What Can Clean Growth Entrepreneurs Learn From the Story of Sila Nanotechnologies?
In early 2019 Daimler led a $170 million round in Sila Nanotechnologies, valuing the startup at $1 billion – making it the battery-chemistry company a Clean Growth ‘unicorn’.
Sila Nanotechnology’s Co-Founder & CEO, Gene Berdichevsky, has talked about the importance of making other people ‘believe your brand of crazy, isn’t that crazy’.
With investors including Daimler, 8VC, Bessemer Venture Partners, Chengwei Capital, Matrix Partners, Siemens Next47 and Sutter Hill Ventures; what can Clean Growth entrepreneurs learn from the way Sila Nanotechnologies story?
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Sila Nanotechnologies understands two key things about its customers:
- The 20 to 30 percent of its customers who will generate 70 to 80 percent of its profits, will come from large companies where the micro-economics of battery packs have a large impact.
- These customers are pioneers looking to unlock the mass market for Electric Vehicles (EVs) or create new features and devices that wouldn’t have been possible with previous battery technology.
There are smaller companies who would benefit from its solution and people in large companies not committed to unlocking the EV market or device innovation – but Sila doesn’t make the mistake of losing focus and ‘watering down’ its story to appeal to them. These people will follow the pioneers.
Priming is an effect, demonstrated by psychological research, where our decisions are often hugely affected by context. Sila knows that the pioneers who make up its target audience are aware that battery technology is becoming the limiting factor in creating a mass EV market or innovating new Consumer Electronics.
It primes this audience for change, by playing this frustration back to them.
The battery industry has ‘been long on promises and short on delivery’, which could weaken Sila’s story. But Sila openly acknowledges this, as part of a ‘building on the category’ strategy.
Call To Adventure:
Sila’s villain of unfulfilled potential in the battery industry, only makes its call to adventure stronger:
Sila products work, today – actual material that works in actual full cells that you can test in actual real-world conditions.
If the technology category you’re part of has disappointed in the past, how can you use that to your advantage?
Crossing The Threshold:
Change is hard, so you need to try to make taking the first step as easy as possible.
Sila uses the fact that it has actual material that works in actual full cells that you can test in actual real-world conditions, to make contacting them seem less risky.
The three challenges for the customers of any business, tend to be trying the change, making the change work and living the change.
Sila addresses these challenges by telling potential customers it has products that can reduce the cost of battery packs today, that can easily drop-in to their existing commercial battery manufacturing process and that can be delivered at the scale they need.
Mentor & Gifts:
People want things more when they feel scarce. One way to make your company feel scarce is to have a unique viewpoint on the Hero’s problem that can move a market, change a category or challenge the status quo.
For Sila, this is ‘unique next-generation battery chemistry’. This is also a classic ‘building on the category’positioning (link to How to be in the right place, at the right time, with the right story blog post) – where companies find or create labels for their technology that suggest a game-changing improvement on what has gone before.
People will only come on a journey of change with you if they trust you. Credibility is a key factor. Sila uses the fact that its Co-Founder & CEO, Gene Berdichevsky, was the seventh employee at Tesla Motors – leading the development of the world’s first, safe, mass-produced, automotive lithium-ion battery. Berdichevsky mentions this regularly in interviews.
You might not have been an early Tesla employee, but do you have relevant experience that will add credibility to your unique take on the problem?
People also prefer to say ‘yes’ to people they like. By showing that, like Sila’s customers, he battled the limitations of lithium-ion batteries at Tesla; Berdichevsky makes himself ‘someone like them’.
The three gifts that a mentor offers have to align with the 3 challenges that customers will face.
This is done through Sila’s key messages about what its unique next-generation battery chemistry delivers:
- Higher volumetric energy density – more energy in each cell means fewer cells for the same battery pack.
- Sila products drop into the existing commercial battery manufacturing process – higher-performing cells in your existing factories on existing production equipment.
- Manufacturing economically, at a global scale – using only globally available commodities and bulk synthesis reactors that scale efficiently.
Allies & Gifts:
When they’re uncertain, people will look to the actions and behaviours of others to determine their own. This is increased when the people who believe in a CEO’s vision are credible to the target audience.
Sila won’t have had all of this on-board when it started – but make sure you emphasise the credibility your existing ‘believers’ to help you secure ‘potential believers’. We see so many investor presentations that throw away these slides, by not fully leveraging them to create trust in your vision.
Finally, to go on a journey of change the destination has to be worth the journey.
To paint a picture about how buying a product or service can improve a customer’s life, companies focus on showing how it will help people ‘get ahead’, ‘get along’ and ‘get meaning’.
- Get ahead – advancing our status in our tribe(s}.
- Get along – advancing our connections within our tribe(s].
- Get meaning – advancing our purpose in life (or at least for this chapter in our life). This last one doesn’t have to be world-changing – depending on your personality your purpose can be equally rewarding whether it benefits one other person or the whole world.
Sila paints an effective picture of the future for potential customers:
Get ahead – Lower cost battery packs.
Get along – Being seen as an innovator within the business and beyond.
Get meaning – Help unlock the mass adoption of EVs; or feature and device innovation.
Sila understands that because it’s audience sees themselves as ‘pioneers’, its Better World has to reflect this.
Show this Better World to your customers; if you hope they’ll figure out how your solution will make their lives better; you’re leaving an important part of your story to chance.