For the foreseeable future global markets will require billions of highly specialized electrical machines that far outperform the inefficient remnants of the past.
We initially approached this as a hardware challenge, until we determined that the key to meeting the demand for next-generation electric motors actually lies in software. That’s why we switched to a SaaS model.
As with any major startup diversion, there were several “a-ha!” achievements, accompanied by trials to make it all work. Fortunately, the SaaS direction has paid off: we have achieved a relatively strong product-market fit and cash flow positive status without major VC increases or burn rates.
The process wasn’t exactly linear, but (looking back) we did four key things to conclude that SaaS was our model:
- Assess what was truly disruptive, scalable and profitable about our technology;
- Our board and investors candidly engaged;
- Study of global markets and technical trends;
- Quickly marketed our MVP and chose to polish in public rather than perfect privately.
Moving from hardware to SaaS was the right move for our electric motor design start-up, but the process wasn’t exactly linear.
ECM PCB Stator Technology is based on the innovation of MIT-trained electrical and software engineer Dr. Steven Shaw, our lead scientist. After launch, we started developing proprietary PCB stators that replaced bulky copper windings – the central component in electric motors – and using in-house software to make them lighter, faster and more efficient machines.
Two years later, I joined as a growth stage CEO after leading two energy technology companies to scale and acquisition. At that time, we were still in a relatively early phase of financing and product-market fit. The startup had launched a venture round and flirted with becoming an axial electric motor manufacturing company. The initial impetus for a SaaS shift came when I began to take a fresh look at the company and engage Steve and the Board of Directors on our inherent benefits and path to profitability.
At that time we also attracted some new investors.
At the macro level, we consulted to determine our competitive advantages and addressable market. An early observation was that there were already several large, established players making off-the-shelf electric motors. An assessment of global trends (e.g. mass electrification, automation, reduction of carbon emissions) also revealed that the needs and requirements for next generation electric machines were rapidly changing.
After much analysis and a number of board meetings, this assessment emerged: The global market will require more efficient, higher performing and custom designed electric motors that can be produced in the hundreds of millions in a more sustainable manner.
With that in mind, I turned to Steve and our board to evaluate the best business model. We concluded that the most competitive aspect was the ability to use printed circuit boards through “motor CAD” software to create custom electric motor designs that require fewer raw materials and outperform older offerings.
We then asked a critical question: how can we quickly bring this technology to market with a favorable capex profile?
