Today we had three Business Clinics followed by Workshop IV. Our first clinic was on Angel Investors. We met with Mark VanBuhler and Barry Hotchkies of the Keiretsu Forum. We started the meeting with Nate giving a short version of our business pitch to Mark and Barry to see what they think about it. We also used them to test a few different strategies we have. We talked about some other general issues. For example, they said that angel investors are looking fof 7-10x returns over 3-5 years. They also told us that some of the main attributes they are looking for in a business plan are: large market size, surveys and testimonials, advantage over competition, strong IP and being first to market. The main feedback they gave regarding our current pitch is that we need to develop the problem description.

Our second clinic was on Public Relations with Tim Cox of Zing PR. Tim told us that PR is mainly about using press releases to get a message to customers. He talked about the phases of a product purchase:

1. Awareness: What companies do I know of that make the product I want?
2. Education: Which of these companies fit with my needs?
3. Consideration: What are the reputations of these companies?
4. Purchase: How much does it cost?

Tim says that PR plays an important role in the first 3 steps using traditional media (magazines, newspapers, TV, radio, etc.) and blogs. He also said that most physical products benefit from traditional media while community based services fare better with blogs from trusted community leaders.

Our final clinic was on Strategic Marketing with Mary Kelley of Oak Grove Associates. We talked to Mary about the various market segment we were considering. She seemed to feel that the high-end Home Automation segment would be a good starting place for us because these people cared a lot about using the latest technology and didn’t care much about price. She also suggested we look at the “Lifestyles of Health and Sustainability” or LOHAS. Here are some other pointers from Mary:

• Make sure you have a complete product, e. g. installation, service, replacement parts, etc.
• Keep track of customer satisfaction using surveys
• Be very aware of regulations, privacy issues, and global competition

After the clinic, we had a food break with some time for networking (see above picture). Nate and I mostly talked together about the topics we discussed in the clinics. We also had a brief chat with one of our competitors, Darryl, from Lucid Design Group. Lucid makes some pretty cool software and services for energy monitoring. Nate and I are thinking we may want to partner with a company like Lucid sometime in the future, because they have really nice web applications for the end user experience.

The first session of the workshop was on Channels. It was presented by Mike Haines. He described channels as a method or business partner to get a product or service from you to an end user. Mike promotes ideas like “start with the end in mind” and “the seven habits of highly effective people,” which in this case are:

1. Be as clear as possible about your ultimate customer
2. What is the complete solution?
3. What are you willing to invest in a partner?
4. What are the key selection criteria for your partner?
5. How do you prepare your partner to generate revenue?
6. How do you measure sales productivity?
7. Is your team aligned?

The second session of the workshop was on grant based funding. Stewart Eckman of the Keiretsu Forum and Lifescience Angels talked about a foundation he works with called Canine Health Foundation. While his foundation is not directly related to Clean Tech, he was able to give us an idea about the general flow of grants from foundations. One of the main points was that you do not need to run a non-profit to be able to make use of these grants. You only need to fulfill the need of the non-profit for which the grant is allocated. As a key resource for finding available grants, Stewart recommended the Foundation Center. The second half of this session was about government grants and was led by Jeremy Walker of the CCTO. Jeremy highlighted 3 main government grant sources for Clean Tech:

1. Small Business Innovation Research (SBIR) - funded by the U. S. Small Business Administration
2. Small Business Technology Transfer (STTR) - funded by the U. S. Small Business Administration
3. Public Interest Energy Research (PIER) - funded by the California Energy Commission

The Phase I SBIR grants can be as much as $100k while Phase II can go up to $750k. PIER doles out $62M a year in grants up to $95k per project.

The next section was about organizing your company and was presented by Bob O’Connor. Bob compared the various forms of business entities, including sole proprietorship, general/limited partnerships, limited liability companies, and corporations. The conclusion was if you want venture capital, then C corporations are the way to go. He also discussed stock related topics such options and vesting.

The next section was about Intellectual Property and was presented by Peter Eng and George Willman of Wilson Sonsini Goodrich and Rosati. There are four basic protection tools: Copyright, Trade Secret, Trademark, and Patent (in order of rising protection and cost of implementation). A U. S. patent is valid for 20 years from the filing date. They said the two main reasons companies file patents are:

1. Secure rights and build value (offensive strategy)
2. Avoid misappropriation and infringement (defensive strategy)

Here are their top 10 tips for IP:

1. Leave the past behind - don’t use prior employer information
2. Get it in writing - use legal agreements to record who owns what
3. File before deadlines - in US you have 1 year from first public disclosure or offer for sale
4. Avoid the pitfalls of Provisional Patents - can lead to a false sense of security
5. Pursue a strategic patent program - think ahead an patent the path you plan to travel
6. Avoid joint ownership - this can cause problems down the line
7. Manage infringement risk
8. Manage risk of contamination (from use of others IP) and blocking (stopping incremental development)
9. Avoid restrictive covenants and grant backs
10. Preserve exit options in agreements

The final session of the night was a panel on Starting Up a Venture “Cleanly” moderated by Susan Gladwin of the CCTO. Susan said she had trouble finding clean high tech companies to join the panel, but felt the philosophy was similar across the range of businesses. The panel consisted of:

• Lewis Buchner - CEO of EcoTimber
• Jeff Mendelsohn - CEO of New Leaf Paper
• Larry Bain - Founder of Let’s Be Frank

All of these companies were founded with sustainability at the core. The discussion revolved around the constant trade-offs between the environment and cost. There was also a discussion about how it is not possible to be perfect in today’s market, but you can be at the leading edge of what’s viable for your industry. The hope is that you will pull your industry along the sustainability path while continuing to innovate on sustainable practices.

It was a long day. There won’t be a workshop next week. The final workshop is on September 11 and will focus on the Investor Pitch. Nate and I still have alot of work to do over the next few weeks.