I used to hear a lot about traction at startup conferences. Luminaries have finally come around to defining traction as sales revenue. All of the third party validation proving a technology's function means little if no one wants buy its output.
Guy Kawasaki had a new acronym for us to master: MVVVP means Minimum Viable Valuable Validating Product. I prefer the original formulation of a minimum viable product (MVP) because it focuses solely on the tech's workability. The value and validation come not from the MVP tech but from the target market. Guy's other formulation of Milestone, Assumption, Tests, and Tasks (MATT) is useful for motivating a startup's daily accomplishments. I had to LOL at the mention of the "bozo explosion," where lame executives hire less capable people than themselves, which leads to an inevitable collapse. It takes a lot of courage to hire people better than yourself. I can't hire anyone like that because no one is better than me. That's why I work alone.
I did not know about the Biomimicry Institute's Global Design Challenge prior to the academy. I have known about biomimicry ever since Dr. Hunter Lovins presented the subject at the Commonwealth Club a decade ago. Cleantech people should look to nature for inspiration rather than reinvent the wheel.
Entrepreneurs must link Customer Development and the Business Model Canvas as a holistic effort. Using a capital-efficient framework is implied in those models and the Cleantech Open's experts made it official. CustDev will quickly and cheaply eliminate unworkable hypotheses. One speaker mentioned Rob Fitzpatrick's The Mom Test as the exemplar for explaining a business model simply. The irony is that these approaches require brutal honesty between customer and vendor. In my experience, most human beings abhor honesty. People have fired me from jobs, ejected me from social networks, and threatened me with physical violence for being brutally honest. It's easier said than done.
The Chasm Institute had plenty of tools for startups to work through as they "cross the chasm" from early adopters to mass adopters.A product's inherent complexity can be a barrier to mass adoption, so further product iterations should resist the temptation to over-engineer it with undesired features. I'll bet that startups who successfully leverage their partnership networks can cross that chasm. Startups tend to overuse the word "partner" without differentiating whether partners are in their supply chain, manufacturing value chain, or marketing channels. Marketing channels are the path across the chasm.
Entrepreneurs had plenty of time to work on their pitches at the Academy. Brand audits and SWOT analysis enable better storytelling. The "Weissman score" is not a plot device anymore and information scientists are beginning to use it seriously. We'll know the score has gone mainstream when content marketers start publishing test results from web properties. Data science doesn't connect emotionally with a mass audience.
Conventional wisdom on pitches now includes use of Marimekko charts and 2x2 metrics. Look those up online for examples. Marimekko charts illustrate market segments, showing how a market strategy can reach different segments as a startup achieves milestones and collects capital injections. The 2x2 matrix shows a product's differentiation within its sector. Those things are effective visual displays if entrepreneurs have robust marketing data. Making up stuff is not acceptable. Investors want to see how tech development milestones reduce risk.
Here's one of my new pet peeves about venture capitalists. Some VCs claim they don't understand business models that are heavily dependent on subsidies for financial viability. Pfffftttt, yeah right! Everyone in the Valley loves Tesla Motors even though subsidies and tax breaks rule its financial viability. The same goes for its twin, SolarCity. The whole cleantech sector would not be where it is today without massive government subsidies de-risking things so scaredy-cat VCs can jump in later.
I need to grab a copy of Sull and Eisenhardt's Simple Rules because they went like hotcakes among the Cleantech Open crowd. My simple rules at Alfidi Capital are to be honest, publish daily, and attract hot babes. The "two pizza rule" for product development teams is still popular. I would jump into more product development roles as long as I'm not paying for the pizza. Oh yeah, being cheap and scoring free food are some other simple rules I use.
Government labs are serious about getting the private sector to use their assets. The National Energy Research Scientific Computing Center (NERSC) offers free supercomputer access for companies. Whoa, that's a heck of a deal. It may even be better than free pizza. DOE Small Business Vouchers are also encouraging startups to use government labs. Startups jumping into these programs need to link their participation to their Technology Readiness Level (TRL).
It's good to see large corporations use a corporate development philosophy that includes reverse logistics and life cycle termination. One corporate development participant here described a whole slew of supply chain services they offer to help startups with product delivery. Wow, here's how partnering makes a difference on the back end.
The Band of Angels showed up to describe a convincing financial narrative. I am not convinced that there is publicly verifiable proof of a connection between contact frequency and closing sales. Venture Beat published an excellent article in 2014 about how some commonly quoted sales statistics are worthless. I worked at a major wealth management firm from 2005-06 where the best sales people closed all of their business with one contact. It was easy for them because their rich families gave them all of their money immediately. There are other ways to be convincing besides citing statistics invented out of whole cloth. Once again, emotional hooks and the early involvement of financial backers make a big difference. People from Band of Angels are generally pretty cool.
Someone mentioned CAGIX but did not describe how to use it. Another guru suggested bargaining for discounts from supply chain partners based on how they benefit from a startup's product. I think that would work if the startup has CustDev data to back up any claims. Since introductions from referrals are now the norm among venture capitalists, it makes little sense to even run through the traditional pitch fest circuit. The reality of VCs throwing money away passively is even more depressing than their reliance on inbred referral circles, but that's why many of them fail. I am not surprised that Silicon Valley's elite have become so insular. I expect the next tech sector crash to sweep away the ones that have added zero value.
Bill Reichert always excels when he teaches us how to "get to wow" when pitching. Venture capitalists are only human, as I described above, and they invest when they fall in love with a team. You can read his wisdom online so I don't need to repeat his thesis here. I do need to repeat his warning that entrepreneurs should not lie, because too many of them think lying is okay. I have personally met people in the startup community who excuse lying as an "everybody does it" thing. That's one reason why almost everybody fails at startups. Investor due diligence uncovers lies about founders' backgrounds. Customer due diligence uncovers product flaws that destroy reputations. I could go on but only a few honest people on the planet will ever grok what I say about integrity.
The closing keynote on how society is transitioning from coal to solar was a big winner. Scarcity makes some energy sources more expensive, but tech advances are making solar cheaper. Thermal coal prices are certainly crashing as utilities switch to cheap natural gas. I concur with the broad argument that the coal sector is in decline and deserves Wall Street's short interest. I do not know at this time whether non-coal substitutes for metallurgical coal are viable. The metal refining sector still needs coke for steel production. Clean coal technology also exists, and it may extend coal's viability if it reduces carbon impact or produces attractive byproducts (i.e., CO2 feedstock for algae-based biofuel). The lack of obvious non-coal substitutes for steel making mean coal companies with large metallurgical coal deposits may be bargain plays. Some part of the coal sector will still be viable for several decades regardless of the energy sector's trends favoring solar over coal. This is the heart of an Alfidi Capital thesis I shall develop in future research.
I normally get plenty of unsolicited attention at these types of business events. I was on my best behavior at the Cleantech Open 2015 academy. Mission accomplished.