always leave a situation if it doesn't feel right to you. I'm going to add a second one too, which is just learning to trust your gut. And that has been huge for me, especially when comes to learning to trust my gut when it comes to people and relationships and the people on my team. And that has also been such an important learning. And, you know, something that I now take with me when I'm trying to make a big decision is like, how does this make me feel in my body? And that has been huge. And something that I definitely learned through all of this hard transition and starting over and everything.

Speaker A: It's just incredible to hear about your perseverance and how you've been able to, you know, transition during the stretch of time from a scientist to a founder and now a leader. So thank you, Margaret. Thank you for joining. From founder to leader. Full transcripts of the podcast are available on our website, foundertoleader.com. that's the word founder, the word to leader.com. and if you're looking for more concrete tips, tools and guides to accelerate you as you build, check out the Tough Tech Toolbox, which is a collaboration between Founder to Leader and the engine built by mit. You can buy a membership as an individual, as a team, or as an enterprise for your accelerator or portfolio. And if you're looking to skill up with a coach, please reach out. We'd love to meet, hear about your video goals and explore how we can support you. Building hard tech doesn't need to be so hard. We got you.