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September 3rd, 2010
4 weeks ago, Green Light Distrikt Boston had an event, ‘Energy Efficiency: Why is the Low Hanging Fruit so High?” The speakers discussed what they’re working on and why, if energy efficiency (EE) has such high returns, the adoption of these behaviors and technologies seems to be happening at a snails pace.
Based on the presentations there were 6 things that I learned why EE adoption is not happening quickly enough. If you need a refresher on the those 6 items see the previous link.
Using these 6 points, I’ll outline the 6 characteristics of what a BLOCKBUSTER company addressing homeowner and small business energy efficiency would and/should look like. If you’re a VC and reading this, your welcome, you can pay me later.
Here’s the 6 characteristics of the perfect EE company I would invest in, start, or work with.
1) The technology is simple, works, and is cheap. You need the technology to be ‘in the game’ but the technology itself won’t solve the problem. The winning combination will be a mix of technology + service. This is why, as Rob Day points out, angels will be the heros of EE technology space because the technology is so cheap to build. It is the selling, servicing, monitoring, and changing of behaviors that will make or break a great EE company.
2) A team focused on branding and marketing. Once you have the technology; branding and selling become the most important aspect. Thus, if I were looking to invest in a company and the founder was a strong headed, tech guy who wouldn’t listen, I would stay far, far away. These types tend to think that if the technology works, units will sell. This is wrong.
3) Minimizes transaction costs. A huge aspect of the EE industry is that the ROI might be great, but the transaction cost is too high. See Brian Hayden’s post on doing some EE work in his house to understand why. Thus, any concept that can minimize the transaction cost will do well. I’m seeing a 1 Block off the Grid, but for energy efficiency. An example would be, grouping a whole neighborhood of $5,000 contracts and then letting contractors bid on the entire $500,000 pool. By pooling a bunch of contracts together you’ll make the process of doing upgrades a million times easier for both the contractor and homeowner.
4) Makes it simple. To go along with transaction costs, making the process simple and providing small property owners a clear path is essential. On the west coast, Energy Savvy is working on a platform that provides homeowners the needed information and contacts to local, qualified contractors. I haven’t used the service, but the concept of simplifying is key. There are many Boston area companies focusing on this too, notables include Next Step Living, Green Guild Boston, and New Generation Energy who presented at our first Cleantech Kingpins.
5) Makes energy efficiency fun. Without a doubt the best way to change behavior in the long term is to make it fun. I would invest in a company that focused on ‘EE fun’. The only concept that comes to mind is the Moolah Maker from Energy Circle. It turns EE into a game for kids, I don’t know how well they’re doing, but the concept is sound. Just in cased you’re not convinced making it fun is essential to changing behavior, see the below clip.
6) Social Pressure. B2B is all about money, and that is pretty straight forward, EnerNOC, Ameresco, Nexamp, Comverge all understand this and are forming great business models around doing it. Selling EE to homeowners and small business is ALL ABOUT symbols, not money. So a concept that uses social pressure and symbols (think solar panels, Prada bags, Priuses) is onto something as well. Wattzy is a great example of a company that is using a simple piece of technology as well as social pressure to make people understand their bills and complete with one another to lower them.
There you have it folks, the 6 characteristics of an EE company I would look at when starting one, investing in one, or working with on.
Did I miss anything? Can you think of any companies and organizations that using these techniques that I forgot to mention?
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