Great to chat with Jonathan Nwosu, Co-Founder and CEO at ClimaView, software that analyzes financed emissions and enable sustainable finance products! We discussed measuring bank emissions, the Mom Test, how to make early enterprise sales, the difficulties of gathering clean data and more!
https://carbotnic.com/climaview
Download Podcast Here: https://plinkhq.com/i/1518148418
To contact Jonathan about their fundraising, please email him here.
Remember, If you want to support the podcast please rate and review 5 stars on Apple, Thanks so much!
James
The unedited podcast transcript is below
James McWalter
Hello today we’re speaking with Jonathan Nwosu founder at Climaview. welcome to podcast dot Jonathan Nwosuathan.
Jonathan Nwosu
Hey James yeah, really glad to be on the podcast. Thanks for having me really excited to get things going.
James McWalter
Bridge at the start. Can you tell us a little bit about Climaview.
Jonathan Nwosu
Yeah, absolutely so clean of you is a software platform and essentially what we do is we help banks measure their emissions and their finance emissions which then enables them to build green sustainable financial products.
James McWalter
And what drove that initial decision to start Clima View.
Jonathan Nwosu
Yeah that’s a great question and it’s a question that we think about a lot. So what the reason we decided to build clean view was because um, me and my co-founders. We knew we wanted to work in the climate space. We looked at all the challenges that were going on in the world and we realized that climate was. Um, one of the biggest challenges that humanity faces over the next ten or twenty years so this is a space that we decided to focus on. But even though we knew we wanted to focus on climate. We didn’t quite know which space in climate to focus on and this is where we started with customer discovery so in about. Span of about 6 to eight months we started interviewing over 150 people I those people included esg analysts industry experts investors climate operators pretty much anyone that you can think of that’s working in the esg in climate space. Um, and then we started to see some common themes and some common patterns and one of the challenges that we saw was that banks and financial institutions really struggled to measure their finance emissions and as a result they really struggled to build green financial products. And I can dive into more detail as to what that actually means.
James McWalter
Yeah, and I guess those 150 people and I think it’s a really good lesson for anybody thinking about starting a company. You know you do have to talk to a lot of potential users reinsend the problem. How do you find those people.
Jonathan Nwosu
So yeah, another great question so we um, we found those people through ah various means um one was just our extended network. So we sort of leveraged our existing network. Um, and so we just randomly hit up people on Linkedin. We sent lots of messages. We sent lots of cold messages. Um, we had lots of warm introductions and we sent lots of emails. Ah but we also ah all met at Oxford University which is where we all studied and therefore we had access to quite a wide range of professors and climate experts from our university. Um, and we really leveraged that um connection that we had to the university to go back to speak to some of our old professors and to speak to some ah professors in the climate school there as well. Um, but it was just mainly a lot of hustling and really just a lot of work. But.
James McWalter
And you mentioned your cofounders you all went to University together I Guess you know how were you kind of previously friends were you working on projects together were you studying the same things. You know how did that kind of cofounder relationship develop.
Jonathan Nwosu
Yeah I think with any sort of great Businesses. We All did start off as friends so men was actually on my course so I was doing software engineering. Um and we also met tech shesh as well Who was studying climate physics. Um, and we did start off as friends initially we were just all super passionate. Super ambitious and. We really knew we wanted to make a change in the world as Cliche as that may sounds but we knew we wanted to have lasting impact. Um, and we realized we could have lasting impact within the climate space and that’s why we chose to focus specifically on this climates on this climate challenge. Um, but.
Jonathan Nwosu
We knew that one of the key ways that we could have impact was through starting a business and that’s exactly what we chose to do I think um, we had this kind of common understanding that entrepreneurship was a way ah for us to create the change that we wanted to see out into the world. Um, and we knew that the only way we could kind of create this change was by starting a business. Um, so it became pretty obvious really early on that it was right for us to so start a business.. There was great team synergy at the very beginning we were all friends as I mentioned um and we were all passionate about this space Now we have um, individual reasons as to why we’re tackling Climate. Ah, but we all had this kind of common gold and common vision um of trying to leave the earth in a better condition than I guess where we found it.
James McWalter
So yeah, one of the ways I kind of think about it is is a lot of these kind of big levers that individuals and organizations can can use to combat climateish and governmental is like 1 obviously big lever activism ah, you know, very very large corporates have various levers. They can pull. But obviously you know the the emets of this startup and like the community that that I’m part of and and that you’re part of is the lever around you know, early stage fast moving startups that try to have a very very large impact and a very very short amount of time and I think all these levers are necessary. We basically have to get you know. A a to a plus decisions and motion across all lers to really you know combat to the level that we need to um, but that makes some of sense right? because you can’t do all them right? I think the people who are like oh I’m going to be governmental and also doing the startup thing on the side. Um, that never works you have to kind of be really really full in on one of these directions. And then that’s how you have the greatest impact and you know as you were kind of going through. You know the process of like talking to people listening to different problems and ideas that would have a potential climate impact was there ever were there any other kind of ideas that you came close to moving forward with that. You decided against so.
Jonathan Nwosu
And yeah I would I guess I’m going to start that off by saying I completely agree. There’s um, on your previous statement that is um, there’s a lot of things that we could have done and there’s more than one way to sort of um, be a catalyst for change right? We looked our our existing skill set and we. Essentially a group of physicists and and engineers and we thought we’re really good with technology and therefore we decided to take a tech first approach and um in trying to solve this problem but you’re right in saying that there’s um, other ways to solve the climate challenge such as activism and obviously um, working in politics and fruit of the regulatory lens as well.
Jonathan Nwosu
But just to answer your second question. Yeah, there’s a ton of really bad ideas that we worked on initially um and I think um as we were interviewing 150 people ah we actually started um, putting out theories. Um, and start we started putting out assumptions right? And these assumptions were basically startup ideas.
James McWalter
I absolutely.
Jonathan Nwosu
Um, one of the ideas that we had really early on was ah we wanted to introduce carbon neutral meals to restaurants. Um, so anytime and you would go to a restaurant. You’d basically pay a little bit extra to basically make your ah meal carbon neutral and to offset um your meal. Um, and we thought that this was like the best idea that had ever been created. But I think in hindsight it. It was a pretty terrible idea but it’s one of the ideas that we had really early On. We didn’t pursue it much further I think we did a lot of validation and we spoke to a lot of people and we realized that this is something that a lot of like restaurants don’t Need. Um.
James McWalter
And.
Jonathan Nwosu
You know I think you’re probably well aware James that ah most small businesses. They’re really really um, struggling to just survive and they’re struggling to meet to make ends meet. Um, so the last thing that they’re sort of thinking about is introducing more expensive pricing for their customers. Um, but. And yeah, it just wasn’t it wasn’t a great idea for that’s only of the ideas that we had and I’m pretty sure we had plenty more um but then after 150 interviews you do get a a good grasp of what some of the key challenges are in certain sectors and that’s how we kind of stumbled upon. Um. The idea that claim if he’s working on now.
James McWalter
Yeah, yeah, a lot of investors will use the kind of terminology of is it a vitamin or you know like a pain color right? something that it’s nice to have or or need to have I don’t personally the the the thing because sometimes you know like a vitamin gets you you know, preventative and all these kind of things.
Jonathan Nwosu
Interactive and seconding.
James McWalter
But I actually had my own. Um, pretty arguably bad idea. Although anybody listening things feel free to try it themselves which was sms ah chatbots aimed at farmers to prompt them into more climate friend. Friendly decisions based on their specific farm right? because it would do some geo-occation on on you know where the farmers receiving it. And and yeah I grew up on a farm and it is just hard to sell to farmers and so the tech was actually pretty easy in that case like we you know myself and a couple of friends we we spun something up pretty quickly but trying to get users is always you know nearly always the major challenge with startups right? Usually it’s market risk more than technical risk and so as you’re kind of thinking through then.
James McWalter
You know you have ah an idea you’ve tried a few different ideas like okay this specific idea which became clean of you. That’s the one we’re moving forward with from that point what was the kind of next step was it building an Mvp was it trying to sign up some you know early waitlist users like what what would those next couple of months look like.
Jonathan Nwosu
I yeah, it’s a great question. Um I was going to say though James that doesn’t actually sound like a bad idea the farmer in the sms chap but I was just like I’m really sure that will be actually pretty useful. Um night three.
James McWalter
But if if if the farmer the but for the farmer right? It’s not yet a pain Killer right? So if the farmer was feeling the pressure to have the climate friendly impact. Um you know, but but similar to you you in the conversation we’re having about the restaurant idea like the margins are so thin that until you have either regulatory pressure or some other.
Jonathan Nwosu
Um, exactly.
James McWalter
Lever that actually pushes them I think maybe it’s just too early. But yeah, you know so but somebody should try it. Yeah.
Jonathan Nwosu
Yeah, yeah, exactly? Um, but I guess just won’t see your question in terms of how we further developed the idea. So I guess we developed the idea in 3 kind of core stages one was just. Um, the first part was just that we did a lot of customer discovery right? So as I mentioned for like 6 to eight months we built nothing. There was no code, no nothing, no product, no demo nothing like that we were just having conversations and I think what that did was it helped us really understand the space better than most people out there and. Just by intensely focusing on this space for 6 to eight months where we just we read. We listened to podcasts. Um, we read books we spoke to industry experts. We were able to learn really really quickly and we were able to learn at a really accelerated pace. Um. And then we identified one problem and 1 of the core challenges was that banks and financial institutions um have a hard time in measuring their scope three finance emissions and I’ll dive into what that actually means um so let’s take a bank like Jp Morgan or Hsbc. Um, if one of these large banks gives maybe a billion dollars to um x on mobile and Exxon Mobile um carries out oil exploration work with that and that leads to further emissions. Um those emissions that are created are actually part of Jp Morgans or Hsbc’s wider emissions and these are known as finance emissions.
Jonathan Nwosu
So even though J P Morgan and Hsbc were not directly relevant to the contribution of these emissions. Um, it’s actually still um, a duty for the bank to report on these emissions. Um, and it turns out that they really struggle to figure out what that quantifiable number is. Um, and that’s what we’re helping these banks and financial institutions really do Um, and so what we did was we created a bunch of demos we showed it to some of these banks and we were like hey if we actually build out a fully fledged solution would you pay for it. Um, and it turns out that some of them will um and some of them have um so that’s. That sort of leads us into the the third and final part which is um, we’re sort of now in the process of creating a paid pilot with one of the largest banks here in the u k so some really really exciting times and we sort of approach this whole startup journey in a really methodical way and we read this book called that disciplined entrepreneur which is. Fantastic and I would highly recommend it to anyone building out a business because it really forces you to think about business from like first principles and it really forces you to think about um business from a very methodical and logical process and we made very few assumptions that.
James McWalter
Yeah I love that and other kind of similar books that tackle kind of similar approaches things like the mom test and a few others where you have to presume very little. Um, you just have to you know, be incredibly humble about the problem space and then you can be you know, very very innovative on the on the solution side right.
Jonathan Nwosu
Oh yeah.
Jonathan Nwosu
Um, exactly.
James McWalter
But but you know we are you know quotequote the idiots right? Even if it’s a problem you yourself have had you’re like Okay, what is the user. How are they solving it. You know how are they solving it from a time and money point of view and so on and and and this kind of progress and I think it’s it’s ah also this very common problem that a lot of startups. Get.
Jonathan Nwosu
Yes.
Jonathan Nwosu
Exactly spot on.
James McWalter
Caught up it and in previous startups to to one I’m working on now I also did that where you are either over build before you validate really the market demand and there’s nearly nothing worse than building too early because you’ve now built something and you’re looking for customers for your product rather than um, ah building a product for your customers and all of a sudden. Yeah, once something exists that you put hours into or days or weeks or months it’s like you know you’re nearly naturally going to be somewhat defensive of that effort and then if users don’t want it. It’s like okay well the users are wrong. Let’s go find some users who actually want to use our product and so many startups get caught up in that and again I’ve I’ve also had that issue in the past. Whereas if you go and you just have mockups and you try to you know, ideally, try to sign some letters of intent even if they’re nonbinding um, and again as you said that you can start with free or free demos and and kind of start moving into paid pilots from there. You just start to move along this kind of. Trust. You know this trust process and then you’re also iterating right? It’s a lot easier to iterate on a deck than it is to iterate you know with code um and so I think you know the kind of approach you’ve taken so far makes a ton of sense and so now that you are starting to work with this. You know this first kind of cornerstone. Um potential customer for the paid pilot. You know how are you thinking about like you know the the onboarding of that when we talk about scope 3 emissions like these are near Toby definition. Very very hard to measure and so what’s the kind of methodology that you’re taking to a problem right.
Jonathan Nwosu
And yeah, that’s a great question I’m so glad you mentioned the mum test because that’s a book that we heavily relied upon in the early days it is a goldm mine. Um, it’s such a good book if you’re thinking of starting a business or in a or in a process of starting 1 I would definitely definitely recommend it. Um.
James McWalter
Yeah, it’s it’s ah it’s a mom test in America mom tests and in the U K and mam test in Ireland you know.
Jonathan Nwosu
I love that yeah actually spent some quite some time in in Ireland I used to live in I and I see you also grew up in island um, which is pretty cool. Um, yeah in terms of how we’re thinking about integrating um and onboarding and you know just diving deeper into how the technology works.
James McWalter
Yeah.
Jonathan Nwosu
Um, so a lot of our calculations or we figure out scope 3 finance emissions ah based on transactions data. Um, so we’re quite lucky that we’re really just focused of banks and financial institutions. Um, and banks have a lot of transactions data. So basically going back to the example that I gave before of. Ah, Jpmorgan Chase giving out loans to oil companies. We’re lucky that. Um we would be able to access. Um, you know Exon’s Mobile’s transactions data through the bank. Um, and we’d be able to accurately assess their emissions based on transactions data right? So and if they are. Buying um a million pounds worth of ah pumps or something um to pump oil from one region of Texas to another. We’d be able to basically assess what the emissions were um that are attributed to that ah oil moving from one part of the Us to another part. And we’d be able to attribute the cost of the pump and the materials associated with the pump simply by looking at transactions data and what we’re trying to do is build um, a really large database of emissions factors. Um, where we’re basically scraping online journals and scientific journals as well as using existing. Um. Global standards for emissions factors and we’re compiling a proprietary database where we’ll be able to use transactions data to look at a company’s emissions. Um, and this will help ah banks measure their portfolio emissions just because like in the example that I gave jp Morgan Chase will be able to assess the emissions of Exxon Mobile
Jonathan Nwosu
And by looking at x on mobile scope one and 2 emissions. We’ll be able to help Jpmorgan Chase um figure out their scope three emissions so we just do it through transactions data.
James McWalter
So if you take take let’s say I think this is a really interesting example. So just some understanding is this a top-down or a bottom-up calculation. So the case of x andmobi there I’m sure for any large public company like that there are some sort of like top line. Ah. You know number data. So you know one hundred units of of carbon emitted by that particular company and then if you look at all of that company’s expenditure that you could potentially tie a dollar of expenditure to that topline number and so a dollar of Expenditure x on mobilebiil is 2 units of carbon where is a dollar of expenditure. Um, or or loans or whatever maybe be by ah you know I Don know Apple is you know, zero point two five dollars of expenditure are are of emissions ah units of emissions or are you looking at? Okay, um, diving into exonmobile’s specific. Loan for a pipeline which will be causing. Yeah let’s say ah oil pipeline which will cause way more emissions than excel mobile you know, maybe renting some office space which be lower I guess how are you thinking about the balance of that top-down versus bottom-up approach.
Jonathan Nwosu
exactly exactly I’m so glad that you mentioned that because we are taking a bottoms up approach as opposed to a top down approach with a top down approach There’s a lot of assumptions that you can make um whoever toppped out with ah a bottoms up approach. We’re looking at you know how is the loan actually being used. What specific material is being used um with that loan. What purchases are being made with that loan. So we’re able to introduce a lot more accuracy than if we took a top down approach. Um, so you’re spot on in saying that we don’t make you know high level assumptions. We don’t look at their sort of global emissions and we don’t say. You know, um, there’s x amount of co 2 being produced because we know that you know Xl mogul is responsible for x number of emissions. We really take ah a granular approach where we look at the exact transactions data and we look at the nature of the transactions and this is where a lot of the machine learning capabilities that we use come in. We’ll be able to identify the activity from the transactions data and then assign the relevant emissions factor to come to the relevant emissions for that particular activity. So our calculations are very very granular. They’re very very accurate. Um, and we notice that a lot of our competitors are taking a top-down approach as opposed to a bottoms up approach. And this is where we introduce more accuracy into these calculations and and these emissions.
James McWalter
It Yeah I Really like that as a kind of point of differentiation compared to the the the top-down approach I Guess the difficulty though is the data right? and with the difficulty with with with the data in general and um, you know I think a lot of companies in a lot of startups. Are you know.
Jonathan Nwosu
Um, hundred percent yeah
James McWalter
Those who are kind of built on or have a kind of machine learning as core to their approach either. They’ll try to use publicly available data to run their models and and and label and build their models where to a certain extent. The the startup is in control of their own destiny from ah at least from a data point of view Now. It does definitely lower the ah moat right? because. If it’s publicly available data. Anybody can also get it and so in those worlds I think startups very very much rely on their modeling capability on the other side. It’s like okay, our customers actually have all the data. Um, but we have to actually navigate. You know the byzantine. Um, internal like you know data structures and so on of these very very large organizations. But once you do that you have access to data that no other competitor has access to and you can start having value in a way that um is very very hard and you know for somebody else to get over that Moat. Um, and so it sounds like it’s more the latter kind of approach and with. That and you know with that being the case how you approaching you know building the relationships you know and kind of moving through these organizations to get the data that you need to run your models and.
Jonathan Nwosu
Yeah that’s a really interesting point and it actually hasn’t been easy James. It hasn’t been easy at all. Um I think um, getting access to some of this data is is is quite difficult depending on the size of the bank. Um, and we know that banks have different ways of storing their data. Um, you think you may think I’m joking when I say this but some banks actually store a lot of their data on premise um, so they have actual physical services. Um, and I actually hadn’t seen the physical server in in quite some time. Um, but it’s quite shocking to see that some of these financial institutions still have.
Jonathan Nwosu
Um, onsite ah servers which I think makes sense from a security standpoint. It may not make sense to have everything on the Cloud which is completely fine, but then it does make our job of maybe getting some of that data a little bit harder. Um, but we’re lucky that we’re working with some institutions. Where a lot of the data that they have especially the transactions data of their end clients is stored in the Cloud Um, and therefore we’re able to kind of access that data and integrate to that data fairly easily I think it’s also important for me to note that um you know we actually don’t have access to the transactions data Of. Ah, these banks and of the of the bank’s portfolio. Um, it’s encrypted so we don’t actually see the name of the real companies nor do we actually see the transactions data from our end. Um now the banks can see this data because they have contracts with their customers and therefore they’re able to see their customers transactions. So an Esg analyst working at a bank will be able to view this data but actually even as the founders we have no access to a lot of this data and by the time it comes to our end. A lot of this data is encrypted um and um, we we can’t see any company name or transaction. Um, and all examples. You know that I mentioned obviously during the podcast were just examples. We’re not actually working with those with those specific entities. Yeah, exactly someday exactly I Love that? yeah.
James McWalter
Yeah, no, Absolutely so someday someday. It’ll be um, okay that that makes sense and I think it is definitely anything that touches the financial space does have ah you know data security considerations that are definitely tougher than in other areas where. You know a some manufacturing company might be just so it’s a lot easier potentially from a data security point of view at least to have read and even sometimes write access to some of their databases whereas Yes, it makes complete sense to me that in the financial space. Um, you know you would not have the relationship with. The the actual um bank Customer. Um, and you’d have to have their buy-in and that would make the data collection problem even greater. But then I guess like if some of the data is encrypted. There is I’d imagine specific attributes you need at a minimum in order to actually go into your model. So um, yeah I Guess how how do you think about Like. What does good enough look like um from the kind of input and you know some of this I’m sure is Ip but yes, just on at its high level. Um, what are the kind of things you look for that might make a ah data set look good for you.
Jonathan Nwosu
I yeah I think one of the biggest challenges is always like clean data right? and um, as surprising as this may sound there is no um, standard for transactions data right? So like um, a lot of transactions data obviously comes with a specific amount ah see the amount of the purchase sometimes it may come with the location of the purchase which is helpful. Oftentimes. It doesn’t it might come of a purchase description but oftentimes these descriptions are very vague. Um, and they actually don’t describe the specific activity right? So if we see. Ah, description coming in and someone has spent $10 at a Starbucks in New York city um then that’s really easy to see because we can see the the amount we can see the location. We know the um, it’s the the coffees come from Starbucks and we know that it’s coffee as well and therefore we can track where the coffee beans have come from. Ah, we can kind of assume that they’re based um that the coffee beans have come from Brazil and therefore you know maybe we can attribute 3 or four kilograms of co 2 for that sort of coffee that was that was purchased but oftentimes transactions data can be very messy sometimes it doesn’t come with a location sometimes the descriptions don’t make much sense. It could just be as vague as and someone spending $10 at Starbucks and we don’t know what that purchase was for but maybe we can assume they bought a cross on or maybe you’re a coffee. Um, and that’s where things get really difficult. Um, so ideally in an ideal world. We’ll have really clean transactions data.
Jonathan Nwosu
In reality we know that we’re dealing with data that is oftentimes messy but here’s where the really interesting part comes in James because we’re building models that will be able to um, assess the accuracy. Um, so if we are making more assumptions than is necessary. We will flag those with the bank because we believe in being fully transparent and we’ll actually ah sign ourselves an accuracy score. Um, so if for instance, um, we notice that we’re making a lot of assumptions. We can’t get the descriptions required for the relevant transactions. Then we’ll be like hey you know for this particular item that was purchased. It’s a big item and we don’t quite know what the emissions are that us are associated with this particular item and will be fully transparent and we will flag that with the banks as well and the institutions that we’re working with um, but yeah. The data can be very messy sometimes it’s clean sometimes it’s not there isn’t a global standard for transactions data. Um, but um, yeah, that’s just some of the problems that we encounter as a startup.
James McWalter
Yeah, yeah, absolutely and I think some of the related elements are selling into very large enterprises you know, financial institutions and banks. These are some of the largest corporations in the world. Um, and they clearly have this you know a problem to be so.
Jonathan Nwosu
Yeah, exactly.
James McWalter
Solve so that I’m sure they’re seeking seeking solutions and yeah, clearly you’ve had folks, you know, taking your calls and and moving through you know a sales process. Um, but you know as a small you know, emergent company. How do you think about? you know sales into these types of large enterprises. Um any things you’ve kind of learned in the in the kind of early days so far right.
Jonathan Nwosu
Yeah I think some really that’s a really interesting problem actually of in in question, interesting question and something that we’ve actually been thinking about significantly over these past few weeks specifically um, enterprises are very difficult to sell to right? You know that sales cycles are oftentimes very long. Hard to identify who the decision maker is. It’s hard to identify who the person that’s going to be using. The product is um and it’s a very long and tedious process. Um, so we’ve actually moved to ah trying to kind of work with more of the midmarket segment right? where the banks are large enough to um. Know that they should be reporting on their finance emissions. Um, but that they’re small enough where we can still approach them and the sales cycles are in the months and not years. Um, so one of the tricks that we’ve done is just we’ve gone downmark basically and we’ve sort of targeted the midmarket segment um and you’d be surprised by how many midmarket size banks. There are James there. Um. I think we’re all kind of accustomed to the big names and you know the wells fargos and the Jp Morgans and um all the other sort of large financial institutions but there’s a lot of midsized market banks that are looking for solutions like this and that’s who are really targeting but oftentimes one of the tricks that we’ve learned is that if we are targeting some of these larger enterprises. It all always makes sense to um, approach their innovations and partnerships team because we know that this team has a high propensity to work with startups. Um, and um, they are actively looking for startups to partner with um and startups to kind of collaborate with.
Jonathan Nwosu
Um, and they’re always looking for new solutions because as you know it’s very difficult for these large financial institutions to um, create new engineering products themselves or to create. Um the capabilities required for them to accurately assess their financeissions. Um, it would maybe require them to hire a team of anywhere between 12 to 50 yeah esg analysts data engineers and software engineers. Um to basically build what we’re doing um and instead of hiring 50 people. It makes sense to just use our solution to help um, figure out their financedmis. Um, but yeah, when selling to these large institutions. There’s yeah 2 kind of key tricks. We’ve realized which is one going to the midmarket segment as sales cycles are just a little bit easier and faster and 2 if we are approaching enterprise customers. It always makes sense to get your foot in the door with their innovations and partnerships team as this team is um. Always kind of open to having conversations with new interesting startups.
James McWalter
Yeah I think that’s a lot of very interesting elements in there. Yeah first you know coming any organization and I think everybody on this call has been sold to right? We’ve all received lots of cold emails and all this kind of thing you know if you are basically just competing. Yeah, 1 to 1 against like within the kind of volume of noise that everybody’s dealing with it becomes very very difficult and so having those kind of internal like venture focus groups or new innovation focus groups that gives you the potential for this warm intro that absolutely is is kind of a way to kind of kind of move into it. Also think that a lot of startups make this mistake especially selling to large enterprises of trying to pretend. They’re larger than they are and it’s a mistake. Yeah, but it’s a mistake in 2 ways, right? So First of all um, you know because you’re not. You actually can’t do all the things right? You’re not going to be sucked too compliant and you’re not going to have all the.
Jonathan Nwosu
I Read exactly.
James McWalter
From bells and whistles all these kind of things and so first of all if people if the customer is expecting those things they’re going to immediately be disappointed and second of all, you actually want the organization and the people at the organization to self-select into being the types of people who are early adopters the kinds of people who got super excited. By you know this 3 person startup who are trying to make a massive difference and are going to dramatically solve our problem and all those kind of things and you also get the you know one of the kind of rare occasions where a sometimes junior level employee or a mid-level employee is talking to. You know the Ceo and the cto and the Ceo right on a regular basis and like. They might never get that chance again and it’s very you know or you say startup you know we’re obviously try to be as humble as possible but like there’s a lot of power in being a founder and there’s a lot of power in like having that relationship with people who you know lot of work is kind of boring and drudgery and so on. But it might honestly be the best part of their month talking to a company like yours and so I think you know at some point that shifts right? like once you have the initial early adopters then startups often try to seem bigger than they are and like actually I think that’s probably a good move right? You start to you know, have different layers and you have different types of you know sales. Segmentation and all that kind of thing but in the early days like that kind of founder to customer relationship is honestly nearly the only thing you have going and to hide that like a lot of startups do um is a massive mistake and so I’d love to hear that you guys are.
James McWalter
Kind of like really kind of leading with that and you know building those relationships from the ground up.
Jonathan Nwosu
Yeah, no I think you’ve touched upon some really great points that actually really really sort of great points I think being small in the early days can really be an advantage right? like I think a lot of founders as you mentioned try and appear to be bigger than they are and actually I think the reason we were partnering with such a large institution is because. We were the exact opposite of them. We were a free person team. They’re like a 15000 person company and so they’re not looking to partner with a another large company that’s going to move slowly. They want to partner with a small so scrappy startup um with a bunch of you know, very very young founders that are able to bring in. Really innovative solutions to their company and actually James would love to kind of throw this back at you and say you’ve obviously had ah quite some strong traction with paces. Um and would love to kind of understand a little bit more about your sales techniques and um, how you’re taking your product to market and what it’s been like for you as. Um, as someone who’s previously done sales as well in selling to other businesses and.
James McWalter
I yeah happy to give you whatever little kind of bits that we’ve done but I think like the number 1 thing is founder led sales is just very core and actually is in her book I’ll put into the show notes I think it’s literally called founder sales. It’s a free ebook on online that that people can kind of download. A lot of companies, especially Saas B 2 b saas or you know similar type companies will try to hire. You know, 2 3 salespeople when they just get a little bit of traction but it’s genuinely like a massive mistake because the founder or whatever number of founders are responsible for getting people in the door. They need to be there more than anybody else just because they need to hear the problems they need to hear you know what is compelling. Um every demo is an opportunity for some iteration you know like a lot of things obviously are on Zoom if you can get in a room. It’s even more powerful but it’s like you know I mentioned this word and they perked up. Are they a fear or hope-based buyer right? like there’s a lot of these different elements that you know people kind of read about but really, it’s about the the rapid iteration and you know having just such a high level of curiosity about how the potential buyer or the potential user like perceives you and just constant experimentation. So I would say that you know that’s one piece just on the on the kind of higher level like prospecting thing I mean it’s kind of similar to you guys finding? um you know, ah folks via user research. Um a lot of what we did for the first you know six to nine months trying to just get initial people is like hey I’m the founder of paces. Um I’m just looking for a user research interview which genuinely was right.
James McWalter
And then we would try to spend you know 30 minutes or a 20 minute call like 90% of it on their problems listening and so on and nearly inevitably. They’re like so so what do you? What? what? are you guys built like you know and like I would genuinely be like trying to make it all about them and they’re like no no, no show me something like I’m I’m really excited to see something and so you have this kind of little bit of pent up.
Jonathan Nwosu
Yeah.
James McWalter
Demand and then you show it to them and they’re like oh I really want to see a proper demo of that and then you schedule that or trial whatever it may be the last piece and I think this is something that we’re still iterating on and you know our cell cycles are are definitely shorter than you know you guys and ah the midmarket you know like this is this phrase. Rabbit steers elephants right? The deers are the the kind of midmarket. The midmarket for your segment is probably larger than the elephants in my segment just because the nature of these different different industries. Um, so our sales cycles are weeks and you know maybe a month or 2 at the max. Um, but I mean more for an elephant like very very large customer whereas most of our midmarke we try to close within you know within a calendar month.
James McWalter
I think the big thing we’re I guess still trying to iterate on and struggle with and and you know and we definitely haven’t solved is we have a trial they find value. They’re really interested in moving forward and it still might take 2 to three weeks of the contract back and forth to get it closed and we have very very customer friendly contract terms. Um. Outside of it being a twelve month contract and I think that’s the thing that we’re still trying to figure out and say okay, um, can we you know? can we get the contract start negotiations starting the day of the trial that’s something we’ve tried can we get? Um, you know if they are large enough to have like a few rounds of legal. Can we get those and these are things that. Just can’t see iterating on and it’s always a struggle but I think the big thing is a no or rejection is a form you know is something to be curious about and not feel like defeated by because you’re just going to get a lot of them right? Um, so I don’t know if any of that ah is is compelling at all.
Jonathan Nwosu
And yeah, no I think we really resonate with a lot of a lot of what you said, especially with the founder led approach. You know I think in the early days. It’s I think it’s vital I think it’s really crucial for one of the founders to be really selling. Um and in the early days. It might even make sense to have all the founders. Ah, maybe sitting on on the chords and maybe not actively saying anything but but the listening is really the most important part and I think you touched upon this changes and it’s a really good point and I want to hone in on it. But ideally you do want to be focused on your customers and their problems and they may actually switch it back to you and say hey you know what are you building? You know we’re really curious to find out. And actually the same thing happened to us quite a few times. So ah I’m definitely not surprised that that you that you mentioned it. Um I’d say we’re probably definitely at at an earlier stage where um, we are only working with 1 or 2 kind of customers at the moment. Um, and you know just because of. Time I am just focused on the fundraising aspect and I haven’t sort of gone back to the selling part. Um, but I think yeah I think you’ve mentioned some really great points into um in terms of sort of prospecting and negotiating and having really friendly terms as well. Um, and I’m quite curious to see how the twelve month kind of contracts. Landing with your customers. You think you’re getting any pushback from that would they prefer shorter contracts. Um, and who exactly ah is it that you’re sort of selling to because I actually imagined also that you’d be selling to enterprises and large customers who are looking to do these infrastructure projects. Okay.
James McWalter
Yeah, so we’re typically selling to what’s called the project developer so largesca solar project developer or battery project developer and what’s interesting about product developers is that at least in the United States they might only be a 15 to 20 person team but they’re often working on $100000000 projects
James McWalter
That’s not their entire. You know there’s a lot of other organizations that get involved at various points but the ones who are actually getting the project from an idea to you know what’s called notice to proceed or like the stage right before it being built these tend to often be like reasonably small organizations. Um, it’s. Pretty large dumbbell effects or barbell effect where you have very very large organizations. Not a lot of middle market to be honest and then a lot of kind of small entities who are still working on large projects. Um in terms of the twelve month contract so one of the things actually this is something I didn’t mention which might be beneficial to you guys and then other people listening is none of our contracts look the same. And we tie product enhancements to our contracts and so we will literally say okay, um, we you know you found value in the in the in the in the trial and the pilot. Um, but in our case, a lot of it is data breath. It’s like okay you started with 3 or 4 us states. Actually want 7 states that you want to look at data for we will not bill you the entire. You know we’ll ramp over the course of a month to the full billing. Um and we commit to hitting adding those 3 states within the next three weeks and we’ve done that for pretty much every customer. Well every customer we’ve had has ramped the contract so we’d still have a twelve month contract but they might not pay this the full monthly price. Um that we invoiceed them for a couple of months while we ramp and we always have very very aggressive times to ship the product and we’ve never missed a day and usually we try to like you know? Yeah basically over promise and then overde deliver right on everything.
James McWalter
Um, and then and then kind of go with that way because I think like there’s a lot of tradeoffs to make but I think having twelve month contracts has become very important to us our first 3 contracts were monthly um, but having twelve months is really valuable because you know we’ll hit our series a stage at some point and we’re not trying to lock people in just for the sake of locking them in. But does allow us to you know have a bit more security around saying that we’re truly at at ar versus an um mrr and if you have like lower you know a lot of transactions monthly transactions and Mr might might make more sense particularly if you’re a more s and b focus but I think for large enterprises twelve month contracts are new, a necessity. And honestly like if I was like working with banks. Um, within six months I’d be trying to target 2 to 3 year to contracts with some of these folks as well. But I think at the early days twelve months I think is ah is a good hard but achievable kind of contract length.
Jonathan Nwosu
I yeah um, some really interesting points actually and I want to dive into them a little bit deeper. Um, so the idea of having um, really flexible on drags and having bespoke contracts is really new to us and is actually something we’ll be using moving forward. So that’s a really really. Really great suggestion. Um, and I guess I’ve never really quite heard of the idea of over promising and and over deliververing I usually hear people saying that they under promise and overdeli but actually um I guess your job as a salesperson is to sell a vision and to sell dreams and it’s your responsibility as a team to sort of. Make that vision come true. So it’s great that you’re selling these long term these sort of twelve month contracts and um, having expectations of where to ship the product on and and quickly shipping the product to meet some of these contracts expectations. Um, so that’s like yeah.
James McWalter
And and just just just and just real quick on that like to be clear. The timelines is something my cofounder you know who is a Cto and the technical person like he tells me so I never say okay guys we’re going to deliver this in two weeks and then ah and then like engineering is like oh my god it’s impossible like I always ask him I’m like.
Jonathan Nwosu
Yeah, so.
James McWalter
Could we ship this? What is ah what is a tough but reasonable time and he’ll be like one week two weeks seven weeks whatever it may be and that is the number because I think like I yeah had engineering and sales often clash because of ah misaligned expectations and and pressure and in this case were fully aligned.
Jonathan Nwosu
Yeah, yeah, Nice I Love that? Yeah I Love that I Love the kind of cohesion that you and your co-founders. Um, really show. That’s that’s fantastic. But yeah, really really Interested. Um, on the idea of the sort of the flexible contracts and ramping up and stuff I thought that was. A really really great point and I think it’s something myself and my co-founders can kind of go back with and and really learn from and actually any other entrepreneur out there I think all of the stuff that you were mentioning is really of high value to any sort of B Two B sass player out there. So um, yeah, some really great advice. There. That’s that’s. Pretty helpful.
James McWalter
And again, none of this you know this is all from reading making a lot of mistakes. Yeah know organizations like Ycombinator or sasster.com these are all places that like have a ton of like great insights and so um, but but a lot of it’s just like making the mistakes right? because you know we’ve all read the advice and that we still do the. Thing and there’s like oh now I reallyund understand why the advice exists. Um, and that’s just the kind of nature of these things. Um I also believe you guys are are doing a little bit of fundraising as you talk to investors. What are some of the kind of elements of the pitch that people are finding most compelling right.
Jonathan Nwosu
In back of.
Jonathan Nwosu
Yeah that’s a great question. Um, so actually people and so part of the thing that I didn’t mention that I probably should have mentioned earlier on was that um we aren’t just calculating portfolio emissions or finance emissions for the sake of it. Ah, banks are actually using something with this information. Um, and what they’re doing with this information is something really really cool. They’re creating these new green financial products. Basically um so it’s expected that at least in the U K and Europe um, this could be ah, a new revenue stream for a lot of these banks and financial institutions. But it’s also a way for these banks and financial institutions. To get their portfolio customers to net zero and so let’s take a bank like hsbc or any other example or any other bank and again this is just an example, it’s it’s all hypothetical and so any large sort of bank in the Uk will maybe give out um a million or two billion pounds worth of green loans. And these green loans for these companies that are accepting these loans are going to be used for. Maybe um, green infrastructure projects that will make the business a lot more sustainable. So if hsbc is providing loans to a manufacturing company and a manufacturing company wants to use this money to acquire new suppliers or Greener suppliers. Um, then this is how these loans will be used and it’s in a way. It’s good for both the bank and the business the business um is able to sort of leverage this money and use this money to become a greener and it’s great for the bank as well because the bank is helping their customers um reduce their emissions which actually.
Jonathan Nwosu
Affects the bank’s emissions as well. So It’s almost like this Win-win situation. Um, and this is the part of the pitch that has really drawn investors because this is something that’s unique and um, something that we’re working on that nobody else is really working on at the moment. Um or at least not at the scale as to which we’re sort of doing it. Um, so as well as you know providing banks with the information. Um, so on top of the information that we’re Providing. We’re also helping these banks and financial institutions create these green products. Um and very similarly to how ah businesses have a credit score now. Um, in the future lending decisions will be based on things like the credit score which we have at the moment and your emissions score as Well. Um, So if you’re a high emitter. It may be that you get loans at a less favorable rate than someone else in your industry that is a low emitter. Um, so. Yeah, these are things that are really interesting and things that are really drawing in Investors. Um, and we basically allow and enable these banks to create these financial products because of the data that we give them in terms of helping them assess the emissions score of their portfolio businesses.
James McWalter
I brilliantant no I love that and I could definite see you know the the tan the totally addressable market of of that kind of part really being attractive to to investors but John and this has beenryant really enjoyed the conversation before we leave off is there anything I should have asked you about. But did not.
Jonathan Nwosu
Cool I’ll say 2 things 1 is just ah, a point that I wanted to say and then I’ll say a call to action if that works cool cool. Yeah I think there’s there’s 2 things I think um one is just maybe about the team I’m happy to kind of dive into the team a little bit. Um and just to say that.
James McWalter
So perfect.
Jonathan Nwosu
Ah, super grateful for the team that I have and my co-founders. They’re incredible. We’ve got deck shesh and men um men’s focus is focused on the technology side and deck shesh is doing some amazing work on the science side. So very very grateful for my team and very grateful for the work that they’re doing I think we’re doing some really groundbreaking stuff here. Um. I think the second thing that I did want to mention was we are actively fundraising at the moment so we are raising our preced round and we’ve seen some good traction and some good interest quite early on so we’ve been pretty lucky with that and we’ve had some commitment from some angels and some prominent angels in the industry. Um some Sas operators as well. Um, and some people from the banking and financial industry as well. So we’ve been pretty lucky with that but our fundraising efforts will continue and um, yeah, we’re currently fundraising at the moment. So definitely and feel free to reach out to myself if you’re interested in investing in um, a climate tech startup that’s focused on. Helping the financial service transition to net zero.
James McWalter
So absolutely and we’ll include your contact details and the other bits that we mentioned in the show notes. Thank you Jonathan Nwosuathan.
Jonathan Nwosu
Thanks James pleasure speaking.