An October ice storm in 2013 broke every power pole in a North Dakota region, leaving residents without power for months. For Thread CEO Josh Riedy, this catastrophic failure revealed a critical gap in utility infrastructure management – one that would shape his company’s bold go-to-market strategy.
The Epic Opportunity in Utility Asset Management
In a recent episode of Category Visionaries, Josh drew an illuminating parallel between Thread and healthcare giant Epic. “If you think about Epic, it really created the electronic medical records industry and digitized healthcare as we know it today,” he explains. Thread aims to do the same for utility infrastructure, creating a comprehensive system of record for critical assets.
From Problem to Product-Market Fit
The utility industry faces a unique challenge: engineers are often hundreds of thousands of miles away from the assets they manage. Josh explains how Thread bridges this gap: “Enabling those frontline workers to perform some of the diagnostic tests, like gathering imagery specific to an asset or a particular component of an asset, is very helpful when the engineers are trying to diagnose problems from afar.”
A Novel Approach to Landing the First Customer
Thread’s path to securing its first enterprise client defied conventional startup wisdom. “We were the first startup to build a co-development arrangement with XL Energy,” Josh reveals. But here’s the twist: “Xcel Energy did not retain any intellectual property, but they also didn’t give us money to do it.”
Instead of following the traditional path of building a product and then selling it, Thread took a riskier approach. “We didn’t get paid until we proved it,” Josh emphasizes. “It didn’t come overnight. It came from many years of hard work.”
The Strategic Value of Utility Market Dynamics
Thread’s bet on Xcel Energy proved strategically savvy due to the unique nature of the utility market. As Josh explains, “Utilities are a very unique market. It is a fast follower, close knit, heavy influence market.”
This market dynamic meant that success with one major player could catalyze broader adoption. “All of that work for XL isn’t just for one company,” Josh notes. “It’s for a company that spans five states ranging from the Canadian border to the Mexican border.”
Understanding the Market Size
The utility market’s structure creates interesting opportunities for scale. Josh breaks down the numbers: “There are the nonprofits or the cooperatives… those represent roughly half of the market from a user perspective. The rest of the market and where we currently place our focus is generally investor owned utilities that comprise the Edison Electrical Institute… those institute members number, I believe in the 60s, but the market as a whole is roughly 800 entities in the United States.”
Key Lessons in Enterprise Sales
Thread’s go-to-market strategy offers several insights for founders targeting enterprise clients:
- Co-Development Can Beat Traditional Sales: Working closely with a major client to develop your solution can provide better product-market fit than building in isolation.
- Prove Value Before Asking for Payment: While risky, demonstrating clear value before monetizing can build stronger, longer-lasting relationships.
- Understand Market Dynamics: In close-knit industries, success with one major player can create a powerful ripple effect.
Measuring Success Through Safety and Efficiency
The impact of Thread’s solution is measurable in both safety and efficiency gains. “What used to be necessary to inspect a Turbine was a three person crew repelling down turbines that are 80 meters in height,” Josh explains. “Today with a thread solution on Demand is a one person job in roughly 20 minutes.”
For founders targeting enterprise clients, Thread’s journey demonstrates the value of patience and proof in building lasting customer relationships. Sometimes, the best way to secure a major client isn’t through traditional sales tactics, but through a willingness to prove your worth before asking for payment.