WEBVTT - Paying People to Turn Off the Fridge 0:00:15.316 --> 0:00:24.196 Pushkin. We're in the middle of this profound energy transition. 0:00:24.796 --> 0:00:28.116 Solar panels and wind farms are now cheaper to build 0:00:28.116 --> 0:00:31.516 and install than fossil fuel power plants, and they're coming 0:00:31.596 --> 0:00:36.836 online fast. This is great news, But there is always 0:00:36.836 --> 0:00:40.876 a butt in stories about renewable energy, and that butt 0:00:40.996 --> 0:00:44.276 is often about the intermittent nature of a lot of 0:00:44.316 --> 0:00:47.716 renewable power. What do you do when everybody's running their 0:00:47.716 --> 0:00:50.356 air conditioner, but it's a cloudy day with no wind, 0:00:50.476 --> 0:00:53.996 and you can't generate enough power to meet demand. What 0:00:54.116 --> 0:00:56.596 you do right now is you fire up what's called 0:00:56.676 --> 0:01:01.796 a peaker plant, an expensive, inefficient fossil fuel power plant, 0:01:01.836 --> 0:01:04.276 to make up that difference. If only there were a 0:01:04.316 --> 0:01:06.516 way to get people to cut back on their power 0:01:06.636 --> 0:01:09.836 usage right at those moments, just enough to spare us 0:01:10.036 --> 0:01:13.196 from having to turn on those crappy peaker power plants. 0:01:17.676 --> 0:01:20.156 I'm Jacob Goldstein and this is What's Your Problem, the 0:01:20.156 --> 0:01:23.276 show where entrepreneurs and engineers talk about how they're going 0:01:23.316 --> 0:01:25.876 to change the world once they solve a few problems. 0:01:26.316 --> 0:01:30.036 My guest today is Matt Dusterburg, co founder and president 0:01:30.116 --> 0:01:33.236 of ome Connected by the Way. That's o HM, the 0:01:33.356 --> 0:01:36.636 unit of electrical resistance. They're in the power business, not 0:01:36.676 --> 0:01:40.596 the meditation business. Matt's problem is this, how do you 0:01:40.636 --> 0:01:43.716 build a business around getting people to save energy, not 0:01:43.836 --> 0:01:46.316 all that much and not all the time, but just 0:01:46.596 --> 0:01:51.156 enough at just the right time. The answer, spoiler alert, 0:01:51.436 --> 0:01:57.316 you give them money. So I think to really understand 0:01:57.356 --> 0:01:59.556 how your company works, I think we should start with 0:02:00.116 --> 0:02:05.036 just how does the market for electricity in California work? 0:02:05.076 --> 0:02:07.636 Because it's it's weird and dynamic, and it's sort of 0:02:07.836 --> 0:02:10.916 keyed up to your whole business. Right, Yes, that's right, 0:02:10.956 --> 0:02:14.196 and it really the inception of this came from deregulation, 0:02:14.316 --> 0:02:17.476 which happened in the early two thousands, and it basically 0:02:17.516 --> 0:02:20.756 created a market where you can buy and sell electricity 0:02:21.636 --> 0:02:25.476 on a daily or hourly basis. So you can go out, 0:02:25.516 --> 0:02:28.916 if you're a market participant, and buy ten megawatt hours 0:02:28.956 --> 0:02:31.716 of electricity at a certain price, and that's a market 0:02:31.716 --> 0:02:34.596 define price. Now, what happened to be clear that the 0:02:34.676 --> 0:02:38.236 people buying that are our power companies are PGN E 0:02:38.356 --> 0:02:41.876 or whoever the company is supplying power to people in California. Right, Yes, 0:02:42.036 --> 0:02:46.196 so PGN SDG are the usual suspects, and the price 0:02:46.276 --> 0:02:49.556 swings wildly right. I think this is a key maybe 0:02:49.636 --> 0:02:54.316 the key thing for your business is how different demand 0:02:54.436 --> 0:02:57.756 is across even one day, and how big of a 0:02:57.836 --> 0:03:01.436 deal that difference is. Right, That's absolutely right. And this 0:03:01.516 --> 0:03:03.996 is something that no one really understands because most people 0:03:04.036 --> 0:03:07.876 are just paying a flat rate, but prices vary on 0:03:07.916 --> 0:03:11.196 the order of force sense per kilowatt hour, which is 0:03:11.236 --> 0:03:14.676 what normally it is. It's a eighty to ninety percent 0:03:14.676 --> 0:03:17.636 of the time, it's four sense to a dollar a 0:03:17.716 --> 0:03:22.276 kilowatt hour. So it just very quickly between those and 0:03:22.356 --> 0:03:25.756 in fifteen minute periods. So it would be like if 0:03:25.836 --> 0:03:28.196 you were like you bought gas on the way to 0:03:28.236 --> 0:03:30.276 work and it was four bucks a gallon, and then 0:03:30.356 --> 0:03:31.876 you looked on the way home from work and it 0:03:31.916 --> 0:03:34.356 was one hundred dollars a gallon, right, and then a 0:03:34.356 --> 0:03:35.996 few hours later it was back to four. Like it's 0:03:36.076 --> 0:03:40.036 that intense, it's that wide of a jump. That's absolutely right. 0:03:40.116 --> 0:03:43.676 And one really interesting stat is twenty percent of all 0:03:43.796 --> 0:03:47.156 costs come from only one percent of the hours. And 0:03:47.316 --> 0:03:51.156 just to be clear, why is it that the cost 0:03:51.236 --> 0:03:54.156 behaves that way, Like other things don't work that way? 0:03:54.316 --> 0:03:57.316 What is it about electrical power that makes these peak 0:03:57.436 --> 0:04:02.556 demand moments so expensive. So at certain moments in the 0:04:02.636 --> 0:04:05.836 grid you would need to actually turn on a new 0:04:05.916 --> 0:04:09.116 gas power plant. It has to basically turn on from 0:04:09.196 --> 0:04:13.036 not running at all to turning on to deliver fifty maguats, 0:04:13.316 --> 0:04:16.556 and often these are peaker power plants, and a peaker 0:04:16.596 --> 0:04:20.516 power plant it's super inefficient, it's like one third of 0:04:20.516 --> 0:04:24.716 the efficiency of regular power plants, and it's really pollutive, 0:04:24.876 --> 0:04:28.676 it's really bad for the environment, and it's really expensive. 0:04:28.796 --> 0:04:31.276 Presumably that's why the price goes up so much because 0:04:31.276 --> 0:04:34.836 you have to buy that really inefficient, really expensive power 0:04:35.236 --> 0:04:38.036 because at this particular moment, all of the power that 0:04:38.076 --> 0:04:41.276 the like regular power plants and all of our beautiful 0:04:41.476 --> 0:04:44.916 renewable things can create is being used up. So if 0:04:44.956 --> 0:04:48.516 you have to run your AC at seventy degrees, we're 0:04:48.516 --> 0:04:52.356 gonna have to turn on this terrible power plant for you. Yes, 0:04:52.636 --> 0:04:55.916 that is the most expensive, most pollutive, and you can 0:04:55.996 --> 0:04:58.196 think of it. Only fifty hours a year does this 0:04:58.236 --> 0:05:02.676 power plant run, So they're basically compensating all of that 0:05:03.036 --> 0:05:05.876 infrastructure for fifty hours a year of running. You have 0:05:05.956 --> 0:05:08.076 to pay for that whole plant even though it only 0:05:08.116 --> 0:05:10.436 runs fifty hours. Here and the reason they have to 0:05:10.476 --> 0:05:12.476 have it is because we live in a world where 0:05:12.476 --> 0:05:14.836 we expect that we will always have power, and so 0:05:14.916 --> 0:05:16.476 they have to be like, well, we'll have this one 0:05:16.556 --> 0:05:18.636 for those crazy days when it's really hot and everybody's 0:05:18.676 --> 0:05:23.156 running the ac. Yes, that's right, And I mean, is 0:05:23.196 --> 0:05:26.436 it right that I feel like the point of your 0:05:26.476 --> 0:05:28.916 company is, at least at the beginning for us not 0:05:28.956 --> 0:05:31.276 to have to do that, Like that's kind of where 0:05:31.276 --> 0:05:34.356 I start when I think about I'm connected? Is that right? Yeah, 0:05:34.396 --> 0:05:36.916 So we're creating a little bit more flexibility in the 0:05:36.996 --> 0:05:39.116 man's side, But I would say we are a few 0:05:39.196 --> 0:05:42.036 years behind. We needed to be there as soon as 0:05:42.076 --> 0:05:45.476 solar and wind started coming into the grid at the 0:05:45.516 --> 0:05:49.636 scale look's been going in. And is that because solar 0:05:49.676 --> 0:05:52.956 and wind are less reliable than fossil fuel. So now 0:05:52.996 --> 0:05:55.116 not only do we have to worry about the peaker plants, 0:05:55.116 --> 0:05:57.996 but we have to worry about when there's clouds or 0:05:58.036 --> 0:06:00.996 when the wind stops blowing. That's exactly right. When there's 0:06:01.036 --> 0:06:05.636 clouds coming through or the wind stops blowing, you need 0:06:05.676 --> 0:06:09.196 power somewhere, and so we can either turn on of 0:06:09.236 --> 0:06:12.836 those really expensive power plants, or we can just say, hey, 0:06:12.956 --> 0:06:16.316 let's delay our start of our dishwasher washing machine for 0:06:16.316 --> 0:06:19.196 fifteen minutes or an hour, not turn that on, and 0:06:19.236 --> 0:06:22.036 then actually, we'll pay the people who are reducing or 0:06:22.076 --> 0:06:24.996 not turning on their appliances, you know, a portion of 0:06:25.036 --> 0:06:28.916 those proceeds. So let's let's get in a little bit 0:06:28.956 --> 0:06:31.676 to how that works. Right. So, if you're a power company, 0:06:31.716 --> 0:06:34.356 you're in this market where you are paying for power 0:06:34.876 --> 0:06:38.996 from different whatever owners of power plants and solar cells 0:06:38.996 --> 0:06:40.716 and whatever. You're paying for power all the time, the 0:06:40.756 --> 0:06:43.276 price is going up and down, and now there is 0:06:43.316 --> 0:06:47.716 this way where they can also pay people to not consume. 0:06:47.756 --> 0:06:50.396 And it's kind of the same, right, your PG and 0:06:50.516 --> 0:06:53.756 your utility. And you have this moment when you're like, well, 0:06:53.956 --> 0:06:56.516 either we got to turn on this super inefficient, super 0:06:56.556 --> 0:06:59.156 expensive peaker plant, or we got to figure out a 0:06:59.156 --> 0:07:01.076 way for a bunch of people to turn down our 0:07:01.116 --> 0:07:04.236 conditioners in the next half hour, right, And that's where 0:07:04.276 --> 0:07:07.996 you commit yes, and we want to basically replace those 0:07:08.196 --> 0:07:13.196 really really at inefficient expensive power plants, which is smarter 0:07:13.436 --> 0:07:17.876 usage of electricity. And one of the big technology breakthroughs 0:07:17.876 --> 0:07:20.436 that has happened over the past ten years is smart devices, 0:07:20.476 --> 0:07:22.556 So we can do that for people without them having 0:07:22.556 --> 0:07:27.076 to even think about it. So there is this moment whatever, 0:07:27.116 --> 0:07:29.436 even on a fairly normal day, right, a normal summer day, 0:07:29.436 --> 0:07:31.956 everybody's coming home from work, they're all turning on their conditioners. 0:07:31.996 --> 0:07:35.876 The power company says, oh, we're screwed. We got to 0:07:35.916 --> 0:07:39.356 turn on this really expensive, really polluting plant unless we 0:07:39.396 --> 0:07:41.516 can get people to suddenly in the next half hour 0:07:41.596 --> 0:07:43.436 useless energy. And that's where you come in, right, And 0:07:43.476 --> 0:07:46.036 so can you just walk me through what happens at 0:07:46.076 --> 0:07:48.436 that moment? Like how does the money go? How does 0:07:48.436 --> 0:07:52.676 it work? Yeah, so we have bids ride alongside as 0:07:52.756 --> 0:07:56.516 gas power plants, these really inefficient, expensive power plants. They're 0:07:56.516 --> 0:07:59.076 coming in. Say they come in at nine hundred dollars 0:07:59.076 --> 0:08:01.596 a megawatar, and we bid in at eight hundred and 0:08:01.676 --> 0:08:05.436 ninety nine dollars megalodar. That's negoets. You're doing little air 0:08:05.556 --> 0:08:10.356 quotes that negowats like the opposite of a goat, negative watts. 0:08:11.076 --> 0:08:14.596 That's exactly right. And so most power plants generate megwats. 0:08:14.596 --> 0:08:17.076 A gas power plant will generate fifty megawatts at a time. 0:08:17.436 --> 0:08:22.076 We generate fifty negowats. And the federal Energy Regulatory Commission 0:08:22.156 --> 0:08:26.516 or FIRK has said that basically, one negowat should equal 0:08:26.596 --> 0:08:29.876 one megawat, and so we're just generating a bunch of negwats. 0:08:30.076 --> 0:08:33.316 The grid will actually say, hey, we want ome connect 0:08:33.396 --> 0:08:37.716 to dispatch those fifty negowatts, and then that relieves the 0:08:37.796 --> 0:08:40.356 grid need and we don't actually have to turn on 0:08:40.476 --> 0:08:43.636 that peaker power plant. So the power company gives you 0:08:43.676 --> 0:08:47.196 eight hundred and ninety nine dollars, and you turn around 0:08:47.196 --> 0:08:51.276 and you say to your customers, turn off the air 0:08:51.316 --> 0:08:53.476 conditioner and we'll split this eight hundred and ninety nine 0:08:53.476 --> 0:08:56.956 dollars among you. Basically, yes, that's exactly it. So we 0:08:57.036 --> 0:08:59.716 get paid eight ninety nine. We pass most of those 0:08:59.716 --> 0:09:04.396 savings to our users and pay them for actually reducing 0:09:04.516 --> 0:09:08.836 their electricity. So I love the idea that the power 0:09:09.476 --> 0:09:12.796 is willing to pay for negative power in the same 0:09:12.836 --> 0:09:14.796 way they're willing to pay for power, because it's kind 0:09:14.796 --> 0:09:19.036 of the same to them. There's something a little weird 0:09:19.076 --> 0:09:22.156 about it, right on some level, Like I mean, this 0:09:22.276 --> 0:09:23.956 is obvious, and I'm sure there's an answer for it, 0:09:23.996 --> 0:09:26.636 but like, how do they know I would have used 0:09:26.716 --> 0:09:28.636 the power? Couldn't I be like, give me some money, 0:09:28.716 --> 0:09:30.676 or else I'll turn on my air conditioner like I'm 0:09:30.756 --> 0:09:33.156 weirdly sort of holding you hostage or something like. How 0:09:33.156 --> 0:09:37.316 does that part work? We use what they call a 0:09:37.436 --> 0:09:41.756 counterfactual or baseline to say what you would have normally used. 0:09:41.756 --> 0:09:43.876 And it's a very simple calculation. It looks at your 0:09:43.956 --> 0:09:48.276 last ten days, whether it's weekdays or weekends and says, okay, 0:09:48.276 --> 0:09:51.236 on average, you use from seven to eight pm two 0:09:51.316 --> 0:09:54.836 kilo lots. If you then use one kilo lot, I 0:09:54.836 --> 0:09:57.956 can actually take the one kilowat savings that you made 0:09:57.996 --> 0:10:00.836 and sell it into the market. So let's just talk 0:10:00.836 --> 0:10:03.596 a little bit about about your company, kind of how 0:10:03.596 --> 0:10:06.956 big it is, where it is, like, how big is 0:10:06.956 --> 0:10:08.876 the company? How many? How many customers do you have? 0:10:09.196 --> 0:10:10.956 What are the metrics use? We are about a quarter 0:10:10.996 --> 0:10:16.076 million customers across the US and Australia, and they are 0:10:16.116 --> 0:10:18.636 reducing on the order of two hundred to two hundred 0:10:18.676 --> 0:10:21.876 and fifty megawatts at any given moment, and so that's 0:10:21.916 --> 0:10:26.476 really between three to five power plants that we've removed 0:10:26.676 --> 0:10:29.916 from the grid. You said across the US, I mean, 0:10:29.956 --> 0:10:33.796 I know electricity markets are relatively local, right, and weird 0:10:33.956 --> 0:10:37.676 and regulated and jankie in all these ways. So are 0:10:37.676 --> 0:10:40.156 you everywhere in the US or where are you? Weird 0:10:40.356 --> 0:10:44.996 is like the perfect word for electricity markets. So right 0:10:45.036 --> 0:10:47.756 now we're in California, Texas, and New York because it 0:10:47.876 --> 0:10:51.356 is weird, and those are single state markets. There's some 0:10:51.476 --> 0:10:54.836 other areas that we're looking into, like Baltimore and Chicago, 0:10:55.636 --> 0:10:58.876 and we'll be across the entire US with a lightweight 0:10:58.996 --> 0:11:01.996 version of our product in the next year. And so, 0:11:02.156 --> 0:11:05.676 I mean, how often is it that you say to 0:11:05.716 --> 0:11:08.076 your customers, Hey, if you use less power right now, 0:11:08.116 --> 0:11:12.196 we'll give you some money. We're doing a day, Yeah, 0:11:12.236 --> 0:11:15.156 we're doing events with our customers fifty to one hundred 0:11:15.156 --> 0:11:17.316 times a year, so one or two times a week. 0:11:17.636 --> 0:11:20.716 We asked people to reduce what's a normal amount of 0:11:20.716 --> 0:11:22.876 money somebody would get paid to turn off the air 0:11:22.956 --> 0:11:25.916 condition or for an hour. Yeah, it varies, but we 0:11:25.996 --> 0:11:30.396 have anywhere between fifty dollars a year to three hundred 0:11:30.436 --> 0:11:32.996 dollars a year being earned on our platform. If you 0:11:33.116 --> 0:11:36.196 have say so per year means like per per event, 0:11:36.276 --> 0:11:39.076 it's like a buck. It's like turn off your condition 0:11:39.116 --> 0:11:41.356 for an hour, We'll give you a dollar. That's right 0:11:41.876 --> 0:11:44.396 up over time. Yeah, a good good metric is about 0:11:44.436 --> 0:11:47.156 a dollar per event per hour. So there was this 0:11:47.236 --> 0:11:50.556 day recently in California that made national news. There was 0:11:50.596 --> 0:11:53.196 a heat wave, everybody was cranking the ac looked like 0:11:53.196 --> 0:11:55.636 they were going to be blackouts. The state just wasn't 0:11:55.636 --> 0:11:57.956 going to be able to provide enough power. And then 0:11:58.076 --> 0:12:02.316 the state sent text messages to whatever to everybody saying basically, 0:12:02.596 --> 0:12:05.476 you better save energy right now or we're going down, 0:12:06.076 --> 0:12:09.516 and kind of surprisingly it worked right. Consumption went down 0:12:09.556 --> 0:12:12.316 really fast and there were no blackouts. So this was, 0:12:12.436 --> 0:12:15.116 you know, a big news story. But I'm curious what 0:12:15.196 --> 0:12:17.756 was happening at your company that day, Like, how was 0:12:17.796 --> 0:12:21.876 it for you? Well, we were in full war room mode. 0:12:21.916 --> 0:12:25.236 We actually had daily war room meetings at eight am 0:12:25.276 --> 0:12:27.876 at two pm. We were trying to figure out what 0:12:27.996 --> 0:12:31.556 else we could give to our customers to really incentivize 0:12:31.596 --> 0:12:34.916 them to reduce more. We ended up giving away a 0:12:34.996 --> 0:12:38.476 fifty dollars Amazon gift card if you were able to 0:12:38.476 --> 0:12:40.956 reduce ninety percent of your electricity or more, and ninety 0:12:40.996 --> 0:12:43.436 percent is really hard. Only a few members of the 0:12:43.436 --> 0:12:45.716 own Connect team were able to hit it, but we 0:12:45.836 --> 0:12:49.796 had thousands of own connect members being able to step 0:12:49.916 --> 0:12:52.556 up and really turn off a lot of their electricity 0:12:52.716 --> 0:12:56.756 to earn that fifty dollars gift card. I mean ninety percent. 0:12:56.796 --> 0:12:58.756 You got to unplug the fridge. That seems like the 0:12:58.796 --> 0:13:00.836 big one, right, Like I'll turn off the lights, I'll 0:13:00.836 --> 0:13:03.596 turn off the AC, but unplugging the fridge seems Yes. 0:13:03.876 --> 0:13:06.556 My mom is in the same boat, which is like, 0:13:06.636 --> 0:13:08.756 I can't believe you would tell me to unplug the fridge, 0:13:09.516 --> 0:13:14.276 but yes, Actually, the FDA allows or specifies that fridges 0:13:14.276 --> 0:13:16.516 can be off for six hours. We're turning off for 0:13:16.516 --> 0:13:18.316 about two or three hours of time, and we are 0:13:18.356 --> 0:13:20.956 turning off hundreds of thousands of refrigerators across the state. 0:13:21.876 --> 0:13:25.596 So you're offering a fifty dollars Amazon gift card to 0:13:25.596 --> 0:13:27.716 anybody who could do that for just a few hours 0:13:27.716 --> 0:13:30.596 at that key moment, that's right? And are you offering 0:13:30.676 --> 0:13:33.196 some smaller amount of money to people who were like, well, sure, 0:13:33.196 --> 0:13:34.836 I'll turn off the A C, but let me leave 0:13:34.836 --> 0:13:37.996 my fridge on. Yes. So I wasn't able to hit 0:13:38.036 --> 0:13:40.836 the ninety percent threshold, but I was able to earn 0:13:40.836 --> 0:13:45.156 about twelve dollars and I have a small apartment in 0:13:45.196 --> 0:13:48.636 San Francisco, but we were reducing for two hours. We 0:13:48.636 --> 0:13:51.156 didn't have the fan on, we turned off the refrigerator, 0:13:51.196 --> 0:13:54.956 we didn't run any appliances. So I delayed the start 0:13:54.996 --> 0:13:58.556 of my washing machine and dishwasher for a couple hours, 0:13:58.876 --> 0:14:04.636 so we got out of that critical time. That's just 0:14:04.676 --> 0:14:07.236 like the hair club for men. Guy. He's not only 0:14:07.316 --> 0:14:11.076 the president of them connected, he's so a customer in 0:14:11.116 --> 0:14:13.876 a minute. The really interesting things that Matt and ome 0:14:13.916 --> 0:14:17.956 connect have learned not about electrical power, but about human behavior. 0:14:25.676 --> 0:14:28.956 Now back to the show. Home Connect is kind of 0:14:28.956 --> 0:14:31.516 a strange company. It's, you know, the kind of thing 0:14:31.556 --> 0:14:34.756 that is somewhat hard to explain exactly how it works. 0:14:35.076 --> 0:14:37.436 And so I was curious how they got the word 0:14:37.476 --> 0:14:40.076 out when they were first starting out, and Matt told 0:14:40.076 --> 0:14:42.956 me this story about just one day early in the 0:14:42.996 --> 0:14:45.836 life of the company. That was really key. What happened 0:14:45.876 --> 0:14:49.436 was this this sort of personal finance guru called mister 0:14:49.516 --> 0:14:54.356 money Mustache tweeted about ome connect. Basically, he said, here 0:14:54.476 --> 0:14:56.716 is an easy way to make five bucks a week, 0:14:56.956 --> 0:14:58.596 and he put a link to the company's site right 0:14:58.636 --> 0:15:01.316 there in the tweet. I actually remember that day. I 0:15:01.396 --> 0:15:03.556 was at a board meeting and we saw the number 0:15:03.636 --> 0:15:07.036 is skyrocket in terms of user enrollments. It was this 0:15:07.156 --> 0:15:09.716 crazy moment of like, are those numbers right? Are this 0:15:10.596 --> 0:15:12.956 is our data being pulled correctly? And do you remember 0:15:12.996 --> 0:15:15.476 how you figured out where it came from? Yeah, my 0:15:15.676 --> 0:15:19.516 co founder Kurt started investigating. We saw everyone coming back 0:15:19.556 --> 0:15:22.956 from this Twitter thread, and then we realized that this 0:15:23.076 --> 0:15:27.116 was exploding even outside of Twitter within a reddit community, 0:15:27.716 --> 0:15:30.356 and so we started leaning into that and saying, hey, 0:15:30.436 --> 0:15:33.316 we'll figure out a way to make your energy bills 0:15:33.436 --> 0:15:35.596 lower as well as giving you money. What was the 0:15:35.636 --> 0:15:39.796 reddit community? I was a subreddit thread called beer money. 0:15:40.556 --> 0:15:44.556 Beer money. So beer money is exactly what you are right, Like, 0:15:45.116 --> 0:15:48.276 You're not going to change anybody's life, but whatever, it's 0:15:48.356 --> 0:15:50.756 it's close to free money if you know, you're like 0:15:50.756 --> 0:15:52.556 you said, if you're gonna go for a walk at 0:15:52.556 --> 0:15:54.036 eight and you can go for a walk at six 0:15:54.076 --> 0:15:56.636 instead and turn off the AC, why not get the money? Yeah, 0:15:56.636 --> 0:15:58.516 And our users really look at it that way. They 0:15:58.516 --> 0:16:02.916 don't see this as like core financial, you know, income. 0:16:03.196 --> 0:16:05.676 They see it as fun money. And so we ran 0:16:05.756 --> 0:16:08.396 this weird experiment where we're going to give people a 0:16:08.436 --> 0:16:12.396 twenty dollar gift card or twenty dollars in cash, and surely, 0:16:12.436 --> 0:16:15.316 as a pure economist, you would always say everyone's going 0:16:15.356 --> 0:16:18.116 to take the twenty dollars cash. But actually because you 0:16:18.156 --> 0:16:20.316 could just buy the gift card if you want or 0:16:20.396 --> 0:16:24.636 anything else. Yeah, exactly. And we were just shocked at 0:16:24.716 --> 0:16:27.156 everyone's like, I want a gift card, and the reasons 0:16:27.156 --> 0:16:29.716 actually made sense. They were like, if it's cash, it's 0:16:29.756 --> 0:16:32.316 just gonna go for my bills. I worked and I, 0:16:32.716 --> 0:16:35.276 you know, saved energy to make this money, so it's 0:16:35.356 --> 0:16:37.676 my money, it's fun money, and so I'm going to 0:16:37.756 --> 0:16:42.156 go splurge on myself. Huh. That's a really interesting sort 0:16:42.156 --> 0:16:44.996 of behavioral insight. So for you, it's the same, like you, 0:16:44.996 --> 0:16:46.716 you would just as soon give people cash, but they 0:16:46.756 --> 0:16:49.916 actually prefer a gift card. That's right. So I love 0:16:50.276 --> 0:16:54.756 I love the gift card versus cash example, I get it, 0:16:54.756 --> 0:16:58.396 although I would always choose the cash. Are there other 0:16:58.596 --> 0:17:02.076 sort of surprising insights that you've had that are not 0:17:02.196 --> 0:17:04.756 restricted to kind of this wonky energy market side, but 0:17:04.796 --> 0:17:07.836 more on the human behavior side. Yeah. I think that 0:17:07.916 --> 0:17:11.556 the most entrying thing that I've found is that people 0:17:12.196 --> 0:17:16.236 really have a need and a desire to save electricity. 0:17:16.556 --> 0:17:20.036 But don't know how to. I'll give you an example. 0:17:20.236 --> 0:17:23.876 We got a bunch of users early on that would 0:17:23.956 --> 0:17:27.596 send pictures of them in the dark saying, hey, I'm 0:17:27.596 --> 0:17:31.396 reducing electricity, but they would have their AC running or 0:17:31.436 --> 0:17:33.676 their washing machine running in the background, and we could 0:17:33.756 --> 0:17:37.276 actually see that in the background. And the lights are 0:17:37.356 --> 0:17:41.836 basically nothing. There's almost because of compact fluorescent and all 0:17:41.876 --> 0:17:46.996 of the most technology advancements of light bulbs, there's almost 0:17:47.156 --> 0:17:49.996 no electricity to being used there. But the AC is 0:17:49.996 --> 0:17:53.756 this enormous literally twenty to thirty light bulbs at once 0:17:53.956 --> 0:17:58.156 on equivalent, and so you just need to have them 0:17:58.196 --> 0:18:00.636 turn off the AC for for six or seven degrees. 0:18:00.756 --> 0:18:03.156 Let's just talk a little bit about power consumption at home, right, 0:18:03.196 --> 0:18:07.956 So AC is the biggest, and like, like, what are 0:18:07.956 --> 0:18:10.876 the other biggies. The easy way to think about it 0:18:10.916 --> 0:18:14.156 is anything that's heating or cooling is going to be 0:18:14.196 --> 0:18:17.796 some of the biggest usage of electricity. So AC units 0:18:17.876 --> 0:18:20.516 obviously comes to mind. But if you're in the winter, 0:18:20.836 --> 0:18:24.196 electric heating is a big portion of your energy consumption. 0:18:24.516 --> 0:18:27.756 Your refrigerator is a big portion of your energy consumption. 0:18:27.756 --> 0:18:30.276 Now a lot of those refrigerators are getting you know, 0:18:30.516 --> 0:18:34.876 much more efficient, but they're running all the time, right, Yeah. 0:18:34.916 --> 0:18:37.076 I mean I guess the other thing, like when we 0:18:37.116 --> 0:18:39.596 think about, you know, wanting to conserve, right, like I 0:18:39.636 --> 0:18:44.876 want to conserve energy, is how different the meaning of 0:18:44.916 --> 0:18:48.636 conservation is at different times? Right? There are moments, certainly 0:18:48.676 --> 0:18:51.516 now in California there's so much renewable energy on when 0:18:51.556 --> 0:18:55.276 you can actually run your air conditioner guilt free. Right, 0:18:55.316 --> 0:18:58.916 the sun is shining, electric power plants are producing electricity. 0:18:58.916 --> 0:19:01.476 It's coming to your house and you're cooling your house, 0:19:01.516 --> 0:19:03.836 and like that's the dream come true. Right, But the 0:19:03.916 --> 0:19:06.396 same house, the same AC, the same setting on the 0:19:06.396 --> 0:19:09.556 thermostat at a particular hour when there's so much demand 0:19:09.596 --> 0:19:11.276 that they've got to turn on the dirty peaker plant. 0:19:11.316 --> 0:19:15.116 Like then the AC is like a disaster. And that 0:19:15.276 --> 0:19:17.676 is so not intuitive because it's the same AC, it's 0:19:17.676 --> 0:19:20.476 the same amount of cooling. It's just contingent on like 0:19:21.076 --> 0:19:23.676 demand and the grid and the power plants that you 0:19:23.796 --> 0:19:27.036 just can't feel that as a consumer, c jcob, you 0:19:27.156 --> 0:19:31.156 are the visionary of energy. That's exactly where I think 0:19:31.196 --> 0:19:34.476 the energy sector will go is that you have free power. 0:19:34.596 --> 0:19:38.316 You basically have free energy all the time or not sorry, 0:19:38.356 --> 0:19:40.316 most of the time ninety eight percent of the time 0:19:40.636 --> 0:19:43.396 and then two percent of time you have really really 0:19:43.436 --> 0:19:46.876 expensive energy that is encouraging you to reduce or save energy. 0:19:47.236 --> 0:19:50.116 But in California, during the middle of the day from 0:19:50.156 --> 0:19:53.236 twelve to two pm, we have too much power on 0:19:53.276 --> 0:19:56.716 the grid. We are actually having to curtail solar on 0:19:56.756 --> 0:19:59.276 a regular basis. So we want you to use power, 0:19:59.476 --> 0:20:01.436 use as much power as you need. We have too 0:20:01.516 --> 0:20:04.276 much power, So it should be thought of as a 0:20:04.356 --> 0:20:07.676 free commodity of free resource except for certain times of 0:20:07.676 --> 0:20:11.516 the day. And like those times of the day are 0:20:11.556 --> 0:20:15.036 the times that home connect was created to deal with. Right, 0:20:15.316 --> 0:20:18.436 that's right, We're created to really hone in on those 0:20:18.476 --> 0:20:21.156 one or two hours a day, really balanced the grid 0:20:21.236 --> 0:20:24.556 and then pay our users for actually providing that grid 0:20:24.596 --> 0:20:31.076 support and grid service. Let me ask you this, why 0:20:31.196 --> 0:20:35.156 don't the power companies go directly to the consumers to 0:20:35.196 --> 0:20:37.756 do this? Like they already have the customers, they know 0:20:37.836 --> 0:20:41.036 my phone number. Like, why do they even need you 0:20:41.116 --> 0:20:43.916 to do this? Jacob, have you ever gotten a good 0:20:43.956 --> 0:20:48.156 experience from kand or PG? And I mean the companies 0:20:48.276 --> 0:20:51.196 are trying, so they actually have had these programs in 0:20:51.236 --> 0:20:54.796 place for decades, the challenges that they've never really focused 0:20:54.836 --> 0:20:58.156 on them as a company, and nor are they very 0:20:58.156 --> 0:21:01.036 good at engaging the consumer. So what are some of 0:21:01.036 --> 0:21:03.316 the things you sort of haven't figured out yet, Like, 0:21:03.356 --> 0:21:05.516 what are some of the key problems you're working on 0:21:05.556 --> 0:21:08.596 now that you haven't solved yet. We really want to 0:21:08.596 --> 0:21:12.876 be able to scale to the entire US, And one 0:21:12.876 --> 0:21:16.476 of the challenges you had mentioned the electricity markets are weird, 0:21:16.596 --> 0:21:20.316 and that's a perfect moniker for it. But going into 0:21:20.436 --> 0:21:23.836 each of these unique different areas coned we need to 0:21:23.876 --> 0:21:27.116 integrate with BGN, we integrate with so one of the 0:21:27.156 --> 0:21:29.116 things we're trying to figure out is how can we 0:21:29.196 --> 0:21:31.916 do it all at once and then be able to 0:21:32.116 --> 0:21:35.716 extract those revenues later. And I mean, is that just 0:21:35.876 --> 0:21:40.356 a matter of grinding out all of the regulatory stuff basically? 0:21:40.436 --> 0:21:43.796 Is that what that story is? There's forty different regulators 0:21:43.796 --> 0:21:47.076 you've got to deal with and just talking to a 0:21:47.236 --> 0:21:49.956 thousand people at forty different utilities. I mean, is it 0:21:49.996 --> 0:21:52.996 just that? Is it just boring grinding work? There's some 0:21:53.036 --> 0:21:55.956 element of that. And you know, one of the reasons 0:21:55.956 --> 0:21:58.756 we're in the three biggest states California, Texas, New York 0:21:58.836 --> 0:22:01.836 is because there's economies of scale. The grinding out of 0:22:01.876 --> 0:22:04.436 each regulatory conversation is worth it when you're able to 0:22:04.476 --> 0:22:08.716 access then five, ten, fifteen million customers. Yeah, so each 0:22:08.756 --> 0:22:11.156 sub quent one you have the same amount of grinding 0:22:11.196 --> 0:22:14.236 out for fewer customers. So it gets to be like 0:22:14.276 --> 0:22:16.916