Only successful cleantech startups have a positive impact on climate change and global resource problems. The problem is that most hardware-based cleantech startups are very capital and time intensive. Entrepreneurs and investors constantly look for new strategies to accelerate the development and marketing of smart green innovation. Applying the lean startup philosophy to cleantech could be the perfect solution. Cleantech startups also search for scalable business model, product market fit, validated learning from customers and engine of growth. In this context, it was a special honour to go to Japan – especially after Fukushima – and speak about Lean Cleantech Startup at the spectacular New Context Conference Tokyo 2012 two weeks ago.

In Japan, everybody knows that Germany decided to get out of nuclear by 2022 when the last nuclear power plant will be switched off. Germany’s Energiewende (energy transformation) is a role model for Japan which up to now is rather a renewable energy follower than a first mover. As of 2011, the installed solar capacity in Germany was 25 GW while Japan only reached 5 GW. But comparing the Japanese lifestyle with the American gives hope. Americans have too much space and completely depend on cars. Japanese use space a lot more efficiently because it is extremely limited. 73 percent of Japan consists of mountains and forests and is unsuitable for agricultural, industrial or residential use. As a result, Japan is one of the most densely populated countries in the world.

Urban density fosters efficiency. Public transport in Japan is the best in the world and the social discipline of the Japanese is very impressive. Japanese corporates love long-term planning and quickly embrace new high-tech. Look at the Nissan Leaf and Mitsubishi iMiev or the eco ideas of Panasonic. By 2019, Panasonic wants to be the smart green ichiban – the number one green innovation company in the electronics industry. At the same time, 80% of Japan’s energy system is still based on fossil fuels as Shimpei Yamashita explains in his lecture on Cleantech in Japan. Provided that Japan seriously pursues its own Energiewende, it is well positioned not only to lead electric mobility but to build a competitive Smart Green Economy.

In fact, walking around Tokyo by night feels like acting in a science fiction movie. The next morning we step back into reality, pick up our NCC12 badge and are overwhelmed by the big organising team, ubiquitous conference branding and extraordinary hospitality. And the spacy NCC12 T-Shirt featuring mother Earth is beautiful, too. Arigato!

NCC12 was hosted by the Co-Founders of Digital Garage, Kaoru Hayashi (CEO, photo above) and Joi Ito (MIT Media Lab Director, photo below). The Internet holding Digital Garage was founded in 1995, is a public company on JASDAQ with a market cap of €322M and recently adopted the new strategy Lean Global. As a result, they opened new offices in Hong Kong and San Francisco and founded the product innovation company New Context together with Ian McFarland and Eric Ries.

Developing cleantech products faster can be done by investing more capital and human resources. But it can also be done by improving the process of product development. In particular, it can be done by adopting lean manufacturing techniques that originally were invented in Japan. Eric Ries, author of The Lean Startup, has provided the lean startup movement in his book with a common language and consistent framework for embedding resource efficiency into strategy and day-to-day operations.

At NCC12, Eric and Joi did a skype call on stage in which Eric stressed that the lean startup approach is not only cheaper but a lot faster. The goal is to bring the engineers as close as possible to the customers by locking them together into a closed feedback loop. Software engineers nowadays practice continuous deployment of new software code on a daily basis. For hardware, this means designing and producing small batches that can be quickly improved from one version to the next. According to Eric, lean startup is about learning more quickly what works and discard what doesn’t.

A good example for a lean hardware project is the non-profit sensor network Safecast that was founded after Fukushima because people wanted reliable nuclear radiation data and affordable geiger counters were not available. At the beginning, Safecast had no people, no money, no device, no data, no cars and no supply chain. Then it started using the Internet as supply chain and quickly found the resources and skills it needed to build a new device and web service. 18 months later, over 4 million nuclear radiation measurements have been carried out and shared with the public.

Developing new hardware is a complex challenge. That’s why Cyril Ebersweiler (photo above) founded Haxlr8r, the first hardware accelerator located in Shenzen, China. Cyril claims that hardware projects participating in the accelerator programme can be developed 3 times faster than standalone startups. Combining the power of external hardware expertise with low-cost manufacturing in China and the online marketing miracle Kickstarter enables a new generation of hardware startups of which many will be active in cleantech, too.

Liam Casey (photo above), CEO of PCH International, also recommends to embrace China for cleantech manufacturing as quickly as possible to reduce cost and time. Nowadays, PCH is able to deliver an order received by 6 pm from China to Tokyo the next day and to Europe within 3 days. Such a fast and cost-efficient supply chain is a dream come true for every cleantech startup that wants to be lean, smart and green. Consequently, Liam created the PCH Accelerator which is focused on supporting new startups from the beginning. Creating new supply chains from scratch for startups is a big challenge but it enables PCH to keep in good shape by learning continuously from ambitious customers.

Lean Cleantech Startup really means to learn fast and to focus on your own core expertise while working with the best partners in the market. Berlin-based startup Ubitricity is a good case study of a Lean Cleantech Startup. Having only 8 employees Ubitricity focuses on system integration and outsources the development of all hardware and software product components to a value web of technology suppliers. Ubitricity’s new electric vehicle charging infrastructure aims at being very lean and cost-efficient by putting the intelligence into the charging cable. Both Co-Founders of Ubitricity are lawyers which is quite useful when it comes to designing and negotiating supplier contracts that are beneficial for the startup. According to Knut Hechtfischer (photo above at ECO12 Berlin), 5 key terms should be part of a good supplier contract: Technology access, competition, duty to deliver, pricing and intellectual property.

Wouldn’t it be wonderful if Cleantech VCs were able to invest in, grow and eventually exit startups faster and with higher returns? They could then raise more funds, do more deals and foster more innovation. Lean Cleantech Startup is a new topic and it is big because it can help our industry a lot. Therefore, we are going to further discuss Lean Cleantech Startup at Ecosummit Düsseldorf 2012. And we are planning to bring Ecosummit to Tokyo next year. We hope that you join us on our journey to accelerate smart green innovation and to make Lean Cleantech Startup ubiquitous.

Tags: Berlin, China, Cleantech Startup, Cleantech VC, Cyril Ebersweiler, Digital Garage, electric mobility, Energiewende, Energy Transformation, Eric Ries, Haxlr8r, Ian McFarland, Japan, Joi Ito, Kaoru Hayashi, Knut Hechtfischer, Lean Cleantech Startup, Liam Casey, MIT Media Lab, Mitsubishi iMiev, New Context, New Context Conference Tokyo 2012, Nissan Leaf, Panasonic, PCH International, Pieter Franken, Product Innovation, Safecast, Shimpei Yamashita, Smart Green Economy, Smart Green Ichiban, Smart Green Startup, Sumitomo, The Lean Startup, Tokyo, Ubitricity, WBGU