People Power and Powerzoa: Efficiency Firms Looking for a Business Model and VC Money

Is the issue of energy efficiency in the home and office going to be solved by hardware or software? Will consumers change their behavior?

Eric Wesoff December 15, 2010

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

The good news, according to Matt Lecar of GE's Smart Grid Strategy group, is that due to our utter national inefficiency and energy-wasting ways, the U.S. is the "Saudi Arabia of energy efficiency." There's lots of opportunity for saving energy.

But finding the value proposition for the consumer -- and a business model for a startup -- is a challenge.

Powerzoa and People Power are energy efficiency companies looking for funding. Both have videos on their websites that show them controlling and monitoring electric lamps (they appear to be incandescents) with a combination of hardware, software and consumer time and effort. (See the image accompanying the article for a lower-tech home energy management solution.)

How much time are you willing to spend to automate, orchestrate and monitor your lamp and hair dryer usage?

I'll give you my personal answer: zero time.

We've covered this topic in depth, from angles ranging from OPower's successful software-only approach to Tendril's hardware-intensive solution. VCs at Accel Partners and Battery Ventures have given us their perspectives, as well.

Is energy efficiency in the home and office a problem to be solved by hardware or software? How much are consumers and businesses really willing to pay to save some electricity? And how much time and effort are consumers willing to invest in that project?

FountainBlue put on an event at Menlo Park, California's SRI last week that brought together two energy efficiency startups along with Matt Lecar of GE and a researcher from HP.

Sandra Kwak, the founder of Powerzoa, spoke of the lurking energy drain of "vampire power" and how her firm's "smart plugs" could reduce the megawatts of power devoted to keeping appliances in stand-by mode. Her boot-strapped startup connects smart plugs to an online website via Wi-Fi. She claims that businesses can save 5 percent to 20 percent with a system payback of 22 months. Her firm goes after plug-level appliances like computers as opposed to the main building energy user: heating and cooling. After lighting and HVAC, the plug level is the next step, according to Kwak.

Powerzoa is very early stage, "entering into beta trials with customers and utilities," and "soon looking for angel funding." The startup is aiming for a price point of $25 per plug.

Kwak acknowledges that the educational barrier for a lot of Americans is very significant.

Verdiem is an established firm looking to control corporate PC networks. There are a number of other plug-level home energy startups, including just-funded Energy Hub.

Also speaking was Sunil Maulik, the VP of Business Development and Program Management at People Power.

Maulik describes People Power as a cloud-based analytic solution that controls and compares devices, including energy devices. With 100 billion devices soon to be connected to the internet, the VC-funded startup looks to take this "internet of things" and become a social behavior, analytics and games company.

Looking to check off all possible buzzwords, Maulik also describes People Power as having a "B-to-B strategy," as well as a "B-to-B-to-C [with consumer electronics]" strategy involving licensing their products. Like Powerzoa, People Power is not dependent on the smart meter.

People Power has been looking for a round B of funding for a while now. Vinod Khosla has passed on the chance to invest, according to People Power's CEO. Khosla's view of the smart grid looks a bit different than People Power's vision.

In Matt Lecar's words, "We need emotional drivers." He added, "Turning off standby power is not compelling." According to Lecar, "Business and C&I will be the early adopters because they think about ROI." as opposed to the home because "The smaller the customer the bigger the transaction costs."

Consumer home energy monitoring motivations and energy usage pain-points are very different than those for smart phones or consumer entertainment gadgets. Many device-heavy consumer smart grid startups with consumer-oriented entrepreneurs and their investors are going to learn that good and hard in the coming years.