The 2016 Elections That Nobody’s Talking About

Last year I had the privilege of joining the board of the Environmental Voter Project (EVP), a new organization that is mobilizing the 16 million non-voting or poorly voting environmentalists in the US.  In the post below from the EVP blog, EVP founder Nathaniel Stinnett and I outline how increasing environmental turnout in municipal elections can help to save the planet.  Enjoy!

By Reid Capalino and Nathaniel Stinnett

Everybody knows that 2016 is a big election year. Over 120 million people will likely vote for our next President and Congress, and many will also be choosing new governors and state legislators.

But you probably don’t know that tens of millions of Americans will also have the opportunity to vote for a new mayor in 2016.

And if you care about the environment, that’s a big deal.

According to the U.S. Conference of Mayors, a total of 483 American cities will hold mayoral elections in 2016, including San Diego, Baltimore, Milwaukee, Sacramento, and Portland, OR. Eighty-seven of these cities have populations over 100,000, and most will choose their chief executives in relative silence, without any of the 24/7 media coverage that surrounds even the smallest Presidential caucus.

But here’s the thing: mayors can save the planet, so if you care about the environment, you need to pay attention to these municipal elections…and you need to vote.

 

Over 71% of Americans live in cities of more than 50,000 people. We are an urban nation, and municipal governments have an enormous degree of control over energy use, air pollution, water pollution, and land conservation policies. With enlightened municipal leadership, our cities can lead the fight against climate change and create a cleaner, healthier, more sustainable country. To cite just a few examples:

Clean Heat Initiatives: In certain cities, the burning of No. 4 and No. 6 fuel oils to heat buildings is a major source of air pollution and associated health impacts. In 2011, New York City began its New York Retrofit Accelerator program, which combines new regulations, financial incentives, and some mandatory conversions to accelerate the shift to cleaner heating systems. As a result of this program – in just its first five years – citywide fine particulate matter levels have dropped 23% and sulfur-dioxide levels have dropped 69%. Over five years, this reduction in emissions has prevented an estimated 4,000 deaths and 10,000 hospital visits due to lung and cardiovascular disease.

Sustainable Municipal Buildings: Municipal governments are often the largest property owners in cities, providing major opportunities to improve the sustainability of our built environment. Many cities, including London, Paris, Seoul, Houston, and New York, have undertaken large retrofitting efforts. In particular, London has retrofit over 440 buildings over the last 5 years, resulting in CO2 emissions reductions of 30,000 tons/year as well as energy cost savings between 25-35% for each retrofitted building.

Bus Rapid Transit: Bus Rapid Transit (BRT) is a relatively cheap, yet particularly effective, form of public transportation, largely operating in dedicated lanes where high capacity vehicles have right-of-way priority over other vehicles. BRT systems have been developed in many cities, including Bogota, Istanbul, Beijing, Jakarta, Helsinki, Barcelona, Montreal, Los Angeles, and New York. In 2000, Bogota created its TransMilenio BRT system, which is now the most-used BRT system in the world. While previously Bogota had 2,700 conventional buses to provide for 1.6 million daily riders, in 2013 Bogota used just 630 BRT buses to transport 1.9 daily riders. As a result of this BRT system, Bogota reduced emissions of CO2 by 1 million tons annually, sulfur dioxide by 43%, nitrogen oxides by 18%, and particulates by 12%.

Green Roofs: By requiring or incentivizing buildings to paint or plant on their roofs, cities can dramatically reduce both cooling energy costs and storm water runoff. Toronto, New York, Tokyo, London, and Melbourne already have eco-roof programs and – once implemented citywide – Toronto expects to save $42-$118 million on infrastructure savings, pollution reduction, and reduced erosion control needs. Additionally, Toronto projects $79 million in energy savings, as well as a reduction in the city’s local ambient temperature by 0.5 to 2 degrees Celsius.

These policies are already having a huge impact on climate change and the environment, but here’s the problem: cities aren’t exactly lining up to enact measures like this. Why? Because most mayors – as politically progressive as they tend to be – are still politicians, and politicians tend to be much more responsive to the needs of people who vote than they are to the needs of people who don’t vote.

Unfortunately, our research at the Environmental Voter Project reveals that most environmentalists never even think of voting in municipal elections. We see similar outcomes in demographic turnout studies showing that eligible voters over the age of 65 are 20 times more likely to vote in municipal elections than people between the ages of 18-34, which is a big problem for environmentalists because young people are significantly more likely to prioritize environmental issues than people over the age of 65.

We need to change this, and we need to start in 2016. Cities and towns should be easy pickings for the environmental movement – there’s no congressional gridlock, no Koch brothers (at least not yet), and a largely non-partisan discussion of issues. Even a small increase in turnout among environmentalists could easily give mayors the nudge they need to lead on climate change and other environmental issues.

Voting in municipal elections is an easy way for environmentalists to start making a big difference. So let’s make 2016 about voting in every election, and not just the Presidential election.

Reid Capalino is a Senior Energy Analyst with the Carbon Tracker Initiative and the Director of Energy & Resiliency at Capalino+Company. Reid also serves on the Board of Advisors of the Environmental Voter Project.

Nathaniel Stinnett is the Founder & CEO of the Environmental Voter Project.

Adapting our one-way grid to handle more two-way power: quick recap of Solar One/GTM Research panel

Last night Solar One and GTM Research hosted a terrific panel on “The Expansion of Distributed PV in the Age of the Grid Edge.”  My quick recap is below:

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  • US solar boom poised to grow: GTM Research’s latest numbers show that the US installed 4,751 MW of solar PV in 2013.  Over the past year twenty-nine percent of all new electric generating capacity added in the US has come from solar.  2013 additions are up 41% over 2012 and nearly 15X over 2008.  Moreover, GTM projects a continued ramp-up – from new distributed solar PV installation every four minutes in 2013 to one every 83 seconds by 2016.
  • Creating technical challenges for the grid: Since Edison made history at Pearl Street more than a century ago, the electric grid has been designed to handle one-way power flows (i.e. from generation to load).  Solar panels generating power on rooftop are now introducing an increasing volume of two-way flows – creating exciting opportunities but challenges for the grid.  Naimish Patel (of Gridco Systems) noted that the challenges arise because (1) output from solar PV panels varies throughout the day/year (often on the order of seconds), with peak ouput usually coming several hours before the peak load on the distribution system (which, in NYC, occurs on summer nights when folks return home and crank up the AC); and (2) fluctuations in output can lead to sudden changes in voltage on the distribution system.
  • For which technical solutions exist…: Solutions to these challenges exist, ranging from the simple (installing thicker wires or larger transformers) to the more involved (requiring PV panels to be able to curtail output when necessary, as Germany has done) to the new and exciting (Gridco’s hardware/software, or SolarCity’s new energy storage systems).  Most of these solutions, however, require some up-front investment by the utility.
  • … and raise the question of who pays for the grid (i.e. the “Aunt Millie effect”): Increasing deployment of solar PV reduces the amount of electricity that users consume from the grid.  The cost of the grid, however, is largely not in the electrons but in the physical network of wires, transformers, etc.  In the US we generally bundle those costs of investing in/maintaining the grid into the overall electricity rate.  Solar adopters who offset 100% of their electricity use therefore often pay none of these costs.  In the aggregate, deployment of PV can shift the fixed costs of the grid onto a shrinking pool of consumers – even though what we demand of the grid remains the same (and, for the reasons noted above, arguably increases). Critics of solar sometimes accuse solar adopters of “using the grid like a big battery for which they are not paying the costs of operations and maintenance.”  This view simplifies and overstates the problem by, for example, not accounting for the benefits that distributed PV can bring to the grid (i.e. deferring the need for distribution upgrades in certain areas).  There is, however, indeed a question of how to allocate these fixed grid-related costs – what NYSERDA’s Richard Kaufmann has dubbed the “Aunt Millie effect.”  As solar penetration rises in the US (from what remains a very low base) more states are likely to consider passing along grid-related costs to users via fixed charges rather than as charges bundled into the electric rate. How this will affect the economics of distributed PV in different markets remains to be seen.
  • Though current “grid payment” regimes hardly always benefit solar: The “Aunt Millie” effect notwithstanding, our current policies for allocating grid-related costs sometimes penalize (rather than subsidize) solar adopters.  SolarCity’s Shaun Chapman noted that when a solar installation requires the utility to perform some distribution upgrade (i.e. install a larger transformer), the first/last project to trigger that upgrade is often stuck with 100 percent of the bill (even though future/previous projects as well as other consumers will also benefit from the upgrade).  A more rational or pro-rata approach to allocating such costs would make the economics of solar better, rather than worse.
  • Remember the name Gridco: Of the four excellent companies represented on the panel, Gridco Systems stands out as particularly exciting.  Gridco’s team is leveraging its top-flight experience in the IT space to solve a pressing and lucrative problem in energy – how to help utilities integrate more renewables.  What we need more of in the cleantech space!

Overall an exciting start to the 2014 Clean Energy Connections series.  Looking forward to the next event.

Financing the Clean Energy Future: Panel from 2014 Investor Summit on Climate Risk

At the United Nations last week a panel of financial experts discussed the keys to quadrupling annual global investment in clean energy by 2030. The panel included my colleague Mark Fulton, who served as Editor of the new Ceres report – “Investing in the Clean Trillion: Closing the Clean Energy Investment Gap” – on which I had the privilege to serve as Lead Analyst. A full list of panelists is below; check out their thoughtful and provocative ideas on how to link capital markets to clean energy.

Watch the panel at the link below (to get to the start of the panel, fast-forward this video to 1:55, or an hour and fifty-five minutes in):

https://link.brightcove.com/services/player/bcpid1722935254001?bctid=3059096647001&autoStart=false&secureConnections=true&width=480&height=270

– Mark Fulton, Senior Fellow, Ceres; Founding Partner, Energy Transition Advisors
– Jack Ehnes, CEO, California State Teachers’ Retirement System (CalSTRS) (moderator)
– Lisa Carnoy, Head of Global Capital Markets, Bank of America Merrill Lynch
– Michael Liebreich, CEO, Bloomberg New Energy Finance

How many financial leaders does it take to quadruple investment in clean energy? – “Clean Trillion” report released at UN summit

What do Bob Rubin, Tom Steyer, Christiana Figueres, Richard Trumpka, and the NYS/NYC Comptrollers have in common?  They and 500 other global financial leaders were all at the United Nations last week for the release of a new Ceres report –  Investing in the Clean Trillion: Closing The Clean Energy Investment Gap – on which I had the privilege to serve as Lead Analyst (with my former Deutsche Bank colleague Mark Fulton as Lead Editor).

The report provides 10 recommendations for investors, companies and policymakers to increase annual global investment in clean energy to at least $1 trillion by 2030 – a roughly four-fold jump from 2012-13 levels.  Such an increase is the bare minimum necessary to limit future global temperature to two degrees Celsius (2 °C) above pre-industrial levels and avert the worst impacts of climate change.

ImageA list of the report’s recommendations are below, and you can read the full report (or much shorter executive summary) here.

Mobilize Investor Action to Scale Up Clean Energy Investment
1. Develop capacity to boost clean energy investments and consider a goal such as 5% portfolio-wide clean energy investments
2. Elevate scrutiny of fossil fuel companies’ potential carbon asset risk exposure
3. Engage portfolio companies on the business case for energy efficiency and renewable energy sourcing, as well as on financing vehicles to support such efforts
4. Support efforts to standardize and quantify clean energy investment data and products to improve market transparency

Promote Green Banking and Debt Capital Markets
5. Encourage “green banking” to maximize private capital flows into clean energy
6. Support issuances of asset-backed securities to expand debt financing for clean energy projects
7. Support development bank finance and technical assistance for emerging economies

Reform Climate, Energy and Financial Policies
8. Support regulatory reforms to electric utility business models to accelerate deployment of clean energy sources and technologies
9. Support government policies that result in a strong price on carbon pollution from fossil fuels and phase out fossil fuel subsidies
10. Support policies to de-risk deployment of clean energy sources and technologies

Megawords, not Megawatts: Introducing my New Monthly Podcast

This month I will begin podcasting conversations with leading professionals in energy, climate, and sustainability (tentative title for the series: Power Talk).  My aim is for Charlie Rose-style interviews that offer lively and informed discussion of key issues.   Unlike Charlie Rose, however, I hope to open up the conversation to include anyone eager to participate via phone, email, blog comment, or Twitter.

ImageMy first guest will be Eric Maltzer, formerly of the U.S. State Department’s Office of Global Change (i.e., America’s international climate negotiations team).  From 2005-2009 Eric served as a clean energy negotiator for this 20-person team and advised U.S. diplomats and foreign counterparts on energy and climate issues.  He also managed the U.S.-China climate portfolio through the EcoPartnerships forum and other initiatives.  Eric and I will be discussing the outlook for UN climate negotiations, the political landscape for climate policy in the US, and where China is headed on energy and climate issues.

Please share your questions for Eric via comments to this post, emails to Reid.Capalino@gmail.com, or tweets to @RCapalino.  Details to come on the exact broadcast date.  We look forward to hearing from you!

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Eric Maltzer, currently an MBA student at MIT’s Sloan School of Management, was until August a Foreign Affairs Officer in the Office of Global Change (i.e., America’s international climate negotiations team) at the State Department. In this role, he served as a clean energy negotiator for the 20-person team and an expert resource on energy and climate change for U.S. diplomats and foreign counterparts.  Eric also managed the U.S.-China climate portfolio and the sub-national engagement portfolio in that office from 2010-2013.  Before joining the State Department, Eric was an environmental strategist in the Boston office of Esty Environmental Partners. Eric has a Master’s in Public Policy (M.P.P.) from Harvard’s John F. Kennedy School of Government and a B.A. from Yale University.

“Sometimes you don’t get to pick the perfect fight” – Comments on the Politics of Keystone XL

This week’s New Yorker profiles the movement prevailing on President Obama to oppose construction of the proposed Keystone XL oil pipeline.  To this excellent article, I’ll merely note the following: whatever the Administration’s conclusion as to whether this pipeline will “significantly exacerbate the problem of carbon pollution,” there remains a clear political rationale for opposing it as part of a larger climate strategy.  Withholding approval for Keystone XL could make it a bargaining chip in future negotiations over comprehensive climate legislation – thereby giving the President (or whoever succeeds him) sorely needed leverage with members of Congress from oil-and-gas states.

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In his June climate speech the President reaffirmed his support for a “bipartisan, market-based solution to climate change, like the one that Republican and Democratic senators worked on together a few years ago.”  As detailed in another New Yorker piece from 2010, the last major effort to enact a “bipartisan, market-based solution” died in the Senate amid near-complete opposition from Republicans and weak support from Democrats in coal/oil-and-gas states.  Securing 60 votes for any future such legislation is likely to require every conceivable source of leverage; recall that the beginning efforts to court Republican and industry support for the 2010 Kerry-Graham-Lieberman bill included promises to, among other things, vastly expand offshore oil drilling along the East and Gulf Coasts and pre-empt the EPA’s approval to regulate greenhouse gas emissions under the Clean Air Act.

Unseemly (and, in the case of Kerry-Graham-Lieberman, futile) as this political horse-trading may be, it will be essential to shepherding any “bipartisan, market-based solution” to climate change through Congress (just as backroom deals were key to passing the Affordable Care Act).  The Administration ought therefore to be stock-piling every possible source of leverage to be used in future climate negotiations.  Continuing Republican efforts to force the President’s hand on the Keystone XL decision suggest the approval permit for this pipeline to be a potentially valuable chip indeed.  Even if credible climate legislation does not surface for a few years, the Administration could help lay the groundwork for its success by withholding approval for the Keystone XL pipeline.

Preserving Keystone XL as a bargaining chip in future climate negotiations will enable the Administration to compensate for some of its previous gaffes in this area.   During the 2010 push for the Kerry-Graham-Lieberman bill, the Administration repeatedly rolled out energy/climate policies favored by Republicans and moderate Democrats – expanded offshore drilling,delayed implementation of EPA carbon regulations, billions in nuclear loan guarantees – without extracting any cooperation in return.  This effectively squandered the inducements that Kerry-Graham-Lieberman could have used to solicit votes.  Approving the Keystone XL pipeline risks repeating that same mistake.  When comprehensive climate legislation again reemerges in the US Congress – a development that, however distant it may now seem, is the President’s own avowed goal – climate advocates will be in a stronger position if they can use pipeline approval as a means to bring reluctant colleagues to the table.

The idea of maintaining the Keystone XL as a politically controversial energy issue (similar to the status of oil drilling in the Alaska National Wildlife Refuge) is open to criticism.  Perhaps the Canadians will instead ship oil to the Gulf Coast by rail and/or build pipelines to export oil from their coasts (though a pipeline to the Gulf will always be more cost-effective than rail, and new pipelines within Canada will take years to build).  Perhaps the strategy will backfire and diminish support for action on climate change (though a grassroots “build Keystone” movement has yet to materialize).  Perhaps, after bowing to popular pressure to oppose the pipeline, it is unrealistic to expect President Obama (or any Democratic successor) to reverse the decision (though, as noted, past negotiations over comprehensive climate legislation have effectively put everything on the table).  Or, perhaps Republicans – though eager to torment the President over Keystone now – will simply never care about building a pipeline to Canada enough to endure the blow-back from climate deniers in their own party.  In my view, the need for all available leverage to pass future climate legislation justifies accepting these risks.

The grassroots anti-Keystone movement has succeeded at forcing President Obama to reconsider what had seemed a foregone conclusion.  At the end of the New Yorker piece, billionaire environmentalist Tom Steyer observes that: “Sometimes you don’t get to pick the perfect fight.  Sometimes, someone punches you in the face and you’re in the fight.”  As President Obama decides whether to approve Keystone XL, he ought to favor a decision that will strengthen his hand in the fight he does want – the fight in Congress for a market-based solution to climate change.  The demands of that fight suggest withholding approval for Keystone XL to be the politically smart move.

Don’t Hire the Resume – and Other Team-Building Tips from Cleantech Pros

Following up on yesterday’s post about sales and marketing, today I summarize key takeaways from last week’s Cleantech Open Northeast panel on “Building Your Team.”

  • Don’t “hire the resume”: Panelists uniformly discouraged early stage companies from “hiring the resume” – hiring a candidate based chiefly on her track record/industry expertise, without regard to whether the candidate will thrive in a start-up.  Recognizing that “a start-up is not a smaller version of large company,” executive recruiter Kevin Brown (Hobbes and Towne Inc.) emphasized the need the consider whether a person can transition to the informal and fast-changing environment of an early stage company.
  • Smart, smart, smart – but not an ass!@#*:  In response to a question about the qualities she valued in a team member, entrepreneur Pat Sapinsley (Watt Not and Build Efficiently) replied that the ideal team member would be “smart, smart, smart – but not an ass!@#*.”  More generally, panelists tossed about various phrases – people sense, team smarts, EQ – to underscore the importance of “fit” in a start-up environment.  As to how one best assesses a candidate’s potential “fit”, recruiter Kevin Brown recommended spending ample time with the person; Brown’s hiring process at Hobbes and Towne evidently included five long dinners with one of the firm’s co-founders.  Such conversations can illustrate how a person relates to others far more effectively than a formal interview.

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  • Consult references not supplied by the candidate: In a 2011 NYT “Corner Office” column, Bing Gordon of Kleiner Perkins allowed that – when hiring – he likes “in person meetings for chemistry and references for truth.”  Following on this thread, Pat Sapinsley further emphasized the importance of going beyond references supplied by the candidate.  She advised informing candidates upfront that part of the interview process will involve seeking input from a candidate’s previous colleagues.
  • Formula for team success?: Investor Oliver Guiness (Clearpoint Ventures) described how – in evaluating potential deals – much of his focus will be on understanding whether or not a team can work effectively together.  At a minimum, Guiness endorsed the conclusions of a study by Josh Rogers and Matthew Nordan on “what makes a great cleantech team“; after surveying 37 cleantech businesses (both successes and failures) and 122 executives within these businesses, Rogers and Nordan concluded that “winning cleantech start-up teams are complete at founding, have strong pre-existing relationships, and include the inventor of the core technology.”
  • Have the talk (the dilution talk, that is): As a fellow at Harvard’s Wyss Institute for Biologically Inspired Engineering, Pat Sapinsley helps scientists to bring technologies from the lab to the marketplace.  A critical step in this process is explaining to scientific founders the inevitable dilution that accompanies becoming part of a venture-backed company.  To make the conversation less personal, Sapinsley apparently directs founders to resources such as Hutchinson Law Group’s “University Spinout Founders Handbook.”  Even for companies formed outside the realm of Harvard labs, early and frank conversations about future dilution of founder’s equity are useful to remove a source of potential bitterness.  In addition to the resource above, I would also recommend this helpful note from Marty Zwilling and Matt Nordan’s “cap table template.”
  • Lose the pyschometrics: An executive recruiter in the audience questioned the panelists about the role of pyschometric evaluations (e.g. the Myers-Briggs Type Indicator) in the hiring process; many large corporations (including GE and Bridgewater) favor such testing for its alleged helpfulness in predicting “fit” and reducing employee turnover.  Panelists were generally cool toward the idea of submitting candidates to psychometric tests, preferring the more informal “five dinner” method describe above.  In addition to questioning the predictive ability of such tests, panelists worried that (1) forcing a candidate to complete a battery of tests will potentially sour her view of the firm; and (2) asking only some, but not all, candidates to complete such tests may expose a firm to liability for discriminatory hiring practices.  While investor Oliver Guinness did acknowledge a role for pyschometrics in helping to clarify personality types within an existing team, this panel did not advocate that start-ups begin making Myers-Briggs a mandatory part of the hiring process.

Make it Rain: Recap of Cleantech Open Sales & Marketing Workshop

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.