Hype Cycles and Start-ups

Arguments

The audience member is interested in the timing of investments or entrepreneurial ventures with respect to trends or waves

Topics: Investing, Entrepreneurship, Trends

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How to remain grounded during the start-up hype cycle?

Supporting facts:

• Devany Smith, representing Global Shapers, has asked the question

Topics: Entrepreneurship, Hype Cycle, Start-ups

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Report

The audience members are interested in the timing of investments or entrepreneurial ventures in relation to trends or waves. They want to understand how to capitalize on these trends and waves to maximize their chances of success. Additionally, they are seeking advice on how to remain grounded during the start-up hype cycle, which refers to periods of extreme excitement and popularity surrounding a new business or technology.

Devany Smith, a representative of Global Shapers, asked the question on behalf of a delegation of young entrepreneurs. This indicates that the audience consists of aspiring business owners who are eager to learn from experienced founders and investors. They value the insights and experiences of these industry experts in navigating the challenges and pitfalls associated with the start-up hype.

The main focus of the session is to gather advice and strategies on dealing with start-up hype. This suggests that the audience members recognize the need for a measured and level-headed approach in the face of excessive optimism and media attention.

They likely understand the importance of staying focused on the fundamentals of their business rather than being swept away by the hype and risking poor decision-making. It is noteworthy that the audience members are also interested in the timing aspect of investments and entrepreneurial ventures.

This indicates their awareness of the significance of market trends and waves in determining the success or failure of their endeavors. They are likely seeking guidance on how to identify and capitalize on emerging trends, and how to time their investments or ventures accordingly.

Overall, the audience members are seeking practical advice and insights from founders and investors who have experienced the start-up hype cycle firsthand. They are interested in hearing about strategies for remaining grounded, making sound decisions, and capitalizing on market trends to increase their chances of success.

By providing these insights and experiences, the speakers have the opportunity to offer valuable guidance and support to the aspiring entrepreneurs.

Arguments

Hype cycles are an important part of technological development.

Supporting facts:

• They’re the process of a technology making its way into the market

• The transformation of ecosystems and industries happens through this technological change, but those transformations aren’t linear.

• Hype cycles start off with hype and great expectations, lead to a phase of disillusionment, and then shift towards maturity of practical applications.

Topics: Hype cycle, technological development, startups

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Misalignment between the enthusiasm of prospective capital and what technologies can do in their early days lies at the core of hype cycles.

Supporting facts:

• The hype cycle comprises of the gap between the enthusiasm of prospective capital and technological capabilities in the early stages.

• The hype cycle helps decode the dynamics between startups and investors.

Topics: Hype cycle, Investment, technological development

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The hype cycle is beneficial for creating awareness among potential teams and customers, but can be detrimental once disillusionment begins to set in.

Supporting facts:

• Many technologies in the space industry are at different stages of the hype cycle

• The hype cycle is beneficial in creating awareness among the teams that companies may want to hire and among customers

• When disillusionment starts, other investors may walk away, making it hard for startups to raise capital

Topics: hype cycle, investors, customers, space industry

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The hype cycle can be a healthy filter for non-viable companies

Supporting facts:

• Customers sticking through the downward cycle might indicate a solution to a real-world problem

• These customers could potentially become biggest anchor customers

Topics: Hype cycle, Business viability, Customer retention

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Businesses in spaces like tech are often seen as high risk, high return

Supporting facts:

• Companies can learn from the failures of others

Topics: Tech industry, Investment

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The influx of capital during the takeoff period can inflate valuations

Topics: Capital inflow, Business valuation

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Investment in US battery industry has led to significant hype

Supporting facts:

• There has been a lot of investment related to the US battery manufacturing business, leading to hype in the industry

• At one point, the market valuation of battery companies was higher than Ford

Topics: Battery industry, Investment, Market valuation

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Azeem is concerned about the possible negative impact on a sector’s reputation if the performance of companies doesn’t meet the exuberance and expectations surrounding them

Topics: Startup Failures, Sector Reputation, Technology

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Azeem Azhar considers the media focus on funding as an inevitable part of emerging technologies

Supporting facts:

• Azhar reflects that the media scramble to cover emerging technologies and the funds they raise because of the difficulty in discerning one privately-held company from another.

Topics: Media, Technology, Funding

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IRA subsidy framework has an anti-innovation dynamic

Supporting facts:

• The IRA created a subsidy framework that ended up benefitting traditional battery makers.

• This situation has taken up talent and capacity in the U.S. domestically, disproportionately affecting innovators.

Topics: Subsidies, Battery Industry, Innovation

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Entrepreneurs start businesses when they see a potential for revolutionary technology, which doesn’t necessarily relate to timing the market

Supporting facts:

• Following a technical breakthrough, teams often approach with their ideas

• Waves of ideas often come through in the deal flow, but without clear timing patterns

Topics: Entrepreneurship, Technology, Innovation

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The hype cycle manifests during technology advancement and people start moving capital faster than developers and consumers with an over-exuberance and lose contact with reality.

Supporting facts:

• Technology becoming plausible leads to the hype cycle.

• Capital moving faster than developers leads to exuberance.

• Founders and CEOs lose contact with reality in the face of hype.

Topics: Start-up, Investment, Hype Cycle, Technology, Product, Customer

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Maintaining proximity to the product, to customers is crucial to stay grounded during periods of over-exuberance.

Supporting facts:

• Staying grounded is essential for journey through tough phases in start-up.

• Proximity to product and customers allows the founders and CEOs to stay grounded.

• Sue weathered a decade of battery space winter, implying the importance of resilience and connection to vision and practicality.

Topics: Start-up, Product, Customer

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Taking money from investors when available but maintaining a sense of balance is crucial to avoid raising unnecessarily high expectations.

Supporting facts:

• Taking money when available is suggested.

• Excess valuation raises high expectations.

• High expectations may lead to less stock-based appreciation for future hires.

Topics: Start-up, Investment, Company Valuation, Expectations

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Customers act as an anchor point for start-ups, providing stability even in times of fluctuations in media and investment focus.

Supporting facts:

• Customers can be an anchor point for start-ups.

• Customers provide stability amid changes in media and investor focus.

Topics: Start-up, Customer, Investment, Media

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Report

Hype cycles are an integral part of technological development, representing the journey of a technology from its inception to its practical application in the market. These cycles involve the transformation of ecosystems and industries, but they are not linear processes.

Rather, they consist of different phases, starting with hype and high expectations, moving to a phase of disillusionment, and eventually leading to the maturity of practical applications. Misalignment between the enthusiasm of prospective capital and the actual technological capabilities of a technology is at the core of hype cycles.

This misalignment can have significant impacts on startups and investors, as their expectations may not align with the reality of a technology’s capabilities in its early stages. Decoding the dynamics between startups and investors is an important aspect of understanding hype cycles, and it helps in navigating the challenges and opportunities that arise during these cycles.

Understanding the different stages of the hype cycle is also crucial for large companies, investors, and policymakers. By considering where a technology might be in its hype cycle, these stakeholders can make informed decisions and take appropriate actions. This understanding helps to avoid the pitfalls of over-exuberance or premature dismissals, and enables them to navigate the hype cycle effectively.

While the hype cycle can create awareness among potential teams and customers, it can also have negative implications once disillusionment sets in. This can make it difficult for startups to maintain interest and secure funding, as other investors may become hesitant to invest during the phase of disillusionment.

However, customers who stick with a technology and continue to support it during the downward cycle can indicate the solution to a real-world problem. These loyal customers can become the anchor customers for a startup and contribute to its long-term success.

Founders and CEOs play a crucial role in navigating the hype cycle by staying grounded and maintaining proximity to the product and customers. This enables them to remain connected to the practicality of their vision and make informed decisions during periods of over-exuberance.

Taking money from investors when available is suggested, but it is important to balance the expectations that come with excess valuation. Maintaining a sense of balance helps to avoid unnecessarily high expectations that may lead to stock-based appreciation issues in the future.

In addition to its impact on startups and investors, hype cycles can also have wider implications for the tech industry and sector reputation. If the performance of technologies and companies does not meet the exuberance and expectations surrounding them, it can affect the overall faith of buyers in that particular sector.

Therefore, it is important to manage expectations and focus on delivering value to the customer rather than solely on market valuation. The media plays a significant role in hype cycles, as it often scrambles to cover emerging technologies and the funds they raise.

This focus on funding is considered an inevitable part of the evolution and growth of the tech industry. However, it is essential to distinguish between privately-held companies and assess their true potential rather than solely relying on funding as a measure of success.

Overall, hype cycles are a natural and necessary part of technological development. While they bring challenges and risks, understanding and effectively navigating these cycles can lead to successful and sustainable innovation. It is crucial for stakeholders to stay informed, grounded, and focused on delivering value to customers throughout the various phases of a hype cycle.

Arguments

Different elements within the space industry are on different points on the hype cycle.

Supporting facts:

• Satellite constellations, for example, focusing on business cases on earth endure the disillusionment and get up to maturity.

Topics: Space industry, Investment, Hype cycle

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Perceptions about space sector investing have changed over time and more big corporates are putting large investments into the space industry.

Supporting facts:

• When the company started five years ago, investors thought it was a crazy idea but that perception has changed over time.

Topics: Space industry, Investment

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The hype cycle can be a beneficial filter for discerning legitimate deep tech companies from less reliable ones

Supporting facts:

• Customers that stick with a company during the downward phase of a hype cycle could indicate that the company is solving a real-world problem

• These loyal customers may later become the company’s biggest contributors

Topics: Deep Tech, Hype Cycle, Investment, Risk Assessment

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Space businesses are often seen as high risk, high return

Supporting facts:

• There’s significant development happening globally in the space sector, promoting mutual learning from each other’s failures

Topics: Space businesses, Investment, Risk-Reward balance

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The higher valuation you raise money at, the less it offers your new inbound hires and also the greater pressure it is on you as a CEO

Supporting facts:

• When we raised 155 million series C, our competitors in the US raised basically a billion dollars series C

Topics: Fundraising, Valuation, CEO pressure

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In building a company out of Europe, the valuation is often lower compared to US counterparts

Supporting facts:

• On average, probably the valuation of a European company versus their US counterparts is probably a third or a fourth or maybe a fifth

Topics: European Companies, Valuation Differences, US vs Europe

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It’s crucial to balance the amount raised to allow for growth without negatively impacting potential future rounds and avoiding a down round in case of market downturns

Supporting facts:

• You have to balance how much you raise so you can change the company for the next round and ensure you don’t go for a down round in case anything happens to the capital markets

Topics: Fundraising, Company Growth, Market Downturn

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While investing in space companies, especially out of Europe, it is important to be smart about it to get a good return on investment.

Supporting facts:

• Some early employees of SpaceX who made quite a bit of money have set up a fund to invest in space companies in Europe.

• There is potential for high returns if the company delivers on its promises.

Topics: Investment, Space companies, SpaceX

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Commercial space exploration is technically feasible and exciting for many people

Supporting facts:

• Back in the 60s, being an astronaut was what drove everyone

• There are companies building deep space exploration technologies

Topics: Space Industry, Space Exploration, Commercial Space Companies, Moon Missions, Mars Missions

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The economic feasibility of commercial space exploration is questionable

Supporting facts:

• There is uncertainty about what can be done after reaching Mars to make the venture economically viable

Topics: Space Industry, Economics of Space Exploration, Commercial Space Companies

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Entrepreneurs don’t need to time the market to build something

Supporting facts:

• Daniel Metzler believes that if an entrepreneur feels something needs to be built, they should just build it without waiting

Topics: Entrepreneurship, Innovation, Market Timing

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Starting a venture involves facing challenges

Supporting facts:

• Metzler mentions that entrepreneurs may have to run through some walls which may hurt sometimes

Topics: Entrepreneurship, Challenges, Innovation

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Daniel Metzler believes in maintaining groundedness by not inflating salaries.

Supporting facts:

• Daniel advises against increasing salaries by 50% year over year, implying the practice of financial prudence and focus on sustainability in company expenses.

Topics: Salary Management, Organizational Culture

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Report

The space industry encompasses various elements, each at a different point on the hype cycle. Different segments within the industry are progressing at different rates, facing unique challenges and opportunities. Perceptions about investing in the space sector have changed over time, with big corporates now making significant investments.

Education plays a crucial role in raising awareness about the industry’s potential and securing necessary investments. The hype cycle serves as a filter for distinguishing reliable deep tech companies from less reliable ones. Space businesses are seen as high risk, high return, but their capital intensity should not be seen as a no-go option.

European space companies often have lower valuations compared to their US counterparts. Balancing the amount raised in fundraising ensures future growth without negatively impacting potential rounds. Investing in space companies, particularly those in Europe, can offer high returns if done strategically.

Commercial space exploration is technically feasible and exciting, but its economic feasibility is uncertain. Entrepreneurs don’t need perfect market timing to build something valuable, but they should prepare for challenges. Luck also plays a role in the success of ventures.

Financial prudence and sustainability should be prioritized in company expenses, including salary management.

Arguments

Generative AI industry is experiencing multiple hype cycles simultaneously

Supporting facts:

• The capabilities of the technology are changing rapidly, creating multiple hype cycles

• Organizations are struggling to adjust to the fast pace of change

Topics: Generative AI, Technology Disruption

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Varied understanding and adoption of generative AI in the enterprise sector

Supporting facts:

• Some companies are nearly ready to introduce AI agents, while others need basic explanations

• A section of the market is in the trough of disillusionment, finding the technology hard to understand or unimpressive

Topics: Generative AI, Enterprise Adoption, Technology Education

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May Habib acknowledges that competing with large, established companies like Microsoft, Google, and OpenAI is challenging, but also advantageous.

Supporting facts:

• May’s company focuses solely on enterprise generative AI, which gives them an edge in competitions.

• The competition with well-known entities helps establish a clear baseline in Proof-of-Concept(POC) trials.

Topics: Competition, Technology Market, Artificial Intelligence

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May Habib considers balancing fundraising and retaining company identity as essential.

Supporting facts:

• May Habib considers it important to protect from dilution those who worked hard to enable the fundraising.

• Ensures reassuring enterprise customers about the company’s financial stability and independence.

Topics: Fundraising, Company Identity, Enterprise

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Tech media focuses more on funding news and less on markers of tech progress.

Supporting facts:

• Competitors with lesser revenue but more funding get more press.

Topics: Tech media, Funding, Progress in technology

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Excessive media attention can be a distraction from product and technology focus.

Topics: Media Attention, Product development, Technology focus

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The emergence of new technology and creation of companies is an inevitable process

Supporting facts:

• Smart founders build companies in categories that didn’t previously exist

Topics: innovation, technology, startups

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It is important for companies to be transparent and explain their work to customers and partners

Supporting facts:

• May Habib takes responsibility and asks for customers testimonials to display progress of the company

• She goes an extra mile to introduce folks to their customers and explain how their technology works

Topics: transparency, customer relations, business strategies

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Decisions and perseverance played a significant role in the success of Rider.

Supporting facts:

• May Habib has worked in the machine translation company for five years before starting Rider

• She was familiar with concepts of machine learning and AI before the hype

• She saw the potential in generative AI before it became a trend

• She and her team had been working on enabling hundreds of micro features in the machine learning system for over three years

Topics: Rider, Machine learning, AI, Machine Translation, Transformers, Encoder-Decoders

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2020 was a difficult year due to challenges brought by COVID and the start of a new company

Supporting facts:

• COVID had started

• we just started this new company

Topics: 2020, COVID-19, new company

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Finding joy and importance in one’s work can help manage adversity

Supporting facts:

• if you’re doing something you love, you think it’s important and you’re close to the people, you know, it’s hard to have too many bad days in a row

Topics: joy in work, importance of work, managing adversity

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Report

The generative AI industry is currently experiencing multiple hype cycles simultaneously. The capabilities of this technology are evolving rapidly, leading to a constant cycle of heightened expectations and disillusionment. As a result, organizations are finding it challenging to keep up with the fast pace of change.

This neutral sentiment reflects the ongoing state of the generative AI industry. In the enterprise sector, there is a varied understanding and adoption of generative AI. While some companies are on the verge of introducing AI agents into their operations, others still require basic explanations to comprehend the technology.

Additionally, a section of the market is currently in a trough of disillusionment, finding generative AI difficult to understand or unimpressive. To address this, tech companies need to take responsibility and play a role in educating the market about generative AI.

There is a need for wider understanding of what generative AI can accomplish, its potential applications, and its benefits. This positive sentiment recognizes the necessity of providing education and information to foster broader knowledge and adoption. May Habib, the founder of a generative AI company, acknowledges the challenges of competing with established giants such as Microsoft, Google, and OpenAI.

However, she believes in creating the best product as a means of surpassing the competition, instead of solely relying on fundraising. This positive sentiment encompasses her approach of prioritising product excellence and differentiation to gain a competitive edge. Balancing fundraising efforts and retaining company identity is considered essential by May Habib.

She recognises the importance of protecting those who have contributed to the company’s success from dilution during fundraising. Furthermore, reassuring enterprise customers about the company’s financial stability and independence is crucial for building trust and maintaining strong business relationships. The tech media’s focus on funding news rather than markers of tech progress is a point of concern.

This negative sentiment highlights the potential imbalance in media coverage, where startups with less revenue but more funding tend to receive more press. This can potentially overshadow or undervalue companies that are making significant tech advancements. Enterprise buyers of generative AI have discerning minds and tend to prioritise customer stories and reference calls when making purchasing decisions.

Their positive sentiment stems from a cautionary approach, as they understand that selecting the wrong technology can halt progress for an entire year. This underscores the importance of providing robust case studies and testimonials to build trust with potential customers.

Excessive media attention can be detrimental as it can divert focus from product and technology development. This negative sentiment suggests that media hype may serve as a distraction and hinder innovation. Startups and companies need to strike a balance between media exposure and staying focused on advancing their products.

The emergence of new technology and the creation of companies are seen as inevitable processes. This neutral sentiment acknowledges that innovation drives progress and leads to the formation of new companies, contributing to industry growth and disruption. Transparency plays a vital role in establishing strong customer and partner relationships.

May Habib believes in being transparent and explaining the company’s work to customers, partners, and the wider audience. This positive sentiment recognises the significance of open communication in gaining trust and fostering long-term collaborations. Tech journalists should not rely solely on press releases for information but should dig deeper into the functioning of companies.

This positive sentiment underlines the importance of investigative journalism. May Habib appreciates when journalists take the time to understand their technology and value proposition, ultimately leading to more informed and accurate reporting. Decisions and perseverance have been significant factors contributing to the success of Rider, May Habib’s generative AI company.

Their positive sentiment originates from May Habib’s experience working in the machine translation industry, her familiarity with AI and machine learning, and the team’s dedication to developing micro features over several years. While luck may have played a role in Rider’s success, it was not the sole reason.

This neutral sentiment contextualises Rider’s success, which coincided with the start of the generative AI hype cycle. Moreover, their prior work on relevant technology positioned them for success, beyond mere chance. The year 2020 marked a difficult period due to the challenges brought by the COVID-19 pandemic and the start of a new company.

This negative sentiment acknowledges the additional hurdles faced by May Habib’s company during its initial stages. Staying grounded and finding joy and importance in one’s work are essential in managing adversity. This positive sentiment highlights the importance of maintaining a sense of purpose and connection during difficult times.

May Habib emphasised the significance of staying connected with team members to maintain balance and focus. In conclusion, the generative AI industry is navigating multiple hype cycles, and there is a varied understanding and adoption of this technology in the enterprise sector.

Tech companies play a crucial role in educating the market about generative AI, balancing fundraising efforts while retaining company identity is essential, and media attention should focus more on tech progress. Enterprise buyers are discerning, and transparency is crucial for building trust with customers and partners.

Furthermore, tech journalists should prioritise in-depth investigation, decisions and perseverance contribute to a company’s success, and luck should be considered alongside other factors. The challenges of 2020 and the importance of staying grounded and finding joy in work are also highlighted.

Arguments

The bankruptcy of A123, a battery company that received substantial government support, influenced the perception of investing in the battery field.

Supporting facts:

• A123 went bankrupt even after receiving $250 million in government support.

• The bankruptcy made it challenging for new companies in the battery field to draw investments.

Topics: Battery Industry, Investment, Bankruptcy

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The period around 2009-2010 witnessed the inception of several solid-state startups in the battery field.

Supporting facts:

• Most of the top solid-state battery startups in the US were established around 2009-2010.

Topics: Battery Industry, Solid-State Batteries, Startups

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Having multiple customers is beneficial as it mitigates risk during difficult times

Supporting facts:

• There are different market dynamics and capital market dynamics

• Their customers are strategically balanced from mass market to premium market

• They chose Mercedes, Stelentis, and Hyundai not only for their good relationships but also for strategic balance

Topics: Customer diversity, Risk management

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Setting the right expectations is important while raising funds

Supporting facts:

• If you raise too much funding quickly, you still have to deliver the value

Topics: Startup funding, Expectation Management

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Value delivery to customers and consumers is paramount

Supporting facts:

• What is conveyed to employees is not about valuation, but the value being delivered to the customer and consumers

Topics: Customer Value, Consumer Satisfaction, Value Delivery

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Value can be created by hypes, financial investors, industries, and government

Supporting facts:

• Investment related to the US battery manufacturing business created substantial hypes

Topics: Value Creation, Investment, Industrial Participation, Government Intervention

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Siyu Huang agrees that despite the inflated value of some battery companies during the SPAC boom, companies that focused on meeting customer expectations and creating a valuable product managed to survive.

Supporting facts:

• Some battery companies without products were valued in billions during the SPAC boom.

• Companies that managed to survive did so by focusing on products and customer expectations.

Topics: SPAC, Battery Technology

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Despite rejections, Siyu Huang kept persevering in the battery industry

Supporting facts:

• Siyu Huang and her business moved from Epstein, New York to Boston with the help of an alumni

• An investor who was skeptical about battery companies helped her

Topics: Battery industry, Investment, Perseverance

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U.S. manufacturing is a byproduct of government support and has created many companies

Supporting facts:

• More recent creation by RA

• Companies not intentionally coming to U.S. for manufacturing ended up doing so

Topics: Government support, U.S. manufacturing, Startups

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There is a challenge for U.S. battery makers as very few are producing lithium-ion batteries locally

Supporting facts:

• Takes long time for this technology to commercialize

• Most of the RE funding goes to conventional lithium-ion based in Asia

Topics: U.S. battery manufacturing, Lithium-ion batteries, Technological development

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IRA subsidy framework has an anti-innovation dynamic

Supporting facts:

• Most subsidies have gone to traditional battery makers taking up talent and capacity in the U.S. domestically

Topics: Innovation, Subsidies, Battery Makers, IRA

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Subsidy structure could give more preference to next generation cell makers

Supporting facts:

• For every traditional cell maker that invests $2 billion, they get $6 billion return which is more than the total investment all the next generation cell makers in the U.S. have received.

Topics: Subsidy Structure, Cell Makers, EV Industry

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Siyu Huang started her startup while she was at Cornell and also worked at Johnson & Johnson.

Supporting facts:

• Siyu Huang started her startup when she was at Cornell

• Siyu worked in sales and marketing at Johnson & Johnson

Topics: Startups, Cornell, Johnson & Johnson

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One should jump into the startup life when they feel it’s right, not based on market timing.

Supporting facts:

• Siyu Huang was advised to start a startup when she feels ready

• Siyu believes you can’t time the market accurately

Topics: Startups, Market timing

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Startup success takes hard work and dedication, waiting for the right time.

Supporting facts:

• Siyu started her business during a tough market

• She said that it’s necessary to be ready for when the opportunity comes

Topics: Startups, Hard work, Dedication

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Stay close to the team, technology, product and customers

Topics: team management, product management, customer relation

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Don’t hire too many big executives

Topics: team structure, hiring

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Company going from 50 employees to 100 employees can be a painful period

Supporting facts:

• Investors may pressurize to increase the team size

Topics: team growth, business scaling

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Report

This analysis delves into various aspects of the battery industry and the startup ecosystem, drawing insights from discussions with Siyu Huang and others. One key aspect discussed is the bankruptcy of A123, a battery company that had received significant government support.

Despite the financial assistance of $250 million, A123 still went bankrupt. This event had a negative impact on the perception of investing in the battery field. It made it challenging for new companies in the industry to attract investments. Another topic explored is the emergence of solid-state battery startups around 2009-2010.

This period highlighted a wave of innovation in the battery industry, as these startups focused on developing solid-state battery technology. This advancement represented a significant step forward in battery technology and showcased the industry’s potential for growth and advancement. The importance of having multiple customers is discussed, as it helps mitigate risk during difficult times.

By strategically balancing their customer base between the mass market and premium market, companies in the battery industry can withstand fluctuations and uncertainties in the market. Siyu Huang emphasizes the importance of setting the right expectations when raising funds. It is crucial for startups to manage and communicate realistic expectations to investors.

This ensures that the startup can deliver on promises made, avoiding potential setbacks and disappointments. Furthermore, the value of delivering quality products and services to customers and consumers is highlighted. Siyu Huang stresses that the focus should be on providing value to customers rather than solely focusing on valuation.

This customer-centric approach ensures that companies stay aligned with market demands and cultivate consumer satisfaction. The analysis also touches upon the SPAC (special purpose acquisition company) boom in the battery industry. While some battery companies without products were valued in billions during this period, Siyu Huang argues that survival and success ultimately depend on meeting customer expectations and creating valuable products.

This highlights the importance of product development and customer satisfaction as key factors for long-term sustainability. Siyu Huang’s unwavering belief in the potential of the battery industry is another noteworthy insight. Despite rejections and challenges, Siyu Huang’s perseverance demonstrates her strong conviction and determination to contribute to the industry’s growth and innovation.

U.S. manufacturing in the battery industry is discussed, with the analysis acknowledging government support as a key driver. The establishment of many companies in the U.S. can be attributed to this support. However, challenges remain, particularly in the production of lithium-ion batteries.

Very few U.S. companies are currently manufacturing these batteries locally, and a large portion of renewable energy funding goes to conventional lithium-ion battery manufacturers in Asia. The analysis also critiques the subsidy structure, particularly the IRA (Investment Tax Credit) subsidy, for favoring traditional battery makers over next-generation cell makers.

Siyu Huang suggests that the subsidy structure should prioritize and provide more support to newer, innovative cell makers to foster further industry growth and development. Siyu Huang’s background as a startup founder, which began during her time at Cornell and while working at Johnson & Johnson, underscores her experience and expertise in the industry.

Her journey serves as an example of blending academic knowledge and real-world industry insights. In terms of starting a startup, the analysis highlights Siyu Huang’s belief in the importance of readiness rather than market timing. Siyu Huang suggests that aspiring entrepreneurs should jump into the startup world when they feel prepared, focusing on their own readiness rather than trying to time market trends.

The analysis also emphasizes the significance of hard work, dedication, and being prepared for opportunities in the startup ecosystem. Siyu Huang’s determination to persevere through challenging market conditions and seize opportunities aligns with the qualities required for startup success. The importance of staying close to the team, technology, product, and customers is also highlighted.

This close connection ensures that companies remain in touch with market demands, technological advancements, and customer preferences. This insight underscores the need for ongoing collaboration and responsiveness to maintain a competitive edge within the industry. Lastly, in terms of team management and growth, it is cautioned against hiring too many big executives, as this can disrupt the startup’s dynamics.

Instead, the focus should be on hiring experienced doers who can contribute to the company’s growth and success. In conclusion, this analysis provides a comprehensive exploration of various topics within the battery industry and the startup ecosystem, offering insights from Siyu Huang and others.

From the challenges of bankruptcy and investment perception to the importance of delivering value to customers, the analysis sheds light on the dynamic landscape of the battery industry and the key factors for success in the startup world. Siyu Huang’s journey and perspectives further contribute to the understanding of the industry’s nuances and potential for growth and innovation.

Arguments

Understanding a hype cycle is crucial for deep tech investors

Supporting facts:

• Hype cycle relates to human cognitive bias, making it hard to pinpoint where an investment lies within the cycle.

• Investors need to evaluate whether they are investing during the overhyped first part of the curve or the maturity phase.

Topics: Hype cycle, Deep tech, Investing

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Hype cycle can indicate presence of a good technology in an ecosystem

Topics: Technology, Investing, Hype cycle

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The hype cycle in biotech particularly, has been ongoing since the 90s with advancements in AI solving hard biotech problems.

Topics: Biotech, AI, Hype Cycle

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Fundraising should be an ongoing process for startups

Supporting facts:

• Zachary Bogue advised to always be fundraising.

Topics: Investment, Startups, Fundraising

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Maintain discipline in valuation to avoid fundraising difficulties in the future

Supporting facts:

• Zachary mentions the importance of not getting too swept away in the hype and maintaining valuation discipline.

Topics: Investment, Startups, Valuation

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Focusing on delighting customers should be a priority over attracting fickle investors.

Supporting facts:

• Zachary emphasizes that customers are more loyal than investors.

Topics: Customer Satisfaction, Investors

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Effective PR is necessary even in the deep tech investment field.

Supporting facts:

• Zachary mentions the importance of not underestimating PR, stating that it’s possible to be outdone by a lesser technology due to superior PR.

Topics: PR, Deep Tech, Investment

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Blockchain and Web3 had a hype cycle that affects their adoption

Supporting facts:

• Institutions have short attention spans

• Blockchain and Web3 had their moment

Topics: Blockchain, Web3, Technology Adoption

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Climate investing was unpopular due to the implosion of cleantech 1.0

Supporting facts:

• Cleantech 1.0 was a huge implosion

• It was felt socially unacceptable to talk about investing in climate for years

Topics: Climate Investing, Cleantech 1.0

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The role of a VC board member is to balance the CEO’s perspective

Supporting facts:

• In good times, a VC board member needs to keep the CEO grounded

• In bad times, a VC board member need to build up and keep the CEO going

Topics: Entrepreneurship, Management

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A big myth about venture capital is that it’s all about picking the best companies and sitting back to get returns after several years

Topics: Venture Capital, Investment Strategy

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Venture capitalists need to actively help ensure the success of the company over a span of usually seven years after making the initial investment

Topics: Venture Capital, Company Success

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The strongest signal in determining successful investment is the quality and willingness of the team to be a good partner.

Supporting facts:

• Zachary Bogue emphasizes that despite the importance of technology breakthrough, a strong team willing to engage in a good partnership consistently paves the way for best results.

• Bogue reiterates that not focusing enough on team dynamics can lead to trouble.

Topics: Investment, Teamwork, Partnership

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Zachary Bogue believes water tech investing is deeply undervalued and underhyped

Supporting facts:

• Climate change is quickly bringing water to the forefront of issues

• There are interesting material science breakthroughs enabling credible water tech companies

Topics: water tech investing, climate change, material science breakthroughs

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Entrepreneurs start businesses when the time is right for them, without considering the exogenous market.

Supporting facts:

• Great companies are started oftentimes in the biggest downturns, economically speaking.

• Great companies are also founded at the peak of market.

Topics: Entrepreneurship, Market timing

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Start-ups are often initiated by a technical breakthrough that leads to a novel application.

Supporting facts:

• Different teams approach them after realizing the potential of a particular technical breakthrough.

Topics: Start-ups, Technical breakthrough, Novel application

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There is a trend of people who fail in one tech sector, trying in another, which is to be avoided.

Supporting facts:

• They have an internal acronym, FICTA, meaning Failed in Crypto, Trying AI, representing this trend.

Topics: Tech sector, AI, Crypto

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Report

Understanding hype cycles is vital for deep tech investors as it enables them to evaluate where an investment stands within the cycle. This knowledge is crucial because the hype cycle is influenced by human cognitive bias, making it challenging to determine the position of an investment.

By understanding whether they are investing during the overhyped initial phase or the maturity phase, investors can make informed decisions. The presence of a good technology in an ecosystem can be identified through the hype cycle, which is particularly relevant for deep tech investors.

This allows them to identify technologies with the potential to thrive and create an impact. In the field of biotech, the hype cycle has been ongoing since the 90s, with advancements in AI playing a significant role in solving complex biotech problems.

This highlights the continuous development and growth potential in this sector. Startups should engage in fundraising as an ongoing process. Zachary Bogue, an industry expert, advises that startups should always be fundraising to ensure they have sufficient resources for their growth and expansion plans.

Maintaining valuation discipline is also important for startups. It is crucial not to get carried away by the hype surrounding the company and to maintain a realistic valuation. This discipline is essential to avoid fundraising difficulties in the future. While attracting investors is important, Zachary Bogue emphasizes that focusing on delighting customers should be a priority.

Customers are more loyal than investors, and their satisfaction and loyalty are crucial for the long-term success of a business. In the deep tech investment field, effective PR is necessary. Zachary Bogue highlights the significance of not underestimating the power of PR.

It is possible for a company with a lesser technology but superior PR to outperform others. Therefore, deep tech investors should prioritize and invest in effective PR strategies to gain visibility and a competitive advantage. Blockchain and Web3 experienced a hype cycle that affected their adoption.

Institutions, which have short attention spans, were initially attracted to these technologies. However, their adoption and subsequent success faced challenges due to the hype cycle, resulting in slower progress. Investing in climate also faced challenges due to the implosion of cleantech 1.0.

For a long time, it was socially unacceptable to talk about investing in climate-related initiatives. However, despite past failures, it is still important to invest in climate actions to address the pressing issue of climate change. VC board members play a crucial role in supporting CEOs.

In good times, they need to keep the CEO grounded, while in challenging times, they need to motivate and build up the CEO. This balance is essential for the success of startups and the overall growth of the company. Venture capital is not solely about picking the best companies and waiting for returns after several years.

Venture capitalists need to actively support and ensure the success of the companies they invest in over a span of usually seven years after the initial investment. The quality and willingness of the team to be a good partner are strong signals in determining successful investments.

Zachary Bogue emphasizes the importance of teamwork and partnership dynamics. A strong and cohesive team, willing to engage in a good partnership, consistently paves the way for the best results. Relying solely on technological breakthroughs without sufficient focus on team dynamics can lead to issues.

Zachary Bogue warns against the potential trouble that can arise when there is a lack of adequate emphasis on team dynamics. Finding a balance between technological breakthroughs and team dynamics is crucial for overall success. Water tech investing is considered deeply undervalued and underhyped.

As climate change brings water-related issues to the forefront, there are interesting material science breakthroughs enabling the development of credible water tech companies. Investing in this sector has significant potential for growth and impact. Starting a great company does not necessarily require timing the market perfectly.

Great companies have been started during both economic downturns and market peaks. The timing of the market should not deter entrepreneurs from pursuing their ideas and ventures. Starting a company solely based on the trendiness and fundraising potential of AI is considered a mistake.

Zachary Bogue cautions against starting an AI company solely because it seems like a lucrative opportunity for fundraising. This approach can lead to failures and should be avoided. There is a trend of individuals who fail in one tech sector and then try their luck in another.

This trend, referred to as FICTA (Failed in Crypto, Trying AI), is not encouraged. Moving from one sector to another without a solid understanding or expertise can be detrimental to success. In conclusion, understanding hype cycles, maintaining valuation discipline, focusing on customer satisfaction, investing in effective PR, and prioritizing teamwork and partnership dynamics are crucial for successful deep tech investments.

Additionally, being mindful of past failures, such as the implosion of cleantech 1.0, and valuing team dynamics alongside technological breakthroughs are also important factors to consider. Water tech investing is seen as an undervalued sector with significant potential. Timing the market is not essential for starting a great company, and starting a company solely based on the trendiness of AI is considered a mistake.