We are officially 2 months into the Hacking for Energy Class, and as the interview counts improve, so do the business hypotheses! Since we last saw the students, they have done 171 interviews, bringing their totals to 306. We have also seen some changes in the class composition. Team SolarLedger, who was working to build a blockchain-based solution for grid security for the Electric Power Research Institute (EPRI), disbanded because two of the team members got job opportunities, making the time commitment for the class impossible to manage. One of the other members that team decided to stay in the class, and was able to join the DemoDogs team and work on their project. The other team member decided to audit the course but not participate on any specific team.
Since the February Update, the student teams began to dig more deeply into the other boxes of the Business Model Canvas. They also started to make strides on their hypotheses and potential fits for their solutions. Below is a brief rundown of the topics and concepts that they learned in the last couple of weeks.
Week 4: Since the students were asked work on Customer Segments in Week 3, the natural next step prior to Class 4 was to have them spend a little more time matching their customer segments to the value propositions they explored in the earlier weeks. This time, we had the students build a Value Proposition Canvas, which is a great diagram that helps entrepreneurs think through who their customers are and why they should care about the proposed solution.
Week 5: This week, we stepped away from the question “What customers are you selling to?” and moved through “How do you deliver your product to your customer?” We had the teams start to answer that question by building a channel diagram. A channel diagram is a tool that helps entrepreneurs think about what physical channels (direct sales, distributors) or online channels (direct sale from website, web store) they can use to make their product available to their customer and also about the economics (costs) of using each of those channels.
Week 6: Week 6 asked a new question “How are customers going to find your product?” Making your product available through physical or online outfits is one thing, but you still need to get the word out to your customers to find your product so that they can buy it. To help answer that question, we had the students create get-keep-grow diagrams. A get-keep-grow diagram is a tool that helps entrepreneurs map out the various marketing techniques and sales strategies that they can use to reach their customer base. This diagram is based on information gathered in customer interviews about how customers behave now: what events do they go to, how do they search for new products, what websites or blogs do they follow? By knowing how customers consume information and find out about new products now, teams can better develop strategies for reaching them.
Week 7: Another week, another diagram! This week, we asked the students to think about how money will move in and out of their organization, and to map out that movement using a Payment Flows Diagram. This is an important exercise in any industry, but is particularly helpful in cleantech because customers are in complex ecosystems with a variety of players within the customer’s organization as well externally. There are so many federal, state, and municipal incentives that cleantech entrepreneurs need to keep track of as well. By mapping out the payment flows from a variety of sources, entrepreneurs can figure out if the breakdown of money coming into their company is revenue, private capital, or subsidies, and determine if their business has a healthy business model.
This brings us up to the present, Week 8, which is what today’s recap is about. For this week, the students were asked to a recap of what they have learned so far, presenting all the diagrams that we asked them to create so far, but now updated to include the instructors feedback. You can see the results of this exercise in the student presentations below.
Some fun highlights from the past couple of weeks:
A good entrepreneur can pivot on the spot
Student: “We have decided to narrow our customers to the A and B because we think they will care more.”
Instructor: So do you add them to your Business Thesis?
Student: No, we SHOULD HAVE added it
We are training an army of passionate energy nerds:
A student struggles to remember what FERC stands for: “They are the Federal Energy…..” The rest of the class helps out and chimes in, “REGULATORY COMMISSION.”
Sometimes saying something out loud helps clear up confusion:
Student: “We think this group might be our customer.”
Instructor: “Sounds like they are not your customer, but you need to care about their behavior.”
Student: “Yes! They are the customer of our customer.”
Instructor: “Right, they are not YOUR customer.”
Student: “ Ah yes! right, right!
Here are Week 8’s presentations:
First up was Aquathots, the team working with the New York City Department of Environmental Protection to develop a water-saving device for residents to reduce water consumption and save on their water bill. The team is struggling to understand who their customers are and what motivates them. They made a creative move in how they connect with their proposed customer segment, interviewing individuals who originate from water-scarce countries but now live in New York City, but the instructors did not see a lot of learning from those interviews, and the learnings they did have were not reflected in their business thesis or their diagrams. Not reflecting updated intel in the slides and diagrams is something we saw from all the teams (some were worse than others) and is a common thing that will happen as entrepreneurs go through the customer discovery process and update their hypotheses about their business idea. Doing customer discovery is a lot of work, but it is vital to take the time to input the new ideas into the diagrams, and then doing the work to figure out if those new assumptions will stick and make sense. We could tell this was a challenging week for the team, and we hope they are able to make some gains in the future.
Next was 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 was actually able to gain some insight, as they learned through their interviews that the DER market is expected to triple between 2017 and 2021, and it is a market of particular interest to NYISO. However, their channel diagram needs work, as they are drawing conclusions on how to interact with aggregators based on only a few interviews. They need to spend more time on their get-keep-grow diagram since the numbers they presented did not look entirely accurate. All of that aside, the instructors were impressed by how the team has been working to understand the complicated DER and DR markets, and could really tell from this presentation just how much the students have learned about the industry in such a short amount of time.
Our next 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 last time we saw this team, they were really struggling with finding a good solution to the overarching problem of better transportation in cities. The team, by conducting more customer interviews and consulting with the instructors in office hours, have hit on a potential solution to their problem and are now testing it its effectiveness. Their idea is to create an app that predicts demand for ride-hailing at transportation nodes, improving drivers’ profitability and convenience for riders while reducing the amount of time ride-hailing drivers spend riding around alone looking for customers. Their journey is a great example of Lean LaunchPad in action: you may not see the forest through the trees in the beginning of your journey, but staying open-minded in the customer discovery process can lead you to a solution you never would have even considered in the beginning. You will notice a marked difference in the last presentation that we shared and this more recent one: with a defined business thesis, they have been able to make great strides in thinking about their customer, channels, sales, and payment flows, though they still need to better understand the GHG impact of such a service.
Our final presentation was PowerTab, who are working with the Electric Power Research Institute (EPRI) to think of different battery revenue models for electric vehicles, though they have refined their problem some to focus more on solving the information gap that exists around EVs and the capabilities of their batteries. The current solution that this team is proposing is 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). The team started off by saying they have decided to narrow their focus to people who purchase electric vehicles for municipalities and universities because they are interested in environmental benefits. This team also had a good insights this week from their interviews, they learned that many of their potential customers have range anxiety, a worry that the batteries in electric vehicles will not be able withstand the driving patterns required of the user. They also learned that most of the batteries in EVs have a lifespan of 8 years or 100,000 miles. The fleet owners have very different driving patterns than that of a home user, so the team now needs to ensure that the types of trips that the fleet users do would not dropping the battery life down too much, which would affect the calculations in their web app.
As the students continue working on their projects, we are excited to announce that we have a date for the Hacking for Energy final presentations. The event will take place on April 26th in the afternoon up at Columbia University. If you have been following this blog and enjoying watching the students’ progress, we hope that you join us and watch the students present on their journey in customer discovery. Head to our event page to learn more and RSVP.