Four New Energy Stars: A Greenstart Demo Day Preview

10/30/12Follow @wroush

Shouldn’t there be an easy online place to share a bike, the same way people are sharing their cars and apartments these days? Shouldn’t it be easier and cheaper for homeowners to put solar panels on their rooftops? Shouldn’t it be possible to control your electrical plugs, your fridge, your thermostat, or your home security system from your smartphone? Shouldn’t small power-generating plants have access to the same type of software that helps large utilities run more efficiently?

Those are the kinds of questions being asked by the entrepreneurs behind the four startups graduating today from Greenstart, the San Francisco-based accelerator and design studio for digital cleantech companies. And you can bet their companies have answers.

In a “demo day” session scheduled to start at 4:00 pm Pacific time today, the founders of Liquid, Root3, People Power, and Kiwi will explain to investors and journalists why their startups deserve attention and funding, and how they plan to change the way people get around town or manage their homes and energy-generating facilities. To get a preview of their presentations, I met with the CEOs of the four companies last week; my extended profiles are below.

“What we’re seeing is that entrepreneurs are really excited about this connection between energy and software, and so there is an increasing number of good-quality companies out there, and I think this group is representative of that,” Greenstart co-founder Mitch Lowe told me in an interview yesterday. “All four are pretty well poised to do some great things.”

Mitch Lowe addressing the audience at Greenstart's May 2012 Demo Day

Mitch Lowe addressing the audience at Greenstart's May 2012 Demo Day

Lowe has some news of his own to announce today: Greenstart, which invests $115,000 in each startup, is switching to a rolling investment model, with companies entering and leaving the program on their own schedules. That’s a big change from the “cohort” model that’s been the tradition in the accelerator community; under that model, startups are admitted in semiannual batches and move through a curriculum of presentations and mentor meetings together, climaxing in a final demo day like today’s.

“We continue to veer farther and farther away from the accelerator model, though we are certainly taking the best pieces from that,” Lowe says. “When you’re building an ecosystem around the companies—the design studio aspect and the teaching and helping with the business model and product design and brand design—it just doesn’t scale. When we’re throwing all of our resources into these companies, we can only work with three or four at any one time. So rather than having six months a year when we’re not working with any companies, we are switching the model so we can work with 12 to 15 companies a year and spread it out evenly.”

Companies will still be in residence with Greenstart for about three months, but new companies will only be admitted as old ones graduate, Lowe says.

“We are trying to take the best elements of an accelerator and the best elements of a seed-stage venture firm and the best elements of a design studio and see what that looks like,” Lowe says. “It’s as if Y Combinator and Ideo had a baby in cleantech.”

Greenstart will still have Demo Days for graduating companies in the future, but they’ll be smaller and more specialized, Lowe says.

Meanwhile, here’s a look at the cohort exiting the program today.

Root3

Many big universities, hospitals, and corporations have something in common: they’re off the grid. In the electrical sense, anyway. They’ve got their own energy plants that generate heating, cooling, and electricity for their campuses. They build these plants to save money (and stay independent of the big utilities), but the truth is that smaller energy plants also waste a lot of money, because they typically aren’t equipped with the same caliber of predictive analytics and management software long used by big utilities.

These small operators “have all this data coming in from their machines, they know energy prices, they know the weather patterns, but they can never figure out the right machines to use—which ones to run and which ones to turn off,” says Archisman “Archie” Gupta. “So they are usually super conservative and they leave them on all the time. My software helps them figure out how much energy to generate, on which machines.”

A former systems engineer, regional planner, and grid analyst at the Michigan-based transmission company ITC Holdings, Gupta developed the idea for Root3 while he was working toward an MBA at Chicago’s Booth School of Business. He says companies like ABB, General Electric, and Siemens have been supplying energy system management software to large utilities for years—at a cost of tens of millions of dollars per utility. “We found a better way to do it for these small utilities,” he says. “We collect the existing data, we pass it through our very sophisticated predictive analytics and optimization algorithms, and we show the operator what they need to do.”

These algorithms were originally developed at Stanford as part of the university’s planned $438 million overhaul of its campus energy system. Gupta obtained an exclusive license to commercialize the technology. Root3, which has raised $450,000 in seed funding from Greenstart and friends-and-family investors, has now spent seven months generalizing the software and moving it to cloud-based servers, where customers will be able to access it for a monthly subscription fee.

The software doesn’t actually control a campus’s energy systems, although that may come in the future. For now, it just feeds operators advice about which systems to activate and which to shut down based on weather predictions, historical usage patterns, and other factors, Gupta says. The University of Chicago is Root3’s first beta test site. “After running the beta for a month they saved nearly 10 percent on their energy costs,” Gupta says. “They recently converted to being a full customer, and we have three other sites that have signed up. So, out of the 22,000 central-energy plants in the U.S., we have 21,996 to go.”

Liquid

If you had to sum up the company in three words, you’d say that Liquid is “Airbnb for bikes.” But while Airbnb certainly helped to pioneer the sharing economy that Liquid is now building upon, it’s not a perfect analogy, says co-founder Will Dennis. For one thing, the matching problem is harder for bikes. Apartment owners who use Airbnb tend to know way in advance that their place will be available during a given week. Bike owners might want to rent out their bikes for an hour, or a day, and might make the decision at the last minute.

“There’s more predictability with apartments, or even cars,” says Dennis. “So we are learning that our system has to be a little bit smarter and a little bit more flexible.”

Liquid—which was known until last week as Spinlister—got its start in early 2011 when Dennis, a student at the University of Southern California, decided to spend the summer in New York City. “I wanted a bike while I was there and I didn’t see any options other than buying and reselling on Craiglist,” he says. “At the same time, all these other collaborative consumption marketplaces were emerging, like Airbnb and Getaround. I said ‘I’m sure there’s something out there for bicycles,’ but I didn’t see anything.”

Dennis and his technical co-founder Jeff Noh, a Berkeley graduate, coded up a website and launched their bike-sharing service in New York and San Francisco on April 1. In September, they went national. “We now have 550 bikes available for rent around the country,” Dennis says. “What’s beautiful about our business model is that it’s infrastructure-light and location-independent. Anyone who wants to list a bike in Liquid, if it’s a good-looking bike at a reasonable price, we can make that live.”

Dennis says he thinks Liquid will appeal to three main types of renters: People who have friends visiting and want to rent a bike for them; serious cyclists who want to get in a ride while on a business trip; and travelers who want to explore a city by bicycle. The site offers a diverse range of bikes, from a $5/day cruiser up to a $130/day titanium cyclocross bike, and rental periods can vary from hours to weeks.

Liquid earns money by charging 25 percent commission on each rental, split between the owner and the renter. (On a $100 rental, in other words, the renter would pay $112.50, the owner would get $87.50, and Liquid would keep the difference.) That share is enough for Liquid to cover insurance and payment-processing fees, “and ideally become a profitable and successful business, which is good for everyone in the system,” Dennis says.

The main problem Liquid is trying to solve—and the inspiration for the name—is the illiquidity of the bike market. “There are 100 million bikes in the U.S. and over a billion in the world, but only about 0.3 percent of them are being ridden on any given day, so there is this huge oversupply,” Dennis says. “At the same time, you see rental shops and public bike-sharing systems that are very expensive. We help people find a higher-quality bike at a more affordable price.”

Kiwi

If you’d like to install solar panels on your roof but you don’t want to shell out the cash that would be required, some new options have come along in the last few years. Companies like SunRun, Solar City, and Sungevity will install a system on your home at their own cost then either lease the equipment to you, or sell you the power it produces. But to Nick Yecke, there’s a big catch with these kinds of offers. “The price of panels has dropped by about 50 percent in the last two years, but lease payments have stayed the same,” he says. “Homeowners aren’t seeing the value of these reduced costs. As panel prices come down, traditional ownership starts to make more sense.”

Making it cheaper and more convenient for homeowners to own their own rooftop solar installations is what Yecke’s company Kiwi (known until recently as PV Power) is all about. This week the company is introducing a product called the “JuiceBox” that combines four components and services that Yecke says DIY solar owners would otherwise have to find on their own.

The first is software that helps a homeowner figure out whether installing solar makes financial sense for them, and if so, how many panels will fit on their rooftop. Second is the equipment itself: panels, racks, and the associated electrical equipment, all shipped to the homeowner’s driveway.

Third is a connection with a local installer who can put the system together. Fourth, and perhaps most important, is a financing option to cover the cost of the other three parts. Financing ranges from $12,000 to $24,000, depending on the desired power output (3 to 5 kilowatts).

While a deal with a leasing company like Solar City or Sungevity usually doesn’t require homeowners to put any money down up front, Yecke argues that their customers are forgoing big savings. “In the lease model, for an average system the lifetime value will be a net of $12,000”—that’s the amount homeowners will save after their lease payments, primarily through lower utility bills. “For a 5-kilowatt JuiceBox that number is $80,000. That’s a $68,000 discrepancy, and as a homeowner I wouldn’t want to leave that on the table.” (The $80,000 figure assumes that installing panels will increase a home’s resale value by a certain percentage, and also includes a $7,500 federal solar-installation rebate that would otherwise go to the leasing company.)

The JuiceBox will be available to start in two pilot markets: Denver and Colorado Springs, CO, both cities where PV Power—an installation contracting company that Yecke founded in 2009—has an existing network of solar contractors. The company expects to expand to other cities eventually, Yecke says. It can afford to offer JuiceBox at reasonable prices because its own operating costs are low. “We operate virtually and we don’t own the labor or the materials,” Yecke says. “But I’ve seen the profit margins for some of the large solar [installation] companies, and we are directly in line with those guys.”

People Power

Gene Wang, the founder and CEO of People Power, is probably the most senior, experienced, and successful entrepreneur ever to come through Greenstart’s program. His last startup, Bitfone, had grown into the world’s largest mobile device management company before it was acquired by Hewlett-Packard in 2007 for $150 million. At Bitfone, Wang led the creation of software that helped companies manage their employee’s mobile phones; at People Power he’s creating software to help companies manage a huge panoply of other devices that are gradually being hooked up to the Internet.

“We’re shifting from a world of 5 billion computers to about 50 billion devices of every shape and use, from thermostats to door locks to smart cars to healthcare equipment to smart plugs and beyond,” Wang says. “The ‘Internet of Things’ will be comprised of all these connected objects, and our job is to turn these everyday objects into apps that you can control.”

Wang’s logic is that nearly every piece of hardware that’s sensing or acting upon the world will, sooner or later, be connected to the Internet and controlled from some kind of mobile interface—witness the Nest smart thermostat, for example. But not every manufacturer will want to learn all of the tricks needed to build friendly, engaging, usable apps to control these devices. That’s where People Power comes in—it will handle the networking and application layers so manufacturers don’t have to.

“At bottom we’ve build this whole open-source API [application programming interface] so that with any type or flavor of device, even things we’ve never heard of before, their manufacturers can easily connect up to our cloud and get the benefits of mobile access,” Wang says.

One of People Power’s first partnerships is with Monster, the maker of high-end cables, headphones, power systems, and other components for audio systems. At the International Consumer Electronics Show in Las Vegas in January, Monster announced a “PowerControl” smart plug that monitors the energy use of appliances such as home entertainment center components and can be programmed to power these devices up or down at various times during the day. The plug, which will ship later this year, is controlled through a smartphone app called “Monster Power Control” that was built by People Power, Wang says.

Future apps from People Power will address areas like home security and monitoring, energy management, and home healthcare and wellness. “The common themes are, you connect up a device, you surf in on a mobile phone, you apply analytics, you take various actions to add convenience and comfort or reduce spending and add efficiency, or make yourself more safe and secure,” Wang says. “It’s all built around this vision of the Internet of Things.”

So why would someone with Wang’s background be interested in joining an accelerator? “One of the things about Greenstart that really impressed me and, in my view, distinguished them from other types of organizations like this, is their strong focus on user experience and user-centered design,” Wang says. “We’re really pleased to be working with David Merkoski.” Merkoski is the former Frogdesign creative director who joined Greenstart as its chief creative officer last spring.

“In my five previous startups I’ve really learned that it’s all about the user experience,” Wang says. “So the way they think about this is the way we think about this.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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