At the end of 2011 Energy Flair was officially shut down. Here’s the story:
A couple years ago I was brainstorming ways to solve the problem of too much energy use. And I’m talking unnecessary energy use…like using a less energy efficient light bulb, or having electronics plugged in sucking up phantom power when no one is actually using what is plugged in.
Inspiration came when shopping with my dad at Menards. He was looking for more light bulbs, so I went & grabbed some compact fluorescent light (CFL) bulbs (way more energy efficient than incandescent). He looked at the CFL bulbs, noted the price difference from the incandescent, & opted for the cheaper incandescent bulbs (even after my spiel about time value of money & saving money from lower electric bills, in the long run). At that time, a light bulb went on in my head! (haha pun intended)
The light bulb – maybe people need an additional incentive to take actions that reduce their energy consumption. Maybe “savings in the long run” wasn’t enough. Initially I thought a service like Recycle Bank, which rewards people for recycling with coupons & discounts, would be perfect for energy….reward people for using less energy!
This was 2009 – I was attending the University of Michigan & was a regular entrepreneurial event attendee. I went to a Mingle N Match event to share my idea for “Energy Bank” – an online service to reward people for using less energy. At the Mingle I met Rajesh – my future business partner.
Rajesh & I met regularly, usually at the business school, & ended up titling our company “Carbon Perks”. We did usability studies, consumer research, market research, putting together mock ups, entering business plan competitions, talking to potential customers, & then some. We had the cutest logo too – a flower that resembled an electric plug. Clever – yes. Thanks to a talented student/graphic designer for that one!
We raised a couple thousand dollars through all the business plan competitions, grants, & other programs available to students. We also applied to Momentum (basically the TechStars / YCombinator of Michigan). After a couple intense interviews & trips to Grand Rapids, we were accepted & we decided to enroll & move out to Grand Rapids for the summer after graduating from UofM.
Early on we learned valuable lessons, including:
- There was a negative connotation with the word “Carbon”. Carbon Perks’ name had to change.
- Real rewards just weren’t economical. We did analysis to discover that we probably wouldn’t be able to cover the cost of providing real rewards that were meaningful or inspiration.
- People were motivated by virtual badges on some new (at the time) mobile app called Foursquare. People were shoving each other to become Mayor of their favorite local spot (okay maybe that’s an exaggeration, but people were pretty serious about it).
As a result of this, we changed our name to TerraPerks & decided to call our service Energy Flair – where people could earn virtual flair (aka buttons) by using energy more efficiently. They could share & compare their flair with friends via Facebook, adding an element of social pressure & gamification to the whole thing.
We continued speaking & meeting with a lot of potential customers & learning everything we could about utilities, working with utilities, consumer behavior, behavioral psychology, & beyond. About midway through the summer we had learned some more critical findings:
- Utilities are slow moving.
- We couldn’t move fast enough. Not being able to hack away at something ourselves really impacted the speed at which our iterations happened.
- Jennifer Aniston did not answer her phone when we called. (If you’ve seen the movie “Office Space”, you may have an idea why we would be calling her. If not, watch this scene from the movie & you’ll figure it out)
We “pivoted” our model so our revenue did not depend on utilities. We explored other business model options & continued to learn & grow. We developed partnerships with energy affiliated organizations, attended energy efficiency seminars, developed a lot of educational content, & made regular updates to our site. We even did a program for students at an elementary school in Ann Arbor. The kids learned a lot & had fun doing so (we led a “beer less pong” game for the students at their big school event). We received some revenue after adjusting our business model.
After the summer I made the decision to leave working with Energy Flair full time. I said I’d still be involved in a much lesser role & help where I could with introductions, talking through some challenges, & brainstorming solutions to problems. There wasn’t enough evidence for me to keep forward at a full+ time pace. Rajesh stayed on to work on Energy Flair & learned even more since that time.
About a month or so ago Rajesh & I had the conversation. The conversation when we decided to officially shut down Energy Flair.
- Team. Rajesh was working on Energy Flair full time, alone. After I left working on Energy Flair full time, I’d chat with Rajesh from time to time to touch base & take action depending on what I could do to help. We didn’t have the people on board to really make this sustainable.
- Traction. It didn’t go viral. Oops. Lesson – just because you build a cool thing that you think is awesome & everyone should use, & you add in features to build in “virility”, doesn’t mean it will go viral! We didn’t figure out the model on a per unit scale…& as a weis (intentionally spelled wrong) person once told me – “optimize first, scale later”. We didn’t try to go big before figuring out the unit economics.
- Tender. Aka Money. An important factor when building a business. It may not be as important at first, when you’re figuring things out & have low personal expenses. At some point it is more needed though.
What did I learn?
A lot! Some of the highlights which inform my current & future endeavors:
- People. Make sure you have the right people on the bus.
- Product – be able to build it yourself. Hiring an outside consultant, firm, or freelancer to build your product for you does a few things: a. slows you down. If you can’t build the product yourself, you can’t always iterate is quickly, something that is important at an early stage when first trying to figure things out.
- Customer feedback. Listen to it, but filter appropriately. We spoke with dozens of electric utilities, users, auditors, utility consultants, & other relevant parties, & a lot of what they said was supportive of our proposal.
- Long sales cycles suck. Selling something to anyone who takes a year & a day to decide which brand of water to buy for the staff lounge is not an ideal situation. Utilities are slow movers. When we “pivoted” (I put pivoted in “” because I think it’s an overused term…but at least people know what it means) away from selling to utilities it definitely saved us from the waiting game.
- Make it easy. Minimize friction on your site. Don’t make users think. If your grandparents can navigate the site without your help, you’re golden.
- It’s easy to start a company. It’s easy to shut down a company. It’s challenging to build a company.
Failure? No. There are no mistakes, only gifts. I learned a lot from the experience & don’t regret it. I’m smarter for it & will be even better next time around!
Venture on (& go turn off your lights =),
MEL aka Venture Gal