Who Says Nothing in Life is Free?

by Stephen Bohnet

An Interview with Scott Mercer, CEO of Volta Charging

Volta Charging stations are being installed all over the West, Southwest and Hawaii, with expansion soon to come in other major markets throughout the country.   Brands such as Fiat, Sungevity, and SolarCity, were early to adopt.  The stations are built at convenient retail locations, and offer to electric vehicle (EV) owners free charging for their cars.

Volta Charging not only offers free charging for consumers, but also installs these stations at no cost to the retailer. So how does Volta make money?  It’s a new advertising model:  “Free charging brought to you by…..YOUR BRAND NAME GOES HERE.

FastCoexist.com recently profiled Volta Charging.  I sat down with Scott Mercer, CEO and Co-Founder, to dive deeper into how this startup took shape and  what lessons he learned.

Inspiration

How did you come to focus on the area of electric vehicles?

During college I was apprenticing to run a classic car restoration business, rebuilding vintage sports cars from the 50s and 60s.   When I graduated, I had an early crisis of conscience.  I had the looming desire to do something impactful, but still wanted to be involved with cars.  I started to think about the future of the automobile.  How will we shape the technology over the next 30-40 years.

For me electric was the immediately apparent path, mainly because it’s both sustainable and I thought that it could be cheaper to the average individual, and that the combination would become so much more compelling that people would have to make the shift.

You say electric cars were the obvious future, but when you started, Tesla was on the brink of bankruptcy.  No major automakers were touching electric.  And what about America’s love affairs with muscle cars and trucks; bumper stickers proclaiming “Keep your Prius, I’ll keep my manhood.”  What did you see in electric that others were missing?

Michael Menendez, my cofounder and I come out of the classic muscle car, speed, noise and power crowd.  Michael still has an old Cobra replica that sets off car alarms.  I kept ahold of an original Alfa Romeo GTV.  Michael now daily-drives an early Tesla Roadster and I have an electric motorcycle.   We both gravitated towards the fastest things we could find (and afford!) in electric.

The potential for EV’s to be faster than a gas car was one of the most powerful realizations that swayed me personally towards electric. There is the potential for more speed here, for the EV to supersede gas for enthusiasts over time. The realization of the gearhead potential of the EV for me was the combination of the acceleration of the Tesla Roadster and riding some of the early motorcycles.   The bikes have a sort of Star Trek gear-whine jet engine sound.  It feels futuristic, and hardware-y.

How did you go from an interest in electric cars to the business idea for Volta?

The question that germinated was, if someone is going to buy a new car, how can you help them arrive at electric as early as possible? There were two barriers.  One was to make the best car possible as a technical showcase. The other was to build a very high profile (charging) infrastructure that showed the social safety net of the technology. We thought that building the infrastructure would be our way of accelerating the adoption of the electric car.  We decided that making the infrastructure visible and exciting was the important part.  Simply seeing the stations would accelerate adoption of the electric car.

How did you come to the idea that you could offer retailers the station installs at no cost, and at the same time, give consumers a free charge?

To get electric cars to sell, you need to have the infrastructure in place. The infrastructure has a psychological purpose – to inspire people towards electric and convince them that it’s safe to switch.  And, with a model built on showcasing technology and inspiring the community, we came to the sponsored-service model.  The model is an inspiration for social good.  You’re building something for visibility; for social change.  You have this opportunity to market that for advertisers, so that they can align that mission with their brands.

I was expecting you to tell me that you built Volta to minimize emissions and protect the environment.  Where does the environment fit into this equation for you?

We’re in this camp that says the environment is fundamental for business, but for the individual, an electric car has to be a cool car first. Using energy more intelligently will be critical as society progresses.  But cars are part of the American ethos. You can’t sell everyone on, ‘have a shittier car because it will improve the community as a whole’. You have to sell them on ‘this will be better for you, cheaper for you, and cooler’.

Let’s fast forward for a moment. You’re growing and putting up new stations all the time.   Do you have any evidence that Volta engages people the way you expected, or that the ad model works?

In the past year we’ve done quantitative research to see how much brand perceptions can be improved by advertising on Volta.  We used Fiat as our first test case, and brand perceptions improved as much as 27 points, on statements like surprises me in a good way and a brand I find myself liking more and more over time. (See the FULL RESEARCH REPORT).

There is also a lot of anecdotal evidence. I’ve met Tesla owners who sit in our stations and work while they recharge.   A CEO from one of our clients got a letter from a one of our users that said, ‘thank you so much for what you’re doing for the community.’ And some evidence is in plain sight.  Our first office was by AT&T Park and we had a charging station right out front.  I drive a Fiat 500, and would charge it at our station at the office.  One day a silver Fiat showed up, then a black one, then blue.  We had quite a few people coming into our office who had just bought the Fiat 500, asking if they could charge.  We found that we’d sold somewhere between a half a dozen and a dozen Fiats to people within 4 blocks of the office.

Getting it Off the Ground

You were straight out of college with this business idea.  Tell me what you tried first to get the business going.

We started out with all the confidence in the world that we could make this work.  We took the idea to investors and said, ‘This is our plan.  If you give us $500k, we’ll give you 50% of the business.’ We were immediately laughed out of the room.  They said, ‘Great idea.  Come back to us once you’ve built it.’

Your first shot at VC is a dead-end.  What did you do to keep your idea alive?

We retracted from our fundraising plan, and found a market niche to learn from.  In Hawaii there was a new law that required any business with more than 100 parking spots to include an electric charging station.  We decided to go after that market.  We thought we could earn enough by installing these chargers to fund Volta prototypes in the background.

You still needed money to build these charging stations.  Where did the money come from?

There is definitely a starvation part to this.  Before Volta, I spent about 18 months wrenching on cars for 80 hours a week.  I lived at my parents’ house and saved money purely to have enough money to start my own venture.

So you burn 18 months restoring cars and banking the money. Now it’s time to pour your life savings into the business.   What did you discover?

We won Volta’s first business by undercutting everyone on price. Once we could show that we had business, we could win more business.   We didn’t make much money, but it was still enough to build Volta prototypes ourselves in our garage. And in the meanwhile, we built a reputation, and it added to our credibility.

You went back to investors for funding. How did your attitude differ from your first time in the shark tank?

We had changed our thinking from, ‘we’ll build these stations if we get investors’ to ‘we’ll build these stations on our own dime and we’ll only pitch for investment money after we’re making our own.’ When we went back for funding a second time, we pitched for the same $500k investment. Only this time, we had stations in the market, sponsored and being used.   The same investors that we’d pitched earlier, offering 50% ownership of the company, invested in the seed round for a much smaller fraction of ownership.

What would you tell aspiring entrepreneurs about raising capital?

Investors don’t want to invest in your raw idea. They want something that’s proven.   All of the self-confidence that you have that you’re the guy who can execute the idea is purely internal.  The raw idea is your ego.  On the other side of the table, investors are looking for some sort of external proof that your team is as good as you think it is.

Early entrepreneurs often miss this. It’s not just about proving the business case.  You have to prove you have the ambition, energy and ability to do it all. That’s when they can trust you.  We built the first dozen stations by hand in a 2 car garage and installed them. We did it reasonably well for an immensely bootstrapped budget. And it worked.

Lessons

1. Be a Little Bit Crazy

Many startups talk of hardships in their early days.  Is it a necessary part of the journey?

There is this sacrificial piece to a startup.  ‘I’m going to work my ass off to do this and starve a little bit.’ I think a lot of people are uncomfortable doing that. To me, it seems an absolute necessity to getting a business off the ground.

It is a really hard thing to do and it can be terrifying.  You don’t know if you’re going to fail or succeed. It is easy to negotiate away from yourself.

There is a recurring theme with entrepreneurs I meet that they have to believe in themselves and their idea almost to a fault.

There is this single mindedness about it, mixed with the realization that you’ll always hit incredulity. You have to have that kind of craziness to go after it.  You have to not only have the confidence to do it, but also to prove it to everyone at every level.

2. Adapt Your Sales Message to Different Buyer Segments

For Volta to earn revenue, you have to sell advertising space on your stations. Are advertisers excited by the opportunity for their brands to sponsor Volta stations?

We have sponsors in Hawaii that have been with us 3 years.   Their campaigns are really working and are really sticky.   But sometimes new people we’re talking to don’t know where to put us.   This is the crux of being a new medium in an old market.  Even big companies like Twitter are experiencing this right now.  They are selling advertising, and buyers are not sure how it fits in.

Are ad buyers looking for something new, or are they are resistant to change?

That depends on who you are selling to.  We found that CMOs are interested in the new idea. They understand how the sponsorship can affect their brand.  If we’re selling to an ad agency it tends to be different, because they try to fit us into a category that is understood by someone they report to, or by their client.  We offer a new way of way of connecting your brand with the community, and we don’t fit into a comfortable and known framework for the buyer.

Is it better to reach out to brands directly, or will you have more success if you go through the usual ad buying channels?

Both. We have one team that sells into a more conventional framework, and another team that pitches the more aspirational vision directly to brands.  You have to do both, because some people want to be on the forefront, and others want something comfortable.

Find Your Team of Crazies

What has been the biggest challenge for building the business?

It’s a struggle to build a team that aligns with your mentality.  There is a difference in hiring based on someone’s past success and their future potential.  Our first sponsorship sales person in Hawaii was a waitress before joining Volta.  We saw great potential in her.

I’ve also hired a handful of people with huge resumes, who turned out to be petrified in an unstructured environment and didn’t know how to sell a new idea.  You have to find your team of crazies.

Do you find that this is a life-stage thing; that it’s hard to teach an old dog new tricks?

There are probably fewer older people who are willing to take the risk, but we’ve found a lot of people who are excited about reinventing themselves.  We have people who are 20 years into very successful careers, but they are looking to do something that is interesting and completely different.  So it’s not really about age.

Is there a good interviewing technique to find someone who fits your team of crazies?

It is something you can look for, but you need to realize that people think of themselves as having a higher risk tolerance than they really do.  People imagine a level of risk tolerance and self-sacrifice, but not everyone will act upon it.

What I’m really looking for is someone who can help us solve big challenges. I lay out a hard problem, and tell them that this is terrifying. I have no idea how we’re going to do this.   The right person’s response is, ‘NEAT’. That’s what I want.  That’s what I’ve found most linked to success.  People who say, ‘WOW I have no idea how to do that. That sounds really interesting.’ Some people look at big, scary problems and see potential.

To Sum It Up

Persistence is a recurring theme in my discussions with entrepreneurs, and it’s surprising how often the word “crazy” is used to describe the feeling of starting a new business.  Craziness means an unshakeable belief in yourself and your idea.  As Scott points out, craziness also means the willingness to make a huge sacrifice in time and money.  Another recurring theme is an ability (and willingness) to take on every single task to bring the idea to life.  If you can’t do the legwork, maybe the investors are right, and it’s just another crazy idea.

image credit: Fast Company

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Stephen Bohnet is a founder of F’inn, a company that helps leaders discover and hold onto great ideas, give them purpose, and make them real. Stephen has spent most of his 20 year career in the innovation world, where he has helped companies across different industries with their new products. He has first-hand experience creating, marketing and selling new products in the market research space. Stephen strives to learn more by interviewing innovators who have a unique story, and he regularly  guest lectures to undergrad and MBA students.

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