Tom from Utiliz here. While dissapointed to miss out we were pumped to get into the final 20.
The Q&A was enlightening and enjoyable.
Good luck to the winners and thanks to Kevin and Dan.
I am a little surprised not to get into the top 20 as my submission got more votes and comments (and I thought they were quality ones) than AutoMicroFarm but their product sounds awesome so I wish them the best.
I'm also thankful to YC for doing this and to the people who took the time to read and comment on my business. That extra runway and the YC advice would have been a nice bonus though.
Ig1. Absolutely it is enough to build a sustainable business. Lets look at NY as an example. Over 7.2MM households and at our low end price point and a 0.5% penetration (36K customers) that’s over $1MM annual recurring revenue for electric alone. That's a drop in the bucket when you look at how we scale.
1) 15 deregulated states + DC: well over 50MM households with the ability to switch suppliers
2) commercial - over 3MM businesses
3) natural gas - upsell on gas to a subset of the above market (gas has fewer deregulated states)
4) deeper penetration into our markets through marketing and education.
Traditionally this market is underserved due to the customer acquisition cost (CAC) but our differentiator is to use social media / referral based rewards in addition to more traditional physical marketing and partnerships to drive sales at a low CAC
Finally this will be an incredibly sticky service, we are expecting hyper low attrition once acquired
I don't disagree on the size of market, but you need to do a bottom up analysis and not just a top down one.
Very few businesses which aren't inherently social/viral manage to make social media, referral, etc. channels scale without significant cost. Unless you've got a strong expertise in making such marketing channels work you'll be likely to struggle (and investors will know this and won't take you seriously if you make this pitch).
I'd recommend you look at other businesses in this space (ComparetheMarket, uSwitch) in other countries. Generally they make a brand play and then amortise the cost of customer acquisition by up-selling price comparison on everything (insurance, mobile contracts, etc.) so they have a much higher revenue per-customer.
I wouldn't assume attrition is going to be low either, especially if you require user effort (photographing bills) and presumably your cohorts will decrease in value organically over time (i.e. if you keep switching to cheaper providers approximately each switch is going to be a smaller saving than the previous).
Hi Ig1. We shared top down as it's easier for people to visualize the size of the opportunity. Bottom up our revenue model projects CAC between $5-$8.
We think this business is inherently viral because everyone everyone knows buys electricity, and people who find a simple way to save money are usually eager, even proactive, about telling their friends about it.
We respectfully disagree with your assumption that the value prop diminishes over time or that we would have high attrition. The value is not in the relative price of the switched plans but in the total time & money savings to the customer versus staying with their more expensive incumbent supplier.
The snapshot of a customer’s bill is only needed on signup, not ongoing. In fact our system is designed to be zero effort after signup. The whole point is for us to work in the background, saving our customers money without them having to worry about a thing. However we will employ site features and notifications to remind users of how much they’ve saved and will continue to save, as well as how much we’ve saved our customers in aggregate. Once a customer is in our system there is high incentive to stay and refer their friends, and little reason to leave.
Shanacarp, Tom from Utiliz here, thanks for the feedback. To clarify we have zero exposure to energy fluctuations. We don’t hold any credit, counterparty or price hedging risk as the contract is still ultimately between the supplier and the consumer. We are operating as an authorized agent of the consumer. If a given supplier mis-hedges and goes insolvent, their customers’ incumbent will step in as the supplier of last resort. Those who are also our customers will continue to benefit from switching at the next good opportunity. Given this we only leave the upside in your feedback of driving market efficiency and revenue at scale. Happy to discuss further. Tom
First, it is just Shana. (first a is hard, second a is soft) Carp is my last name.
I would love to discuss this further. what is the best way to get in touch with you?
The reason I stated what I did is in the previous apartment my fiance and I were living in, there were these guys who would come by every so often to offer the ability to switch electrical suppliers while also locking in the price paid per kilowatt hour in advance (This is in NYC, btw) - Con Ed I think had fluctuating prices instead based on both demand and not specified but also obvious if you looked at it, the oil market and coal market. So this contract I was being offered effectively was a form of a forward. At the time, I was trying to convince the sales guy that I should be able to reset the contract every month because oil still hadn't hit rock bottom (he was very confused by this idea), and I was thinking that electric prices per Kilowatt hour was going to drop further in response.
In that sense, I would be the type crazy enough to switch hourly if that was doable, as well as bet on the fact that I know my schedule better than my electric company(s), who only see me in aggregate.
I also think my fiance would not allow me to run that bet and determine it too risky :D (I have a measurably higher risk tolerance than he does, it is good he says things like that)
I still have to wonder if you hold liquidity risk, as well as how my risk as an end buyer is handled (and yes, I do understand that most of your users are not going to be like me)
pjc50, a very good question. There are many 'comparison' sites out there. Some are government run (energize CT), some are energy brokers (chooseenergy) and others are bundlers (comcast energy rewards) and of course the two you called out.
All of these sites have one or more of these drawbacks:
1) you have to do the research and switching yourself. Given the best rates are on short term contracts this is every 3-6 months.
2) you are not getting the best deal as they are being funded by the supplier as fees or a spread above the true rate
Utiliz differentiates itself by continuously monitoring the market and switching you as often as needed to guarantee you the best rate, all without you lifting a finger - it's a concierge service. Additionally by charging one transparent annual fee and passing through all the savings to the consumer we put the power back (pun intended) to the customer.
Our models show that this could be significant revenue in itself but the big idea here is that the energy market is massively inefficient. Think about trading stocks before exchanges--there were no standards and it was a pain. If we can get enough customers to drive standardization in the market we could revolutionize this industry and realize the original vision of what deregulation was meant to be.- Tom
Bcoates,
At Utiliz we have spent a significant amount of time looking at the energy market, average usage and addressable customers and our estimate on savings is more than a few dollars. Kevin came up with this idea after saving a few hundred last year through frequent switching. We estimate we can save the average household on the order of $150-300/year, at a cost of $30. It's free money, and that doesn't include the time we save people having to do it themselves. The bigger ambition is that by doing this we rationalize the chaotic consumer electricity market, force bad suppliers out, reduce electricity rates through broker negotation on our increasing client book, and finally help states deliver on the promise of deregulation. That is the moon shot
You can categorize the potential customers into 4 main cohorts:
(1) Educated and spend time every few months finding the best plan and enjoy it - we will never get these guys
(2) Educated and spend time every few months finding the best plan and hate it - we will win all of these - Kevin lives here
(3) Educated and keep forgetting to switch on time - we will win all of these - Tom lives here
(4) Not educated and need to better understand the whole process - this is a massive cohort where we can probably win 25 - 50%
nickysielicki. Tom from Utiliz here, thanks for your vote! We are super excited to make the final cut as we realize the opportunity here is skewed towards the north east, great to see the idea connects nationally. Kevin and I have progressed the business significantly since the original post and would welcome any Q&A on the idea and our current activity - Tom
Hi there. Are you thinking for inbound (original bill upload) or outbound notification? We thought about it for the inbound but while we believe we can get the registration down to a simple 2-3 step process the bill itself is not enough so we would still need supporting information (force the use of the site anyway).
Regarding form factor our plan is a responsive site that down scales to touch devices. That will cover both desktop and mobile well.
Sure. But why scan? A phone pic is enough. That was the plan. How they send it in is the customers choice but in my view a simple web form is easier than asking them to write a bespoke email.
But by and large we would accept applications any way they would want to be send but I question the value of building MMS in the MVP. This would cater to the 'camera enabled non browser devices' and our research shows this is a tiny slice of our audience. However this is a quick thing to build so as we progress research on our target audience we may change our mind.
This is the best map we have showing our market opportunity. http://www.eia.gov/electricity/policies/restructuring/restru... - Notice how skewed to the north east it is? While we believe there will be a trend towards more deregulation the opportunity in the current market is huge.
When we looked at the competitive landscape to this project we did review Comcast Energy Rewards and what they have done is partnered with an energy provider for their customers in deregulated states to create custom deals. We don't consider this competition as to us they are 'just another plan option' however it does add complexity to how people select their plan and that's only good for us!
At this time their offering is a one time switch onto their partners energy plan and they are masking the rate with gift card type incentives. This is the same if you get a telemarketing call from A N Other energy and decide to sign up.
In our design we have already considered where we intersect with Comcast Energy Rewards and will allow a customer in their coverage area to give us their Comcast account number so we can evaluate that plan along with their other options, similarly we ask them if they are a veteran or want a certain % of renewable energy etc.
Absolutely. While our MVP is residential electricity in CT we are building a model that scales to all 14 deregulated states, all consumer types (commercial, manufacturing etc.) and gas.
