Welcome back to the Clean Techies podcast, where we interview climate tech founders and VCs to discuss all things building and investing to solve the biggest challenge of our generation climate change. Today, Somil and I interviewed Jeff Chapin and discussed what he's doing at Haven Energy, a home electrification service with a particular focus on batteries. It was a really fascinating conversation, including topics like how they only pitched two investors to raise their seed and how building a climate business is not about playing to people's goodwill to solve climate change, but rather to build a better technology that serves customers better. Really great conversation with Jeff, and we hope you enjoy this episode. Alright, welcome to the show, Jeff. How's it going?

Jeff Chapin: 0:48

It's great Thanks for having me.

Silas Mahner: 0:52

Yeah, absolutely Really glad to have you. Somil and I are excited to have this conversation, so I guess let's just kick things right off. Give us a quick background on yourself, just kind of who are you and what are you working on today?

Jeff Chapin: 1:05

Yeah for sure, my name is Jeff Chapin. I'm a product designer by trade, but kind of old school product designer. I studied mechanical engineering and physical product design. I worked for about a decade at IDEO, the big design consulting firm, so I touched on a ton of different industries there, some of which were relevant for what I'm doing today. I left in, say, 2009 and started working in the developing world in taking product design and market development to issues around clean water access, access to improved sanitation and rural areas of Cambodia, vietnam, myanmar, kenya, ghana. I did that for a couple of years and then somehow, through a friend that I met in that world, ended up co-founding Casper in 2013, the direct to consumer mattress and sleep company, and ran product and, in the early days, supply chain for that business and then left in 2021.

Jeff Chapin: 2:09

We talked about before the show started. We were living in the Bay Area. I have a wife and three little kids and when COVID happened we were just locked up in our house with twin two month olds. We decided to make a change and we moved to a small town in rural Wyoming for my wife's work, and that actually is what brought me back to some of the work I had done at IDEO earlier in my career. We had purchased a 110 year old house that was uninsulated, had literally a 90 year old natural gas boiler, original windows in the house and I post Casper.

Jeff Chapin: 2:48

I took about eight months off and just dug into home construction and learning about the space. I renovated the house dramatically and started on my own journey of home electrification, and that's where I ran into some of the difficulties which led me to start this business I've been working on the past year, which is Haven Energy, and we're focused at present on deploying and accelerating the adoption of residential batteries, and we can talk more about it, I think, later in the show. But essentially it's a nascent market and a fairly new product for homeowners to think about, but has a lot of benefits both in terms of costs and resiliency and environmental benefits that we can get into.

Silas Mahner: 3:32

Yeah sounds good, so I think it's quite interesting. So you wanted to electrify your home just because you were going through the process of renovating your house? Have you always had a particular interest in climate? Why specifically go and build a company around it? Because it's in your blood, you know. Entrepreneurism can't be taken down.

Jeff Chapin: 3:52

I've always had an interest, I would say, in basic human needs. So in my time at IDEO I tended to focus on medical devices, healthcare products, essentially like what are the basic human needs that in the US, most people are still having to deal with. In my time there I did some work with General Electric on a battery. Actually, they had a molten sodium battery which was branded the GE-Dirthon battery.

Silas Mahner: 4:21

Hey there, quick break to remind any founders or VCs listening. If you are looking for deal flow, seeking to raise funding, looking for partners to help service your needs, or perhaps you're looking for corporate investment partners, feel free to reach out to us through our Slack channel, which can be found in the description. Because we meet a lot of people in this space, we set aside time each week to make introductions to the various people that we encounter. This is something we do free of charge in order to help these incredible companies solving climate change to scale. Looking forward to hearing from you in the Slack channel.

Jeff Chapin: 4:50

And it was originally built for local motives, for hybrid locomotives. And then they were looking at adapting it for peak demand shaving, which is a way for commercial electric customers to reduce their bills. And also critical they're looking at critical infrastructure backup. So very different chemistry than the batteries that are being used today. But it was my first real look at both the economic and technical side of batteries and battery management and I found it super interesting. Just the energy markets are fairly opaque and most people actually aren't that interested in them. But when you get into it they're quite fascinating. And I also worked on the consumer side of my time at IDO. We had worked on home energy monitors, which don't really exist in the marketplace right now, but at the time there were companies putting out, I would say like pre-nest, devices with touchscreens that allowed you to monitor electricity consumption, gas consumption, water consumption, and we were looking at how to use gamification and social networks to drive behavior chains to reduce consumption.

Somil Aggarwall: 5:56

And so.

Jeff Chapin: 5:57

I kind of always had an interest. Then I obviously went and worked in developing world and water and sanitation Casper, if you think about the mattress industry, is not particularly interesting, honestly, but sleep as one of these basic human needs that we developed economies still have a lot of issues with and generally a bad relationship, was super interesting and so I think the broader promise of that business was actually in line with my history of looking at basic human needs. And obviously now we're faced with both a climate crisis and also energy resilience crisis, where we're getting more and more climate-induced weather events, more outages, more blackouts in areas where batteries can help and home electrification can help.

Somil Aggarwall: 6:49

Super insightful. I think one of the things that you pointed out it's related to things that we see in terms of other companies and other founder stories. I wonder if you feel as though the industry was, whether it was easy to learn or there were some real challenges, coming from sort of an outside operational background, because in a lot of the companies that I see, for example, working in venture capital, you have the model of the industry insider who will come and be able to tell you how things work, and then you have the role of the operational executive, maybe more similar to your background, which is excellence in one operating role can translate over to another. Which side do you think you fell more on? How do you think that helped you succeed?

Jeff Chapin: 7:32

It's a really interesting question. I think when we started Casper, I had actually, like our CEO and business partner, philip Cren, he had dabbled in e-commerce selling of mattresses previously, so he understood that side of it. This was like early e-commerce, and I had worked at IDEO with some of the larger mattress brands that an average American would know, so we kind of knew the industry. We made the mistake, though, of not hiring any industry insiders for years, and so I think it was the year six or year seven before, on the operation side, we brought somebody who used to run mattress manufacturing plants and the insight like he could answer in a second questions that we had spent years trying to figure out, and so I think, as you need a balance of like, you obviously need the outsider view, so you try something different, but in any industry, in a particularly energy, which is very complex, there's a lot of value of having insiders, and so, as we've built Haven, we're a small team I think we have, in addition to the founding team, I think we have 12 or 13 employees. Both of them come from either Tesla they used to work on Powerwall, they worked in solar sales or solar install operations. They worked at SPAM, the smart electrical company. So we're balancing, like outside expertise with inside knowledge, and I think that is an important thing to do.

Jeff Chapin: 9:07

To your earlier question, the first part of the question, there's a lot to learn. We spent six months before we even started to put pen to paper on like what this idea would be, just doing phone calls, and it's one of the things that, like I'm very grateful for. We started with like a friend who so one of our co-founders, phillips from Texas, and he was childhood friends with somebody who worked in the energy industry Not the right part, he was building natural gas peaker plants, but he understood the energy markets and so we started with a phone call to him and then we, as the conversation's going, you have half hour of their time, they might mention another person or another business and just graciously at the end you ask okay, can we get an intro? And I think everybody offered and everybody followed through and I think it's like. I think human nature is still generally good and people like to help each other out, and I don't think it's just self-interest, I think they just like to share their knowledge and help each other out.

Jeff Chapin: 10:15

And so we had dozens and dozens of these phone calls to learn the industry and shape. And we would go back to people like, hey, we talked two months ago. Like our ideas have evolved. Can we catch up on the phone? And we also have to follow through. Like when we started the business and raised our seed round of funding, we sent notes out to those people and we're going to do that for the support. This is where we are. You know you'll see updates from us going forward. So I do think you have to close the loop with the people that have helped you and keep them kind of involved, because they have essentially given you something and it's good to return the favor, even if it's just information or an update.

Silas Mahner: 10:49

Hey, there are you building a climate tech business and looking for very specialized talent? Consider reaching out to our sponsors, next Wave Partners. Next Wave are experts in talent acquisition, recruitment and retention across the climate tech, renewables and ESG spaces globally. So if your team is growing or you're looking to make a career change yourself, feel free to reach out to Next Wave at Next-WavePartnerscom or reach out to one of their consultants directly via their LinkedIn page. Yeah, I think this is a pretty interesting point.

Silas Mahner: 11:15

This is something that has been some of the usually like the biggest, like eyeopening things that founders have talked about before is like, hey, we really like we tried to build something and then we went, we went back and realized, hey, we just need to do a ton of like customer discovery and talking to people and understanding what's going on.

Silas Mahner: 11:32

Especially if you're an outsider, if you're somebody who's not familiar with the space, you can actually learn the insights pretty quickly if you're willing to just put in the effort to have those conversations, talk to experts and just go down the rabbit hole, because I'd say, people in climate, you know they might. I feel that they're a little bit more generous with their you know recommendations and sharing because they have, you know, the broader goal of like let's solve climate change in mind, usually, and they're not going to be too stingy, you know, with their, with their Rolodex. One thing I do want to ask is you know for people who are listening, who are not, who are who want to build a climate tech company but are not quite on the journey yet, you know, how should they get going, any mindset things that they should develop to get going, like what's your tips for them to really just get the, you know, get the train moving?

Jeff Chapin: 12:21

Yeah, I mean, I think at the end of the day you just set that curiosity and like follow lines of inquiry, so you know you're going to have maybe an idea about something you could do.

Jeff Chapin: 12:34

Just start learning and have those conversations with people that can give you feedback that might know more than you. You know it's a little hard to select this feedback. You can't listen to every piece of feedback and take it like follow what they're recommending. You have to put your own filter on it. But I think it's just. You got to get out there. I think it's like extra hard in this era where people are working from home and used to like being a bit more insular. But you know, it's stupid small things. Like we went to the industry trade show for solar and just walked and talked to people and they thought we were idiots. Like we told them what our business idea was in the early days and like, well, I think like nine out of 10 people set up the terrible idea. So if it was like 10 out of 10, we might have turned back. One person was was interested. It was the same for Casper. Honestly, like if you're getting too many people who think it's a good idea, it's probably like too obvious or something. So I don't know.

Jeff Chapin: 13:37

I think the simple advice is just get out there and start learning. You have to like. You have to always. It might be something that's hard to learn if you don't have it innately, but you just have to have curiosity. So like if you're having a conversation with an expert in the industry. So like for us, maybe we talk to somebody like who runs ERCOT or you know it works on a trading desk or runs a retail electric provider or something. It's a bad idea if you run out of things to ask them or her before your 30 minutes is up. Like you got to have curiosity and do your homework ahead of time so that you have a ton of questions. If they're giving short answers, you got to engage them.

Silas Mahner: 14:21

Yeah, kind of like prepping for a podcast. No, just kidding. I think this is interesting. I really like that. It's helpful advice. I think it is. It can be difficult, but, yeah, just get out there and have the curiosity. That is a hard one to develop, I think, if you don't have it, naturally, but it can be done. So let's talk a little bit more than particularly about Haven, right? So I want to understand you've mentioned where the impetus came from. You know, while you were remodeling your house, you wanted to electrify it and you maybe had some issues. Maybe, if you want to elaborate a little bit on what particularly you saw as a problem and why you're like hey, like this is worth starting a company for, but, generally speaking, want to just kind of get the really like deep overview of what you guys do and how you guys started.

Jeff Chapin: 15:10

Yeah for sure. So in terms of my own experience and journey, if you look at home electrification or building or like electrifying average person's life, there's only like four or five things you can do. You can get an EV so you get rid of your internal combustion engine. You can switch from a furnace or a boiler to a heat pump. You can switch from a gas stove or electric stove like a resistance electric stove to an induction stove. You can switch to a heat pump, hot water heater and then you can add generation, you can add solar and you can add a battery, which kind of touches everything, but there's not. It's a very short list and, coupled with that which I mentioned earlier, you do have to look at like efficiency, because if you're going to, you know in this house, through air sealing and insulation, I could cut my energy consumption even before I switch to electrification by 40%, and so you got to do that first, because if you don't do that first, you're going to size a heat pump for the wrong heating load when you look to electrify your home. There's only like a small set of things that you can do so you can switch from internal combustion engine car to an EV. You can switch from a fossil fuel heat to a heat pump. You can change from a natural gas stove to an induction stove. You can change from a gas or resistance electrical resistance hot water heater to a heat pump hot water heater, and then you can add generations. You can add solar on your roof. You can add a battery which pairs naturally with solar but also has some functions.

Jeff Chapin: 16:50

When you think about interacting with the other electrified appliances in your home, you shouldn't do that, honestly, until you look at efficiency. So what is the heat loss from your home? In this, where we moved here, just through insulation and air sealing, we reduced the heat loss or energy consumption of the home for heating by 40%. And so if you don't do that first, you don't fix that first. You're going to specify a heat pump that is oversized and it'll actually be inefficient to operate it. And so, in terms of my experience, we bought an EV and I found that to be quite easy. I called an electrician for $300. He came and wired a 240 volt plug and we plugged in the charger and it worked. And so I was like, right, that's not that hard. There are businesses that are looking to do that at scale, but it didn't seem like there was like great opportunity there.

Jeff Chapin: 17:51

When it came to adding a heat pump, that was tremendously difficult. I could not find hey, granted, I live in a small town, but I could not find anybody who was conversant in heat pumps. And specifically we have hot water heat and radiators, and so getting like air to water or water to walk heat pump where you're like pulling heat out of the ground near impossible. And I spent I mean, I did my own. There's these like manual GA calculations where you're calculating heat loss from your home, and I spent forever researching this and modeling my own house stuff that I had time on my hands and I had a technical background. And then I started working with a plumber to specify. He wanted to put in an appliance which was rated for twice as much BTU as my calculations were saying and it was a couple of thousand dollars more expensive and what it would do is it would heat up the water really quick.

Silas Mahner: 18:55

Yeah, basically. So you know we've had a little bit of technical difficulties, but basically, if I understand correctly, you were having like a tremendously difficult opportunity like getting your heat pump installed, and this kind of like essentially led to you realizing that, hey, we need to provide these services in a way that's like simpler and more accessible. Is that right? Hey there, Are you building a climate tech business and looking for very specialized talent? Consider reaching out to our sponsors, Next Wave Partners. Next Wave are experts in talent acquisition, recruitment and retention across the climate tech, renewables and ESG spaces globally. So if your team is growing or you're looking to make a career change yourself, feel free to reach out to Next Wave at next-wavepartnerscom or reach out to one of their consultants directly via their LinkedIn page.

Jeff Chapin: 19:40

Yeah, thanks for summing it up. Yeah, I ran into the same thing. I wanted a battery backup because we get a lot of outages, because it's a pretty windy here, and that was also equally difficult. I couldn't find somebody who would actually even do it, and so it struck us that a lot of the appliances, although they will improve over time, they're already good enough to provide the benefits and they're affordable enough, and that's happened very recently, like the price of solar or the efficacy and price of batteries just driven by EVs. Those have come down dramatically in the last decade.

Jeff Chapin: 20:20

And so there is this opening of a window, but what was not there was the service side.

Jeff Chapin: 20:26

How do I actually figure out what to get?

Jeff Chapin: 20:30

Construction is notoriously difficult, especially renovation, because you have every home is unique and you need to design around that home, and so that's what the business is focused on is like how do we accelerate the adoption of batteries through a service model? And so we're creating tools on a platform that enable both us to sell and other people to sell on top of our platform to get batteries properly specified, installed, and then the last part is maybe not into it is operated. So, once the batteries installed, it can do a lot of things both for the grid and for the homeowner, and there is a need for active management of the battery, or at least intelligent management of the battery over time, and so that is also a function working and that's very different generally than like most of the home electrification installations where it's kind of set it and forget it. Maybe on solar you need to monitor to make sure you don't have, like, inverter go out or a panel go out but you're not actively optimizing the solar in a way that you might with a battery.

Somil Aggarwall: 21:37

You brought up a really good way of thinking about it. Did you follow the All-In Podcast by chance?

Jeff Chapin: 21:45

I do occasionally, but not really. I used to listen to podcasts religiously, but now it's very hard to find time.

Somil Aggarwall: 21:53

Well, hopefully we can change your mind on this one, but related to the All In podcast.

Somil Aggarwall: 21:59

Their most recent episode actually brought up a really interesting counter viewpoint to the traditional way that we look at climate, and I think that's especially relevant here for your founding story. It's the idea that you can have a focus on bringing renewables, more reliable energy storage, less pollutants all of these things to improve the way that we access and use energy, without necessarily using the good will of supporting climate, is the only reason to go forward with a business, to go forward with a business model and bring something to market. I feel like I really heard that in your story, but I wonder, throughout your journey being an entrepreneur within climate, within energy, if you've had to balance those conflicting viewpoints between the people who are sort of wanting you to tell your messages saving the planet, and I think where you naturally more gravitate towards was this is just a good innovation that should be brought to market with the benefit of you know, bringing you know good energy along the way.

Jeff Chapin: 22:55

I would say we this is an interesting question We've never felt pressure to go one way or the other. Obviously, like we got into this because we had an interesting climate and electrification and the benefits. We've done our due diligence to understand the benefits, the climate benefits that home batteries can have, and so we have confidence and comfort in that. When we look at our audiences, I don't say it's the exact opposite, like I don't think there's much of a business you can build if you're relying on, like climate interest or climate goodwill and I think, the consumer side. You know the battery has three benefits it reduces your electricity costs. It provides you resilience, so backup power, and it does reduce your carbon footprint and honestly, like when we started selling, we were talking about all three on equal footing and now we don't even talk about the carbon footprint. We never found a good way to talk about carbon footprint. It seemed inconsequential to homeowners and so we talk about energy cost savings and resiliency. That's what matters to people. Those are emotional and they say in politics like kitchen table issues.

Jeff Chapin: 24:21

And on the investor side, I would say, like you know, particularly in this investing climate, they're looking for viable businesses, large markets, and I think you need to have a large audience and appeal to multiple motivations. And also, you know, we're kind of piggybacking on a solar industry that has learned that you need more than one motivation to close a deal and sell a job, and so that's been learned many, many times in the solar industry. And so we're, we're, we're building from there and, and you know, obviously in a sales presentation you might tailor the message based on what you're hearing from the customer and we have some tools that help us understand, like where somebody's coming from emotionally and mentally when we start talking to them. But I think you, we've got essentially like these three tools in the tool shed to talk about, although we do find and talk more about, you know, bill savings and resiliency, I think this is.

Silas Mahner: 25:26

I think it's quite interesting because I come as I mentioned before the show, I come from a really rural area as well, and people are usually like, oh, you know, climate change is a hoax or whatever they want to say.

Silas Mahner: 25:35

But if you can put up, if you put the focus on like, hey, this is actually just a better product and it's substantially better, then you don't have to rely on all those things to try to convince people to do something that you know is more costly, because it's just a better business, it saves the money, it's more convenient, whatever it is, that's how the real climate solutions are going to be adopted, and just very quickly, right?

Silas Mahner: 25:57

Because if people can have a better thing, they talk to their neighbors, right, and they make it happen. The thing I always find fascinating and I'd be kind of curious to get your thoughts on this here is you know, you work probably with a lot of contractors, right? You know quote unquote blue collar workers to install these things, and usually those are the people who are like oh, you know, I'm not interested in this like renewables thing or whatnot. So I'd be kind of curious to hear, like how I don't know exactly how to ask this maybe how you approach these contracts about working in this thing. That is kind of quote unquote, climate focused and what their, what their reaction is to it, and then just generally speaking, how you know, how you've seen them in kind of take on to the space or if they really enjoyed a lot.

Jeff Chapin: 26:42

Yeah, that's interesting, I think. So, going back to some of the things we discussed earlier, very early when we were formulating the business, we did a lot of ethnographic research. So we talked to homeowners, we talked to battery manufacturers, we talked to, essentially, grid operators and the people that operate energy markets, and we also talked to electricians and I would say that, like the, the actual, like core driving thing for an electrician at least the ones you know that we've been learning from and working from is really business focused. Is this a good business opportunity for me? Are you going to be a good business partner? Are you going to deliver? You know, give me jobs that are well specified, pay me on time. Am I going to be efficient with my time? And less so about what they're doing. I would say we did learn.

Jeff Chapin: 27:42

There's like different types of electricians and different levels of interest and trying something new, and that could be anything new. And, just like most jobs out there, you make more money when you get good at a narrow set of things and do it repeatedly, and so in larger metros, you might have an electrician that just wires swimming pools, or an electrician that just wires EVs or just does recess lighting, and there's enough business to support that. And we had a guy we were talking to in Boston and we had actually sought him out because we saw that he was installing EV chargers were like, right, anybody who's installing EV chargers probably an early adopter of technology and wants to grow their business. So let's speak those people out and start to talk to them. And he brought up swimming pools and he said why? Why are the swimming pools really easy? He said I'd never wire a swimming pool because I don't do it enough and if I make a mistake I'm going to kill somebody. And he said I'll let the pool guys do the pool electrical.

Jeff Chapin: 28:45

And so I think it's more about like understanding how they run their business, how they think about good opportunities, what's important to them in terms of cash flow and reliability of essentially us being lead gen to an installer and we have to structure our business to fit into that. We're very fortunate that, like battery installs are generally like a full eight to 12 hours, so an electrician can show up on site in the morning, work all day and get paid for a full day's work. For a residential electrician that's far more lucrative than doing three or four house calls. And so we actually have like a very good offering for an electrician and so we've had a. You know we're early days and we need to build out our network more, but we've had a reasonably good time attracting and partnering with electricians in an era where in the press, you see that there's this massive shortage of trades. We haven't really run into that yet, although obviously we're still small, and so maybe we'll run into in the future, but right now it's not an issue.

Somil Aggarwall: 29:51

That's, that's super. I definitely see where you're coming from on that. Um, I wanted to, you know, pivot a little bit about talking about how you grew on a different side of things the institutional funding side, right? So I you know, you raised from from my understanding, you raised from Leroy Hippo, if I'm saying that correctly, and in October of 2022, is that correct?

Jeff Chapin: 30:12

Yeah, we had two leads with Leroy Hippo and Giant, which is a BC firm out of London. But yeah, the time is right. I think we close the deal in October.

Somil Aggarwall: 30:24

Okay, very cool. And you raised from them, you know very well known venture capital firm, what was raising in in, you know, the later, latter half of 2022, like not only as a company looking to raise sort of like, you know, early stage funding, but also a company within energy and climate which, in general, as we've seen, has had some interesting dynamics, you know, I think, in the in the beginning, first half of 2023 and definitely at the end of 2022.

Jeff Chapin: 30:53

Yeah, I mean I would say we were very fortunate to be just given our backgrounds.

Jeff Chapin: 31:01

Leroy Hippo was a seed investor in Casper, and so we've known them for a decade, and then one of the operating partners at Giant, the CEO of this current business, vinnie Campo. He was the US GM of bulb energy, which was a retail electric provider in Texas that was actually based in the UK, and the former boss was an operating partner or venture partner at Giant. So you know it was a typical. We had inside connections, network track record. They knew us very well and so I don't, generally, when you're doing like a seed round, from what I gathered, having just done it twice, there's a lot of evaluation of the team and some acceptance of like the category here we had passed the evaluation of the team. It was just did they see that there was a business opportunity here? And you know you, even if you pivot a little bit here and there, do they believe that there's something in an electrification and residential energy storage. So I think it's it's atypical just because of our, our backgrounds and we're, you know, very fortunate in that.

Somil Aggarwall: 32:12

In that regard, you know it definitely makes sense. I think you know I work in venture capital myself. If you see a founder who has demonstrated obvious success in you know taking a company pretty far, I think that is obvious cause for for confidence and conviction and later investment. I'm wondering this time around, when you went through that process, if you know to whatever you're comfortable, if you were in conversations with any other, you know available funders, private funding, things of that nature and why you eventually decided, you know, to back the people who had been originally, but also if there were any considerations and in going that route versus you know choosing perhaps if it was on the table, another more you know specifically climate only investor or another new investor on the table, just for the founders who are, you know, potentially fortunate to decide between term sheets.

Jeff Chapin: 33:04

Yeah. So good question, we can. Only we only pitched to those two firms. And then we have another private equity firm, quantum innovation partners, that's innovation fund, that's on our cap table to, and so we did not do a competitive process.

Jeff Chapin: 33:25

I do remember when we had the term sheets, they weren't quite what, candidly, quite what we were hoping for.

Jeff Chapin: 33:36

This was still, I think, before, like this light hiccup and climate funding. So we thought we should have like a slightly higher valuation. But we were faced with like, do we take the term sheet as is and try to negotiate a little bit here and there, or do we take a step back and run a competitive process and go wider? And we, you know you're essentially just trading like dilution for time, and we thought it was both better for the business to just start building the business, because we do think there is. We saw there were some timely things in terms of the energy markets and the inflation reduction act that we wanted to be ready to take advantage of, and then this sounds maybe like it's coming from a very privileged place. We just were more interested in starting to build the business, then go out and do a bunch of pitching for seed round funding and we knew that we would have that time later at a round if we got there or be around if we get there, and so it was.

Jeff Chapin: 34:46

It was kind of a combination of, like, you know a bird in the hand, just go with it, start building the business, like if you're successful in extra three or 4% dilution you won't even think about it. Well, you know, five, 10 years down the road and so we just wanted to get going. And so we, we partner with people that we trusted, that believe in us, and they've been good partners as we think about the business, about growing the business that they have. They see a lot of businesses. Larry hippos, obviously consumer focused we are a consumer facing business and so he had they have good insight there. And then giant is a more ESG focused fund, so they do have more climate background or more climate focus than Larry hippo. So we kind of have a balance of both.

Silas Mahner: 35:36

Yeah, this is quite interesting. I've never like, quite candidly, this is like the craziest raising story I've ever heard. I've never heard of this. This is really interesting to chat with you about this, but you mentioned something that obviously we wanted to talk about, which is the IRA, and so I guess would be really curious to have you I don't know how we should attack this probably Can you give us a bit of an explanation to start us off on how specifically the IRA relates to home electrification. For people who are unaware and I'm very lightly aware of this would be really helpful for you to give us a bit of a kind of a deep dive here.

Jeff Chapin: 36:12

Yeah, I think it's a little bit simplifying, but you can think about what the IRA does in two chunks One is like utility focused and one is home focused. So when you think about building left, electrification and homes, there's essentially three parts of it. They extended there had been for a while this rooftop solar tax credit, which is a 30% tax credit. So if you spend $10,000 on rooftop solar, you get to write off $3,000 on your taxes. That's a big incentive. They extended that, which is nice. The other thing they did is they extended it for 10 years. It always been like we upped every one, you know, for one year, for two years, and so it gave stability to the market. They also included battery storage, and so you can do standalone battery storage and get that 30% tax credit, or you can pair battery with solar. And then the other thing they did, which is a little bit nuanced, is that you used to have to charge the battery with your rooftop solar, otherwise you couldn't claim the credit. Now you can charge it from solar or charge it from the electric grid, and that enables better economics for a homeowner, even a homeowner who has solar. There's better economics if you can do some grid charge and grid export, and certainly for we've had a small number of customers who don't have solar and just buy batteries. So that's one thing.

Jeff Chapin: 37:48

The second thing on the electrification side, there are and so those are tax credits. There are rebates, essentially like more point of purchase rebates for electrical panel upgrades, electrical wiring upgrades, heat pump installs, and those are a little bit different. Those, just those get passed through the states and so even though the IRAs you know what is it, you know a year old, eight months old, whatever those are just passing through the states. I'm not even sure there's a state yet where you can claim those rebates, because the states have to set up those programs, but they're significant. I think there's another 10 to $15,000 on the table in rebates.

Jeff Chapin: 38:29

And the third thing, which is not home electrification but is related, as we talked about before, are there are rebates for home efficiency upgrades, so insulation, home energy audits, window upgrades and, as I mentioned before, you need to decrease your energy load. That's one of the ways we need to to, one of the things we need to do to succeed in greater electrification movement. And then there are like related to those. There's some kind of nuanced things in terms of like grant through ability attacks, credits which help businesses like us but don't necessarily help help homeowners, and so that's on the electrification side. That's all kind of for not if the electricity that those homes are now consuming comes from coal and gas.

Jeff Chapin: 39:18

And so there's a separate set of incentives out there that came through the IRA to incentivize construction of new solar, new wind, different types of energy storage.

Jeff Chapin: 39:34

You know, in addition to batteries there's many other types of energy storage that are useful on the utility scale, and so we need to, we need to transition the utility scale electric grid to renewables in order to make the climate impact we want through home electrification. So that's the two halves of it, that obviously one is homeowner focused and there's a, you know, a lot of incentives out there. The downside is, like most you know, we've done some studying of our consumer base and most people are unaware of the benefits that are sitting for them in the IRA, and so there needs to be a lot of education done by public institutions and by private businesses, because obviously in our our self interest to educate homeowners about how federal and we didn't even talk about it but there are state incentives to a different flavors that help reduce the cost to ownership and shorten ROI for for a lot of these home electrification investments that are more of my make.

Silas Mahner: 40:32

Okay, interesting, that's a really that's really helpful. I appreciate that, that context. So the big thing that I'm really kind of curious about is, in terms of your business model and you're helping homeowners electrify is how does this, how does the IRA play into your business model? If you can share this, because I'm also curious to understand. You know the things you guys are doing differently than other other companies trying to help with electrification.

Jeff Chapin: 41:00

Yeah, for sure.

Jeff Chapin: 41:02

So if you look at the IRA, a very obvious one is the federal tax credit, and so every project the homeowner gets a 30% Reduction in that install cost that they can claim on their taxes. So that's significant. A lot of homes require electrical panel work and service work. Either it's a you know Upgrade of their service level, say from a hundred amp panel to a hundred 200 amp panel, or we have to add a backup sub panel like that you get into, like the nitty-gritty, health, how to design the home electrical system. The rebates program Helps, will help we're not into it yet, but we'll help cover the cost of some of those upgrades, and they can be significant. You know, a main panel upgrades from a hundred to 200 amps could be four or five thousand dollars and so that that can be a that can make a project out of reach. But if there's a four thousand dollar rebate on it, then it can become affordable for the homeowner. And so those are probably the main things.

Jeff Chapin: 42:09

We don't do much On energy efficiency. I think you could, but we have to stay focused, and there I know there are other businesses out there, startups and income the larger incumbents that are focused on energy efficiency In some small set of our customers. We go a little bit broader. We've installed EV chargers, we've installed rooftop solar. Those are kind of tangential when somebody's looking to make multiple steps at a time and in that case you know there are other federal incentives in the IRA for, you know, ev adoption, charger installation, rooftop. You know that mentioned PV installation.

Jeff Chapin: 42:43

Yeah so it really is a lubricant for, you know, a market that the federal government is trying to jumpstart.

Silas Mahner: 42:51

So so basically, just to clarify I wanted to make sure I got this, because this is the thing that a lot of people talk about Is they say, oh, you know all these companies, it's only gonna work because they're basically able to kind of skim through Some of the benefits from it. But in reality, the IRA is just simply making it easier for the consumer that you're targeting to say you know what actually we can do. That Is that. Is that correct?

Jeff Chapin: 43:13

Yeah, I mean, if you think about it as like a piece of industrial policy, the federal government has Decided that we as a country need to electrify. You have many, both on the labor side and the hardware side. These are like fairly nascent products, like we maybe have been making dishwashers for 80 years, but we've been making solar cells for 15 to 20 years, and residential batteries effectively for about four or five years, evs for 10 years. And so I, in response to that criticism of, like you know, will these businesses work without the IRA? I think, like today, it'd be hard. There's still be adopters, but they'd be hard in five years or ten years when both labor, soft costs and Hardware costs have come down dramatically. Then you don't need the IRA anymore and that's why it sunsets, and so that these businesses become viable on their own, without subsidy. And so those lines will cross, and right now this subsidy is just, it's starting a set of both service and product industries that the, you know, the government views as important for both, like GDP growth and the environment.

Somil Aggarwall: 44:33

Yeah, you said something at the end there that I think is really interesting, like this being the catalyst for a cycle that could, you know, get consumers Acquainted with this kind of thing and just sort of start the cycle.

Somil Aggarwall: 44:45

The best, more venture partners, which is, you know, one of the most well-known VCs, put out an article about two weeks ago Talking about how a lot of you know solutions within climate, energy and other, you know, other Innovations related to this area, these areas where we've seen a lot of government funding, how they can succeed, you know, given the fact that there is what some people say government subsidy money propping up business models that aren't commercially viable. Right, and I think one thing you expressed is you know, very, very, you know interesting and approach to that Point blank. I'd love to kind of dive into the thing you said at the very end there, which is do you believe, how do you think about a business model outside of the IRA? And you know, in generally be advice to people who are in an industry like home of the that's a vacation that has all these benefits how do you keep your eye on the North Star of creating a viable business outside of those structures? To, you know, try and grow and get to venture scale.

Jeff Chapin: 45:44

Yeah, I mean, if you're, if you're building a climate focused business that receives no benefit From the IRA, like if, if there is a benefit there, you should capitalize on it like the guy. It's free money for your customers, so go get it for them or help them to get it. That's what the government wanted. If, if you're building a business in a space where that doesn't exist, yeah, there's obviously more pressure. There's nothing to like Reduce the cost to your homeowners, and so your value proposition has to. You know there has to be positive unit economics or like a pathway to positive unit economics. Otherwise there's it's not a viable business. And to your earlier comment, it might yeah, maybe it's good for the planet. But if you're take tackling it from a business first, approach F, you know the first thing you have to do is build a viable business. Those of us that are benefiting from the IRA, we have to build a business that will remain viable when the IRA sunsets and in the, in the short term, we'll benefit from it. It gets us going, it lets us Build technology, it lets the hardware manufacturers Bring down costs. I mean, I think that may like to me.

Jeff Chapin: 47:02

The amazing thing is we have an example here. Like the Chinese government 10, 15 years ago, decided that they wanted to own PV, rooftop solar production and the US government at that time said we didn't want to, and so that all moved to China. They subsidized that industry tremendously and costs came down. I don't know if it's 10x or 100. It was.

Jeff Chapin: 47:24

It's enormous, the the cost of rooftops Solar. It's come down so dramatically that they don't need subsidies anymore. And so we in this you know very mere adjacent industry we have, like the best example you could imagine, like government policy Subsidize the industry and now it doesn't need subsidy anymore. Unfortunately, it was not our government that did it, it was a different government and now we're trying to get some of that back with the IRA and some of the like domestic manufacturing incentives. But you know it can be done and it's being done and we're already seeing the benefits In terms of domestic manufacturing and investment in in US infrastructure and capacity to to you know. Oh, and our part of this kind of change in the electric grid. Yeah, I think this is that's quite interesting.

Silas Mahner: 48:15

I really appreciate that that take. I think there's a lot of people, my myself included, always debating that the the merits of policy and actually making things change. But it is a very clear example we can we're coming off of Want to move into Advice to founders, because obviously that's the kind of the point of the show and we are running out of time. I want to get a couple questions in here. So you know, given Given your fundraising experience kind of unconventional fundraising experience based on your kind of seeing how this went Do you have any particular advice to Founders on the fundraising process, things that you would do differently, or just maybe Conglomerating advice from your past experiences building ventures as well?

Jeff Chapin: 49:04

Yeah, I mean we started. Casper was very different, I don't know. We did 50 or 80 seed ground pitches, I guess, to the degree that you can afford to do it while you're going through the fundraising process or before you just have to start building. You know, obviously this specific business Haven was easier for us Casper. I do remember Ben Blair, one of the the owners or partners at Blair Hippo.

Jeff Chapin: 49:36

We went in, we we were investing our own money very much in the investing our own money, visiting factories to design the product and we, you know, take a time but we kept kept time to fundraise but we kept building. I remember going to a meeting in their office where we brought like a Two foot by two foot square of the mattress to show them what we were thinking and doing. And nothing. And then he's like make me a mattress. And I remember we delivered mattress. We had a hand built at a factory. We delivered it to his house in upstate New York. I swear he conceived his first child on that mattress I'm not sure I'll admit it. And they had no cover, no, nothing, just like a chunk of foam, and then he slept on it and then he invested. And so I think we just had. You just have to keep building so you can show progress. You got to find the thing that people need to see so that they can believe in it.

Jeff Chapin: 50:38

The other thing I'd say, both with this new business and with Casper, is on the if you have partners, like we, have supply chains for both of these businesses. We found, in both cases, a similar business like a startup mattress manufacturer and it's not quite a startup, but an earlier stage battery manufacturer you need to find somebody who's hungry like you to be like your development partner. So, if you are in a business where partnerships are important, you got to find like I don't know how to say like at the. When we started this business 10 months ago, tesla was not responding my calls when I was asking about powerwalls.

Jeff Chapin: 51:22

But there's other business, franklin. They would answer our calls and so we learned that time from them and I would hope vice versa, and it helped us make progress and get going. We got to do some installs with free batteries. They let us trial things, and so I think if you're early stage, you don't build an asilo. Get out there, find your partners, find the right partner for you and just keep you know to the degree that you can afford to do it with time and money. Just start building, because I believe investors. Whether it's a digital product or a physical product, anything tangible just gets them across the line to believe in you and believe in the idea.

Somil Aggarwall: 52:06

And you know I'm sure a lot of this advice is coming from. You know multiple, like you said, 50 to 80 pitches. You know multiple operating experiences. A lot, of, a lot of really successful embedded advice here. We do. You know, we know and we get a lot of feedback from a lot of the founders who listen to this podcast and really appreciate you know all of the guidance that you and other you know fantastic guests give us. There's so many things that you know have gone well that you've been able to execute on. And you know, for the founders who are hoping to emulate your journey, go in your footsteps, hopefully be, you know, a serial entrepreneur. What are your top three pieces of advice as to how they can succeed and do well at what they want to do?

Jeff Chapin: 52:50

Yes, good question, I think, if you're really. I think. I think your question is focused on really early stage and now. There's nothing novel here. Hiring you got your first 10 employees make all the difference in the world and we don't always get it perfect, but we've had some have now and have had in the past a cast or some phenomenal early employees where we would have. We wouldn't have the success we had without them.

Jeff Chapin: 53:18

And so hiring, I would say it's very difficult, so invest the time in it, spend a lot of time with people and leverage your network. I you know it's so important that you got to get it right. Part of that is like earlier we talked about different audiences. Potential employees are not another audience, so you have to sell them. Like somebody might be leaving a well paid job with stock options to come join your three startup with $3 million in the bank if you're lucky and you need to. Like they got to dream the dream to and believe in it. I think there's something funny with like founder economics. I would be generous with stock options. If it works out, you'll be fine. So, like, don't hoard and be, don't be too frugal with stock options. You need those, those important hires to be well incentivized and believe their owners and be owners.

Jeff Chapin: 54:18

So one, two experimentation. So always try things like we've been a business, active in business for four months. I think we do something different every week in terms of process or offering the. You know whether it's revising proposals or introducing a new financing product. Whatever it is like, experiment quickly. There's obviously easier to do if you're building a digital product, if it's live More like service focused business, a little harder. But I just I view like seed stage and a round financing as the time you should be experimenting. It's not your, your VC. So you might disagree with me. I don't think of those like scaling rounds. It's like let's just keep experimenting and learning so we can fine tune and then kind of related that with my team. Counterintuitive, I would say, is focus and know what you're trying to do. Don't get too distracted. Yes, experiment, but be very intentional. Have a hypothesis, test it out, see what you learn. I think at Casper this happened a little bit more later stage in the business. This was one of my learnings and can't really like.

Jeff Chapin: 55:29

One of the things that we got from Ben Lair at Lair Hippo is he had gone along for the ride. He was on the board the whole time I was there and he saw us lose focus. You know, we launched into Europe and then we got to the US. There was another company that called called purple, which you guys probably heard of, which came up and started to eat our lunch in the US because we were putting a lot of attention in Europe.

Jeff Chapin: 55:52

We ended up and then some native companies grew up in Europe and they knew the market customers better. We ended up with $50 million trying to do Europe and walked home, you know, with $50 million less in our pocket. There were a couple things like that at Casper where we we did the wrong experiments and didn't have focus, and so I think those are those are kind of the three things that I would say. Oh, and the point of Ben Ben reminded us of all this during the fundraising and continues to remind us of this when we talked about the business, and so it is kind of nice to have an investor who knows you and it's gone through some ups and downs with you, because he knows essentially what some of our natural tendencies are and can be a check in that regard.

Silas Mahner: 56:39

Yeah, I think that's quite interesting. You know it's it's not every day that you get that opportunity, especially with the climate ventures there's not a lot of. I mean there's obviously people have raised before and done things, but it's maybe not as common to have that kind of past relationship. But it does make me think a little bit of you know if, if it maybe in Ben's shoes, he, he knows, he knows he can invest because he kind of knows the weakness and he can, he can be aware of the things to guide you as a team right. So I think it's quite interesting. But overall, really appreciate you coming on, jeff. I think this has been great. Anyway had a couple technical difficulties here. We'll sort that out. So listeners have a nice experience. But overall, where where can people reach you? What's your call to action for the audience?

Jeff Chapin: 57:19

Oh man, I'm not on social media. Our businesses, on all the standard social media channels, find me on LinkedIn. That's the only one I ever look at and I'm a call to action.

Jeff Chapin: 57:33

I guess, if your audience is climate founders, I think it's like what's super exciting for us and for me is this is such a generational shift like this is the second time we're building an electrical infrastructure and distribution and generation, and so there's so much that can be done.

Jeff Chapin: 57:53

We're bringing layers of intelligence to systems that have been pretty, and so I think there's like so much to be done is the huge moment we're at the like very early stages. So I would say you know, if you want to start a business here, persevere, experiment, be curious, just try to learn from whomever will talk to you. People like sharing their knowledge, and so just tap into that kind of natural human tendency and build out your network and don't be afraid to ask for help from people. It is, to your earlier point, like it is somewhat unique in that everybody in the space kind of wants everybody else to succeed, and that certainly was not the case in the mattress industry, and that is like in that regard, you have actually more people out there willing to help you than probably any other sector out there. So I just tap into it and and learn and move forward.

Silas Mahner: 58:53

Absolutely Awesome. Well, we really appreciate you coming on, looking forward to seeing what you do and, yeah, thanks so much. Have a good rest of your day.

Jeff Chapin: 59:02

Yeah, for sure, for sure. Thanks guys for the time.

CleanTechies Podcast

#120 Serial Entrepreneur Fundraising, the IRA & Home Electrification, IRA-Dependent Business Models, & More w/ Jeff Chapin (Haven Energy)

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