What does it take to scale a startup from zero to $40 million in just four years? In this episode of ’73 and Sunny,’ we sit down with Jonathan Hafemann, a revenue leader who has brought four different startups through the highs and lows of growth and innovation. Jonathan shares his experiences from pioneering LED retrofits to his current role at NEXT Energy Technologies, where he’s transforming windows into solar power sources. Tune in as Jonathan discusses the critical importance of product-market fit, the lessons learned from both successes and failures, and the strategies for navigating the complex dynamics of introducing disruptive technologies into established markets.

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Damien: Hello and welcome to ‘73 and Sunny,’ the podcast about the journey of getting things just right. We talk to tech sales and marketing leaders about how they’re growing, dialing in best practices and getting closer to that sweet spot. Today. We’re happy to have Jonathan Haifman join us. Jonathan is the VP of commercialization and growth for next energy technologies, a deep tech solar technology startup that is building coatings and equipment to transform windows into solar assets. Jonathan has been a revenue leader for more than 12 years across four different startups and has an abundance of knowledge surrounding market structure sales and business development strategies Thanks so much for joining us today, Jonathan.

Jonathan: Thanks, Damien. It’s great to be here.

Damien: So let’s start with Next Energy Technologies. And, what the heck are codings?

Jonathan: Yeah, so these are codings specifically for Windows. So the idea is that we’re developing a coding that you can see through it. So it’s transparent but when the sun’s hitting it, it’ll generate energy for the building.

So just think of it as like a transparent solar cell that you can integrate into a window. And the idea is that the underlying technology is going to enable us to turn the facade of a highly glazed commercial building into a solar asset. So we can leverage both the vision area and the, what’s called the spandrel area, which is the glass that sits in between floors.

It just covers up the. The concrete nobody wants to see and turn those into energy, clean energy producing assets for the building. Okay. So I know that one of the big parts about, or the big limitations. Of capturing solar is just real estate is just the amount of, a volume of where you can actually put solar panels because right now it’s just on roofs typically, but what you’re doing is multiplying that by a factor, right?

To be able to say, Hey, listen, we’re not just talking about all these roofs. We’re talking about the sides. We’re talking about awnings. We’re talking about any part that might be facing the sun. That’s correct. Yeah, so we’re basically saying, hey, rooftop solar is great. We’re not competing with rooftop solar anywhere.

You can put rooftop solar. You can and should do that. If your goal is to build an efficient building, that’s as close to net 0 as possible. The just the reality is that the further up you build, the higher your building goes, the. The ratio of energy that you can generate from your rooftop space relative to the total square footage of a building just gets worse and worse.

And so you basically, you need assets to be able to add to that clean energy generation equation. That’s going to help you get closer and closer to net zero. So we’re looking to be a part of that solution.

Damien: Okay. Got it. And I know that there’s. There’s a ton of investment going into windows and window treatments.

I’ve seen the clickers on those conference room windows that, make everything opaque and then you turn it back on and you can see through. Is that is this what is the technology with this? Is this know you’re talking about a coding, but I know, I believe those are using Like electricity to be able to actually make everything opaque or some of them are actually a mask like a clear mask that would then, be become a opaque.

What is the.

Jonathan: Yeah. So there’s a couple of frontiers of, I would say new glass technology. So right now, like the challenge with glass is that when it comes to. The energy efficiency of a building. You’re way better off having a wall than you are having glass, right? Walls are gonna be a lot more efficient and you’re gonna be able to heat and cool and maintain that building a lot more efficiently with a wall.

The problem is everybody wants views. Everybody wants to be able to enjoy the view out there building and everybody wants, 10 feet of floor to ceiling glass. And so those. To the choice between those two is historically been at odds. And so where the future of glass technologies is going is actually to be able to maintain that transparency and outperform a wall.

And there’s two there’s two aspects to. I would say performance inside of a window. There’s what’s called the heat gain coefficient or the heat gain management. So that’s sun’s energy coming in and wanting to radiate into the building. And then there’s the other factors, the insulating value or the R value of the building.

So that’s basically like when you’re cooling the, or you’re heating the building on the inside and it’s cold outside, how much heat is escaping through the window. And so there’s basically four. Categories are sorry, two major categories, four technologies, two in each category that are pushing the envelope of performance forward to where in the next five to 10 years there will be no trade off between choosing glass or choosing a wall.

You will have all the performance of a wall with all of the benefits and transparency of glass at your disposal. So buildings should be getting a lot more efficient while maintaining their desirability from an aesthetics, a performance and occupant experience standpoint

Damien: That’s, that is very cool.

And I know I live in San Jose and we are, we have Southern facing walls and windows and we spend a ton on air conditioning. So that would be great to be able to have a little bit better, our rating and a little bit better experience there. Is this something that. That you’re envisioning for both commercial and for residential solutions.

Jonathan: We’re still exploring the residential market. I would say for sure, commercial, no question. Commercial is a great first fit. There’s a lot of reasons from tax incentives perspective, from a capabilities perspective within the channel of people to be able to manage the kind of the complexity and added costs that comes with a window that has wires and that can Hook up to standard solar components to create power that goes into a building.

That’s a complex thing to manage on the residential side. Where we’re seeing where we’re seeing an opportunity is around what we’re calling it, what we’re calling enabling functions. So where we can generate enough power to charge a battery that then does something that isn’t native to a window right now.

And so that could be something like a window that you can then program with your phone to. Move up and down a certain time of the day. It could be a window that enables a function like smart, like privacy glass that, that you click a button and it switches state. It could be something that’s enabling like solar powered garage doors, right?

Just these different things that today have to be powered or you have to either run wires to the edge of the building. So in a retrofit scenario, that’s almost economically a no go right at the gate. And so the folks that we’ve talked to on the residential side has see the opportunity the biggest portion of the residential window market is retrofit hands down.

And so if you can figure out how to get something that both self generates power and provide some new functionality that doesn’t currently exist in the market then you’ve got, you’re in a sweet spot and that’s the direction we’re headed with our solutions.

Damien: Okay, I appreciate that.

That’s good to know. And I think that goes along with Hey, if you’re just focused on commercial right now or know that’s a great place to start, that goes along with what you’ve written about in the past in terms of product market fit. Above all else, right? And so it’s, product market fit.

Hey, if it’s not, residential right now, it’s commercial, but product market fit, talk to us a little bit about product market fit and why you feel that is, is the paramount of all considerations in terms of either starting a business or, going to market in terms of a strategy.

Jonathan: I’ve lived this, I would say in a real positive way and a real negative way. I’ve experienced it both on both sides. And my first startup that I worked at in Lunera and in the startups that I’ve been a part of, I’ve always come in at the when when a product’s been developed and they’re ready to scale, they need to figure out there’s Hey, we’ve developed this thing. We think we know where it fits in the market, but we need to figure out how to sell it, how to sell it and where it’s going to go. And so at Lunera, Lunera was making a transition. They were. A company that had been making custom led light fixtures primarily for Apple.

So they were doing all of Apple’s like their in store experiences. So they were making the logo and all the backlighting, and this was pre Apple watch. So the lighting looked a lot different in their stores at that time. And they basically figured out Hey, this was a business that we developed.

Because we needed revenue, but it wasn’t a business that was going to scale. Custom design fixtures was not a scalable business. And the whole led market was trending towards, volume and scalability, which is really what the lighting market’s built on. And so they developed this novel retrofit lamp that I would say went a little bit ahead of where the market was at in terms of focusing on a category that didn’t have the broadest install base, but it was like a, it was a part of the market that they could take ownership on.

And we built a brand and we, so we basically launched this retrofit lamp business that would allow us to pull out an existing lamp. And then use the same kind of underlying infrastructure, plug in an led lamp that would save energy and, garner incentives and have a much longer lifetime, a really clear value proposition.

And that business scaled really quickly. So we took that business from the retrofit lamp business from zero to 40 million in about four years. And we saw a really rapid growth with that, with a, for a hardware based solution and in a. Amidst that the price fell dramatically. Almost 75 percent from where it started.

And the volume had to just continue to ratchet up, as prices fall and to continue to grow our top line. And that worked really well. That was a great example of having product market fit to getting traction and start scaling revenue on the other side for me, where I lived a lot of pain was in the smart glass industry, my, my last role with a company called Halio the, I’ve been in, this is my fourth, next is my fourth startup.

The other three have just completely gone away. And all of them went way over 10 million in revenue. You, there’s a lot to learn right about revenue is not your only it’s not your only opportunity for things to go sideways. So it, Haleo, what I learned. I’m actually publishing an article on this tomorrow about just the lack of product market fit with the solution and the glazing market.

I learned a lot is a very risk sensitive market. It’s basically the last place you want to have a problem if you’re building a building, because now you’ve got to cut a hole in the building. You got to get a crane out there. Glass is heavy. It’s it’s labor intensive to. manage and install. And it when you’re, if you have a tenant in a building and you’re the owner of the building, like the last thing you want to do is tell your tenant, Hey, we’ve got to cut a hole in your building today, and maybe don’t come in.

Right. So that’s a really disruptive kind of thing. And it’s really tends to be the last place people are willing to take risks on the edge of on the edge of a building. So it’s a very risk sensitive market, bringing a new technology into that space. I learned a lot. It was a big education both in terms of the structure of that market, the kind of where the risk sensitivities were, how you could sell something like that in that kind of environment.

And I basically figured out that everybody that was competing for dollars and, The space to try to bring this smart glass, which was basically a switchable, it was kinda like what you were describing where, it’s it goes opaque, but it’s for exteriors, right? So that, that white glass in a conference room where you hit a button and it switches on and off, that’s only used for use in interiors.

It can’t stand up to the UV and ir heat that, a sun that the sun brings. So we developed one that was for managing heat gain and the outside of a building. All that to say that product was overpriced. It had too much risk and it it, the underlying economics were not there. The underlying manufacturing economics were not there to drive the price down at kind of the volumes that we were able to sell at.

And so that, that was an example of a business that collectively there’s three companies that really made a push to commercialize smart glass. Two of them combined raised about two and a half billion dollars over about 12. To 13 years. And one of them is completely gone. The other one’s bankrupt and, we’ll be gone soon.

And that, that’s an example of where product market fit did not, was not there and they were able to somehow convince investors that they could get it there, that everything else was going to work out. Just, we just needed more money. That was not the case. That was just, it was far from it. In my mind, that’s the kind of investment opportunity that only comes around when you’re at zero or near zero interest rates.

And there’s too much money in circulation and not enough quality opportunities or assets to, to buy. I don’t know how else that happens because the business model never made sense to me.

Damien: That’s scary, right? That is, it’s scarier than looking over a hole in your building, 30 floors up, but It’s this is the business that is, probably going to be, you know, falling, but it is the risk tolerance of either what you’re talking about, investors or, the founders or the the executive team there.

I don’t have that kind of risk tolerance, like what you’re on your fourth and you’re, you just talked about, Hey, some. Some wins, some successes and some failures. Like what is to you, since this is 73 and sunny, we’re trying to get to that sweet spot. What is that sweet spot in risk for you? Because without risk, there’s not going to be a lot of payoff, right?

There’s something has to be a, you have to go over your skis a little bit. So what is that sweet spot for you in terms of risk? When you’re thinking about a product market, but you’re thinking of starting about starting a company, what is that? What do you weigh when you’re looking at that risk?

Jonathan: For me, what I figured out is there’s. People are good at different stages and different life cycles of a business. I’m not good at zero to one. I don’t like the whole let’s take an idea and then let’s build something around it. And let’s grind for two, 18, 12, 18, 24 months without any pay and just try to bring something out of nothing.

That’s not, I’m not good at that. That’s not my sweet spot. My sweet spot is. I’m actually really good at taking your concept, your idea that’s been developed and that has been validated in the market and then scaling getting, I would say, getting to scalability on the revenue side. So that actually is really my sweet spot.

And that’s where I’ve spent a lot of time. It goes back to. Figuring out like in my time at Lunera, I figured this out when I looked up one day in about year four and I realized I was doing a job I would have never applied for like this job of basically my channel was established. I had revenue growing, I had all the things that I, like any salesman would want.

Great customer base and a good brand. And I was bored out of my mind. It was not the right fit for me, that stage of scaling growth. I realized that the fun part for me was actually building that process, building trust, establishing the channel, finding the right players in the market getting, tuning the strategy.

Understanding what the knobs were to pull once I got those things dialed in and revenue was growing and he just needed to keep doing more of the same. I was bored and it was not a fit for me. So, I’m not zero to one, but I’m more like one to five or something, whatever those kind of intermediate steps are in, in growing a business.

But man, if those things aren’t right, like if the underlying conditions aren’t right, it can be so painful that I tried to. I spent a year after Haleo. It was so bad. I was in so much pain. I got fired from that job because I went to the board of directors and lobbied for them to replace the CEO.

Because I was he and I were so diametrically opposed to each other in terms of our like strategy and approach and all these things. It was like either it was either it needed to be him or me. Like one of us needed to go in the end, both of us ended up leaving and then the company cratered. The, the.

For me, that was like when I really started seriously reevaluating the risks I was taking and the reward that the reward potential of it, and that was when I spent a year really going down the path of entrepreneurship through acquisition. I internalized the idea. I’m not good at zero to one.

I don’t like that early startup phase, but I could take something that somebody else had put in motion and I could grow it. And so the idea of entrepreneurship through acquisition, the ETA movement that’s been happening the last few years really appealed to me. And I, my wife and I, we sold our house.

We took the equity in that house and we spent a year. Going after it. And I spent, three, but offers in on three different deals, nothing panned out but I was very clear about, what was a good, what was a good fit and what wasn’t and where I was going to be able to have traction and success.

And I’m still open to going back down that path. I still think that’s probably the sweet spot for me in terms of risk and reward is where I can apply my skillset. See the upside, but I don’t have to bank on, I don’t have to worry about What percentage of the cap table do I have who votes ahead of me?

How many people are, who, or how much am I going to get diluted on the next round? Like none of that, all that goes away. And if I’m, if I own the business, even if I have investors to help me take down a deal, that’s maybe larger than what my personal balance sheet can handle, that’s fine.

As long as there’s clarity around like, Where my ownership stake is and what’s required for me to grow I can leverage that down the road for the next deal and keep rolling up portfolio companies. That’s probably the longterm. That’s probably where my sweet spot is.

Damien: Thanks for sharing that in terms of the sales strategy.

So it’s not in the creation, but it is the building is what you’re saying, building the revenue, building, maybe the process, building the sales strategy. Because we have a lot of listeners who are part of the sales strategy or the go to market strategy in mindset what lessons do you have for them in terms of looking at a sales strategy, how to attack a market that is nascent or has some risk to it.

Jonathan: Yeah, that’s going to vary by market, of course, and certainly if you’re doing hardware versus software, but I think for me, when I looked at on the hardware side, I can speak to that really clearly, which is really just understanding the structure of the market is really important. And then the potential for the technology to disrupt the existing.

And if you play it forward far enough, trying to figure out who wins and who loses or who’s going to get squeezed by the introduction of a new technology. And this was something that I have to give a lot of credit to my longtime boss, Tom Quinn. Tom’s a brilliant, big picture thinker. Tremendous communicator.

He’s a natural salesman. You walk in the room and Tom lights up the room and he just, he can tell a story that has everybody captivated and really tie in strategy and leadership. He’s got the whole package from a revenue leader perspective and working for Tom for about eight years, he really took my thinking.

When I was, I would say a natural thinker in the 10 to 20, 000 foot range. And he was a natural thinker in like the 40 to 50, 000 foot range. And we would just over the course of seven or eight years of working for him, I would, he kept lifting the lid on my, my thinking over time and taught me how to really understand a market and the structure of a market.

So an led, for example, you had these channels that were, had been around for 40, 50 years, maybe longer built around this core technology, which is basically, you have a a ballast, which is like an energy pack that sends energy across some gas, some gases that get charged inside of a tube and that light up.

That’s the core. That was the fundamental underlying technology for lighting forever. And then along came, the semiconductor and the blue led and how that began to change the whole underlying structure of that market. And so it shifted dramatically and. What I saw was really, it was this whole, it really, the whole industry migrated from domestic production and overseas production, like in places like Europe or Eastern Europe to China, like almost overnight, like within three to five years, it just very rapidly Shifted.

And then that also shifted the way people were brands were appearing in the market because you used to have like on the, there’s sort of two major components to the lighting market. There’s the lamp and ballast side of the business of parts and pieces. And then there’s the fixture side of the business, which is like your housing, right?

You’re basically the entire housing. It used to be that you would sell a fixture. And then somebody else would sell lamps and ballast to energize that fixture, but then leds came along and those were all integrated. So all the parts and pieces were integrated into 1 housing and then all of the lighting support, the lighting lamp business was consolidated to 3 companies prior to led.

After led, it was probably also down to three companies again, but all three of those companies were in China and they didn’t really care who they sold to or what brand you represented in what part of your market. So the lamp business got fractured. Manufacturers began to get really squeezed by that dynamic and distributors in the end were the ones that won because they could just sit back, let that game play out, figure out who they liked long term and choose a winner.

When the dust settled, the manufacturers, which is where the side of the business that I was on were the ones like in the trenches fighting and scraping to try to stay alive, keep their business going. And so you could see this trajectory of how like an incumbent or an incoming new technology was going to disrupt the existing structure.

And then there’s, all these other components that, that filtered technologies that filtered into that market, like lighting controls and, IOT and things that became attached to. The light fixture that further, I think, exaggerated that, that dynamic. So it was interesting to learn how to think structurally about the structure of a market, think through who stands to gain, who stands to get squeezed and come under a lot of pressure because of a new technology.

And then really wrap strategy around that. And and really starting with relationships and then really. Looking to align our interests with the companies that could help us scale and stay in the fight.

Damien: It’s to me again fraught with risk, right? Like you’re talking about earlier, where everything, that The cost came down and then you’re talking about outsourcing everything or everything is now being manufactured in China and not being able to see that trajectory that you talked about, or, have that crystal ball.

You’ve done this four times and what, is there something that you would do now? That you would be doing differently in terms of saying, there’s no way like, is that talking to Tom Quinn and saying, Hey, listen, Tom, you have a better understanding of a, a more holistic or a higher level view, or is it just what you’re talking about, knowing about the different economics or the, Global landscape, like what can either founders or executives try to glean from your experiences in terms of, Hey, no one has a crystal ball, but you have a lot of experience.

And so what are some of those things that you could say, Hey, listen, if you’re going to do this, it’s mentorship, it is understanding the market before you dive in. It is like what are those things that you would recommend to people to cobble together some type of projection?

Jonathan: Yeah. Yeah, I would say foundationally understand the structure of the market you’re going into and don’t try to fight the structure itself. You can make incremental disruptions in a business and. Look to disrupt maybe the way people are doing things, but the structure of the market itself, unless you are sitting on something that is truly transformative, which is pretty rare, you really want to look to figure out how to align your priorities.

Your strategy and your business and your revenue model around the existing structure of the market. So look to iterate, but not disrupt the entire structure. That would be one thing. The other thing would be, we didn’t do this early enough at our, at the companies that I worked at, which was bringing in, so like in the example of the lighting business or the The glazing business.

It’s like bringing people who are longtime industry veterans who understand the dynamics of the market and what landmines you’re about to step on. If you go do X, Y, or Z, having those people in your corner that you can either on your advisory board or on your payroll are ideal because they can help you Avoid some really costly mistakes that I’ve seen play out a few times.

The other would be really think hard about the exit strategy and have a number of different options on the table because exits man, there there was a company that was very similarly built to Lunera that was like a, a. A cousin to us, they were in the same side of the market.

They were a lamp business. They ended up doing it. They were the, probably one of the very few companies that actually succeeded in that space. They started something that they sold at a good price. But a good return is a company called green creative and their founder. One of their co founders, Cole Zucker he and his partner had a really clear strategy.

They were, they took on some money, but they were mostly privately held and they grew organically and they ended up selling it for a really significant sum of money to them. Personally as individuals and to some of the people who joined their team and got options Lunera scaled up to 40 million and then just went away.

And the reason they went away was they basically realized that as a venture backed company, that this business had turned into like a, maybe an ideal lifestyle business, like a private equity funded or private equity style, kind of cash flowing business, but it would, it had, it it’s promise of providing a multiple on revenue, some kind of big exit to that adventure.

Companies looking for had long gone, it morphed into what they would call a zombie business in the venture world, where it’s it’s profitable. It’s hanging around, but it’s not doing anything that’s in any way impacting the overall profile of returns in that portfolio. And so they made this bet to try to attach an IOT sensor business onto and sensor strategy onto a light bulb.

which was the wrong business, which was the wrong strategy for that business. And they brought in this guy who, had the vision. He was, but he was this like marketing executive who was, his personality was all gas and no break. He was untempered. And so he just spent money recklessly and drove the company off the edge of a cliff financially and ruined this really.

frankly, lovely brand we had built in the market and channel. And and so that kind of scenario, when I talk about exit strategy and exit planning, it’s really important to know like what the expectations of your investors are, how you can meet those expectations, what the exit strategy needs to look like to match that.

And then, if your growth profile is venture, where you’ve got a scale money, you’ve got to scale, it’s all about speed and volume of returns versus Organic growth, taking less money, going slower. And then maybe looking, you’ve got more options, I think, for an exit at that point where you can get on the private equity path.

You can go down getting debt and scaling the business that way. There’s a lot of other levers you can take that give you opportunities to get cash back as a founder or as a early group of founders and early employees that can be rewarding. And man, if you don’t have a clear line of sight on that It’s just inviting destruction in my mind.

Damien: So what I’m hearing from you is, on the front end iterate, don’t disrupt, which reminds me of that. I think it was BASF, the old in the eighties, they had a commercial is that we don’t make things, we make things better. And then, so it’s Hey, iterate on what is out there and on the backend, just understand the exit strategy as best you can before, before jumping in.

Jonathan: Yeah. All right. Yeah. It’s a line. And when I say iterate, don’t disrupt what I’m really referring to is like structure market structure. Don’t try to challenge market structure that’s where you’ll get in trouble. And that’s where that company that raised, 2 billion and it’s going to transform the glass industry with their smart glass solution.

They tried to disrupt the structure of the market and they just got chewed up and spit out. And I’ve seen that a couple of times and it’s it’s. It’s terrible for everybody.

Damien: On that on that note Jonathan, thanks. Thanks so much for joining us today. If you’d like to learn more about Jonathan and the work he’s doing, please visit next energy tech.

com. So Jonathan, thanks so much for joining us today.

Jonathan: Yeah. Great to be here.