As many startups which have come before us know, the idea that you start out with might not be what ends up making your venture successful. Gaining a better understanding of what customers really need – by gathering critical on-the-ground data and running a reality check – sometimes means changing course.
Slack, a business collaboration and communication app, began as a company that made a computer game called Glitch. The game was a flop, but the colorful chat functionality used by players and employees turned into a hit. Similarly, Groupon started out as a social network for activists called The Point which later evolved into a daily deals site.
Over the past six months, extensive interviews with sustainability departments at major Swiss companies and learnings from a mini pilot project in Ghana have prompted us to rethink our business model to find a product-market fit that can achieve scale. The idea of this article is to help other budding entrepreneurs who may be in a similar situation by sharing our experience of the challenges we faced.
When we first conceived our business venture during IMD’s EMBA program, we developed the Energy Transition Accelerator Model (ETAM) to enable access to clean energy technologies in emerging markets. Our original plan was to provide households with access to solar home systems and electricity for free in exchange for using all available rooftop space. Our company, IntellSol, would supply the technology, develop and manage the project, and finance the acquisition of the solar home systems. In addition, we would issue blockchain-based certificates to sell on to corporations to provide measurable impact on SDGs.
During our mini pilot in Ghana, however, it quickly became clear that trying to provide home solar equipment without a strong, local partner was unviable and not scalable. Our aim now is to act as an intermediary between the suppliers of renewable energy and the market.
Our USP is supplying the certificates in the form of NFTs (non-fungible tokens) that provide information from high-quality, traceable, and long-term sourcing of carbon certificates with environmental, social, and economic impact. By acting as a platform, rather than an infrastructure provider, we can facilitate the interaction between any household with a solar panel on its roof and corporates who are interested in purchasing the certificates, thus creating the potential to achieve greater scale.
Below are the four biggest lessons we have learned as we built our company.
We co-founded IntellSol while many of us were still working in our corporate jobs. As we move to finalize our business model and value proposition, it is essential that all co-founders are truly committed to the project and its vision, and that our values are fully aligned.
Building a startup is hard work and the whole team needs to be willing to put in the time for the foreseeable future to help the business perform at its best so we can deliver in a continuous and timely manner.
We also realized that the company culture and structures need to be formally defined and explicitly managed so that they don’t develop ad-hoc. The result of these discussions between the founding members may lead to some changes in the organizational structure to ensure we have a strong and committed team going forward with the necessary capabilities to shape a business model to scale.
Having worked for 20 years in the pharmaceutical industry across a variety of commercial and marketing roles, a personal challenge for me was navigating the renewable energy ecosystem to identify the right business partners and customers.
IMD’s network proved invaluable here, helping to connect us with relevant experts in the field as well as chief sustainability officers at major companies. The latter are often bombarded with requests from startups who want to discuss their ideas, so these personal introductions helped us get a foot in the door to share our vision.
Our contacts have also suggested experts within their own networks, particularly those who have experience in Africa and in the solar industry who have provided us with frank feedback on what kinds of models are likely to work – or not. These experts have then referred us to other experts. By being humble and patient, every conversation and pitch, even when we got knocked back, was an opportunity to learn.
We were lucky to secure a grant from the Swiss Innovation Agency that enabled us to interview 30 heads of sustainability at Swiss companies. The feedback from these interviews gave us deep insights into how our customers might think and use our product and have helped us refine and adjust our planned value proposition.
Originally, we had hoped to attribute the benefits of offsetting carbon and providing social and economic value to communities into blockchain-based certificates to sell to any Swiss company that wants to show measurable impact on their SDGs.
Our conversations showed us that many big customers already have partners that help them to meet their SDGs. Moreover, those with little or no business presence within Africa struggled with how they would sell the benefit of providing clean energy infrastructure there to their stakeholders.
We realized that to find the right problem to solve for the right customers, we needed to target mid-size companies that have a footprint or geographical interest in Africa. This could include companies such as cocoa growers or commodity traders, who can credibly weave the broader value of providing clean and reliable energy to African households into their sustainability stories.
Before you even think about how you might scale your idea, it’s essential to complete a rock-solid pilot in the field. The aim of our mini pilot, which aimed to connect a 15Kw solar home system in Ghana with Ethereum’s blockchain technology, was to understand the challenges around deploying solar technology and collecting the data in the field from clean electricity produced and its equivalent of CO2 emissions saved. During this period, it became clear that our plan to manage the projects by financing the acquisition of the solar home equipment ourselves was unviable.
We still want to make solar energy more affordable for many households, but now we focus on finding strong local partners who will provide the equipment and sources of financing directly to households by leveraging stakeholders in the ecosystem (i.e., commercial banks, solar providers, subsidy programs, philanthropic investors, government agencies, energy development funds, etc.). We will then focus our efforts on building a one-of-a-kind platform which will allow any household with a solar panel to trade their certificates with corporates in developed countries.
A second pilot is now planned to validate this new business model. If successful, the next stage will be to approach investors with concrete needs for funding.
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