Element 8 Member & Former Board Member
What drove you to invest in Ethical Electric?
Ethical Electric is a unique company because they’ve taken data driven digital marketing techniques and applied them to renewable energy. I got excited about them once I realized it was an incredibly leveraged opportunity to accelerate the transition to low carbon energy sources.
They’ve been successful by understanding the market and leveraging their ability to aggregate customer demand for renewable energy options. They provide a relatively low cost and high convenience option to consumers that are looking for ways to reduce their energy carbon footprint. In areas of the US with open energy markets, customers just have to sign up – there are no changes to their billing, no technical hurdles and no complicated requirements.
What excited you about this opportunity and provided you the confidence to invest in the company multiple times?
The investment opportunity with Ethical Electrical became more interesting as I learned more about their team. Specifically their CEO, Tom Matzzie. Tom brought a strong background in data, social media and web technology from his experience working at MoveOn.org, an innovative cause driven non-profit. At MoveOn.org you needed to raise money to get your own project funded, so many of the organization’s veterans have taken that entrepreneurial experience and started their own companies after leaving MoveOn.
By the time I talked to Tom, he had clearly laid out his plan to raise $2 million in funds on a $4 million pre money valuation. But the really impressive part was that he had already raised a significant amount of that before speaking to us. However, none of these investors had conducted deep due diligence on the company, it was just a group of investors that firmly believed in Tom, his idea, and his ability to build a great company.
In what ways does Ethical Electric’s business align with Element 8’s mission and investment goals?
It’s actually pretty straight forward. Every time Ethical Electric gets a new customer it reduces carbon emissions by replacing the use of fossil fuels with renewables.
What has allowed Ethical Electric to succeed throughout the years and be successful?
Their opportunity was created by the increased adoption of renewable energy standards at the state and federal level, which created liquid markets for renewable energy. But the company has been able to successfully leverage this opportunity because of how data savvy the organization has been. Over the course of their existence they’ve adapted their customer acquisition process and effectively leveraged direct mail, different partner channels and online marketing. They tracked what worked and they tracked what didn’t work — they tracked it all. By performing data analytics on this broad marketing data they’ve been able to adapt, acquiring more customers for the same marketing spend.
In addition to being an early investor in the organization, I also sit on the board, which has allowed me to see the company grow and bring on the right talent at the right times. They are extremely well managed and have had the discipline to slow down marketing spend when needed and been able to speed up when the time is right.
How do you see the market for clean tech investment evolving in the next 3 years?
It’s actually a very interesting time for clean tech with so many companies increasing their revenue and growing their teams. Unfortunately as an investor, there haven’t been a lot of exits up to this point. I see this trend changing in the coming years with more opportunity for exits as companies mature and reach critical mass and profit.
Looking at the broader economy, I see low natural gas and oil prices. But there continues to be momentum for renewables, including solar. This seems to be largely driven by an improved cost structure for renewables. As I see it, it’s inevitable that solar and other renewables will only grow their share of US power generation, and Ethical Electric is helping to accelerate that trend.
Since you brought it up, how do you see low oil and gas prices affecting the clean tech economy?
At the immediate level, there are lots of businesses that are impacted, especially if they compete directly with oil and gas. However, most clean tech companies aren’t competing directly. One interesting thing about the current low oil and gas prices is how state and federal governments are seeing it as an opportunity to establish new taxes or end subsidies for oil. In Washington State, for example, it has opened up the political space for the Governor to propose putting a price on carbon.
Are you reading any good books right now?
Currently I’m reading a fascinating book, Manna, about potential futures in a world where automation has an ever greater impact on the job market. I am also anxiously waiting for the third book in Ramez Nam’s fantastic Nexus Sci-Fi series, Apex. The first two books, Nexus and Crux, explored the lines between nano-tech and the brain and asked the question: “What does it mean to be human?”