Last Thursday the Cleantech Open Northeast organized a doubleheader of industry panels on “Go-to-Market/Sales & Marketing” and “Building Your Team.” The panelists – a group of eight entrepreneurs, investors, and service providers – shared useful insights about how to grow a cleantech business. Below is a summary of the key takeaways from the “Go-to-Market/Sales & Marketing” panel; tomorrow I’ll post takeaways from the “Building Your Team” panel.
- Start with Why: Drawing on the work of Simon Sinek, David Droz of Urban Green Energy urged companies to “start with why” – to begin dialogues with potential customers by emphasizing why the company’s product is relevant to the customer’s needs. Only after establishing the initial “why” does it make sense to proceed to the how (how the customer’s needs can be met) and what (role of the company’s product in meeting those needs). H.G. Chissell (Viridity Energy) effectively illustrated this approach by noting the burden of escalating peak power prices – “too many people using electricity at the same time and, increasingly, in the same place” – for large electricity consumers; consumers can minimize this burden reducing their exposure to peak power prices, and this is what Viridity’s price forecasting and demand-response software enables consumers to do.
- Sell pragmatism, not idealism: Bob Mitchell (Quench USA) advised start-ups to think carefully about which aspects of their value proposition will resonate with customers. Quench USA sells office water coolers that filter tap water (essentially giant Brita filters), thereby relieving customers of the need to continually purchase 5 gallons jugs of Poland Spring. As described by Mitchell, Quench’s initial value proposition to customers was “saves money, more convenient, better for the environment.” It soon realized, however, that office purchasing managers – who are evaluated on their ability to reduce company expenses – cared far more about saving money that they did about improving the environment. More generally, Mitchell urged any B2B cleantech start-up to recognize that commercial customers generally base buying decisions on pragmatic considerations e.g. money and time saved) rather than idealistic ones.
- Marketing differs for B2B, B2C (“nobody buys water coolers on Facebook”): Panelists were somewhat divided on the usefulness of building up a strong social media brand. H.G. Chissell (Viridity Energy) shared various tactics to build up a social media presence – such as the use of HootSuite to synchronize postings to Twitter, LinkedIn, and a company website with one click. Chissell noted how, in its early days, Viridity had used such tactics to “make a four-person firm look like a forty-person firm.” Bob Mitchell of Quench USA shared a more cautionary tale – recalling how Quench had invested to nurture its social media cred only to realize that “offices don’t buy water coolers on Facebook.” Hence, Quench has subsequently transferred its social media budget for use on Google AdWords and various search engine optimization techniques.
- The customer is always right… except when they’re not: In one of the evening’s more interesting exchanges, H.G. Chissell (Viridity Energy) and David Droz (Urban Green Energy) discussed the wisdom of always listening to one’s customers. Chissell encouraged responsiveness to customer input as absolutely essential for a company to attract and retain customers. Droz, however, warned that customer demands can sometimes lead start-ups down a rat-hole. To wit, he revisited Urban Green Energy’s origin as a manufacturer of small wind turbines (the company now sells distributed energy solutions to telecom customers), and recalled how – tantalized by the prospect of major orders from European turbine producers – the firm toiled for years on what was (in retrospect) an unworkable business model. Stephen Filler (Joule Assets) agreed that – amid all the pressure for young, revenue-starved companies to satisfy customer demands – entrepreneurs must carefully assess whether a given customer aligns with a viable long-term business model.
- Bring in a good CFO early on: Whether via a misguided marketing budget or solicitousness toward an overly demanding customer, what sinks most start-ups is simple: running out of money. Stephen Filler (Joule Assets) thus argued that the most important investment a young company can make is to recruit a good CFO as early as possible. Among other things, a “good” CFO must be someone the founders respect enough to have question every decision involving use of company money. Though usually the most expensive hire for a start-up, a CFO can also be the most valuable hire.
- Make it rain: Noting that “if you don’t make it rain, there won’t be any crops,” H.G. Chissell (Viridity Energy) stressed “a sense of urgency” about attracting customers as the essential ingredient for start-up success. Each day, employees of start-ups can invest their time and effort in a range of projects – all of which can seem critical, yet only some of which will actually help to get “ink on paper” with customers. Citing Samuel Johnson’s famous quip (“When a man knows he is to be hanged in a fortnight, it concentrates the mind wonderfully”), Chisselladvised focusing on the entrepreneur’s equivalent of hanging (i.e. losing out on customers) and prioritizing projects around their potential to help avoid this fate. Grim imagery aside, Viridity’s success with customers and investors ($40 million in financing over the past few years) suggests this is advice worth heeding.