The Middletown Press (Middletown, CT)
POWERING THE FUTURE
Shelton entrepreneur building a ‘virtual utility’ for energy savings
Over the past several years, Connecticut’s utility operators, Eversource Energy and Avangrid, have warned customers to be wary of anyone knocking on the door to get them to sign up for alternate service, or other scams to take their money.
If Al Subbloie Jr. shows up at your door — the office variety anyway — it may behoove you to give him a listen. All he wants to do is hand you money, and as an ongoing annuity you can feel good about.
Months after securing $55 million in fresh funding, Subbloie’s startup Budderfly is on an exponential growth trajectory with a business model in which it takes over utility bills for commercial buildings, then invests in improvements to glean efficiencies that result in energy savings it shares with those customers.
Under the Budderfly model, its customers win by getting guaranteed savings of at least 10 percent of what they pay to the utilities each month; Budderfly wins by getting its own residual revenue stream that grows steadily over time; and the environment wins as the company chips away at the 30 percent waste of energy or more in many buildings.
If the company exceeds the performance and longevity of Subbloie’s previous company, Connecticut could win as well. At its peak, Tangoe employed more than 2,300 people on a similar model but with an eye on a
different corporate expense, analyzing telecommunications bills for savings.
Budderfly is now looking for expansion space, with the company’s main office and test lab now located in Shelton.
“At Tangoe, we onboarded $30 billion in expense — $30 billion,” Subbloie told Hearst Connecticut Media. “Nobody really remembered that, because it (reported) $200 millionplus in revenue.”
The ‘utility’ of the future
It’s a pitch that is sparking the interest of many, including Subway, which has rolled out Budderfly’s “virtual utility” to a number of restaurants. Budderfly’s systems were quick to pinpoint the times during the day when electric use soared at any single restaurant — for instance, while baking bread — and find new intervals for those operations to smooth out the electricity consumption and to avoid electricity spikes that lead to higher utility bills.
“If you were rebuilding the utility of the future, you would want to own the end points — you would not want to own the (electric transmission) highway or the generation,” Subbloie said. “You’ve got this metering (infrastructure), which is not even placed in the right place . ... You can’t manage what you can’t measure.”
But solving the problem in the way Subbloie envisions requires a big capital base for Budderfly to draw on, as it takes over those corporate utility bills and retrofits facilities. In addition to that work, the company is spending on internal research as it develops its own devices to find those energy savings — for instance, power outlets and portable strips with embedded sensors to send data on what specific electric appliances are being used the most in any room at any time, or thermometers to track cold air escaping from a walkin cooler that is a candidate for an inexpensive strip curtain.
It is an approach that got the investment team of Connecticut Innovations thinking, with the statebacked venture fund join
ing Princeton, N.J.based Edison Partners among investors that funneled $22 million in early funding to Budderfly.
“That is huge,” said Matt McCooe, CEO of Connecticut Innovations, on Budderfly’s success raising backing and early traction with customers. “It’s going to be great for Connecticut.”
‘Going to pull a Ross Perot’
Budderfly’s arrival coincides with several highprofile corporate initiatives, to include Amazon becoming the first company to sign onto The Climate Pledge that calls for entities to achieve netneutral carbon emissions by 2040, a decade ahead of the deadline of the Paris Agreement of 2015.
But for many companies that requires a major upfront investment — Subbloie sees Budderfly as a way to grease the skids by picking up that electric tab on its customer’s behalf.
The company has grown rapidly in the past year, from about 100 locations using its systems a year ago to a pace where it is now adding more than 10 times that number monthly, most of them large corporations where Budderfly can bring economies of scale. With Budderfly continually monitoring facilities for waste and opportunities, it amounts to an ongoing monitoring of any location to maximize its energy consumption.
“The Tangoe value proposition taught a lot of people a lot of ... stuff that applies here,” Subbloie said. “I am going to pull a Ross Perot on this and outsource it for (companies) . ... I’ll do everything and pay for it (and) take my piece last.”