Act Like Who You Want to Be

Neil (Nonfiction):

Hi Ted! Tell me about Clean Energy Ventures, the investment thesis, and the sorts of criteria you have for the companies you're looking to invest in.

Ted (Clean Energy Ventures):

We invest in early stage climate tech. Our archetypal investment is two or three engineers who've been at a lab or a university for the last two to eight years. They've been building something really fantastic, but they need to transform from a very strong technical team to a very strong commercial team.

There are three things that make us different as a firm that I think speak to our investment criteria. One is we're very hard tech focused. About 85% of our portfolio is hard tech centric. We know how to think about hardware technologies and understand the risk profiles in going from early stage to commercial scale.

The second thing that makes us different is our emissions reduction profile. Every company we invest in has to be able to mitigate two and a half gigatons of CO2 between now and 2050 cumulatively. And that's actually something we measure on a regular basis.

And the third thing that makes us different is that we're very hands-on after investment. We've co-authored IP. We take board seats. We have a leadership coach. And I spend a lot of time helping companies think about branding, marketing, commercialization. Most of the entrepreneurs who come to Clean Energy Ventures for investment are coming to us because they're looking for that guidance.

Let's talk about that hands-on guidance, particularly your background in branding and marketing. How does a company's brand play into your decision to invest? And, if they don’t have a brand to speak of, how do you help shape their brand in order to jumpstart growth?

In our archetypal investment, very little has often been done. Most of these companies have a logo that was probably developed in Canva over a weekend by a brother-in-law's roommate. Our role after we make an investment is to help these companies look and act as exciting as we think they are.

We want companies to look and act like the billion dollar company we know they can become. As an early company, you're very high risk. Being able to walk in the the door and have a first impression that creates a sense of trust also creates a sense of scale.

I often say we want them to look and act like the billion dollar company we want them to become. That's an important part of how we think about it. So, you’re right, most don't come with a brand at all. Some do come with some foundational elements they've used to get their first sets of customers, and we take that into account. But I think at this stage we're looking for their receptivity to coaching and advice. We're looking for them to understand the importance of brand and marketing in your story and your overall journey.

So what do you think the biggest challenges are? When you’re advising them, how do you convince these engineering led companies to translate their technology and ideas into brand, design, and marketing?

The biggest challenge I see is shifting the mindset of our leaders from a purely engineering and product focus to thinking about how they’ll build a presence in the market. One of the things I sometimes talk about was the Apple marketing philosophy in 1977. It started off by saying unfortunately, people do judge books by their covers, as much as we don't want them to.

That's often a message that I share with our founders and CEOs. “We have a really fantastic product here, but unfortunately if we don't design the cover the right way, and if we don't tell the story the right way, we still won't sell the book.” Convincing folks that this is something to spend time and focus on is a big early thing to accomplish.

Most of these engineering led companies have spent their time thinking about the science, the engineering, and the technology. Rightfully so. They've created something very special, but they haven't spent a lot of time thinking about how they'll position it in market.

I love that analogy. I sometimes describe it as curb appeal. You've got to have that curb appeal in order to sell the house. Obviously branding is so much deeper than just curb appeal or a book cover, but you need that first impression just to get people excited and willing to go deeper with you.

There's also a big trust aspect. I've spent my whole career in climate tech. When you're a small innovative company dealing with large multinational organizations, whether that's a utility or an OEM or otherwise, they think about risk very carefully. As an early company, you're very high risk. Being able to walk in the the door and have a first impression that creates a sense of trust also creates a sense of scale. Those are important things in helping move forward early partnerships and early sales.

And brand is hard to measure, candidly. That's one of the challenges. We have to understand strategically that this is something that's important to do. To make the investment and understand branding has benefits in lots places but it’s sometimes hard to measure.

Let’s build on that. How do you help companies see branding and design and voice and copy and messaging as an investment and not as an expense?

One of the things we've done that's unique in climate tech is providing marketing and branding support from the investor side. Sometimes a consultant or an agency might go to an early stage startup and say, “Hey, we think you could have a lot of benefit from going out and doing some branding and creating some stronger messaging and improving the visual identity.” Most founders in that scenario will tune it out as a sales conversation. What we've done at Clean Energy Ventures is make marketing and branding an important part of what we're recommending to our companies. Because we're on the same side of the table, there's an immediate understanding that we have their best interest in mind. Typically that's enough to get over a hurdle for us to actually spend meaningful time doing this work.

Then, we can build a deeper, more strategic foundational on the brand side. We can build a position, craft compelling messaging, and work with a firm that can really develop a brand identity that stands apart in the space.

You’re not somebody trying to sell them on something they don't see any value in. You're helping them understand the value from the beginning. We've talked a lot about the challenges of taking a technology and engineering led company to market through the lens of brand. What advantages do these companies have as startups when it comes to building the brand, maybe compared to building a brand from a more established or later stage company?

One would be excitement. Innovative technologies in older markets that are looking for disruption is something that gets people excited. An investment in brand can underscore that in a way that a large business really can't harness.

Two is the ability to kind of have sharp elbows. Or very strong perspectives. There's always tension here between the risk of aggravating the wrong people and the benefit of having a distinct position in the market. But I tend to push companies more towards the distinct position. Talk candidly about what’s wrong in their space. It's okay to say, “hey, the technologies we have today aren't working, or they're dirty and they need to stop.” Small businesses and growing startups can have those types of messages.

Innovative technologies in older markets that are looking for disruption is something that gets people excited. An investment in brand can underscore that in a way that a large business really can't harness.

So, once they understand the advantages and are on board with the importance of building a brand, how does it happen? What are the next steps?

Most of the time when I engage with a company there's an initial window of internal branding work. Let's work through our positioning, our visual identity, our revised website, maybe some collateral. Then we typically build a 12 month marketing plan. The goal of that marketing plan for a company at this stage is twofold. One, we start to work the marketing muscle so people understand its role within the organization and how to practice it. Two, it's to build awareness in the market. We need to change the conversation from people asking, “who?” to people knowing your name before you even meet them.

That makes a lot of sense. We see what we do at Nonfiction as planting the flag and then raising the flag. And once you've got that flag raised, you've got the foundation for everybody be consistent with it and have all the tools they need to stop reinventing the wheel every time you need to talk about yourself.

We've talked about trust and credibility, but the other thing that I say when I'm speaking to early stage companies like this is there's also visibility and recognizability. That seems like we're hitting on here. That way, when you do show up, you're both recognizable but immediately building trust around what you're doing by being credible.

I think we're preaching from the same book. I see this in businesses large and small where a message gets talked about for a year or 18 months and people internally feel like they've heard it ad nauseam and really don't want to repeat it again. But I often tell them that's the moment where you've really raised the flag. That's when you have to keep saying it.

That's an excellent point. Our relationships tend to last years. We'll start early on with a company and help them grow. And as they grow, we'll help scale up the brand. Then we'll hear them say, “we've been saying the same thing for a year. Can we change our brand yet?” But after a year, nobody knows who you are yet. It takes two or three years to really build that recognition. It's going to get really boring to you, but it's still super fresh to everybody that you're talking to. You’ve got just stick with it and keep singing that song because otherwise nobody else is going to able to pick up the tune.

I agree! I think telling new companies what you just said right at the outset can be really impactful. We're creating a story that's simple to understand, easy to repeat, and that everyone in the company can sell. That's another reason to spend that foundational time getting it right, because we want have that consistent message that's going make sure we're building uniform awareness.

Exactly. A couple final questions. Last time we talked, I heard you say that strong design differentiates in the climate space. Why is that? What do you think somebody like Nonfiction can bring to this space to make companies stand out?

I’ve spent my whole career in clean tech and I’ve loved every minute of it. The first part of my career had a lot of new influx of capital and talent. But it was a very dry business. Marketing was mostly an afterthought. It just wasn't seen as a place that needed investment in design. And in climate tech, everything is very engineering focused. Design feels like a soft thing.

But that means the design in this space was lacking. Strong design really made you stand out. In consumer products, for example, it's a must have in order to go to market. In clean tech and climate tech, it's an advantage because nobody else is spending any time on it. That’s starting to change. But spending time and money on design differentiates you and creates a sense of trust.

People judge a book by their cover and that's visual in addition to language. I often also tell our startups that when we're investing in visual identity, what we're trying to do is underscore our position in a way that goes beyond words. We're trying to create a feeling, a more complete picture of the position we want have in the market in a way that attracts someone immediately. Design is the strongest, best way to do that.

I often also tell our startups that when they're investing in visual identity, what they're trying to do is underscore their position in a way that goes beyond words. Design is the strongest, best way to do that.

Brand and marketing are two sides of the same coin, because if you don't have a brand, marketing has nothing to say. But if you don't have marketing, nobody hears about your brand. Last questions. How do you see the role of branding evolving for climate tech startups in the future? And what advice would you give to a climate tech startup on building their brand?

As this space continues to grow and expand and get more crowded, the role of brand becomes more important because you need to be more differentiated. Making sure that you've spent time thinking about how you differentiate from competitors and what your discreet and distinct value is to customers is really important. A lot of that value in this space has to do with economics and cost.

So, while I think there's always benefit in the mission alignment of solving climate change, reducing greenhouse gases, decarbonizing your business or your your own personal carbon footprint, that message is difficult to align with a broad group of people. Now brand positioning needs to be more economically differentiating. How can I just help save you money and at the same time save the planet? Thinking about those things is more and more important.

Spending dedicated time thinking about who you want to be in this space and aligning your mission, your vision, and your position is a really important piece to get right. What can you as an organization and your team members do every day to have an impact? That’s your mission. How do you see the world changing and what's your role in it? That’s your vision. Your position is really how are you differentiated today from all the others in the competitive set. Knowing what those things are clearly and making sure your entire team, not just those involved with brand and marketing or leadership, understand those elements is critical.

Thanks, Ted!