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.