It is April 5, 2018, and we are less than a month away from the end of the Hacking for Energy class. Since we last saw the students, they did an additional 106 number of interviews, bringing their total interview count to 413. They also learned about the remaining boxes of the Business Model Canvas, continuing the lessons from the March and February. Below are the concepts that they learned.
Week 9: Since Week 8 was a recap week and the following week (March 15th) was spring break, it had been some time since we introduced the students to a new business topic. This week we had the students focus on key resources and activities. Key activities what a company must do in order for their business model to be a succeed, and key resources are assets, whether they are physical, financial, intellectual or human, that a business must have to enable that success. For example, if your company is a cell phone manufacturer, one key activity might be be manufacturing the batteries while some key resources would include the manufacturing equipment, the building where you do the manufacturing, and the intellectual property related to the cell phone . To help the students think through these concepts, we have them fill out a table that lists all their key activities, what key resources are necessary to enable this activity, and the status of the activity. We also have them color code the chart to display human, financial, equipment, and intellectual assets.
This week also marks the first time that the students began working on the left side of the Business Model Canvas. We started the course by having the students focus on Value Propositions, and then had them move into the right side of the canvas, which are topics related to the customers - customer segments, customer relationships, and channels. In Week 9, we had the students begin to think about the left side of the canvas and topics related business structure - key activities, key resources, and partners. This sequence is intentional in Lean LaunchPad. The right-hand side is about figuring out who your customer is, if they are willing to buy your product, and what motivates them to buy. The left-hand side is about figuring out if and how you can deliver the product envisioned after answering the key questions from the right-hand side.
Week 10: Continuing with topics on the left side of the canvas, in Week 10 we had students look at Partners. In Lean LaunchPad, Partners help provide the key resources or execute the key activities that you are not able to do within your own business. In the case of the cell phone manufacturer example from above, a partner may be a battery manufacturer who helps you design a prototype battery for your phone because you do not have the technical expertise in-house to do what needs to be done.
The types of partners you see in a business are:
To help the students think about partners, we had them build partnership diagrams where they mapped out their potential partners, including the type of relationship they would have, and the value that each partner would get out of the relationship.
For this week (Class 11), we had the students focus on the Cost Structure box of the Business Model Canvas. In particular, we asked to students think about all the costs that need to be incurred for their company to function. This is the culmination of their learning, as they are going to take all of the information they have gathered from the past 11 weeks (How will you reach your customer? What are resources do you need? What partners will you have?) to determine how much it all will cost. Once students fully understand the costs that drive their business model, they can then compare them to potential revenues to really understand if this is a potentially scalable business.
Some fun highlights from the past couple of weeks:
We think they are happy to be coming to the end:
Instructor: This is your last day of the Business Model Canvas
The students: Woohoo!!
But it also clear they have learned a lot:
Student: We talked to a company doing something very similar to us but in the Midwest. They definitely need to do their customer discovery though because they were talking about how their product was for everyone.
Instructor: You sound like Steve Blank right now and it makes me so happy!
We also love these teams’ true priorities
Student: We did very well at this event the in-person interviews but I was disappointed.
Students: There was not a lot of free swag
Student: I like free swag.
Here are Week 11’s presentations:
First up was Aquathots, the team working with the New York City Department of Environmental Protection. When we last saw this team, they were developing a water-saving device for residents to reduce water consumption and save on their water bill, but they are now developing a water usage tracking service that will help managers and residents save money by saving water.
This week, the team spoke to property managers and some companies in the metering sector. When describing their cost flow diagram, they indicated that their business model depends on the data that they collect being free, which is the case with city building water usage data. Their current plan is to have residents download their app that benchmarks their water usage. As they reduce their water consumption, they will earn coupons or possibly monetary rewards. Since the property managers and not the residents pay the water bill, any money savings on the water bill will accrue to the managers, who will then share some of the savings with the Aquathots team. The team thought that property managers would also want to download the app to track water consumption, but they learned from their interviews that larger property managers would not be as interested in the product that they are offering since they have too many other things to think about. The teaching team asked the students if they thought about how they would incentivize each customer that they have identified, as small business owners and residents have different considerations when making buying decisions. Why would a resident want this app? What kind of savings would a property manager need to see in order to get excited about the product want this app? They suggested talking to more of their target customers (property managers and residents in metered buildings) and finding out from them what would incentivize them to save water.
Our next presentation was DemoDogs, who are working with the Environmental Protection Agency (EPA) to come up with new transportation options for low-density areas in order to reduce GHG emissions. This team has been progressing quite nicely since they hit on their idea to create an app that predicts demand for ride-hailing services as a way of reducing the idling time of those drivers. This week, the team did a really nice job thoughtfully outlining their costs. In particular, we like that they ran experiments with Google Ads to see what their customer interest might be and learned that the conversion rate for Google Ads was much lower than they thought. They used this new data to rethink their Customer Acquisition Costs which they are worried might be too high to sustain a business. We were really happy to see the team using real data but also cautioned them to take this data with a grain of salt: getting someone to click on an ad is one thing, but getting them to actually pay more for a service is another. We recommended that, once the app is up, they could refine what their conversion rate is. This will likely increase their CAC, but a high CAC on its own is not a bad thing. It is really the comparison between the CAC and the Lifetime Value (LTV) that matters, so we also recommended they revisit their revenue model and LTV calculations.
Next was PowerTab, the team working with the Electric Power Research Institute (EPRI) to solve the information gap that exists around EVs and the capabilities of their batteries, with their current solution being a web app that will provide fleet owners with a custom comparison of the cost-savings, environmental benefits, and mileage range of electric vehicles (EVs) to better make purchasing decisions. This team had a good week, as they were able to get some good industry interviews at the International Auto Show at the Javits Center. In particular, they spoke with telematics data providers to learn more about the feasibility of getting data collected from GPS trackers into their web app to better inform their analytics. What they learned from speaking to the telematics providers is that much of the raw data they need to make their app successful (battery health, current vehicular mileage range) would be impossible to access without buy-in from the auto company, and right now there is little incentive for the auto companies to provide that type of data to a third party. Other than that newly discovered challenge, the interviews from the auto show were fruitful, as they helped the team build out a well-thought cost structure, and helped them better define their business model.
Our final team is Residential Potential, who are working with the New York Independent System Operator (NYISO) to build something that enables the participation of residential and small business owners in the distributed energy resources (DER) and demand response (DR) market. This team, which is made up primarily of CUNY students, only had two interviews this week because they it was CUNY’s spring break, though they will have to finish off the remaining 8 interviews next week. The one non-CUNY student on the team who was not away enjoying spring break was still able to give a good presentation on Cost Structure. In particular, the team did some research to figure out where the highest number of DER aggregators there are by location. They not only learned the states with the most aggregators (Texas, followed by California and New York), but also that the total number of aggregators in each state in very small, the most in Texas with 300. The teaching team emphasized that they need to think about the relatively small pool when determining the price of their services. Given how small this market looks, how many DER aggregators will the team need to have as customers (and how much will they need to charge) in order to see a profit?
The next time we will be blogging, it will a recap of these students’ Final Presentations! It will be an exciting day, when the teams will tell us whether or not they are going to go forward with their projects - you don’t want to miss it! Learn more and register below.