The Entrepreneurs for Impact Podcast: Transcripts
#145:
The Outsized Benefits of Doing Hard Things — Gabe Phillips, CEO of Catalyst Power
PODCAST INTRODUCTION
Gabe Phillips:
A lot of our customer segment really thinks of the long-term commitment to buy something, not as a hedge, to take that risk off the table, but they view it as incremental risk. So, we try to solve for that and I think we've successfully solved for it by scaling down the size of our installations with respect to customers' consumption. We don't want to produce something built that is over 100% or 100% of the customer’s needs. We want it to be easy for them to make this long-term commitment.
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 Gabe Phillips, founder and CEO of Catalyst Power. Catalyst Power is an ESCO or energy service company, retail electricity provider, community solar aggregator, and solar and battery project developer for commercial and industrial businesses in the Northeast US. In addition, Gabe is a distance runner, musician, woodworker, father, husband, and thriver, somehow, on four to five hours of sleep per night. When I learned that, I mentioned, of course, we may need to have an intervention later on his sleep habits.
Anyway, in this episode, we talked about the outsized benefits of doing hard things. How his customers view risks and risk mitigation when it comes to choosing things like solar batteries or microgrids. Why a rollup acquisition strategy made sense to launch his business. How he's able to get clean, renewable power at cheaper prices than brown power for his customers. We also cover three of his favorite books on entrepreneurship, meditation, and the benefits of being uncomfortable, you may see a theme here, and a whole lot more. Hope you enjoy it and please give Gabe and Catalyst Power a shout-out on LinkedIn, Slack or Twitter by sharing this podcast with your people. Thanks.
02:44
Gabe Phillips, the Founder and CEO of Catalyst Power, welcome to the podcast.
Gabe Phillips:
Thanks, Chris. Thanks for having me.
Chris Wedding:
We were talking before we pressed record, which by the way, I always hate saying that because it's just said so often. Anyway, it's true. People do talk on podcasts before press and record and a couple of things came out, which I'll just tease the audience with if there are four-letter words dropped on the podcast, you can't help it. You're a New Yorker, started working at age 13, and love to do hard things because often there's outsized return when we do hard things. So, dot, dot, dot, Gabe, great starter for us. What in the world is Catalyst Power? Who do you serve? What kind of problem do you solve?
Gabe Phillips:
Catalyst Power is a decarbonization platform. We focus on energy supply in a lower carbon manner for specifically the mid-market independent business owner of the North Eastern Quadrant of the US. So, mid-market commercial industrial end users are our target and we supply them with regular way, meet all electricity, and then we bring them down the decarbonization path one step at a time.
It's a journey for many of them because their mind share for their energy supply is minimal. The type of business I'm referring to is independent. They’re not public companies, they don't have like a giant procurement department or sustainability officer or somebody focused on energy or commodity procurement, even if they're a heavy energy user relative to their output. They might be the CEO that makes these decisions or the CFO who ends up talking to my team or myself frequently.
A lot of multi-generational businesses, where the grandfather started something, the father is still saddled with the decision the grandfather made 20 years ago and the son or daughter is pushing for some change to do something new. There's that conflict there that we try to find ourselves in the middle of to help to bridge and to start that journey is just regular way retail energy supply. Then a community solar subscription, which is like lighter touch. It's offsite solar. It only exists in a handful of markets, but they happen to be coinciding well with the Northeast where power prices are high and policy objectives are in line with our objective of decarbonization for the most part.
05:15
And so, that alignment works well for our business model where we try to bring all of these solutions under one tent to be a one-stop shop for the customer with very limited bandwidth to procure lower carbon energy. Then the next step along the journey after that lower touch community solar subscription is actually hosting something physical on-site, and there's different ways that you can cut that. There's different pieces of equipment that can achieve the decarbonizing goal, but the four categories that an onsite solution can provide value to a customer in are typically immediate savings of some form, monetary.
Another monetary benefit is long-term budget certainty because usually, it’s a long-term contracted element to an onsite asset that us as the owner of that equipment need in order to make it financeable. Then there's the obvious decarbonization element as long as it's renewable or a storage resource that can shift consumption from higher carbon intensity hours to lower carbon intensity hours. Then there's actually like the broader benefit of distributed resources out there of resiliency.
So, the utilities actually are supportive of these things that take away volume from them because they are a non-wire solution to meet many of their localized system-related needs. And so, there's this broader societal benefit that one host in one area brings to their area, but also on-site resiliency like from a battery, you ramp that thing up in a power outage, there's actual resiliency elements to it as well. So, that's sort of what we offer, why we do it and then I think it speaks a bit to what you mentioned at the top, which is, we like to do hard things.
This customer segment is not known for like deep penetration of distributed resources and renewables. So, we had to package this suite of energy and decarbonization products for this customer segment in a way that's more palatable for them, that demystifies some of the overly complex elements of energy, the broader markets, but also like hosting an onsite resource. It being renewable in nature as well makes it even more complicated. And so, we've called it our connected microgrid product because the customer remains connected to the overall system, remains connected to the grid, but we develop a micro-generation asset, again, technology agnostic.
07:33
As long as it's decarbonizing and peaks with peak demand in some way naturally or via dispatch, that works for us and it works well for the customer. We are actually able to unlock additional economic benefits as a retail supplier that a standalone distributed generation developer could never do. And so, it just makes sense on the surface from that perspective to bring the businesses together, but also, you got to start with the customer needs and they need a one-stop to shop for these things. Starting there, it makes sense to bring these businesses together and finding these other ways that we benefit from it, obviously are why the business works and functions economically.
Chris Wedding:
Right. So, I think it's important to stress, you really are at least two different businesses in one. A retail electricity provider, which I'd like you to explain that a bit more in a second, because some folks like us in North Carolina don't live in that kind of world. You're a distributed energy developer or owner of sorts to make onsite improvements easier. Often those are different businesses you brought them into one. So, back on the retail.
Gabe Phillips:
All right. There's a third, that lighter touch product in the middle there, the community, subscription aggregation is a whole other business as well.
Chris Wedding:
It’s true.
Gabe Phillips:
We get subcontracted too, by other aggregators to help bring our customers to their projects that they're representing and we are hired directly by some, like Standard Solar’s a customer of ours. We did a ribbon cutting last year with them on a project that we aggregated the customers for. So, that's like a whole other standard of business, but again, it makes sense to bring all under one umbrella.
Chris Wedding:
That's a great point, so three businesses in one. So, let's go back to the retail electricity provider. For those folks that either don't live in a deregulated power market or those that do and think, “How is it possible that I can have the same or lower cost power and it be renewable?” why isn't everyone doing this? Is this real? Dot, dot, dot.
09:31
Gabe Phillips:
Yeah. So, deregulation in the 90s has rolled out across the country in a patchwork. It wasn't dictated from the top down. Now, where it has occurred and regional transmission operators sprang up the coordination of physical power movements, the Federal Power Act allowed the creation of FERC. FERC came in and started to create markets in all those areas and in turn created wholesale power markets alongside the early days of deregulation when the utilities in some states unbundled their upstream generation from their downstream responsibilities of delivering commodity to a customer, and ensuring the grid remained reliable. That was like the first stage of deregulation.
Then once these markets formed and there was a way for third parties to buy power, either from a physical auction basically like the Independent System Operator runs like a daily auction for physical power, or from third-party market makers like anyone else hedges other price risks in the world. There are other market makers of other types of commodities or instruments, derivatives, so that then you can buy and sell with third parties that just want to make you a market. Once all that was able to develop, when that was enabled, then you could now have third parties offering physical supply themselves and using the grid owned and operated by the local utilities to deliver that power. So, that’s what deregulation really is with respect to retail choice.
And I think that retail choice, that word, used in conjunction with deregulation is very important because it's not only meant to deliver benefit economically relative to what utility rates are. Utility rates are set in a patchwork of ways, state by state, even utility by utility. There's auctions that they run to procure power from wholesale market makers, like I described before. They do them in these rolling long-term auctions, but then they only offer one product to a customer in most cases. Like, “Here's our tariff rate for a year, we'll change it next year based on these auctions and the other procurement schedules that we have.”
Or in New York, the utilities actually are totally variable priced, they're wholesale market-based. So, if you're a New York-based retail energy consumer, that's with the utility for supply, you own all the risk. You've got market-based risk, whether you like it or understand it or not. So, retail providers coming in to offer choices that met customers' needs at however varied they were, is really the key benefit in my line of retail deregulation when it came to the point of permitting third-party suppliers to participate.
12:04
Chris Wedding:
And so, how about the part where folks say, “How is it possible that I can get cleaner and lower carbon power, which I thought cost more, but to get it at or below the price for business-as-usual power from the typical providers on a grid?”?
Gabe Phillips:
The idea of the length of time of a commitment to buy something is key to that equation. The zero commitment you provide to your utility, I could leave the utility whenever I want, or I could remain a customer, it lends one premium to their price. That if I commit to a solar provider to buy their power for 20 years or 25 years, there's obviously a very different risk premium associated with the delivery of that power for the seller in that case.
I've got a contracted asset now with this customer for 20 years. I could offer that power for a lot less than a shorter-term contract provider would have to offer it for because I've got locked in revenues for a long time. That's where some of the big benefit price-wise comes from when a customer is contracting for renewables versus brown power and finding an economic benefit in doing so. But to be clear, renewables don't actually come cheaper than non-renewables by definition.
I mean, if I had a brown power asset and I sold you power for 20 years, I could do it for cheaper than my renewable asset for 20 years. There's still a premium associated with renewables. In some cases, incentives, both federal and state incentives, and in some cases even more local than that, help to bridge some of that gap and bring down what the levelized cost of power-associated renewables are so that I can offer them below brown power. But inherently and then unfortunately still at the smaller scale asset size that we focus on like below a megawatt typically in size and again, distributed in nature. So, at the customer site, not in a wholesale power plant connected to the high voltage system type of a configuration, you're dealing with more expensive cost of levelized power.
Chris Wedding:
Yeah, I think the way you explained the first part of that is one of the best ways I've ever heard it described. That if you're in a retail market, here's how you get cheaper, clean energy. Somebody commits to 20 years and with that certainty, that product owner gets cheaper financing, et cetera, to make the cost more affordable to the ultimate end user. I think for listeners who want to dig more into levelized cost of various forms of energy, Lazard, I think they still put out each fall the levelized cost of energy reports for electricity, for storage, for green hydrogen, and great graphs, which increasingly do show actually that for larger systems, the unsubsidized cost levelized is getting to be cheaper than brown.
14:58
Gabe Phillips:
And that does the industry a huge disservice when they put that out, because everyone goes, “Oh good, we're done, we're done. The incentives did their job, we're done,” but that's not the case. That's not the reality on the ground. Like where we need to put assets is not far from load, it's near load. In fact, where we have lots of unused space, ground field or rooftop, is in fact the point of consumption, not far away. And therefore, all project sizes in those applications are going to be small and the levelized cost of power for those assets is way more expensive than the levelized cost of power of a 800-megawatt combined cycle gas plant somewhere that is connected to high voltage systems and then bring it to load.
Chris Wedding:
Totally. You're right on. I think folks who look at those reports, they'll see the smaller systems, those graphs, those bars do show higher LCOE than the big brown.
Gabe Phillips:
It just bugs me that the headlines that I see in the paper sometimes are renewables are a parody and I'm like, only if they walk a day in my shoes.
Chris Wedding:
Yeah. The same is true with so many headlines. We don't have time for nuance and details. We have time for headlines.
Gabe Phillips:
Yeah.
Chris Wedding:
You talked about this market being a hard market. So, mid-tier commercial industrial in the Northeast. What parts of that, or maybe it's all parts, make it harder to reach or penetrate with clean energy solutions, do you think, Gabe?
Gabe Phillips:
The independent business owner in America is arguably the engine of our economy, I think many people would agree with that statement. It's the largest employer. It's also the largest owner of rooftop space and represents one of the largest consuming groups of end users when you segment them out. That is a massive opportunity to deploy renewables, those are solar and storage at the moment and it's totally untapped right now.
17:05
The reason is, small projects take a lot of the same effort, time and cost to underwrite, finance, build, and then own and operate as larger projects do. And short, there's enhanced economics associated with smaller projects usually, and there should be because they're harder to do and you need to be compensated for that accordingly. But really the biggest cost associated with that is not the underwriting and the operating expense that I said that didn't scale down like the project size, it's actually the sales cycle.
It's getting a customer to agree to sign on the dotted line, to host a project either as a landlord to a project that's shipping the power elsewhere, or as a direct off-taker. And the biggest reason for that is that the long-term commitment that we talked about a moment ago, the 20-year commitment. I mean, I've been an entrepreneur for 13 years now, and at the moment I don't have an office, but when I did, I never signed a lease longer than two years. That's indicative of the type of decision-making time horizon, most independent business owners need to bring to bear because there are uncertain times that you work through. Long-term commitments, even if they are a hedge to a current risk you have, it's very easy to perceive them as an incremental risk rather than a nice long-term hedge to the risk that you bear when you wake up in the morning.
Chris Wedding:
A good point.
Gabe Phillips:
And like I said before, we all bear wholesale power market risk, even in North Carolina. It's less acute for you and less tracking with the movement in the wholesale power markets because of the fully regulated environment you're in. But in the Northeast, where utilities are setting rates annually, at a very minimum, you've got year-to-year power market exposure. In New York, you've got day-to-day power market exposure as a utility customer, and then as a deregulated choice customer, you got whatever tenor you contracted to, that's risk you bear. Whatever contract form you agreed to, like did you get a price lock? Is it fixed price? Is it variable in some way? Is it an index? There are lots of risks that you wake up in the morning with as a retail consumer.
19:06
The market goes up, you're short. I like to give everybody the definition of being long and short things, sometimes that's elemental to the conversation, but you are short power when you wake up in the morning. So, the prices go up, you experience financial pain. Prices go down, you experience financial benefit and if you don't do something to hedge that risk by entering into a long-term contract to procure that thing that you're short, that you're choosing to warehouse all the risk completely.
A lot of our customer segment really thinks of the long-term commitment to buy something, not as a hedge to take that risk off the table, but they view it as incremental risk. So, we try to solve for that and I think we've successfully solved for it by scaling down the size of our installations with respect to customer's consumption. We don't want to produce something built that is over 100% or 100% of the customer's needs. We want it to be easy for them to make this long-term commitment. T
There’s benefit to leaving some unhedged load so that we could, as the world evolves and someone invents a fusion generator or something or that produces carbon neutral or carbon-free electricity on the power of good vibes, we can pay for it, install it and own and operate it. I think there's value to leaving some of that risk unhedged, at least now in these relatively early days of the technological advances that we're seeing on the renewable side.
And so, that's how we approach it for our customers to make it more palatable and so far that's been one successful attack that we've taken, but it's really just the sales cycle is long and expensive. And so, we have like five other things that we sell to customers so that we can remain solvent along that journey with them and we can remain relevant to them. They look to us as a resource with respect to, what should they be thinking about now and in the future for their energy consumption, both brown power, non-renewable, and decarbonized energy supply?
That's why we started with a retail energy business and we actually started with other people's retail energy businesses, frankly. We decided to execute a roll-up strategy to start off this business and get to as many customers as possible as early as possible. We felt the need to play the numbers game because of how opaque this is and how deep the knowledge gap is for most independent business owners in their energy procurements and specifically around renewables and hosting physical assets. So, I guess I could roll the clock back on Catalyst and give you that evolution because it's actually very important to understand why we started with that as our strategy.
21:49
Chris Wedding:
Maybe before you go to the evolution, a lot of great thoughts there. One, there's two ways you all can install solar batteries, let's say, and one is the host customer uses that power, the benefits of, say, storage directly on site. The other is their landlord, and I'm guessing you would lease, say, the roof space and the power goes back to the grid.
Can you, or do you want to comment on which of those is the more typical sale, which of those structures is growing? I mean, I can just imagine best in your prior comments, the landlord solution is the easiest because if I'm that small business, I think, “Well, someone's going to own this damn building.” It's a revenue stream regardless of whether there's power to produce widgets in here or not.
Gabe Phillips:
We have again, surprisingly found that the fixed revenue stream associated with the lease, even though it's less economic benefit for the customer is viewed as a less risky commitment that they're making. Tying up their roof for 20 years or 25 years for my equipment is easier for a customer to agree to now at this earlier stage in their journey with us, than committing to buy something from us for 20 years or 25 years. They might have committed to a price that they're now overpaying for at some point in the future. Again, even though it functions as a hedge to risk they have right now is viewed as a risky decision to make.
So, we're actually seeing a lot of success leasing rooftops from people in markets where we can monetize the asset outside of their fence or outside of their meter. And that has taken the form of small community solar projects in New York, smart projects in Massachusetts, which is another state that we're operating in, where the power is sold to the utility under PURPA. The environmental attributes are compensated to us from the Massachusetts Smart Program.
In Connecticut, they have a buy-all program, this NERS auction and RES auction that we're participating in where the power and the environmental attributes get sold to the utility. And in other states that we start operating in and different constructs are popping up every day. That's the thing, you have to have geographic diversity, both for the retail business and for the distributed generation side of our business, because these incentives show up. They get depleted. They change. It's a constantly moving tapestry of incentives for us to try to keep track of, and you've got to be there already with customers, ready to serve them with these new products when the incentive structure emerges.
24:25
Chris Wedding:
Yep, and I think just for listeners, if they are feeling confused by different states, different state programs, different acronyms by state, we're not going to go through all those right now, only to emphasize what you just said, solar is a state-by-state market. Almost every single state has a different incentive program.
So, Gabe, again, I know we've got a pen on the board to go back to your old rollup strategy and the origin. Before we go to the last part of our pod on you as the person leader here, I want to ask a question around, you get you through business lines and it sounds like it's an evolution. Folks start with the retail power, then maybe community solar aggregation, and then maybe distributed solar or solar storage or microgrid installation.
If I had to guess, I would say the margins are likely smaller, but the dollar amounts are bigger for the top item. I'm not sure about the middle one, but maybe the margins are bigger for the third, maybe more predictable long-term revenue. Whatever you want to say without divulging your business strategy, how do you think about the various pieces there and their contribution to say your profit on a unit basis per sale versus aggregate, how they roll up as a contribution to your overall say top line?
Gabe Phillips:
Retail electricity is the number one revenue driver. It's a thinner margin on a risk-adjusted basis as compared with the other products that you noted that we offer, but it's one that you can get to scale more quickly and it's an ongoing delivery. It's a continuous sale, and assuming we can renew with our customer and they like the fact that we're communicating with them hyperactively about the opportunities that they could take advantage of that we also offer, they tend to renew with us for a long period of time. Our churn is lower than industry average because of all the other things that we bring to bear.
The community solar subscription for us as a third-party aggregator, in that case not the installation owner, is only a one-time economic benefit for us. Very high margin, but it's not repeatable. So, it needs to be higher margin for it to be like worth it, but also it's like the first crack in the door. Just opening that door a little bit, getting the customer to understand that there's economic value for them in solar. This is one easy way for them to do it. It's just like guaranteed savings and it's almost always like, what's the catch? The conversation ends up there and so we have to demystify that.
27:04
Like, “Yeah, the state created an incentive. The only way we can access our revenue is by having a subscriber. They wanted to push the democratization of solar across the state.” That's how New York approached it and Massachusetts and others and the purpose of community solar is to make it something that the community benefits from. So, they made it easy and it's almost like too good to be true. That's like a funny objection that we run into sometimes, but that is worth it to us because it starts the solar conversation.
There's an orchard and cidery and winery at upstate New York outside of Buffalo that's a customer of ours. They were a lot of time brown power retail electricity customer from our first acquired company, US Energy Partners that we bought in ‘21 out of Buffalo. Then we subscribed them to a community solar array nearby that we were managing and then we signed them behind the meter PPA. Now we're developing an onsite solar array for them and we're putting in four EV charging stations.
So, I know I sound like I'm nuts, but that's yet another product that we offer. I'm not at the point, totally where I'm making that a whole new business line, but that is a different business that people are in. We are now also offering it, at least in this one case, just to test the waters. It is part of the package for them. They were able to value the non-monetary benefits of hosting solar in a way that made the economics, which were relatively like modest, matterless. And so, part of that was the EV charging stations and so we're able to fit that in economics.
Chris Wedding:
I'm with you.
Gabe Phillips:
A good example of a good journey that someone's gone on with us over the couple of years.
28:36
Chris Wedding:
Yeah. It's almost like a product ladder of sorts. Start with one product, customer sees value then go to the next one, et cetera, et cetera. Okay. Let's spend a few minutes, maybe three or four minutes on, you’re mixing this rollup strategy a few times. I think some folks get that, other folks don't appreciate what that really means and then we'll switch to Gabe versus just Catalyst Power. Does that sound good?
Gabe Phillips:
It's your show, man.
Chris Wedding:
Yes. Yes, it does.
Gabe Phillips:
So, we talked about the retail electricity markets just broadly are really complicated. And when they first deregulated, anyone who could sell a pencil and didn't know the difference between a kilowatt and a megawatt, started a retail energy business and deregulated markets in the Northeast. Actually at the time I was trading electricity at Sempra Energy Trading in Connecticut. I was getting these requests to provide hedges to these new participants who just didn't know they were asking their elbow and driving me nuts. It was very clear to me that there's a whole new suite of participants in the power business that doesn't know how to use the market to meet a business need.
At the same time, renewable developers were showing up also with their hedging needs, 10-year, 20-year power offtake agreements and they also didn't know how to use that market, that's really complicated wholesale power market to meet their business need. So, I left trading, which was quasi-entrepreneurial, but not exactly. I remember a guy I used to work with who described it as like a mall. We all have our stall at the mall with our own OPM. It was a little more of an integrated business, but at least that particular trade floor was a cool place to work at the beginning of my career. But I left and I started GP Energy Management to provide advice, physical logistics, market access services, and front, middle, and back office-like services as if we were the trade floor on behalf of others for these two natural participants, both upstream generators and downstream retail energy suppliers.
And I, in that business, got to meet everybody and saw the good, the bad, and the ugly all over the retail energy world and there are some crazy people in the retail energy world. Not to say that the distributed generation in the renewable’s world is all that sane either, but the retail energy world attracts a lot of sales-focused people who move quick and didn't know a lot about the really complicated electricity markets. And so, I provided this service to them and built a business around that contracted revenue stream and then marketed renewables on the upstream side for generators to help to make their projects financeable.
31:01
And so, that was my balance between my brown power service platform and gas service platform with my support of the renewables sector. That's just how I did those two things, I balanced those two things before my last business, which I sold in 2016 and ultimately exited in 2019 and then got started on Catalyst then and we have that balance here, let me start with the brown power.
In any event, I saw an extremely segmented and very fragmented marketplace. Lots of hyper-regional participants that couldn't really quite get the scale, but they owned a very valuable asset that they were not monetizing. And that was to the detriment of the environment and to their customers, which is that supply relationship with the customer. They're the supplier of record. They're the trusted advisor to that customer. If it's the broker, then they have a one-step removal from the trusted advisor of that customer and they're in a position to take advantage of assets that peak with peak demand economically and share that value with the customer if they adopted or realized that distributed assets had value to them as a retail supplier. It wasn't just reducing the volume that they sold.
The lack of sophistication in that marketplace meant a lot of these folks didn't really pick up on that. And so, I really wanted to focus on that when I got out of my last business. That's one of the reasons why I exited and I wanted to get back to the principal side of the market as well. Advising is nice, but every customer is also your boss and that can get old after a while.
Chris Wedding:
That's a very important statement there.
Gabe Phillips:
Yeah. So now, I was able to get back to the principal side of the market, able to balance the provision of brown power with adoption of renewables, but I needed to get to customers. And so, I found financial backing in BP Energy Partners out of Dallas. We closed funding in the throes of COVID in June of ‘20, which was crazy. Did everything remotely, we met once before the lockdown. Did everything else via Zoom. It was dicey to say the least, but the strategy of buying these hyper-regional players and being good at integrating them into one operational retail energy platform, which we spent our initial phase of the business focused on. Then had a good critical mass of revenue and customers to start cross-marketing these other things, too. That was the strategy, always.
33:17
Now, we're at this point of our life cycle, just about three years in, we're seeing that bear fruit and we're signing solar deals that customers are agreeing to host. All of them were an existing relationship from the supply perspective first. Now, our data points are so little light there to say that this is absolutely like a statistical trend that I can point to, but—
Chris Wedding:
It makes sense.
Gabe Phillips:
…it’s hard to ignore.
Chris Wedding:
Yeah. You built the trust, right? You built the trust over a number of years, oftentimes and so they were open for more ways for you to create value for them.
Gabe Phillips:
Yeah.
Chris Wedding:
Let's switch, Gabe, a little broader here. Tell us about a strong belief you have, probably outside of work, certainly outside of Catalyst Power, which has influenced maybe why you started Catalyst or how you run it, the culture you're creating, the vision you have, et cetera.
Gabe Phillips:
Yeah. I did a lot of hiking and backpacking and stuff growing up and there's a big mantra in that community and a saying that every trailhead would say, leave it better than you found it, that’s a very important mantra to me, personally. And so, I have tried to find ways to inject more good than I receive and to try to leave things better than I found them. I didn't know how I was going to do that necessarily when I was like young.
I knew that I'd been the beneficiary of others who had done that. I knew that my parents taught me that that was an important thing that we should do as human beings. And as I've grown up and had my own family, the impetus to want to do that is just stronger and stronger every day, but I thought when I was younger, I'm going to find a way to make a lot of money and then I'm going to give a lot of it away. And that'll be how I leave things better than I found them.
35:16
At some point in my journey, I found that I had a whole suite of technical skills and I could really specialize knowledge in something that was complicated. The climate change started to become something that was not like esoteric, but it was real and we were observing it. When I started to realize that I could use my specialized knowledge to benefit the environment and I could make a living doing that and not a bad one. In fact, maybe enough that I could also give back in that way as well, that to me became like the holy grail. That was like fucking best thing I could do would be to make money doing good and then give some of that money away to do more good. And then also teach my kids that if you pick hard problems, that the answer is to unlock really good things, the outsized benefits aren't just monetary. They can be and that isn't so bad because you could use that to compound your good effort. But it's to be able to find all those categories of good from one effort to me is very uplifting and that's a mantra.
Chris Wedding:
Yeah, I think it's really well said and totally agree. I recall when I was in private equity, we were considering launching an environmental hedge fund product. Here I was commuting on the bus and reading a classic in the hedge fund space, More Money Than God. I recall some of my fellow passengers who certainly lean very liberal like, “Man, Chris, you totally sold out.” I was like, “Hold up, hold up. You can use hedge funds as a tool for good, not just making a boatload of money to give away.”
Well, and speaking of backpacking, hopefully I'll be going on my first backpacking trip since our kids were very young with some friends this weekend if my friend's son who just got COVID doesn't pass it to my friend. And I'm like, holy shit. I wanted to make sure we're delivering on the four little words here, so I just had to throw that in there to balance it.
Gabe Phillips:
Yeah, cleaner than usual.
Chris Wedding:
But way clean, way clean.
37:31
Gabe Phillips:
I am sorry.
Chris Wedding:
How about some habits, what are some habits, Gabe, daily, weekly, et cetera, that keep you healthy, sane, and focused as a busy CEO?
Gabe Phillips:
Excuse me, you just made me think of something I did once. I get asked to speak at conferences sometimes because I'm not willing to say things that are incendiary and I once said that, “Fuck, you should grow a pair,” to a room full of a thousand people or something at an executive conference. That was pretty funny.
Chris Wedding:
Yeah, that stood out.
Gabe Phillips:
Yeah, that was a good one. Sorry, ask your question one more time. Habits?
Chris Wedding:
It's hard to focus on that question with that kind of memory addition.
Gabe Phillips:
Yeah.
Chris Wedding:
It was, tell us some habits or routines that keep you healthy, sane and focused on the entrepreneur journey.
Gabe Phillips:
I mean, I have a lot of hobbies and there's a saying I got from a close friend, you can't pour from an empty cup. And so, I think it's really important that if you want to deliver good for your family, for those around you, the people you care about in the world, you have to fill up your cup so, you got to figure out what that is.
For me, it's like a lot of variety. I have a lot of hobbies. I play a bunch of instruments. I like to exercise in a bunch of different ways. I just cut my hand before we got on the call in my garden outside. I do a lot of woodworking. I think it's important to do these things that, for me anyway, to fill my cup. That should be different for everybody, and so for me, it's like a high variety of things. The key is fill your cup.
I do that by reading and drawing and woodworking and coaching my kids in their sports and making sure that my wife and I get out on our own and I distance run, I like to rock and hike in the woods. I think that all of those things are the habits that I have formed, which is really not sitting still ever and they all help me with work and they help me to create more good and leave things better than I found them.
39:41
Chris Wedding:
Well, I think listeners will appreciate with the list as long as that, it must be true you never sit still.
Gabe Phillips:
I don't sleep a lot is the other challenge or maybe that's a superpower. I don't know, but I'm good on like four and a half hours.
Chris Wedding:
Four and a half. Well, that sounds like a follow-on conversation not recorded, Gabe, an intervention. Speaking of cutting your hand gardening, I was talking with one of the CEOs in our peer group program once, and I was also gardening, pruning. Then I didn't communicate this on the phone call, but I had nicked a part of my finger off and was bleeding profusely. I'm like holding my finger with toilet paper above my heart, finishing the CEO call. I was like, “Honey, I think I'm going to go to the urgent care.” “What's wrong? Oh, wow. Would you please go right now?”
Gabe Phillips:
Need to go to the urgent care, yeah.
Chris Wedding:
Yeah, exactly.
Gabe Phillips:
When I was first working on the concept for Catalyst, it was after I'd exited my last business and I had for the first time in a very long time, really nothing like to do for work yet. My now COO was a former client of mine at that time, he still has a little company, and I decided to remodel a bathroom in this gap of time that I had. And so, I had to keep asking him to hold while I like cut something or like smash a tile or whatever. I still do that to people on the phone all the time. Like you're lucky you got me sitting still here because I'd be outside running a circular saw or doing something like that at mid-conversation.
Chris Wedding:
Wonderful. Let's see, how about as a maybe final question, how about some books or podcasts, Gabe, that you might recommend listeners pick up?
41:22
Gabe Phillips:
So, I prepared a little bit for this and I had written down a couple of book titles, but I actually think there's one that I didn’t to write down that I want to bring up that's a really special book to me is The Little Prince by Antoine de Saint-Exupery. I remember reading that as a sophomore in high school and realizing that it was very important to maintain a childlike element to the way you approach the world and to get over yourself.
Now I can fast forward to the books I've read in the last couple of years that all are on a similar theme, which is around getting over yourself a little bit and realizing that the sense of self is something that's hard to wrap our heads around. This book, The Comfort Crisis, focused around longevity, but finds other avenues that people have gotten lifelong and life-extending benefits from that are not just physical, like meditation.
Then I went down that road and read 10% Happier is a very approachable introduction to practical meditation. Something I'd done for a long time since younger and before I read that book, but I liked its approach to it and I've recommended it to a lot of people that I work with actually of late. I think The Comfort Crisis is one that just goes in so many different directions. It's by Michael Easter and I think that weaving in this month-long caribou hunt in every other chapter associated with delving into some other thing that people do that gets them outside their comfort zone that has these big benefits for their lives, I think is very valuable for everyone to recognize. Doing hard things is one of the chapters.
I do that my whole life. I'm a wrestler, I picked that because I had a screw loose and that's really hard. I was better at English and I decided to go to engineering school because that was really hard. I just found that I'd gotten these benefits from doing hard things that are well beyond just the direct benefit of doing it. There's a whole chapter in this book about how that could actually help you slow time down and you can return to that experience. You can talk about it and you can relive it in ways that allows time to slow a little bit for you.
That's a form of longevity that you can measure yourself. In any event, those are a couple of books I think a lot of people should read or reread. Certainly, The Little Prince, I hope everybody had exposure to as a kid, but that's what I've read with each of my kids and I get a real benefit from it every time.
44:07
Chris Wedding:
It's a great list. The Do Hard Things has come up in our CEO peer groups a lot. In fact, this guy, Charlie Dimmler, CEO at Checkerspot is a big fan of that phrase, that's the culture for his company. Actually, I was thinking about this backpacking trip, which may or may not happen. I just recently realized that the first afternoon is six miles and we climbed 4,200 feet and were 30 pounds on our back and I'm not 25. My 15-year-old, who probably listens to a fair amount of David Goggins, some of you may know that name, former Navy SEAL, he was like, “Well, if you're going to hike, it should be a hard hike. Otherwise, why do it?” And I was like, “Okay. Okay. Yes. My job here is done, folks.”
Gabe Phillips:
That's awesome. Yeah. I turned 40 a month ago today and it's another example of my screw-loose nature, I decided I would run a 20-mile trail run on my birthday and then host 40 people for a party afterwards and barbecue for them all.
Chris Wedding:
What a combo.
Gabe Phillips:
Grill for them all. I got to get that right. Anyone from North Carolina would say barbecue is kind of food, I've been corrected on that before. I had never run that far before, so that was new, but now I'm hooked.
Chris Wedding:
Well, that's a fun place to wrap, Gabe. Anyway, look, fun to see the evolution, the origin, where you're all going with three businesses, maybe to become four businesses into one turnkey provider for this mid-market CNI customers in the Northeast. Hey, look, man, rooting for your all success at Catalyst Power.
Gabe Phillips:
Well, thank you. This was great.
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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