Originally posted on pv Magazine USA.
In this #Solar100 interview, Richard Matsui, Founder and CEO of kWh Analytics, speaks with Emily Kirsch, Founder and CEO of Powerhouse.
Dubbed the “Oprah of Clean Energy” by Emily Fritze and Alex Harbour of Powerhouse – with special thanks to fellow #Solar100 Leaders Kyle Cherrick and TJ Kanczuzewski for the nomination – Emily Kirsch is Founder and CEO of Powerhouse and the driving force behind a growing clean energy empire.
Emily’s dedicated her career to “supporting entrepreneurs who are building the future of energy.” Her company, Powerhouse hosts and invests in cleantech software entrepreneurs.
In this interview, Emily talks about Powerhouse’s origin story and their big new announcement. She also gives out our first-ever startup superlatives, including Most Changed Since Freshman Year, Life of the Party, and Most Inspiring.
CLEAN ENERGY AND COFFEE IN COSTA RICA
Richard Matsui: People in the industry know you as the Founder & CEO of Powerhouse. How did you first get into clean energy?
Emily Kirsch: My first experience with clean energy is pretty unique. After high school, I had a scholarship to a school in New York. My whole plan was set, but at the last minute I decided I didn’t want to do any of it. Instead of going to college, I moved to Central America and lived on an organic chocolate and coffee farm in Costa Rica. It was heaven. What made it such an influential experience for me was that the farm was off-grid and fully powered by solar and storage. I remember being mesmerized by this technology that could provide us lights at night with no generator, no noise, no fumes. Just peaceful, quiet bliss in Costa Rica.
PRINCE AND POWERHOUSE
Richard Matsui: What’s Powerhouse’s origin story?
Emily Kirsch: I started my career working with Van Jones, a political powerhouse who now has his own show on CNN. I worked at the organization he started here in Oakland for six years doing workforce development, climate policy, and state ballot initiative work all focused on clean energy. I’m grateful for that experience on the policy side of the industry, because so much of our industry has been enabled by policy. Van was friends with Prince who was doing anonymous philanthropic work across the country. For Prince it wasn’t about his name, it was about doing meaningful work. Prince wanted to do something related to clean energy in Oakland, and at the same time Billy Parish and Dan Rosen were starting Mosaic. Van made the introduction, and Prince gave Mosaic a grant to help kickstart their Oakland pilot.
At the time, Mosaic was helping non-profits crowdsource capital so they could go solar. They needed someone who was plugged into the Oakland community, so I worked with Mosaic on their pilot (which nobody knew at the time was backed by Prince). I loved the team and what they were enabling these great organizations in Oakland to do. I helped to connect them to some of their first customers and Danny Kennedy, who became my co-founder, connected them to their first investors and provided them with their first office in Berkeley.
I realized then that every startup needs those three things: customer connections, capital connections, and physical space. I thought to myself, “This is the San Francisco Bay Area. There must be someone, some organization, helping clean energy startups get access to those three things.” I looked for months while I was still working for the organization that Van started, but I couldn’t find anything. I wondered, “How is that possible?” We’re the hub of global clean energy innovation and venture capital, and yet this doesn’t exist.
I was young and idealistic enough at the time to say, “I could start this”. I was 27 when Danny and I got our first investor to put in $50,000 at which point I quit my job to start Powerhouse. Danny was already hosting Mosaic and a couple other startups (including kWh Analytics) in extra space at Sungevity’s old office, and that became the first home for Powerhouse.
Richard, I remember when you had a tiny office there and the only thing in that office was a suitcase because you were always on the road. Every time I saw you, no matter what season it was you were wearing shorts and flip-flops and I thought, “This guy is definitely from Hawaii and he’s onto something.”
That’s pretty much the origin story. It started with you and Mosaic and a handful of other companies. Since then, we’ve hosted over 60 clean energy startups out of our office in uptown Oakland.
LESSONS FROM FOUNDING POWERHOUSE
Richard Matsui: In the early days of any business, there are always problems. What was the biggest problem you had to solve at the start of Powerhouse?
Emily Kirsch: It took time to build trust. Trust is always a work in progress, but it took us a while to establish ourselves as a legitimate player in the space. It took us years to get to the point where people knew us at all—let alone respected and believed in us. Now, it feels like an inflection point. The successful companies we’ve helped support, our monthly Watt It Takes podcast, our signature events, have all helped us establish trust. You can only build the depth of relationships that it takes to be successful over time.
Richard Matsui: That really resonates. I think most people would broadly categorize that as brand building, but that kind of trust is more fundamental. I’m sure you’ve had a couple of watershed moments, times during which you felt like you were really moving the needle. What are those moments?
Emily Kirsch: When I’m out and about in the world, people usually say one of two things: “I love your Watt It Takes podcasts” or “I love your New Dawn party.”
The first time we threw New Dawn was in May 2014 when we moved into our new office in Oakland’s Uptown. I said, “We should do an office warming party,” because that’s what people do. We were only a year old at the time and I was so afraid that no one was going to show up that I personally emailed every person I’d ever met through Powerhouse— literally hundreds of people. We anticipated somewhere between 30 and 50 people would show up. The day of the party we end up with more than 300 people on our roof deck, which has capacity for maybe 50. Everyone I spoke to said something along the lines of: “This is the best clean energy party I’ve ever been to. You have to do this every year.” That was the beginning of New Dawn.
POWERHOUSE GOES VC
Richard Matsui: Every startup ends up evolving its model. How is Powerhouse’s model shifting over time and how does it relate to the big announcement you just made?
Emily Kirsch: The biggest evolution in Powerhouse’s model has been the result of recognizing gaps in the industry that we are uniquely positioned to fill. After working with early-stage startups for a few years, we heard over and over again that they needed access to smart seed capital. There are a few energy savvy angels out there and some funding through the Department of Energy, but startups need a seed fund led by people who truly understand
the industry, with investors who have the corporate and capital connections to help make these investments a success.
For months we looked around the country for a seed specific fund for clean energy, and were again shocked to find that it didn’t exist. At that point, we realized that we already had the brand, the reputation, and the credibility to raise this fund, so we did. Just yesterday Bloomberg covered the launch of our new fund, Powerhouse Ventures.
Richard Matsui: How big is the fund going to be?
Emily Kirsch: The seed fund is $5.5M and we invest $50K-$200K per startup. It’s still an insane amount of work to form $5M compared to a $50M fund, which helped me understand why so few people do seed funds. Powerhouse’s infrastructure has been instrumental in launching Powerhouse Ventures—both entities are mutually beneficial, and profits from Powerhouse help enable the funds operations.
Richard Matsui: I didn’t realize that Powerhouse is profitable—that’s fantastic.
Emily Kirsch: We’ve grown steadily; about 20% a year, every year.
Richard Matsui: The previous Powerhouse model resembled the Y Combinator model. What drove you to move on from the YC model to a venture fund model?
Emily Kirsch: There are a few reasons that our model evolved. First, when we were investing via our accelerator, the investment capital came from our own revenue so we were limited in how much we could invest, and our deal flow was limited to startups at pre proof of concept. Some of the early startups that we invested in have been successful; UtilityAPI has become the default utility data provider for our industry. Second, accelerators have a set time frame which is usually 3-6 months. This time constraint limited our ability to move quickly on deals, because we were only able invest on a set schedule. Lastly, we required that startups we invested in be based in Powerhouse which restricted the pool of startups we could select from. With the fund, we can invest in startups anywhere and anytime, with the right amount of capital.
SUCCESSFUL STARTUPS PUT THEIR TEAM FIRST
Richard Matsui: You’ve served as a judge for the DOE SunShot Startup Showcase and the Clean Energy Leadership Institute (CELI) pitch competitions, and you talk to startups every day. You eat, sleep, and breathe startups. What kind of traits do successful teams share?
Emily Kirsch: We have a four T framework. The first, and most important T, is team. Every investor says this, but especially at the seed stage when there is often little or no revenue, the team is everything. The second T is total addressable market. Your market has to be big enough to be interesting from a venture standpoint. The third is timing. The last T is technology. A lot of entrepreneurs and founders think about tech first, but the other Ts are as important if not more from our standpoint as seed investors.
Richard Matsui: It sounds like an inversion of the cleantech investment model circa 2007.
Emily Kirsch: Exactly. Most of our investment emphasis and process have come from insights developed in-house. We’ve been selected by the Department of Energy to run a program called Access Innovation. The purpose of the program is to talk with every major energy company and utility in the country and learn what challenges they are facing, how they work with early-stage companies, and what types of teams and technologies they want to connect with. Simultaneously, we’re building a network of hundreds of early-stage clean energy startups and then we get to play matchmaker.
We’re excited about this initiative because we’ll be able to help startups develop products with direct feedback from their potential customers. We measure the success of this program through the number of startup customer agreements, pilot projects, investments, and even acquisitions that are made as a result of our matchmaking.
Richard Matsui: The grant fits squarely into what you already do, and you’ll be able to expand it in the next logical adjacency, which is talking to every single utility. That’s fantastic.
EMILY KIRSCH’S STARTUP AWARDS
Richard Matsui: Can you name a few off the radar startups in solar for the following categories?
Emily Kirsch: Happy to!
Startup Awards: Most Unexpected
Leap. They’re an energy software startup that’s developed a distributed energy exchange platform allowing users managing distributed energy resources to participate in demand response through an API. They have the potential to remove technical barriers and enable responses to price signals and verification of load reduction. They win the most unexpected award for the 90MW capacity contract that they secured through the California Demand Response Auction Mechanism (DRAM), which is more than half of the total MWs awarded to all of the other contract winners combined.
Startup Awards: Best Marketing and Communications
OhmConnect. They describe themselves as a software-based power plant. Instead of turning on dirty coal or gas plants during peak demand, they can tap their users to reduce electricity consumption. OhmConnect wins the Marcom award for creatively engaging their customers with texts and rewards for saving energy. Fun fact about them: They came out of our first hackathon in 2012, before we were even incorporated.
Startup Awards: Most Intellectual
Station A. It started in 2013 as an internal tool that NRG would use to determine optimal sites for projects, and spun out in 2018 as a result of the increasing complexity and scope of what they were building. Today, Station A develops software that leverages data at scale alongside geospatial analysis and machine learning to model the locational value, feasibility, technical operations, and financial performance of clean energy assets across the country. I’ve had the opportunity to see their software in action—it’s really powerful stuff.
Startup Awards: Most Changed Since Freshman Year
Solstice Energy Solutions. We’ve worked with them since pre proof-of-concept and it’s been incredible to support them in their journey over the past couple years. Solstice has developed SHYFT, a hybrid inverter and corresponding energy management platform that lets homes and businesses in emerging markets monitor and manage power sources via a mobile app. After graduating from Stanford, the cofounders, Ugwem Eneyo who is Nigerian-American and Cole Stites-Clayton were struck by the billion plus people who have only intermittent access to electricity, many of whom use diesel generators as backup power. Solstice is enabling people in Nigeria and beyond to leverage software to reduce the use of their diesel generators and shift to solar and storage.
Startup Awards: Life of the Party
Station A also wins the Life of the Party award. When I was on stage at New Dawn, there was this one section of the audience that kept clapping and yelling. I looked over like, “Who are these people”?” It was the Station A team. Throughout the night, you would hear this faint ‘AAAAAAAA’ and it was their team yelling the letter ‘A’ for Station A. Their “Life of the Party” award was set in stone when they showed up on the dance floor and ended up staying until the very end of the night.
Startup Awards: Most Inspiring
SparkMeter. They offer a low-cost microgrid metering solution to existing urban central grid utilities. Their customers are utilities, and their product helps make access to electricity possible in harder to reach, underserved markets. They’re not very well known, but they’re already in 22 countries around the world and have 30K+ units installed. Their customers are utilities like E.ON that are building out microgrids in emerging markets. They’re doing some really phenomenal, unique, and cutting-edge work in bringing functional micro grids to market.