David Friedberg: Hey, everybody. Hey, everybody. Happy Sunday. And I'm hoping you're having a great holiday weekend.

SPEAKER_02: But if you need to get away with your family, we have a show for you. Yes. Or are you going on a bike ride? You might want to listen. Yeah, there you go. Exactly. On This Week in Climate Startups, I talked with Matt Dusterberg

Jason Calacanis: of OM Connect, which is a super interesting startup letting consumers save energy, but then also become almost a decentralized energy provider themselves. Fascinating, kind of complicated energy markets business, but comes down to at the end of the day,

SPEAKER_06: you get a $50 gift card from OM Connect for like turning off your air conditioning for an hour

SPEAKER_08: during peak usage. But first, we're going to do VC Sunday School, we're going to break down

David Friedberg: how to identify and answer the question, is this startup venture scale? This is an important topic for people investing in companies. But it's also happens to be a very important topic for founders to understand if their business is venture scale. And maybe that's why they're not clearing market

SPEAKER_10: with investors. It's going to be a great show. Enjoy your barbecues and stick with us.

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SPEAKER_15: what's your question this week? What are you thinking about? What are you learning?

SPEAKER_18: So a thing that has come up a lot is this question of, you know, as we talk about multiples and revenue

Jason Calacanis: potential this question fundamentally of like, what is or isn't a venture scale business. And our president, Mike Savino had said this kind of great thing. I think what you said is like the most painful decision for a VC is the strong $40 million business. That's like, you know, hey, kid, you got a great business here. But it's not venture scale. And doing that math, like, you know, the math that you do to figure out if company is better off, I don't know, just getting like a bank

David Friedberg: loan. Yeah, so in many cases, people think that venture capital is the funding source for their business. Venture capital is the funding source for a very small number of businesses in the world. This should be obvious to everybody. But it's not because they don't understand how venture capitalists get paid. And they don't understand why they exist in the world and why LPs give them money. So you will have somebody who's making a movie, or starting a hotel, or a pizzeria, or a chain of, you know, drive in say, I want to raise venture capital. And now venture capitalists are charged with getting returns that are, you know, two, three, four times the public markets. In other words, instead of making 7% on average a year, they're expected to make 15, 20, 25% every year in returns for their investors. And their investors are looking at this category of investing as a way to go after very high growth, some might argue violently high growing companies, very hard to have a company triple, triple, triple, double, double, double their revenue, a million dollars to 3 million to 9 million to 18 million to 36 million to 72 million. Like this is hard work doesn't happen for most businesses, certainly not for a chain of drive in movie theaters that you want to build or your album or your pizzeria, or your consumer package good company. So that's the first group of people. And it's pretty easy to explain this to them. We only invest in high growth software companies. This is not a software company, or this is a low margin company. So we can kind of take that first swath out of this small mom and pop businesses, non scalable real world businesses, that's 50% of the people who have this, um, you know, mistaken idea that venture capital is for them, they should build their businesses off of sweat equity, um, bootstrapping, uh, saving money for five years and then opening their restaurant, like a lot of restaurant tours will save money for a decade, then raise some money from folks,

SPEAKER_30: and then they'll open their restaurant or they'll open a version of the restaurant like a food truck, or instead of making their three or four movie series, they'll make a short film at Sundance, and then use a short film to make a bigger film. In other words, they do their own little

David Friedberg: incremental thing. Let's take all of those out of here. Pretty easy to explain to them why they're not venture, um, scale. Now there's a different group of people who are making software businesses, right? Yeah. And they're making marketplaces, but maybe even those are too niche. And that group of people, it's, you know, you kind of have to hand, you know, you kind of have to do the back of the envelope math yourself, do a bottom up ham total addressable market size, and really start to look at, okay, maybe this business does have good margins, it can make $10 million in revenue with $5 million in profits. But it can't get past 10 million, or it's not going to get past 10 million, it's got a natural ceiling. So if you're making the proverbial software for dentists, and you know how many dentists there are in the country, you can actually do what's called the bottom up ham. And so sometimes it's very easy to figure out what the market is for a piece of software, there are only so many dental offices in the United States or the English speaking world. And they can only afford to pay a certain amount for their software. And you know, that business can't get to $1 billion in revenue where

SPEAKER_36: Salesforce could or Twilio could or AWS could, or other SaaS software could. And so that's, that's

SPEAKER_11: the heart of discussion. And then that's just a function of where you invest if you're investing as an accelerator at two or $3 million implied valuation or a seed investor at 5 million. Okay, yeah, maybe you'd be happy with $100 million exit. But if you're investing at 50 million as a venture capitalist or 25 million, you're not happy with a ceiling of a two x.

SPEAKER_10: Mm hmm. That's an interesting point. Because you're saying there's different scales of venture

Jason Calacanis: scale, depending on your check size. Right? Maybe. Like, is there? I mean, I guess if you're saying,

David Friedberg: okay, yeah, if you're a late stage investor, or you do Series B, or even if you do Series A, you might look at a business very differently than Y Combinator, Techstars, Launch Accelerator, or a seed investor,

SPEAKER_30: or an angel investor, or friends and family. And because you might say, you know what, if the upper bounds of this investment is 20x, I can make that work in my portfolio. Whereas if the upper bound is 2x, same company, I got onto the company, when they had two customers paying $1,000 a month, each $24,000 a year in revenue, and I invested at $3 million valuation, if the company got sold for $100 million, I'd be 30x, I feel pretty good. Right? Whereas if I invested at $30 million,

David Friedberg: and I bought 10% of the company or 20% of the company, I could triple my money, maybe if the upper bound is $100 million exits, you have to look at what the potential exit is. And the potential exit will be based on the potential revenue and potential earnings. So you can actually just do math here. And sometimes you'll break it down for a founder, and you'll say, How many customers are there for this business? What's the most you could charge them. And then once you know that, you can say, Okay, well, here's what the evaluation would look like 10 times the top line revenue 15 times the earnings, the profits, 20 times the profits. Okay, you think you can build a $10 million business 10 times that is 100 million. Okay, you think you can have 5 million profits 3, 3 million profits is what you think 30% margin, great margin $3 million times 20 is a $60 million valuation. So this business is worth somewhere between 60 and 100 million, depending on who wants to buy it. Not a great business.

SPEAKER_45: And that's the venture scale issue. Can you get to a billion in revenue?

SPEAKER_47: Right? What's your what's the minimum x? That's acceptable when you start to do that, you know, the minimum multiple that's acceptable to be a venture. Great question.

Chamath Palihapitiya: I think it would be enough to return two times your fund. So your whole fund, your whole not your

David Friedberg: investment, not yet you need to have investments that can, you know, if you're going to take the time to invest in them, they got to return double the fund. So let's say your fund was $100 million fund. And you planned on having 30 names in it 30 companies in there. And you are on average going to invest 2 million in each of those companies that 60 million, you have some management fees coming out off the top, you know, maybe that's, you know, 10 million. And so then there's 30 million left to invest in the big winners. So the top five get another 6 million, something like that. Anyway, you put all that together, Molly. And each of those 30 companies has to have a chance. And let's say your average ownership was 10% each company, those 30 companies, those 30 names, Uber, Instacart, DoorDash, whatever you invested in, Airbnb, each one of those has to become worth, your position has to become worth 200 million, your position is 10%. 200 million times 10 is 2 billion. So in other words, you got to hit a $2 billion outcome in order to double your fund with each of those investments. So you can start to think of the multiple if you invested at 50, you would need to have a 40x. So I would say for a seed venture fund, they're looking for typically like that 50x 20 to 50x would be good.

SPEAKER_11: 40, 50, 60x is where you're doubling your fund, and you're returning two times your money with one of the investments, which is what you need to do at some point, you got to hit a winner,

David Friedberg: a big winner. And so that's why this business is hard. And if you double the size of your fund, okay, now you need to hit, you know, either 100x, or, you know, you have to put more money into each

SPEAKER_11: company, you know, it just becomes harder and harder. You have to be able to find companies that are willing to put that money to work, which is also kind of why the billion dollar funds or $2

David Friedberg: billion funds become really unwieldy. And they have, they have smaller returns than the bigger funds, because you need to hit gigantic outcomes like $10 billion unicorns. So how many $10 billion unicorns are there? So this is what the major LPs are looking at, when they examine our funds or other people's funds, what are the chances of you hitting another Uber? What are the chances of you hitting Dropbox or Airbnb? Okay, well, we know because we know the funds that did hit them, because we have all the data because we're all these in those funds too. Right. So if it can't hit venture scale, I think you need to take a deep pause and say, why are we wasting a bullet on this, we got a certain number of bullets in this gun. You know, we're gonna try to hit sniper shots here, we don't want to just shoot randomly in the air, we got to make everyone count. That's why venture capital can seem very cutthroat. Yeah, at least the most disciplined people, they don't want to make willy nilly investments to feel good about themselves, etc. And when you do see them do that, that's why it stands out so much.

SPEAKER_30: When somebody does make like an emotional investment in something weird. You're like, why would you waste a bullet on that? Like, what are you doing? Are you not disciplined?

David Friedberg: And you know, this is where this whole debate comes from venture scale? Is it venture scale? Can it

SPEAKER_11: return 40 times my money 20 times my money 100 times my money?

Chamath Palihapitiya: Yeah, it's a whole it's a mindset.

David Friedberg: Listen, lots of founders are loosey goosey with all these personal phone numbers flying around. They put them in company documents, they'll use them for sales calls and more. And this makes things really messy. Okay, you don't know who's calling. Is it a sales prospect? Is it somebody from your kid's school? Should you pick up? Should you not pick up? You don't want to get random calls at the summer barbecue, right? I'm doing multiple barbecues a week. I don't want to start getting the wrong calls in the wrong number, I want to be able to filter. And if you're the company, you want to keep that professional phone number. Again, if somebody leaves the team, you just want to look professional open phone can help you create business phone numbers. Right now. It's super easy. It works through an app on your smartphone or desktop, you just pick a number, you install the app and you're done. No need to carry two phones like back in the day. And by the way, we can tell you open phone is amazing because our sales team uses it every day. And open phone is so affordable at just $10 a month. That's their starting price, really affordable. But twist listeners can get an extra 20% off any plan for your first six months by signing up at open phone.com slash twist. And if you have an existing phone number with another service, no problem. Open phone will port that over for free for you. Easy peasy lemon squeezy. Head over to open phone.com slash twist today to get 20% off and to make your life easy.

Chamath Palihapitiya: It's a lens. And that lens has to be over one eye all the time.

SPEAKER_30: Well, and I think a lot like a monocle. Yeah. And I think a lot of

David Friedberg: you have a lot of founders who don't understand this math. So I think this lesson in BC Sunday School is I think you kind of understood this already. We're trying to get outlier returns. Yeah, but I think that's the issue. I think a lot of people are Yeah, having here is the founders don't understand this. So you're having this conversation with founders like you're not venture scale. And they're like, What do you mean? We we're going to change the world and said, you know, change the world for dentists. You know, like, there's 20 different ways for a dentist to manage their practice. And you are about one of these 20. It's a race to the bottom. It's

SPEAKER_30: not a big enough market. We can't waste our frankly, the VCs don't say they don't want to waste their time. Because that person building that dentist CRM system management software, they're like, I don't want to waste my time on this. I want to do something big and expansive that could be $10 billion. Not everybody's got that vision.

Jason Calacanis: Well, okay, then that leads to one quick follow on, which is a lot of a lot of companies at our stage will come and say I have this business now and it makes this much money. And then I want the next part of my business to make the venture scale money. And so

SPEAKER_30: why are we not going after that business now? Is that what the VC would say? Why are we not just doing? Like, why are we doing this mid step here? We have venture capital? Well, they want to give it

SPEAKER_68: to you for the second idea. They're like, I need your money to build the second idea.

SPEAKER_11: Right? So if you need the money to build the second idea, you should go to an accelerator, pursue that idea, get an MVP, then get some seed investors, then get two customers and then go there. Why are we

David Friedberg: wasting our time on this intermediary step to build it for dentists? If you really want to build it for

SPEAKER_30: all doctors and you want to do every an open doctor platform. Now if you presented it as this is our beachhead is dentists, the same software is just needs to have this customization pack written for

SPEAKER_11: orthodontists. And then we're going to go over to chiropractors. And then we're going to go over to, you know, whatever, you know, group of people, and we're going to just go right down the line to, you know, diabetes, doctors and nutritionists, and it's going to be a CRM for any medical practice. And so this is just our beachhead. And so you know, a lot of times founders will be scared, and

David Friedberg: they don't want to explain the big vision. They just want to explain the small one that they think they can accomplish, or maybe they're just not that ambitious. And so a lot of times that's what founders do they come with a small idea, they don't get funded, then this person comes in with a bigger idea, and they do get funded. And then there's all this hand wringing, like, wait, you, you gave this money to Theranos? Why did you do that? So she had the bigger idea. If you wanted to do to every blood test, not just one blood test. Now, in that case, it was BS. But some, I mean, this is

SPEAKER_11: the truth, like, I think a lot of people would rather go for the long crazy idea, because it has the outsized impact, then for the more modest idea. If she had come and said this, I'm going to just make something to test your, you know, glucose level or whatever, one singular test. People were like, ah, seems like a small business, you know, she, she presented a really grand vision, and

SPEAKER_59: she got a lot of money. So ventures, yeah, venture scale is the goal that can also be a trap.

David Friedberg: Yeah, some people can be BS artists. But you know, when Travis was talking about Uber, he was talking

SPEAKER_11: about as a logistics company, hey, we're going to do trucks, eventually, we're going to do food, we're going to do delivery, you know, we're going to do everything convenience stores, whatever needs to move from point A to point B, we're going to do it once we have this logistics network up, what else can people move from point A to point B is going to be the question. You know, we could do cannabis, we could do food, we could do food and cannabis, we could, you know, send you like, you know, from a 711, it could be closed from the gap, you know, it could be anything. And now they have started to do that, right. And so you start to see that vision in the second decade of Uber, it takes a long time. But that was the original pitch. We'll start with Lincoln Town cars, and you know, getting people who are affluent from the airport to their homes, for business trips, and then we'll go from there.

Jason Calacanis: Nice. Yeah. Um, well, actually, that's a nice place to segue a nice way to segue into this week in climate startups, because I interviewed a company that's like, let's replace energy.

SPEAKER_86: Yeah, there you go. Excellent.

Jason Calacanis: Or at least the way it is sold. Today on this week in climate startups, I have Matt Dusterberg, president and co founder of a company called Ohm Connect. It's an energy startup that plugs into smart devices and people's, you know, utility meters and forms and enables consumers to make better energy choices. Basically, it pays them to save energy. And the way Ohm Connect makes money is that it says, Okay, we've got this base of consumers, they saved five megawatt hours of energy, because we either remotely turned off their thermostats, which they let us do, or did some other energy savings. Now we can sell that five megawatt hours of energy on the open market and utilities will buy it. Yeah. So they enable these energy savings, and then they turn around and make money on the savings, which is fascinating. In 2020, there was that big August heat wave, which was the first time we had blackouts in California since like 2001. And Ohm Connect users reduced one gigawatt hour of electricity demand in California, which is enough to power the city of San Francisco for an hour. Super interesting. They just closed a $55 million series D and have raised about 100 million bucks.

SPEAKER_11: I didn't invest in this company. They launched at, uh, they, they did a company demo with us in 2014. I think Mike Savino, our president did personally invest in the company. Um, and this was in 2014. So eight years ago, they were one of the companies that presented at launch festival. Yeah. Um, which I started after I had the partnership with my guarantee for tech crunch 50, and we split up. He went and just did, uh, disrupt and I want to do launch festival. Um,

SPEAKER_92: and, uh, yeah, there you have it. Yeah. 2014.

SPEAKER_11: Amazing. Uh, super congratulations to them. And, uh, yeah, great company and congratulations on the money raised and I'm an idiot for not investing. Apparently hit them all. All right. Great job.

SPEAKER_94: We'll see. We'll see. Enjoy the interview. Enjoy.

SPEAKER_97: Can't wait. Matt Dusterberg is president and co-founder of Ohm Connect. Welcome to the show. Thanks for coming on. Thanks for having me, Molly. So I've been wanting to talk to you guys for a

SPEAKER_100: while because I'm just so interested in this model. Tell people who aren't familiar what you guys do.

SPEAKER_103: Yeah. Ohm Connect pays people to reduce their electricity one or two times a week. It's a very simple model. We ask people to turn down for an hour or two, you know, once a, once a week,

SPEAKER_97: and then we'll pay you for it. How, uh, first of all, how do you know? And then second, how did you get any investors to go for that? Just kidding. I know.

SPEAKER_103: That's a great question. Actually, we, we did secure one of our first investors at a launch

SPEAKER_106: conference. Um, so, you know, it all ties back to Jason. Uh, so big shout out to him. Um,

SPEAKER_103: things do. Yep. Um, yeah, so the model is a little bit interesting. Um, but, uh, to get into your question, which is how do we actually measure it? We're actually tapping into smart meters, which has been installed in about 90% of the nation,

SPEAKER_107: um, really through the American re reinvestment and recovery act back, um, in the days of Obama.

SPEAKER_109: Um, and then how do you tie into that? Like with an API, tell me a little bit more about how you get

SPEAKER_103: installed. Yeah. So one of the big, uh, requirements, as soon as a user signs up with us, we ask them to basically validate that we can get access to their utility meter data. And then, um, that's through utilities or third parties. And we're then able to look at historical data, look at what you usually use, and then compare that to what during an, an, you know, single event, what a person is using. So, you know, if a user usually uses one or two kilowatts,

SPEAKER_106: and they reduce to half a kilowatt, we can calculate precisely how much they're reducing.

SPEAKER_97: And then how do, um, they realize those, you know, when you say you pay them, what does that look like to the consumer?

SPEAKER_103: Yeah, we have a virtual currency called Watts and each one of those Watts, um, can be cashed out through PayPal or, um, Venmo. And then we can also give gift cards through Amazon or target, but we love to kind of really, um, try and get more devices into users' homes so we can automatically save for them as well as, um, encourage them to get prizes such as a trip to Disneyland.

SPEAKER_77: And does this work? Are you seeing a meaningful reduction in power usage as a result?

SPEAKER_103: Yeah, absolutely. We're seeing 20 to 30% reductions on our users on an everyday basis, which is pretty meaningful. If you look at other folks in our space, like Opower, they generally use about or reduce about 1% at all times.

SPEAKER_09: So what kind of devices would I have to have in my house in order to do this?

SPEAKER_97: Like, are you talking like a nest thermometer or are you talking about a smart meter

SPEAKER_117: from my utility, both all?

SPEAKER_118: Thermo thermostat, the thermostat. Sorry, thermostat. Thank you. My kids.

SPEAKER_103: Um, yeah, so you, you don't actually have to have any devices to start. Um, you can just do behavioral changes, which is, Hey, turn off your AC for an hour. Don't run the, uh, laundry or don't want the dishwasher. And that will actually usually net a couple of dollars. Um, the more advanced users do have devices. We do encourage that, um, smart plugs are on the order of five to $7. We're often able to give you the first one for free. Um, lot of our users are low to moderate income. So this is their first smart device in their home, which is really cool. We're introducing them to the whole new world of internet of things. Um, but then the ideal kind of the best device we like to have, uh, access to is thermostats. And that's really controlling about 50% of your energy usage at any given time. The really cool thing is people don't even notice. So we'll turn off your thermostat or turn down, um, or change the temperature set point by a few degrees. And they won't really notice. And we'll be able to save a lot of energy during some really critical times for the grid.

SPEAKER_18: Tell me, um, give me some stats.

SPEAKER_97: It looks like, uh, my notes say that in 2020, um, connect users reduced one gigawatt. Gigawatt hours of electricity demand in California during an August heat wave.

SPEAKER_103: Yeah, that was specifically during, if you may recall, there were some, uh, blackouts in California. Um, this was the first time we had blackouts since 2001. Um, it was a pretty big deal. Um, and I remember.

SPEAKER_128: It certainly rose to the kind of. Both of those actually, the 2001 and then these ones. Yeah.

SPEAKER_131: Yeah. It created some political shockwaves, which we're still kind of dealing with today.

SPEAKER_103: But, um, yeah, so we were called to dispatch our users. We dispatched about, um, a million user events, which means like, you know, a million user hours. And we saved about a gigawatt hour of reductions during that time. It was pretty fascinating, um, to see kind of the level of reductions that people were doing and have the consistency. People were writing in saying, Hey, look, you know, this is hard. I'm, you know, turning off my AC for three hours, but you know, I've got my fan and you know, I'm watching the Dodgers game on the iPad and it's all good because I'm making five, 10, $15 for just doing that. Yeah. Um, so they, they saw the, the tangible rewards directly and they were rewarded for doing so.

SPEAKER_97: I want to ask you more about incentivizing behavior change. Cause that is such a, you know, philosophical and fundamental part of tackling the climate crisis. But before I asked you that, I want to ask how you make money.

SPEAKER_106: That's, that's a great question.

SPEAKER_103: And that's something that's a little bit, um, more nuance and, you know, I've been my whole career in the energy sector, so it's, um, it's quite complicated, but just at a simple view of it is, um, we act as a generation unit. So instead of, uh, turning on a natural gas power plant, when the sun's not shining or the wind's not blowing, um, we get turned on instead. Um, and as we, as California and the rest of the world adopts more and more renewables, which is awesome, by the way, we're seeing phenomenal adoption rates of solar and wind. The challenge is that we're using electricity all the time. So when the sun has some clouds over it or, you know, it's not windy, there's volatility in the grid and usually that's solved by natural gas being turned on and off. And instead of having that turn on, they just ask, Hey, can ohm connect users reduce a little bit during that time. We do that and we get paid for doing that instead of having to build a new natural gas power plant.

SPEAKER_107: Um, and then we, we pass most of those savings on to our users. We've paid out over $20 million today.

SPEAKER_143: Before we get to the ad, it makes our team so happy to see our partners celebrate big wins. And I'm thrilled to hear about this huge funding round for our amazing partner. Oh, do really great stuff from Julian, the team there, especially in this crazier venture market. So congratulations. And speaking of the market right now, being capital efficient is more important than ever. You know that if you're an entrepreneur and one easy way for you to cut costs is to run all of your SaaS apps on one platform. So check out Odoo suite of business apps. Using Odoo means you don't have to have a bunch of different SaaS subscriptions. Everything you need is already on Odoo right now. All you have to do is turn it on when you're ready. And they only charge you for the apps you use. Odoo has over 40 main apps and over 16,000 apps from their open source community. All of this will streamline your business. No more issues transferring data back and forth. And you'll have one customer support contact across all of your apps, not 20. And here's the best part. Your first app is free forever. And Odoo is offering you $1,000 in credit on your first implementation pack. So go to odoo.com slash twist for $1,000 off.

SPEAKER_96: That's odoo.com slash twist. So you are being paid by utilities?

SPEAKER_145: In a roundabout way. Yeah.

SPEAKER_121: So in the energy sector, you may live in the Bay Area.

SPEAKER_103: I don't know, but you probably have PG&E as your utility. PG&E actually buys its power from the California ISO, which is an energy market. It's similar to the NASDAQ, for example. You can buy and sell stocks of Apple on the NASDAQ. You can buy and sell kilowatts of energy on the California ISO. So PG&E is going and buying it. We're selling it. We don't never really kind of see each other because it's all being kind of transacted through the market. But in a roundabout way, yes, PG&E is basically buying it from us.

SPEAKER_97: Right. So what you're essentially saying is we have all of these users. We have a measure and apparently a consistently measurable amount of energy savings that we can effectively sell as like excess electrons.

SPEAKER_103: That's right. Yes. Yeah. Excess. And it is really driven by a federal law that happened over the past few years. It actually got passed in 2013 and ratified in 2016 that basically said you can sell negawatts

SPEAKER_152: of power just like you would sell megawatts of power.

SPEAKER_117: That was N as in Nancy as opposed to M as in mama. That's right. Okay. Like negative. Yeah. Go Watts. Right.

SPEAKER_131: You can see me already going into the energy lingo, you know, negawatts, megawatts. I know. I'm just trying to keep up with the acronym soup.

SPEAKER_18: I'm in the radio, you know, universe too, where I'm like, okay, nobody's going to hear the difference between those two words.

SPEAKER_97: So let's, um, I mean, uh, energy selling and buying is so fascinating and so complicated. And it seems like it would really take somebody who came from that sector to understand that because what you are describing is it and what you have built is effectively a virtual power plant, right? You've said we have, we will be able to generate this much electricity through savings. How certain are you of the supply? You know, like, are you having to measure the excess electrons minute by minute, the negawatts?

SPEAKER_158: Yeah.

SPEAKER_18: I mean, you know, what if you don't do it that time? They're like, nah, I'm good. I got a bonus.

SPEAKER_103: That's a great question. And that is something that we're talking to the energy regulators, energy operators all the time about, and we don't always hit it exactly on the head. You know, if you dispatch a natural gas power plant for 50 megawatts, you'll get 50 megawatts, but sometimes you might get zero, you know, it may fail and there's a non-zero chance. When we dispatch for 50, you're either going to get between like 40 or 60. You don't really know which one. And so, you know, we're working with the energy operators to account for some of that very ability and have them get comfortable with that. And really figure out a way to create that flexibility in the grid as we bring on more renewables on the grid.

SPEAKER_18: I wonder, so like in terms of the reliability, though, if it's 40 to 60, if you say it's going

SPEAKER_97: to be 50 and it's between 40 and 60, how does that compare to say ERCOT in Texas?

SPEAKER_117: Like, it still seems like it might be more reliable than some of the energy supply that we've seen.

SPEAKER_103: Yeah. I mean, I think that's one of the biggest advantages of us having kind of such a distributed set of resources. There's very little chance that we'll get zero. Whereas there's the non-zero chance that a natural gas plant might fail or a wind turbine might freeze over. And so really what we're doing is we're diversifying our resource fleet to be resilient to extreme weather events, as well as this higher penetration of renewables. And we're seeing kind of this, this fight happening all the time. The renewables are so cost effective. They just want to plow more renewables into the grid.

SPEAKER_118: The grid operators are scared because they're like, I can't turn on the sun and I can't turn on wind.

SPEAKER_166: Right. So what do I do? And there are batteries, but not quite enough.

SPEAKER_104: Yeah. And there's a lot of competing uses. Like we should definitely get batteries in cars.

SPEAKER_103: There's, you know, more than enough electric vehicles that we need to get on the, on the roads. But if we can solve this problem, this flexibility in the, in the grid, we can really start to get to high, a hundred percent penetration renewables, which really solves a quarter of the entire carbon footprint. And so there is a pathway that I see in the next 10 to 15 years where we could get 25% of the carbon footprint fully under our control. And so it's a pretty exciting time, but it's also like, we need to move fast because, you know,

SPEAKER_131: the, the extreme weather events aren't stopping. Yeah.

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SPEAKER_47: So let's talk about scale.

SPEAKER_97: Let's go back to that gigawatt hour savings in 2020 for people who don't necessarily understand what we're talking about. Give us the perspective. I mean, is that a block? Is that a city?

SPEAKER_103: Yeah, it's about San Francisco, the city of San Francisco for about an hour. And so, you know, that's what we're trying to get off at scale. The idea is, can we get to terawatt hours? Now, we only have a couple hundred thousand users in California, New York, and Texas. We want to be millions of users, and we just raised a round of financing to do so.

SPEAKER_106: We're also expanding our footprint and bringing on a lot of strategic partners to do so as well.

SPEAKER_01: Yeah, we should note you just closed a $55 million Series D fundraising round a few weeks ago. Total investments close to $100 million overall.

SPEAKER_103: Yeah, that's right. And most of these are through strategic partnerships. So Sidewalk Infrastructure Partners, which is an affiliate of Alphabet. So Google, we have a deep relationship with Google through that. SunPower, and we're delivering solar and storage solutions for our users through SunPower. Carrier has been an amazing partner. They're bringing a fleet of kind of contractors that are installing HVAC systems into homes directly. So there's a whole ecosystem around the home and energy use management that we're partnering with the key folks in each of those verticals.

SPEAKER_09: And so what could this start to look like?

SPEAKER_97: I mean, I imagine, you know, goal one is onboard those millions of users with this behavior change specifically around energy. I have also, though, talked to, you know, providers of mobile charging infrastructure or makers of EVs who are talking about bi-directional charging. Like, it seems like this idea of distributed energy storage and generation is almost limitless.

SPEAKER_18: Well, maybe not limitless, but it seems like there's a lot of potential. Like you could really amp up the Watts.

SPEAKER_131: So absolutely amp up the Watts. I love it. I'm a little embarrassed by that.

SPEAKER_180: Well, we're all working with own connects, so just put it all in there.

SPEAKER_103: Yeah, absolutely. I mean, there's a tremendous amount of interest here. I think one of the areas that the energy sector has failed to date is thinking about who's adopting it. They've always had the mindset of we'll build it and they'll come. And they keep building these, you know, field of dreams with no one actually showing up because they're like, Oh, the customers don't want, you know, PG need to control my entire home. Why wouldn't they?

SPEAKER_118: You know, they're scratching their heads. Don't even get me started, man. Yeah. Paging John Oliver. Exactly, exactly.

SPEAKER_103: And so, you know, there's a whole spectrum of kind of the end user here. But, you know, really, what you need to do is engage them from the beginning, give them direct access to some of the value. Like, oh, I am going to turn off my AC from six to seven on a hot day because I'm earning $5 from it. Like, we have created a very nice cyclical loop where a user can take an action and directly get rewarded from it that we've not seen in the industry to date for some reason.

SPEAKER_117: There's a lot in that for some reason. I mean, what do you think that is?

SPEAKER_97: Is it just because certainly utilities are starting to send they're being a little more proactive. It's protectionist, it seems like in nature that they're being proactive about saying, like, please turn your air conditioning off during these hours because we can't keep the lights on if you don't. But what do you think it is about utilities?

SPEAKER_189: Is it just that it's a rate-based system? And so, frankly, the more you use, the more they get paid.

SPEAKER_103: Yeah, I mean, I wish I had, like, the silver bullet to figure that out. I mean, I think there's been a lot of folks studying why utilities have the inability to engage users that, by the way, they call them rate-based or rate payers.

SPEAKER_112: Rate payers, exactly. Or load.

SPEAKER_103: Even worse, I've seen them, you know, oh, yeah, or load. But you mean, you mean the, you know, Jane and John Doe, like, down the street, you're just going to call load?

SPEAKER_121: Yeah, of course, just the load. You know, it's just a different mindset. I'm sorry. I don't want to say it.

SPEAKER_156: But, like, really, we're all just big poops to you. Thanks a lot. Yeah, exactly. Yeah. Wow.

SPEAKER_194: I am a child. I'm sorry. Please, continue.

SPEAKER_121: Yeah, no, that's exactly it. And so, they are really, really, utilities and the incumbent in the energy sector is really, really good at delivering electricity every day, every hour of the week.

SPEAKER_103: They are not good at engaging people. And, in fact, they really want people to just go to sleep on them. They don't want to engage. And they just want you to pay your bill, you know, month in, month out. So, I think this has to really change the paradigm of how you think from the energy sector. How do you engage customers? You're asking them to give you access to your home, which is a very personal thing. We're literally in people's homes, turning off and on refrigerators, turning off and on your thermostat. In some cases, we have users with 20 plugs. We're turning off and on everything in your home for an hour, 15 minutes at a time. That's a personal event.

SPEAKER_106: And no offense to PG&E, but, like, that's just not something I think of when I think of PG&E.

SPEAKER_18: Talk to me about that consumer experience. Like, when people sign up for OhmConnect, I know they're not buying these devices from you, but do you have, what's the learning experience like and the kind of the onboarding?

SPEAKER_117: Like, do you have a kit? Order this. Yeah. You know, referral link from Amazon.

SPEAKER_104: I'm learning as fast as I can. And it's still drinking from Firehose eight years in. I'm the energy guy. My two co-founders are really consumer deep.

SPEAKER_103: And it was funny. We had a demographic that we originally targeted, which was like, oh, you know, you've got an EV. You've got solar. You're really energy conscious. Of course you'll come on. And there were some of those folks, but actually, they were kind of our worst users because they're already, like, super efficient. They're already kind of all, you know, fully renewable. We got, I remember back in 2016, we got a post by Mr. Money Mustache. He's a Twitter handle, like Mr. Money Mustache. And we literally, I was in a board meeting and, like, the numbers were going through the roof. I'm like, what's going on? I was like, oh, Mr. Money Mustache posted about us. And then we tapped into that, you know, it was Reddit beer money, like, earn $5 to buy you beer, just turn off your fridge. And then you really tap into a different demographic. They don't have solar. They don't have EVs. They probably haven't even ever installed a smart device in their home. But they're really sensitive to $50 to $100 a year in saving. And so, we're providing kind of this Uber or Airbnb service where you can actually monetize the latent value of your electricity within your home. So, $50 to $100 was really interesting to them. And we started tapping into them. But a lot of that was, you know, that's all my co-founders. That's not me from the energy sector. And we mainly hire out of the consumer expertise. Google, LinkedIn, Facebook, Zynga. So, you know, staying away from the energy sector as it comes to consumer engagement.

SPEAKER_18: I mean, yes. All due respect to you.

SPEAKER_97: It's great to be the only guy in the room who can talk about PPAs and BPPAs and virtual power plants and, you know, electrons and gigawatt hours. But, yeah. Well, I mean, this is honestly one of the things I find so compelling about energy efficiency. And when you talk to people in the climate space and, like, long-time journalists and activists, I mean, one of the things they'll tell you is the massive return on investment that you get from energy efficiency. And the sort of benefit that if you position it properly, it doesn't even matter if people, you know, I hate to use the word believe.

SPEAKER_01: But it doesn't even matter if they believe that the climate crisis is a climate crisis because who doesn't want to save money?

SPEAKER_103: That's right. And there's another aspect of that, which is really independence. I think, I don't know who it was, but maybe Volt Solar, but they did a study a few years back and, like, they were trying to figure out what's the biggest driver of solar adoption. And they cut it by, you know, a hundred different variables. And the one thing that was, like, the most indicative was NRA membership. National Rifle Association membership.

SPEAKER_211: Yeah. Right.

SPEAKER_103: Which seems, like, crazy. And when you think about it, like, this is kind of juxtaposition. But as you think about it from the lens of independence, I control this. It unlocks this other group. And it's really powerful because if we're thinking about tapping into millions of users, we need everyone to come on board and help us about the climate challenge we have today.

SPEAKER_01: Yeah, 100%.

SPEAKER_97: I mean, you can see the crossover with Preppers completely because ultimately this is about some version of decentralization, which arguably is why utilities might not go for things like this, right? Because death spiral. I'm not trying to draw you into anything that's going to get you in trouble. But you could imagine that that's part of, well, it could be an opportunity for utilities or it could end up being a threat long term.

SPEAKER_167: That's right. And, you know, it certainly disrupts the industry in a lot of different ways.

SPEAKER_156: Who is your competition? Aside from PG&E maybe.

SPEAKER_104: Yeah, I mean, I think you hit the nail on the head. But I think the status quo is really it.

SPEAKER_103: And I mean, if you've seen, you know, just today, there's a bill going through the California state legislature about kind of unlocking more funds to build more fossil fuel based power plants. And that is the status quo. That is, you know, even in California, a very progressive state. But they're so scared of keeping the lights on when the wind's not blowing and the sun's not shining that they're resorting to going back to exactly what we say don't do. Don't build natural gas power plants. And by the way, just so you know, natural gas prices has just, you know, skyrocketed over the past couple months. Right. So we're building gas power plants on this fuel that's super volatile, that has connections to Russia. Like, there's a lot of negative around all that, but it's just the status quo and this fear, really, of change.

SPEAKER_97: What kind of scale do you think you have to get to to be a really, really significant disruptor?

SPEAKER_103: Terawatt hour. Yeah. So it's about a thousand X where we are today. And we've seen kind of pathways to get there. And it has to be global. But, you know, as I mentioned earlier, like, I'm so excited. Like, we literally have a pathway to control a big portion of the climate crisis on our hands. And it's like, and that's driving, you know, we have very good team. We have an amazing team. We have very good investors. We have very good partners. Everyone who's all aligned on trying to figure out and tackle how do we get to 100% decarbonized, decentralized grid.

SPEAKER_97: Um, how did you, before, you know, one last question, how did you come to this and, and decide to get involved in, in kind of tackling, you know, it sounds like your old career in this innovative way.

SPEAKER_219: No more status quo for you.

SPEAKER_103: Yeah, no, I mean, I, I saw it from a different angle. I was an energy trader when I first got out of college and had a couple of $30 million portfolios. It was fun. It was also like, and kind of. Icky in a way that I'm making a lot of money out of these markets and no one else has access to it. I was only able to get access because I was a trader and like, it made no sense. So in a way, this was the idea of democratizing that the access of us to trade and get $30 million out of this market. I want to give directly the hands of these low and moderate income users. They are earning, you know, 50 to a hundred dollars a year for just turning off their lights or their AC for a couple hours a week.

SPEAKER_18: Matt Dusterberg is the president and co-founder of Ohm Connect. Where can people find you? Ohmconnect.com?

SPEAKER_103: That's right. www.ohmconnact.com

SPEAKER_161: Go check it out. Get that beer money, people. Thanks, Matt. Get that beer money. Get us to Terrawat. We got this.

SPEAKER_05: Okay, great show, everybody. Tune in on Tuesday. We're off tomorrow, Monday. Enjoy your July 4th. But we'll be back on Tuesday with a lot of news, I am sure.

Jason Calacanis: I am just assuming there's going to be a lot of news because there always is. So, yeah, hit that subscribe button on YouTube. You can join us live first thing Tuesday morning, 10 a.m. Pacific at thisweekinstartups.com slash YouTube.

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SPEAKER_05: Or you can join our Discord instance where people are talking and sharing memes. Thisweekinstartups.com slash Discord. We're not doing the Slack so much anymore.

SPEAKER_11: Too much spam over there and just too hard to manage Slack with 30 or 40,000 people in it. This doesn't really work for that use case.

SPEAKER_232: Yeah, kind of a hot mess.

David Friedberg: Now, if you are an early stage founder and you haven't gotten your business insurance, check out Embroker at Embroker.com slash twist. And they'll get you 20% better rates than the incumbents on your insurance. Founder.university starting up again our 12-week program. And that's free if you come to all 12 weeks and you learn how to build an MVP.

SPEAKER_11: Launch Accelerator. You can do a Google search for that or go to launch.co. We're always looking for companies to come to our Accelerator.

SPEAKER_01: And actually, since it's Sunday, thesyndicate.com slash climate. If you are a climate startup founder and you want to apply to our Climate Syndicate, you can go there.

Jason Calacanis: And, of course, if you're an accredited investor, you can join the syndicate and invest in these great companies that we're sourcing. Alongside of us, yes.

SPEAKER_13: And you can follow Molly at slash Molly Wood or you can follow me slash Jason on Twitter.

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SPEAKER_238: Bye-bye.