It has been 2 weeks since we last heard from the Hacking for Energy Class, and we already see the students making progress on their projects. In this time period, the students teams have already done 135 interviews (approximately 27 interviews per team). From those interviews, the teams are beginning to realize that their initial project ideas may not be the best solutions for the problem at hand. Some of the teams had to go back to the drawing board and look at the feedback they were getting from their interviews to redesign their solution to better meet the needs of the market. This process is called pivoting and is a very normal and healthy practice in the development of a startup because it means they are listening and adapting.
Since we last checked in, there has been an update in the group roster. The team Fresh Minds, who were working with Bright Power to develop a solution that would better organize energy data, was struggling early on to keep up with the pace of the course. Since they were not able to complete the required weekly customer discovery or adequately prepare for the weekly presentations, we saw that it would be a challenge for them to catch up and asked them to leave the course. We take commitment to the course seriously and hope that they apply next year knowing full well the time that is necessary to succeed.
In the weeks since we last checked in the rest of the student teams, they have learned quite a few concepts in Lean LaunchPad through assigned readings, video lectures, worksheets and in-class discussions. Below is a brief rundown what was discussed in the last couple of weeks.
Prior to the first class, the students learned about the central tool of the Lean LaunchPad methodology, the Business Model Canvas (BMC). The BMC helps entrepreneurs map out their business idea and helps identify if there are any gaps or problems that they should dissect. The Business Model Canvas has been wildly successful, and the creators, Steve Blank and Alex Osterwalder, are working with partners to build variations for other organizational structures including non-profits and governments.
During week one, the students also learned about Value Propositions (VPs), which are statements that illustrate why a customer need a business’s services or products. We believe it is important for students to think about their Value Propositions early in the class because it forces them to think about if their idea solves a pain point for their customer and if the pain point is so severe that they would be willing to pay for a solution.
Prior to the Week 2 Class, the students were required to record one of their first interviews and then analyze how they did. We have actually done this exercise as part of PowerBridgeNY, the cleantech accelerator that we run for our day jobs. Every time we have asked our accelerator participants do this, they find the exercise incredibly helpful, as they are able to get outside of their own heads and observe their own behavior. It is also helpful for the instructors, as we can really see who is getting the methodology and who needs more assistance.
In addition to the interview analysis, we also asked the students learn more about customer segments. Customer Segmentation is the process dividing your customers into different groups based on similar, matching characteristics. It is important to understand that different customer segments have different needs (i.e. value propositions) associated with them. Though teams usually start off with a wide variety of customer segments, they quickly learn that it is impossible to service them all at once as a startup, so refining customer segments down to an early adopter will be a key task in the coming weeks.
Prior to this week, we had the students continue to focus on the customer, but we now asked them to create a diagram for each customer segment relevant to their project, visualizing how they work and make decisions. You can see the results of this exercise in the student presentations below.
Some fun highlights from the past couple of weeks:
One team initial had trouble even starting:
Student “So, we have a problem about the problem…….”
When the virtual world and the real world merge in solution building:
“They want something like a SimCity for their plan”
Drawing customer diagrams can bring to light challenges that you didn't realize were there:
Student: “So now we are asking: who is going to pay for this? The Government does want to pay, the real estate developers don’t want to pay, and the residents don’t want to pay!”
Here are the Week 3 presentations:
PowerTab is helping the Electric Power Research Institute (EPRI) think of different battery revenue models for electric vehicles. This week, for the Customer Diagrams exercise, the team presented a customer diagram for a fleet owning organization. The students did a nice job on this, and the instructors commented that they were able to back up info in the diagram with evidence from their interviews. Based on their interviews, this team is starting to think that their target customer is Fleet Operation Managers. That is not necessarily who they have been targeting in interviews (this week they spoke mostly to sustainability officers and a finance officer), so they will need to confirm this target customer hypothesis by interviewing fleet managers. The instructors also pointed out that, although they know their target customer, the students need to investigate who might be stopgaps or influencers to that customer. In most cases, even if a fleet manager wants the car, someone else (usually a CEO or financial officer) needs to approve the purchase, and that can stall a possible sale.
Next, we had Residential Potential, who are working with the New York Independent System Operator (NYISO) to build a cost-effective, accurate, and simple energy meter transmission device for distributed energy resources. This team put together a customer ecosystem, but it was missing one vital piece: people! Many times our students will forget that they are not selling to the companies, corporations, or agencies; they are selling to a specific person who works at those entities. Those people have the power to say “yes” or “no” to whether they want your product or service, so it is important to construct your pitch with all of their needs and challenges in mind. Even though they did not exactly follow the assignment, this presentation was a big improvement from the week before. We could see the students were motivated to learn and took feedback seriously. Determination, drive, and willingness to learn are as important in entrepreneurship as having talent and a great idea.
The third presentation was DemoDogs, who are working with the Environmental Protection Agency (EPA) to come up with new transportation options for low-density cities in order to reduce GHG emissions. The team struggled this week, in part because they are still trying to wrap their heads around the scope of their project. Their problem, building new transportation options for smaller, less dense cities, is an overarching societal one, and so it has been a challenge for them to break it down and devise a good business model to help solve a piece of the issue rather than trying to tackle the whole issue all at once. Not pinning down a discrete problem to tackle has an effect on how you think about everything related to your business idea, including who your true customers are. The instructors suggested that all is not lost, as they had the right instinct to narrow the problem first before trying to decide on a solution. The team should continue conducting interviews, as that first-person data will give them more insight in the industry, and help them determine if there was a solution out there that they could build.
Second to last was Aquathots, who are working to make a water-saving device for buildings. Since we last saw the team, they pivoted from having their solution be used in commercial buildings and are considering designing it for residential (including multifamily residential) use. The instructors were not able to provide much feedback to this team because they ended devoting a lot of time to the fact that the students used a survey to gather data. Surveys are a terrible way of getting honest customer data compared to interviewing. When you conduct interviews, you can detect interviewees’ opinions or reactions to something not just by their answer, but by observing their speech patterns, body language, and other visual and aural clues. All of that is lost in a survey, and you have little context to someone’s answer.
Last but not least was SolarLedger, who are working with EPRI as an Industry Host to build a grid security system using blockchain. Prior to the class, the students’ actually went to the Solar Wake-Up conference in New York City to get some interviews. They not only got a few interviews (though less than we expected considering how large the conference was), but they also got to see the dynamics of the solar industry and what it prioritizes. We always encourage teams to go to conferences, because they can learn through sessions and conversations about what the trends are in the industry. One tip we always give our teams is to look at the attendees list ahead of time and try to set up short interviews during any breaks. Even with the intel from attending the conference, this team still had some trouble with their business thesis, it lacked clarity and did not tell us “why” their solution would be valuable to their customers. We hope that the students will have some time to distill their learnings from going from the conference, and present a more thoughtful business thesis the next time.
Over the next few weeks the teams will continue to refine their understanding of the product and define their product-market fit. However, finding that fit is not the end of their journey. After they know who their customers are and what specifically they need, our teams will need to make sure that they can reach those customers (Customer Relationships), deliver a product to them (Channels), make money from their solution (Revenue Models), and build the actual product (the left-hand side of the Canvas). There is still a lot more work to be done, but we are sure the teams are up for it!