We first met Dan Yates and Alex Laskey six years ago when Opower was piloting a new kind of energy efficiency program to just a few thousand homes by a small utility in Sacramento.
The program had a simple hypothesis: By giving people personalized data-driven insights about their energy consumption, you could help them save energy. Inspired by Dan and Alex’s enthusiasm and belief that Opower would one day become pervasive in the global utility industry, [New Enterprise Associates] led the their first round of institutional venture capital when the company had just 12 employees.
Since 2008, my partner Harry Weller and I have had the privilege of being a part of Opower’s journey, and watching Dan and Alex’s dream become a reality. Opower today reaches over 32 million households and businesses through 93 utilities in eight countries, analyzing over 100 billion meter reads a year. Their IPO milestone earlier this month will enable the company to continue to deploy its products around the world.
The utility industry has historically underinvested in technologies such as [customer relationship management] and consumer engagement (a company like Opower could not have been imagined just 10 years ago!) In recent years, the industry has changed, and utilities have come under increasing regulatory and environmental pressure to build fewer power plants, find cleaner sources of fuel and compete with new entrants such as solar installers. Around the world, utilities are embracing Opower to leverage advanced behavioral science, cloud computing and “Big Data” analytics to give us all a rich understanding of our energy use.
Opower was far from an overnight success. The company’s remarkable journey can be attributed to two incredible entrepreneurs who have largely defied and debunked conventional wisdom:
First, in an industry where billions of dollars are invested annually in research and development to supply the world with clean, cheap, renewable energy, Opower has always focused on transforming consumer demand through software. In doing so, they have become one of the largest “virtual power plants” in the world, generating nearly half the energy of the Hoover Dam The founders have always been contrarian thinkers, and were never ones to follow a herd.
Second, rather than attempt to disrupt the status quo, Dan and Alex made the hard decision early on to work side by side with utilities, state regulators and governments around the world, educating them on the benefits of embracing modern solutions such as cloud computing and behavioral science. Their early investment in government relations ultimately proved that regulators can and do play an important role in accelerating, not impeding, the adoption of new technology.
Finally, Opower has, from the very first day, been a “double bottom line” company, one whose economic and environmental results were aligned. Revenue generated by Opower results in energy savings for the planet, and ultimately reduces use of fossil fuel. The alignment of these incentives is extremely hard to find in any company, let alone one that is publicly traded.
Jon Sakoda is a partner at New Enterprise Associates. This column was excerpted from a blog post published April 4.