20 Years, CEO, Lessons Learned | Anza, Mike Hall

Intro

00:00don't start a bakery if you love to bake if you love to code don't necessarily start a tech company if your passion is specific technology you might have a great idea you might not be happy in the long term being CEO yeah I'm Mike Hall I'm the CEO of Anza Anza is a data technology and services company focused on helping large-scale buyers of solar modules or solar panels we've actually got 95% of the US market partnering with us on the platform because I've been in this industry for over 20 years we really haven't evolved it's pretty complex Market the price of Solar

00:34modules the price of batteries can move up and down significantly month to month and sometimes even week to week there are tens and tens of different providers and they each have multiple products these sellers need to know hey today where does my product stand why don't we create databases instead of driving information out of PDFs and emails hey you log into our platform and you can see all the options right there in a few clicks on these large projects it's millions of dollars of value that's can't find unless you have this St and Technology what's taking right now weeks

01:03and months and we can do it in [Music]

Leaving What I Loved, Finding What I Needed

01:20seconds when I started I used to go around the local community organizations and I would do a presentation on the US power supply maybe 45% came from coal you were to look at the slice that was renewable energy you couldn't even see it it was so so thin yeah the industry has grown 35,000 times literally 35,000 times since we started basically all new generation in the US is renewable the cheapest source of new energy electrification of transportation and electric vehicles is really exciting it was fun to be very early in an industry there was a lot of energy and enthusiasm

01:52about it it was also hard though because nothing worked so like the first power converters we bought for example they had 100% failure rates everything that is easy now was much harder in the beginning but it was also small I'm being real our very first customers are family so I think my father was the first system my uncle was a second and we were basically going into people's homes and trying to sell them on you know 25 $50,000 rooftop systems i' probably pitch four or five homeowners a day actually go into people's houses and sit at their kitchen tables and none of

02:27them even knew people who had solar panels so they were all very early adopter so you had to explain everything you had to convince them that it was going to work Grew From just a few of us doing this to actually like an Enterprise with employees the good times and the wins are a little bit like a drug you know you're just like searching for the next one if you ask customers about their problems they might not always be able to name them dayto day they're just like oh it's not a problem because that's how I do it but they might not realize how much opportunity

02:52they're missing focus on the industry you know best go out and talk to customers and validate that you really do have something how do you do this thing a really great question is how long does it take simple question but there's there's actually two different questions there is how many hours does it take you process time and then how long does it take on the calendar how long does the clock both of those are potential sources of waste somebody too long to actually like do the task a task can take too long to get done because collaboration is slow weight times are

03:19long how much does something cost how many times you have to do something over and over again and whenever you find waste you've got a problem to solve the thing that you started with and might be successful in the beginning might not be successful forever and you may have to make some hard decisions to just move on thing that you might have loved that's what happened for us residential market like installing solar on people's homes that become so competitive our margins started to compress took like a year year and a half trying to do everything we could to turn it around we kind of

03:46had two choices we could just continue to chase the competition down or we could look for another Market these bigger projects were higher leverage with fewer people per dollar whereas the other one is so human capital intensive and so we had the glimpses of a new exciting Niche within the project and customer base we already had we just needed to put all our Focus there and ultimately we made the hard decision to get out of the business entirely we actually sold that whole business unit off we were 165 people then about 120 of them worked in that business we

04:18overnight went from 165 person company to a 45 person company as those problems changed our projects types changed but also our business changed we negotiate with the utility and the local authorities to do a large project here it's really hard to go from something you know really well to something you don't know at all we hadn't done that I'm not sure the company would have

To Know the Right Price, Ask the Right Questions

04:41survived best way to figure out what the price is to have those awkward conversation with customers and potential customers about their willingness to pay and that's the right way to do it anything else is just guessing I think people do it backwards a lot where they arrive at their pricing because that's what they need to have in their business model to hit their forecast or they could price based on cost but that can be completely disconnected from what the market is willing to pay the first thing you have to establish is how is your Market segmented are they even interested in

05:10the product you want to sell one of the most important questions that I don't think people talk about enough we're going through this right now with a product launch we're doing in September okay if we were to charge $30,000 what number would you give that price and there's actually macro data on if they give you a five they're like 80% chance they'll actually buy if they give you a four it might be a 50% chance they'll buy it if you're getting all ones and twos you're probably overpricing it and then from there once they've said hey I am willing to pay that's binary so then you can ask them

05:40the next question about how much if you get a lot of data you might be able to start to find price Cliffs where a psychological thing that happens at that price point humans don't actually respond rationally to pricing but you also are going to have to move forwarder than perfect data at some point almost no one has the money to get perfect data I'd also be careful about just saying what are you willing to pay because customers tend to give you a small number because they think they're in a price negotiation even though they're not you may want to Anchor them and then

06:08have them respond to your anchor margins are a different question and it really speaks to your strategy if you really have a genuine case that high amount of market share High penetration is going to in and of itself create a competitive Advantage you probably just need to price at whatever it takes to get that market share if that's not the case you need to price so that your unit economics are profitable I mean you may spend more than your gross margin on R&D and sales and that's fine you know if it's taking you two years to recover your cost of sales you've got problem I

06:41see a lot of companies that price to gain market share but don't necessarily have a great story for how that market share is going to deliver a long-term competitive

Why Star Players Don't Always Make Great CEOs

06:54Advantage I mean I love my job I think it's a lot of fun it's also tiring not all the work is yours to do but all the responsibility is yours so you wake up with it you go to bed with it you think about it in the shower as a CEO your job is to make those tough calls it's not a democracy if you ask everybody to vote they will probably vote to maintain the status quo because the unknown is so scary but if you don't make a decision to change then you're making the decision to stay hey you have a lot of employees who you're loyal to and you have shareholders who may have wanted

07:27you to hit some number sometimes there's going to be tension between that's what's tough and I don't have a great formula for that how do you separate your own attachment and other people's attachment of the status quo from what you believe to be right to sometimes persist stand on that Hill whether to keep going or to make a big change of course and you're the only one who can make that decision well I'd say the hardest part if you were the Superstar individual contributor and now you're trying to be a leader you're just trying to set up the infrastructure and the

07:57culture so that someone else can close a big deal or deliver the product on time that can be a difficult transition many people who used to work with me have gone and started their own companies and I think this is one of the most fundamental challenges they have just kind of emotionally they were all star performers individually and now all the credit should be going to someone else your job is to create the environment so that they can be successful not that you can be successful don't start a bakery if you love to bake if you love to code don't necessarily start a tech company

08:24if your passion is a specific technology you might have a great idea you might not be happy in the longterm being CEO