Starting a Company Is Hard
Today isn't quite the one-year anniversary of me beginning my full-time focus on Smart Office Energy Solutions but it is about the one-year anniversary of my departure from Poken, and that gives me pause to think about what has--and hasn't--been accomplished since then. When I look back at it, the clear conclusion is that starting a company is hard even for a well resourced team and even harder for a bootstrapping lone warrior.
To be clear, this isn't my first rodeo. Smart Office Energy Solutions is the fourth company I've founded or joined very early. This experience combined with the many skills I developed in business school provides me with many tools with which to start up a company. While these tools make the startup process more effective, they don't make it any easier. 10 years ago I might have thought that, by the time I started my fourth company, I would be able to do it with my eyes closed--but I would have been wrong!
Looking briefly at the history of my current venture, it is clear that constant change is the foundation of this--and possibly any--startup. This time last year we were building a business plan around being a joint venture "sister company" to an existing European business in the smart energy space. We analyzed the North American market and put together a very detailed plan to develop it but, after four months, we still hadn't arrived at a deal with our would-be partner. We considered many different models: JV, subsidiary, holding company, etc. but time and again the other party failed to consider our interests.
Despite this, I became more convinced every day that our market opportunity was valid so, finally, at the end of last year, we incorporated Smart OES LLC, a completely separate company from the European "partner," which we engaged purely as a supplier of hardware and software products. If we were going to do this, it would be on our own.
This year began with fundraising, a process which I had never led before. Because it was new to me I was somewhat apprehensive about it, but by the end of the first quarter we had raised 50% more than was our original goal. I remain humbled and honored that so many friends, family, colleagues, and classmates had the confidence in us to put their own capital at risk.
This spring was incredibly productive as we deployed pilot installations at several clients in Houston and Austin. These validated the market for us and were a source of proprietary expertise we developed in eliciting energy savings 50% greater than anything that had been demonstrated by our European suppliers.
At the same time, though, it became clear that our suppliers simply weren't the long-term partners we needed. We still hadn't been able to work out a mutually beneficial partnership arrangement and there was no telling when we would ever be supplied with products that were electrically certified for North America. Thus, less than a year after launching a business built around partnering with them, we formally ended our relationship and began searching for other ways to serve the sizable market that was simply waiting for us to be able to sell.
This whole process has required weekly updates to our business plan, which is part of what makes starting the company so hard. If we had a clearly defined, unchanging path, it would be easy to know what to do--and to do it--every day. But with the ground constantly shifting under our feet, we are engaged in constant realignment and adjustment--it's like tap dancing during an earth quake!
That's OK; it is extremely important for a company at our stage to remain agile and to be able to evolve our business plan as we experiment with what actually works in the market. At the same time, though, we have to be careful not to lose focus--I've seen many companies fail because they have opportunistically leaped from one idea to another to another and, at the end of the day, they never saw anything through enough to build a business around. It is a fine line between strategic agility and lack of focus. The key to success here is to stay true to a clear and well defined vision while constantly adapting our tactics to realize that vision. Returning to the "path" metaphor, we must keep the end destination in sight while constantly adapting our path as we meet different road blocks and forks in the road along the way.
The other hardest aspect of this startup is one I have mentioned before: it is really lonely. Right now there are just two of us fully engaged. We have deliberately followed a "lean" approach to starting this company, outsourcing everything we can to reduce fixed overheads. This dramatically reduced the amount of capital we needed to raise to get started, a great thing for us and our investors. Some people thrive in an isolated work environment; I do not. I'm a team player through and through and, until we reach the milestone that enables the growth of our small team, I will be challenged. In the meantime I am taking extra care to ensure that I am maintaining constant contact with investors, clients, and business partners to feel like I am part of a larger extended team.
There is nothing I would rather be doing than starting up Smart Office Energy Solutions right now. Every day we move closer to our goal of making a very, very significant difference in the global energy landscape. It is hard work to be sure, but I have never shied away from hard work for a worthy cause. I finish each day with more energy than I had when the day started and that, more than anything, tells me that we are really on the right path!