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Why Education Becomes Your Greatest GTM Challenge in Category Creation
Larry Fink’s watershed 2020 letter declaring “climate risk is financial risk” didn’t spark champagne celebrations at Persefoni. Instead, for founder Kentaro Kawamori, it validated a thesis that would define their go-to-market strategy: carbon accounting was transitioning from an environmental agenda to a financial imperative.
In a recent episode of Category Visionaries, Kentaro shared how Persefoni navigated the complex journey of category creation in climate tech, offering valuable insights for founders building in nascent markets.
The core challenge wasn’t building the technology. As Kentaro explains, “When you’re in the early part of a hype cycle, the customer base and the market are saying a whole lot of things, but they don’t even know what they’re asking for most of the time.” This insight gets to the heart of why category creation requires a different GTM playbook.
Persefoni’s approach to this challenge was methodical. Rather than trying to boil the ocean, they focused on a specific, pressing need: helping companies move beyond spreadsheets for carbon accounting. “If you think about providing the federal government or any regulator any sort of disclosure, especially one that involves complex math, you would hope that there’s sort of good systems and audits and systems of record to be able to do that,” Kentaro notes.
The parallel he draws to cloud infrastructure’s evolution in 2012-2013 is particularly illuminating for founders. “You just have to go through the cycle and the companies that can educate their customers and provide the confidence of this is what you need, this is how you do it, this is how we get it done, this is how the technology works, this is how you integrate it, tend to be the winners.”
This education-first approach shaped every aspect of Persefoni’s strategy, including their unconventional choice of investors. “The last thing I want to do as a Founder and CEO is spend my time educating my investors on where the market’s heading. I want my investors to be able to help educate me,” Kentaro explains. This led them to partner with climate and energy tech-focused investors rather than traditional Silicon Valley firms.
The results speak for themselves. Persefoni grew from about a dozen customers at the beginning of 2022 to over 200 by early 2023, with expectations to multiply that further. But perhaps more telling is how closely their founding thesis aligned with market evolution. “When I look at how close our founding thesis was to now, we’ve just started year four of our business, it is remarkable how little that’s changed,” Kentaro reflects.
For founders building in new categories, Kentaro emphasizes the importance of making complex things appear simple. “How do you make the complex simple?” he asks. “Boy, there is nothing harder than making something complex at least seem simple, because you generally can’t make it simple, but you have to make it seem simple for the user.”
This principle guided Persefoni’s product development, leading them to create what Kentaro describes as “a carbon accounting system” that functions similar to financial accounting. “Think of that very similar to what financial accounting does. It takes in a wide variety of data sources… Same exact concept for carbon accounting.”
The journey of category creation is often lonely and always challenging. But as Persefoni’s experience shows, success comes not from having all the answers, but from being willing to educate the market while remaining open to learning yourself. It’s about building trust through transparency and making the complex accessible, all while maintaining the conviction that you’re either going to be “phenomenally right or phenomenally wrong.”
Actionable
Takeaways
Identify and Solve Core Industry Pain Points:
The inception of Persefoni was rooted in Kentaro's firsthand experience with the inefficiencies of carbon accounting in the energy sector. Founders should look for pain points within their industries that are ripe for innovation, focusing on areas where current solutions fall short in efficiency, accuracy, or accessibility.
Embrace Sustainability from Personal Values to Business Strategy:
Raised in a sustainability-oriented environment, Kentaro naturally gravitated towards addressing climate change. Entrepreneurs should consider how their personal values and experiences can inform a business strategy that not only seeks profit but also contributes positively to societal and environmental goals.
Educate Your Market as Part of Your Go-to-Market Strategy:
In category creation, educating the market is as crucial as developing the product itself. Founders in new or evolving sectors must invest in educating their target customers about the need for their solution, the problems it solves, and the long-term benefits of adopting new technologies or methodologies.
Prepare for Regulatory Changes and Market Evolution:
Persefoni's growth was partially predicated on anticipating regulatory changes around climate disclosure. Entrepreneurs should stay informed about potential regulatory developments and market shifts that could impact their business. Preparing for these changes can position a startup as a leader when the market inevitably evolves.
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