UCLA Anderson MBA students conduct Applied Management Research field study projects in lieu of a thesis. Anderson gives full-time students the Business Creation Option in which entrepreneurs launch companies while still in school. During Impact Week (April 17–21, 2017), whose theme is Purpose + Profit, we’re highlighting stories of Class of 2017 mission-driven BCO projects that fulfill unmet needs in sectors from e-commerce to cleantech.
The Energy Management Group's annual Energy Innovation Conference kicks off Impact Week on Friday, April 14!
By Akhil Modi, Antonio Arellano, Dan Komula, Shawn Ranjbaran and Kevin Shah, MBA Class of 2017
“Welcome to BCO!”
Last summer, we thought the hard part was over. Little did we know that it was just the beginning. Over the past six months, we have racked up a list of accomplishments that includes:
- 90 stakeholder conversations
- 3 pivots (which feel like many more)
- 20 different logo designs
- 5 domain name purchases (plus a list of over 100 more)
- 5 case competitions
- 200 versions of a pitch deck
- 75 versions of a business plan
- 1 surprise partnership
(We also went through one potential lawsuit — but that is a story for another day, maybe a fireside chat.)
The point is, after all that, we failed to get one customer and we failed to make a single dollar of revenue. So, what do we have to show for ourselves outside of a pretty deck with pictures culled from Google Images?
The failure to execute was a disappointment but remained our greatest opportunity. We confess that when it came to pounding the pavement and knocking on doors, we hid behind our pitch deck and business plans. Don’t get us wrong: We are not discounting what we have done — we have actually accomplished quite a bit. But if we could trade it all in, we’d trade it for one customer. The time to execute is now.
We remain convinced that there is a decidedly unmet demand for a solar management service. Among our more than 90 primary research interviews there was one in particular that caught our attention. It was with an individual named Oscar. Oscar is the vice president of a small enterprise in the Los Angeles area. He owns several multifamily apartment units in Bakersfield, California; he pays all the utilities, making his properties perfect sites for a solar installation.
Our friend Oscar represents a market of property owners who could use help in assessing their solar options. In the U.S. there are some 1.4 million properties owned by individual investors, and this accounts for over 6 million apartments.
Through our primary and secondary research into real estate, our running thesis is that real estate property managers can benefit from the value provided by solar consultants. We propose four working assumptions to support this hypothesis: 1) they receive excessive inbound pitches about solar; 2) they lack the bandwidth to evaluate pitches; 3) they have limited knowledge about solar; and 4) they are curious about solar. Our goal as a management service would be to target individuals like the ideal customer Oscar, who own investment properties as passive income, are interested in additional impact investment opportunities, but don’t have the time or expertise to evaluate opportunities like solar.
So we scheduled meetings with three potential customers like Oscar, property owners with multifamily units. We determined that it all came down to 30-minute conversations and our ability to put six months of knowledge into a clear and concise pitch about why our service could provide value that is justified and attainable. It would be about building a meaningful and long-lasting relationship. “Will we fail?” we asked ourselves. “Maybe. Heck, probably!” But we pledged to walk away from this experience with no regrets. We knew it would all be worth it one way or another, but the fact that we had an opportunity to actually make a sale made this project all the more exciting. “Sure,” we all agreed, “there have been hard knocks. But we wouldn’t have it any other way.”
A partnership built for success
Our three customer meetings all culminated in one adamant refrain: “Why should we work with you?” Fair enough. Solar is a competitive commodity today and there are a number of solar developers who can provide a better price than we can. We asked ourselves, where does Sun Democracy we go from here? Are we even the right team to get the job done?
We called in the SWOT team (that is, we reflected on our strengths and weaknesses), and found that even though we make one of the strongest and most experienced teams, customers trust the proof in past successful projects. Our three customers were high-profile clients who owned many properties in Los Angeles; however, as a market entry strategy, we needed to show our value through smaller projects, which meant working on a small scale first. We needed to reevaluate how we approached customers and which customers to target.
As we continued our primary research to gain further insight, we found the light (no pun intended) when we were connected through our Anderson network with an L.A.-based startup called Hemvest. Hemvest is a solar financing company, now a veteran in the industry, whose contracts include financing institutions and solar developers. After discussing some of the industry pain points with Jeff, CEO at Hemvest, we were able to identify a market opportunity that would allow Hemvest to grow its operations.
Our team decided to propose a partnership deal that would allow both companies to pursue this market more effectively together, rather than each trying on its own. The partnership meant that Sun Democracy would bring in the deal flow, and Hemvest would bring its contracts with financiers and developers, a clear win-win, and together we’d be ready to execute right away.
At Sun Democracy, we define entrepreneurship as using limited resources but harnessing large networks. With Hemvest we’ve identified a unique market segment to target, and we are just a few phone calls away from our first solar install.