F|R: What Startups Can Learn From Michael Dell

It’s not a new idea to make hay by seizing the messy business opportunities no one else wants. Innovating the distribution of a technology, rather than inventing the technology itself, isn’t novel either. This is the model that made founder Michael Dell a billionaire. Now, San Francisco-based Sungevity is taking a page from Michael Dell’s playbook in an effort to do to solar panels what Dell did to personal computers.

Solar installs are typically custom jobs — labor intensive and therefore costly. While there are rebates and tax incentives to cut the costs, the paperwork is dizzyingly complex, so consumers (and even developers) often don’t bite. Since most solar startups are focused on making the sexiest technology, Kennedy figured it was a no-brainer that Sungevity could effect more change, and make more money, by addressing the logistically painful process of selling, installing, and handling the paperwork associated with everyone else’s gear.

Michael Dell innovated the economy for PC-manufacturing by taking commodity computing components, then custom-assembling them to each buyer’s order in what we now commonly call a “just-in-time” supply chain. Similarly, Sungevity uses off-the-shelf web tools, commodity solar modules and drop-shipping to streamline a sales process for the retail solar industry that once took weeks or months. (Read more at Earth2Tech). Below, Kennedy offers a few tips for How to Spy Startup Opportunities in the Sales Cycle:

1) Identify a technology/product that has experienced enough innovation to be approaching commodity status, but which is still not widely distributed. “A solar module is a solar module, like a motherboard was a motherboard when Dell started out,” Kennedy says. Dell simply delivered them farther, wider, faster.

2) Are operators in your industry warehousing their products? Begin with a geographically small scope and use a drop-shipping partner to compress delivery. Sungevity serves California, but plans to expand into up to seven states next year.

3) Are you looking at an industry where the sales cycle is slow, say, longer than 30 days?
Can you compress the sales cycle simply by digitizing the paperwork? With CRM systems no sales cycle needs to be this long.

4) Does the channel you’re considering involve government bureaucracy or rebate programs?
You can make a business out of offloading these processes all alone. One of Sungevity’s strongest selling points is that it handles the paperwork for tax rebates.

5) Can you apply standard technology to create a new, value-added process?
Sungevity’s “big invention,” says Kennedy, is an innovative software application it wrote to use pre-fab satellite images to remotely determine the right solar panel configuration for a roof.