Week #6 - 2/23/17

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:

• Figuring out how to use EV infrastructure efficiently is a form of demand management.
  
• The electric grid is electro-mechanical. To convert the current grid to a smart one, you need to take highly analog system and add digital sensing, communication, and eventually control.
  
• As he discussed in a previous lecture - the two goals of a utility are high reliability and low price. Any new technology needs to lower costs without having any negative impact on reliability.
  
• Related to the above - the economic motivation of a utility is to deploy things because it improves their rate base. They get incentivized to make improvements and penalized if there are failures.
  
• How does energy efficiency fit into all of this? Energy efficiency is important but hard to measure because savings are determined by a baseline.
  
  • Baseline is determined by the amount you “would have used” as opposed to what you “used to use”. With energy efficiency, it is difficult to determine if energy savings came from efficiency measures or changed behavior.
    
  • Any business model that relies on baselining carries some inherent risks.

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
​

• There is a natural tension between building a viable business model and solving a given problem. We had been telling teams to find a problem worth solving in the same realm as their original problem statement but realize that will not work for all the Industry Hosts. Instead, we have refocused the teams to solve the original problem but to try and find other applications for that solution that could be a viable business. We will have to be clearer about this in the future with both the Hosts and the students.
  

• Since the start of the course, we have offered space for teams to meet and conduct phone interviews. We are glad that we did that, as it is more valuable than we realized. Space is at a premium in universities, so it is usually difficult for the students to find quiet meeting spaces that are available for over an hour. It is a nice perk to offer, and it also removes any potential excuses for not getting enough interviews