20VC When To Transition From Growth to Profitability & The KPI's of The On Demand Economy with Frank Mycroft @ Booster Fuels

Summary Notes


In this episode of 20 Minutes VC, host Harry Stebbings interviews Frank Mycroft, the founder and CEO of Booster Fuels, an on-demand fuel delivery service. Mycroft, an ex-rocket scientist with NASA and a former VP of strategy at Planetary Resources, discusses his transition from aerospace to launching Booster Fuels, driven by his desire to solve practical challenges and inspired by the inconvenience of late-night fuel runs as a new father. He emphasizes the importance of naivety for certain entrepreneurs, the distinction between immediate on-demand services versus efficient scheduled delivery, and the necessity for startups to engage with regulators early on. Mycroft also touches on the fundraising process, the significance of building investor relationships, and Booster Fuels' potential role in distributing environmentally friendly fuels. Looking ahead, he envisions leveraging parking lots to provide multiple services to parked cars, enhancing convenience for consumers.

Summary Notes

Introduction to Frank Mycroft and Booster Fuels

  • Frank Mycroft is the founder and CEO of Booster Fuels, an on-demand fuel delivery service.
  • He has an impressive educational background with degrees from Princeton, Stanford, and Harvard Business School.
  • Frank Mycroft has a history as an ex-rocket scientist with NASA and a VP of strategy at an asteroid mining company.
  • Booster Fuels has received investments from well-known venture capital firms.

"So joining me today is Frank Mycroft. Now, Frank is the founder and CEO at Booster Fuels."

This quote introduces Frank Mycroft as the guest on the podcast, highlighting his role as the CEO of Booster Fuels and his impressive background.

The Founding Story and Inspiration Behind Booster Fuels

  • Frank Mycroft was drawn to complex operational challenges in the physical world from an early age.
  • His interest in space and NASA was overtaken by the practical challenges of parenthood.
  • The inconvenience and safety concerns of late-night gas station visits sparked the idea for Booster Fuels.
  • The concept for Booster Fuels was influenced by Frank's experience with mobile refueling of small airplanes.
  • Frank advises that founding a company should only be pursued if the idea is consuming and compelling.

"And then I would go to the gas station late at night, and I would do this for both my car and my wife's car because I didn't want her going to the gas station at night."

This quote explains the personal experience that led Frank Mycroft to conceptualize Booster Fuels, highlighting the inconvenience and safety issues of traditional fueling methods.

The Role of Naivety in Entrepreneurship

  • Frank Mycroft discusses the importance of naivety for entrepreneurs, suggesting it's beneficial for certain types.
  • He differentiates between industry experts who innovate within their field and outsiders who bring fresh perspectives.
  • Naivety can empower entrepreneurs to challenge the status quo and overcome the skepticism of naysayers.
  • Frank believes that without naivety, many entrepreneurs wouldn't achieve the success they do.

"You need a lot of naivety to actually jump in and do that."

This quote emphasizes that naivety can be a driving force for entrepreneurs who are new to an industry, allowing them to take risks and innovate.

Misconceptions and the On-Demand Economy

  • Frank Mycroft addresses the comparison of Booster Fuels to Uber, stating that it's an oversimplification.
  • He clarifies that Booster Fuels aims to build something more substantial than what the term 'Uber for fuel' implies.
  • Frank discusses the broader on-demand economy and the emergence of numerous startups in the fuel delivery market.
  • He suggests that the on-demand model has its unique challenges and opportunities.

"I don't think anything could be farther from the truth of what we're trying to build."

This quote reveals Frank's view that comparing Booster Fuels to Uber doesn't accurately represent the company's vision and goals.## Misconceptions of "Uber for X" Business Models

  • The term "Uber for X" is often misinterpreted as just creating an app to deliver services at the push of a button.
  • True success, like that of Uber, requires a service to be better, faster, safer, and lower cost than existing options.
  • On-demand startups must focus on quality, convenience, safety, and cost-effectiveness to outperform incumbents.
  • The specifics of the market and the unique needs of consumers must be considered for a startup to disrupt effectively.
  • An example provided is the difference in urgency between needing a ride and needing fuel, which allows for operational efficiencies.

"I think that any entrepreneur, any starting company that is trying to simply apply what was a successful business model in a different space to their new vertical is setting themselves up for failure."

This quote emphasizes that merely copying a successful business model without adapting it to the unique challenges and needs of the new market is likely to lead to failure.

"For us to succeed, or for any on-demand startup to succeed, we have to be better quality, more convenient, safer, lower cost than the incumbent in our business."

The quote underscores the necessity for on-demand startups to surpass the existing market options in multiple dimensions to achieve success.

Unit Economics vs. Growth

  • Startups often face the challenge of balancing unit economics with the venture capital demand for rapid growth.
  • Investors play a crucial role in understanding and supporting the vision for startups, especially in low-margin industries like fuel.
  • Obsessing over customer service and price sensitivity is key to becoming a product that disrupts rather than caters only to a niche market.
  • The focus should be on healthy growth that builds operational efficiency and density, rather than just top-line growth.
  • Savings should be passed on to users to create a positive feedback cycle that fuels further growth.

"Let's focus on healthy growth that has the density to drive our hypothesis about how you can actually make money utilizing your assets, your people, your vehicles, your procurement funnels in the most efficient way, and then pass those savings on to users so that that positive feedback cycle just grows and grows and grows."

This quote highlights the importance of focusing on growth that enhances operational efficiency and asset utilization, which can lead to sustainable profitability.

The Tipping Point from Growth to Profitability

  • Determining the transition point from growth to a focus on profitability is crucial for on-demand startups.
  • Startups should aim for a scale five to ten times their minimum viable scale to allow for sufficient experimentation and adaptation.
  • Diverse markets and customer bases are necessary to test different approaches and achieve unit economic profitability.
  • Timing is essential when shifting focus to unit economics to avoid negative feedback loops and to foster controlled, thoughtful growth.

"Once you have about five to ten times, what is your minimum scale? Unit economics, you have enough that you can play with."

This quote suggests that startups need a significant buffer beyond their minimum viable scale before they can safely experiment with and focus on unit economics.

Regulation and Industry Challenges

  • Regulation can be a limiting factor for companies in the on-demand fuel sector.
  • Early and meaningful engagement with regulators is crucial for building partnerships and navigating regulatory challenges.
  • Different perspectives on dealing with regulation can influence a startup's ability to operate and succeed in the market.

"To win and build meaningful partnerships with regulators, you have to start the conversations very early."

The quote advises that proactive communication with regulators is essential for developing successful partnerships and overcoming regulatory hurdles.## Engagement with Regulators

  • Understanding the importance of regulators in new industries is crucial.
  • Regulators ensure a minimum standard for safety and quality of operations.
  • Educating and involving regulators early can lead to positive outcomes.
  • Finding regulator innovators and early adopters can help in piloting and demonstrating the benefits of a service.

"ving that the regulators are a very important part of the ecosystem and that you have to engage them very early in the discussion."

This quote emphasizes the necessity of including regulators as a part of the ecosystem right from the beginning of any venture in a regulated industry.

"When I look at our business, I have great confidence that mobile refueling can be vastly better than the status quo of gas stations."

Frank Mycroft expresses confidence in his business model, suggesting that mobile refueling is a superior alternative to traditional gas stations.

"We have to educate and then get the regulators involved."

Frank Mycroft implies that educating regulators about the business model is a prerequisite to their involvement and support.

"I also think that regulators are people too, and some of them are late adopters, but some of them are early adopters or even innovators."

Frank Mycroft acknowledges the human element in regulation, noting that some regulators are more open to innovation than others.

The Approach to Regulation in On-Demand Startups

  • There is a trend in on-demand startups to act first and deal with regulations later.
  • This approach can lead to conflicts with regulatory bodies.
  • Startups often find regulatory processes slow and cumbersome.
  • Working with less bureaucratic regulators can set a positive example for others.

"To regulation, not being kind of downheartened by ordering the uber move fast and break things and then try and worm a way out of it."

Harry Stebbings points out the often aggressive and reckless approach to regulation taken by on-demand startups, contrasting it with a more proactive and positive approach.

"Regulators have a hard time moving at the pace of startups."

Frank Mycroft explains the mismatch between the fast pace of startups and the slower, more deliberate pace of regulatory bodies.

"The model with which we create regulations is not one that easily allows for pilots to demonstrate safety and data."

Frank Mycroft criticizes the traditional regulatory model for not being conducive to innovative pilot projects that could demonstrate the safety and effectiveness of new services.

Fundraising Process and Investor Relations

  • Building relationships with investors is key, especially at the seed stage.
  • Investors look for good ideas, market timing, and trustworthy leaders.
  • Demonstrating progress towards growth, profitability, and user satisfaction is essential for Series A funding.
  • For Series A, investors look for evidence of product-market fit and customer retention.

"A lot of that had to do with the relationships that we had built over time with individuals."

Frank Mycroft attributes the success of their fundraising to the relationships they had cultivated with investors over time.

"At the series a, what you're looking for is pretty simple. It's okay. You raised money in your seed and you said you were going to do certain things for us."

Frank Mycroft outlines the expectations for startups at the Series A stage, which include meeting previously set targets and demonstrating progress.

"We also looked for an investor that was very much an entrepreneur's investor."

Frank Mycroft describes the ideal qualities of a Series A investor, including a deep understanding of the business and a passion for the industry.

Vision Beyond "Uber for Gas"

  • The company's vision extends beyond the initial concept of "Uber for gas."
  • There is a broader ambition to impact the company and the world in unique ways.

"But you have a pretty different vision for the company and the world, according to Angela, beyond Uber for gas."

Harry Stebbings alludes to a conversation with Angela, an investor, who has pointed out that the company's vision is more expansive than simply being an on-demand gas service.## Environmental Solutions and Challenges

  • Carbon neutral fuels are a significant environmental advancement.
  • Challenges in non-urban areas, like traffic and environmental impact, are severe and growing.
  • Carbon neutral gasoline can operate in existing vehicles and doesn't emit net CO2.
  • Distribution of clean fuels is difficult due to gas station infrastructure limitations.
  • Reinventing the supply chain of fuel allows direct channel distribution of clean fuels.

We've studied a lot of clean fuel solutions, and we've looked at a lot of data about electric car adoption and challenges in the Bay Area and other massive metroplexes where road congestion is a challenge.

This quote highlights the research into clean fuel solutions and the challenges faced in urban areas, emphasizing the need for innovation in fuel distribution and adoption.

Carbon neutral gasoline that can operate every vehicle out there that operates gasoline, but use carbon fuels built on a short carbon cycle and thus not emit any net CO2.

This quote explains the concept of carbon neutral gasoline and its environmental benefits, suggesting a solution to make existing vehicles more eco-friendly.

What we've done is completely reinvent the supply chain of fuel and cut out a middleman.

This quote indicates the innovative approach taken to solve the distribution problem of clean fuels, suggesting a new business model that could facilitate wider adoption.

Clean Fuel as a Tool for Climate Change

  • Clean fuel is not seen as competition but as a complementary solution.
  • Multiple approaches are necessary to address climate change.
  • There is potential for partnerships with large corporations to use carbon neutral fuels.

Not at all. I think that there are many tools. There is no one answer to solving a lot of the climate change challenges.

This quote emphasizes the view that clean fuel is part of a broader set of solutions needed to tackle climate change effectively.

I look forward to the day where we can partner with some of our large corporate customers and say, would you like to work with us so that all of your employees are using carbon neutral fuels in your vehicles?

This quote suggests a forward-looking strategy to create partnerships with corporations to promote the use of carbon neutral fuels, highlighting a proactive approach to environmental responsibility.

Quick Fire Round Responses

  • Favorite book is "Oh, The Places You'll Go" by Dr. Seuss, appreciated for its poetic take on life's challenges.
  • HBS provides a valuable transition for engineers into business, offering network and strategy tools.
  • Aspiring to be like Elon Musk for his innovative impact on the automotive and space industries.
  • Geographic and product line expansion for Booster Fuels is focused, with parking lots seen as underutilized assets.

Goodness, this is a tough one. But I've got a two year old now, and I've been reading her a book by Dr. Zeus called oh, the places you'll go.

This quote reveals a personal favorite book, highlighting the importance of life's journey and lessons, and the value of sharing that with family.

I would say a business school, especially one like HBS, is phenomenal for taking what may be raw technical talent and providing that layer of people and strategy and networks and connections to give you the tools to do what you're really passionate about.

This quote explains the benefits of attending a business school like HBS for engineers, particularly in terms of networking and strategy education.

It would have to be Elon Musk, what he's done with Tesla, what he's done with SpaceX.

This quote expresses admiration for Elon Musk's achievements in transforming industries and the desire to emulate his innovative mindset.

We view parking lots as an underutilized asset, especially in this day and age, with real estate prices being as high as they are and mobile technology allowing you to pinpoint locations very precisely.

This quote suggests a vision for the future use of parking lots, leveraging them as multifunctional spaces to provide various services to consumers.

Future of Booster Fuels

  • Focus is a core company value, with the aim to excel in a single area.
  • Consumer spending on fuel is significant, suggesting less need for rapid expansion.
  • Long-term vision includes transforming parking lots into service hubs for consumers.

One of our core goals or culture in the company is focus. And we believe in doing one thing and doing it one thing really, really well.

This quote underscores the company's philosophy of specialization and mastery in their field, suggesting a strategic approach to growth and service.

You can come back to your car from wherever you've been and it's filled with fuel, it's filled with groceries, it's been serviced, and all of these things have just happened for you while you're away.

This quote paints a picture of the company's future vision, where parking lots become centers for comprehensive, convenient services for car owners.

Show Appreciation and Conclusion

  • Enjoyment and appreciation expressed for the conversation with Frank.
  • Anticipation for the growth and success of Booster Fuels.
  • Invitation to follow the podcast and check out the sponsor, DesignCrowd.

Well, Frank, I can't tell you honestly how much I've enjoyed chatting today.

This quote conveys the host's genuine pleasure in the discussion, reflecting a successful and engaging interview.

I have to add how immensely excited I am for the future ahead with booster fuels.

This quote expresses enthusiasm for the company's future, indicating a positive outlook on its prospects and impact.

But before we leave you state do not forget to check out design crowd.

This quote serves as a reminder to the audience about the sponsor, highlighting an opportunity for listeners to engage with services offered by DesignCrowd.

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