Todd Hynes is the co-founder and CEO of Boston-based XL, a company that specializes in connected electrification solutions for commercial and municipal fleets. Customers include the Coca-Cola Company, Yale University and the City of Boston. The company’s systems allow commercial fleet customers to increase their vehicles’ fuel economy by 25 percent and reduce carbon dioxide emissions, decreasing operating costs and meeting sustainability goals with zero impact on fleet operations or service. XL has received the most approvals to sell into California from the California Air Resources Board, one of the most influential agencies in the sustainable energy field.
The mistake was waiting too long to learn as much as we could about our potential customers' buying habits.
XL is a fleet electrification company. We make the electric powertrains that go into commercial hybrids and plug-in hybrid vehicles: the electric motor, battery pack, converter and all the brackets and cooling systems needed to get that hardware into the vehicle.
We were more focused on the retrofitting opportunity when we started the business: taking a vehicle already on the road and in the hands of the customer and adding the system to that vehicle. In the commercial fleet world, the average vehicle is 11 years old; many of these vehicles are on the road for a decade or two. That’s a big install base, and if you can retrofit the vehicles, you can reduce fuel consumption and emissions much more quickly.
The mistake was taking too long to learn that the customers were already buying vehicles and adding things to them as new vehicles. When we started we didn’t know about this industry called upfitting. We learned that almost all commercial vehicles go from the base vehicle manufacturer to another facility where it’s completed. Big vehicles like delivery trucks or shuttle buses are made in two stages, and the body is added later. Even smaller vehicles, like cargo vans, will have interior shelving packages or roof racks added to the vehicles as they’re manufactured. When we learned about that industry, we started really digging in to find out more about the process. We got feedback from General Motors about who the best upfitters are, and then we went out and talked to as many as we could and identified a great partner to launch with.
It took us awhile, but we did eventually figure out that the bigger and faster path to market for us was through getting our system installed as the vehicle is being manufactured. The vehicle would show up at the facility, our system would get added and the vehicle would then be sent anywhere in the country through GM’s shipping structure. We didn’t even touch the battery or the motors; we had those shipped directly from our suppliers to the installers. It was a very seamless and efficient way of getting these solutions to market.
Time is critical in a startup. When we were beginning the company, we were planning on doing mobile installations — going to the customer facilities and hiring our own staff, which is labor intensive. As we started raising money, that was the plan, and we spent a decent amount of time going in that direction. If we had more quickly engaged with the upfitters and more quickly focused on the new vehicle market, it might have accelerated our time to market. Maybe we would have raised more money more quickly and moved faster, so we’d be that much further along today.
Know all aspects of how your customers will buy and use your product.
Knowing your customer is important, and we knew that starting the company. But the real lesson is that you have to go deeper and know all aspects of how your customers will buy and use your product.
Really try to understand, with respect to what you’re trying to sell customers, the full chain of how they procure it in the first place, how they receive that product and how they service and operate it.
When you’re running a startup, it’s really about how quickly you can learn and adapt. You go in with your assumptions; some will prove to be true and some will not, so it’s important to learn and take action on that learning. Our original plan was to do it one way, but we successfully adjusted and now have a great relationship and a number of partnerships with some of the leading upfitters in the market, and that’s become a good competitive advantage for us.
XL is on Twitter: @XlFleet.
Photo courtesy of Tod Hynes