THE TORCH is an interview series from Entrepreneurs for Impact. We profile CEOs mitigating climate change. Our goal is to highlight their work and inspire others. As we deal with multiple crisis, from COVID and racial injustice to climate change and economic recession, we need some of this positive light in what seem like dark times. Onward and upward.
Why did you decide to start Voltus? Who’s played a critical role in the formation of its mission?
The quick answer is that we founded Voltus with the desire to do well by doing good. Our incredibly talented leadership team, whose skills intersect energy, the environment, and economics, have also had a critical role in shaping the development and mission of Voltus.
You’ve been an entrepreneur before, so what led you to return and do it again?
I started as a management consultant and then moved into the energy industry. I was one of the founding members of a company called Enernoc where we developed the building blocks of distributed energy. During that time, there were a lot of firsts, whether it was developing technologies, taking products to market, or general commercialization. My business partner Matt Plante and I relied heavily on that experience when starting Voltus. Changing regulatory and market dynamics made the time ripe for returning to the distributed energy arena.
What does Voltus do and who are your customers?
The foundation of Voltus’s business model is demand response, and our customers are large industrial, commercial, and institutional energy consumers. Using our technology platform, we identify and enroll these organizations’ operational flexibility and behind-the-meter energy assets in demand response programs, creating new revenue streams for these businesses. We also optimize their energy consumption for energy savings. When we receive a signal from grid operators, we prompt our portfolio of customers to curtail their electricity usage based on a predefined plan we developed together. In exchange, our customers receive financial compensation.
There is obviously a lot of attention paid to wind and solar and the supply side, but you all manage the demand side. Can you speak to the value of this demand side management?
We consider distributed energy resources to be the connective tissue of the energy transition. There is a significant need to balance grid supply and demand, particularly with the rise of intermittent renewables like wind and solar. Demand side management, perhaps in the form of onsite or behind the meter battery storage, can provide that balance.
Our business is the aggregation of many different times of distributed energy resources, including electric vehicles, onsite generation, and other technologies. There is a clear analogy from the computing paradigm of the 1970s and 1980s. Just like then, we are moving away from large centralized power plants to these distributed resources. These distributed resources, the equivalent of mobile computing, just in a much more agile and dynamic environment, are enabling the energy transition.
How do you differentiate from your competition?
Voltus’s differentiation is simply an economic one. There are many other demand response aggregators, but our model is to simply make money for our customers using pre existing assets. We never want to be a distraction to a customer’s core business. The reality is that nobody ever got fired for not signing up for demand response. It's an important point. Energy is often out of sight and out of mind; it just works. Presenting a complicated picture to clients regarding their energy use or asking them to take more financial risk is not a winning customer acquisition strategy. We simply deliver more dollars at no cost and no risk and with technology that makes their participation easy.
Do you help with third party financing or is that outside of your core offering?
Occasionally we do, but our core business is really about using existing onsite assets. There is a growing interest in this kind of financing product, but there are a number of existing providers in that vein.
What has COVID meant for your business?
Really not that much. When we started the company in 2016, we started it to be a virtual company in recognition of a couple of factors. First, as a digital company you have unlimited access to talent, without geographic restrictions. Second, our clients are by definition all over the world. Having a central office never made a lot of sense.
What keeps you up at night?
There are two things that keep me up at night. The first is talent. It's incumbent upon us to recruit, inspire, and motivate talented young professionals and develop that talent. As you know, nobody graduates from the University of North Carolina or Duke University with a degree in demand side management. There are some clean energy programs that are popping up, but it's still pretty rare. We put a lot of energy into these efforts to make sure we can recruit the best talent out there.
We describe our team members as “Voltans.” Voltans are the brightest, grittiest, and good(est) of folks. Every day our team of Voltans apply their talents to deliver “Less Energy, More Cash” to our customers while making the world a better place. “Doing well by doing good” drives their passion to unlock the potential of our technology to deliver cash to the bottom line of our customers.
The second is the regulatory environment. Energy is the most regulated industry in the world. Right now, we deal with a very fragmented regulatory picture, with 3,300 U.S. regulated electric utilities and a whole host of energy retailers and power providers. Many of these regulators are politically appointed, and we’ve seen lately there can be a lot of change rather quickly in that arena. As an example, consider the changing appointments of FERC Chairs and other political positions that have a very real impact on our business.
You recently took in $25M in Series B funding. What did that process look like for you all?
We were fortunate to have had a pretty good experience with capital raising. From our first email to money in the bank, it took just 42 days. This is incredibly fast relative to the many months required for many capital raises. A lot of that has to do with the recent popularity of our sector among VC’s and other capital providers, with the energy transition being widely considered one of, if not, the largest wealth creation opportunities of our lifetime.
Another factor that played into that experience is the simplicity of our business model. The negative working capital nature of our business is unique. We are paid by the grid operators to perform demand side reduction prior to our revenue sharing with our industrial and commercial customers. Beyond that it's a recurring revenue, high-margin business that creates a network, with the increasing return dynamics inherent in networks.
Raising this money has allowed us to pour fuel on the fire and accelerate our growth as a platform that connects these high intensity energy users with the grid operators. That growth has resulted in the expansion of our engineering and data analytics teams. We are hiring dozens of new team members right now. If folks are interested in applying, they can visit this website: www.voltus.co/join-us
Can you talk about some challenges that you’ve faced whether with Voltus or other ventures to dispel the notion of overnight entrepreneurial success?
My scar tissue is thick. I like to describe my learning process as failing twice at everything that I do. Building a company is a labor of love. If you don’t love it, you’re likely going to fail at it. If you’ve ever loved somebody, you know there's a lot of heartache involved. The beginning of any venture is difficult because you want to hire the best people possible, but you don’t have much money to pay them. Fortunately, we had a team that was really familiar with each other at the start, so we were able to avoid that problem this time around.
I’d describe our first market entry at Voltus as a challenge and learning experience. We first attacked the MISO market with the belief that the market clearing prices and competitive playing field were conducive to success. We went all in and sold a number of clients only to have the market price drop dramatically, with market clearing prices at 5% of what we expected. We kind of had a moment of panic, repeatedly hitting F5 on the keyboard to hopefully see different results. We were able to remain calm and keep the longer term vision in mind, with the knowledge that one day we would be able to look back and chuckle. Of course, there have been other struggles along the way, but there is certainly something to be said about the valley of death that hardens and improves your resiliency.
Do you have any quotes, books, podcasts that you’d recommend?
My favorite is the "Man in the Arena" by Teddy Roosevelt.
"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."
I read this quote once a week. I really believe there is something to be said about the person that is willing to put in the blood, sweat, and tears to pursue their dream and work on something they believe in. Ultimately, I think that’s what life is about.
As far as industry-specific books, there are plenty that I’d recommend, including The Grid, which does a great job of explaining the complexity of the electricity grid and its balkanization and relative stagnation since the days of Nikola Tesla. More generally, I appreciate books that do a good job of explaining the complexity of our energy systems, as the hardest part of doing well by doing good, is doing well financially. In that vein I’d recommend Influence by Robert Cialdini which we often rely on when developing the principles of our business. It helps us understand and keep front of mind the questions of “What are we trying to convince others to do that they haven’t done already?” and “How are we going to change their minds?”
Do you have any personal habits that keep you energized and motivated?
I have a number of things. I think it's really important to recognize that you can't help others unless you help yourself -- you know the whole notion of putting your own oxygen mask on before putting the mask on others. Helping others is very important to me so I take care to abide by this lesson. For me, it's a combination of staying active physically from running, biking, strength training. I also believe in transcendental meditation to calm my mind and help with insomnia. And then beyond that, it's making sure that I spend time with my kids and partner Fran who are very special to me. At times, it's easy to blend your personal and professional lives, but it's essential to be present in all of these moments and know when to unplug.
Do you have any closing advice for other entrepreneurs?
I think if you believe in doing well by doing good, and you’re ready to be on this path, then it's very important to keep the bigger picture in mind. There will inevitably be challenges, but if you can stay in contact with your vision, while respecting the trials and tribulations of the journey, you’ll have a chance to be successful.
Photo from Jason Rosewell on Unsplash