With that knowledge, what kind of business could I build around selling energy dashboards to the utilities?
A few assumptions, some of which are probably pretty optimistic just to simplify things without really changing the conclusion (I hope):
- I want to run a business based on annuities (utilities pay me a "subscription") rather than hardware and s/w services (utilities buy my h/w and s/w directly).
- I manage to get 100% of electric utilities in CA to put my product in 100% of customers' buildings [~12.9M customers]
- The utilities agree to pay me 50% of the saved costs of generation [~$17.82/customer*yr]
- A customer dashboard costs my business $35 installed.
- I take out 15% profit and have 10% overhead costs to run finance, HR, facilities, etc.
- 35% of my workforce is engineering or other functions not directly customer facing / supporting.
- It costs $200k/yr to hire, compensate and retain each employee on average.
- $453M - The cost to install the equipment at all the customers' locations. That's serious start up capital or a very slow ramp of the business. Starting isn't going to be easy.
- 23,000 - The number of customers per non-engineering employee that would have to be supported assuming I could start the company, pay off my debt and get to a steady state. If I'm paid actual savings, that means I need to get all the customers to actively use their dashboards and change behavior. The challenge of getting a diverse population (the state of CA) to sustainably change behavior over time with such a ratio is staggering.
I think I can throw this business plan out as a case where annuities are a bad business model.
However, that $453M number does suggest that selling h/w and analysis / customer feedback infrastructure to the utilities might be a better way to go. Maybe I could even write a game to make engagement fun.
Photo credit: Leften on Flickr ... not a picture of CA ...