1 00:00:15,316 --> 00:00:24,196 Speaker 1: Pushkin. We're in the middle of this profound energy transition. 2 00:00:24,796 --> 00:00:28,116 Speaker 1: Solar panels and wind farms are now cheaper to build 3 00:00:28,116 --> 00:00:31,516 Speaker 1: and install than fossil fuel power plants, and they're coming 4 00:00:31,596 --> 00:00:36,836 Speaker 1: online fast. This is great news, But there is always 5 00:00:36,836 --> 00:00:40,876 Speaker 1: a butt in stories about renewable energy, and that butt 6 00:00:40,996 --> 00:00:44,276 Speaker 1: is often about the intermittent nature of a lot of 7 00:00:44,316 --> 00:00:47,716 Speaker 1: renewable power. What do you do when everybody's running their 8 00:00:47,716 --> 00:00:50,356 Speaker 1: air conditioner, but it's a cloudy day with no wind, 9 00:00:50,476 --> 00:00:53,996 Speaker 1: and you can't generate enough power to meet demand. What 10 00:00:54,116 --> 00:00:56,596 Speaker 1: you do right now is you fire up what's called 11 00:00:56,676 --> 00:01:01,796 Speaker 1: a peaker plant, an expensive, inefficient fossil fuel power plant, 12 00:01:01,836 --> 00:01:04,276 Speaker 1: to make up that difference. If only there were a 13 00:01:04,316 --> 00:01:06,516 Speaker 1: way to get people to cut back on their power 14 00:01:06,636 --> 00:01:09,836 Speaker 1: usage right at those moments, just enough to spare us 15 00:01:10,036 --> 00:01:13,196 Speaker 1: from having to turn on those crappy peaker power plants. 16 00:01:17,676 --> 00:01:20,156 Speaker 1: I'm Jacob Goldstein and this is What's Your Problem, the 17 00:01:20,156 --> 00:01:23,276 Speaker 1: show where entrepreneurs and engineers talk about how they're going 18 00:01:23,316 --> 00:01:25,876 Speaker 1: to change the world once they solve a few problems. 19 00:01:26,316 --> 00:01:30,036 Speaker 1: My guest today is Matt Dusterburg, co founder and president 20 00:01:30,116 --> 00:01:33,236 Speaker 1: of ome Connected by the Way. That's o HM, the 21 00:01:33,356 --> 00:01:36,636 Speaker 1: unit of electrical resistance. They're in the power business, not 22 00:01:36,676 --> 00:01:40,596 Speaker 1: the meditation business. Matt's problem is this, how do you 23 00:01:40,636 --> 00:01:43,716 Speaker 1: build a business around getting people to save energy, not 24 00:01:43,836 --> 00:01:46,316 Speaker 1: all that much and not all the time, but just 25 00:01:46,596 --> 00:01:51,156 Speaker 1: enough at just the right time. The answer, spoiler alert, 26 00:01:51,436 --> 00:01:57,316 Speaker 1: you give them money. So I think to really understand 27 00:01:57,356 --> 00:01:59,556 Speaker 1: how your company works, I think we should start with 28 00:02:00,116 --> 00:02:05,036 Speaker 1: just how does the market for electricity in California work? 29 00:02:05,076 --> 00:02:07,636 Speaker 1: Because it's it's weird and dynamic, and it's sort of 30 00:02:07,836 --> 00:02:10,916 Speaker 1: keyed up to your whole business. Right, Yes, that's right, 31 00:02:10,956 --> 00:02:14,196 Speaker 1: and it really the inception of this came from deregulation, 32 00:02:14,316 --> 00:02:17,476 Speaker 1: which happened in the early two thousands, and it basically 33 00:02:17,516 --> 00:02:20,756 Speaker 1: created a market where you can buy and sell electricity 34 00:02:21,636 --> 00:02:25,476 Speaker 1: on a daily or hourly basis. So you can go out, 35 00:02:25,516 --> 00:02:28,916 Speaker 1: if you're a market participant, and buy ten megawatt hours 36 00:02:28,956 --> 00:02:31,716 Speaker 1: of electricity at a certain price, and that's a market 37 00:02:31,716 --> 00:02:34,596 Speaker 1: define price. Now, what happened to be clear that the 38 00:02:34,676 --> 00:02:38,236 Speaker 1: people buying that are our power companies are PGN E 39 00:02:38,356 --> 00:02:41,876 Speaker 1: or whoever the company is supplying power to people in California. Right, Yes, 40 00:02:42,036 --> 00:02:46,196 Speaker 1: so PGN SDG are the usual suspects, and the price 41 00:02:46,276 --> 00:02:49,556 Speaker 1: swings wildly right. I think this is a key maybe 42 00:02:49,636 --> 00:02:54,316 Speaker 1: the key thing for your business is how different demand 43 00:02:54,436 --> 00:02:57,756 Speaker 1: is across even one day, and how big of a 44 00:02:57,836 --> 00:03:01,436 Speaker 1: deal that difference is. Right, That's absolutely right. And this 45 00:03:01,516 --> 00:03:03,996 Speaker 1: is something that no one really understands because most people 46 00:03:04,036 --> 00:03:07,876 Speaker 1: are just paying a flat rate, but prices vary on 47 00:03:07,916 --> 00:03:11,196 Speaker 1: the order of force sense per kilowatt hour, which is 48 00:03:11,236 --> 00:03:14,676 Speaker 1: what normally it is. It's a eighty to ninety percent 49 00:03:14,676 --> 00:03:17,636 Speaker 1: of the time, it's four sense to a dollar a 50 00:03:17,716 --> 00:03:22,276 Speaker 1: kilowatt hour. So it just very quickly between those and 51 00:03:22,356 --> 00:03:25,756 Speaker 1: in fifteen minute periods. So it would be like if 52 00:03:25,836 --> 00:03:28,196 Speaker 1: you were like you bought gas on the way to 53 00:03:28,236 --> 00:03:30,276 Speaker 1: work and it was four bucks a gallon, and then 54 00:03:30,356 --> 00:03:31,876 Speaker 1: you looked on the way home from work and it 55 00:03:31,916 --> 00:03:34,356 Speaker 1: was one hundred dollars a gallon, right, and then a 56 00:03:34,356 --> 00:03:35,996 Speaker 1: few hours later it was back to four. Like it's 57 00:03:36,076 --> 00:03:40,036 Speaker 1: that intense, it's that wide of a jump. That's absolutely right. 58 00:03:40,116 --> 00:03:43,676 Speaker 1: And one really interesting stat is twenty percent of all 59 00:03:43,796 --> 00:03:47,156 Speaker 1: costs come from only one percent of the hours. And 60 00:03:47,316 --> 00:03:51,156 Speaker 1: just to be clear, why is it that the cost 61 00:03:51,236 --> 00:03:54,156 Speaker 1: behaves that way, Like other things don't work that way? 62 00:03:54,316 --> 00:03:57,316 Speaker 1: What is it about electrical power that makes these peak 63 00:03:57,436 --> 00:04:02,556 Speaker 1: demand moments so expensive. So at certain moments in the 64 00:04:02,636 --> 00:04:05,836 Speaker 1: grid you would need to actually turn on a new 65 00:04:05,916 --> 00:04:09,116 Speaker 1: gas power plant. It has to basically turn on from 66 00:04:09,196 --> 00:04:13,036 Speaker 1: not running at all to turning on to deliver fifty maguats, 67 00:04:13,316 --> 00:04:16,556 Speaker 1: and often these are peaker power plants, and a peaker 68 00:04:16,596 --> 00:04:20,516 Speaker 1: power plant it's super inefficient, it's like one third of 69 00:04:20,516 --> 00:04:24,716 Speaker 1: the efficiency of regular power plants, and it's really pollutive, 70 00:04:24,876 --> 00:04:28,676 Speaker 1: it's really bad for the environment, and it's really expensive. 71 00:04:28,796 --> 00:04:31,276 Speaker 1: Presumably that's why the price goes up so much because 72 00:04:31,276 --> 00:04:34,836 Speaker 1: you have to buy that really inefficient, really expensive power 73 00:04:35,236 --> 00:04:38,036 Speaker 1: because at this particular moment, all of the power that 74 00:04:38,076 --> 00:04:41,276 Speaker 1: the like regular power plants and all of our beautiful 75 00:04:41,476 --> 00:04:44,916 Speaker 1: renewable things can create is being used up. So if 76 00:04:44,956 --> 00:04:48,516 Speaker 1: you have to run your AC at seventy degrees, we're 77 00:04:48,516 --> 00:04:52,356 Speaker 1: gonna have to turn on this terrible power plant for you. Yes, 78 00:04:52,636 --> 00:04:55,916 Speaker 1: that is the most expensive, most pollutive, and you can 79 00:04:55,996 --> 00:04:58,196 Speaker 1: think of it. Only fifty hours a year does this 80 00:04:58,236 --> 00:05:02,676 Speaker 1: power plant run, So they're basically compensating all of that 81 00:05:03,036 --> 00:05:05,876 Speaker 1: infrastructure for fifty hours a year of running. You have 82 00:05:05,956 --> 00:05:08,076 Speaker 1: to pay for that whole plant even though it only 83 00:05:08,116 --> 00:05:10,436 Speaker 1: runs fifty hours. Here and the reason they have to 84 00:05:10,476 --> 00:05:12,476 Speaker 1: have it is because we live in a world where 85 00:05:12,476 --> 00:05:14,836 Speaker 1: we expect that we will always have power, and so 86 00:05:14,916 --> 00:05:16,476 Speaker 1: they have to be like, well, we'll have this one 87 00:05:16,556 --> 00:05:18,636 Speaker 1: for those crazy days when it's really hot and everybody's 88 00:05:18,676 --> 00:05:23,156 Speaker 1: running the ac. Yes, that's right, And I mean, is 89 00:05:23,196 --> 00:05:26,436 Speaker 1: it right that I feel like the point of your 90 00:05:26,476 --> 00:05:28,916 Speaker 1: company is, at least at the beginning for us not 91 00:05:28,956 --> 00:05:31,276 Speaker 1: to have to do that, Like that's kind of where 92 00:05:31,276 --> 00:05:34,356 Speaker 1: I start when I think about I'm connected? Is that right? Yeah, 93 00:05:34,396 --> 00:05:36,916 Speaker 1: So we're creating a little bit more flexibility in the 94 00:05:36,996 --> 00:05:39,116 Speaker 1: man's side, But I would say we are a few 95 00:05:39,196 --> 00:05:42,036 Speaker 1: years behind. We needed to be there as soon as 96 00:05:42,076 --> 00:05:45,476 Speaker 1: solar and wind started coming into the grid at the 97 00:05:45,516 --> 00:05:49,636 Speaker 1: scale look's been going in. And is that because solar 98 00:05:49,676 --> 00:05:52,956 Speaker 1: and wind are less reliable than fossil fuel. So now 99 00:05:52,996 --> 00:05:55,116 Speaker 1: not only do we have to worry about the peaker plants, 100 00:05:55,116 --> 00:05:57,996 Speaker 1: but we have to worry about when there's clouds or 101 00:05:58,036 --> 00:06:00,996 Speaker 1: when the wind stops blowing. That's exactly right. When there's 102 00:06:01,036 --> 00:06:05,636 Speaker 1: clouds coming through or the wind stops blowing, you need 103 00:06:05,676 --> 00:06:09,196 Speaker 1: power somewhere, and so we can either turn on of 104 00:06:09,236 --> 00:06:12,836 Speaker 1: those really expensive power plants, or we can just say, hey, 105 00:06:12,956 --> 00:06:16,316 Speaker 1: let's delay our start of our dishwasher washing machine for 106 00:06:16,316 --> 00:06:19,196 Speaker 1: fifteen minutes or an hour, not turn that on, and 107 00:06:19,236 --> 00:06:22,036 Speaker 1: then actually, we'll pay the people who are reducing or 108 00:06:22,076 --> 00:06:24,996 Speaker 1: not turning on their appliances, you know, a portion of 109 00:06:25,036 --> 00:06:28,916 Speaker 1: those proceeds. So let's let's get in a little bit 110 00:06:28,956 --> 00:06:31,676 Speaker 1: to how that works. Right. So, if you're a power company, 111 00:06:31,716 --> 00:06:34,356 Speaker 1: you're in this market where you are paying for power 112 00:06:34,876 --> 00:06:38,996 Speaker 1: from different whatever owners of power plants and solar cells 113 00:06:38,996 --> 00:06:40,716 Speaker 1: and whatever. You're paying for power all the time, the 114 00:06:40,756 --> 00:06:43,276 Speaker 1: price is going up and down, and now there is 115 00:06:43,316 --> 00:06:47,716 Speaker 1: this way where they can also pay people to not consume. 116 00:06:47,756 --> 00:06:50,396 Speaker 1: And it's kind of the same, right, your PG and 117 00:06:50,516 --> 00:06:53,756 Speaker 1: your utility. And you have this moment when you're like, well, 118 00:06:53,956 --> 00:06:56,516 Speaker 1: either we got to turn on this super inefficient, super 119 00:06:56,556 --> 00:06:59,156 Speaker 1: expensive peaker plant, or we got to figure out a 120 00:06:59,156 --> 00:07:01,076 Speaker 1: way for a bunch of people to turn down our 121 00:07:01,116 --> 00:07:04,236 Speaker 1: conditioners in the next half hour, right, And that's where 122 00:07:04,276 --> 00:07:07,996 Speaker 1: you commit yes, and we want to basically replace those 123 00:07:08,196 --> 00:07:13,196 Speaker 1: really really at inefficient expensive power plants, which is smarter 124 00:07:13,436 --> 00:07:17,876 Speaker 1: usage of electricity. And one of the big technology breakthroughs 125 00:07:17,876 --> 00:07:20,436 Speaker 1: that has happened over the past ten years is smart devices, 126 00:07:20,476 --> 00:07:22,556 Speaker 1: So we can do that for people without them having 127 00:07:22,556 --> 00:07:27,076 Speaker 1: to even think about it. So there is this moment whatever, 128 00:07:27,116 --> 00:07:29,436 Speaker 1: even on a fairly normal day, right, a normal summer day, 129 00:07:29,436 --> 00:07:31,956 Speaker 1: everybody's coming home from work, they're all turning on their conditioners. 130 00:07:31,996 --> 00:07:35,876 Speaker 1: The power company says, oh, we're screwed. We got to 131 00:07:35,916 --> 00:07:39,356 Speaker 1: turn on this really expensive, really polluting plant unless we 132 00:07:39,396 --> 00:07:41,516 Speaker 1: can get people to suddenly in the next half hour 133 00:07:41,596 --> 00:07:43,436 Speaker 1: useless energy. And that's where you come in, right, And 134 00:07:43,476 --> 00:07:46,036 Speaker 1: so can you just walk me through what happens at 135 00:07:46,076 --> 00:07:48,436 Speaker 1: that moment? Like how does the money go? How does 136 00:07:48,436 --> 00:07:52,676 Speaker 1: it work? Yeah, so we have bids ride alongside as 137 00:07:52,756 --> 00:07:56,516 Speaker 1: gas power plants, these really inefficient, expensive power plants. They're 138 00:07:56,516 --> 00:07:59,076 Speaker 1: coming in. Say they come in at nine hundred dollars 139 00:07:59,076 --> 00:08:01,596 Speaker 1: a megawatar, and we bid in at eight hundred and 140 00:08:01,676 --> 00:08:05,436 Speaker 1: ninety nine dollars megalodar. That's negoets. You're doing little air 141 00:08:05,556 --> 00:08:10,356 Speaker 1: quotes that negowats like the opposite of a goat, negative watts. 142 00:08:11,076 --> 00:08:14,596 Speaker 1: That's exactly right. And so most power plants generate megwats. 143 00:08:14,596 --> 00:08:17,076 Speaker 1: A gas power plant will generate fifty megawatts at a time. 144 00:08:17,436 --> 00:08:22,076 Speaker 1: We generate fifty negowats. And the federal Energy Regulatory Commission 145 00:08:22,156 --> 00:08:26,516 Speaker 1: or FIRK has said that basically, one negowat should equal 146 00:08:26,596 --> 00:08:29,876 Speaker 1: one megawat, and so we're just generating a bunch of negwats. 147 00:08:30,076 --> 00:08:33,316 Speaker 1: The grid will actually say, hey, we want ome connect 148 00:08:33,396 --> 00:08:37,716 Speaker 1: to dispatch those fifty negowatts, and then that relieves the 149 00:08:37,796 --> 00:08:40,356 Speaker 1: grid need and we don't actually have to turn on 150 00:08:40,476 --> 00:08:43,636 Speaker 1: that peaker power plant. So the power company gives you 151 00:08:43,676 --> 00:08:47,196 Speaker 1: eight hundred and ninety nine dollars, and you turn around 152 00:08:47,196 --> 00:08:51,276 Speaker 1: and you say to your customers, turn off the air 153 00:08:51,316 --> 00:08:53,476 Speaker 1: conditioner and we'll split this eight hundred and ninety nine 154 00:08:53,476 --> 00:08:56,956 Speaker 1: dollars among you. Basically, yes, that's exactly it. So we 155 00:08:57,036 --> 00:08:59,716 Speaker 1: get paid eight ninety nine. We pass most of those 156 00:08:59,716 --> 00:09:04,396 Speaker 1: savings to our users and pay them for actually reducing 157 00:09:04,516 --> 00:09:08,836 Speaker 1: their electricity. So I love the idea that the power 158 00:09:09,476 --> 00:09:12,796 Speaker 1: is willing to pay for negative power in the same 159 00:09:12,836 --> 00:09:14,796 Speaker 1: way they're willing to pay for power, because it's kind 160 00:09:14,796 --> 00:09:19,036 Speaker 1: of the same to them. There's something a little weird 161 00:09:19,076 --> 00:09:22,156 Speaker 1: about it, right on some level, Like I mean, this 162 00:09:22,276 --> 00:09:23,956 Speaker 1: is obvious, and I'm sure there's an answer for it, 163 00:09:23,996 --> 00:09:26,636 Speaker 1: but like, how do they know I would have used 164 00:09:26,716 --> 00:09:28,636 Speaker 1: the power? Couldn't I be like, give me some money, 165 00:09:28,716 --> 00:09:30,676 Speaker 1: or else I'll turn on my air conditioner like I'm 166 00:09:30,756 --> 00:09:33,156 Speaker 1: weirdly sort of holding you hostage or something like. How 167 00:09:33,156 --> 00:09:37,316 Speaker 1: does that part work? We use what they call a 168 00:09:37,436 --> 00:09:41,756 Speaker 1: counterfactual or baseline to say what you would have normally used. 169 00:09:41,756 --> 00:09:43,876 Speaker 1: And it's a very simple calculation. It looks at your 170 00:09:43,956 --> 00:09:48,276 Speaker 1: last ten days, whether it's weekdays or weekends and says, okay, 171 00:09:48,276 --> 00:09:51,236 Speaker 1: on average, you use from seven to eight pm two 172 00:09:51,316 --> 00:09:54,836 Speaker 1: kilo lots. If you then use one kilo lot, I 173 00:09:54,836 --> 00:09:57,956 Speaker 1: can actually take the one kilowat savings that you made 174 00:09:57,996 --> 00:10:00,836 Speaker 1: and sell it into the market. So let's just talk 175 00:10:00,836 --> 00:10:03,596 Speaker 1: a little bit about about your company, kind of how 176 00:10:03,596 --> 00:10:06,956 Speaker 1: big it is, where it is, like, how big is 177 00:10:06,956 --> 00:10:08,876 Speaker 1: the company? How many? How many customers do you have? 178 00:10:09,196 --> 00:10:10,956 Speaker 1: What are the metrics use? We are about a quarter 179 00:10:10,996 --> 00:10:16,076 Speaker 1: million customers across the US and Australia, and they are 180 00:10:16,116 --> 00:10:18,636 Speaker 1: reducing on the order of two hundred to two hundred 181 00:10:18,676 --> 00:10:21,876 Speaker 1: and fifty megawatts at any given moment, and so that's 182 00:10:21,916 --> 00:10:26,476 Speaker 1: really between three to five power plants that we've removed 183 00:10:26,676 --> 00:10:29,916 Speaker 1: from the grid. You said across the US, I mean, 184 00:10:29,956 --> 00:10:33,796 Speaker 1: I know electricity markets are relatively local, right, and weird 185 00:10:33,956 --> 00:10:37,676 Speaker 1: and regulated and jankie in all these ways. So are 186 00:10:37,676 --> 00:10:40,156 Speaker 1: you everywhere in the US or where are you? Weird 187 00:10:40,356 --> 00:10:44,996 Speaker 1: is like the perfect word for electricity markets. So right 188 00:10:45,036 --> 00:10:47,756 Speaker 1: now we're in California, Texas, and New York because it 189 00:10:47,876 --> 00:10:51,356 Speaker 1: is weird, and those are single state markets. There's some 190 00:10:51,476 --> 00:10:54,836 Speaker 1: other areas that we're looking into, like Baltimore and Chicago, 191 00:10:55,636 --> 00:10:58,876 Speaker 1: and we'll be across the entire US with a lightweight 192 00:10:58,996 --> 00:11:01,996 Speaker 1: version of our product in the next year. And so, 193 00:11:02,156 --> 00:11:05,676 Speaker 1: I mean, how often is it that you say to 194 00:11:05,716 --> 00:11:08,076 Speaker 1: your customers, Hey, if you use less power right now, 195 00:11:08,116 --> 00:11:12,196 Speaker 1: we'll give you some money. We're doing a day, Yeah, 196 00:11:12,236 --> 00:11:15,156 Speaker 1: we're doing events with our customers fifty to one hundred 197 00:11:15,156 --> 00:11:17,316 Speaker 1: times a year, so one or two times a week. 198 00:11:17,636 --> 00:11:20,716 Speaker 1: We asked people to reduce what's a normal amount of 199 00:11:20,716 --> 00:11:22,876 Speaker 1: money somebody would get paid to turn off the air 200 00:11:22,956 --> 00:11:25,916 Speaker 1: condition or for an hour. Yeah, it varies, but we 201 00:11:25,996 --> 00:11:30,396 Speaker 1: have anywhere between fifty dollars a year to three hundred 202 00:11:30,436 --> 00:11:32,996 Speaker 1: dollars a year being earned on our platform. If you 203 00:11:33,116 --> 00:11:36,196 Speaker 1: have say so per year means like per per event, 204 00:11:36,276 --> 00:11:39,076 Speaker 1: it's like a buck. It's like turn off your condition 205 00:11:39,116 --> 00:11:41,356 Speaker 1: for an hour, We'll give you a dollar. That's right 206 00:11:41,876 --> 00:11:44,396 Speaker 1: up over time. Yeah, a good good metric is about 207 00:11:44,436 --> 00:11:47,156 Speaker 1: a dollar per event per hour. So there was this 208 00:11:47,236 --> 00:11:50,556 Speaker 1: day recently in California that made national news. There was 209 00:11:50,596 --> 00:11:53,196 Speaker 1: a heat wave, everybody was cranking the ac looked like 210 00:11:53,196 --> 00:11:55,636 Speaker 1: they were going to be blackouts. The state just wasn't 211 00:11:55,636 --> 00:11:57,956 Speaker 1: going to be able to provide enough power. And then 212 00:11:58,076 --> 00:12:02,316 Speaker 1: the state sent text messages to whatever to everybody saying basically, 213 00:12:02,596 --> 00:12:05,476 Speaker 1: you better save energy right now or we're going down, 214 00:12:06,076 --> 00:12:09,516 Speaker 1: and kind of surprisingly it worked right. Consumption went down 215 00:12:09,556 --> 00:12:12,316 Speaker 1: really fast and there were no blackouts. So this was, 216 00:12:12,436 --> 00:12:15,116 Speaker 1: you know, a big news story. But I'm curious what 217 00:12:15,196 --> 00:12:17,756 Speaker 1: was happening at your company that day, Like, how was 218 00:12:17,796 --> 00:12:21,876 Speaker 1: it for you? Well, we were in full war room mode. 219 00:12:21,916 --> 00:12:25,236 Speaker 1: We actually had daily war room meetings at eight am 220 00:12:25,276 --> 00:12:27,876 Speaker 1: at two pm. We were trying to figure out what 221 00:12:27,996 --> 00:12:31,556 Speaker 1: else we could give to our customers to really incentivize 222 00:12:31,596 --> 00:12:34,916 Speaker 1: them to reduce more. We ended up giving away a 223 00:12:34,996 --> 00:12:38,476 Speaker 1: fifty dollars Amazon gift card if you were able to 224 00:12:38,476 --> 00:12:40,956 Speaker 1: reduce ninety percent of your electricity or more, and ninety 225 00:12:40,996 --> 00:12:43,436 Speaker 1: percent is really hard. Only a few members of the 226 00:12:43,436 --> 00:12:45,716 Speaker 1: own Connect team were able to hit it, but we 227 00:12:45,836 --> 00:12:49,796 Speaker 1: had thousands of own connect members being able to step 228 00:12:49,916 --> 00:12:52,556 Speaker 1: up and really turn off a lot of their electricity 229 00:12:52,716 --> 00:12:56,756 Speaker 1: to earn that fifty dollars gift card. I mean ninety percent. 230 00:12:56,796 --> 00:12:58,756 Speaker 1: You got to unplug the fridge. That seems like the 231 00:12:58,796 --> 00:13:00,836 Speaker 1: big one, right, Like I'll turn off the lights, I'll 232 00:13:00,836 --> 00:13:03,596 Speaker 1: turn off the AC, but unplugging the fridge seems Yes. 233 00:13:03,876 --> 00:13:06,556 Speaker 1: My mom is in the same boat, which is like, 234 00:13:06,636 --> 00:13:08,756 Speaker 1: I can't believe you would tell me to unplug the fridge, 235 00:13:09,516 --> 00:13:14,276 Speaker 1: but yes, Actually, the FDA allows or specifies that fridges 236 00:13:14,276 --> 00:13:16,516 Speaker 1: can be off for six hours. We're turning off for 237 00:13:16,516 --> 00:13:18,316 Speaker 1: about two or three hours of time, and we are 238 00:13:18,356 --> 00:13:20,956 Speaker 1: turning off hundreds of thousands of refrigerators across the state. 239 00:13:21,876 --> 00:13:25,596 Speaker 1: So you're offering a fifty dollars Amazon gift card to 240 00:13:25,596 --> 00:13:27,716 Speaker 1: anybody who could do that for just a few hours 241 00:13:27,716 --> 00:13:30,596 Speaker 1: at that key moment, that's right? And are you offering 242 00:13:30,676 --> 00:13:33,196 Speaker 1: some smaller amount of money to people who were like, well, sure, 243 00:13:33,196 --> 00:13:34,836 Speaker 1: I'll turn off the A C, but let me leave 244 00:13:34,836 --> 00:13:37,996 Speaker 1: my fridge on. Yes. So I wasn't able to hit 245 00:13:38,036 --> 00:13:40,836 Speaker 1: the ninety percent threshold, but I was able to earn 246 00:13:40,836 --> 00:13:45,156 Speaker 1: about twelve dollars and I have a small apartment in 247 00:13:45,196 --> 00:13:48,636 Speaker 1: San Francisco, but we were reducing for two hours. We 248 00:13:48,636 --> 00:13:51,156 Speaker 1: didn't have the fan on, we turned off the refrigerator, 249 00:13:51,196 --> 00:13:54,956 Speaker 1: we didn't run any appliances. So I delayed the start 250 00:13:54,996 --> 00:13:58,556 Speaker 1: of my washing machine and dishwasher for a couple hours, 251 00:13:58,876 --> 00:14:04,636 Speaker 1: so we got out of that critical time. That's just 252 00:14:04,676 --> 00:14:07,236 Speaker 1: like the hair club for men. Guy. He's not only 253 00:14:07,316 --> 00:14:11,076 Speaker 1: the president of them connected, he's so a customer in 254 00:14:11,116 --> 00:14:13,876 Speaker 1: a minute. The really interesting things that Matt and ome 255 00:14:13,916 --> 00:14:17,956 Speaker 1: connect have learned not about electrical power, but about human behavior. 256 00:14:25,676 --> 00:14:28,956 Speaker 1: Now back to the show. Home Connect is kind of 257 00:14:28,956 --> 00:14:31,516 Speaker 1: a strange company. It's, you know, the kind of thing 258 00:14:31,556 --> 00:14:34,756 Speaker 1: that is somewhat hard to explain exactly how it works. 259 00:14:35,076 --> 00:14:37,436 Speaker 1: And so I was curious how they got the word 260 00:14:37,476 --> 00:14:40,076 Speaker 1: out when they were first starting out, and Matt told 261 00:14:40,076 --> 00:14:42,956 Speaker 1: me this story about just one day early in the 262 00:14:42,996 --> 00:14:45,836 Speaker 1: life of the company. That was really key. What happened 263 00:14:45,876 --> 00:14:49,436 Speaker 1: was this this sort of personal finance guru called mister 264 00:14:49,516 --> 00:14:54,356 Speaker 1: money Mustache tweeted about ome connect. Basically, he said, here 265 00:14:54,476 --> 00:14:56,716 Speaker 1: is an easy way to make five bucks a week, 266 00:14:56,956 --> 00:14:58,596 Speaker 1: and he put a link to the company's site right 267 00:14:58,636 --> 00:15:01,316 Speaker 1: there in the tweet. I actually remember that day. I 268 00:15:01,396 --> 00:15:03,556 Speaker 1: was at a board meeting and we saw the number 269 00:15:03,636 --> 00:15:07,036 Speaker 1: is skyrocket in terms of user enrollments. It was this 270 00:15:07,156 --> 00:15:09,716 Speaker 1: crazy moment of like, are those numbers right? Are this 271 00:15:10,596 --> 00:15:12,956 Speaker 1: is our data being pulled correctly? And do you remember 272 00:15:12,996 --> 00:15:15,476 Speaker 1: how you figured out where it came from? Yeah, my 273 00:15:15,676 --> 00:15:19,516 Speaker 1: co founder Kurt started investigating. We saw everyone coming back 274 00:15:19,556 --> 00:15:22,956 Speaker 1: from this Twitter thread, and then we realized that this 275 00:15:23,076 --> 00:15:27,116 Speaker 1: was exploding even outside of Twitter within a reddit community, 276 00:15:27,716 --> 00:15:30,356 Speaker 1: and so we started leaning into that and saying, hey, 277 00:15:30,436 --> 00:15:33,316 Speaker 1: we'll figure out a way to make your energy bills 278 00:15:33,436 --> 00:15:35,596 Speaker 1: lower as well as giving you money. What was the 279 00:15:35,636 --> 00:15:39,796 Speaker 1: reddit community? I was a subreddit thread called beer money. 280 00:15:40,556 --> 00:15:44,556 Speaker 1: Beer money. So beer money is exactly what you are right, Like, 281 00:15:45,116 --> 00:15:48,276 Speaker 1: You're not going to change anybody's life, but whatever, it's 282 00:15:48,356 --> 00:15:50,756 Speaker 1: it's close to free money if you know, you're like 283 00:15:50,756 --> 00:15:52,556 Speaker 1: you said, if you're gonna go for a walk at 284 00:15:52,556 --> 00:15:54,036 Speaker 1: eight and you can go for a walk at six 285 00:15:54,076 --> 00:15:56,636 Speaker 1: instead and turn off the AC, why not get the money? Yeah, 286 00:15:56,636 --> 00:15:58,516 Speaker 1: And our users really look at it that way. They 287 00:15:58,516 --> 00:16:02,916 Speaker 1: don't see this as like core financial, you know, income. 288 00:16:03,196 --> 00:16:05,676 Speaker 1: They see it as fun money. And so we ran 289 00:16:05,756 --> 00:16:08,396 Speaker 1: this weird experiment where we're going to give people a 290 00:16:08,436 --> 00:16:12,396 Speaker 1: twenty dollar gift card or twenty dollars in cash, and surely, 291 00:16:12,436 --> 00:16:15,316 Speaker 1: as a pure economist, you would always say everyone's going 292 00:16:15,356 --> 00:16:18,116 Speaker 1: to take the twenty dollars cash. But actually because you 293 00:16:18,156 --> 00:16:20,316 Speaker 1: could just buy the gift card if you want or 294 00:16:20,396 --> 00:16:24,636 Speaker 1: anything else. Yeah, exactly. And we were just shocked at 295 00:16:24,716 --> 00:16:27,156 Speaker 1: everyone's like, I want a gift card, and the reasons 296 00:16:27,156 --> 00:16:29,716 Speaker 1: actually made sense. They were like, if it's cash, it's 297 00:16:29,756 --> 00:16:32,316 Speaker 1: just gonna go for my bills. I worked and I, 298 00:16:32,716 --> 00:16:35,276 Speaker 1: you know, saved energy to make this money, so it's 299 00:16:35,356 --> 00:16:37,676 Speaker 1: my money, it's fun money, and so I'm going to 300 00:16:37,756 --> 00:16:42,156 Speaker 1: go splurge on myself. Huh. That's a really interesting sort 301 00:16:42,156 --> 00:16:44,996 Speaker 1: of behavioral insight. So for you, it's the same, like you, 302 00:16:44,996 --> 00:16:46,716 Speaker 1: you would just as soon give people cash, but they 303 00:16:46,756 --> 00:16:49,916 Speaker 1: actually prefer a gift card. That's right. So I love 304 00:16:50,276 --> 00:16:54,756 Speaker 1: I love the gift card versus cash example, I get it, 305 00:16:54,756 --> 00:16:58,396 Speaker 1: although I would always choose the cash. Are there other 306 00:16:58,596 --> 00:17:02,076 Speaker 1: sort of surprising insights that you've had that are not 307 00:17:02,196 --> 00:17:04,756 Speaker 1: restricted to kind of this wonky energy market side, but 308 00:17:04,796 --> 00:17:07,836 Speaker 1: more on the human behavior side. Yeah. I think that 309 00:17:07,916 --> 00:17:11,556 Speaker 1: the most entrying thing that I've found is that people 310 00:17:12,196 --> 00:17:16,236 Speaker 1: really have a need and a desire to save electricity. 311 00:17:16,556 --> 00:17:20,036 Speaker 1: But don't know how to. I'll give you an example. 312 00:17:20,236 --> 00:17:23,876 Speaker 1: We got a bunch of users early on that would 313 00:17:23,956 --> 00:17:27,596 Speaker 1: send pictures of them in the dark saying, hey, I'm 314 00:17:27,596 --> 00:17:31,396 Speaker 1: reducing electricity, but they would have their AC running or 315 00:17:31,436 --> 00:17:33,676 Speaker 1: their washing machine running in the background, and we could 316 00:17:33,756 --> 00:17:37,276 Speaker 1: actually see that in the background. And the lights are 317 00:17:37,356 --> 00:17:41,836 Speaker 1: basically nothing. There's almost because of compact fluorescent and all 318 00:17:41,876 --> 00:17:46,996 Speaker 1: of the most technology advancements of light bulbs, there's almost 319 00:17:47,156 --> 00:17:49,996 Speaker 1: no electricity to being used there. But the AC is 320 00:17:49,996 --> 00:17:53,756 Speaker 1: this enormous literally twenty to thirty light bulbs at once 321 00:17:53,956 --> 00:17:58,156 Speaker 1: on equivalent, and so you just need to have them 322 00:17:58,196 --> 00:18:00,636 Speaker 1: turn off the AC for for six or seven degrees. 323 00:18:00,756 --> 00:18:03,156 Speaker 1: Let's just talk a little bit about power consumption at home, right, 324 00:18:03,196 --> 00:18:07,956 Speaker 1: So AC is the biggest, and like, like, what are 325 00:18:07,956 --> 00:18:10,876 Speaker 1: the other biggies. The easy way to think about it 326 00:18:10,916 --> 00:18:14,156 Speaker 1: is anything that's heating or cooling is going to be 327 00:18:14,196 --> 00:18:17,796 Speaker 1: some of the biggest usage of electricity. So AC units 328 00:18:17,876 --> 00:18:20,516 Speaker 1: obviously comes to mind. But if you're in the winter, 329 00:18:20,836 --> 00:18:24,196 Speaker 1: electric heating is a big portion of your energy consumption. 330 00:18:24,516 --> 00:18:27,756 Speaker 1: Your refrigerator is a big portion of your energy consumption. 331 00:18:27,756 --> 00:18:30,276 Speaker 1: Now a lot of those refrigerators are getting you know, 332 00:18:30,516 --> 00:18:34,876 Speaker 1: much more efficient, but they're running all the time, right, Yeah. 333 00:18:34,916 --> 00:18:37,076 Speaker 1: I mean I guess the other thing, like when we 334 00:18:37,116 --> 00:18:39,596 Speaker 1: think about, you know, wanting to conserve, right, like I 335 00:18:39,636 --> 00:18:44,876 Speaker 1: want to conserve energy, is how different the meaning of 336 00:18:44,916 --> 00:18:48,636 Speaker 1: conservation is at different times? Right? There are moments, certainly 337 00:18:48,676 --> 00:18:51,516 Speaker 1: now in California there's so much renewable energy on when 338 00:18:51,556 --> 00:18:55,276 Speaker 1: you can actually run your air conditioner guilt free. Right, 339 00:18:55,316 --> 00:18:58,916 Speaker 1: the sun is shining, electric power plants are producing electricity. 340 00:18:58,916 --> 00:19:01,476 Speaker 1: It's coming to your house and you're cooling your house, 341 00:19:01,516 --> 00:19:03,836 Speaker 1: and like that's the dream come true. Right, But the 342 00:19:03,916 --> 00:19:06,396 Speaker 1: same house, the same AC, the same setting on the 343 00:19:06,396 --> 00:19:09,556 Speaker 1: thermostat at a particular hour when there's so much demand 344 00:19:09,596 --> 00:19:11,276 Speaker 1: that they've got to turn on the dirty peaker plant. 345 00:19:11,316 --> 00:19:15,116 Speaker 1: Like then the AC is like a disaster. And that 346 00:19:15,276 --> 00:19:17,676 Speaker 1: is so not intuitive because it's the same AC, it's 347 00:19:17,676 --> 00:19:20,476 Speaker 1: the same amount of cooling. It's just contingent on like 348 00:19:21,076 --> 00:19:23,676 Speaker 1: demand and the grid and the power plants that you 349 00:19:23,796 --> 00:19:27,036 Speaker 1: just can't feel that as a consumer, c jcob, you 350 00:19:27,156 --> 00:19:31,156 Speaker 1: are the visionary of energy. That's exactly where I think 351 00:19:31,196 --> 00:19:34,476 Speaker 1: the energy sector will go is that you have free power. 352 00:19:34,596 --> 00:19:38,316 Speaker 1: You basically have free energy all the time or not sorry, 353 00:19:38,356 --> 00:19:40,316 Speaker 1: most of the time ninety eight percent of the time 354 00:19:40,636 --> 00:19:43,396 Speaker 1: and then two percent of time you have really really 355 00:19:43,436 --> 00:19:46,876 Speaker 1: expensive energy that is encouraging you to reduce or save energy. 356 00:19:47,236 --> 00:19:50,116 Speaker 1: But in California, during the middle of the day from 357 00:19:50,156 --> 00:19:53,236 Speaker 1: twelve to two pm, we have too much power on 358 00:19:53,276 --> 00:19:56,716 Speaker 1: the grid. We are actually having to curtail solar on 359 00:19:56,756 --> 00:19:59,276 Speaker 1: a regular basis. So we want you to use power, 360 00:19:59,476 --> 00:20:01,436 Speaker 1: use as much power as you need. We have too 361 00:20:01,516 --> 00:20:04,276 Speaker 1: much power, So it should be thought of as a 362 00:20:04,356 --> 00:20:07,676 Speaker 1: free commodity of free resource except for certain times of 363 00:20:07,676 --> 00:20:11,516 Speaker 1: the day. And like those times of the day are 364 00:20:11,556 --> 00:20:15,036 Speaker 1: the times that home connect was created to deal with. Right, 365 00:20:15,316 --> 00:20:18,436 Speaker 1: that's right, We're created to really hone in on those 366 00:20:18,476 --> 00:20:21,156 Speaker 1: one or two hours a day, really balanced the grid 367 00:20:21,236 --> 00:20:24,556 Speaker 1: and then pay our users for actually providing that grid 368 00:20:24,596 --> 00:20:31,076 Speaker 1: support and grid service. Let me ask you this, why 369 00:20:31,196 --> 00:20:35,156 Speaker 1: don't the power companies go directly to the consumers to 370 00:20:35,196 --> 00:20:37,756 Speaker 1: do this? Like they already have the customers, they know 371 00:20:37,836 --> 00:20:41,036 Speaker 1: my phone number. Like, why do they even need you 372 00:20:41,116 --> 00:20:43,916 Speaker 1: to do this? Jacob, have you ever gotten a good 373 00:20:43,956 --> 00:20:48,156 Speaker 1: experience from kand or PG? And I mean the companies 374 00:20:48,276 --> 00:20:51,196 Speaker 1: are trying, so they actually have had these programs in 375 00:20:51,236 --> 00:20:54,796 Speaker 1: place for decades, the challenges that they've never really focused 376 00:20:54,836 --> 00:20:58,156 Speaker 1: on them as a company, and nor are they very 377 00:20:58,156 --> 00:21:01,036 Speaker 1: good at engaging the consumer. So what are some of 378 00:21:01,036 --> 00:21:03,316 Speaker 1: the things you sort of haven't figured out yet, Like, 379 00:21:03,356 --> 00:21:05,516 Speaker 1: what are some of the key problems you're working on 380 00:21:05,556 --> 00:21:08,596 Speaker 1: now that you haven't solved yet. We really want to 381 00:21:08,596 --> 00:21:12,876 Speaker 1: be able to scale to the entire US, And one 382 00:21:12,876 --> 00:21:16,476 Speaker 1: of the challenges you had mentioned the electricity markets are weird, 383 00:21:16,596 --> 00:21:20,316 Speaker 1: and that's a perfect moniker for it. But going into 384 00:21:20,436 --> 00:21:23,836 Speaker 1: each of these unique different areas coned we need to 385 00:21:23,876 --> 00:21:27,116 Speaker 1: integrate with BGN, we integrate with so one of the 386 00:21:27,156 --> 00:21:29,116 Speaker 1: things we're trying to figure out is how can we 387 00:21:29,196 --> 00:21:31,916 Speaker 1: do it all at once and then be able to 388 00:21:32,116 --> 00:21:35,716 Speaker 1: extract those revenues later. And I mean, is that just 389 00:21:35,876 --> 00:21:40,356 Speaker 1: a matter of grinding out all of the regulatory stuff basically? 390 00:21:40,436 --> 00:21:43,796 Speaker 1: Is that what that story is? There's forty different regulators 391 00:21:43,796 --> 00:21:47,076 Speaker 1: you've got to deal with and just talking to a 392 00:21:47,236 --> 00:21:49,956 Speaker 1: thousand people at forty different utilities. I mean, is it 393 00:21:49,996 --> 00:21:52,996 Speaker 1: just that? Is it just boring grinding work? There's some 394 00:21:53,036 --> 00:21:55,956 Speaker 1: element of that. And you know, one of the reasons 395 00:21:55,956 --> 00:21:58,756 Speaker 1: we're in the three biggest states California, Texas, New York 396 00:21:58,836 --> 00:22:01,836 Speaker 1: is because there's economies of scale. The grinding out of 397 00:22:01,876 --> 00:22:04,436 Speaker 1: each regulatory conversation is worth it when you're able to 398 00:22:04,476 --> 00:22:08,716 Speaker 1: access then five, ten, fifteen million customers. Yeah, so each 399 00:22:08,756 --> 00:22:11,156 Speaker 1: sub quent one you have the same amount of grinding 400 00:22:11,196 --> 00:22:14,236 Speaker 1: out for fewer customers. So it gets to be like 401 00:22:14,276 --> 00:22:16,916 Speaker 1: a worse and worse deal for you over time. Yeah. 402 00:22:16,956 --> 00:22:20,516 Speaker 1: But what's really great is the all of the states 403 00:22:20,676 --> 00:22:22,996 Speaker 1: learn from each other very quickly, and so when you 404 00:22:23,036 --> 00:22:25,036 Speaker 1: go to California and go to New York, they serve 405 00:22:25,076 --> 00:22:28,716 Speaker 1: as an example to other states. Illinois as a leader 406 00:22:28,756 --> 00:22:31,436 Speaker 1: in that space too. So you mean you can go 407 00:22:31,476 --> 00:22:33,476 Speaker 1: to these other places and say, hey, look it works. 408 00:22:33,716 --> 00:22:35,876 Speaker 1: I know it sounds weird, but trust me, hundreds of 409 00:22:35,876 --> 00:22:39,076 Speaker 1: thousands of people are doing it and it works. Don't worry, 410 00:22:39,116 --> 00:22:46,076 Speaker 1: we can do this. Yes, that's exactly right. We'll be 411 00:22:46,116 --> 00:22:56,356 Speaker 1: back in a minute with the lightning round. Now let's 412 00:22:56,356 --> 00:23:00,076 Speaker 1: get back to the show. Almost done. Let's let's close 413 00:23:00,156 --> 00:23:04,956 Speaker 1: with a lightning round. Just fast. Questions Are you ready? Yep? 414 00:23:06,636 --> 00:23:09,916 Speaker 1: Would you rather be too hot or too cold? Too hot? 415 00:23:11,516 --> 00:23:16,956 Speaker 1: Thomas Edison or Nicola Tesla? Tesla? What else should we 416 00:23:16,996 --> 00:23:22,916 Speaker 1: pay people not to do? Fly? I love this idea 417 00:23:22,956 --> 00:23:25,516 Speaker 1: that you'll pay me to not run my air conditioner. 418 00:23:25,916 --> 00:23:28,556 Speaker 1: I mean, is there some are there other people who 419 00:23:28,596 --> 00:23:31,756 Speaker 1: will pay me to not do things? You can look 420 00:23:31,796 --> 00:23:34,436 Speaker 1: at us kind of like an Airbnb or an Uber. 421 00:23:34,836 --> 00:23:37,916 Speaker 1: We're providing a gig economy service. You have a latent 422 00:23:38,036 --> 00:23:42,476 Speaker 1: value that is your air conditioner. And yeah, but Airbnb 423 00:23:42,556 --> 00:23:44,476 Speaker 1: doesn't pay me to not rent out a room in 424 00:23:44,476 --> 00:23:48,476 Speaker 1: my house. Fair? Yeah, like that's what. I don't want 425 00:23:48,476 --> 00:23:49,796 Speaker 1: to rite out a room of my house. I want 426 00:23:49,796 --> 00:23:51,116 Speaker 1: to not rite out a room of my house I 427 00:23:51,196 --> 00:23:53,716 Speaker 1: get paid for. You could take the reverse. We're paying 428 00:23:53,756 --> 00:23:58,676 Speaker 1: you to stay a little bit warmer than you normally would. Okay, okay, fair. 429 00:24:02,996 --> 00:24:05,276 Speaker 1: If everything goes well, what problem will you be trying 430 00:24:05,276 --> 00:24:08,356 Speaker 1: to solve In five years we get one hundred percent 431 00:24:08,396 --> 00:24:11,956 Speaker 1: clean energy, and then we start to tackle the transportation sector. 432 00:24:12,556 --> 00:24:16,556 Speaker 1: And if we're able to solve decarbonization of the electricity 433 00:24:16,636 --> 00:24:20,956 Speaker 1: and transportation sector, that's fifty percent of carbon emissions, and 434 00:24:20,996 --> 00:24:24,716 Speaker 1: there is a pathway in our lifetime to be able 435 00:24:24,756 --> 00:24:27,196 Speaker 1: to solve climate change. How will you know when it's 436 00:24:27,236 --> 00:24:32,036 Speaker 1: time to do something else for work? When we've achieved 437 00:24:32,036 --> 00:24:34,836 Speaker 1: true scale and when I say scale. I'm talking about 438 00:24:34,876 --> 00:24:41,236 Speaker 1: gigawatts of electricity under control, and gigawatts is like how 439 00:24:41,236 --> 00:24:45,836 Speaker 1: many customers you need to be doing that? Millions? We're 440 00:24:45,836 --> 00:24:47,796 Speaker 1: at that far for millions. If you're a two hundred 441 00:24:47,796 --> 00:24:49,876 Speaker 1: and fifty thousand, you're a lot of the way there. 442 00:24:49,876 --> 00:24:52,796 Speaker 1: You started zero. Well, I've also been doing this for 443 00:24:52,876 --> 00:24:56,516 Speaker 1: eight years, Jacob, Okay, well, at that rate, it's going 444 00:24:56,556 --> 00:25:01,836 Speaker 1: to take a while. What's one piece of advice you'd 445 00:25:01,836 --> 00:25:05,596 Speaker 1: give to somebody trying to solve a hard problem, Be persistent. 446 00:25:05,796 --> 00:25:08,076 Speaker 1: As long as you live another day, there's another way 447 00:25:08,116 --> 00:25:16,716 Speaker 1: to solve that problem. Matt Dusterberg is the president and 448 00:25:16,796 --> 00:25:20,476 Speaker 1: co founder of Home connect. Today's show was produced by 449 00:25:20,596 --> 00:25:23,956 Speaker 1: Edith Russlo, edited by Robert Smith, and engineered by Amanda 450 00:25:24,076 --> 00:25:26,916 Speaker 1: kay Wong. I'm Jacob Goldstein, and we'll be back next 451 00:25:26,916 --> 00:25:35,396 Speaker 1: week with another episode of What's Your Problem.