Photo Credit: Powerhouse
Given the youth of the cleantech industry, there isn’t a ton of publicly accessible guidance on how to succeed with a startup.
A new partnership aims to tackle that by hosting public conversations with clean energy founders to discuss what worked and what didn’t. In September, Oakland incubator and accelerator Powerhouse and Greentech Media kicked off a project called Watt It Takes. The monthly conversation happens live at Powerhouse, and is broadcast subsequently via Greentech Media’s podcast channels.
The next show will feature Andrew Birch, founder and former CEO of now-bankrupt solar installer Sungevity, on Wednesday, October 18 at 5:30 p.m. (RSVP here). This will be his first time speaking publicly about the company since it unraveled in March.
Last month’s event featured a solar company that has weathered many ups and downs since 1985, but still stands: SunPower. Founder Dick Swanson has such a legacy in this industry that his name adorns the “law” that describes solar price declines as a function of cumulative modules shipped.
When SunPower got started, a solar panel cost around $6.50 per watt, and a cumulative 100 megawatts had shipped globally. Since then, the cost of panels has fallen by roughly 92 percent, to around 50 cents per watt, and cumulative shipments grew by about 37,000 percent.
Before his company became a veteran high-end module producer and developer, SunPower was yet another scrappy materials startup spinning out of research conducted at Stanford University. Swanson recounted how close he came to bankruptcy on several occasions and some of the unexpected strategies that kept the business afloat.
Here are a few of his insights that resonate for startups entering this turbulent space today (scroll down for a list of tips written by Swanson himself).
To hear the full conversation, check out the recording of the talk here:
You can run a company without any prior business experience
Swanson started his company with experience as a Stanford faculty member, not as a seasoned corporate veteran.
“When we started, everybody in the company was from academia -- nobody had ever had a real job,” Swanson said.
“I didn't really know what businesspeople did,” he added. “I knew what engineers did; they did everything important. The only thing I was sure businesspeople did was play golf.”
Given his research experience, Swanson found the technological challenges at the company to be fairly straightforward. They were deterministic: You knew how to identify the problems and how to improve them.
The more challenging part was the human element: generating team cohesion, working with customers and figuring out what the market was looking for.
When he realized he needed to beef up on business basics, Swanson took action.
“I subscribed to Fortune magazine. That was useless,” he recalled. “I read books about entrepreneurs and how they started. That was useless.”
Books written by professors about business weren’t much help, either. In his telling, the principles of business leadership came from within.
“You just do it -- in fact, that's been trademarked,” he said.
Reflecting on his experience, Swanson did have some words of caution for the folks sitting across from a startup pitch.
“If I ever became a venture capitalist, I would think long and hard about funding a professor,” he said. “These guys are just in the clouds -- that's the impression that people have, and it's true.”
It’s never too late to change your name
There are certain tropes that appear again and again in solar company nomenclature. This was true even in the early days of the 1980s, when Swanson went looking for a suitable sun deity to brand the company with.
“It turns out every conceivable god, whether it's Egyptian or Greek or Roman, that had anything to do with solar was already taken,” he said.
The company branched out a bit and chose Eos, whom Homer referred to as “rosy-fingered dawn.” She chased away the night each morning.
When the company brought on a business adviser, the first piece of advice was to swap out that “snobbish” name for something more approachable. That replacement was SunPower, which states clearly what the company provides for a living.
Incidentally, Eos reappeared in other brands, including a Cannon camera line, and more recently as a long-duration battery company with a proprietary “zinc-hybrid cathode” chemistry, challenging conventional lithium-ion technology.
Be flexible in finding revenue until your core product takes off
When SunPower started commercializing advanced solar technology, people weren’t really looking for it.
In the early days, the few solar companies had to make do selling to niche applications like off-grid marijuana farms, offshore oil rigs, mountaintop repeaters and those emergency call boxes that used to appear on the side of freeways.
At one industry conference, Swanson saw a whole talk about how to keep seagulls from pooping on solar panels placed on Coast Guard navigation buoys.
“We were founded to do concentrated PV; that market just didn’t happen, so we were forced to build other things,” he said.
Those supplemental products had little to do with the core competency. They included barcode readers for cash registers, optical retina implants and CT scanners for GE.
“I would attract young engineers to work on solar cells, and get them all pumped up, and then say, ‘But, for now, I want you to work on this diode for International Rectifier,’” Swanson recalled. “I felt kind of like I was doing a bait and switch, but it worked.”
That flexibility helped keep SunPower alive even when the company was “at death's door three or four times.” At one point, counter to the typical startup narrative, Swanson considered moving into his son's basement.
Today, the challenge of selling a product people don't realize they could use resonates more with energy storage startups than solar companies. That’s particularly true for exotic chemistries, like flow batteries.
Swanson described this challenge for storage vendors with the oft-quoted Wayne Gretzky line about skating to where the puck is going, not where it is.
“You have to lead a little bit and realize that you have a vision: ‘We envision storage on the grid this way,’” he said. “It may not be exactly how it happens -- that doesn't really matter. What matters is that you have a vision, you march, you talk to people.”
Workplace morale could save your company
Even with creative workarounds, SunPower barely scraped by on several occasions, and endured five or six rounds of layoffs.
“We went through horrible ups and downs, and it was really, really stressful,” Swanson said.
Years later, Swanson learned something remarkable about how his employees coped with the lean times. Unbeknownst to him, some of the solar cell manufacturers took on shifts at a chip company next door, and came in after working there to do a second shift, unpaid, at SunPower’s factory.
“We had such a team, and everybody believed in it,” he said. “It attracted people who got really immersed in the vision and the hope of the whole thing, and they wanted it to succeed.”
To be clear, Swanson does not counsel aspiring founders to go off and cut costs by convincing people to work for free. This episode does show, though, that rallying a team around a joint vision for the future can make a considerable difference in keeping morale high in the face of financial difficulties.
Don’t leave your valuation to experts who don’t understand the industry
SunPower eventually was able to make payroll thanks to a $750,000 check written for them by Cypress Semiconductor founder T.J. Rodgers. Rogers later helped take SunPower public in 2005.
“There had been no solar IPOs on the U.S. exchanges, so the bankers were very, very skeptical,” Swanson said.
The investment bankers helped set a plausible price target when SunPower filed the necessary paperwork with the Securities and Exchange Commission. On the first morning of a roadshow in Germany to promote the IPO, though, it became clear that the stock could sell for twice that amount.
“They didn't realize there was such an appetite for cleantech that had boiled up in Europe, totally missed in the United States,” Swanson said.
To capture that value, the team withdrew its form and refiled a new one with SEC the very next day at twice the price. It sold for even more than the revised estimate.
That's something to keep in mind given the generally dour attitude Wall Street has taken with many cleantech stocks lately. Of course, SunPower's story didn't end with the IPO. The company still had to find the buyers that wanted what it had to offer.
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Dick Swanson's Thoughts and Guidance for New Entrepreneurs
- Do what you like and enjoy (e.g., Nvidia was started by gamers who were passionate about what they did and understood the need for better video processors).
- Play to your strengths. (1. and 2. are usually connected.)
- Create a vision, or story, of the future you strive for. This is the story that will entice others to join your quest.
- Plan on meeting the needs of the future, not what they are now. In the words of Wayne Gretzky, “Skate to where the puck will be, not were it is.”
- Listen to “experts,” but be VERY skeptical of what they say.
- Be totally immersed in your endeavor. If you are not thinking about it at night, on the weekends, etc., you are doing the wrong thing. It must be an integral part of who you are. But do take deliberate time off for the other things in your life.
- View entrepreneurship as a wonderful life journey to create value, not a way to get rich. If your goal is simply to get rich, there are much easier and less risky ways.
- Remember your team is your most important asset. Select it carefully and nurture it. Be totally loyal to it.
- Next come your customers, the only reason your company exists.
- Be totally honest and upfront with your stakeholders: employees, customers and investors. The slightest hint of sleaziness will put up a big red flag to the other stakeholders.
- You must endeavor to become profitable as soon as possible, but remember that a company is more than a vehicle for shareholder returns (despite what some “experts” say). It is a part of the community, of the nation, a place where people find meaning, and a player in the march of human civilization.
- Focus on an initial market where you have an unfair advantage, and that is small enough that established players won’t worry about you (unless you are Elon Musk). Concentrate your efforts here to become the best possible solution.
- Do not be ruled by fear. Decisions made under the influence of fear are usually suboptimal. Realize that you could fail, or die tomorrow (as the Stoics emphasized), and gain strength and clarity from that.
- Be a sponge for new ideas and skills: technology, accounting, marketing, team-building, you name it.
- Be humble. Recognize that you are a small part in the grand scheme of things. That all you do is intimately tied to the many people and influences you have had. The opposite, arrogance, is a sure road to failure.
- Remember that if you succeed, luck will be a big part of the reason…and vice versa. The trick is to stay viable and flexible enough to take advantage of serendipitous events when they present themselves.
- Be ready to pivot when needed. Finding the optimum here (knowing when to pivot) requires great effort and study. Pivot too much and you flail and fail; pivot too seldom and you march into oblivion. Realize that most the great startups and companies have had to pivot. Your ultimate vision helps guide you here. (SunPower’s biggest pivot was from concentrating PV to flat-plate modules. We would have disappeared if we didn’t do this.)
- Read voraciously, especially biographies of entrepreneurs, business magazines, and business how-to books (but remember 5 above).