Experience the ease and the affordability of going solar by getting a solar iQuote at www.sungevity.com.Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.
—MARGARET MEAD
I’M AN ACTIVIST AND AN ENTREPRENEUR. I’VE FOUND THAT when people discover this, certain descriptions pop into their heads: revolutionary, game changer, world changer, mover and shaker, troublemaker, fool, and Richard Simmons. That’s right, I was recently described as “the Richard Simmons of solar” in a blog post flaming solar businesses, and I took it as a compliment; like the fitness guru, I’m an unabashedly enthusiastic activist for my industry. Plus I have curly hair.
I’ve been an activist most of my life—since I was 12 years old, in fact. We jumped around a lot during my childhood—from Los Angeles to Chicago, then to Australia when I was three, and then back to LA until I was nine. After that it was off to London for a couple of years. I was 11 by the time we had settled again in Sydney, that sunny seaside city that makes me think of blue skies and beautiful beaches. A restless young stranger in this town, I fell in with a group of volunteers at the Australian Conservation Foundation in the Rocks district downtown. The foundation’s and other groups’ purpose was to block the construction of a dam in Tasmania, a project that would threaten that gorgeous island’s massive wilderness.
Our goal was to get the federal government to oppose the building of the dam, which, through our electoral efforts, it did—thus blocking the construction and, more importantly, spawning the Australian Greens Party, which to this day holds the balance of power in the Federal and Tasmanian Parliaments. It was my first taste of victory as a global citizen—and my first realization of the power we have. This is what we can make happen by galvanizing our friends, sending out letters, organizing rallies, leveraging the media, talking to cameras, shouting loudly, joining minds and hands, voting, and working in unison for a common cause.
After that there was no stopping me. Forest campaigns in the mainland wilderness of New South Wales were my main thing until the late eighties, when I got active on “atmosphere issues” such as global warming and ozone depletion.
When I was holding up signs at big mining-company meetings, or physically protecting forests from destruction, or throwing my body under police vans, or climbing hundreds of feet up in the air to hang a protest banner—all with the aim of stopping Big Business from doing harm to people and the planet in the name of profit—I’d often hear some distant, disembodied voice shouting at me, “Get a job, you bum!” And I always laughed because most of the blokes saying it don’t have a clue about how grueling a job effecting social change really is.
I’ve dug my elbows and belly into gravel in acts of civil disobedience, and I’ve spoken at corporate meetings on behalf of an order of nuns who were shareholders in a mining company but wanted to stop its environmental and human-rights abuses (we were met by the heckles of board members, including Henry Kissinger!). Efforts like these made for a harder day’s labor than a lot of those I’ve experienced as a businessman. Down Under they call this “yakka,” and activists as well as Aussies know what that means: hard work.
Now that I’m not only an activist but also an entrepreneur—the type of job creator those hecklers might have had in mind as a suitable pursuit—I find that my life hasn’t changed very much at all: hard yards and lots of change. As an activist, you have to have passion, you have to be fearless, you have to be willing to take risks, and most of all you have to believe that you can change the world. You also have to be at least a little bit crazy. These same traits I’ve found to be useful in entrepreneur-ship as well.
So the obstinate mind-set that led me to activism seems to suit me just fine as an entrepreneur. And this mind-set served me well as I embarked on the endeavor that would become Sungevity. Deciding to make the leap from activism to business in 2006 wasn’t really tough at all; I’d still be working within my core passion, which was to protect and better the lives of all the world’s people with clean energy. One might believe that I became an environmentalist because I love the Earth, but it would be much more accurate to say that I love people, and I want to protect the Earth because people live on it.
I’d worked for Greenpeace as a campaign manager for almost a decade, and before that I’d directed Project Underground, an organization committed to protecting the human rights of people struggling with mining and oil operations. I came to realize that I could now effect more change as an entrepreneur. Not to be crass, but money talks—and while the world’s governments might be able to ignore activism, they can’t ignore the voice of commerce. The market won’t be denied in this day and age, or at least that’s the theory of the political economy with which we seem to be stuck.
The main question was, What kind of business would I start? I remembered when, 11 years earlier, I’d hiked up to a gas plant that British Petroleum had installed in Papua New Guinea’s highlands and witnessed the ravages of Dirty Energy on that gorgeous land. I recalled turning my face to the sun and thinking that solar power was the remedy to the sickness, pollution, and corruption that ol’ King CONG was spreading throughout the world. The Huli and Engans wanted electricity, but they could get it so much more easily from solar panels in their community than by letting the place be dug up for gas to be exported and returned to run turbines in some imaginary future called “development,” or “devil-upment” as one of the country’s wisest politicians called it. Remembering these experiences, I knew that harnessing solar power and making it available for universal need was the business I wanted to be in.
When I first met Alec Guettel in 1990, he was wearing a penguin suit and protesting outside the Montréal protocol negotiations in London. I was 19 and attending these meetings as a youth delegate of the Australian government. We were the good guys trying to control ozone-depleting substances, whereas the United States and the United Kingdom, with their respective vested interests in DuPont and Imperial Chemical Industries—major producers of chlorofluorocarbons and other ozone-depleting substances—were, in our eyes, not such good characters. Alec was there with a group of student activists protesting the United States’ performance in these talks, and as a like mind I stepped outside the convention hall while Margaret Thatcher was speaking and went to have a beer with Alec and some other activists, or “ratbags,” as they were called by some of the delegates inside.
The rest is history: we became firm friends.
Around 2001 we first talked of the need for clever, clean-energy companies, but it really wasn’t until 2006 that our conversation grew serious. Prior to that, around 2004, I remember flying to New York to attend a UN Commission on Sustainable Development meeting about global warming and crashing on his couch for a couple of days. We stayed up late one night, drinking at some bar in SoHo like the lads we once were and discussing the idea of putting solar panels on the California State Water Project.
I’d worked in California a couple of years before and had become obsessed with the aqueduct that runs through and irrigates the Central Valley. It’s the Golden State’s largest single consumer of electricity, with 12 pumping stations along its route. Its course—from Sacramento down through Fresno to Bakersfield and beyond—means that plenty of sunlight falls on it. Alec said then that he would bankroll me to make the business idea happen and support me with his networks and know-how. “You’re crazy,” I said. I knew how to use the “vampire effect” to hurt companies that are doing the wrong thing—that is, to destroy them by shining a light on them—but I didn’t know much about building a company.
But then, as I went on to run Greenpeace’s political work in Australia and the Pacific for five years, I realized that I had at least some of what it takes to run a startup. For a start, working in a nonprofit environment teaches you how to do a lot with a little. Greenpeace may be well known globally, but resources are always scarce. Even though we had a 100-person staff in five offices in the region, we had a lot of work to do—stopping activities such as illegal logging, pirate fishing, and toxic dumping. Aligning the team to common objectives was key to working there, and it’s how you have to think when planning a startup.
But it wasn’t until I read American community activist Bill Moyers’s book Doing Democracy that I really understood how an entrepreneur could bring about social change. Moyers explains the eight stages that all social movements go through and the four roles that are required to push them through these stages, including that of small businesses as change agents. At points in any struggle to solve a social problem, Moyers says, you have to demonstrate that there’s an alternative to business as usual—especially once you’ve convinced the majority of people that the current authorities don’t have the solutions.
In 2006 Alec and I became determined to build a business that would demonstrate the scaled solution of solar electricity for the masses. Coincidentally, serving the end users was a great profit focus because while the industry had been growing like gangbusters in the preceding 10 years, that growth had been primarily in the area of hardware, so we saw a huge opportunity in the customer-facing sales space. Many industries have had a period of growth predominantly focused on hardware, driven by engineers and technologists, only to watch their margins taken by companies downstream that served the end user. Dell and Apple come to mind—two companies that sold not only hardware but also a service to their customers.
So as we looked at the solar industry as an opportunity, we wanted to start a business providing consumers with the best possible proposition in terms of price, product, and brand. As we brainstormed different business models, we focused on delivering a combination of good energy and great service. We looked at everything from solar-powered coolers for tailgate parties to a residential solar sales company, but it wasn’t until we teamed up with Andrew “Birchy” Birch that we really nailed down the future of Sungevity because he had the acumen to really make it happen.
I’d met Birchy through an academic friend at the University of New South Wales, which has one of the most prestigious electrical-engineering schools in the world due to its good work around the policy and the economics of the Solar Ascent. My friend introduced Birchy as a crazy Scottish banker who was doing an electrical-engineering master’s degree with a focus on economics, and who, despite his banking background, was doing fine with the physics.
After Birchy graduated from the University of New South Wales, BP snapped him up to be a Big Business development exec in its solar division. There he encouraged the company—which at the time was one of the top three manufacturers of solar panels in the world—to think outside the Big Oil box and focus more on the customer’s needs as an end user of BP’s solar-panel product. He encouraged the company to use its substantial capital to create good customer finance solutions for solar systems on homes and also to use its distribution network and household name to market and sell solar products. He felt this would be the best way for the company to make its 20-year-old solar division profitable in a period during which manufacturing was being scaled by other companies better suited to the task.
Instead BP dug more holes in the ground because when you have a hammer, everything starts looking like a nail. In BP’s case, this myopia manifested itself in the company’s decision to open new mines to produce silicon for new factories to turn the silicon into cells, albeit through a global supply chain. As a result of these choices, BP Solar slipped from being one of the world’s top solar companies at the start of the century to being a minor player by 2010, and BP Solar closed its doors permanently at the end of 2011 because of its inability to compete in an oversupplied market. (Solyndra wasn’t the only casualty of low-cost, affordable solar panels.) By then Birchy had left BP to join Sungevity, and I’d bet there are some people at BP who wish they’d listened to him then, before they spent several hundred million dollars barking up the wrong tree.
So by 2008 Birchy had built us a business plan to realize my and Alec’s dream of creating solar energy for universal need. His father is a longtime chef and hotelier, so Birchy also brought to our business his dad’s work ethic and customer service expertise. The biggest insight Birchy had was that we could use the Internet to change the way solar was sold. It turned out that Birchy, like me, had been reading a lot about Dell, and it was clear to us that what Dell had done with the bundle of components we now know as the personal computer was what we needed to do with a solar system.
Before Dell and other companies, such as Apple and Gateway, brought retail savvy and user orientation to the table, the personal-computer industry was a dog’s breakfast—a mess. As you may recall, we would go into a store somewhere downtown or in a mall, and a man in a white lab coat would ask us questions that we didn’t understand but were too embarrassed to push back on, like “Do you want a 286 motherboard or a 24-bit modem?” I for one didn’t know what I wanted, but I’d somehow get led through a process to buy “a box,” as they were called, which I took home at great expense, unclear whether or not it would serve my needs.
Now we buy computers online, knowing they will be shipped to us and that they’ll work—straight out of the box—far better than we could have imagined just a decade ago. Birchy’s long-term business plan was to make our company’s customer experience as seamless as Dell’s in the way we served solar electricity to suburbia. He envisioned an online, interactive quote and monitoring solution for installed systems to interface with the customer. This is what we now have come to call the iQuote and OurSungevity.
When we were conceptualizing how Sungevity would work, the fledgling solar industry felt a lot like the way the PC industry did in its early days. As Birchy pointed out, a typical conversation between a solar provider and a potential customer was ugly:
“Do you want a Fronius or a Kaco inverter?”
“Um, I’m not sure what an inverter is.”
“You like 60-cell format or 72-cell format panels?”
“Ack, I’m not sure.”
“Will 175 or 170 watt work for you?”
[Helpless silence from the customer.]
If you looked at the websites of the solar companies in the space in 2006, you’d find a lot of clutter covering technical specifications of hardware. But average customers care less about this than what the hardware can deliver. All they really wanted was the service—electricity! This is the classic trap of young industries fixated on their own brilliance and trying to sell features, not benefits. Michael Dell famously disrupted (from his dorm room) all those clunky corner-store experiences in the early personal-computer days with a simple website that let you easily select your choices for a PC; his company then configured the machine to do what you wanted and shipped it to you.
By the time we were launching Sungevity, Dell’s innovative solution—using the Internet to deliver superior service—had spread. Take, for example, what Expedia has done for the travel business, or Amazon for book selling, or Zappos for shoes. But this sort of innovation had not been applied to the construction industry, specifically the solar construction projects that we wanted to see spread across suburbia to slow the pace of climate change by creating a greater supply of clean energy. So the question was, How do you apply the tools of the Internet to the sale of solar solutions for homes in America? Birchy, Alec, and I had a few good ideas, and more came as our team grew and we consulted potential customers and other partners in the solar space.
I asked Alec whether he thought I needed a master’s degree in business administration (MBA), and he said no. “Read a lot” was his suggestion. The only real benefit of getting an MBA, he told me, was the little black book that you get out of it; but as a result of my long career in activism, my work organizing campaigns, and the people I’d met along the way, I already had one. And one of the first people we recruited, initially by using her backyard shack as an office and then by slowly sucking her in as our first employee, was an old friend, Martha Belcher. She has an MBA and the operational prowess to set up the processes and procedures for our business, and I knew she’d become the systems queen we needed to deliver an excellent customer experience. That was enough, he said.
Plus we had Alec’s big black book. Sure enough, it was enough: his friends and family, as well as some of mine and Birchy’s, composed a big enough network to capitalize our business and allow us to start our plan of building the Apple of residential solar.
Our early investors took a gamble on a vision of solar for universal need (which I call SFUN) and our sense of how we could get there, or at least how we might find the path toward it. With their help we’ve created a business that’s truly remarkable.
As we built the company, Alec kept us honest and on track with five icons that symbolized the qualities we had to display to succeed: a tennis net, a target, a roller coaster, a handshake, and a magnet.
The tennis net reminds us that the ball is always in our court; it’s always our move. We shouldn’t wait for someone else to act or reply; rather, we have to make things happen. I believe this bias toward action is the great hallmark of entrepreneurs, activists, and anybody who wants to get things done.
The target is a bit more obvious; it means “stay focused.” I had always felt as a campaign manager at nonprofits that focus was the greatest resource we had, for if we could avoid distractions and home in on the target, we could achieve great results. Avoiding “ideaphoria” is evergreen advice.
The roller-coaster ride was to warn us, as we aimed to be successful businesspeople, that reaching our goal was going to involve lots of twists and turns, gut-wrenching falls, moments of scream-inducing terror, the desire to vomit, and the sense that the thing could come off the rails at any time—sensations that are followed by sheer joy and relief. How apt this icon turned out to be; it’s been a helluva ride!
The handshake symbolizes partnership, which is critical to success, especially for a company like ours—built by friends. Most businesses fail over the founding partnership. Partnering with other people is a skill that requires the use of one’s ears and one’s mouth in the ratio that they were given to us—that is, 2 to 1. As well as good listening skills, partnering requires emotional intelligence and maturity.
Finally, the magnet is about attracting talent. Whether your company is in startup mode or already profitable, you need to be engaging, attracting, and telling your company’s story to get the best people to join the mission.
At Sungevity we created a plan to break down the three greatest barriers to the mass adoption of solar: cost, hassle, and mistrust. We’ve seen the cost come down because of the commoditization of the hardware components of the solar system. The panels are sold at a certain amount per watt to residential companies like ours (when we started in 2008 we were paying $4 per watt to suppliers, but now it’s closer to $1 per watt). Businesses like Sungevity have made selling and installing solar for residential customers around the world more efficient. Our remote solar-design tool cuts 10 percent of the cost of making a sale because we don’t have to drive to a dozen houses before making one. Equally important has been the introduction of third-party financing to cover this outlay. Solar leasing has been the game changer in our industry (as discussed in chapter 4)—and we’re still looking at more-creative financial solutions.
Let’s get into the nitty-gritty of how the solar lease works: Customers have a solar system installed on the home at no cost, and then every month they pay for the electricity that they receive from the system. When their solar panels produce more electricity than customers can use, that electricity goes back into the grid to be used elsewhere, and it earns them credit for electricity they may use later, such as at night. As we’ve discussed, this is a substantial money-saving proposition for most customers in the states we serve.
The complex financial structure on the backside of this deal is the most important innovation in the residential solar industry in the past decade. In short, an investor seeking tax credits and depreciation values can monetize these by paying for the system to be installed. This covers most of the cost to install, and the remainder is paid off through lease payments over the life of the system. This model has been so wildly successful that it has gone from no market share just four years ago to being the majority of the residential solar market in the United States today. By the end of 2011, third-party-financed systems were 60 percent of the home solar market.
When you think about it, it makes sense that a solar-power system should be financed just like all other energy systems are. In that familiar model, you have a contract with the utility provider and you make a monthly payment, which is used to offset the cost of building the power plant that generates the electricity. There is a cost of capital, or the rent that some financier is extracting for lending the power company the money to build the power plant, included in this price you pay. So it is now with solar.
On to the hassle that customers expect when considering a solar option for their homes. What Sungevity is doing with its iQuote is a game changer of a different kind that makes going solar easy. With it we can effectively calculate the electricity-producing potential of the home wherever sufficient aerial or satellite photographs exist, which is now much of the world. As solar panels become more widely accepted and their production increases, they’ll be integrated into buildings’ facades—the windows as well as the roof. With our software tool, we can determine what a building’s output would be if it were covered with solar panels, which is an important step in marketing and financing that solar-system installation.
We look forward to a bright future because our market will grow from thousands of units to millions of units in a few short years using this tool. And there are many more tools in the toolkit that our New Greatest Generation can build to ensure the Solar Ascent. This is where many hot jobs will originate in the years to come. Software solutions to help solar scale will have a big business impact with a lot less resource requirement than some parts of the advanced-energy economy we’ve discussed.
At Sungevity we’re also focusing on some of the tools needed to break down the barrier of mistrust, specifically social networking and peer pride. For example, we have a social iQuote, which helps feed the virality of the solar experience so that it can spread through neighborhoods quickly.
Shortly after starting Sungevity, we realized the significance of virality in spreading the benefits of solar, and now with our social Sunshine Network software, we’re trying to feed it. We’re building web products such as an online referral center to help our Rooftop Revolutionary customers get others to sign on to the Solar Ascent. We’ve made it a bit like a game, and you get financial as well as social rewards for telling your friends to go solar and spreading the savings and the sunshine of the Sungevity solar lease. I don’t want to dwell too long on our model lest I bore you, but most of our business comes from this sort of online word of mouth. And with third-party partners like the home improvement giant Lowe’s and the environmental group the Sierra Club recommending us to people who know and trust them, we’re trying to make solar something that everyone not only feels confident in but also believes is cool to have.
It all sounds so easy when I say it now, but of course creating an entirely new process for selling solar and harnessing the value of leasing for our customers did not just fall into place without some trouble. And at the time of this writing, managing the cash flow and the operational processes of our phenomenal growth and keeping our customers satisfied are still challenges. We actually launched our business at the start of 2008, at the beginning of the Great Recession. I laugh now thinking about it—how insane we were to do something entirely new and different just as the world’s financial system started to fall apart. I think that in some ways beginning a business at the time of the Great Recession made our company stronger, and surviving as we have until now suggests that our model works and will really succeed as the economy recovers.
Birchy pushed us to keep dreaming big, and we broke down the conventional solar sales cycle to 16 steps—quoting, selling, permitting, installing, inspecting, interconnecting, and so on—which we sought to standardize and digitize in our business platform.
With the couple million dollars we raised from investors, we set out to hire the software developers required to build our dream business. We put a request for proposals on Internet job boards for software engineers and dot-com survivors around the world. We received bids from everywhere—from Bulgaria to Bangalore to the Bay Area—but the best bid actually came from a company called Extro down the road from where I used to work in Sydney. There were a couple of tough choices at the end of a $0.5 million tender process between Extro and another developer, but Birchy’s wife, Lulu—who was living with all of this day in and day out—made the call. She was right!
In a few short months, this twentysomething, Adam Pryor, and his team of a half dozen code writers made history. They had created the tool for remote solar design, which allows us to calculate the electricity-generating potential of any building, and integrated it into a complete customer relationship management database for all of the stages of the solar sale. The avoided truck rolls alone save a lot of carbon pollution as we sell millions of systems, but more important is how this platform makes going solar so easy. Extro blew our minds by being on time and under budget; and with the product they created, we launched Sungevity in 2008.
We then went on to win numerous awards for our software ingenuity, including the Public Broadcasting Service Innovator of the Year award for moving the planet forward in 2011, in a field that included Serious Materials and other great companies. But perhaps the greatest accolade came when we showed some of the algorithms and code to a Microsoft worker who wanted to understand how we were using the aerial image feeds his company had licensed to us to build a three-dimensional model of a home. Once he got the complex math and clever design of the software, he whistled and said that out of Microsoft’s 300 developers working with these photo datasets, none of them had been able to do what we’d done.
We have now refined that tool and built it out in many ways, and the reason for this story is not to brag about our intellectual property but rather to show what some creative thinking and great talent can do to advance the Solar Ascent. We have broken the mold for how solar is sold, making it much less likely that you’ll have a guy come knocking on your door to take measurements and draw up plans. This has significant cost-saving implications for the entire industry, and it just makes for a better customer experience.
This efficiency and creativity is what we need to achieve the potential of our Next Great Generation. This shift will make customers more likely to refer us to others, creating a ball of sunshine that grows from neighbor to neighbor across communities around the world; and serving all these customers will require more ingenious entrepreneurs to build software solutions that can work with ours to spread sunshine online. We look forward to the competition!
By the end of 2011, Sungevity was more than 200 people strong. Our offices in Oakland’s Jack London Square are cool and cavernous, and every day in our airy environment I feel the buzz of passion, imagination, and commitment that our free-range staff brings to Sungevity’s mission.
Another of the many rock stars who have become engaged by our vision is Patrick Crane, who was previously the chief marketing officer of LinkedIn. Patrick helped build that business, which has disrupted the recruiting and human resources industries by getting new signups for the social network to a pace of one per second at the time he left in 2010. We’ll need that kind of velocity to administer the installation of solar systems on enough roofs to ensure the necessary change from dirty to clean energy in the twenty-first century. We believe that the total addressable market is maybe 50 million roofs, and mathematically we can get to that many only with a much more efficient customer acquisition and sales cycle and a much cleaner fulfillment process than currently exists.
Patrick helped articulate Sungevity’s mission “to build the world’s most energized network of people who power their lives with sunshine.” We’d always known the SFUN vision and how we want to create a constituency for the change to an advanced-energy economy, but naming it and claiming the network effect as the means to get there give us a chance to get to those 50 million roofs. Taking solar adoption online and harnessing solar enthusiasm as a social network phenomenon is the best way to achieve solar for universal need.
Overall our contribution to the Solar Ascent is triggering a Rooftop Revolution around the globe as people become liberated from Dirty Energy, building an ever-growing group of citizens touched by the benefits of going solar. Those people then become a motivating force for the political changes needed for other solar businesses to deliver solutions more broadly.
I hope in this saga you see ways you can contribute as a solar citizen or solar entrepreneur. We need these roles more than anything. Recently, I came across a definition of entrepreneur-ship on Inc.com: “the pursuit of opportunity without regard to resources currently controlled.” I think that nails it, and I also figure it explains why activists make great entrepreneurs. If you’ve ever organized against all odds to stop some large government or corporate interest from building a block of apartments or an incinerator, or if you’ve sought to change your Constitution the way Australian Republicans are still trying to separate their country from the British Monarchy (yep, the land of my youth is still trying to catch up with revolutionary America in this basic regard), you know what it’s like to do a lot with a little against formidable inertia. Indeed you almost have to disregard resources currently controlled because if you focus on that, you may decide not to pursue your goals at all.
Yet activists prevail. Social movements make history, not just powerful white men and corporations. And entrepreneurs build big, popular markets. Margaret Mead, quoted at the beginning of this epilogue and referenced frequently at political campfire discussions and social-change training centers in my youth, had it mostly right: small groups of thoughtful and committed citizens do change the world—but only by bringing in lots more folks to their cause. The hows and the why-fors of these movements are sometimes less easy to follow, but in the significant civilizational change that we’re on the cusp of by “going solar,” the few and the brave who do it now will change not only the power systems but also the power relations that dominate our society.
“Get a job, you bum.”
I still hear these words inside my head. And I still laugh. As president of a multimillion-dollar enterprise, I work in a role these hecklers might approve of. It’s probably the only time I’ve ever done what they’ve asked of me.
What You Can Do as a Rooftop Revolutionary
Experience the ease and the affordability of going solar by getting a solar iQuote at www.sungevity.com.
Follow Sungevity on Twitter (@sungevity), Facebook (facebook.com/sungevity), and LinkedIn (linkedin.com/company/Sungevity). Follow Danny Kennedy on Twitter (@dannyksfun).
If you’re not a homeowner, invest in a community solar project at Solar Mosaic (www.solarmosaic.com).
Share this book and shine a light on the Solar Ascent for someone who is skeptical.