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James
The unedited podcast transcript is below
James McWalter
Hello everybody this is going to be a bit of a shorter episode and just me this time. Basically I want to take an update everybody on how things are but going with my startup called paces. Basic. Someone would let everybody know how things has been going when my startup paces and to kind of fill you in on how things are going to go with the podcast for the next few weeks we’re going to have a couple changes and then we’ll be back to normal starting in October. Um, first of all in terms of um. Paces so we’ve been going through what’s called wide combinator for the last couple of months and started beginning of June and in the next couple of days around the time you’re going to hear this podcast with something called demo day and so for those who aren’t aware. Combinator is this program. 1 of the first accelerators for startups and has you know a pretty great reputation for being the startup accelerator which airbnb and Dropbox and stripe and companies of that it came out of now. There’s not a ton of climate companies that have come through I see. Um, that seemed to have changed a couple years ago although the current batch doesn’t have that many at all. But I’d long wanted to get into Yc and it actually tried with 4 previous ideas to get into Yc and applied and was never even able to get an interview whereas this time we not only got an interview but we also got in.
And haven’t gone through Yc I think that there are certain things that people should know. Um, overall the experience has been amazing. I’m very very happy. We did it I would say though that it’s more valuable to people earlier in their career or people who have less experience starting. Or working at early stage startups. You know I’m 38 this week and so yeah, I’ve made a lot of mistakes I’ve been involved in a lot of failed efforts and a lot of the lessons that Yc gives on a very frequent basis are the kind of things that you learn after making a lot of mistakes. Ah. And so what they’re trying to do is have you as you know early stage founder not make those mistakes or make them faster so that you can learn from them and move on to the next thing. So for me if I had done my c in my twenty s I think it would have been even more profoundly positive. Then what it is now that yeah a lot of the kind of advice is something that I kind of figured out after making all the mistakes myself, um, now having said that I think that the number 1 thing that’s great about y c and I’ve said to everybody who’s asked me about it is the absolute obsession with getting to revenue interaction. You know there’s a lot of. Silicon Valley type startup perception where everybody just talks about their valuation or the number of employees that they have and those are not important things but those should just be proxies for is your company solving the problem enough to make reasonable revenue and ideally exploding revenue.
Where you’re just dramatically going up in terms of the amount of money you’re making and that is why c’s focus. They make you really think through what it means to have a company and a company solves a problem and makes money doing so and so we got you know everybody at yc has a um. Yeah, this kind of smaller group because there’s over a hundred companies in it I think it’s closer to 200 in our batch but there was closer to 400 in the previous match. So you’re slightly smaller than previous batches but still larger than maybe what wise he was five years ago and we’re in a with a group of about 10 companies and every week or every two weeks we have to. Talk about how we’ve done from mostly from revenue point of view and then explain how we’re going to hit specific targets in the knock next two weeks and the Wei Partners who you’re assigned to um, yeah, they never tell you what to do but they say hey could you be more ambitious or is it reasonable. You’ll get to that point. Um, why not go even further and those are ways of just adding a bit of competition and adding a bit of um, you know I guess friendly. You know, friendly pressure to you know really excel because the big thing do I see is it’s only three months and really it’s like can you get to a kind of regular ah can you get to a fast iterative cycle so that you’re building launching getting revenue or getting feedback to direct you towards revenue as quickly as possible. Um, so all that part has been great. Um.
We started off during covid there was no um in-person ycy whatsoever previously that Weisi had always been in San Francisco so people would fly there for a few months um this time it’s a bit of a hybrid so it started off somewhat in person with this retreat in San Francisco and then um, some major cities like New York or we’re based have regular meetups so it’s good to kind of chat to otherwise he partners or founders even that are in your space. 1 big thing I’ve noticed is that a lot of the startups in yc pivot quite a bit and so. Pivot is you are working on an idea and you can either do a hard pivot where you just start working on something completely different or you can do? What’s called a soft pivot where you know you’re basically working ah in the summer space or you’re taking a different approach to a similar problem. It’s very surprising to me the number of hard pivots I see um and so far. Because a lot of the people doing the hard pivot are honestly doing them fairly late into the program. It’s very hard to know whether they’ll be successful or not um, in our case, we definitely did not do any sort of hard or even much of a soft pivot. We did slightly change the direction of our product development though and by doing so we actually went from. Having lots of trials and nobody willing to become a paying customer to our first three pain customers and we did this by basically changing whether we were a map forward interface to something a little bit different and by going to a slightly different approach. Um, yeah, we the first 3 companies.
Ah, that trialed that new approach all closed as customers and now we’re working through trials with another half dozen and so it’s it’s been really, really exciting to kind of see after lot of building for a few months actual paying customers getting that real feedback from somebody who’s willing to give you hard earned money and we’re also not you know a. Super cheap $20 a month product product. You know we are a for figureer monk product and so having people willing to put over their you know hard earned money and their company money is incredibly validating. Um, and so yeah, so the other big thing for us is that we’re trying to show that our approach. Will not just support so developers when they’re trying to find the best places to build projects but will support any sort of green infrastructure developer whether that’s utility storage wind electric vehicle charging stations all the way through to things that are more climate. Neutral. But. Let’s say a renewable energy-based carbon neutral data center and so um, we have multiple verticals now trialing and the big thing for us is kind of working through those trials making sure the product is as good for those other verticals as it is for those initial solar customers and really showing that our approach makes sense. And may not right? You know one of the benefits of being small and nimble is that you’re learning from the market and so we have a hypothesis about what the market needs and we’ll see if it works and we should know pretty quickly because we’re very very fast. 1 big thing in terms of.
How fast we’ve been able to move is that throughout Yc the only 2 full time people are my cofounder Charles and I you’ll have heard charles on a previous episode a couple weeks ago a couple months ago and basically we are moving very fast and so um. We do our growth meeting on a Monday which I lead. It’s just the 2 of us and then we do a product meeting on a Tuesday morning which he leads and it’s just the 2 of us and in the growth meeting. We’re like okay you know we’re going to add this amount of revenue in the next week not months or quarter but like week. Um, and to do that we need this many demos. We need this many trial starts. We need this many trial closes and then on the product meeting the following day um we’re basically ideating and saying okay, what are the things that we would need to do from a product point of view to close existing trials or to attract more people trialing. And 1 really good example is there might be a feature that a customer will be willing to sign a contract if that feature is in the product and so 2 of our first 3 customers. We basically have contracts that structure and say hey if you sign today we commit that the product you need or the extra. You need will be in product within let’s say two weeks otherwise you get out of the contract and a lot of our product development is based around you know commitments that the customer has made to us from a revenue point of view and then commitments we make back to the customer in terms of shipping product that meets our need and so this has worked really well for us. Um.
We have hit the point where things are not super scalable. Um, we have some great interns helping paid interns of course startup shows paid interns helping with things around data collection as well as a little bit of sales research and then we also have a couple of ah contractors software engineers helping Charles with some aspects of. Ah, data integration. Well, we definitely hit the point where we are really struggling to keep up with interest which is two full-time people and so now we are heads down hiring. We’re hiring our first 2 ah full-time people. Um one is a data engineer and 1 is a software engineer um, those would both be founding engineers. With appropriate compensation from an equity and um salary point of view and so if anybody’s listening to this and knows anybody who are a software or data engineer who would love to be the founding on the founding team of a company really working hard on climate change like paces. Um, please reach out I’m going to include my email address on the show notes of this particular podcast would love to chat to people and we’re really really pushing to have those hires done in the next month or so and you know we have a very very high bar in terms of the the kind of level of talent and cultural fish. Um, but it’s also very very important to us that people bring you know they’re true and full selves to the office and so on because we have our own blind spots and we’re definitely trying to build a company that has um you know a huge amount of diversity throughout. It.
The thing I guess is ah I kind of touch upon a little bit but on the product side. Um, yeah, one of the things we really realized and we we knew this kind of going in and starting paces but the importance of data and so as part of the inflation reduction act. Um, there are concepts like things called energy communities where identifying. Places where energy communities exist as per the text of the bill has not become very very valuable to the types of customers that we talk to and so we are rapidly integrating that data probably it’ll be ready in the product by the time this podcast comes out and not just this but other datasets that are very very important things that are related to the grid like interconnection data. Ah, things that are related to zoning that we’ve been collecting for a few months but we need to do even greater job to have a world-class dataset in that front. So for us data collection being just the best source of data to identify the best place to build projects is absolutely their our real focus over the next few months um we continue to build out the software in the interface and improve on that. But basically if we have the best data we feel like we’ll have amazing service and product for the customers that we try to serve and that builds us also a competitive mode over time. Ah, the other thing I want to talk about is raising capital so we had raised as. People probably heard. We’d raised 7 figures of funding as part of our preceded in April of 2022 so you know four or five months ago and that’s the first time I’d ever raised money myself. Um I’ve written a pretty lengthy article on my own blog about that process.
Um, you know it’s a massive numbers to game talk to you reach out to hundreds and hundreds of people to get sixty seventy meetings and to close 10 or 12 investors and I would say we probably had a pretty easy time of it relative to a lot of folks who try for a very long time and certainly a ways your time than. I’d experience as part of other founding teams raising money even though I wasn’t the 1 directly doing the raising I’d probably been part of teams that had struggled to get anywhere as close to what we ended up doing and I put that down to a couple of factors. First of all I think you know we have a really really strong team on the technical side through my cofounder Charles. Um, you know former. Ah, Ai guy out of Facebook ah, but also I think we’ve really identified the problem and have a kind of a wedge into something that’s going to be a very very large industry in the next few years and I think that if I had 1 bit of advice and actually give this advice to a few friends and and even family members in my close circle. About what type of startup to build It’s try to find a market that is just starting to explode and just like try to grab a whole of that market. It’s so much easier than trying to summit a market out of nowhere or to you know, try to build something in a market that’s static or shrinking um like for us. You know, even if we had 100% market share. Um, we’d have a so solid size company. But what’s great is that the market share like the market’s going to double next year and double or the next over the next couple years and then double again and then double again. Um, and so that’s very very exciting because that allows us to just.
Do a great job and execute well but we know more customers are going to continue to flood in and you know have problems that we can potentially solve for them. Um, and so yeah, back to raising capital. Um, so coming up to the end of Ycombinator, there’s something called demo day and during demo day. You basically give a ah 1 minuteut pitch. About your company and there’s this whole interface where accredited investors and I think there’s usually a couple thousand of them can watch the pitch and hit the button that says they want to potentially invest and that means I’ll basically set up a meeting with the with the founding team. In this case, it would be with me. Um, one of the dirty secrets that a friend of mine who’d gone through y combinator last year told me was ideally you shouldn’t you should have all your money raised before demo day try to have your meetings in the couple weeks before on the lead up to demo day close those if you can at all and then demo day doesn’t re have of a ton of pressure on it. Um.
Luckily and I think there’s a couple of factors for this and we were able to close our entire round before demo day. So we’re about ten days from demo day right now we closed another round of funding just in the last week and there’s a couple of factors for why I think we were able to close so fast I mean first of all just to mention. We had about 90 investor meetings booked and all except 5 were inbound. Um I e I was getting an email from an investor introducing themselves saying hey like like what you guys are doing would like to talk. This is very different to our preet where I was doing a ton of outbound. Um, the main reason being that we’re in y combinator and there’s a y combinator directory that shows all the companies in the current batch and people can look that up and we’re on that of course, why were we getting that because I talked to other y combinator founders and they didn’t they got a lot of inbound interest but maybe not quite as much. Ah, generally think it’s just because there’s not that many climate companies in the current batch. Um, so there’s I believe there’s 6 or 7 out of you know a couple hundred companies as I said um and there’d been a way higher percentage in previous batches and so as more and more money goes towards climate tech. They’re looking for high quality startups that are solving problems in that space and so I think we’re just quite lucky to be right place right? time and not honestly have a lot of competition in terms of climate companies solving big problems in the climate space and so I think and that was honestly a lot of the inbound emails. We got refer to that directly. So I think if you are.
I’m interested in getting the y combinator. Um I’m not saying it’ll make it easier to get in. But if you are a climate company and y combinator. Um, our recent experience would indicate that raising capital as long as you know you do all the other things right? Um, might be slightly easier than other companies who are maybe not in the climate space. Um. And so yeah, so we um, we raised boat from a combination of existing investors increasing their investment as well as a couple 2 new investors coming in. Um, we actually closed around about three days after starting it which is very exciting and then we canceled most of those 90 meetings. We kept some of those meetings with like very very. High levelvel or or high tier vcs who might be interesting people to build relationships with for subsequent capital raises down the road. Um, but the big thing for us now is to kind of get through a lot of the meetings that have been booked and get back to work and for us get back to work again means getting new customers. Making the customers. We already have incredibly happy. Um, yeah, know making charging people money make generating revenue expanding the product to have a really really great moat and then between all that also obviously making hires building up the team. Um, so yeah, so over the next twelve months um we hope to hit our series a milestones. Um. Talked to a few investors now about what they think of as series a milestones and that ranges from a million dollars in recurring revenue per year. Um, all the way to no hard milestones but things like we want to see a replicable sales motion. We want to see the average contract size increasing. Yeah great team. Some people even.
Say that you should have good advisors so we take a note of all those things but we have our own internal idea of what we want to achieve um that would make us ready from our perspective to be series. Ah a investable um and our internal goals are probably much more ambitious than what an investor would want and that’s how we generally try to treat things we want to be better than what the market says. So that gives us a really really strong position when we do things like rate capital. So um, we’re not going to hire 30 people or anything like a lot of startups do who are well-capitalized like we are as say we’re going to hire probably 3 more full-time people by the end of this calendar year and then maybe another 5 or 6 ah, on the lead up into our series a ah most of those would be technical folks. We might have 1 marketing person I’m going to do all the company sales until we’re at least half a million dollars in annual revenue. It’s very very important I think for the founders to do most of the founder that sales or to do the founder that sales until you get to a decent amount of revenue. Because then you can basically develop a sales playbook and hand that off to you know salespeople that you hire in? Um, but I don’t think you should do that too early and that’s generally the advice. We’ve heard from bode Yc and elsewhere. Um, and yeah and in terms of the podcast. Um, you know we’re going into September when there’s a few different events happening. Ah, re plus which is this very very large renewable energy conference. Um, that will be ash as part of um behalf of paces so we’ll be at that I’m actually going to try to do a live interview while I’m there. We’ll see how that goes that’s be something a little bit different for the podcast. That’s the third week of September um I russset.
Actually also going to take a few weeks off um we’ve basically been on you know, weekly podcasts for 32 years outside of yeah, the occasional break around new year’s um, but what everything else that’s going on in startup. Um, basically we’re a little bit behind in terms of getting guest booked and so on so we’re going to take a bit of a break for a couple of weeks um and so probably the next podcast you’ll hear will be that live one at a plus and then after that we’ll get into a more regular cadence again with some amazing guests. So if you I guess my big ask is if you are somebody who is interested in. You know, working at a company like like pace’s you are a software data engineer. Or you know somebody. Um, we would love to hear from you and have a conversation and see if there might be a fish and yeah have a great end of your summer and looking forward to speaking to you again in a few weeks