The Entrepreneurs for Impact Podcast: Transcripts
#128:
$500M+ to Boost Energy Efficiency in Commercial Buildings — Al Subbloie, CEO of Budderfly
PODCAST INTRODUCTION
Al Subbloie:
What we do at Budderfly, which is interesting, is I harnessed the power of capitalism, essentially to save the world. Because I realized, I need unlimited capital to really put a dent in the problem. So, ultimately, where do I get unlimited capital? I better build one heck of a business model, that attracts success in capitalism, to reuse that resource to save the world.
PODCAST INTERVIEW
Chris Wedding:
Welcome to the Entrepreneurs for Impact podcast. My name is Chris Wedding. As a former environmental private equity investor, four-time founder, climate tech CEO, coach, and professor, I launched this podcast to share the entrepreneurial journey, practical tips, and hard-earned wisdom from CEOs and investors tackling climate change. And if you like what you hear, please, leave us a review on your favorite podcast player. This is the number one way that listeners can learn more about the climate CEOs and investors I interview. All right, let's get started.
My guest, today, is Al Subbloie, Founder and CEO of Budderfly, a business that provides 100% of the upfront capital needed to give businesses premium high-efficiency HVAC refrigeration, LED lighting, and more, to reduce their energy costs and reduce their carbon footprints.
Backed by over $500 million of investor capital, Budderfly uses a combination of patented technologies, and proprietary energy software, to monitor equipment and collect critical data about businesses' energy usage.
In this episode, we talked about what led to his success, building his prior company to 2,500 people over 16 years. How he convinced investors to commit half a billion dollars to grow his current company. His unique model of owning the power bill and owning the outcome of his energy efficiency investments. Why this phrase matters, “A percentage of a large number is also a large number.” How to sell on benefits, not features. Why selling to franchises is a great go-to-market strategy. Power of capitalism to do good in the world. Why he hates to micromanage. What it means to run towards the lion roar, and a whole lot more. Hope you enjoy it. And please, give Al and Budderfly a shout-out on LinkedIn, Slack, or Twitter by sharing this podcast with your people. Thanks.
02:40
Al Subbloie, Founder and CEO of Budderfly, welcome to the podcast.
Al Subbloie:
Thanks, Chris. Looking forward to chatting.
Chris Wedding:
For sure. Let's start with this fun fact. You all have raised over $80 million of investor capital and not many companies can say that, period. Certainly, in the energy space, those with the tech play, for sure. What do you think convinced those investors to believe in you/the company, big dollars?
Al Subbloie:
So, good question and I have to put a correction on it. Prior to the large private equity round we did with Partners Group last July, which we closed, which was announced it was a 500-million-dollar deal -- yeah, I know, we'll have a few chuckles on it.
Chris Wedding:
That's a good one. Yeah. Okay.
Al Subbloie:
Yeah. It's all relative because I think over the next five or seven years, we'll spend well over a billion doing good things for the world, but prior to that, we had raised about 85, so that is correct. It brought the company up to a point to be mature enough to obviously do a large private equity deal. I think three things.
Number one, this is my third company, so I've done it before. As I always say, I have enough gray combined with passion that probably didn't hurt. Then, number two, the business model and the track record to date is you watch companies grow. It always helps when it's just growing consistently. And number three, I had the fortunate ability to make a good amount of money in my last company and I decided to invest millions of dollars of my own in the first angel and A round. So, of course, when an investor comes in and says, “Al also put a lot of his own capital, certainly believes in it,” that didn't hurt.
Chris Wedding:
For sure, and what a great reminder that, when we do research on cap tables online, they are far from perfect.
Al Subbloie:
Oh, they are far from perfect, trust me.
04:36
Chris Wedding:
Like six, seven X far from perfect. What a delightful number and even more to the point. So, you referenced your prior company. I think it's worth just highlighting for listeners what you did over 16 years building Tangoe from an idea to something far more than an idea, yeah?
Chris Wedding:
Yeah, that's fair and I'll try to do it in a way to put in perspective Budderfly, because the experience there certainly helped unrelated businesses, obviously, but listen, when you learn in life, apply that learning to your next thing, that's one lesson we all learn.
So we, because there's a bunch of people here at Budderfly, created the telecom expense management marketplace. And a really simple -- a large company spent hundreds of millions of dollars a year on this complicated expense category, on the expense side of their P&L, and didn't do a great job managing it. So, we built unique software and services. We would essentially charge them a fee to manage this large expense category for them. When I left in 2016 to do Budderfly, we were managing about $30 billion in annual telecom spend.
Put it in perspective, AT&T as a carrier was only a 20-billion-dollar company. So, we were managing more spend than the largest in the world, all over the globe. We had a thousand customers, all the big companies, and it was a lot of heavy tech to do that, which applied well when we did Budderfly. We normalized over 2,000 carrier billing systems throughout the world and normalized all that data. And every month we would process about 1.2 million invoices a month for our customers. Not an easy scale. Took many years, a lot of great talent. We got up to about 2,500 people when I left.
Chris Wedding:
Part of what I hear there is, tell me if this resonates, a small percentage of a large number is a large number.
Al Subbloie:
You pegged it. For now, for this discussion, we would charge about 1% of that total spend, was our revenue to do a better job managing that, and saving them 10 to 20% on an annual basis. So, think about us taking a little piece of that. And we created all the pricing programs, but we got exceptional at managing this highly complex expense category for large companies really throughout the world. And you are correct, we charge a small piece with a really big benefit. You can start to see the similarities with Budderfly on what I call the green money side of Budderfly is not dissimilar. The pricing is all very different and I'll cover that in a minute, but the benefits of the customer as an expense reduction, which is obviously even more on the energy side is not dissimilar to what we did at Tangoe.
07:29
Chris Wedding:
Perfect. Great transition. It's almost like you're guiding the podcast, Al. Let's go to Budderfly. So, what's the pitch? What makes Budderfly different, Al?
Al Subbloie:
So, we are the fastest growing energy as a service provider and I'm going to use the term because it's a category that is a little bit of a catchall of a number of different kinds of companies. But to this day, and that's sort of shocking to me, but it's true, the way we do it is different than anybody in the market. What makes us different, and very different than a Tangoe, because I learned from that, and decided to do it differently here, there's a lot of things about the energy space I don't like, and I'll tell you what they are. It's a very fragmented market, very fragmented, and you've got the ESCO model or the ESA model. Most players in the market focus on a few different components within that. So, any business could do up to 50 to 80 different things to manage energy better. Not five, not 10.
And Chris, if you and I had to study all 50 or 80, it would take us two years to even understand how to do it, and every one of them requires a capital expenditure. Then, nobody really measures anything in the right place, in the energy world. As you know, the meter was put outside the building to send you a bill. So, you're going to go buy an HVAC unit, what percent of that overall spend is HVAC? Nobody really knows. Everybody guesses at it.
So, in that environment, what ends up happening is people do very little. Normally, human nature is if I don't really understand it, I really don't want to spend the money to begin with and I can't measure it. Most CFOs say what? The famous two-letter word is no, or they don't say anything. So, we entered that space and that bothered me, Chris. I'm like, “Well, wait a minute. The world is ending. People are really blowing a lot of money on the expense side, at the same time. How can we get rid of all that friction?” The friction was the issue.
So, we decided to take the whole thing over and if you think it's going to be very subtle, this is subtle, but it's huge. We decided to own the outcome. We ended up owning the building blocks, but the building blocks into themselves are meaningless. The most important thing is the outcome, and the building blocks are a necessary enabler to the outcome. So, we don't sell building blocks. We don't sell anything actually.
09:51
What we did is we took over the entire bill. We became like the customer, and we wrote a billing system. We pass an immediate benefit to the customer, so they get a lower expense. Then we spend all our capital to essentially upgrade that facility with all the things that you can do and it could be upwards of 20 or 30 different things, things that you recognize. It could be commodities like lighting or highly sophisticated IoT devices that are essentially monitoring and measuring usage in different places and driving efficiency. We do that on a long-term contract so that we can amortize that expense just like solar did with the PPA and that way, we earn our money back over a long period of time. We're the last ones to get paid only if we deliver the outcome for the customer and the world. That's a real quick, probably not that quick, but that's a nickel tour of the model.
Chris Wedding:
I think there are at least a couple of takeaways for listeners building their own businesses. One, you talked about getting rid of friction for your customers. I think to the degree that entrepreneurs remove friction, remove pain points, remove hassle, it's a good place for a business. The other thing you do, is you sell … well, you said you don't sell anything, but just bear with me, you sell/focus on benefits, not features, right?
Al Subbloie:
Correct.
Chris Wedding:
I think we all love, especially in our early startups, to focus on the cool features where the customers don't really care. It's like, “Well, what can you do for me?” Right?
Al Subbloie:
You are correct. The notion of friction in business, it’s subtle, but huge. Friction will emerge as long sales cycles and no decisions. How many entrepreneurs build the company, where they have a growth strategy, and they miss it? They always miss it because they forecast X, and X doesn’t happen, I mean, constantly, almost every business. And if you look deep down, it comes down to the buying pattern of the customer and the friction that gets created in the trade of value.
The trade of value will be how you’ve articulated the value equation, how the customer receives the value, how easy or risky it is for them to make that decision, that’s everything. That’s the difference between a three-month sales cycle and a two-year sales cycle, depending on the friction within that. So, I always focus on the business model, and the value exchange between customer and what we’re offering. I’m ruthless about it, and was in the beginning, and we’re enjoying the benefits of a business model that reduced most of the friction and a market that had a tremendous amount of it.
12:35
Chris Wedding:
Yeah, and still does for sure.
Al Subbloie:
And still does. Correct.
Chris Wedding:
You also made an important comment too, which is, you’re the last one to get paid in this relationship. What it reminds me of is, in the project finance world, I mean, there’s similarities, maybe not perfectly similar, but in the project finance world, there’s the waterfall, which determines when there’s money, who gets paid first, who gets paid last. Back to when I first got into private equity, I was not trained as a finance person back then, and I heard about a waterfall. I was like, “Why am I being asked to learn about waterfalls at this PE firm?” Anyway, later to realize how sobering a waterfall is to show how many different parties get paid first before the equity owners get paid, but whatever’s left over, it’s all yours. It’s just that you’re last in line.
Al Subbloie:
You’ve articulated such a crucial decision point, and people in the market, I think, lose their ability, and I’m going to give you a measurement stick. I’m a big believer; look in the mirror. What does it look like? That’s what it is. You know what I mean? How many pages does it take? I don’t want to necessarily criticize the Escrow model, but the typical Escrow agreement is 80 to 100 pages. So, if it takes 80 to 100 pages to describe our relationship, it’s going to take me 18 months just to write the 80 and agree to all the words in the 80 to 100 pages. I insisted that our agreement be two pages. It’s two pages.
Now to do that, you are correct. The notion of a waterfall, you do have to pick, and we picked customer number one. Number one, their monthly financial benefit goes in their pocket. They get it. No matter what. People use the word guarantee, Chris. I hate the word. Why do I hate it? There must be a problem if you have to guarantee something. Right?
Chris Wedding:
Yeah.
Al Subbloie:
So, for us, it’s contractual. It’s just simple. It is what it is, and you get it, and then we have to do what we’re supposed to be good at. By the way, buying this stuff, that’s a commodity. Believe me, people appreciate that we’re spending the money, but it’s really managing that outcome. Being really good at figuring out what to buy, how to integrate it, how to implement it, how to monitor it for a period of time, because that’s what it takes to get a great outcome. Then we have to pay for everything that we wrote checks for. So, it’s our job to go collect that on the efficiency and then we’re the last ones to get paid. If we don’t get it done, we don’t get paid. We’re the last ones. Then what we do, the last piece is important. Above a certain level, we split it. We share it.
15:21
Chris Wedding:
Interesting. Yeah.
Al Subbloie:
Because I want the customer to keep caring about doing better every day, just like we do, really important. That also drives transparency. I’m a big believer that they should understand what we could make if we do a good job. I want them to know that, we don't hide that.
Chris Wedding:
So, I’m thinking about a dangerous word in green real estate, which you all are solving. Years ago, getting my master's PhD in green building, this was a dirty word then, it still is today. Luckily, there are more solutions, but split incentives. Al, maybe describe how you all get around that issue of the ‘who pays, who benefits’ split incentives problem.
Al Subbloie:
We’ve created what I will call a serial share of benefit, serial, and that means they’re not all created equal. Here’s how I’ll describe it. First of all, our software enables the creation of a baseline. You got to figure out what the baseline is when you meet someone, because you’re about ready to change that to the positive, and we make sure the customer agrees to that. The next level of benefit, you can call it a split incentive, I don’t, I call it theirs, they get it, and we set it at a certain level. So, no matter what, they end up with some budget relief and they haven’t done anything, and they don’t have to spend any money to get it. So, their ROI is almost infinity. I insisted on that. Number one.
Then, we spend capital and bear risk. So far, the customer is only way ahead, but if we’re going to come in and do what we claim we do really well, we should be willing to bear that risk and do the work. Now, we have to get through all that to an outcome, by the way, for the benefit of an important party in this, mother earth. I made sure that you can call it a passive outcome, but mother earth benefits the most out of all. We’ll talk about my view of capitalism and doing good for the world, and how they relate to each other. It’s an important aspect, but that last piece, our piece, which is our incentive to do everything is the last one to come to us only if we perform. And if we don’t, we don’t go back to the customer and say, “Oh, wait a minute. All that I gave you before I’ve got to get it back.” There’s none of that.
17:45
I don’t like our industry as much, because there’s an awful lot of split incentives going on. Well, I call it the if-then-else loops.
Chris Wedding:
‘If-then’ what? Say that again.
Al Subbloie:
If-then-else. If you're a computer person, the if-then-else, if this, then that looping that goes this way, and it's that that creates a lengthy contract between customer and partner. I try to get rid of that and make it really simple.
Chris Wedding:
Yeah. I think the other thing which you all do, is you all are deciding which upgrades to make, and you all stand to benefit from that. I mean, the customer does as well, but you all stand to benefit in a very obvious way from that, as well as you should because you’re fronting that capital expense, which is super different than maybe in some more of a commercial real estate thing where you’ve got one entity that owns the building, the landlord, other entities, which are lessors, renters. If all the power costs are a pass-through, the landlord’s like, “Well, look, why am I going to upgrade the HVSC if all the energy savings go to my tenants, not to me?” You all don’t face that challenge.
Al Subbloie:
We don’t, but you brought up a point worth sharing. We also have to be a successful business. I talk a lot about the philosophy of capitalism. We could go on forever on that. I have so many strong feelings about it, but we have to use capitalism to save the world, because we need a lot of capital to do it. So, it has to be successful, and to do that, we pick the market. I call it a multi-location market, but it’s heavily emphasized with restaurants, fast food restaurants, casual dining restaurants.
One reason is their density of energy use is five to 10 X what it is in an office building, to give you a feel for it. What it allows us to do is get really good a few times that we can then replicate many times. So, if we make five, 10, 20, 30, 50 locations work within one of the big restaurant chains, when we do the next thousand or 5,000, they all operate within a tolerance level of outcome that you’d be amazed that can happen. That allows us to execute heavy capital expenditures at an annuity outcome that gives us access to capital, if you follow what I’m saying.
20:03
Chris Wedding:
I do, yeah.
Al Subbloie:
Whereas, a lot of the rest of the market, they decided to go after what I call, the big iron buildings, those custom HVAC things that require 40 engineers to do design. By the way, that equals a long sales cycle as well. So, we’ve also gone after a different segment for a reason. We call it copy exact. It’s a manufacturing term.
Chris Wedding:
Well, I think, when folks go to your website, they’ll look at your various partners, customers, and they’ll see a lot of franchises, which is what you’re describing here. You get handfuls of franchises to say yes, the next 100,000 or whatnot, and much easier to say yes, because all their peers are doing it. Everyone else is doing it that looks just like me. It’s all a risk in saying yes, it seems like.
Al Subbloie:
That's correct, Chris. There's a missing knowledge point and I know this because when I meet with a lot of these people, I'll often say, “What's your square foot expenditure of energy, electricity, and water?” And they don't know. Well, we now know, because we've done 5,000 of them at this point.
Chris Wedding:
Wow.
Al Subbloie:
So, I'll give you a feel for it. That average office building will spend call it $2 and 50 cents to $3 a square foot on electricity. A Subway, a Jersey Mike's, one of the sandwich places is about 10 to $12. The burger places, a McDonald's, a Wendy's, a Burger King, you got all our customers are spending close to $20 a square foot.
Chris Wedding:
Wow.
Al Subbloie:
Now, to add it up, the commercial market in the United States, non-industrial manufacturing is about 150 billion a year in electricity. The restaurant space of casual dining and QSR is roughly about 15 billion a year. It's 10% of the overall market and what you and I would think are tiny little places, why would I ever focus on that? So, I think we found ourselves a segment here that density-wise, it’s bigger than everybody thinks, and the dynamics allow us to succeed with this model much easier than going after what other people think are bigger markets.
22:14
Chris Wedding:
Yep. The metric you're talking about, this is the EUI, the energy use intensity, kilowatt use per square foot per year. You mentioned electricity a few times. Do you all focus exclusively on electricity or do you all work with other forms, natural gas, maybe fuel oil here and there?
Al Subbloie:
A little bit of fuel oil now. We do mostly electricity. We do gas, and we're about ready to add water. Second half of the year, we're going to add water. I made the call where I'm 90 some odd percent we're going to do it. We have a lot of work going on to roll that out. I'll talk about gas and my view of it, one way or the other doesn't matter, but the bottom line is gas is going to be a declining utility fuel to run commercial America, it just is. So, we are pushing very hard to electrify our customers, and we’re moving towards heat pump model as it relates to HVAC energy recovery as a focus, in combination with that. So, we, like everybody else, I don't know if they are or they're not. So, we do gas, but I see it as a declining fuel source, for obvious reasons.
Chris Wedding:
Yeah. It's also interesting that you're moving into the water. I mean, in a way it's super obvious because you got the customer, you got this business model that works, they already trust you, shared savings to some degree. It reminds me a little bit of CDP, the Carbon Disclosure Project, which somehow got investors representing trillions of dollars to say, “Yeah, we care about the results of your survey for the world's largest companies to describe their carbon footprint.” And then the Carbon Disclosure Project was like, “Wait a second, we have the system, let's do water and supply chain,” what else did they do? I forget what else they do, but cities just broaden laterally. I liked it a lot.
Al Subbloie:
Well, think about it, for us, there's really probably got to be no additional cost of sale. We take over the utility anyway, it's just add one more, they get the same thing. Savings, we invest in components to make it more efficient and listen, a lot of places we need more water. Probably depends where we are, of course, but the bottom line is it's a scarce resource and we like to do better for the world. We think that's a good one to do it on.
Chris Wedding:
So, you mentioned a couple of times some strong beliefs, which is always a great place to start for a podcast or go for a podcast. Strong beliefs around capitalism as it relates to, say, addressing resource, efficiency, climate change, et cetera. Go for it. Soapbox is now yours, Al. What do you believe, man?
24:55
Al Subbloie:
It's a fun topic. It's a crazy one. I went to a place called Trinity College. It was a liberal arts school and I had an economics major. I loved economics. You know why? Economics and like price elasticity, it's not an exact perfect science as you probably know. And my second favorite subject was philosophy, even more so. I find elements of capitalism can be quite harsh, but I'll tell you on the playing field, I know how to win and I call it living in the jungle. I often tell stories of the lion and the zebra, if you watch those animal movies, they bum me out a little bit.
I'll say to you that there's so many elements of capitalism that are harsh, but you know what? I didn't make the program. I didn't invent it. I'm in there with everybody else. So, what we do at Budderfly, which is interesting, is I harnessed the power of capitalism, essentially to save the world. Because I realized, I need unlimited capital to really put a dent in the problem. So, ultimately, where do I get unlimited capital? I better build one heck of a business model, that attracts success in capitalism, to reuse that resource to save the world. So, if you look at our model, we've aligned perfectly. The more successful Budderfly is, the more we save the world. I mean, right down to the kilowatt, the kilowatt-hour, and I love that part about what we do.
It's finally solved my inner struggle, Chris, that not many people know about me when you meet me. I look like the poster child of capitalism when you meet me, but I do suffer philosophically once in a while with the whole aspect of what it's about. But Budderfly is by far the most exciting business that I've done. I've certainly been doing this a long time because of that aspect of it.
Chris Wedding:
Well, obviously, I resonate with what you're saying. Kudos that you're making this one-to-one connection and pouring 500 million plus to scale it. Part of the reason it resonates is as a PhD student, I made my way into private equity, not knowing how to spell private equity. But when I was there, I was like, “Oh, my goodness.” The design principles that I'm helping to craft, that will influence the pre-recession that was going to influence $20 billion of real estate build out, I was like, “Wow, what a dent I can make in the universe sitting on the side of capital that has the right intentions.” I mean, look, make a boatload of money as well, but also the right intentions. Yeah, it totally resonates.
27:30
Al Subbloie:
Yeah, that's exciting, Chris. I think the philosophy of capitalism is so crucial for any leader to have. It's so important, but you know what? Capitalism has some great things to it. We wouldn't have all the great things, the solutions to diseases and the pharmaceutical world, and all the things that we do good for. This is just another representation of it. That's why I love the energy space. I really am enjoying this bill more than the others, frankly.
Chris Wedding:
Well, I think the other part is governments don't have or can't allocate enough capital at least to tackle the biggest issue of climate change. I think the numbers you and our listeners have probably seen as whatever, depending on your source, four to nine trillion dollars per year needs to be invested to tackle climate change, basically redo every sector of our economy. I think Bloomberg estimates last year, maybe it was one and a half trillion. So, we're off by like a lot, and as we find more for-profit models, lots of that profit-seeking capital can flow and there's lots of it.
Al Subbloie:
There is a lot of it.
Chris Wedding:
Anyway, plus one, plus one.
Al Subbloie: Agreed, agreed.
Chris Wedding:
Despite all the pros of what's working with Budderfly, what is the hardest part still? What’s an example of a point of friction, a challenge point to grow the business?
Al Subbloie: I'll put two. Again, there are many. Life doesn't come simple all the time. It's never a straight line to the goal, Chris, as you know, which is what I get excited about, obviously. I've learned that the losses create the wins. You know what I mean? You'll learn from them. So, two in particular, because I just think they're highlighted now. The HVAC portion of the market generally is the largest single user of energy. Honestly, across all industries almost because of heating and cooling because if you think about it, heating and cooling probably started to hit in the70s and the 80s. And honestly, I think all the same equipment is out there.
Chris Wedding:
Yeah, [crosstalk – 00:29:32].
Al Subbloie:
We've been on more roofs than I can -- Oh, you have no idea how bad it is out there, and I understand why the drivers are terrible, but the supply chain in that market has been a challenge the last two years. I mean, probably tripled to quadruple what it had been prior. So, if we're moving quickly and we're adding 2,000 locations in a year and we're going to replace three, 4,000 units with a 50% pick up on energy use, so really take a big bite out of that usage apple, but we can't get them for call it nine months, 10 months, sometimes longer, there's no doubt that's a challenge, number one.
Number two, a change of architecture. The heat pump as an architectural change from a regular sort of packaged HVAC mentality has not been an accepted standard in the United States. It has been a lot more in Europe. Now, some of this is an opportunity for Budderfly, because we have an opportunity to lead the world. And when you look at the IRA that came out, the government did a pretty good job motivating heat pumps, but only in residential, not in commercial. So, in the commercial market, there's this lack of innovation mentality going on and we're attempting to overcome that to some degree.
Now, the beauty there, is it leaves room for innovation in an area that frankly, I didn't anticipate. I just figured the world had a tact together, would have figured that out a long time ago and I'm telling you right now it hasn't. So those hurdles to get over, because I want to do the right thing. Ultimately, I'd rather electrify the world. I'd rather not use a gas-based heat source for a lot of these locations because in our model, you got to live with it for 10 to 15 years. I don't want my name on that eight years from now, doesn't make any sense and it's not the right thing to do. So, those two hurdles and challenges stick out for me. There's plenty others, but I thought those two would be interesting certainly for you and the audience.
Chris Wedding:
Perfect. Yeah. I mean, gosh, to think about there being that much demand for the kinds of equipment you need to install and you're a fast-growing company, but others out there for sure, there's screams of business opportunity. Although that's too easy, because the product you need also has their own complicated, fragmented, challenged supply chain.
Al Subbloie:
Yes, correct.
Chris Wedding:
Hey, it's Chris. Just a brief message from our sponsors and we'll get back to the show. Just kidding, we don't take sponsors. On the other hand, I do have the privilege of leading the only executive peer group community for growth stage, CEOs, founders, and investors fighting climate change. With monthly group meetings, annual retreats, and one-on-one executive coaching calls, our members help each other boost revenue, impact capital raised, clarity, confidence, work-life balance, and team effectiveness. Today's 30 plus members represent over $8 billion in market cap for assets under management for climate solutions. If you're interested, go to entrepreneursforimpact.com and join the waiting list today. All right, back to the show.
32:42
So, Al, let's switch from Budderfly to Al. If you could chat with your younger self, what's some advice you might give him to be more effective, happier, et cetera, on this path? And again, interpret path liberally, this could be business or maybe even more fun, not business.
Al Subbloie:
I've got plenty of advice, but I'll try to keep it short. Two, in particular, took me many years to realize it. I never really knew why, what drove to do the things and build a company and do whatever, but I have learned and I'm pretty clear on it. It's not the outcomes that is, it's the journey. And I say that because I played sports, and I realized that I love playing the sports, that's why I did it.
Now, I love the thrill and the opportunity to work with a team of people to win. That was the reward, but you had to lose to know how good winning was. So, the journey of anything is, think about it, Chris, I think hard, we begin in life, then we end in life and there's an awful lot of stuff that happens in between. And it's the in-between part that matters. So, for me, the journey of building teams, like a sport for the common goal with a vision, I love disruptive markets for that reason. I love to sort of change the rules of the game and inefficient buckets, like energy's full of it. So, I've learned that and I don't believe I had that 20 years ago. I wasn't clear on it in my mind.
I probably stress myself out more than I needed to, because I really should just be enjoying and passionate about every day. And I was, don't get me wrong, but you know how that could be. So, you got to be clear on what is making you happy along the way and to me, it's the journey, not the destination, number one.
Number two, don't micromanage. When you're young, all right, you don't have as much experience. So, what do you do? You overcome it with grit. You overcome it with hours. You create this work ethic, that you think you're going to win if you just work harder. Well, let me give some advice. In a five to 10-year haul of building a great company, I guarantee you there will be two, three, four, or five things you do that will be the most important thing, that will make the business great. The thousands of things you did every day, don't get me wrong, they matter, but they're not going to make or break that future outcome for your team.
35:03
So, keep your head clear and don't grind yourself. I used to use a term called, “Let's rhino this one, let's rhino it.” And I had a head of sales come up to me one day and he said, “Al, you realize the rhino is the dumbest animal on the planet?” So, I stopped using that, but it took a lot of years for me to learn those lessons. I don't know if that helps, but they're meaningful to me now.
Chris Wedding:
Well, it’s almost like you read my mind, because the rhino is a great segue to the lion. You reference it over the course of 10 years of building a business. There’s like these few pivotal moments, decisions, partnerships, what have you, business model realizations.
The founder of AngelList, this guy, Naval Ravikant, has this saying that essentially business builders, let’s say, maybe it’s broader than that, should hunt like a lion and not graze like a cow. That reminds me of what you just said.
Now, the problem is we don’t know which of those five or 10 inflection points we’re working on at any given moment. So, we do still have to graze a little bit, but I think the goal would be to move towards, we shouldn’t believe we need to white knuckle it for X hours per week, but like what’s the highest leverage use of our time, relationships, et cetera, right?
Al Subbloie:
Yeah, I'll tell you what, I have won little battles. You'd be amazed at when and how you win them, and you'll say to yourself, “Wow, we were creative enough to think through a set of dynamics that Davey beats Goliath.” I get it. Let me give you an example. There's a guy named Paul Assaiante. He was the squash coach at Trinity still, and he wrote a book called Run to the Roar. It's a great book. He's the longest winning streak in college sports history in this little Division III school on squash, and he wrote the book Run to the Roar. The way he talks about it is the way the lions hunt.
Now, you may or may not know this, a bunch of the lions sit behind the bushes, the zebra out in the field, the big head lion kind of walks real slow around. He goes to the other side of the zebra. The lion has a huge roar. Well, where do the zebra go? They run to the bushes. They run away from the roar, and they basically get eaten by all the lions. So, his book is called Run to the Roar. If they would only run to the roar, the zebras would mostly get away. The lion might get one and the zebras would all be free.
37:37
So, there's a combo to every lock, no matter who you are. I don't even care if you're the zebra, you can still win. Or the lion. But the point is you could outthink any combination, that you can put together to win whatever it is, a deal, a business model, a disruption. I don't care how big the company is, or how small, never have fear of what you can accomplish.
Chris Wedding:
Yes. Also, those poor damn zebras, man.
Al Subbloie:
No, I feel bad for the zebras. I hate those animal programs, though. I hate them and then I say to my teams, because I do a monthly discussion all hands, and I say to them, “The lion has to eat. I didn't make the jungle, though. So, do not blame me for the fact the jungle exists. We just have to know how to operate in it.”
Chris Wedding:
Right. I hear you. Growing companies is hard, even with experience and winning in prior companies. What are some habits or routines that keep you healthy, sane, and focused while building Budderfly?
Al Subbloie:
Listen, you could tell I play business like a sport. I just love doing it. I'm passionate. I love the intellectual challenge. I love the people, the Budderfly team is just amazing, how we come together. And we're not perfect. I love that part about it, too. Probably for me, three things. Family. I have a wonderful family. They support me through this. I work out. I have to. I work out because I just think it's so crucial. Not easy to do that, four or five days, six days a week, but it's important. If you're going to play hard at work, you got to be in good shape to do it. And I like toys that go fast. I just do. Anything you can think of with wheels or float, I do them. And it gets my mind off of it a little bit. I have a number of other hobbies, too. I'm into boating, mostly with friends, family, and my executive team. I take them out and we enjoy the moment. Love to breathe every day when I wake up, too. That always helps.
Chris Wedding:
Breathing is pretty important.
Al Subbloie:
I think so.
39:38
Chris Wedding:
Yeah. I just read an article from one of the CEO members in our peer group and it's a new study talking about just the practice of taking, I think it was maybe like five seconds in-breath, five seconds out-breath, showing a link between that simple practice 20 minutes a day and increasing your heart rate variability. And importantly, lowering these … What are they called? Amyloid peptides, the precursors to Alzheimer's in your blood. So, it's like, that breathing is pretty good to live. It's also pretty good to do it a different way to increase longevity, the health span that we have, to hang out with family or build cool ship.
Al Subbloie:
I totally agree. Sometimes we can read, good intellectual curiosity that gets your mind off certain things, but it's fun to do. I mean, I love all kinds of things. I love astronomy. There's a bunch of things that I just find fascinating. I'd love to figure out where the universe came from. I really would. I wish I had more time to do that. It’d be fun. I still think we could figure it out. I really believe there's an answer to every issue or stop aging, there's a lot of people chasing that right now. I think we'll probably get it done. Maybe not in my lifetime, but hopefully that will be the case.
Chris Wedding:
Well, I certainly have sent my parents the book Lifespan by -- I'm forgetting his last name -- David, the Harvard professor, who's kind of the leading authority on this topic. I'm not sure they've read it yet. But, Mom and Dad, if you're listening, this is the time.
Al Subbloie:
There you go.
Chris Wedding:
How about two more here, Al. One is -- tell us a book, or a podcast, or a tool recommendation you think listeners may benefit from.
Al Subbloie:
Two that have impacted me -- I gave you one, Run to the Roar. Listen, how does a coach have the longest streak in college sports history, in a very small school, in a tough sport? There's something going on there. And by the way, that topic applies to business and life, which I think is helpful. I'm going to use another Trinity writer, Drew Hyland. I took his philosophy course when I was there, Philosophy of Sport. You'll see me use sports analogies all the time. I can remember because I played football and baseball in college.
My last day of football, I cried. I cried. I was going to miss it. And I realized, when I went into business, I really just replicated sports, sports analogy. There are a lot of things to learn, risk-taking, performance, how to prepare, how to win, how to lose. It even could get into topics in heroism, there are a lot of things there. And that book covers that topic incredibly well. I think the analogies and the parallels in business are huge. Would be two that have impacted me quite a bit.
42:28
Chris Wedding:
I got to tell you, I'm amazed that the two you give are from professors in your undergrad, not like a year ago, which is pretty inspiring. Like, for the part of my life as a professor at Duke and UNC, it's like, man, how can I have the same kind of impact you’re talking about? I mean, I can see it on your face. Listeners can't see it on your face. That's pretty amazing.
I'm also thinking about your prior comment of all these things you'd like to learn and figure out, but can't find the time. I'm guessing listeners are also thinking, “I'm pretty sure at some point, with a successful business like this, Al's got a, I don't know, new executive to bring in. He goes to the board, hangs out. He gets a sabbatical after he sells this puppy.” Anyway, you don't need to tell us anything, but there are many possibilities here.
Al Subbloie:
I just want you to know, after I sold them before, I took a weekend off on each. The only reason I did that, is nobody was there to go meet with, so I had to wait till Monday.
Chris Wedding:
Oh, my goodness.
Al Subbloie:
I love doing what I do.
Chris Wedding:
Clearly.
Al Subbloie:
You know what? I think people wrongly measure work as bad. Oh, you got to work. I don't, it's just fun. I really just enjoy it.
Chris Wedding:
I hear you. I mean, technically I'm working right now.
Al Subbloie:
Right.
Chris Wedding:
If we had a beverage in hand, it would definitely not be work.
Al Subbloie:
It wouldn't be work at all. Right.
44:01
Chris Wedding:
Hey, so, Al, last thing here, who do you want to hear from? Is it, maybe, the kind of customer whose bills you can manage to reduce the energy cost, or the kind of potential employee you want to hear from? Who do you want to talk to right now?
Al Subbloie:
I became a carbon expert here with Budderfly. I was not before. Listen, I did a telecom company and it bothers me that we throw garbage in the air. It really bums me out. It's dumb, and we can fix it. And I don't care if you're the one who runs the large brand restaurant business, or you're the employee at Budderfly within our customer service group, or our tech group, or our operations group, we can fix it. We created a model where you don't even have to lift a finger to do it.
By the way, you don't have to do it with us, but please do something. Don't do nothing. Now we exist, you don't even have to spend money to do it. I think we could have a very fast impact. I could do the math for you. At $150 billion to go after, there’s a third of it that's wasted, call it $50 billion, can go away. You translate that to carbon, it's phenomenal. Probably get rid of most of the problem. So, I reach out to the employees, I reach out to the executives, I reach out to the spouses, it doesn't really matter, let's go have an impact.
Chris Wedding:
Great stuff, Al. Hey, we're all rooting for the success at Budderfly. I'm glad you took your lessons learned for other sectors and applied them to this sector.
Al Subbloie:
No, appreciate it. Chris, great catching up. It was fun talking. Looking forward to doing it again with you. We have some commonality and vision in philosophy, which I appreciate.
Chris Wedding:
Hear, hear. Cheers, man.
Thanks for listening. And if you want more intel on climate tech, better habits, and deep work, then join the thousands of others who have subscribed to our Substack newsletter at entrepreneursforimpact.com, or drop me a note on LinkedIn. All right. That's all, y'all. Take care.
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