Serious Energy firmly denied that it has acquired any trade secrets from Scientific Conservation Inc. (SCI) by hiring away its founder and a top sales exec.
"They can't bring anything from their former employer. Nobody allows it," said Serious CEO Kevin Surace, noting that Serious obtained the technology it needs for managing buildings when it acquired Valence Energy last year.
"Maybe Scientific Conservation needs to take a look at how they run their business and treat their employees," added Surace.
Last week, Serious hired John Pitcher, SCI's founder and former CTO, and SCI's vice president of sales, Chip Pieper. The announcement was somewhat surprising. Pitcher is a well-known figure in energy management. He served as the first energy manager for McDonald's and helped develop technology that become Cisco Mediator. More importantly, he owns quite a bit of stock in SCI, which has also raised money from General Electric, Intel Capital and Draper Fisher Jurvetson.
Founders sometimes retire or step down, but you don't see them scurry to competitors often, particularly during the early growth phase of a company.
A few days later, SCI filed suit in Georgia, where Pitcher works, seeking damages for misappropriation of trade secrets. SCI is also seeking an injunction. Although filed, the suit has yet to be served on Serious.
We have no idea who will win this suit -- which pits two quite prominent VC-backed companies against each other -- or which allegations are true. Nonetheless, it highlights the high stakes involved in the multibillion-dollar market for building management. Commercial buildings consume approximately 20 percent of the power in the U.S. and much of that power is wasted. Air conditioners can flip on in the middle of a chilly rainstorm. Heaters sometimes refuse to turn off. That beautiful urban evening skyline is just light pollution by a different name.
Ultimately, demand response and smart grid applications will get married to building management software. Siemens, Schneider Electric, Johnson Controls and IBM have bought companies in this space in recent months and expect more to follow.
SCI takes the mathematics behind neural networks (Pitcher's area of expertise) and examines weather, HVAC, occupancy and other data, and then compares it against computerized simulations to determine what's not working or what's about to fail. Right now, building owners have to hire consultants to do this sort of examination. SCI can't give as precise an answer as an army of blue suits, but it's a lot cheaper. And it can give ongoing advice. CEO Russ McMeekin says getting SCI's services are similar to buying Quicken for your taxes instead of hiring a live accountant.
Last month, it acquired Servidyne, which will allow it to shift from just providing advice (via software) to actually managing buildings and fixing problems.
Last November, McMeekin told us that SCI's software oversaw 10 million square feet of real estate and that within a year, that figure would balloon to 100 million to 150 million square feet, a tremendous expansion. Has it happened? GE and Intel have agreed to install the software at some facilities, but it's not clear if SCI is near its goal and, by the way, the year is nearly two-thirds done.
Serious is something of a newcomer to energy management. The company started out as a green building products outfit. It popularized EcoRock, a version of drywall that takes less energy to produce. It won awards from various magazines and even Joe Biden singled out the company for praise. It also won a contract to install thermal windows in the Empire State Building.
The collapse of the building industry, however, pretty much killed interest in green drywall for the moment. A commercial-scale factory, originally expected to break ground or at least get announced in 2008, has yet to be built and may not get built for a while.
Last September, the company shifted into management by buying Valence, which spun out of Santa Clara University. As an added plus, Valence already had customers.