Stuart Lombard On Selling His Company For $770 Million: The Entrepreneur Behind The Smart Home Revolution

Stuart Lombard has built and sold several companies, as well as having been a VC on the other side of the table. His latest venture, ecoBee, has acquired funding from top-tier investors like Energy Impact Partners, Thomvest, Relay Ventures, and Amazon’s Alexa Fund.

In this episode, you will learn:

• Startup fundraising
• Stuart’ss tips on branding, culture, and strategy
• The three core energy trends changing our impact on the environment
• Why he doesn’t like to think about acquisitions as exits or transactions

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About Stuart Lombard:

Before founding ecoBee in 2007, Stuart had resolved to start programming his thermostat as a way of reducing his family’s carbon footprint and saving money. But it turned out that programming his thermostat was much harder than he could have imagined.

In the age of iPhones and smart cars, why would something that’s supposed to make life easier be so hard to use? Turns out not even an Engineering degree could help you figure out how to program the average thermostat!

When Stuart and his family came home one winter day to find their house freezing, they’d had enough. He knew there had to be a better way, and ecoBee was born.

Connect with Stuart Lombard:

• Crunchbase
• LinkedIn
• Bloomberg
• PitchBook

Read the Full Transcription of the Interview:

Alejandro Cremades: Already hello everyone and welcome to the deal maker show. So today. We have a very exciting entrepreneur very successful entrepreneur entrepreneurs. He recently exited you know he’s saying his company I mean exited I mean he’s still you know, pushing it. But you know there’s a very interesting transaction. There. Worth $770,000,000 that we’re gonna be talking about but again building scaling financing all of that good stuff that would like to hear he’s done it numerous times and I’m sure that you’re all gonna find his story quite inspiring so without further ado. Let’s welcome. Our guest today. Stewart Lombard welcome to the show. So originally born in Richmond in Virginia but I know that day you moved to quite a bit due to your father’s job so give us a walk through memory lane. How was life growing up.

Stuart Lombard: Thank you, Thank you for having me.

Stuart Lombard: Our life was you know it was interesting I think it was chaotic in some ways. Um you know because we moved every two or three years but it was a tremendous opportunity for me to experience. You know, different cultures and and you know really I think foreign part of who I am in any case in terms of just being able to. You know, integrate with new people and you know we lived all over the world including Brazil which was you know, probably 1 of my best experiences of my life and you know my parents gave us quite wide latitude and um, you know they didn’t expect us home from school at any particular time and you know we were kind of wandering the streets and you know doing our thing and. And that I think you know gave me a lot of um coffin just in terms of you know resiliency and and and you know the ability to to kind of manage myself and and learn how to handle situations and so I think that was you know, really helpful from my my point of view and it’s interesting because with my own kids. Have this discussion with my wife about you know how carefully we should you know monitor our kids and and certainly having a lot of latitude help me a time.

Alejandro Cremades: I Love that now I’m sure that it helped you to to dealing with uncertainty because moving you know that often you know, starting new friends. You know new lives somewhere I’m sure that was tough for you as well.

Stuart Lombard: Yeah I think certainly we probably complained at the time but some of the things you know we were able to do both in terms of like you know, being able to meet people make new friends but also learn new Languages. You know we were in you know Brazilian school and you know my parents were like if we’re here you need to learn the language and. And just that ability to realize that some of these things that you think would be incredibly Difficult. You know you were able to accomplish and and you know that I think was you know was very helpful for me.

Alejandro Cremades: So engineering and math. How do you develop the love for this.

Stuart Lombard: You know I think um, again like 1 of the things that was interesting about my my upbringing was you know my dad grew up in a small lumber town and you know one of the things you know was post. He grew up post-depression and so he was very focused on. Self-reliance and resiliency and also you know being able to make things and so he believed actually he could make almost anything and so you know while my friends were you know off having fun on weekends and things like that I was either working for my dad or building something. In the basement that we could have easily bought at Walmart for like $29 and you know, but that also created kind of a you know a willingness to kind of tinker and try things and the belief that you actually you know can make things and and that love of both the environment and making things I think we’re part of that you know.

Alejandro Cremades: Now in your case talking about trying things you tried corporate and you ended up you know with ah with a bos. There was not a very nice to you? What? what? what was that experience like what? what? what? the hell was going on with that boss.

Stuart Lombard: Growing up experience.

Stuart Lombard: Yeah I mean it’s it’s interesting. Um, you know first of all there would I had no plans to be an entrepreneur. So the fact that I’m sitting here talking to you is not because I had like a ah grand plan and you know I think if you had to ask my university colleagues. You know what I was going to be. They wouldn’t have said. You know entrepreneur? um and um and I think you know one of the things that’s interesting is I think you know where there’s chaos. There’s opportunity and and you know I worked for a phenomenal company but it had a horrible boss and he was such a jerk that literally one day I walked into his office and you know. I said take this job and shove it right? and I had a big stack of paper in my hands I remember it and I threw the papers in the air and I said like that’s it I quit and um, you know that you know forced me to. To figure out what my next career journey was going to be and actually serendipity I was walking out of the offices was 1994 you know with my all my belongings from the office and um, you know one of my colleagues said you should really check out this internet thing and this was 9094 when you know the internet was still dial up and you know. Mark Andreesen was still a student at the University Of Illinois and you know no one had really heard of the internet. The search engines were Archie and Veronica there were no web browsers and um, you know I looked it up and I started talking to people and you know.

Stuart Lombard: Ah, wrote a business plan because I was bored and you know next thing you knew we were in the internet service provider business and and you know it was all kind of serendipity.

Alejandro Cremades: I mean that was quite the the journey to now because you guys ended up building one of the largest internet service providers you know in the in the country. So so hey that boredom you know I guess that boredom you know, ended up being very productive now in this case, you know the company ended up becoming one of the largest Ipos. In Canada. So what do you think you know like propelled you know that day that level of growth and you know being able because I mean we’re talking about just a couple of years you know with this company called infforamp you know which was your first your first baby. But. What do you think you know like were some of those ingredients that allow the company to grow so fast and to go public like that.

Stuart Lombard: Yeah, we were very fortunate on the timing so we hit you know the you know right? after we started you know, ah you know Marc Andreessen released the the browser that was mosaic that became Netscape. Um you know and and the internet really took off and and one of the things that we did which. You know was very fortuitous. Is we we thought about brand early and you know in those days you know internet service providers were largely shoestring operations flyby night operations and and really catering to people who were diehard. Um, you know fans of being online and we really tried to focus on. How could we get the next group of people you know the people who were early adopters but were more professional weren’t going to be willing to spend you know all the effort and time to collect all the software and you know figure out all the issues and and so we really focused on you know, a service that was not low-priced it was you know relatively expensive given. Alternatives but really good customer service and and really high quality reliable service overall and and that really propelled the company and so we were we managed to win all the sort of major national canadian accounts. Um, you know all the major banks and all that kind of stuff because you know we were the only game in town and and that was hugely beneficial to our to our future.

Alejandro Cremades: And obviously we say you experienced to you know the public the reporting them. You know all of the admin the red tape. You know how was that experience too of of seeing a company that you found it going public.

Stuart Lombard: Well, it was bittersweet to be honest, um, you know we you know when I started you know I was going to do an Mba and so I’d saved up some money to do an Mba and I basically took the money that I was going to spend on my Mba and my partner and I you know we invested you know that money in the business and and. Um, you know and I thought like you know I don’t know if it’s going to work out or not but you know worst case I’ll get like as good an education as if I had have done an Mba and um, you know we were. We were hugely successful. Um, and the company grew like crazy and and. Had an opportunity to merge the company with 2 other companies and and go public in this go public transaction and at the time you know it just seemed like an outrageous amount of money and you know I had had such low expectations and you know there really hadn’t been many exits in canadian ah you know tech companies and so I was like okay this sounds great and you know. This is ah this is just a win. Um, unfortunately the people that we merged with were um, you know, not great operators and and and and so the the business also ultimately foundered and I think you know one of the things I learned the hard way is that you know you put so much into a business that you know. Who you partner with who you sell it to you know, an exit isn’t just a paycheck right? and and and really thinking about how you create a business that is you know built to last you know that’s going to be sustainable and and and what that partner looks like um and making sure that you have aligned values um is really really important because as.

Stuart Lombard: Nice as the money is it is incredibly painful to watch something that you you know built and cared for and you know had anxiety over and you know toiled for hours and hours and hours and hours on you know, just sort of dissipate into the sand because of you know mismanagement and and um.

Alejandro Cremades: No kidding. So obviously you know as they say you either succeed or you learn. But in this case, you know it was both. You know you saw both so that was you know quite the journey I Guess you know in this case, you know now that you had full visibility you know into the building scaling you know, exiting all of all of the above.

Stuart Lombard: You know, poor execution.

Stuart Lombard: If.

Alejandro Cremades: What happened next.

Stuart Lombard: So you know next we jumped right back into it and and you know we we started a company that allowed you to take your data and encrypt it across the internet and so extend it across the internet and so we built one of the first virtual private networking companies. Um, in the networking space and you know successfully built that company very rapidly and then shortly thereafter sold it to a company called shiva which was in the modem technology business and they were trying to move from you know, modems where they had been you know tremendously successful. They were ah. Public company. hugely hugely successful but their market was ending and so they were trying to get into the networking business and so we successfully sold to to Shiva and and you know that was a great transaction but again was one where you know we probably weren’t that well aligned from a strategic point of view and and so you know once again I kind of moved on and looked for.

Alejandro Cremades: So what was the lesson that you took away with that second journey.

Stuart Lombard: For different opportunities.

Stuart Lombard: You know I think again, you know same thing there was sort of this you know belief that you know I wanted to build something you know that was going to last that would you know stand the test of time and and that really started to change the way I thought about you know, exits and and where we would go. Um. And so you know the path we took with Ecobe I think was very very different and you know obviously with even better outcomes than we had before.

Alejandro Cremades: So what was the ah, let’s talk about echo be because what are what us smashing you know success echo yeah, ah, let’s talk about how the original idea came about because I mean obviously at this point you had 2 2 companies, 2 exits and then all of a sudden you know like it’s time to hey you know like I think that this idea has enough legs for me to take a stop at it. But before you know we go into echobe I’d like to ask you really quickly because you did um a little of a stint you know on the Vc side of things and then you know after your second transaction and you went into. To venture capital I mean you became a partner on this firm you were on this firm for about 8 years and this is before it could be and and I’m sure that you know there you were able to to learn you know some of the tradeits of pattern recognition on investments. You know what? you know things this served money what things you know didn’t and. And some of the good the bad on the ugly no I’m being on the other side of the table and watching other operators. So what did you learn? Let’s say like the 3 key ingredients from some of those companies that ended up becoming smashing hits.

Stuart Lombard: Yeah I think you know one of the great things about working in venture Capital is that um you know you get to see how hundreds of other people think about and run their businesses and so you know before I had been in Venture Capital Um, you know, really. The way I thought was kind of the world according to to me right? and and you know I think you know being in venture Capital allowed me to really look at how hundreds of other people built their businesses and really changed my point of view or opened my mind to you know all the different things that. And different ways that that people were building their businesses I think certainly in terms of things like you know, interesting new business models. New Technologies I think also just in terms of you know customers and what do customers think about and what do customers care about. Um you know that really opened my. My my mind to kind of the breadth of opportunity and how you go about really getting product Market fit. Um, you know those things I think I learned as part of that venture Capital stint which were hugely helpful for me in my ecobe experience.

Alejandro Cremades: And what about getting to product Market fit like what does that look like and what did you learn about achieving it as fast as possible.

Stuart Lombard: You know I think in the in the early days you know my my thought process was really around. You know I was building products and services that I wanted to use right? and so you know I was the test customer and and you know probably my focus was you know quite a bit narrower than it. You know it could have been or it should have been or you know or it should be so I think that was the first thing I think the second thing is really around. You know how you can you know test and iterate really quickly. Um, you know and I’m not a big proponent of the massive pivot. But I think the you know constant small course corrections are are really really important I think that’s one of the you know, really interesting questions as an entrepreneur you know do I make a big pivot or do I stay the course and you know fight your way through I feel like you know the Ecoby story is really one where. You know, despite all the challenges and everything that came along and all the people who told us that we were wrong and going to fail. You know we sort of persevered through all of those criticisms and all the challenges and that’s part of why we came out the other side you know, much better.

Alejandro Cremades: Yeah, no kidding now now. Obviously you know after about 8 years close to 9 years you know pushing on the other side of the table as Savic Eventually you realized that is time to get back out there. So how did you come to that realization because I mean the Vc route you know it’ it’s comfortable. You know like obviously you know it is stressful. It has its own things but it’s not definitely like with the fires that you would encounter as an interpretiter building the initial pipes of the business. No. So so what happened there.

Stuart Lombard: Yeah I mean it’s funny like 1 of my you know I remember when I was in venture capital you know and I had this. You know, beautiful office and I had an executive assistant and I had a parking spot and I had all these things that you know as an entrepreneur at least in the early days you don’t have and and I remember the first person to leave me a voicemail message. You know was my wife and I had my voicemail and it said like hey you’ve reached stuart lombard you know if this is emergency please press 0 and someone will help you and my wife leaves ah a voicemail message for me and she’s like venture capital emergency. What the heck is that there’s no such thing as a venture capital emergency and she hangs out the phone and you know that was. Venture capital right? It is a cushy job and um, you know I think what it takes to be good at at venture capital is part art part science. Um, you know when I’m an analytic person and I really like you know getting my hands dirty and and being involved in building something and I think you know. Venture capital is a great profession and people who do it? Well I think do a really great job. But for me I really enjoy building things and I think that was what I took away from it and so you know I woke up one day and said you know what? it’s just not what I want to do with the rest of my life. This is killing me right? and you know. Started looking for different opportunities and and that really became the impetus for how we started you know ecoby.

Alejandro Cremades: So at what point does it could be come to light. You know your radar and you’re like my God I think that this this this this problem is meaningful enough for me to jump in and take action.

Stuart Lombard: I started you know. So first of all I quit my job so that was the first thing I did and and as you know part of quitting my job as a venture capitalist I I had time on my hands and I was like okay I’m going to reduce my environmental footprint and I went out and I spent $26000 on solar panels and I was on my way to buy a Toyota Prius. And Andrea said to me you know honey like this going green thing is going to break us and you know by the way you don’t have a job so stop shopping and um, you know that sort of kicked off this like there has to be a better way. How do we create? you know practical solutions for people to reduce their environmental impact save energy and save money. And you know the insight we had was that heating and cooling is 40 to 60% of your energy use and so actually better managing your heating and cooling is the best thing that you can do to reduce your environmental impact and you know thermostats are cheap and you know the models in the market at the time were you know dumb is a doorknob they weren’t internet connected and so we said hey if we can use math and science. You know, connect these things to the internet make them phenomenally easy to use like our other consumer electronics products. Um you know, use data like weather and energy prices. You know how much better can we do and in 2009 we invented the smart thermostat and what’s really cool is you know. We estimate our customers have saved over Twenty Eight terawatt hours of power which is enough to take the cities of Chicago in Los Angeles off the grid and so it is a you know from sort of humble beginnings. It’s a massive massive impact.

Alejandro Cremades: So for the people that are listening that and to to be able to get it. What ended up being the business model of echoy. Yeah, so for the people that are listening to get it. What ended up being the business model of ecoie.

Stuart Lombard: Sorry can you repeat the question.

Stuart Lombard: Yeah, our primary business model at the start was selling products so we were you know we were selling smart thermostats and um, you know now today we’re building a service layer on top of our our hardware products. We’ve expanded into smart security which I’m really excited about. Um, and there’s an incredible nexus between security and energy. Um, in terms of you know, understanding whether you’re home or not whether you’re you know, sleep or awake. You know, really helps us automate your energy consumption and and allows us to do a much better job and so you know those 2 markets have been. You know, really really great for us. Um, and so you know we think of ourselves as kind of like a hardware-enabled service platform where we create you know, phenomenal hardware. It’s beautiful. Looks great in your home and then if you open it up the inside of our product would look much more like the inside of your phone than a typical thermostat. And so we can download software to it and it can do more things over time and that enables us to create a long-term relationship with our customers and deliver new features and services over time.

Alejandro Cremades: So tell us what kind of breakthroughs did the ah the competitive environment against you know a company like nest you know like allowed you guys you know to really push yourselves and accomplish you know, unimaginable. Um, you know outcomes.

Stuart Lombard: Yeah, we um, you know when we started. It was interesting because we invented the categories. We were first in the market and and I remember you know people would tell us how great we were and you know how wonderful the product was doing and then the company was doing well and all those kinds of things and you know.

Stuart Lombard: We had to raise venture capital and and raising venture capital was very difficult because when we went out to see the venture capitalists. They were like Stewart nobody wants to pay $200 for a thermostat right? Nobody cares about thermostats and you know by the way nobody wants to pay $200 for a thermostat and they looked at me like I was crazy. Um, you know and then nes came out. And ah and then everyone was like of course everybody wants a $200 thermostat but nest is already one and you know you should just quit and go home and um, you know the the market’s already been won and life is short and you know fail fast and you know just go home and start again and I remember. You know we’ve been rejected for venture capital I think something like one hundred and seventy times and I remember it was a really cold february day and you know you come down from one of those office towers after a meeting with a venture capitalist who told me like fail fast and you know get on with your life. Life’s too short and um, you know I was so stressed out that I i. Bummed to smoke off someone who was standing at the front entrance there not that I smoke and you know I was standing there on the corner literally like having this cigarette thinking like should I quit should I quit should I quit and I I decided I think you know then and there that you know the day that I quit is the day that you know they take the keys out of my. Dead hand and you know I was going to you know persevere and persevere through and and that you know I think was a real turning point for the company because you know one of the things we realized was that there’s a difference between you know, wanting to be good and actually being good and we were.

Stuart Lombard: We were good. We were the champions of the you know you know, whatever the minor league baseball. Whatever it is right? We were you know we were little league champions right? We thought we were playing in major league baseball but we were little league champions right? and and I think you know we realized you know what it took to actually play in major league baseball. You know and be successful in what good is and that forced us to really retool and we think about really everything we did and how to really compete in the consumer electronics business and you know we tell people we compete with Apple not because Apple makes thermostats. They don’t but because the experience that your consumer expects is the same as the experience they have on their iphone. And if our experience isn’t that good then frankly, we’re crap right? and so really like setting a high bar and figuring out what it takes to create that high bar. You know, really you know changed the trajectory of the business. Um, you know and and with seminal I think in our in our in our growth.

Alejandro Cremades: And stored 15 years and and change that you’ve been already pushing this I mean that in do years you know like being this startup I mean it is is unbelievable. The amount of time unbelievable now now how much capital did you guys raise ah prior to the transaction.

Stuart Lombard: Yeah.

Stuart Lombard: Roughly you know a little less than 200000000 I think 160,000,000 maybe

Alejandro Cremades: And what was that the journey of of raising that money. How did it go over the course of time from financing cycle to to the next one.

Stuart Lombard: I Think at the beginning it was you know it was really really hard as I said you know people thought we were crazy. Um, you know and they didn’t want to invest because they didn’t believe in the market then nes came out and you know was interesting actually before before nes they looked at me like I was crazy. After nest they looked at me with pity which was worse actually because they’re like okay you’re a dead man walking like you know we want nothing to do with you and um, you know we were fortunate actually because some of our largest customers invested in us and so you know one of the things I would encourage entrepreneurs to do is that if you are having trouble raising Venture Capital. Go to some of your large customers If you have large customers and see if they’ll invest in the business and and you know we were very fortunate that um you know we had ah you know 2 or 3 of our largest customers invest in the business which really got us through the through the difficult years. Um, and that was that was super super helpful.

Alejandro Cremades: And tell us about this transaction tell us about the acquisition. How the the acquisition come about.

Stuart Lombard: We were. You know we were really thinking about you know where to take the business and and how to take it to the next level and I think um, you know we had an opportunity to to do an ipo you know stack transactions at the time were also you know very hot and so you know we were considering potentially doing a sp transaction. Um, and and then we were thinking about raising capital privately and so I think we had sort of those 3 avenues to to look at and while we were working on the you know the Ipo transaction you know one of the investors in the in in the potential ipo was generac and and they um. You know they were excited about the opportunity. They saw a good ah you know market fit with what they were doing and their strategy of where they wanted to go and um, and really we had great. You know vision and alignment and so you know that kind of changed the dialogue from hey you know we’re interested in investing in your in your. Ipo transaction or a private transaction to you know we like to buy the company and I think you know one of the really great things about you know the combination with generac which was different than the previous. Um you know transactions I’d done in my career was that I think we really had like. Quite a few shared values and a shared vision of where we thought the world was going and what we needed to do to to be successful and and I think you know one of the things that was very different for me was really not seeing this as an exit like everyone sees it as an exit. We talk a lot about you know how we have impact at scale and if we think about our mission of.

Stuart Lombard: You know, improving everyday life while creating a more sustainable world like how do we create a more sustainable world we have to do that at scale and that meant getting into things like solar and storage. Um and really growing our you know our scale and and and generac allows us to do that and and frankly. You know, advanced our product roadmap by about 5 years and so you know really I don’t see this transaction as an exit. It’s one of the reasons that I’m still here I’m really passionate about the mission and and where we’re going and and jenerac was really a mechanism that allowed us to you know, further our mission and and in line with that further their mission as well. And so. It’s been it’s been really exciting and I think you know again, 1 of the things I would you know caution entrepreneurs out there. You know so many people, especially when you’re in the venture capital world or all all about the exit and what the dollars are and you know dollars are wonderful, but. You know you want to build an enterprise that’s built to last you know something that you can look back on and say I’m really proud that I was a part of that and I built that and and you know generac has definitely given us that opportunity and so why I’m still here and why I’m super excited about it.

Alejandro Cremades: Hey Stewart 770000000 I mean unbelievable. What did it feel like that day when you inked the deal and all of a sudden you realize hey wow I can’t believe that we built it to to this level to this type of value.

Stuart Lombard: Yeah, amazing, amazing like it’s it’s been an incredible journey right? and there was you know, clearly you know I think across the team I’m just so proud of the team and and and the work that people have put in and and really the learning journey that we’ve been on you know I tell people you know when we started. You know we were 7 people in a room and you know I was the Ceo but I was really a product manager and um, you know all of us have I think you know, kind of reinvented ourselves. You know as the business has grown and you know what’s good when you’re you know, 7 people is different than what’s good when you’re 50 people. 200 people to 600 people where we are now you know the skill sets you need to create and what it takes to be good and what it takes to compete with you know some of the largest players like Google and Amazon and Honeywell um, you know. That’s pretty exciting challenge and and you know constantly reinventing yourself and and understanding. You know what great would be and I think you know when we started. It was really cool because people said like you know, nobody cares about thermostats and what are you going to do six months from now and the implication was that you know thermostats were as good as they were ever going to be right. And we’re into it 16 years and you know we’re talking about Ai and machine learning and you know vision and you know voice and and we’re using sensorfusion and radar technology and you know it’s really just been a journey of learning and and and reinvention and we’ve really pushed.

Stuart Lombard: I think you know innovation in the category and and you know one of the reasons I think we’ve been able to to compete and and survive really well against some really formidable competitors like Google and Amazon and honeywell.

Alejandro Cremades: So obviously your your third transaction. Third company third transaction hey why what? a good batting average is word unbelievable now now now the the third time around you know I’m sure that they you were very careful. On how you went you know about choosing who you would they partner up with so what did you for sure wanted to make sure that you got that you got right on this third time around.

Stuart Lombard: I Think you know, really focusing on and understanding what the plan is going forward right? What is the plan going forward. You know what are the things that we want to accomplish. Um, how do we add strategic value to the acquiring company. And then how does the acquiring Company. Add strategic value to us and I think if you can map out those things you can understand whether you know the acquiring company is going to take you on the path that you want to go or whether they’re on a different path and you know you want to go right? and they want to go left and you know which is only going to end in you know in heartache and so. You know we spent quite a bit of time. Although you know again to be honest, like I think culturally we were very Well-aligned. We’re a very transparent culture. They’re a very transparent culture and we were like here’s what we want to? do you know?? no Surprises. You know here are the you know challenges and opportunities and they were also very clear about. You know here are the challenges and opportunities and so you know pretty quickly. We realized that you know there were a lot of things that we could bring to them and there were a lot of things that they could bring to us and and so the match was was I think really really great and you know they’ve been Wonderful. You know they’ve done everything that they said they were going to do. Um, and I think the partnership’s been. You know, really strong and and great which is not like the other experiences I had you know previously which ended in much more painful outcomes.

Alejandro Cremades: So you were talking about the excitement of words of what is to come now on on this next chapter for ey. So um, in that regard imagine you were to go to sleep tonight and you wake up in a world where the vision of ecobi is fully realized what does that world look like.

Stuart Lombard: I think it’s a world where you know we live in incredibly sustainable communities. We live in a world right now where you know energy is expensive. It’s scarce and it’s dirty and I think we’re moving to a world where energy is clean, cheap. And plentiful and that’s a very different world and I think you know it’s really being driven by by 3 core trends. Um, the first is just the move to renewables and if you look at renewables. They’re already the cheapest energy out there. You know you can buy solar on a 20 year per hour purchase agreement in California for. Two cents a kilowatt hour is by far the cheapest power anywhere and if you look at why coal and gas is being retired. It’s not so much government policy. It’s just economics. They can’t compete at two cents a kilowatt hour and natural gas costs more than two cents a kilowatt hour so even if you don’t had didn’t have to build a plant just the marginal cost of production is. Is more expensive and so that’s the first component. The second component is really around the electrification of everything and if you think about the major consumers of electricity which are things like transportation and heating and cooling you know electric cars are already better than internal combustion cars and people are going to buy electric cars. Not because governments mandate them. But just because they’re better and more fun to drive and similarly if you look at things like heat pump technology. You know a heat pump is 2 to 4 times more efficient than a gas-fired furnace and so you know why would you put in a gas-fired furnace if you could put in an electric heat pump and and so these.

Stuart Lombard: Technology trends are are turning the world to electrifying you know, maybe not everything but a lot of things so that combination of the decarbonization of the grid. The electrification of most things and then digital connectivity and digital connectivity. You know changes a lot of things and so. You know one of the things that we’re doing is you know we’re building smart appliances that understand what’s happening on the grid understand power prices understand carbon content and they’ll shift when they use energy to take advantage of low-cost carbon free power and so if you look at California right now. You know on an average midday. The price of power in California on average could be minus six cents a kilowatt hour in other words, they’ll pay you six cents kilowatt hour to use power because they have so much midday solar and conversely you know, late afternoon. It becomes very expensive. So if you’re a smart appliance if you’re ah you know a thermostat for example. You know I might say like I’ll cool your house from you know, ° to ° when power is free and I’ll let it coast in the late afternoon when power is expensive and you can create you know tremendous outcomes for people and so you know those 3 trends you know I think the the decarbonization of the electrical grid. Electrification of most things and the connection of things so that you have you know, context and understanding will really change the world for the better and and I think you know we have this this future vision of you know, just cleaner cheaper energy which is tremendously exciting.

Alejandro Cremades: That’s incredible Now. We’ve been talking about the future here. So I Want to talk about the past but with a lens of reflection. Let’s say I was able to put you into a time machine and I bring you back in time to that moment where you are still in your father’s house bore to death you know. Writing you know, pen to paper figuring out. You know, like what business plan that what’s what’s that going to look like let’s say you’re able to show up right there on the spot and and sit down with that younger self and have the opportunity of giving that younger self one piece of advice before launching a business. What would that be and why even why you know now.

Stuart Lombard: It’s a great question. Um, and I think um, you know when I when you’re small in your startup. Maybe let me start first of all I’ll start by saying you don’t know what happens on the path. You didn’t take right? so. This is. There’s a big assumption that you know this path would be a better path and and you know as I said before I think you know when you’re very small. The things that make you good. The fact that you clean out the waste basketkes that you you know work around the clock that you you know you’re the salesperson. You’re the accountant you’re the engineer. You’re like all these things you know. Are are really important when you’re a startup but you know as you grow you know those qualities won’t necessarily take you to the next level and so you know the first thing I think is just thinking about you know, being aware and reinventing yourself. The second thing I would say is is really. I wish I had to spent more time on you know brand culture and strategy and I think you know you’re so busy. You know, just trying to get keep the lights on and the door is open that you know I anyway did not spend a lot of time on that. Um the challenge is when you scale. Those things become really really important and um, you know when you’re 10 people in a room or 20 people in a room or even 50 people you know culture is easy because everybody knows everyone. But once you scale beyond you know 150 people which is Dunbar’s number um

Stuart Lombard: You know people don’t know you and then culture and values and strategy become really really important and I remember one day I was you know sitting in the office and I overheard somebody. You know, whatever at the desk next to me going like I don’t understand our strategy and I don’t know what we’re doing right and that like hit me like. You know, right through the heart because I’m like it’s so obvious to me how can we not know and and that was really you know an alarm bell that said you know we need to spend time on this but it is you know, having clear understanding of what you stand for um and your brand to customers like if you think about the brands that you. That you really admire those are brands that stand for something that that every interaction you have with that company supports those brand attributes and so you know spending time really understanding. You know what you stand for and that clearly is closely related to your values right? your values and your culture. Um, you know. What you reward you know the types of people who do well in your company. You know writing those things down is really important because you know as you you know in the beginning you might do all the hiring but as you grow you can’t do all the hiring and so you know how do you make sure that people are going to you know, support and grow what you’re building. And then tied to that is I think strategy and and you know again in the beginning when you’re when you’re just trying to get like you know, 2% share of ah of a market that’s growing really quickly. Strategy doesn’t matter that much. You know as the market starts maturing and you know you kind of think about how you grow you can grow because the market grows.

Stuart Lombard: Or you can grow because you take share from your competitors when the market growth rate starts slowing and you have to take you know growth from your competitors by taking you have to get growth by taking share from your competitors you know in the beginning you can kind of pick off the week and and again like growth is easy but you know when you have to take share from. From your best competitors. That’s really hard to do you know and when we think about taking share from Google for example, like that is hard I’ll tell you that is very hard and so that’s where strategy I think becomes really really important and so you know if you can start thinking about those things early you know brand. Culture values and strategy. You know you’re just way ahead of the game and and when you’re ready to scale. It’ll just be a lot easier because it’ll already be ingrained in the you know in the Dna of the company.

Alejandro Cremades: I love it so Stewart for the people that are listening that will love to reach out and say hi. What is the best way for them to do so.

Stuart Lombard: Best way is steward at ecobe.comsturtatecobe.com and yeah, please send me any questions and if I could be helpful I’d be happy to do that.

Alejandro Cremades: Wow is he enough Stewart well thank you? So so much for being on the deal maker show today with that is it has been an honor to have you here.

Stuart Lombard: Awesome! Thank you very much really appreciate it.

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