Why I closed my start up
Over three years, I tested a hypothesis across business, policy and consumer stakeholder groups. I learned that the market today was not quite right for Other Way's tools or mission.
Failure: talking about it is rather refreshing
When I announced I was closing Other Way to folks on LinkedIn, I received lots of amazingly positive messages, both in comments and private communications. Many more than I anticipated. Lovely but bittersweet.
One common theme among these comments was how I should not use the word “failure”. Focus on the positives, what I had achieved and how far we had come.
I appreciate that sentiment and agree I should not berate myself for things not going the way I had wanted. But, I disagreed about not talking about my “failure”.
By publicly accepting that I had got things wrong, I left my ego feeling a tad vulnerable. But, by being honest to myself and owning that failure, I actually felt two things: a sense of relief and a sudden sharpness of clarity.
LinkedIn posts are not normally about making your ego vulnerable. But, I hope sharing the experience enables me and others to build better projects, ideas and businesses down the line.
This is not intended to be a post about my founder’s journey though. I want to focus on the context of my start up’s failure; what I learned at this convergence of carbon data and transport.
Other Way’s mission: make transport emissions accurate and engaging
Back in 2021, I kicked off the business testing a key hypothesis: society will value having vehicle-specific carbon emissions data within the next five years.
Why? I was surrounded by questions about the environmental benefits of electric vehicles. Despite the dozens of academic papers on the subject, environmental charity-sponsored campaigns and car manufacturer reports, all delivering the same conclusions, the message was not getting through effectively to business and personal decision-makers.
The discussions only compared generic car with generic electric car. People asked about their own car or fleet, justifying the continuing use of a 30 year old diesel van that they dearly love.
At the same time, the late 2010s witnessed the growth of electric scooters and electric bikes. A modal shift was starting to blur the lines between vehicle choices - some households selling a second car in favour of an electric bike as the new runabout.
Motor vehicles actually have a long history of emissions measurement and eco-labels. But, in a world where a “zero emission vehicle” can still have a “carbon footprint”, the incumbent labelling system is no longer fit for the questions that people are asking.
Other Way got its name from finding “other ways” of both travelling and communicating the environmental impact. It’s product was a rapid Life Cycle Assessment (LCA) calculator for vehicles and journeys.
Market landscape: 2021 was a peak for carbon software start ups
Other Way was not alone.
There was this perfect storm for “climate tech” in 2021. With COP26 around the corner, interest in climate was spiking across the UK, USA and Europe. Venture capital investment stemming from the USA was at a massive high, seeking its next big tech sector. And, we were a year into COVID lockdowns; the time and headspace at home had spurred a lot of entrepreneurial creativity.
This is how I segregated the start ups around me:
Group A: Carbon accounting Software-as-a-Service. Working with businesses, small and large to measure and report the corporate carbon footprint, create carbon reduction plans, and commonly, selling carbon offsets as part of that package.
The appetite had suddenly opened up during this perfect storm. Innovation came in how carbon accounting could integrate seamlessly into day-to-day business operations.
Group B: A more specialist business group targeting how you calculate the carbon footprint (and other environmental impacts) of a product itself.
Groups C and D: Away from that crowd were start ups targeting specific domains. Food. Construction sites. Clothing. Minerals. Financial risk. Every area had niche carbon data problems to solve, driven by an increasing focus on Scope 3 (supply chain) emissions.
For the world of transport, carbon data start ups were springing up, targeting the carbon footprint of moving things (logistics) and people (travel and commuting). Other Way helped with the calculations on some of these start ups.
Like many others, Other Way’s first proposition sat us very much in Group D. To summarise:
A carbon calculation for the whole carbon footprint of any vehicle via its numberplate
The target market was mobility businesses (retailers and operators)
They use this data for internal carbon accounting and external communication (B2B2B and B2B2C)
For example, a taxi company uses Other Way’s software to calculate the journey carbon and they attach this to receipts for business customers.
Me and my lean team went about testing whether this calculation would work for B2B2B and B2B2C propositions. We explored how businesses, consumers and policy would respond.
Business: Mobility has had a tough few years
I began by demonstrating our Climate Wheels app to many across the mobility space. It was great getting individuals to enter their own numberplates and postcodes to get personalised results.
Predominantly, I spoke with retailers with websites where you can buy and sell vehicles and operators of car fleets. There was good interest, more than I anticipated. I learned that this was something new and therefore, not as easy to explain to budget holders as I had imagined.
I set myself the goal of targeting several types of businesses at the same time, to demonstrate that this is a scalable tool, not a gimmick that works for one audience. Ultimately, the most common response was “yes, we have this feature in our pipeline, but the electric product is taking priority at the moment”.
What this means is that a retail website might be really focused on building the features, making sure they get sent the right charging information after they have purchased the car online, making sure the customer journey goes smooth.
As more and more businesses started selling electric cars, bikes and scooters, the transaction was where the product teams were focused. Making electric adoption easy. Showing the environmental side of it at this stage was very “nice to have” marketing. A blog highlighting the latest research will do just fine, for now.
And, I noted another thing. If you sell a “zero emissions vehicle”, it is confusing to add emissions labelling to it. A few were actively against adding carbon footprint data because it affected the image. The friction around “zero emissions” between the vehicle world and the climate world remains significant.
There was a bit of an electric wobble in 2023. Concerns were growing around a slowing in sales, bikes being hit harder than cars. For Other Way’s target clients, this resulted in tightened budgets at best and insolvency at worst.
Yes, I made good progress with some fabulous clients, but it was not the Product-Market-Fit experience I expected. I didn’t achieve the multi-business sales targets I had set myself.
What I learned:
New things do not have existing budgets to tap into and pitching the idea is a longer process.
At an early stage of the market, competition is more likely to be internal product feature teams, not other start ups.
What I learned for Other Way’s hypothesis:
In the coming few years, most mobility businesses will not value vehicle-specific data sufficiently to pay for it.
Policy: Innovating but not in terms of engagement
While I was inspired by solving the “how green is my switch to electric, really?” question, my business focus was on where “nice to have” becomes the “need to have” data. I loved that the data supports engaging marketing campaigns today but I wanted the data to demonstrate use cases throughout the vehicle’s lifespan.
Go and ask a Head of Sustainability about voluntary and mandatory emissions data reporting. What you should receive in response is a lengthy sequence of three and four letter acronyms and initialisms. You might pick up a little exasperation under their voice too.
Helping these people out is a classic Group A and Group C job. But, right now, there was not the perfect home for the Group D proposition I had created.
Policy needed to make vehicle carbon data mandatory. The Transport Decarbonisation Plan had several commitments to accuracy and communication of carbon emissions data to decision-makers. How these commitments were to play out remained TBC.
Away from the UK, the most exciting policy shift has been from Brussels. Every electric vehicle must declare the carbon footprint of its battery - Battery Regulation (EU 2023/1542). By 2027, there could be QR codes with the full sustainability report of the battery available in each car. Not the whole car but its a great start.
So, why are vehicle manufacturers not publishing the carbon footprint of the whole car? It’s really difficult to do, it increases business risk and, crucially, they don’t have to. The larger manufacturers employ teams of LCA specialists to help them understand opportunities for cutting carbon, but this is preferred to remain as an internal tool.
The best data I could use was what was in the public domain via APIs and LCA databases. All of which require cleansing and interpreting to get to a useful calculation.
Downstream of the manufacturers, Other Way explored how carbon labelling looks like for mobility retailers and operators. We conducted some interesting research through funding directly with Department for Transport (DfT). I will share insights in a later post.
At the same time, Defra completed a review into the effectiveness of eco-labels to support net zero. The results of the research was that the impact of labels is both small and inconsistent. No further research was being explored by DfT at that time.
After the excited times of carbon literacy in 2021, it felt that the energy to push carbon labels onto every product had gone. Some sectors it remains a focus, just not where Other Way was sitting.
What I learned:
Government plans cover a broad spectrum of ideas. Don’t assume commitments will all turn into policy.
Civil servants can be your most helpful advisors in pointing you towards the direction of travel. Keep in mind the siloed nature of their team and department.
What I learned for Other Way’s hypothesis:
The value of vehicle-specific data in policy is limited to the battery only for the coming five years. Full vehicle data is of interest, but a longer time frame.
If I was not careful, we could find ourselves in “solution without a problem to solve” territory.
Consumers: do they really care about the climate?
I swiftly pivoted from simply offering an eco-label to an API capable of splicing up a vehicle’s data in several useful ways. But, through the three years debate remained about informing end consumers about the environmental impacts of their products.
I met professors, activists and clients that can passionately communicate that we need climate transparency everywhere.
In 2021, B2C apps for carbon calculation were all the rage. Or at least they were for a certain audience.
At the same time, research from two very different stakeholders was saying don’t talk about the climate so directly to groups who are not in the eco-bubble. Talk about cost-savings and clean air.
Those stakeholders are community engagement groups who have run research projects and corporates who have tested climate communication in their products.
The challenging thing is that the mood on climate is constantly evolving. I would go as far as to say that any research about climate communication that is before 2019 is irrelevant. The launch of the IPCC special report into what 1.5 degrees and above looks like changed narratives irreversibly.
From engaging directly with individuals across the three years of Other Way, I found that there is nuance.
While individuals may not say they are engaged on themes like climate change, they are increasingly likely to share an opinion, an assumption or a question on the topic.
Many (but not all) really gain confidence in a product when the business can honestly demonstrate their impacts rather than sell it as a benefit.
I found consulting opportunities here for Other Way, by combining calculation with communication tailored for each individual business. This made sense, to really build into the Group C world. But, bespoke consulting services was not the scalable product I was testing with Other Way.
What I learned:
Be ready to communicate at the time the user asks for it.
Don’t create dilemmas in consumer decision-making.
What I learned for Other Way’s hypothesis:
Not enough consumers value this data to enable businesses to see value in it over the coming years.
Market landscape revisited: How have others got on?
I chose to wind down Other Way as I had not hit the numbers that would prove my original hypothesis and I was keen to not build a carbon consultancy out of it.
Other start ups have taken both similar and different paths. I have mapped the five paths I have noticed onto our market landscape map:
Pathway 1: grow to other sectors The world of LCA is facing some disruption from start ups, the same way that “no code” platforms have made software building accessible. Some start ups are taking their product carbon footprint tool to a sector-agnostic approach in Group B.
Pathway 2: offer the whole carbon accounting package Just a product carbon footprint might not do it for scaling in this space. Moving to Group C to offer other solutions within the traditional carbon accounting space solves more problems sooner.
Pathway 3: go from sector-specific to agnostic carbon accounting Those who found success in one niche, Group C, are expanding quickly into a wider set of sectors, Group A. The niche knowledge makes their product best in some areas.
Pathway 4: build deeper domain solutions To compete in an increasingly crowded world, generalists from Group A are focusing on building specific solutions to scale across key sectors, challenging Group C.
Pathway 5: call it a day Exiting the carbon data world.
Many bottom-right corner start ups have taken pathway 5 in the last 18 months, instead of pivoting away from their first propositions. I wish all their founders well on their next projects.
That’s my take on why I closed the business, but should be read as only part of the story. Many other reasons exist, including the health impact of being a solo founder for three years.
I will return to my start up learnings in future posts, no doubt. But, for today, thanks for reading.
Thanks for sharing and the interesting read!