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The students are more than halfway through the course, and we are starting to see more sophistication in the teams’ understandings of their customers, business theses, and minimum viable products. As we have seen in PowerBridgeNY and I-Corps, the Lean Startup Methodology is an efficient and effective way for a startup to understand what the true problems are in any industry. Many of these students are Masters students in policy, engineering, and business with an energy concentration, so they have read case studies about the energy sector from afar. We have seen that by taking this class, the students are getting a more nuanced view of how the energy sector functions, including how the companies work and what influences the programmatic and buying decisions of different employees. This type of thinking will not only make their solutions stronger, but if the students decide not to pursue the startup, they will now know a significant amount about the sector and a have new way of looking at problem solving that they can apply to any of their future ventures. Team Presentations - Week 8 This week, we had the teams again thinking about their revenue model and pricing strategy. We wanted to see, given their more sophisticated understanding of their market, if they could make a first attempt at figuring out how they will make money on their product. Some highlights from this week: Students will go to any lengths to determine data from their competitors:……. Student: We know that our competitors are not making money on similar products, so we think that we can actually do what they cannot do. Instructor: Can you talk to one of the [the competitors]? Student: Yes, I have a stealthy plan. They are starting to really understand their customer archetypes…. “Every time you talk about contracts, the engineer’s face goes pale!” We think everyone is having too much fun? One of the instructors said “I know we all love DER. We are all getting tattoos about it after graduation, right?” Here are this week’s presentations: We started off with Team EVE, who conducted eleven interviews this week. As you might remember from last week, this team pivoted their customer focus away from commercial property owners to multifamily residents. They learned that selling the chargers to this customer base and providing maintenance may not be feasible because the cost to purchase a DC charger is 10 times more expensive than what they previously thought. This team is now thinking of having a shared ownership model where residents would jointly lease the infrastructure in order to reduce upfront costs. This team continues to find challenges with their target customer segments, but we are always impressed with their doggedness and positivity. As one team member said during the presentation, “EVs are now getting cheaper, so people without single family homes will be able to afford them and need this infrastructure. Someone has to solve this problem. We would rather it be us.” Great entrepreneurial spirit! If you are having trouble viewing the presentation - check it out here. Second up was AggregEn, who had 10 interviews this week. The team continues to stay laser focused on the financial sector, and this week they determined what specific verticals would be most interested in their customized DER data. From their interviews this week, they learned that equity researchers would most likely not be a customer because they are interested in wholesale market research as opposed to the retail market research that this team would provide. We look forward to seeing if the team is able to hone in on which specific investors would be interested in their data. If you are having trouble viewing the presentation - check it out here. Next we had Sustainable Catalyst Group present, who had 10 interviews. This team modified their business thesis from last week, changing from an energy marketplace between PV owners and EV users to a “network” that connects EV users to local energy. When asked by the teaching team about their business model, the team clarified that it is like a “AAA Buying Club for Solar.” This team also presented their revenue model, which anticipates revenue from many sources, including partners, PV owners, EV Users, and other potential auxiliary operations. The teaching team expressed that the payment flow diagram seemed overly complicated, and the team should consider simplifying. If you are having trouble viewing the presentation - check it out here. Li-ionNYU was next, completing 12 interviews this week. This was definitely a rebuilding week for the team, as the insights from previous interviews caused them to re-examine their customers and business model. They learned that their Week 7 business idea, to create a database of electric vehicle information, was less viable than expected because many databases already exist in the market which are not well used by customers. They also learned from vendors that they would not be interested in leads from Li-ionNYU because they are already backlogged with orders from other sources. This was definitely a learning week for this team, and we are looking forward to seeing how the team plans on delivering the EVs that universities like NYU want. If you are having trouble viewing the presentation - check it out here. Our final team to present was PowYorker, who had 10 interviews this week. This team learned a lot about what project managers and utility workers need in the field from an underground sensor. They learned that the utility service workers really want a better understanding of the physical and environmental conditions of ConEd’s underground structures so that their team can safely go into a situation and fix problems. The field workers hate getting manhole calls because a lot of times they have to go out to the site, send sensors down themselves and wait for the results. Depending on what results they get, they may have to wait hours for the appropriate equipment to arrive. If they had more information ahead of time, they could gather all the resources that they need to do their jobs more efficiently and safely. This was a great piece of intel, because it gives the team a more profound understanding of what is vitally important to their potential client. This team also continues to get good pricing information, this time learning that the client would be willing to pay no more than $200 per harvesting unit. If you are having trouble viewing the presentation - check it out here. Energy Lecture - Week 8 This week, as the students figured out if they could make money off of solutions, Professor Bradford talked about microgrids and New York REV, a new potential revenue generator for the New York energy industry. Some highlights from his lecture:
Lessons Learned - Week 8
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Energy Lecture - Class 7 This week, Prof Bradford went first and spoke to the students about Distributed Generation, including how it is structured in the US might influence certain business models and market decisions. Some highlights from the lecture:
Student Presentations - Week 7 We introduced the students to the Get-Keep-Grow funnel, a diagram developed by Steve Blank to help startups visualize to how to find, keep, and grow your customer base. We also asked the teams to spend some time focusing on how much it would cost them to acquire and keep customers. It was an opportunity to take their assumption of how they plan to build their customer base and determine if it is economically feasible. We noticed that overall this week’s exercises were challenging, and the student teams struggled to estimate the cost of customer acquisition (CaC) and lifetime value (LV) of their solutions. We saw one instance where backup data for assumptions was difficult to track down, and another where they were too optimistic about how quickly they could acquire customers. We also noticed that many of the Get/Keep/Grow funnels were fairly generic and lacked specificity. Building a startup is different from a class because it is not linear or predictable and the teaching team does not have the answers. Founders need to think outside the box to track down the relevant data they need to better understand their customers and how to sell to them. It was definitely another rude awakening. Here are this week’s presentations: Our first presentation this week was Li-ionNYU, who had 9 interviews this week. Li-ionNYU has been hyperfocused on university officials as their primary customer. The team learned that, when shopping for electric vehicles, most of the sustainability officers do their research online, and they find it difficult to find relevant information. This team also discovered that service providers rarely have relationships directly with universities and other large organizations, but instead use a distribution channel to sell their products. With this information, this team now thinks they can be a great intermediary between university and EV manufacturers, providing both services to help universities better buy EVs, and direct connections to manufacturers. When we moved on to discuss this team’s cost of customer acquisition (CAC), we mentioned that they should consider the implication of those numbers, as it looked like they will not be profitable for a few years as a company. Next up was Sustainable Catalyst Group, who had a good number of interviews this week with 10. This team decided to experiment with getting customers by setting up a Google AdWords campaign to target geographies with EV incentives. They saw some traffic, with 200 unique visitors in 48 hours, but the teaching team cautioned that those numbers do not tell them about who their customer is and if they can or will buy the product. The instructors emphasized that they should use the customer interviews to better understand who their customer is, and that will help them build a targeted strategy to acquire them. The instructors also noted that the CAC seemed low, advising them to go back and see if they can find more data to help form a more accurate estimate. PowYorker was the next team to present, with 10 interviews this week. This team had a unique week and actually got the chance to visit the factory of one of ConEd’s equipment providers. It was an eye-opening experience for them, as they learned how large and rugged equipment for utilities needs to be and how much testing is required before something is installed. This team discovered previous unforeseen costs, including materials and testing time, that forced them to reconsider how much they need to sell to make a profit. They also learned this week that the problem they’re trying to solve might only be applicable to their Industry Host. ConEd is unique in that they have a lot of infrastructure underground, it is older than most other infrastructure in other comparable cities, and they operate in a climate with cold winters where salt from the roads can get into the manholes and corrode the infrastructure That being said, they believe that, since ConEd’s need is so high, one customer might be all they need. They may be able to apply the same solution to other problems as well. We look forward to seeing if that is the case. Next up was Team EVE, who had 10 interviews this week. This team had a BIG pivot. They learned through their interviews that commercial property owners and store owners do not see value in owning EV charging stations. As a result, EVE has pivoted their primary customer from commercial property owners to residents of multifamily buildings. These owners may be interested in buying EV cars, but the lack of charging prevents them from doing that. They may also own an EV already and not have a place to charge their vehicle while at home. Because of the high density of people and low density of EV charging stations, owners could pool resources to pay for a fast charger provided and maintained by EVE. We stressed the importance of talking to customers that fit this new business model before fully pivoting into this new market. The final presentation for this week came from AggregEn, who had a great week with 11 interviews. This team is starting to do a nice job of formulating their hypotheses so that they are testable and lead to usable insights. They continued to validate that their primary customer is the investment community, learning from their interviews that many of the subscription services out there do not provide enough data for investors to get key insights into the energy market. Recognizing the importance of exploring customer segments, this team also interviewed energy aggregators this week who did not express interest in their solution, believing they had everything they need. When presenting their GKG diagram, the teaching team could see that AggregEn knew who their customer was, and tailored the customer acquisition plan to them. They also took Travis Braford’s advice last week and increased their solution’s subscription price based on what they learned about similar services. Lessons Learned:
This week we asked the students to think about channels. This was a change in focus, because for the past few weeks we have encouraged the students to determine the relevancy of their product to their customer, and this week we asked how they would actually reach their customer. Student Presentations - Week 6 Here are some highlights from Week 6: Student: “I woke up and dressed nice today because I had a feeling I would present!” #Iwokeuplikethis. Here are this week’s presentations: We kicked things off with Sustainable Catalyst Group. They had 8 interviews this week with 6 of them in person. We were happy to see that this team refined this Business Thesis since last week, but instructors noted that it was not addressing an important point: what the value of their solution is to their customer. When looking at their channel diagram, the instructors noted that it was a good start, but they felt like the team devised the numbers and percentages without any data. The instructors were happy to see a long MVP timeline, it means that the team recognizes that, since the EV market has not fully developed, it may take quite some time for their business to see any success. Next up was Team EVE, who had 10 interviews this week but only one in person. This team has a bit of a pivot this week in their business model, experimenting with moving into EV maintenance and installation. With this change in mind, the instructors wanted to know how they would plan on interacting with their customers. They responded that they would have a mobile platform that customers can use to interact with them, and EVE would partner with contractors to provide the O&M. One of the mentors astutely pointed out that with this new business model, they should reframe the type of solution that they are providing: they are not selling the charger, but in fact a turnkey solution. As a result, they might consider that their customer is not a big box store who would install the charger, but rather a charger provider who subcontracts the EVE service to their clients. This team also had an “aha” moment about their market: They learned that Level 1 chargers, the charger that you mostly see, are so cheap that it is actually less expensive to buy a new charger versus paying an O&M contract to maintain them. This revelation taught them the individuals purchasing Level 1 chargers are not their market, and they need to see if the purchasers of Level 2 chargers would be interested in their solution. The third team to present was Li-ionNYU. This team completed nine interviews this week and began to see a trend. Most of their interviews have been with university officials - their anticipated customer - and they noticed that almost everyone they spoke to wants to buy electric vehicles but are not equipped with the necessary information to actually purchase them. This was a major revelation for this team, and they responded by re-positioning their business model to be a comparison product with consulting on the side. The teaching team was happy to see them modify their business model based on the data they picked up from customer interviews, but they stressed the importance of getting more data to see if their hypothesis is correct. We also noted that their current business model requires 40 customers to break even, which seemed high. Next up was AggregEn, who had a strong week with 12 interviews. This week’s interviews further validated their hypothesis that the financial industry might be their primary customer. The investors can find the DER data AggregEn would supply, but current methods are cumbersome. This team’s major learning is that their value proposition is convenience and saving time, something they need to prove is worth money to their customers. For their channel diagram, this team investigated how much other subscription based financial data packages charge. They learned that this data can be very hard to find (it is not regularly published), and so they estimate charging $1,000/year for their service. Travis Bradford, the professor who teaches our energy systems lecture, provided this team some inside information. As one of the founders of Greentech Media, he knows that GTM Research has to keep tabs on this pricing information because they sell to lots of organizations that track clean energy data, including investors. He said that because investors have money allocated in their budgets to purchase market reports, AggregEn could probably charge more. The final team to present today was PowYorker, who also had a solid week with 11 interviews. This week, PowYorker learned more about their market’s supply chain by interviewing both utilities and their vendors. They learned that although utilities are the final user of their technology, they most likely will not be selling to them. Selling directly to a vendor could potentially direct them to multiple utilities at once. Some of the vendors have been offering energy harvesting technology with a sensor, but the vendors have mixed opinions on whether that market will take off. They also know that Con Edison is only interested in the harvester, not the harvester-sensor combination, but the team learned that the sensor aggregators would not be willing to change their design to remove the sensor for only one customer. The team’s interviews with utilities also gave them some useful intel. They learned that ConEd may be willing to pay $1,000/unit for a good energy harvesting sensor technology, and they used this number to build out their channel diagram. We were happy to see that this team found a real data point that they could use to build their channel diagram, because it grounds their assumptions in the real world. Energy Lecture - Week 6 As the student’s learned about how to use distribution channels to sell their products, Prof. Bradford lectured on how demand side management and smart grid better distribute energy. Some highlights from his lecture:
Side note: Prof. Bradford had a great definition for energy efficiency: reducing the amount of energy used to provide the same level of energy services. Lessons Learned - Week 6
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AuthorThis is the class blog of the Spring 2017 Hacking for Energy class. Expect updates, thoughts, and musings from the Hacking for Energy teaching team. Archives
May 2018
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