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Strategic Communications Advisory For Visionary Founders
Conversation
Highlights
From University Software Project to Utility Infrastructure Revolution: How Thread Found Product-Market Fit
The journey to revolutionizing utility infrastructure began in an unlikely place – the University of North Dakota, where Josh Riedy and his co-founders were developing software for FedEx. But it was a personal connection to the power industry that sparked Thread’s creation.
“My late paternal grandfather…had visible scars. And those scars came from my grandfather working on a power generator because they didn’t have electricity delivered to their ranch,” Josh recalls. This incident led his grandfather to start the area’s first power cooperative, serving as board chairman for 40 years.
Years later, a devastating 2013 ice storm that left communities without power for months reinforced the need for modernization. “That just led me to believe that…that industry of all industries, needed modern tooling to make their jobs safer,” Josh explains.
Thread’s approach to market entry was unconventional. Rather than seeking immediate revenue, they pursued a co-development arrangement with XL Energy. “We had to earn the business. XL Energy did not retain any intellectual property, but they also didn’t give us money to do it,” Josh notes. This strategic decision proved crucial for product development.
The partnership allowed Thread to deeply understand utility industry problems and develop solutions with direct user feedback. “We identified the problem. We identified a path to a solution, and we didn’t get paid until we proved it,” Josh shares. This methodical approach helped them establish strong product-market fit with a major customer spanning five states.
Thread positioned itself in an entirely new product category – a combination of ERP solutions and robotics. “It is deep tech, but it’s critical. We cannot make mistakes. Mistakes lead to lives, and I take that seriously,” Josh emphasizes. Their solution transforms how utilities inspect and maintain infrastructure. What previously required a three-person crew rappelling down 80-meter wind turbines can now be accomplished by one person in 20 minutes using Thread’s technology.
The company’s growth strategy leverages the utility industry’s unique characteristics. “Utilities are a very unique market. It is a fast follower, close knit, heavy influence market,” Josh explains. Their success with XL Energy opened doors throughout the industry.
Looking ahead, Thread is positioning itself to capitalize on the utility industry’s transformation. “There is a generational opportunity…utilities making the pivot into renewables and making a pivot away from large opex, which was fossil fuels and uranium, to produce power,” Josh notes. He envisions Thread becoming to utility digitization what Epic is to electronic medical records.
For founders building deep tech companies outside traditional tech hubs, Josh emphasizes the importance of network building: “What I really needed to do at that time was branch out and widen my network.” He also advises leveraging existing resources: “When you are young, make the most and best use out of Y combinator and techstars and all of the documents they have.”
Actionable
Takeaways
Identify Critical Problems in Traditional Industries:
Josh and his team recognized the need for modern tools to manage energy assets, particularly in the wake of natural disasters that exposed the vulnerabilities of the existing system. By targeting a critical problem in a traditional industry, they were able to create a compelling value proposition.
Earn Customer Trust Through Co-Development:
Instead of seeking upfront payment, Thread invested time and effort to understand Xcel Energy's problems and develop a solution that met their needs. This approach allowed them to establish strong product-market fit and earn the trust of a major player in the industry.
Leverage Industry Relationships for Market Entry:
By partnering with Xcel Energy, Thread gained credibility and access to a network of potential customers in the utility space. Founders should seek out strategic relationships that can help them navigate the complexities of their target market and accelerate their growth.
Embrace the Challenge of Defining a New Category:
: As a mashup of robotics and ERP, Thread faced the difficulty of describing their offering to both customers and investors. Rather than trying to fit into an existing category, they focused on communicating the real-world results and impact of their solution.
Capitalize on the Shift Towards Sustainability:
With utilities investing heavily in renewables and setting ambitious carbon reduction goals, there is a generational opportunity for startups that can help facilitate this transition. Founders should look for ways to align their offerings with the sustainability imperatives of their target industries.
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