–This story originally appeared in Challenge Cup News at the 1776 site–
Finding cash on the street was just the affirmation that Andy Frank needed to assure him that his energy-efficiency-related startup idea was a good one. From there, Frank launched Sealed, which guarantees energy savings for homeowners who might otherwise be skeptical that they could legitimately save.
With Frank, the startup’s founder and CEO, pitching, Sealed won the energy category in New York’s Challenge Cup competition last week and will advance to the Challenge Festival in May. Just after his victory, Frank explained which kind of homeowners he’s trying to help first and how Sealed’s savings guarantee works.
What problem is Sealed specifically trying to tackle within the energy efficiency space?
Energy efficiency is a huge opportunity. It’s basically off the charts. But the single biggest thing, by a long shot, that’s preventing the scaling of energy efficiency is confidence in the energy savings. Bottom line is [that] people don’t believe you when you say you can save them money. So we’re solving that problem by actually guaranteeing them savings. You don’t have to believe this project is going to save you money; we’re going to guarantee it can save you money.
So how can you make that guarantee?
We can do that by basically doing a first supplementary reassessment of your home. We go in and are able to understand what your home does, how it uses energy, where the weak points are. We run that through our models and then we’re able to present you with a recommendation proposal of what you could do to make your home more energy efficient and also what we can guarantee you from a savings standpoint.
Then, if you say yes to all that … we actually replace your current utility contract. We take those over, we pay them on your behalf so you never have to pay another energy bill again. Instead you pay us, Sealed, a single Sealed bill at the same time each month based on your past usage minus the savings we guaranteed to you.
How does your business model work in relation to this process?
We make money by taking a small chunk of the savings. So, our interests are directly aligned with the homeowner. It’s cliche to say, but we literally put our money where our mouth is. If you don’t save on energy, we don’t make money.
How did you arrive at this idea? Was there an “a-ha” moment when you realized that his might be a way to get people to decide that energy efficiency was worth it?
I’ve been in energy efficiency for a while—super nerd—and basically I kept seeing this problem over and over again, that people didn’t see the savings as real so it was preventing them from making investments that were really smart. And it sort of reminded me of the classic economics mentality. You tell a classical economist that there’s $100 lying on the sidewalk and he doesn’t even look down; he says, “No, there’s not. If there was, someone would have picked it up.”
And I was literally walking down the street one day—and I swear to God this is true—I found more than $100 lying on the sidewalk. I picked it up. I waited for about 10 minutes to see if it someone would come back. It was, for me, a good reinforcement that there’s a lot of value there if you know to go get it.
Your concentration now is in the Northeast United States. Tell me more about why you’d start there and what your target market is at this point.
Right now we’re in New York and Illinois. Basically our target market is places that are cold, so there are a lot of comfort issues—that’s a big part of what we do—and also places that have high energy prices. So, in New York, we target all sorts of folks, but especially folks that heat their homes with oil. About 10 million homes in the U.S. actually heat their homes with oil, which is really expensive, dirty and inconvenient.
What’s the range of how much money customers of yours could actually save?
One of our first customers, we’ve been saving them over the past six months, over $1,000. So you can save a ton. On average we are guaranteeing people around $125 savings a month. So it’s real money in people’s pockets.
Challenge Festival, which you have now qualified for, isn’t until May. What are the big plans for Sealed between now and then? What will the product look like at that point?
You’ll see an awesome product. We are investing a lot in our software right now. One of the keys of what we do is making it super simple for people to understand the value proposition and to sign on the dotted line. We are currently revamping our software to make it really easy for people to understand the economics of what we do.
A lot of times people don’t understand, when they’re signing up for a project, what the economics are, how they’re going to save over time. So we’re revamping our software to make that really clear to people and also much easier to integrate with everything that’s on the ground, that the contractors do.