Why Daylight as a startup could fail, and what I'm doing about it

failing fast and early, to learn faster | lessons from Antora's co-founders

On my walks with Antora’s co-founders, I learned how they tried to kill their company at every chance they got in the early days.

They asked the hard questions they knew needed to have answers to—not just to answer investors, customers, or partners, but to answer to the reality of the market.

Don’t get me wrong—my mission is unwavering. Climate infrastructure needs to scale—whether it introduces itself as “re-industrialization” or “resilient manufacturing” or not for the next few years.

Asking the hard questions

I’m shedding my ego. Yes, I’ve made real progress with the product and customers. I’ve shipped the MVP and have iterated based on feedback. I am now equipped with more information and experience to get real.

What are all the ways the current product is not going to work? Or is there not a large enough market, now that we have actively tested in the real world?

This week, I wanted to pull myself back up from the weeds and look deeply: what are all the ways this could fail? What are the ways I’m building to protect against these risks?

Where I am at in building Daylight

It’s hard to believe it has already been 6 months of building full time. So much has happened, and I’ve grown immensely.

I’ve done 122 discovery chats with clean fuels and commodities producers, buyers, and investors. I have 226 people in my CRM. I’ve had meetings 3-4 with the world’ largest buyers and producers of SAF, demo’d, strong feedback, and individuals at these companies eager to join Daylight.

I’ve validated there is an acute problem in the intersection of financing and project development that is preventing us from manufacturing industry-critical commodities: clean jet fuel, cement, and steel.

I’m on V26 of the MVP. I have an active pilot underway with a fuels producer, which has been a wellspring of guidance, and many more buyers/producers in the pipeline.

Still, while there have been real highlights and traction to certain ways, there has not been a paid pilot. In my mind, and in “disciplined entrepreneurship”, that is the key signal people actually want what you’re building.

I’ve put down 5 figure contract proposals in front of prospects, and they were actually exploring it with their partners. They said, if you build this out as you outlined, then the pricing is reasonable given the value to the company. That is a really well disguised “no”—but I’ve learned every “no” is also a “no, because…”

“No, because…”

It’s the why not that contains valuable information.

This Thursday at 9:30PM, I was on a call with a Hong Kong-based airline. I spent hours preparing for this demo, and it was meeting #3 with their SAF Procurement Manager.

It started with a “no”. I turned that into a “no, because…” and we have a meeting #4. I am going to integrate their feedback, as I do, ahead of our next. At the same time, I need to get really honest.

Sometimes, the reasons why not are surmountable and within your control.

Sometimes, they are not.

Here I will get into why Daylight’s current product might fail, for reasons within and outside of our control.

While the macro problem is deeply felt and has been confirmed across industry veterans in infrastructure development from investors to commercial buyers—that doesn’t mean what the micro features I’m building and shipping can address the heart of it.

Key Risks

1. The market is not mature enough: Sustainable Aviation Fuel is a fast growing market, and certainly further along than other green commodities. The industry and executives have rallied around “making SAF happen” as compliance costs and losing social license to operate as are real risks if they don’t.

   1. This risk is not fully within our control in that if there are not SAF transactions happening, and they are stalled due to policy uncertainty, then software and reduced transactions costs will not alleviate this.

   2. Many projects will not COD (Commercial Operation Date) aka come online until 2030, and SAF procurement will not be as liquid until they do. Is this within our control? Daylight exists to pull markets for clean commodities forward, so perhaps this is the risk that should be taken as an opportunity. I went down rabbit holes on mitigating price risk this month too.

2. Data privacy and competitiveness: when I demo’d MVP V32 to the 8th producer, they raved. They wanted this to exist immediately. However, when I met with the CEO for the 3rd time he asked—how do ensure we can keep all of our project data under wraps? Airlines and producers want to keep their data very close to their chest. Other platforms like LevelTen Energy, a similar solution in the renewables space, have demonstrated RFP software can work.

   1. I accepted defeat and paid a lawyer to help review Daylight’s Policy Privacy and Terms of Service (you can get so far bootstrapping, but I want us to be buttoned up!!). Even with this legal documentation shared with the producer and airline, they said that it’s a small industry and word can get around.

   2. Airlines don’t want other airlines to know which producers they’re buying from until it’s official, and they certainly don’t want their pricing and contract structures to get out.

   3. Producers don’t want to share their project locations and feedstocks with just anyone. When your main opex is feedstock, that’s your competitive advantage. Showing other producers/airlines where your sourcing, if you have a good looking project, is an invitation for competition, especially at the early stage.

   4. Risk mitigant: provide enough value for the producers to join our procurement platform. Our thesis is generating analysis they would otherwise 50-80K.

3. Fuel procurement contract durations: for offtake contracts to be bankable, you need contracts on the order of 10-20 years, to cover the debt service of the project. Aka, if you are building a solar farm or a SAF factory with a project life of 20 years, a guaranteed buyer and revenue for those 20 years will make the bank happy.

   1. This is not how jet fuel procurement works. Typical fuel contracts are on the order of 1-3 years. Airlines and fuel buyers don’t want to be on the hook for pricing risk overtime or to lock in low prices.

   2. One of my first close customer relationships was with a major aircraft OEM who also procures jet fuel. I recently caught up with them in Houston. They contract SAF every couple years at this point. The volume will eventually ramp up, but 1-3 year contracts are not bankable and there needs to be a market intermediary (see ATOBA, a “competitor” or partner" to Daylight) ideally funded by government to help make double-sided auctions feasible.

These are a few of the key risks I’m actively working through, some of them within Daylight’s control, some of them outside.

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We’ll weather this storm together!

I’m adding a paywall for the content below primarily for IP reasons. These are raw, unfiltered notes from the frontlines of building. Most of y’all are friends—people I went to Harvard with, HUCEG peeps, or climate community members from over the years.

For friends and fam, send me a dm if you’re interested to read the rest and I’ll add you to the list!

Daylight savings is coming up next Sunday. Stay tuned for more updates then. If you enjoyed this version of Daylight’s field notes, dm me on what was helpful and what was not!

I’m grateful for our community as we weather this crazy storm in environmental history. There is resilience in community.

Happy Sunday ☀️